From Henry Ford to Walmart: How North America went from innovation with labour to innovation against labour

The “Occupy” protests – now winding down, but not forgotten – were effective in expressing rage against what was seen as a fundamentally corrupted social, economic and political system, and polls indicated that many agreed the demonstrators had a point. At the same time, many of us were uneasy about the absence of a bill of particulars.

Apart from the obvious – the obscene juxtaposition of extreme wealth and dismal poverty – what exactly is rotten?

A good way to seek an insight into what has happened to American capitalism is to compare Henry Ford’s innovations with those of Walmart from the perspective of labour. Ford built an industry on technical innovation and the prosperity of labour, while Walmart has built a commercial empire on what, by Ford’s standards, is labour exploitation.

Ford’s achievements did not spring from a saintly nature. On the contrary, he was a mean-spirited crackpot. To cite only one example, he financed an American edition of the Protocols of the Elders of Zion (follow the link, scroll down to 1920), a vicious anti-semitic forgery designed to persuade readers of the existence of a Jewish conspiracy to dominate the world. But he was a brilliant crackpot. He had the kind of brilliance that makes it possible to penetrate to the essence of a problem and, in solving it, to defy conventional wisdom.

To understand what Ford did, we also need to appreciate that, until the end of the first decade of the 20th century, cars were expensive luxuries, carefully crafted by highly skilled trades people. There was a lot of hand work involved, and the idea of mass producing the kind of precision that it took to build a car seemed an absurdity.

But Ford thought it could be done. It was his idea that you could mass-produce an automobile if you did two things:

• Used assembly-line methods to produce it at a reasonable price.
• Paid the workers well, so that they’d be motivated to do their jobs well, and, more importantly, be able to afford to buy the cars.

Ford transformed the automobile from a luxury to a good ordinary workers could afford and, at the same time, made workers, who were used to sweating their guts out for a meagre living, into modestly affluent consumers. Beginning in 1914, when Ford introduced the eight-hour, five-dollar work day, jobs at Ford were the best industrial jobs anywhere.  A Model T  Ford could be had some years for less than $400.

The Model Ts sold like beer at a hockey game. The wages Ford paid its workers set a standard for industrial wages and laid the basis for a generation in which it was normal for workers with minimal skills, who were their families’ sole wage earner, to buy homes and finance good educations for their children.

Today, the standard-setter is Walmart, where employees are paid as much as a couple of dollars above minimum wage and, like many workers today, generally work less than full time. Though they are better paid than many in North America’s increasingly low wage economy, compared to 1950s and 1960s industrial workers, they are poor. The standard Walmart sets is not one of worker affluence, but of a hardscrabble existence, with greatly diminished prospects for young people.

Small wonder then that the “Occupy” protesters are angry. They are generally better educated than their grandparents and yet often face dimmer futures than either their parents or grandparents. Their situation is emblematic of a society that has lost its ability to innovate in such a way as to provide good jobs for ordinary people.