Robert Brenner

Mark Glick

The Regulation Approach:

Theory and History

In the past two decades the French (or Paris) School of Economic Regulation
has developed an ambitious historical-economic theory which has already had
a major impact on efforts to understand the current malaise of the capitalist
system and the accompanying economic transformations.1 On the face of it,
the School’s favourable reception is not difficult to explain. The Theory of
Regulation responds to the belief, widespread today, that orthodox econom-
ics has failed to interpret satisfactorily actual patterns of development, past or
contemporary, and that, in particular, its tendency to economic determinism
prevents it from taking into account in systematic fashion the powerful
ways in which historically developed class relations, institutional forms and,
more generally, political action have shaped the evolution of capitalist
economies. For their part, then, the Regulationists explicitly seek to go
beyond the ahistorical verities of neoclassical economics. Their relationship
to Marxist approaches is less clear. Yet it would seem that their original
intention was to grasp how networks of institutional forms, during the
45
successive epochs in which they held sway, have affected the expression
of—or actually modified—the underlying tendencies or laws of capital
accumulation as these have been analysed in the Marxist tradition.2
The Regulationists begin, methodologically, from the idea that the
overly abstract and ineffectual character of much existing economic
theory, as well as the undertheorized nature of much existing eco-
nomic history, derive from ‘insufficient links between theory and
empirical analysis on the one hand and from purely deductive and
inductive methods on the other’. Their fundamental goal is to provide
those links through ‘build[ing] a series of intermediate models’ to
make theory more historically concrete and empirically testable, as
well as more useful for historical interpretation.3
The Regulationists thus deny that the capitalist mode of production is
comprehensible in terms of a single set of laws that remain unchanged
from its inception until its eventual supersession. They see the history
of capitalism, rather, as a succession of phases, each distinguished by
certain historically developed, socio-institutionally defined structural
forms that give rise, so long as they are maintained, to distinctive
economic trends and patterns. There is an obvious similarity to the
Marxist project of grasping history more generally in terms of a series
of historically developed modes of production, each marked by a
structure of social-property relations that give rise, so long as it is

1
This article does not pretend to provide an inventory of the large and disparate family
of perspectives that are today styled ‘regulationist’ by their proponents, let alone to
review the myriad works of an empirical or theoretical nature that claim in some way to
be inspired by one or another version of ‘Regulation Theory’. Our aim is rather to
evaluate, as systematically as possible, one quite distinct and coherent perspective,
which has as its founding statement M. Aglietta, A Theory of Capitalist Regulation. The US
Experience (orig. pub. 1976), London 1979, and which is continued today, perhaps most
prominently, in the works of Robert Boyer and Alain Lipietz, as well as Benjamin
Coriat, J. Mistral and others. We have made every effort, therefore, to present the ideas
of these authors as fully and coherently as possible. For a superb introduction to this
strand of Regulation Theory, to which we are much indebted, see Mike Davis’s
extended review article, ‘ “Fordism” in Crisis: a Review of Michel Aglietta’s Régulation
et crises: L’expérience des États Unis’, in Review (Binghampton), ii, Fall 1978.
The authors wish to express their appreciation to Gerard Dumenil and Dominique
Levy for their helpful comments and their release of data. Mark Glick wishes to acknow-
ledge that his contribution to this project relies strongly on earlier research with
Dumenil and Levy. We are also especially grateful to Dick Walker for reading and
commenting extensively on two successive drafts, and for allowing us to make use of
and refer to several of his papers in advance of publication. We would like to thank
further Perry Anderson, Mike Davis, Diane Elson and Mike Parker for reading various
drafts and offering valuable suggestions and criticisms.
2 Aglietta’s founding statement of the theory of regulation attempts to present it on

systematically Marxist foundations. Lipietz has more or less followed in this tradition.
Boyer, on the other hand, in his very useful summary of the Regulationists’ main theses
—‘Technical Change and the Theory of “Regulation” ’, in G. Dosi et al., eds., Technical
Change and Economic Theory, London 1988—aims for ‘a new theoretical framework which
would combine a critique of Marxian orthodoxy and an extension of Kaleckian and
Keynesian macroeconomic ideas, in order to rejuvenate a variant of early institutional
or historical theory’ (p. 70). Still, Boyer elsewhere says: ‘Making use of long-term or
medium-term history to enrich and elaborate Marxian intuitions: such is the goal of
Regulationist approaches.’ La Théorie de la Régulation: Une Analyse Critique, Paris 1986, p.
41 (our translation).
3
Boyer, ‘Technical Change’, p. 70. Cf. Boyer, Théorie de la Régulation, pp. 36, 41.

46
maintained, to distinctive forms of economic behaviour and systemic
laws of motion. Indeed, the Regulationists’ key concepts of mode of
regulation and regime of accumulation can be seen to function with
respect to the Regulationists’ phases within capitalist history—called
modes of development—rather analogously to the way in which the Marx-
ist concepts social relations of production and forces of production function
with respect to the modes of production. Moreover, just as a number
of recent Marxist theorists refuse to see the fundamental social-
property structures that constitute a mode of production as either
technologically or economically determined or as following a unilineal
pattern of evolution, the Regulationists similarly insist that the struc-
tural forms that constitute their modes (or phases) of development
within the history of capitalism must be understood as the outcome,
to a significant degree, of class and political struggles.

It is the purpose of this essay to analyse and evaluate the Regulation-

ists’ theory in terms of their own distinctive aspirations by examining,
theoretically and historically, the conceptual links that they have
actually constructed between high theory and economic history, and
specifically the series of ‘intermediate models’ through which they
have sought to understand capitalist development. Let us therefore
begin by surveying the basic concepts and the main theoretical-
historical results of the School.

I Basic Concepts and Fundamental Results

Each regime of accumulation represents a distinct pattern of economic

evolution which, though limited in historical time, is relatively stable.
The immediate source of the dynamic specific to each regime of
accumulation is a particular series of regularities which include: (i)
the pattern of productive organization within firms which defines the
wage-earners’ work with the means of production; (ii) the time hori-
zon for decisions about capital formation; (iii) the distribution of
income among wages, profits and taxes; (iv) the volume and composi-
tion of effective demand; and (v) the connection between capitalism
and non-capitalist modes of production.4 What is distinctive about
the Regulationists’ standpoint is that the content of the regularities
defining the pattern of economic growth that constitutes a regime of
accumulation is viewed largely as an expression of institutional struc-
tures governing intra- and inter-firm relations, the relations among
capitals and the relationship between capital and labour—namely,
the mode of regulation. (Regularity (v) seems to sit somewhat uneasily
with the others, since it obviously cannot be grasped simply as a
function of capitalist institutions, and this is a point to which we shall
have to return.)

Each mode of regulation is constituted by a historically developed,

4
Boyer, ‘Technical Change’, pp. 70–71; A. Lipietz, ‘Behind the Crisis: The Exhaus-
tion of a Regime of Accumulation. A “Regulation School” Perspective on Some French
Empirical Works’, Review of Radical Political Economics, XVIII, Spring and Summer 1986,
pp. 15–16.

47
relatively integrated network of institutions that reproduces the fun-
damental capitalist property relationships, guides the prevailing
regime of accumulation, and helps make compatible the myriad
decentralized decisions, potentially contradictory and conflictual,
taken by the economy’s individual units. It functions, in particular, so
as to achieve ‘a certain match between the transformation of the con-
ditions of production (volume of capital employed, distribution
between branches, and norms of production) and transformation in
the conditions of final consumption (norms of consumption of wage
workers and other social classes, collective expenditures).’ The net-
work of institutions that compose the mode of regulation governs the
accumulation process by establishing: (i) the nature of the capital–
wage labour nexus and (ii) the type of inter-capitalist competition, as
well as (iii) the character of monetary and credit relationships, (iv) the
manner of adhesion of the firms of the national economy to the inter-
national economy, and (v) the forms of the state’s intervention into
the economy.5 In fact, in the actual working out of their theory, the
Regulationists have focused primarily on the first two of these insti-
tutional nexuses. Indeed: ‘one of the many structural forms emerges
as being especially important: wage/labour relations . . . the process of
socialization of productive activity under capitalism’, that is, ‘the net-
work of legal and institutional conditions governing the use and
reproduction of the workforce’. As Boyer sums up, ‘this concept is
sufficiently broad for us to be able to anticipate a priori close linkages
between the form of wage/labour relations and the method of regula-
tion’ and the great ‘extent to which economic crisis and change in
wage/labour relations determine one another’.6

The combination of mode of regulation with regime of accumulation

gives rise, from the Regulationist standpoint, to a distinctive mode of
development, with a distinctive type of cyclical, non-threatening and
self-regulating crisis. The extension in time of each mode of develop-
ment ultimately issues in a series of ever more crippling contradic-
tions, which result from the fetters imposed by the already-existing
mode of regulation upon the regime of accumulation. As the mode of
development reproduces itself, hitherto virtuous circles thus give way
to increasingly vicious circles. The outcome is a structural crisis, which
—precisely because the old mode of regulation has broken down—is
accompanied by the necessarily unregulated and conflictual action of
classes, firms, political groups and governments. Out of these histor-
ically indeterminate processes of competitive economic war and
socioeconomic and political struggle, one out of a range of alternative
resolutions of the crisis is eventually hit upon. A new, historically
given mode of regulation—which, by governing the historically devel-
oped regime of accumulation, makes possible a new mode of develop-
ment—is the result.

The Regulation School developed the foregoing battery of concepts in

5Boyer, ‘Technical Change’, pp. 71–5; Lipietz, ‘Behind the Crisis’, p. 15 (quotation).
6R. Boyer, ‘Wage/Labour Relations, Growth, and Crisis: A Hidden Dialectic’, in R.
Boyer, ed., The Search for Labour Market Flexibility: The European Economies in Transition,
Oxford 1988, p. 10.

48
close connection with its ongoing investigation of the various histor-
ical phases of capitalist development. Essentially, it has come to spe-
cify two regimes of accumulation—the extensive and the intensive—
and two modes of regulation—the competitive and the monopoly.
Under the extensive regime of accumulation, growth takes place pre-
dominantly on the basis of artisanal productive techniques via the
application of methods of lengthening the working day and inten-
sifying labour, as well as expanding the size of the labour force. Pro-
ductivity growth is therefore limited, as is the potential for mass
consumption. Under the intensive regime, growth takes place pre-
dominantly via investment in fixed capital embodying technical
advance—which creates the potential for regular increases both in
productivity and in mass consumption. The competitive mode of
regulation is distinguished from the monopoly mode, most crudely, as
follows: in the former, there is craft control and the competitive deter-
mination of prices and especially of wages; in the latter, there is scien-
tific management, an oligopolistic system of pricing, and, most
characteristically, the determination of wages through a complex sys-
tem of capital–labour and governmental institutions—the social regu-
lation of the mode of consumption.
On the basis of this typology, the Regulationists have come to iden-
tify three successive modes of development in the economic history
of Western capitalism over the last century and a half, each repre-
senting a distinctive combination of one of the foregoing modes
of regulation and one of the foregoing regimes of accumulation. First,
through most of the nineteenth century, a competitive mode of
regulation prevailed and imposed an extensive regime of accumu-
lation. Second, under the pressure of class struggle and technical
change, there arose at various historical junctures—from the first
decades of the twentieth century in the United States—a new mode
of development. Here, craft control was sufficiently weakened and
inter-firm competition sufficiently controlled to allow for the
emergence of intensive accumulation. However, this new mode of
development turned out to be unstable because the mode of
regulation, still essentially competitive, was unable to institutionalize
the expanding mass consumption that was required to underpin the
expanding mass production made possible by intensive accumula-
tion. The result was the severe structural crisis—conceived as a crisis
of overinvestment and underconsumption—of the interwar period,
leading to the depression of the 1930s. Thirdly, especially in
consequence of the class struggles of the 1930s, there emerged a
new mode of regulation which finally made possible the full flower-
ing of intensive accumulation and an unprecedentedly successful
period of capitalist development. This monopoly mode of regulation
resolved the contradictions of the previous mode of development
by providing for the rise of mass consumption and thereby con-
stituted the foundations for a new mode of development called ‘Ford-
ist’. However, the historical repetition of the very processes that had
underwritten prosperity eventually proved problematic, as the
progressive perfection of the Fordist labour process resulted in the
exhaustion of the system’s capacity for developing the productive
forces and for underwriting the steady growth of productivity. The
49
upshot was the structural crisis of the Fordist mode of development—
conceived above all as a crisis of productivity—that we are experienc-
ing today.7

In the remainder of this article, we shall consider, one by one, each of the
aforementioned modes of development, their structural crises and the
transitions between them. In each case we shall proceed by: (1) clarifying
each mode’s developmental logic and empirical basis from the Regula-
tionists’ standpoint; (2) critically interrogating its conceptual status;
and (3) investigating its empirical warrant, especially with respect to
what Aglietta terms the exemplary case, that of the United States.

II Mode of Development One: Competitive

Regulation and Extensive Accumulation
The mode of development characteristic of the United States and
parts of Europe until at least the early decades of the twentieth century
expressed the predominance of a competitive mode of regulation, which
governed a regime of extensive accumulation.

1. The Economic Consequences of Extensive Accumulation

Governed by Competitive Regulation

Under extensive accumulation, production was characteristically

based on artisanal labour. Management, for its part, operated in
terms of short time-horizons and limited its placements of fixed capi-
tal. As a result, new capital investment tended to embody extant pro-
ductive techniques, rather than transformed ones. There was, of
course, ‘significant use of science in production processes, but firms
mainly tr[ied] to apply existing knowledge to their business and d[id]
not strive to improve them continuously.’8 The overall outcome, in
Aglietta’s words, was that ‘under the regime of extensive accumula-
tion . . . absolute surplus-value predominates’ and ‘the length of the work-
ing day is the principal means of extracting surplus labour’.9 Growth
was therefore made possible predominantly by means of extending
and intensifying labour, a spectacular increase in the labour force,
and a dramatic expansion of the system in geographical space.

Extensive accumulation is explicable, from the Regulationist stand-

point, in terms of the overarching competitive mode of regulation that
maintained and governed it. It was the institutionalized forms of
capital–capital and capital–labour relationships constituted by com-
petitive regulation that were responsible for restricted capital invest-
ment and limited growth of the productive forces. These fetters upon
capital accumulation came in part from the supply side. Within
firms, craft workers were able to exert considerable control over the
labour process, thereby limiting management’s freedom to introduce

7 For a succinct summary of these propositions, see Boyer, ‘Technical Change’. Cf.
Lipietz, ‘Behind the Crisis’, p. 15.
8 Boyer, ‘Technical Change’, pp. 79–80.
9 Aglietta, Theory of Capitalist Regulation, p. 130, emphasis added.

50
innovations in production. Capital–capital or inter-firm relations
were characterized by cutthroat competition among many uncoordin-
ated units, so that the investment environment displayed a high
degree of risk and uncontrollability. Forced to prioritize short-term
returns, management shied away from technical changes requiring
large-scale placements of fixed capital and from extensive expend-
itures on research and development.10
Nevertheless, from the standpoint of the Regulationists, the key fetter
was to be found on the side of demand. Competitive regulation
allowed levels of direct exploitation in the labour process sufficient to
support ongoing capital accumulation. At the same time, it imposed
strict limits on the growth of mass consumption, which decisively
cramped the trajectory of capital accumulation. These demand-side
constraints derived, on the one hand, from the relationship of early
capital accumulation to its non-capitalist environment, and, on the
other hand, from the institutions governing the capital–labour rela-
tionship within capitalism itself.
In this view of things, the working class, until at least the beginning of
the twentieth century, secured much of its means of reproduction
from outside the sphere of commodity production, apparently from
its relationship to still-largely non-capitalist rural households and vil-
lages. The workers’ ‘environment [was] characterized by close rela-
tionships between town and country, by a rhythm of work punctuated
by season and stabilized by custom, by an incomplete separation
between productive and domestic activities, and by a domination of non-
commodity relations over commodity relations in the mode of consumption—
non-commodity relations finding the conditions for their existence
within the extended family and neighbourhood community.’ This
‘reconstitution of labour-power by a non-capitalist environment in
which it [was] still inserted . . . ma[de] it possible to pay very low
wages and impose very long working hours.’11 For these reasons, the
workers could constitute only a strictly limited market for consumer
goods.
Moreover, the very processes by which precapitalist societies were dis-
solved themselves exerted a downward pressure on wages. Direct pro-
ducers were rendered dependent upon the purchase of commodities
for their reproduction, and their separation en masse from direct non-
market access to their means of subsistence had the effect of
depressing working-class incomes and consuming power. Workers
from rural villages and small towns flooded the great US industrial
cities, where they were joined by wave after wave of immigrants from
Europe and Asia.12 When workers finally entered the overstocked
capitalist labour market, they found the institutional forms governing
capital–labour relations stacked against them. Under competitive
regulation, an essentially unregulated labour market, marked by
10 Boyer, ‘Technical Change’, pp. 71–5.
11 Aglietta, Theory of Capitalist Regulation, p. 80. Boyer comments that, ‘in the last cen-
tury[,] most of the consumption of the workers came from non-capitalist modes of
production.’ Boyer, ‘Technical Change’, p. 73.
12 Aglietta, Theory of Capitalist Regulation, p. 81.

51
limited unionization and little intervention of the state to maintain
labour-power, prevailed. The result was, again, powerful downward
pressure on wages, limiting consumer demand.
For the Regulationists, restricted consumer demand, resulting from
competitive regulation, provides the key not only to the first mode of
development, but to their entire historical conception of capitalist
evolution. On the one hand, a necessary precondition for the full flower-
ing of mass production is the rise of mass consumption; but on the
other hand, the rise of mass consumption cannot be brought about
merely by transforming production, the labour process.13 In conse-
quence, the establishment of mass production of the means of
working-class consumption depends upon the success of sociopolitical
struggles in setting up institutions to guarantee the working-class
norm of consumption. It was thus ‘the transformation of the condi-
tions of existence of the working class which enabled methods of relative
surplus-value production to be generalized throughout Department
II.’14 Capitalists would not make the investments to transform the
labour process and develop the forces of production in the depart-
ment producing consumption goods unless and until there had
emerged a mass market for its products; this required ‘the establish-
ment of social controls to guarantee the formation of the working-
class norm of consumption’.15 Aglietta thus emphasizes time and
again the ‘need for a comprehensive linkage between the two depart-
ments of production, and the absence of any automatic mechanism to
balance their development’.16 In the absence of such a linkage, the
effect of technical change originating in Department I on Department
II will be doubly limited: Department II will fail to adopt the new
methods; goods produced in Department II will fail to decrease in
price, cutting off a corresponding increase in real wages. Aglietta’s
logical conclusion is that the historical appearance of sufficient
effective demand to underwrite the mass production of working-class
consumption goods is ultimately ‘linked to the way in which the class
struggle either succeeds or does not succeed in revolutionizing the
conditions of production and exchange, and consequently in calling
forth an expansion in the mass of commodities produced.’17
So long, then, as competitive regulation prevailed, its capital–labour
relationship prevented any definitive break beyond the regime of
extensive accumulation and made possible, at best, a highly punc-
tuated growth of Department I. As Aglietta spells out the macro-
economics of the Regulationists’ first mode of development: ‘As long
as capitalism transforms the labour process by the creation of collect-
ive means of production, but without reshaping the mode of con-
sumption, accumulation still progresses only in fits and starts. The
13 ‘ . . . Commodities can only form part of the consumption norm if their unit
exchange-value is on the decline and already sufficiently low. The condition in which
these commodities are produced must therefore be those of the standardized labour
process of mass production. [But f ]or this to be the case, the social demand for these
branches of output must be sufficiently large and rapidly rising.’ Ibid., pp. 84–5.
14
Ibid., p. 97, emphasis added.
15
Ibid., p. 158. Cf. p. 197.
16
Ibid., p. 154.
17
Ibid., pp. 154–5.

52
regime of accumulation is principally an extensive one, based on the
build up of heavy industry section by section. The resultant jerkiness
is a function of the uneven development of Department 1.’18
The us as Exemplary Case
The fact remains that, in the Regulationist schema, growth could and
did proceed relatively successfully under the mode of development in
which competitive regulation governed extensive accumulation
because capital had access to enormous regions with inexhaustible
supplies of raw materials and cheap labour power. According to
Aglietta, the ‘exemplary nation’ of this mode of economic develop-
ment was the United States, from the late eighteenth century right
through World War I and beyond. Here growth took place largely
according to the ‘frontier principle’, focused on the securing of
valuable minerals and cheap agricultural products. It based itself
most especially on the technical and commercial dynamism of farmer
(owner-operator) capitalism. The rise of this system of property rela-
tions was conditioned by relatively easy access to land, insured in the
initial class and anti-colonial struggles of the new republic, and con-
solidated through the efforts of powerful speculators and railroad
developers. Agricultural output thus grew by leaps and bounds
throughout the final two thirds of the nineteenth century, as the
economy expanded in space and registered spectacular increases in
agricultural productivity. Meanwhile, mining developed apace to
exploit the mineral deposits that were discovered in one frontier
region after another. Both agriculture and mining stimulated, and
were stimulated by, the dynamic growth of railroads, perhaps the key
Department 1 industry in Aglietta’s account of the nineteenth century
and itself a powerful stimulus to iron, steel and coal production.
The continuity of this process was made possible by wave after wave
of cheap, unorganized labourers, recruited from the farms and from
abroad. Labouring under terrible conditions, these workers were
compelled to cede most of an output that was made to grow largely
through the intensification of labour and the extension of the working
day, and not primarily through productivity increases and the growth
of the organic composition of capital.19 In the end, therefore, the
long-term tendency of the mode of development based on extensive
accumulation and competitive regulation was, in Boyer’s words, that
‘productivity is quasi-stagnating, so are real wages, while . . . growth is
only obtained by a lengthening of the working hours or by the hiring
of more workers.’20 But the consummation of that tendency could, in
the US at least, be put off for a lengthy period through the exploitation
of the extraordinary opportunities offered by the frontier.
2. Competitive Regulation and Extensive Accumulation: A
Mode of Development under Capitalism?
The initial mode of development in the Regulationists’ schema of

18
Ibid., p. 79.
19
Ibid., pp. 72–9; Lipietz, ‘Behind the Crisis’, pp. 16–17; Davis, ‘Fordism in Crisis’,
pp. 217–22.
20
Boyer, ‘Technical Change’, p. 80.

53
phases of capitalist evolution is thus constituted by a regime of
accumulation based primarily upon the extraction of absolute
surplus-value that results from the mode of competitive regulation.
Such a model, however, with its characteristic fetters on technological
change and mass consumption, appears puzzling in the light of what
we know, or thought we knew, about the basic traits of the capitalist
mode of production—specifically, our view of the normal forms of
individual economic behaviour and of the aggregate patterns of eco-
nomic growth that result from the prevalence of capitalist social-
property relations per se. First, what sort of capitalism is it in which
the extraction of absolute surplus-value is predominant? Second, what
sort of historically extended process of capital accumulation is it that
takes place without significant increases in both the real wage and
aggregate consumption? Thirdly, why should the scope and intensity
of capital accumulation in this phase be limited by the lack of institu-
tionally insured levels of consumption? The point is not that it is con-
ceptually impossible to specify specific socioeconomic environments
or institutional conditions in which capitalist development might
take place predominantly on the basis of absolute surplus-value, or
where accumulation might occur without a corresponding growth of
consumption, or where restricted consumption might hinder further
investment. The question that needs to be asked is, on what basis can
the Regulationists posit an entire, normal, initial phase of institution-
ally determined development—an entire epoch—in which capitalist
social-property relations have been fully established, yet which oper-
ates predominantly by intensifying labour and lengthening the work-
ing day, keeps working-class wages and aggegrate consumption from
rising, and finds the road to mass production blocked by restricted
mass consumption?
The Regulationists’ answer, as already implied, would appear to rest
simply upon: one, the modifying effects of the broader pre-capitalist
socioeconomic environment within which their first mode of develop-
ment historically emerged; and two, the structuring effects of the net-
work of capitalist institutions constituted by the competitive mode of
regulation itself. Still, given that both sets of effects are supposed to
have actually reversed or cancelled out fundamental developmental
tendencies widely understood to be built into capitalist social-property
relations per se, the Regulationists should—one would think—have
felt obliged not only to treat more explicitly the paradoxical character
of their result, but also to make much more clear the manner by which
they arrived at it. For, where capitalist social-property relations are
fully established, we can, all else being equal, expect to find: develop-
ment on the basis of relative surplus-value; long-term capital accumu-
lation bringing about rises in wages and aggregate consumption; and
investment and cost-cutting technical change leading to, but not
necessarily conditioned by, growth of the mass market. It will be our
argument, in fact, that the Regulationists have reached their conclu-
sions in essentially two ways: by focusing on some, but ignoring other,
economic effects of the institutions of extensive accumulation and
competitive regulation; and by assuming, without sufficient justifica-
tion, that certain tendencies arising from the environment constituted
by the competitive mode of regulation—either its broader historically
54
determined precapitalist socioeconomic setting or the historically
specific structure of capitalist institutions—will have sufficient quan-
titative weight to set their mark on the overall path of development,
the regime of accumulation.
Competition, Risk and Investment
Let us consider first the Regulationists’ contention that the capital–
capital institutional structure characterized by a multitude of decen-
tralized, competitive firms tended to stifle the investment in fixed
capital required for technical change and that, for this reason, it
tended to bias individual enterprises toward profit-making through
the methods of increasing absolute surplus-value and the system as a
whole toward extensive accumulation. It is undoubtedly true, as the
Regulationists argue, that capitalists have found the risk of investing
in fixed capital under fiercely competitive conditions to pose signifi-
cant problems for capital accumulation and thus technical change.
Yet most previous interpreters of capitalist development, whether
Marxist or non-Marxist, implicitly or explicitly, have assumed that,
since the origins of capitalism itself, the same competitive environ-
ment has tended to make such investment unavoidable. They have
done so for the obvious reason that inter-capitalist competition is
thought to impose, in tendency if not in every individual case, an
inexorable pressure on firms to maximize cost-cutting so as to realize
temporary surplus profits or technological rents, thereby maintaining
themselves against competitors, and to accrue sufficient surpluses for
adequate further investment. Those firms that do not sufficiently
reduce costs are forced out of business. The constraint imposed upon
investment by risk has thus appeared to be a strictly relative one,
incapable in itself of constituting any long-term barrier to develop-
ment by the methods of increasing relative surplus-value.
It should perhaps be noted in passing that, although the level of fixed
capital commitment required for increasingly advanced production,
for technical change, has unquestionably risen over time, it has done
so unevenly, and hardly universally. The classic counter-example is
the revolution in agricultural production of the sixteenth through the
eighteenth century in England. This brought about major reductions
in food costs, with epoch-making repercussions for economic develop-
ment, largely by way of increased specialization and the reorganiz-
ation of farms requiring significant but, in absolute terms, not very
large capital investments. In manufacturing itself, moreover, the his-
tory of technical change has by no means been confined to the growth
of machinofacture requiring greater capital investment, but has also,
to a significant degree, been constituted by processes of productivity
advance carried out through the extension of the division of labour in
manufacture (the break-up of tasks into ever simpler components/the
growth of detail labour), the perfection of cooperation, and the reor-
ganization of production so as to make more efficient use of raw
materials, tools and labour-power. (See, in the recent period, just-in-
time production.) Throughout the history of capitalism, then, growth
has tended, to an important (if limited) extent, to take place on the
basis of extending relative surplus-value even without major invest-
ments in fixed capital.
55
The really fundamental point, however, is that while the initial invest-
ment required for successful innovative accumulation has tended to
rise throughout the history of capitalism, entrepreneurs and their
financiers have found it sensible to assume the risk. For the disincen-
tive resulting from the need to put out, over time, ever greater
amounts of fixed capital has been more than compensated by the
profit incentives of technical innovation (as well as potential negative
sanctions that could result from failure to stay ahead of one’s compet-
itors). Simply put: the increased potential rate of return from invest-
ments in innovations has, sooner or later, more than counterbalanced
the increased degree of risk.
The classic case is, of course, the industrial revolution itself, which
amounted to the transition from domestic putting-out manufacture to
the factory system. This required entrepreneurs to move from a
system based almost entirely on circulating capital—where the
capitalist supplied raw materials and wages (or credit) to workers
who possessed the means of production—to a system based heavily
on fixed capital in which the capitalist owned increasingly substan-
tial assets in plant and equipment (buildings and machinery). The
need for a radically increased commitment to fixed capital assets
did unquestionably constitute a significant initial disincentive to
eighteenth-century British entrepreneurs, accustomed as they were to
short-term investments in production where the direct producers bore
most of the risk (and particularly of the losses from cyclical downturns
in the market). Nevertheless, it took place, for example, in cotton
manufacturing, with the rise of the factory. Nor did the increased
risks bound up with fixed-capital requirements prove more than a
relative barrier to investment during the subsequent epoch of the
power loom, the steam engine, the railroad, and so on. From the very
first stages of industrialization, capitalism showed itself capable of
overcoming barriers to investment in fixed capital to the extent that
such investment could yield greater profits, and thus of developing on
the basis of relative surplus-value. Indeed, the common-sense
assumption of the most diverse currents of economic theory is that
inter-firm competition requiring cost-cutting and profit maximization
has been the central mechanism behind capitalist innovation and the
key to capitalism’s unique capacity systematically to develop the
productive forces.
It needs finally to be emphasized that capitalist entrepreneurs have
constantly transformed capitalist institutions precisely in order to
cope with the growing requirements of fixed capital investment. This
is, in a very general sense, what the Regulationists are arguing. How-
ever, they see such institutional innovation as associated with, indeed
dependent upon, a qualitative economy-wide institutional transform-
ation that made for a qualitative break in capitalist evolution beyond
the initial phase of merely extensive accumulation governed by com-
petitive regulation to a new mode of development, rather than as
inherent in the system of capitalist social-property relations itself.
Institutional transformation to facilitate technical change should be
seen as an evolutionary feature of capitalist manufacturing per se,
rather analogous to, and running parallel with, the process of technical
56
change itself—and, like technical change, arising from a field of
natural selection characterized by cost-cutting competition between
firms. As a result of such innovation, capitalist economic history has
witnessed one institutional advance after another—joint stock
companies, limited partnerships, corporations, regulated banks,
bankruptcy laws, vertical integration, horizontal integration in con-
glomerates—as requirements have increased for the mobilization of
capital, the time horizon for investment, the control over the invest-
ment environment, and so forth.
It is true that institutions have hardly evolved continuously or auto-
matically, but neither has productive technique. The point is simply
that institutional changes needed, at successive points, to facilitate the
fixed capital investment for technical change can and have taken
place, throughout the history of capitalism, as has technical change
itself, in a piecemeal and local fashion—expressing the initiative of
individual capitalists, or groups of capitalists, sometimes aided by the
state. In order to show why such institutional innovations should be
excluded from their putative long phase of extensive accumulation, or
why they should have had to await some all-at-once transition from
extensive to intensive accumulation, the Regulationists would have
had to demonstrate that the institutions constituting the competitive
mode of regulation somehow had the effect of putting a damper on
institutional changes. And this they have not been able to do. In the
end, the Regulationists have not only failed adequately to demonstrate
why intense competition between decentralized firms would actually
have restricted fixed capital investment for technical change; they
have similarly failed to show that the system did not, from the start
and more or less regularly (though, again, not continuously), actually
improve its institutions for making such investments within the
broader competitive environment.
Craft Control, Fixed Capital Investment and Technical Change

There is no reason to deny that workers’ resistance has constituted a

fetter on the placement of fixed capital embodying technical advances,
more or less powerful according to historical circumstances; nor that
skilled workers have sought to make use of their relative scarcity and
their relative indispensability for management within the labour
process to organize their self-defence against capital, and specifically
against the introduction of machinery requiring labour of lower speci-
fic weight. Yet, it is very difficult to understand how the Regulation-
ists can move from propositions of this general sort to the assertion
that control over the labour process exerted by craft workers consti-
tuted an institutionally founded barrier of sufficient solidity and
breadth to structure an extensive regime of capital accumulation, one
which, in their account, was mostly restricted to the extraction of
absolute surplus-value, over an entire historical epoch.
At the heart of the Regulationist argument is the view that the rise of
scientific management or Taylorism–Fordism—in association with
the rise of the corporation and oligopoly—constituted a moment of
discontinuity in the development of mechanization, deskilling and
57
capitalist control over the labour process that was sufficiently sharp to
mark—indeed partially to bring about—the transition from one
regime of accumulation to the next. In Lipietz’s words,
The 1848–1914 period is mainly characterized . . . by a simple extension of
productive capacity without a dramatic change in the organic composition
or in productivity . . . In the twenties a revolution in the mode of organiz-
ation of work was generalized in the United States and partially in Europe:
Taylorism. It consisted of an expropriation, by a gigantic and capillary
deepening of the capitalist control of the labour process, of the know-how
of the collective workers, a know-how which was henceforth systematized
by engineers and technicians according to the methods of the ‘scientific
management of work’. A further step was the incorporation of this know-
how into the automatic system of machines, which dictated the method of
work to the workers who had thus been robbed of initiative: such was the
productive watershed of ‘Fordism’.21
It is difficult to know just what to make of this argument, which is
essential to the Regulationists’ attempt to specify institutional founda-
tions for distinctive regimes of accumulation, but which seems to fly
in the face of the ABC of capitalist development. The Regulationists
seem to be attributing to class conflict over control of the labour pro-
cess a radical autonomy from, and a determinative role in, the process
of capital accumulation. On that basis, a qualitative, once-and-for-all
transformation in the balance of class forces and the nature of tech-
nical change is supposed to have occurred at the time of the Taylor–
Ford revolution, enabling an epochal break to accumulation predomi-
nantly on the basis of relative surplus-value. It is as if craft control
—or, more broadly, control exerted by skilled workers—was, with
respect to the accumulation of capital, all-powerful before, and oblit-
erated after, the advent of Taylor and Ford. But such an extreme and
discontinuous account of the development of control over the labour
process would appear impossible to sustain.

The Regulationists appear largely to ignore the general fact that ever
since the Industrial Revolution, if not before, the capitalist labour
process has been transformed and re-transformed through new tech-
niques that have brought greater profitability to individual firms by
providing greater efficiency (greater outputs for given inputs), not
merely by—and often irrespective of—eliciting more intense or more
protracted labour inputs. Capitalist entrepreneurs, seeking to stay in
business, were driven to adopt these techniques because they cut unit
costs (without requiring greater exploitation, although they of course
often facilitated it).22 Workers might, on occasion, succeed in limiting

21 Lipietz, ‘Behind the Crisis’, pp. 16–17. According to Boyer, ‘[F]rom 1895 to 1920,
average productivity is quasi-stagnating . . . Along with authors like Braverman and
Coriat, the “regulation” approach insists upon the so-called Taylorian revolution.
During the 1920s, productivity speeds up, more than usual after such an episode.’
‘Technical Change’, pp. 80–82.
22
‘Large-scale industry tore aside the veil that concealed from men their own social
process of production. . . . Its principle, which is to view each process of production in
and for itself, and to resolve it into its constituent elements without looking first at the
ability of the human hand to perform the new processes, brought into existence the
whole of the modern science of technology. The varied, apparently unconnected and

58
the introduction of such techniques, in a given industry in a given
locale, sometimes for a significant period; but they could not in prin-
ciple—and certainly not indefinitely—do so over the entire breadth of
a manufacturing economy. Once one or a few firms in an industry
adopted the more efficient technique, others would have to follow
or go out of business, and there was little workers could do. From
this vantage point, although the process of technological change is
incomprehensible in abstraction from class struggle over the labour
process, it is quite wrong to believe that workers’ shopfloor control,
expressing workers’ class power, could come close to limiting fixed
capital investment and technical change over the sort of major epoch
defined by the Regulationists as characterized by predominantly
extensive accumulation.

Long before the era of Taylorist–Fordist transformations, new

machines, representing enormous advances in productive efficiency,
had been more or less regularly—though certainly not continually—
coming into use. For the reasons we have seen, skilled workers could
not systematically, or over any length of time, prevent the accompany-
ing series of gigantic transformations of the labour process—changes
that resulted in massive devaluations of handicraft skill, significant
intensification of labour, and major reductions of workers’ job con-
trol. In one famous formulation, ‘As long as machine production
expands in a given branch of industry at the expense of the old handi-
crafts or of manufacture, the result is as certain as is the result of an
encounter between an army with breach-loading rifles and one with
bows and arrows.’ What else are we to make of the initial industrial
revolution in cotton, with its world-historical cutting of production
costs and its devastating destruction of artisanal labour? How else are
we to understand Marx’s analysis of ‘Machinofacture’ in Capital
(published in 1867), which theorizes already-accomplished (though
necessarily incomplete) processes of destruction of handicraft labour,
subordination of workers to machines, and intensification of
labour that were the consequence of the introduction of cost-cutting
machinery and were every bit as spectacular as—and in many respects
quite analogous to—the processes that occurred under the impetus of
Taylorism–Fordism? The upshot is that the major transformations of
the labour process that took place in United States manufacturing
from the late nineteenth century are incomprehensible if they are
conceived as a transition from one to another regime of capital
accumulation. On the contrary, they represented a further phase of an
ongoing, though hardly continuous, evolution. And, as with earlier
phases, they in part reflected an independent technological dynamic
whose results were, in many cases, in no significant way conditional
upon capital’s previous success in assaulting the bastions of skilled

22
(cont.)
petrified forms of the social production process were now dissolved into conscious and
planned applications of natural science, divided up systematically in accordance with
the particular useful effect aimed at in each case. . . . By means of machinery, chem-
ical, processes and other methods, it is continually transforming not only the technical
basis of production but also the functions of the worker and the social combinations of
the labour process.’ K. Marx, Capital Volume i, Harmondsworth 1976, pp. 616–17.

59
workers’ control, but which nonetheless had the effect of radically
undermining those bastions.23

Furthermore, precisely because the introduction of machinery is not

merely about the eliciting of increased worker inputs, but quite often
centrally about increases in efficiency, whatever their consequence for
labour inputs, mechanization often brings with it a requirement for
new skills and thereby even the potential for a certain weakening of
managerial control. The capitalist mode of production does possess a
systematic tendency or bias toward embodying increases in product-
ive power, technical advances, in machinery rather than in human
beings, all else being equal. This is because, given free labour, capital-
ists find it hard to insure that they will secure the gains from invest-
ments in ‘human capital’: workers may move to another firm. It is
also because skilled workers are, as a rule, more difficult to exploit.
But the fact that machine-using technical changes are much to be pre-
ferred to skill-using technical changes of the same level of efficiency
will not prevent capitalists from bringing in inventions which may
even increase the use of skilled labour (especially at the start), if so
doing will yield a higher rate of profit. In any case, the mechanization
processes of the Taylor/Ford era, with their accompanying transform-
ations in the labour process, both destroyed skills born out of earlier

23 The quotation is from Capital Volume i, p. 578. It is worthy of note that F.W. Taylor

first achieved international fame by developing, in collaboration with Maunsell

White, a landmark technique to create tools that could cut metals at speeds four to six
times faster than in the past, thus opening the way for the devastation of skilled labour
in this field. As David Montgomery explains: ‘The operators of those machines found
themselves at a loss to know what could be expected of them. Taylor’s colleague Carl
Barth provided the answer in another set of experiments on cutting speeds and feeds,
using high-speed steel, from which he developed a twelve-variable slide rule for use in
determining proper machine settings. Armed with the slide rule, machine-shop
employers were in a position to command.’ The Fall of the House of Labor, New York 1987,
pp. 230–32.
The Regulationists seem to draw directly on Braverman, who precedes them in
focusing almost exclusively on the Taylorist–Fordist initiatives of 1890 to 1930, in
attributing these (in a manner that is not entirely clear) to the rise of ‘monopoly
capital’, in neglecting the previous, extensive revolutions in the labour process, and in
offering little analysis of the relationship of the development of science and technology
to the transformation of production and productiveness. See H. Braverman, Labor and
Monopoly Capital, New York 1974. We have been much helped by, and wish to express
our indebtedness to, T. Elger, ‘Valorisation and “Deskilling”: A Critique of Braver-
man’, Capital and Class, Spring 1979. For the destruction of skills that had given craft
workers extensive control over the labour process, and the subsequent emergence of
skills of a rather different sort during the nineteenth century, see G. Stedman-Jones,
‘Class Struggle and the Industrial Revolution’, NLR 90, March–April 1975, p. 37.
Finally, to avoid misunderstanding, we should state, very explicitly, that we in no
way wish to substitute a misleading—and unduly pessimistic—notion of infinite or
perfect capitalist flexibility for the Regulationists’ misleading notion of craft control as
capable of constituting a qualitative barrier to technical advance sufficient to establish
(in connection with a few other institutional forms) a distinct phase of (extensive)
accumulation. Obviously, in many cases, the geographical scope for successful invest-
ment in given technical changes is significantly restricted, for technical, social and
other reasons. As a result, groups of workers can, of course, for greater or lesser
periods, prevent the introduction of new techniques (as well as defend other aspects of
their position). Much clearly depends on the specific potentials for competition from
other regions or nations.

60
mechanization and themselves called into being new skills. ‘Skilled
workers’—a term of such elasticity as to stretch from handicraftsmen
to the semi-skilled operatives of some modern factories—were neither
so central to the labour process before the Taylorist–Fordist revolu-
tion, nor so totally peripheral after it, to have constituted the focus for
the transition to intensive accumulation. As a central institution of
the competitive mode of regulation, the pre-Taylorist ‘craft-controlled’
labour process cannot do the work of structuring ‘extensive accumula-
tion’ that is required of it by the Theory of Regulation.
From Competitive Regulation to Restricted Consumption?

Let us now move from the Regulationists’ account of the supply side
to their more central theses about the two ways in which competitive
regulation fettered the growth of consumer demand: first, the depress-
ing effect of the precapitalist environment and of unregulated capital–
labour relations on the potential growth of wages and aggregate
consumption; second, the restrictive effect of the limited growth of
mass consumption on the growth of mass production.
The Regulationists advance the notion of an epoch of accumulation
where workers’ real wages were prevented from rising and mass con-
sumption stagnated. They ascribe these effects to: (i) workers’ access
to the means of subsistence through direct links to households and vil-
lages of the precapitalist countryside; (ii) the oversupply of labour
resulting from wave upon wave of immigration from largely non-
capitalist rural areas, both at home and from abroad; and (iii) the
highly competitive, unregulated character of the labour market. Let us
consider these factors in turn.
(i) Workers with Non-Market Access to the Means of Consumption

The Regulationists’ paradoxical notion of a phase of fully established

capitalism in which labour-power still retains possession of, or non-
market access to, the means of subsistence is, it must be said, espe-
cially puzzling, and, at the very least, needs much further elaboration.
First, from a purely empirical point of view, there is no evidence that
a significant proportion of farmers, let alone industrial workers, had
direct non-market access to the means of subsistence in the capitalist
United States, outside the South, during the second half of the nine-
teenth century.24 We shall return to this point below. Moreover, even
if this idea had greater purchase historically, its theoretical justifica-
tion, and status within Regulation Theory, would remain extremely
unclear. Aglietta rightly argues that the creation and expansion of the
wage-earning class takes place through ‘a double structural change: [1]
a separation between labour-power and means of production, which
are combined solely in the labour process under the authority off capi-
tal, and . . . [2] the separation of labour-power from all its conditions
24
It is extremely difficult to understand how Aglietta can contend that ‘A long histor-
ical process which began at the start of the 20th century has seen the penetration of capital-
ist production into the internal organization of towns, and into the production of
means of individual consumption for the broad masses of workers’ (emphasis added).
Theory of Capitalist Regulation, p. 79.

61
of existence’ (subsistence/consumption). Yet, from this premiss he
concludes that ‘there is no reason why the two components of this
dual structural change should occur together’, and that there are good
grounds for expecting capitalist development initially to take place by
way of [1] without the occurrence of [2], so that labour retains non-
market access to its means of subsistence.25 This is mystifying indeed.
Most obviously, the very fact of proletarianization would seem to
imply a process by which the direct producers have been, or are
being, separated from the means of subsistence. If [2], the process of
depriving the direct producers of their subsistence land and tools, has
not taken place, how can [1], the process of their subjection as wage-
labour to the domination of capital within the labour process, be
made to occur? It is only workers’ lack of means of subsistence,
and their consequent need to buy on the market, which compels
them to sell their labour-power and submit to the exploitation of
capital. On the other hand, if workers have been made subject to
the authority of capital in the labour process, it would, under nor-
mal conditions, seem difficult for them just in practical terms to
secure their means of consumption from agricultural households and
plots in rural communities.
Suppose one admits, for the sake of argument, a workforce which sub-
jects itself to the capitalist manufacturing labour process yet cannot
constitute a mass market because of its direct non-market access to
the means of subsistence. How, under these conditions, could there
exist an adequate basis for ongoing capital accumulation? One would
have the very odd economy in which capitalists produce machines for
other capitalists with little or no final outlet in consumer goods—an
economy composed entirely of Department I, in which capitalists are
figuratively eating one another’s machines. This seems to be some-
thing like the economy that Aglietta and the Regulationists posit
within the historical-institutional framework of competitive regula-
tion. But it seems at best a logically conceivable construct with little
practical applicability to cases where capitalism has established itself.
Aglietta and the Regulationists may have in mind neither fully capital-
ist cases, nor situations in which producers retain full possession of
the means of subsistence. They may rather be referring to situations in
which peasants have partially lost their land and tools and are thus
obliged to do some work for a wage, but have not yet become fully
dependent upon capital. (It must be said that it is far from certain
that this is what they have in mind, for they refer to a situation where
labour is subject to the authority of capital in the labour process, and
in Aglietta’s exemplary case of the United States the countryside was
primarily composed of neither peasants nor wage-labourers, but
owner-operator farmer capitalists.) One can thus conceptualize and
refer to a multitude of cases, historically and in the present, where
producers, namely peasants—in consequence of population growth
and the subdivision of holdings, the growth of taxation, or other such
processes—found themselves with insufficient land and tools for
25
Ibid., pp. 80–81.

62
subsistence and were thus obliged to sell some of their labour-power
on the market to merchant manufacturers to make ends meet.
In such cases, it is quite reasonable to expect that the path of capital
accumulation might be constricted indeed. Capitalists would nor-
mally find it extremely difficult to organize labour under their own
rule within the factory—to bring about the real as opposed to the
merely formal subjection of labour to capital. They would likely be
obliged to organize production on the basis of the household, that is,
putting out. Indeed, capitalists would prefer this form, if the relatively
low wages for peasant manufacturing workers in comparison with
urban proletarians offset the losses that would accrue from the rela-
tively low industrial productivity of peasant households in compar-
ison with factory production. The upshot would certainly be a strong
tendency to merely extensive accumulation.26 At the same time, in
line with the Regulationist emphasis, one could surely expect severe
restrictions on the home market where manufacturing was organized
on the basis of semi-proletarianized peasants: with producers directly
producing a significant part of their subsistence bundle, they would
offer only limited demand.
Nevertheless, it is not easy to see how reference to mechanisms of this
sort fits in with, or supports, the Regulationist project of showing that
emergent networks of capitalist institutions (modes of regulation)
were responsible for historically varying modes of capitalist develop-
ment. For the sources of the posited restriction on accumulation are
not historically specific capitalist institutions, representing a variation
upon capitalist social-property relations; they are instead precapitalist
social-property relations and the possibilities and limits that these
impose upon the direct peasant producers. By the same token, since
such precapitalist social-property systems cannot simply be assumed
to frame early capitalist development—they may or may not exist—in
what meaningful sense can they be thought to make for an integral
phase or mode of development in the evolution of capitalism?
(ii) An Oversupply of Labour from the Precapitalist Countryside
The Regulationists point to immigration from non-capitalist regions,
both internal and external, as a further element of the competitive
mode of regulation that gave rise to limited mass consumption. But
this would appear to raise problems similar to those we have just been
discussing. No doubt, manufacturing capitalism has often initially
developed within, and secured its labour force from, precapitalist
agrarian societies or such societies in transition to capitalism. No
doubt, in so far as the rise of manufacturing capitalism is accompanied
by processes of so-called primitive accumulation leading to the expul-
sion of agriculturalists from the land, or takes place within an envir-
onment in which widespread rural impoverishment allows for the
26
Neither Aglietta in particular, nor the Regulationists in general, offer any indication
that they are referring to this sort of organization of production as underlying extensive
accumulation. Given their focus on the United States and on the subjection of labour
to capital within the labour process, they seem to have in mind factory labour that
remains partially in possession of, or merged with, the means of subsistence.

63
easy attraction of agricultural labour to industry, the growth of the
supply of labour will exert a downward pressure on wages. But on
what basis can the Regulationists simply take it for granted that such
conditions centrally define and determine a first capitalist mode of
development marked by extensive accumulation, with its restricted
wages and mass consumption, when these conditions are both exter-
nal to the institutions of capitalism itself (though not of course to the
process of development) and historically contingent upon socioeco-
nomic arrangements in the countryside at the time of industrialization?
It remains, further, an open question, even where processes of so-
called primitive accumulation are separating an agrarian population
from the means of production and subsistence, whether and to what
degree it will actually be available for manufacturing. Agricultural
sectors based on intensive forms of husbandry have, in some cases,
proved a potent competitor for labour. And agrarian capitalism has,
in certain critical instances, developed without—or with only the very
slow—separation of the agrarian producers from the means of pro-
duction, that is, on the basis of owner-operator commercial farmers.
In such instances, the rise of capitalist agriculture may bring about
not a plethora but a paucity of labour, pressure for high rather than
low wages in manufacturing. That this is not merely a conceptual
possibility is, of course, evident from Aglietta’s exemplary case of the
United States.
Precapitalist agrarian structures and their dissolution can, of course,
in certain circumstances, supply vast pools of labour that exert down-
ward pressure on wages. But to assert this, it would seem, is to do no
more than identify one historical possibility, rather than to supply the
premiss for the initial phase, or mode of development, posited in the
Regulationist schema. Equally to the point, the mechanism that is here
invoked to account for the restriction of capitalist growth to extensive
accumulation is located, in decisive respects, outside the confines of
the capitalist mode of production per se. It is thus not at all clear how
it meshes with—or exemplifies—the Regulationist project of demon-
strating the way in which historically specific regimes of capital
accumulation need to be understood in terms of historically specific
networks of properly capitalist institutions.
(iii) An Unregulated Labour Market
While the unorganized, unregulated labour market of the competitive
mode of regulation—made that much less controllable by the working
class in consequence of massive immigration—will tend greatly to
facilitate capitalist exploitation of wage labour, it cannot simply be
assumed to cancel out—any more than can the existence of a large
supply of labour—the powerful mechanisms for pushing up working-
class consumption that are built into the normal processes of competi-
tion and capitalist accumulation over the medium term. Indeed, it has
seemed a commonplace that relatively extended or long waves of capi-
tal accumulation—such as were encompassed by the Regulation-
ists’ first mode of development—create inexorable upward pressures
on both aggregate consumption and the real wage, pressures which,
for some reason, the Regulationists, in their discussion of extensive
64
accumulation, basically ignore. Aggregate consumption increases
simply because the investment of surpluses entails the employment of
additional waged workers.27 The level of wages tends to rise in conse-
quence of rising demand for labour. Moreover, more efficient capital-
ist producers are obliged to bid up wages in order to compete with
other firms for the additional workers they need to expand their share
of the market.28 It was precisely the pressures of attracting, keeping
and disciplining a fast-growing labour force for his low-cost auto-
mobiles that led Henry Ford to offer his famous $5-per-day wage.
Since these mechanisms could be just as powerful in the earliest
phases of capital accumulation as later on—and tend to operate even
in highly repressive political environments—there seems little justifi-
cation for positing, without much further argument, that their effects
were offset by intra-working-class competition and immigration
throughout the first mode of development. What appears to be at
issue is the Regulationists’ elevation of a counter-tendency to an abso-
lute, determining feature of a whole epoch of economic history.
From Restricted Mass Consumption to Limited Mass Production?
Finally, even if it were granted that the institutions defining competi-
tive regulation and extensive accumulation depressed aggregate
working-class demand, it would still be necessary to challenge the fur-
ther notion—perhaps the conceptual linchpin of the Regulationists’
general schema of stages in which historically specific modes of con-
sumption play a defining role—that the rise of mass production
required, or was prevented in the absence of, the autonomous rise of
mass consumption. This proposition seems to depend on the assump-
tion that accumulation was taking place primarily through the
methods of extending absolute surplus-value, and that workers were
deriving their subsistence outside the sphere of commodity produc-
tion. More directly, however, it appears to derive from Aglietta’s con-
ception of capital accumulation as tending to take place through the
‘uneven development of Department I’. In his view, technical change
generally arises in Department I producing means of production and
calls forth increased investment in that Department by capitalists
anxious to profit from technological rents. Nevertheless, because
workers’ consumption is restricted under competitive regulation and
extensive accumulation, and because few links of exchange tie Depart-
ment I to Department II producing the means of consumption, the
increase and cheapening of the output of Department I that results
from added investment in the new technique are prevented from call-
ing forth a compensatory expansion of Department II. The outcome is
a tendency to overproduction leading to a sharp fall in prices and a
disruption of accumulation in Department I.
There are a number of problems with this argument. Leaving aside
27
‘Accumulation of capital is . . . multiplication of the proletariat’. Marx, Capital
Volume 1, p. 764.
28
Aglietta himself calls attention to just such a mechanism, although he would likely
deny its applicability to the Regulationists’ first mode of development. Theory of
Capitalist Regulation, p. 305.

65
the limiting, and historically almost inconceivable, case of a capital-
ism in which consumer goods are not at all commoditized—so that
Department II does not effectively exist—it is difficult to see why a
significant part of the innovative activity taking place in Department
I will not result, almost inevitably, in capital goods aimed for use in
Department II. That is, the mere fact that a technical change may
formally originate in Department I—say, with a new tool produced in
a machine shop—does not at all mean that its motivation did not
come from, or that its effects were not most profoundly felt in, Depart-
ment II. Capitalists are, as a rule, obliged to adopt any technique that
will reduce the cost of production for a commodity; this is no less true
of capitalists in Department II than in Department I; cheaper capital
goods that originate in Department I will thus be broadly adopted by
Department II for the production of consumer goods; the reduced
price will increase the size of the population able to buy the commod-
ity, so that unless employment and/or nominal wages actually fall, the
market for this good will inevitably grow as a result of its cheapness.
The Regulationists go to rather extreme lengths to ignore (or even to
deny) this fundamental tendency.29 Yet it appears obvious that, since
the origins of capitalism, the fundamental way in which products
have become mass-consumption commodities has been as a result
of changed conditions of supply leading to a reduction in price;30
and that changes in the conditions of consumer-goods supply have
regularly originated with new machines produced in Department
I.31 It has therefore seemed an elementary empirical generalization
that, for the history of capitalism, the rise of mass production does
not require, but rather issues in, mass consumption—that the latter
has depended upon the former, even though, in some important ways,
facilitating it.

3. Extensive Accumulation, Competitive Regulation and US

Economic History

The criticisms in the previous sections, if sustainable, would appear

to cast grave doubt upon the whole Regulationist account of the first
‘mode of development’. To the extent that the Regulationists have
adduced mechanisms that could, in theory, constitute fetters on

29 See, for example, Aglietta’s odd contention that in the late-nineteenth-century US,

‘The downturn in agricultural prices was . . . decisive in bringing about a fall in

wages.’ Ibid., pp. 78–9.
30 Take, for example, tobacco, which, as a result of the rise of American plantation

production, saw its price fall by a factor of six or more in the two decades between
1620 and 1640; or spun cotton, which as a result of the technical advances initiating the
Industrial Revolution, saw its price fall by a factor of eight between 1779 and 1812; or
the Ford Model I automobile, which, as a result of the introduction of Henry Ford’s
new production system, saw its price reduced by 60 per cent in the seven years
between 1909 and 1916. R.R. Menard, ‘A Note on Chesapeake Tobacco Prices, 1618–
1660’, Virginia Magazine of History and Biography, LXXXIV, 1976, pp. 404–6; S.D. Chap-
man, The Cotton Industry in the Industrial Revolution, London 1972, p. 44; A. Nevins, Ford:
the Times, the Man, the Company, New York 1954; D.A. Hounshell, From the American
System to Mass Production 1800–1932, Baltimore 1984.
31
Take, for example, the congeries of new machines for spinning and weaving cotton
textiles in the English industrial revolution, or the new machines for harvesting in the
American agricultural revolution.

66
production that might yield a pattern of extensive accumulation, these
rely on the effects of peasant-dominated precapitalist social-property
relations. To the extent that they have referred to mechanisms arising
from properly capitalist institutional forms to account for extensive
accumulation, they have failed to explain why these should be
expected to outweigh the effects of processes built into the functioning
of capitalist social property relations per se. The upshot is that the
Regulationists have given us no reason why the capitalist institutions
they define as constituting the competitive mode of regulation should
actually issue in anything but intensive accumulation.
We now need to look more closely at the historical case which Aglietta and
other Regulationists take to be emblematic of a regime of extensive
accumulation governed by the competitive mode of regulation: namely,
the US economy in the second half of the nineteenth century. For ulti-
mately it is upon its capacity to grasp the actual economic history of
capitalism that the usefulness of their conceptualization will depend.
Relative Surplus Value and the Growth of Working-Class Demand
The first question to be asked is whether the US economy that the
Regulationists portray—one structured by craft control, a multitude
of competing firms and a competitive labour market—discouraged
the allocation of funds to the high-risk investments in fixed capital
required for innovation and the lowest-cost production. There seems
little evidence that such investment was discouraged or that product-
ivity growth was thus restricted.
According to Maddison, gross fixed non-residential investment as a pro-
portion of GNP in the US fluctuated between 12 per cent and 15 per cent in
the years from 1871 to 1914, while the average annual rate of growth of
non-residential fixed capital stock in the same period was 4.1 per cent.
These are impressive figures by any standard, and should be compared,
respectively, with the 6 per cent and 1.4 per cent achieved in the same
period by the United Kingdom, an economy that must certainly have
been experiencing intensive and not extensive accumulation.32
Kendrick provides the following tabulation for the growth of manu-
facturing productivity in the US between the end of the Civil War and
the beginning of World War I:
Table I.
Average annual growth of output per unit of labour input in us
manufacturing, 1869–1914 (%)
1869–1879 1.05
1879–1889 2.66
1889–1899 1.53
1899–1909 1.22
1909–1914 2.43

Source: J.W. Kendrick, Productivity Trends in the United States, National Bureau of
Economic Research, Princeton 1961, p. 465.

32
A. Maddison, Phases of Capitalist Development, Oxford 1982, pp. 40, 100.

67
Gallman offers data to similar effect which are somewhat cruder but
go further back in time:

Table II.
Decennial growth in commodity production per gainfully
employed worker, 1840–1909 (%)

1840–1849 10
1850–1859 23
1860–1869 2
1870–1879 22
1880–1889 27
1890–1899 15
1900–1909 24
Source: R.E. Gallman, ‘Commodity Output, 1839–1899: The United States’, in
Trends in the American Economy in the Nineteenth Century, Studies in Income
and Wealth, vol. 24, National Bureau of Economic Research, Princeton 1960, pp.
16, 24.

The rate of growth of labour productivity in the period before World

War I seems to have been somewhat lower than that achieved in the
post-World War II boom. (See Table V below, p. 95.) Nevertheless, it
can hardly be said that productivity stagnated; nor can one possibly
account for the steady growth of productivity over such an extended
period in terms of the intensification of labour. Equally important, we
can find no long-term trend toward the slowing down of productivity
growth at any point in the period between 1850 and the First World
War, such as one would expect if development had been taking place,
after a certain point, on the basis of an effectively given, or only very
slowly growing, level of development of the productive forces. Such a
trend is implied by Boyer’s idea, noted above, of a ‘semi-stagnation of
productivity’ at the end of the phase of extended accumulation, but
this idea has no empirical counterpart in US economic development
before World War I.

Thus, the actual pattern of long-term productivity growth in this

period clearly contradicts the Regulationist contention that the foun-
dations of economic growth were largely confined to the methods of
increasing absolute surplus-value. In reality, the increase of relative
surplus-value leading to intensive accumulation was a central and
defining aspect of the development process in this epoch, as should
not be surprising given the predominance in the post-bellum United
States of a rather pure form of capitalist social-property relations.

The fact that the growth of labour productivity was a characteristic

feature of economic development is itself evidence that the economy
offered ample potential for the growth of real wages. Indeed, product-
ivity growth created a tendency toward—although it could not com-
pletely determine—rising real wages, for the obvious reason that it
meant lower-cost production and, under competitive conditions, all
else equal, downward pressures on the prices of commodities that
entered into workers’ subsistence bundle. Between 1864 and 1880, the
68
Figure I.
Productivity in manufacturing, 1879–1914

Source: US Department of Labor, Handbook of Labor Statistics 1973, Washington

D.C. 1973.
consumer price index fell from 180 to 110, although in so doing, it
reached levels no lower than had obtained in the mid 1850s. From
1880 to 1900, the price level fell significantly further, from 110 to 95.33
Thus, in order to secure quite significant increases in their real wages,
workers had only to prevent their nominal wages from falling as fast
as commodity prices.
In fact, after stagnating during the depression of the 1870s, real wages
grew by about 75 per cent between 1880 and 1914.34 It is true that, in
the period immediately prior to World War I, the flood tide of immi-
gration did result in keeping the growth of real wages somewhat
below the growth of labour productivity, but even that is hardly the
same as saying that real wages stagnated. As Rees concludes, hourly
wages in manufacturing grew by an annual average of 1.3 per cent
between 1889 and 1913, as compared with an average increase of 2.1
per cent in output per ‘production-worker manhour in the same
period. (It should be recalled in passing that 1.3 per cent p.a. was also
the average increase in this period for output per weighted unit of
labour and capital input combined.35) Moreover, during the period
from 1880 to 1914 as a whole, while the real wage was growing by 75
per cent, the labour productivity index in manufacturing was growing
only slightly faster, by 83 per cent.36 If we begin the period at the end
of the Civil War, then wages probably actually rose as a share of the
33 E.B. Hoover, ‘Retail Prices After 1850’, in Trends in the American Economy in the Nine-
teenth Century, Studies in Income and Wealth, National Bureau of Economic Research,
volume 24, Princeton 1960, esp. pp. 142–3, 153, 162.
34 S. Lebergott, Manpower in Economic Growth: The American Record since 1800, New York

1964, p. 163; also A. Rees, Real Wages in Manufacturing 1890–1914, National Bureau of
Economic Research, New York 1961.
35 Rees, Real Wages, pp. 123–7.
36 J.W. Kendrick, Productivity Trends in the United States, National Bureau of Economic

Research, Princeton 1961, p. 465; Lebergott, Manpower in Economic Growth, p. 163.

69
total product.37 Reliable data on the share of consumption (versus
investment) in GNP are available only from 1890, but between then
and the outbreak of World War I it maintained a level equal to or
higher than at any date after 1950. (See Figure VI below, p. 95.)
US Economic Growth, 1850–1914: Classical Capitalist Development

The fact is, then, that the pattern of US economic growth in the period
from roughly 1850 to 1914 could hardly have diverged more decisively
from the Regulationists’ first mode of development, in which growth
primarily rests upon increased exploitation of labour, sharply
restricted productivity increases, and geographical expansion of the
system. No doubt the US capitalist economy, after the Civil War, did very
significantly intensify the exploitation of labour and did dramatically
extend its geographical reach. Nevertheless, economic development
followed what might be termed a classically capitalist path of develop-
ment, conforming to what the Regulationists misleadingly call inten-
sive accumulation, not extensive accumulation. Powered by competition
among many firms, it achieved dramatic increases in mechanization
leading to rising productivity, rising real wages, and the explosive
expansion of the most dynamic home market in the world at that
time. This is evident not only in the aggregate figures for manufactur-
ing productivity and wages already noted, but also in a more dis-
aggregated view of the basic contours and trends in the US economy.
At the core of growth was an agricultural revolution. Starting in the
middle of the century, and aided by the completion in 1869 of the
transcontinental railroad, agriculture underwent a spectacular pro-
cess of modernization. The social basis, as Aglietta emphasizes, was
provided by owner-operator family farmers, not of course peasants.
Their economic activities, so pivotal for capital accumulation
throughout the nineteenth century, explode almost every one of the
Regulationists’ attempts to define competitive regulation and exten-
sive accumulation. Far from being subject to the capitalist labour
process in their production but independent from the market in their
consumption—the labour force envisioned in the Regulationists’
ideal-typical first mode of development—these agricultural producers
still retained significant means of production and control of the
labour process but were, from the 1820s or so, by and large market-
dependent for their means of subsistence. The fact that even most
farmers, not to mention manufacturing workers, bought their means
of consumption on the market makes a mockery of the Regulationists’
idea that in their first period of development in the United States
workers derived their subsistence from outside the sphere of capitalist
commodity production. Precisely because of their market depend-
ence, US farmers as individuals had little choice but to purchase more
advanced machinery from the capital-goods sector, so as to cut costs
and compete on their output markets. This in itself calls sharply into
question the Regulationist view of an economy unable to accumulate
by the methods of increasing relative surplus-value or to develop mass
37
E.C. Budd, ‘Factor Shares, 1850–1910’, in Trends in the American Economy in the Nine-
teenth Century, p. 373; see Table IV below, p. 83.

70
production through capital investment in Department II, for food
production is of course the consumer-goods sector par excellence.
Furthermore, the central role of owner-operator family farmers, who
largely held their place in the economy by producing at the socially
necessary rate, meant that agriculture could only with difficulty
supply a sufficient labour force for the rise of manufacture. The result
was a long-term tendency not to depress wages but, in connection
with other factors, to support wages at the world’s highest levels. The
growth of agricultural productivity thus combined with the growth of
wages to boost the working class’s discretionary purchasing power
and thereby working-class demand for a whole range of non-food
consumer goods. At the same time, demand from the agricultural
sector stoked the machine-tool branch directly and the capital-goods
sector more generally, while farmers’ growing income helped buttress
the demand for household implements and the market in consumer
goods as a whole. Finally, high wages stimulated cost-cutting technical
change—and hence the demand for capital goods—by encouraging
the substitution of relatively cheap capital for relatively expensive
labour in production.38
The dynamic growth of agricultural production and agricultural
productivity stimulated, and was made possible by, the growth of
mechanization, which was itself dependent upon the expansion and
transformation, upstream, of the machine-tool industry. Output per
worker in agriculture tripled between 1840 and 1911, with 60 per cent
of the increase due to mechanization and 70 per cent of that attribut-
able to two epoch-making inventions—the reaper and the thresher.
Demand for agricultural implements was, in turn, heavily responsible
for the impressive growth and transformation of the iron and steel
industry.39 On the other hand, the growth of agricultural output
provided the materials, downstream, for a whole series of modern
mechanized industries in food processing—milling of flour, meat-
packing, distilling, and the like. Aglietta notes the significance of
these industries, but quite wrongly postdates their appearance to the
1890s. In fact, they had begun to work their powerful transformative
effects by the Civil War, if not earlier.40

38 For this and the following paragraph, see the important studies by C. Post: ‘The
American Road to Capitalism’, NLR 133, May–June 1982, pp. 38–44; ‘Civil War and
Reconstruction in the U.S.: Primitive Accumulation and the Bourgeois Revolution
(1844–1877)’, Working Papers of the International Institute for Research and Educa-
tion, no. 5, Amsterdam 1989, pp. 5–8. Our discussion in this section has also benefited
a great deal from B. Page and R. Walker, ‘From Settlement to Fordism: The Agro-
Industrial Revolution in the American Midwest’, which offers a powerful interpret-
ation of US economic development in the nineteenth century. We wish to thank the
authors for allowing us to read this essay in advance of publication. On the question of
the farmers’ market dependence for their means of production and means of subsist-
ence, see R.M. Tryon, Household Manufactures in the United States, 1640–1860, Chicago
1917, esp. chs. vii and viii.
39
N. Rosenberg, Technology and American Economic Growth, New York 1972, pp. 25–6.
40
Aglietta, Theory of Capitalist Regulation, p. 90. An especially illuminating discussion of
these industries and their pivotal role in the developing economy can be found in Page
and Walker, ‘From Settlement to Fordism’; see also Davis’s insightful comments in
‘ “Fordism” in Crisis’, p. 219.

71
The spectacular expansion and transformation of the US productive
economy ultimately rested upon a distinctive capital-goods sector,
with a modern core producing highly specialized dedicated machines.
Perhaps the characteristic feature of the new technology was the intro-
duction of interchangeable parts, which were themselves dependent
upon a new capacity for precision and standardized production.
Essential to the process was of course the substitution of machines for
labour. Machines made possible more effective production and
higher-quality output. They also allowed for the replacement of
expensive craft labour with much cheaper semi-skilled labour at each
of the multiple stages through which a good was manufactured—and
most especially in what had been the highly skilled and time-
consuming task of fitting together all of the component parts into the
finished product. The new machinofacture thus centrally involved the
replacement of ‘fitting’ (and fitters) with ‘assembly’ (and assemblers).41
What enabled the new machine-tool sector to impart such a powerful
stimulus to the development of US industry was its capacity to solve a
series of roughly similar technical problems that had arisen in a wide
range of consumer-goods and other manufacturing industries. Tech-
niques initially devised to solve production problems in such industries
as textiles and gun-making were thus applied, over time, in clocks and
watches, sewing-machines, agricultural implements, locomotives, locks,
hardware, typewriters, bicycles and, ultimately, automobiles. Even by
1851, foreign observers had become aware of the rise toward world
leadership of US industry and clearly saw that the key to its immanent
superiority was the use of machines dedicated to extremely specific
tasks and constructed in highly specialized firms. By the 1860s, manu-
facturers had already begun to organize their factories so as to make
possible the rational progression of semi-finished products from
station to station throughout the shop and, in meatpacking and grain
elevators, to devise mechanisms for continuously moving these com-
modities between work stations—the earliest assembly lines.42
It is hard to overemphasize the centrality of the autonomous growth
of machine-based mass production for the growth of mass consump-
tion, or the centrality of the growth of mass consumption for US
economic development, in the nineteenth century. In 1860 the top ten
sectors of the US economy, listed in order of size, were as follows:
By Value Added: (1) cotton goods; (2) lumber; (3) boots and shoes; (4) flour and
meal; (5) men’s clothing; (6) iron; (7) machinery; (8) woollen goods; (9) leather;
(10) liquor.
By Number Employed: (1) boots and shoes; (2) cotton; (3) men’s clothing; (4) lumber;
(5) iron; (6) machinery; (7) woollens; (8) flour and meal; (9) leather; (10) liquor.
(Source: D.C. North, Growth and Welfare in the American Past, 2nd edition, Engle-
wood Cliffs 1974, p. 80.)

41
Rosenberg, Technology and American Economic Growth, pp. 88–95. As Henry Ford
observed in his article on ‘Mass Production’, which appeared in the twenty-second
edition of the Encyclopedia Britannica: ‘In mass production there are no fitters’ (quoted
in Rosenberg, p. 95).
42
For the previous paragraph, see Rosenberg, Technology and American Economic
Growth, pp. 90–91, 95–112. Cf. D. Nelson, Managers and Workers. Origins of the New
Factory System, Madison 1973, p. 19.

72
It may thus be seen that the greatest part of US manufacturing—by
value added and by employment—was devoted to production directly
for popular consumption. Since so much of iron and machinery pro-
duction was to meet the demand of the agricultural sector, as well as
the mechanized consumer-goods industries, for tools, it seems reason-
able to conclude—as many commentators have done—that US
development even by the time of the Civil War was being heavily
underwritten by the domestic market, by mass consumption.43
It is easy to demonstrate the manner and degree in which mass con-
sumption was predicated on mass production. Of the above ten leading
industries, at least eight—boots and shoes, cottons and woollens,
men’s clothing, machinery, iron and steel, flour and meal, and distil-
ling—had already experienced, or were fully in the process of exper-
iencing, factory mechanization by the time of the Civil War or
immediately after.44 As Carroll D. Wright pointed out in the intro-
duction to the census of manufactures for 1880:45
Of the nearly three millions of people employed in the mechanical indus-
tries of this country at least four fifths are working under the factory sys-
tem. Some of the other remarkable instances of the applications of the
system [besides those in textiles] are to be found in the manufacture of
boots and shoes, of watches, musical instruments, clothing, agricultural
instruments, metal goods generally, fire arms, carriages and wagons,
wooden goods, rubber goods, and even the slaughtering of hogs. Most of
these industries have been brought under the factory system in the past
thirty years.

And Chandler adds: ‘In the refinery and distilling and furnace and
foundry industries the proportion of workers employed in compar-
able industrial establishments was probably even higher.’46 In sum:
the capital-goods sector grew up in large part to serve, and to make
technically possible, mass production in consumer-goods industries.
Once again, this seems flatly to contradict the contention of Aglietta
and the Regulationists that the paucity of links—technical and
exchange—between Department I and Department II was a defining
characteristic of the economy that directly restricted its path of
accumulation. On the contrary, the particular genius of the US
economy of the second half of the nineteenth century was the capacity
of its capital-goods (mainly machine-tool) makers to invent and bring
into play more effective means of production in direct response to the
technical needs of firms, in particular consumer-goods industries.
Driven by competition, capitalist producers dramatically increased
fixed capital investments, thereby making possible major increases in
aggregate productivity—in other words, accumulation via the methods
43
Hounshell, From the American System, pp. 153–88.
44
B. Hazard, ‘The Organization of the Boot and Shoe Industry Before 1875’, Quarterly
Journal of Economics, xxvii, 1913, pp. 236–62; A. Chandler, ‘The Coming of Big Busi-
ness’, in A. Chandler, S. Bruchey and L. Galambos, eds., The Changing Economic Order,
New York 1968; A. Chandler, The Visible Hand. The Managerial Revolution in American
Business, Cambridge, Mass. 1977, pp. 57–8, 245–72; Hounshell, From the American
System, pp. 125–52.
45
Quoted in Chandler, Visible Hand, p. 246.
46
Ibid., p. 246.

73
of extending relative surplus-value. At the same time, lower prices
resulting from productivity increases combined with workers’ bar-
gaining power to allow significant increases in real wages and
workers’ consumption and an impressively growing home market.

This general picture is confirmed by indices of comparative perform-

ance, which show that between the Civil War and World War I, us
manufacturing challenged and even surpassed the British industrial
hegemon. Indeed, well before the end of this era, the US manufactur-
ing economy secured a tremendous new source of dynamism through
the application of science to technology. This ‘second industrial revo-
lution’ was not just a question of the rise of the automobile, itself the
culmination of the growth of machinofacture based on the powerful
machine-tool sector. It also brought entirely new or vastly transformed
industries, in which continuous-process production drew upon scien-
tific advances—namely, chemicals, petroleum, petrochemicals, steel,
aluminium, cement, and so forth.47

Comparative economic data presented by Aglietta himself further

undermine the idea that the pattern of development theoretically
structured by competitive regulation and extensive accumulation held
for the US in the latter part of the nineteenth century, or that the rise
of mass consumption had to await the institutional transformations of
the ‘Fordist’ epoch.

Table III.
Comparison of average indices, 1890–99, assessed in English
money and related to the same indices as established for
England.
Hourly real Value added per Real social
wages production worker wage cost

England 1.00 1.00 1.00

Germany 0.59 0.66 0.90
United States 1.08 1.57 0.68

Source: Aglietta, Theory of Capitalist Regulation, p. 92.

By the end of the century, then, the US economy had succeeded in

raising its labour productivity to a level more than one-and-a-half
times that of England (and some two-and-a-half times that of
Germany), and on that basis had secured unit labour costs sharply
lower than those of its major competitors despite paying measurably
higher wages.48 As we shall see, in most of the main indices of eco-
nomic development—rate of growth of GDP per capita, proportion
of GNP devoted to fixed (non-residential) investment, rate of growth
47
Rosenberg, Technology and American Economic Growth, pp. 116–17ff.
48
The same point is made explicitly by Mike Davis, who observes that Aglietta’s own
data ‘show the differentia specifica of the United States as the economy most integrally
dependent upon the production of relative surplus-value’. ‘Fordism in Crisis’, pp.
256–7.

74
of investment in fixed capital per man-hour, and the like—the dyna-
mism of the US economy between 1870 and 1914 was quite comparable
to what it would be during the great boom of 1950 to 1973.49

We can therefore conclude that the Regulation School’s notion of exten-

sive accumulation governed by competitive regulation entirely mis-
conceptualizes a historical process of development, and that the period
in question actually seems to have been distinguished by a rather spec-
tacular degree of dependence on accumulation by way of the methods
of relative surplus-value and the growth of mass consumption—to have
amounted, in fact, to intensive accumulation. More to the point, because
intensive accumulation was already taking place on institutional
foundations that the Regulationists call the competitive mode of regu-
lation, their overarching interpretative schema of institutionally
founded historical phases of capital accumulation is called funda-
mentally into question. In this schema, a transition from extensive to
intensive accumulation is supposed to constitute a pivotal moment: the
rise of intensive accumulation is prevented, contradicted and under-
mined by the competitive mode of regulation; the establishment of
intensive accumulation is predicated upon an at least partial trans-
formation of competitive regulation; the contradiction between intensive
accumulation and still partially competitive regulation lies behind the
interwar crisis; and the emergence of a new mode of development—in
which intensive accumulation is governed by a newly installed mono-
polistic or Fordist mode of regulation—is explained in large part as a
resolution of that contradiction. If, however, the initial phase of
extensive accumulation never existed in the relevant time period,
what is left of the supposed transition to intensive accumulation? If
intensive accumulation grew up precisely on the basis of the institutions
of competitive regulation, what remains of the supposed contradic-
tion between competitive regulation and intensive accumulation, of
the fettering of the latter by the former? If there was no real contradic-
tion between intensive accumulation and still partially competitive
regulation—since competitive relations among capitalists and on the
labour market could actually promote the dual growth of production
and consumption and of output and demand that made possible
successful intensive accumulation—how can that contradiction lie
behind the interwar crisis? If the interwar crisis was not the result of
the aforementioned contradiction, how can the rise of institutions
guaranteeing the Fordist consumption norm be said to have accounted
for the transcendence of the interwar crisis in the postwar boom?

III Mode of Development Two: Intensive

Accumulation But Still Competitive Regulation

The mode of development defined by competitive regulation and

extensive accumulation gave way, in the Regulationist schema, to a
new mode of development defined by a still essentially competitive
mode of regulation guiding a regime of intensive accumulation. The
49 See Table V below, p. 95.

75
changed regime of accumulation expressed the supersession of craft
production by mass production, the turn to massive investment in
fixed capital embodying major advances in technique with returns
expected over the long term, and a qualitative break to a new level of
productivity growth—most generally, a process of capital accumu-
lation founded predominantly on the extraction of relative surplus-
value. The emergence of these new economic regularities, it is argued,
was made possible by significant institutional changes. New forms of
regulation of the market expressed a higher degree of inter-capitalist
organization, and within the manufacturing enterprise an extended
process of class struggle led to a break beyond craft control. Neverthe-
less, the mode of regulation remained in the last analysis competitive
because the fundamental capital–labour wage relation was still essen-
tially unregulated and marked by untrammelled competition, with the
consequence that there was no transformation in the mode of working-
class consumption or the economy’s capacity to provide demand for
the output of Department I.
1. Mass Production without Mass Consumption

The regime of intensive accumulation was, most immediately and

directly, a function of the rise of Scientific Management, through
which capitalist corporations succeeded, in the face of workers’ resist-
ance, in exerting increasingly systematic control over the labour
process so as to achieve technical innovation. Most generally, this
involved so-called Taylorist methods of rationalization: an acceler-
ation of the mechanical processes of task completion (that is, an inten-
sification of labour facilitated by time-and-motion studies); the filling
up of gaps in the working day that resulted either from lack of coordi-
nation among machine functions or from work breaks; and, especially,
the integration of mechanized segments of the labour process that had
previously been separated (and often subject to significant control by
the workers themselves). Taylorism culminated in and was trans-
cended by the Fordist integration of the labour process, involving the
introduction of conveyors and handling devices that assured the
movement of materials and their arrival at the appropriate machine
tools. The coup de grâce was the automatic assembly line, which rigor-
ously fixed workers to jobs determined by the configuration of the
machine system and deprived them of all control over their work
rhythm and job autonomy. The labour process was thus ‘converted
from a dense network of relationships between jobs, with intermed-
iate products passing back and forth [. . .] into a straightforward
linear flow of material under transformation.’50
The establishment of the Taylorist–Fordist labour process was assisted
by a transition in the mode of regulation of capital–capital relations
away from full competition in the direction of oligopoly. A qualitative
increase in the concentration of capital, the rise of finance-dominated
trusts, and the emergence of the modern corporation allowed for
greater inter-capitalist control of competition, markets and the
50 Aglietta, Theory of Capitalist Regulation, pp. 113–17 (quotation p. 117); Boyer, ‘Techni-

cal Change’, pp. 82–3; Davis, ‘Crisis of “Fordism” ’, pp. 222–3.

76
investment environment more generally. The resulting reduction in
the level of risk, combined with the destruction of craft control of the
labour process, facilitated a qualitative leap in fixed capital invest-
ment embodying technical advance, especially from the end of World
War I.51

Taken together, the foregoing processes brought about the rise of

a new mode of development in which accumulation by the methods
of increasing relative surplus-value came to predominate and the
potential first emerged for regularized mass consumption. Aglietta
dates the beginnings of this breakthrough in the United States from
the end of the nineteenth century and its decisive establishment from
the 1920s.

It is a central thesis of the Regulation School, however, that because

the new regime of intensive accumulation was still guided by a com-
petitive mode of regulation in terms of the capital–labour wage rela-
tionship, the newly-emergent mode of development was inherently
unstable. The spectacular growth of mass production thus brought
new problems because it continued to be associated with restricted
mass consumption. As Aglietta explains, under extensive accumula-
tion capitalism had ‘implant[ed] itself for a long historical period
without destroying traditional ways of life, indeed even benefiting
from the reconstitution of labour-power by a non-capitalist environ-
ment in which it [was] still inserted.’ Then came the rise of intensive
accumulation.
The destruction of the traditional social environment is only accomplished
by the development of heavy industry, which enforces the total uprooting
that is characteristic of the wage relation: the separation of labour-power
from all its conditions of existence. The mode of life of the wage-earning
class then suffers a deep degradation. This degradation is the basis of the
gigantic structural transformation that all the capitalist countries exper-
ienced from the end of the nineteenth century . . .52

The tendency to hold down workers’ wages grew more acute, then,
around the turn of the century in the United States. This was due not
only to the producers’ loss of access to non-commodity sources of
reproduction and their (resultant) flooding onto the labour market,
but also to the massive downward pressure on wages from the rising
wave of immigration. Then, in the wake of World War I, in a series of
great confrontations with capital, workers suffered a series of devas-
tating defeats that opened the way for cuts in their living and working
standards during the 1920s. Finally, especially during the 1920s, tech-
nical change further eroded their bargaining position by undermining
the old craft-union structures.53 As a result: ‘[T]he disproportion
between expansion in Department II and accumulation in Depart-
ment I rapidly increased, since the forces that were revolutionizing
the labour process were also those reducing effective demand for

51
Aglietta, Theory of Capitalist Regulation, chapters 4 and 5.
52
Ibid., p. 81.
53
Ibid., p. 155. Cf. Boyer, ‘Wage/Labour Relations, Growth, and Crisis’, pp. 5–6.

77
commodities from Department II.’54 The general underlying struc-
tural contradiction of the mode of development based on intensive
accumulation but governed by competitive regulation thus began sud-
denly to manifest itself during the late 1920s, and issued in the great
crisis of the 1930s. Boyer sums up the problem as follows: ‘[M]ass pro-
duction is technically possible, but cannot be sustained since the pre-
vailing “regulation” strongly moderates real wage increases; at the
same time as wage-earners become a dominant fraction of the total
labour force. It turns out that such an intensive accumulation is highly
contradictory (the profit rate is too high adequately to permit an ade-
quate effective demand) and unstable.[. . .] Therefore this is not a
viable mode of development in the long run.’55

What apparently allowed this mode of development to flower to the

limited extent that it did was the continuing opportunities for the
growth of Department I provided by the opening of the frontier. But
as the possibilities for accumulation on the frontier were exhausted,
and especially as the pace of technical change suddenly accelerated
during the 1920s, economic growth took place on increasingly fragile
foundations. For a brief period, growing consumer demand from the
rising middle layer of managerial, sales and technical personnel—
paid for out of the social surplus itself—endowed the economy with a
new source of dynamism; but the underlying tendencies to the uneven
development of Department I and underconsumption could not for-
ever be postponed.

2. Was There a Structural Problem of Underconsumption?

At the core of the Theory of Regulation is the idea that the level and
character of working-class consumption are: (a) in crucial respects
institutionally conditioned; (b) untransformable through changes in
technology and the labour process alone; and (c) critically determinat-
ive for the path of capital accumulation. The establishment of inten-
sive accumulation on a stable basis therefore required institutions
that would assure the Fordist norm of working-class consumption.
Even so, it is possible that the Regulationists would deny that capital-
ism in general is subject to crises of underconsumption, arguing
merely that the crisis of the 1920s needs to be understood in terms of
historically developed tendencies associated with a quite specific path
of development—the rise of intensive accumulation in association
with a still competitive mode of regulation. The fact remains, how-
ever, that an underconsumptionist theory provides the basis for—and
is indispensable to—not only their account of this crisis but also their
institutional-historical theory of capitalist development in general.

This is evident, first of all, from the Theory of Capitalist Regulation, the
founding text of the Regulation School, which is centred upon a very
54
Aglietta, Theory of Capitalist Regulation, p. 94. ‘Massive savings on living labour,
combined with the crushing defeat of the workers’ movement after the First World
War, rapidly increased inequality of incomes’. Cf. Boyer, ‘Technical Change’, p. 83.
55
Boyer, ‘Technical Change’, p. 82. Cf. Boyer, ‘Wage/Labour Relations, Growth and
Crisis’, p. 4.

78
explicit—if not fully worked-out—traditional underconsumptionist
thesis. More generally, underconsumptionism is the dominant theme
within a Regulationist approach to crisis that views capitalism as
developing along a sort of tightrope, with the Scylla of a rising organic
composition/falling rate of profit crisis on one side and the Charybdis
of a rising rate of profit/underconsumption crisis on the other. From
this standpoint, technical mutations originating in Department I are
at the core of capital accumulation. Thus, ‘a deepening of the prin-
ciple of mechanization [. . .] induces a rise in the organic composi-
tion of capital as the counterpart of the saving on labour-power.
Relative surplus-value increases thanks to an ever more intensive
renewal of the means of production. Department I consequently
grows at an ever more rapid rate.’ But this process involves a double
danger.
On the one hand, if ‘the transformation of the conditions of produc-
tion takes place by a [. . .] rise in the organic composition of capital’,
unless ‘wage costs fall more quickly than the proportion of constant
capital in total exchange-value rises [. . .] then the total costs of pro-
duction increase [profitability falls] and the rate of accumulation slows
down.’ This is, of course, the classical falling-rate-of-profit motif.
On the other hand, while it is true that ‘if total costs of production
[do] fall, the result is an increase in the general rate of profit and an
acceleration of the rate of accumulation’; nonetheless, ‘this process
can be impaired by diverging forces’—notably, forces making for
insufficient consuming power in society. Specifically: ‘[i] the internal
development of Department I runs too far ahead, since the social
demand for means of production must be ever greater to sustain a
sufficient saving of labour-power to permit the fall in the costs of pro-
duction to continue; [ii] the exchange-value of wages distributed
undergoes a relative decline, whilst profits build up more and more,
particularly in Department I.’ The result is a crisis of underconsump-
tion leading to a crisis of realization.
A moment is necessarily reached when the rate of profit in Department I
increases relative to the capital advanced, by virtue of the accelerated
development of this department, whereas accumulation in Department II
is restrained by the restriction of the social demand for means of consump-
tion. The proportion of income assigned to purchase the exchange-value of
Department II grows far less quickly than the proportion of income
assigned to purchase means of production [. . .] There is then an inevit-
able difference between the rate of profit in Department 1 and that in
Department II. The result is that Department II becomes unable to pur-
chase sufficient means of production to match the rate of growth in
Department I, since the distribution of income develops in a way that does
not enable the formation of sufficient social demand for means of con-
sumption. In these conditions, the constraint of full realization of exchange-
value is transgressed. [. . .] an overproduction of means of production.56
In Aglietta’s view, the underconsumptionist dynamic is an abiding
problem of the capitalist mode of production, at the root not only of
56
For the foregoing quotations on this page, Theory of Regulation, pp. 285–6.

79
the interwar crisis but also of the crisis of Fordism that began in the
mid-to-late sixties, although he also recognizes that the underlying
historical conditions were very different. But even if their works had
failed to contain so clear a statement, the underconsumptionist thesis
would still form the theoretical foundation of the Regulationists’
entire edifice. This is because the direct logical outcome of their argu-
ment is that a capitalism developing on the basis of relative surplus-
value will experience crises of underconsumption in the absence of
historically contingent counteracting tendencies—and, more specific-
ally, in the absence of special institutional forms to maintain an ade-
quate growth of workers’ consumption. In other words, capitalism
without the Fordist norm of working-class consumption suffers from
underconsumption. As Boyer succinctly puts it, ‘when wage form-
ation is mainly competitive, a new industrial revolution leads to such
a high profit rate that it cannot be sustained in the long run because of
a lack of appropriate total demand.’57

The two main factors which the Regulation School sees at work here
—(1) inadequate growth of Department II, leading to a disproportion-
ality between Department I and Department II, and (2) pressures
against the growth of wages, leading to inadequate incomes to pur-
chase the growing output from ever rising capital investment—are
precisely the ones which advocates of the underconsumptionist posi-
tion, from Malthus to Sweezy, have seen as the source of capitalist
crisis.58 Yet no mechanism has yet been provided to show why these
factors—both tending to issue in inadequate consumer demand—
should generate serious problems. If profit rates rise in the capital-
goods sector owing to increased investment opportunities, why should
further investment not flow into capital goods until profit rates equal-
ize? In parallel manner, why is it that supposedly insufficient demand
for consumer goods—and therefore for capital goods in Department
II—will not be more than offset by demand for capital goods by firms
seeking to remain competitive through investment and technical
change (which itself will lead to increased consumer demand by bring-
ing about increased employment)?59

It is somewhat curious, in this respect, that the Regulationists make

no reference to the one serious attempt in the past half-century to
57 ‘Technical Change’, p. 83. See also Boyer’s statement to the same effect, quoted
above, p. 65 and n. 55.
58 See M. Bleaney, Underconsumption Theories. A History and Critical Analysis, New York

1976.
59 It should perhaps be mentioned in passing that full-blooded Keynesians—as

opposed to Marxist ones—have eschewed underconsumptionist arguments for a focus

not on inadequate consumption per se, but insufficient aggregate demand, specifically
insufficient investment. Marxists tend to be barred from this route by their insistence
that capitalist competition leaves producers little choice but to invest so long as the
rate of profit is above the rate of interest; they have therefore been obliged to focus not
on inadequate investment, but on the contradictory effects of investment. The excep-
tion (that follows the rule) are those Marxists, notably Baran and Sweezy, inspired in
part by Steindl and Kalecki, who see a tendency to stagnation in modern economies as
emerging with, and attributable to, precisely the stifling of competition with the rise of
monopoly and monopoly’s inhibiting effect on investment. See P. Baran and P.
Sweezy, Monopoly Capital, New York 1966.

80
demonstrate the logical necessity of crises of underconsumption—
an effort that actually has the same point of departure as theirs.
Paul Sweezy, like Aglietta et al., thus begins from the premiss that
Department 1 grows faster than Department II in consequence of
the competitive pressure to accumulate and innovate. (Another way
of stating this would be that investment grows faster than con-
sumption as a portion of national income.) His second premiss,
viewed as technologically determined, is that the result of increases in
investment will be increases in output proportional to the increase
in means of production; that is, that with increased investment, the
incremental capital/output ratio will remain constant. He concludes
that because necessarily proportionally increased investment will
lead to proportionally ever greater output, while consumption takes
an ever decreasing proportion of national income, output will outrun
consumption.60
But there are two errors in Sweezy’s argument. The first, already
mentioned, is the unwarranted assumption that rising investment
necessarily entails a roughly proportionate increase in consumer-
goods output. The second is the assumption that increased invest-
ment, taking up a greater share of national output, will not only
produce a larger quantity of goods (use-values), but also produce
goods of greater value, which cannot by hypothesis be bought. In
fact, increased investment, while bringing about an increase in
physical units of output, will, in consequence of the technical change
embodied, produce units of less value than before—that is, an
aggregate output in value terms that may still be able to be consumed.
The upshot is that there is no problem in specifying a path of stable
capital accumulation, in accord with Sweezy’s two premisses, that
avoids underconsumption.61
To sum up: none of the many different theorists of the inevitability of
realization/underconsumption crises has yet put forward a systematic
and general argument to show that realization will not take place by
way of the increased aggregate demand that stems from: (i) further
expansion of capital investment (demand for capital goods), under the
pressure of competition requiring technical change and through use
of the new labour forces that are almost always available; (ii) new con-
sumer spending by the labour forces employed to make the additional
capital goods; (iii) the rising wages that can usually be expected to
accompany technical change over any temporally extended process of
capital accumulation; (iv) unproductive expenditures. The point
obviously is not that serious problems of effective demand cannot
arise; it is merely that accumulation through the relative growth of
Department 1 vis-à-vis Department II leading to an increase in relative
surplus value, in the absence of institutions assuring a workers’ con-
sumption norm, does not, in itself, constitute an adequate mechanism
for determining the appearance of such problems.

6o P. Sweezy, The Theory of Capitalist Development, New York 1941, pp. 186–9.
61 The mathematical demonstration is available, on request, from the authors. For a
refutation of Sweezy’s argument, see S. Mage, ‘The “Law” of the Falling Tendency of
the Rate of Profit’, Ph.D. thesis, Columbia University, 1963, pp. 133–9.

81
It needs to be emphasized that, in the course of capital accumulation,
the growth of demand and consumption will in fact generally take
place much more quickly and efficaciously through a rise in invest-
ment leading to the hiring of more workers than through an increase
in wages per worker. For example, in the postwar us, changes in
employment account for some 80 per cent of the changes in aggregate
demand.62 Especially for this reason, theories that seek to understand
crisis as the result of a lack of effective demand would seem obliged to
provide some other mechanism—not just insufficient working-class
consumption—that leads to insufficient investment.

3. Did the Development of an Intensive Regime of

Accumulation under the Competitive Mode of Regulation
Bring About a Structural Crisis of Underconsumption in
the 1920s?

In the Regulationists’ model, the problem of mass consumption

emerged in potential as soon as the regime of intensive accumulation
had been established. Indeed, following the argument initially
advanced by Alvin Hansen and other Keynesian interpreters of the
Great Depression, the Regulationists believe that the crisis of the
1930s was delayed as long as it was only because certain historic-
ally contingent factors—above all, the continuing possibilities of
‘the frontier’—tended to counteract the uneven development of
Department 1 and underconsumption.63 What is the evidence for
this? Did the rise of intensive accumulation within the context of the
competitive mode of regulation create the structural problems of
uneven development of Department 1 and underconsumption that
resulted in the interwar crisis? Was that the reason why special insti-
tutions had to be created to ensure workers’ consumption, thereby
avoiding or transcending crisis and achieving successful development
in the long run?

First, we need to insist again that there is no evidence—quite the con-

trary—to support the Regulationists’ basic thesis that intensive
accumulation was fundamentally incompatible with competitive
regulation, requiring an institutionally insured workers consumption
norm to achieve stability. Despite a secular trend to significantly
rising productivity, wages were able to maintain, and perhaps even
increase, their share in national income over the period 1850–1914, as
follows:

62 M. Glick, unpublished manuscript (available from the authors on request).

63 Hansen, the leader of the first generation of US Keynesians, naturally saw the under-
lying problem as one of lack—or disappearance—of investment opportunities. In
addition to the end of the frontier, he refers to declining population growth, declining
technical requirements of fixed capital for innovation, and the maturation of certain
key industries. See Full Recovery or Stagnation?, New York 1938, esp. chapter XIX on
‘Investment Outlets and Stagnation’; also ‘Economic Progress and Declining Popula-
tion’, American Economic Review, XXIX, March 1939. Cf. P. Sweezy, ‘Why Stagnation?’,
Monthly Review, XXXIV, June 1982; ‘The Crisis of American Capitalism’, Monthly Review,
XXXII, October 1980: ‘The Economic Crisis in Historical Perspective’, Monthly Review,
XXVI, March 1975.

82
Table IV.
Wages share in GNP (%)
1849–50 46.1
1859–60 45.4
1869–70 50.3
1879–80 50.9
1889–90 56.8
1899–1900 51.5
1909–1910 53.1

Source: E.C. Budd, ‘Factor Shares, 1850–1910’, in Trends in the American Economy in the Nine-
teenth Century, Studies in Income and Wealth, vol. 34, National Bureau of Economic
Research, Princeton 1960, p. 373.

But what of the crisis of the 1920s? The Regulationists argue that capi-
talists were then installing the new technologies of Fordist mass pro-
duction at an unprecedentedly rapid rate. This increased the propor-
tion of investment funds going to Department I vis-à-vis Department
II and radically increased productivity growth. But because wages
were held down in favour of profits, a crisis resulted from dispropor-
tionality between the two departments and lack of sufficient working-
class consumption. We should therefore expect to find, during, the
twenties, a trend for the profit rate and the profit share to rise at the
expense of wage growth and the wage share and for consumption to
lose out to investment. What is the evidence?

First of all, far from being held down, real wages in the manufacturing
sector rose dramatically in the period from the end of World War I.
By 1924 they were about 33 per cent higher than they had been in 1914
and about 44 per cent higher than in 1917. After that, they remained
roughly at the level of 1924 until the end of the decade.

Figure II.
Annual real wage, all employees, 1914–1919

Source: Lebergott, Manpower in Economic Growth, p. 523.

83
Similarly, partly as a result of this rise in real wages, the share of
profits (vis-à-vis wages) in national income fell precipitately during
the 1920s. Whereas in the period 1900–1919 the profit share had fluc-
tuated between 41 per cent and 48 per cent of the national income,
during the period from 1922 to 1929 it fluctuated at levels between 28
per cent and 32 per cent of national income.64

Figure III.
Profit share 1909–1929 (%)

At the same time, as Dumenil, Glick and Levy have shown, far from
rising disproportionately between 1917 and 1929, the rate of return on
investment (that is, the profit rate) remained on average significantly
below the prewar and wartime years of 1900–1917 and, though it
recovered somewhat from the immediate postwar collapse, at no time
did it reach even the average rate recorded between 1900 and 1917.
If the depression had found its cause in a squeeze by profits upon
wages, it should have come before, not after, World War I.65
Given that the wage share rose, it is perhaps not surprising that, over
the period 1919–29, there was no decline in the rate of growth of total
consumption. Indeed, the proportion of consumption in total income
reached levels significantly higher than it had attained in any previous
decade (relevant data are available from 1890) or would reach again in
any decade up to the present.66 (See Figure VI, below, p. 95.)
64 M. Glick, ‘The Current Crisis in Light of the Great Depression’, in R. Cherry et al.,
eds., The Imperiled Economy, New York 1987, p. 132. Based on M. Leven et al., America’s
Capacity to Consume, Washington D.C. 1934.
65 G. Dumenil, M. Glick and D. Levy, ‘The Rise of Profitability during World War

II’, CEPREMAP, Paris 1990. See also the data on the rate of profit over the long run,
measured in various ways, in G. Dumenil, M. Glick and J. Rangel, ‘The Rate of Profit
in the United States’, Cambridge Journal of Economics, XI, 1987, pp. 354–5 and ff.
66
For this conclusion we are indebted to G. Dumenil and D. Levy, who have gener-
ously allowed us to use their statistical results. See also, en passant, Temin’s conclusion
that ‘the idea that consumption was depressed before the onset of the depression by an
unfavourable distribution of income occasionally appears . . . The ratio of consump-
tion to national income was not falling in the 1920s. An underconsumption view of the
1920s therefore is untenable.’ P. Temin, Did Monetary Forces Cause the Great Depression?,
New York 1976, p. 32.

84
Figure IV.
Rate of profit in the United States, 1900–1929 (%)

Source: Data appears courtesy of G. Dumenil and D. Levy, CEPREMAP, Paris,

France.

In order to buttress the hypothesis that demand was insufficient

in the 1920s, Aglietta argues that the growth in consumer-durables
industries fell after 1926, and that residential housing construc-
tion also declined in the same year.67 Let us consider each of these
points.
Aglietta maintains that the rate of profit in the consumer-durables
sector was lower than average throughout the 1920s and that this
manifested chronically low consumer demand. Nevertheless, he gives
no evidence that there were serious problems in this sector before
1926. According to the standard work on profitability in the consumer
and producer-goods industries in this period, the consumer-goods
industries actually enjoyed a much higher rate of return than did the
producer-goods industries: ‘[t]he 18 industries manufacturing pro-
ducers’ goods show an aggregate earnings rate that runs from 6 per
cent in 1922 to 10 per cent in both 1923 and 1925 and stands at 8 per
cent in 1928. The group making consumers’ goods (26 industries)
enjoys much higher and much steadier earnings—from 12 to 16 per
cent in all years of the same period.’68
The high rate of profit in consumer goods in the 1920s was a result of
the fact that ‘sales in consumers’ goods groups grew somewhat more
rapidly than did capital investment’. Although Aglietta is right to
claim that the growth in sales of consumer durables slowed after 1926,
investment continued to move into this sector—that is, its rate of
investment relative to the rate of investment in producer goods did
not fall—because its rate of profit remained absolutely higher than

67 Aglietta, Theory of Capitalist Regulation, p. 95.

68 R. Epstein, Industrial Profits in the United States, New York 1934, pp. 18o–81.

85
that of every other sector up to the crash of 1929. Slowing sales but
high rates of return are far more suggestive of an adjustment process
than of a descent into crisis.69

Aglietta further maintains that the downturn in the growth of resi-

dential housing construction was a sign of underconsumption. But
although it is true that the value of residential construction declined
from $5.7 billion in 1925 to $3.2 billion in 1929, this sector represented
only 4 per cent of GNP, so a decline in its growth can hardly, in itself,
constitute evidence of economy-wide problems in consumption.
Moreover, as has often been argued, residential construction appears
to follow its own long-term trend and the drop from 1926 seems best
understood as a turning point in this cycle. In any case, any reduction
in consumption that occurred as a result of the decline of residential
construction was at least compensated by the growth in other sectors,
for, as we have already noted, there was no longer term problem of
consumption during the 1920s.70

Finally, increasingly insufficient demand should—by hypothesis—

have been reflected in declining use of existing plant and equipment.
The fact is, however, that there is no good evidence of a significant
decline in capacity utilization in the 1920s, right up to the moment of
the crash.71

This is not the place to offer an alternative account of the crisis of the
interwar period. Nevertheless, one can at least suggest that the point
of departure should be less changes occurring during the decade of the
1920s itself than the contrast between the economy of the 1920s and
the interwar period as a whole and that of the epoch before World
War I. Thus, it may be thought that the major fall in the rate of return
on investment introduced into the economy of the 1920s a new
fragility that made it fatally vulnerable to the various shocks that trig-
gered the crisis—the farm crisis, international imbalances, monetary
problems, and so forth. From this standpoint, the central focus for
investigation into what caused the Great Depression should be the
problem of what caused the drop in profitability in the period follow-
ing World War I.

IV Mode of Development Three: Intensive

Accumulation and Monopoly Regulation

In the view of the Regulation School, the crisis of the 1930s was
resolved through the establishment of a new mode of monopoly regu-
lation. This served to supersede the basic contradiction between
intensive accumulation and competitive regulation by constituting a
complex set of institutions that not only regularized inter-capitalist
69
Epstein, Industrial Profits, pp. 181 (quotation), 184–5.
70
Temin, Monetary Forces, p. 67.
71
M. Leven, H. Moulton and C. Warburton, America’s Capacity to Consume, Washing-
ton D.C. 1934, p. 2.

86
competition but also, for the first time, made for significant regula-
tion of the capital–labour wage relation and thereby allowed the
growth of workers’ consumption to meet the requirements of
intensive capital accumulation. According to the Regulationists, the
monopoly mode of regulation was not installed easily or directly, but
only as a result of the massive crisis and, especially, the great class
conflicts of the 1930s. The success of workers’ struggles in founding
the CIO and winning the Wagner Act was thus indispensable in
setting off the chain of events ‘whose outcome was the establishment
of social controls to guarantee the formation of the working-class norm
of consumption and to regularize its evolution’.72 More generally, in
Boyer’s words:
In monopolist regulation (régulation monopoliste), the distribution of income is
significantly socialized through a series of compromises between capital
and labour (Fordist wage formation along with inflation and productivity),
between firms (mark-up pricing), and between the state, citizens and capi-
tal (welfare state, pattern of public spending and tax system). Therefore the
pure price adjustment mechanism bears only a minor part of the burden in
adjusting social demand and production. To a large extent, a complex set
of institutions, conventions and rules constantly aims at developing effect-
ive demand at the same rate as production capacity, which in turn is
partially linked to the intensity and direction of technical change via the
accumulation process.73

1. The Dynamics of Fordism and the Post-World War II

Boom

Even under the unstable mode of development of the interwar period,

structured by intensive accumulation and still-competitive regulation,
corporations had, in the Regulationists’ view, gone some distance
toward stable growth by regulating inter-capitalist competition and
achieving a degree of control over markets. As it matured after World
War II, ‘Oligopolistic competition [. . .] moderate[d] possible struggles
between firms by eliminating price cuts as the usual tool for obtaining
market shares.’ Instead, ‘firms compete[d] through advertising, and
more generally through product differentiation, while prices [we]re
derived from a mark-up applied to average costs.’74

But the fundamental distinguishing feature of the new Fordist mode

of regulation was to be found, again, on the side of demand: the ‘capi-
talist class [now] seeks overall management of the production of wage-
labour by the close articulation of relations of production with the
commodity relations in which the wage-earners purchase their means
of production [. . .] between process of production and mode of con-
sumption.’75 Most pivotal in this respect was a particular form of
collective bargaining in which labour ceded to management full sover-
eignty over the labour process in exchange for wage increases in line
72
Aglietta, Theory of Capitalist Regulation, p. 158, emphasis added.
73
Boyer, ‘Technical Change’, p. 79.
74
Ibid., p. 85 and p. 73.
75
Aglietta, Theory of Capitalist Regulation, p. 117. Cf. Boyer, Théorie de la Régulation,
p. 50.

87
with productivity growth and inflation.76 This allowed capital to
accelerate innovation without fear of workers’ opposition and to
make major placements of fixed capital without fear that these would
fail to be realized as a consequence of sudden drops in wages and thus
demand. ‘Now that they could incorporate into capital advanced a
future wage movement known with a high degree of probability, the
corporations systematically introduced and extended the semi-
automatic labour process applied to long and standardized produc-
tion runs.’77
Collective bargaining was buttressed by the state’s adoption of
Keynesian fiscal and monetary policies, which made up for shortfalls
of demand and so smoothed out the business cycle and prevented high
levels of unemployment. Meanwhile, the welfare state, broadly speak-
ing, constituted a safety-net for the structurally or temporarily unem-
ployed and, in so doing, both redistributed income toward the working
class and functioned in counter-cyclical fashion to keep the economy
turning over. Finally, new institutions were fashioned to facilitate
long-term consumer credit. The ultimate outcome was to allow for the
regular matching of production with consumption, thus transcending
the tendency toward underconsumption and providing the basis for
the great postwar boom.78
2. Does Stable Intensive Accumulation Require Monopoly
Regulation?

The Regulationists seem largely to take it for granted that, for most of
the twentieth century, monopolies or oligopolies dominated markets
in the United States and other advanced capitalist economies. Mono-
polistic control, by eliminating the likelihood of radical devalorization
of capital consequent upon the invasion of markets by lower-cost pro-
ducers, made possible the ongoing investment in fixed capital that
was crucial to intensive accumulation. Which economic-institutional
arrangements, however, allowed for monopoly in the first place? This
issue immediately poses itself because the existence of monopoly sig-
nifies that some firms are securing over time higher-than-average rates of
profit, in the face of the general drive of capitalist firms to invest
wherever there are higher-than-average profit rates and, in so doing,
to bring them down to the average.
In the standard view, partially rehearsed by Aglietta, the evolution of
capitalism, by bringing about the growth of market concentration and
a massive centralization of capital, eventuates more or less directly
in the transition of capital–capital relations from competitive to

76 ‘The content of collective bargaining thus shifted from working conditions to mone-
tary gains from capitalist production, and the form of collective bargaining from a
decentralized pattern of decision to an ever more centralized pattern.’ Aglietta, Theory
of Capitalist Regulation, pp. 193–7 (quotation from p. 195). For the same emphasis and
theses, see also Boyer, ‘Wage/Labour Relations, Growth, and Crisis: A Hidden
Dialectic’, pp. 8, 10–11. Cf. Boyer, ‘Technical Change’, pp. 82, 85.
77
Aglietta, Theory of Capitalist Regulation, p. 197.
78
Ibid., chapter 3; Boyer, ‘Technical Change’, pp. 84–6; Boyer, ‘Wage/Labour Rela-
tions, Growth, and Crisis’, pp. 4–12.

88
monopolistic regulation. Giant corporations are thus able to establish
monopolistic positions by virtue of the decreasingly small numbers of
firms in each industry and especially the growth of discouragingly
large fixed-capital requirements to enter each field. It is sometimes
additionally argued that small numbers of producers in a given indus-
try pave the way for collusive price-fixing and control over output. As
Marx put it: ‘Competition rages in direct proportion to the numbers,
and inverse proportion to the magnitudes of, antagonistic capitals.’79
But the problem with this view is that capitalist development has not
only tended to increase concentration and the size of capital invest-
ment required for entry. It has also tended to create the institutional
forms through which capitalists can mobilize enough abstract capital
for entry into any field where producers are achieving a higher-than-
average rate of profit. First, the modern corporation itself, by increas-
ing the financial, or free, capital at the disposal of management for
reallocation to the point of highest return, and by increasing the
rapidity and geographical reach of such capital transfers, has forged a
powerful instrument for the undermining of monopoly. This is above
all true of the highly evolved corporate forms to be found in East Asia
(keiretsu and chaebol of Japan and Korea, respectively), which instant-
iate a hitherto unprecedented degree of merger between financial and
manufacturing capital and allow a hitherto unattainable degree of
diversification. Secondly, the giant banks, mobilizing much of the
world’s capital, are in a position to offer sufficient finance for entry
into any line where the rate of profit is significantly higher than
average. Thirdly, capitalist states themselves, especially in the devel-
oping countries, have made possible hitherto unrealizable allocations
of capital to national industries, even in lines where the potential rate
of profit was not necessarily—or even potentially—higher than aver-
age. Given, moreover, modern developments in transportation and
communication, firms are in a position to materialize their financial
resources in the form of real productive capacity with the greatest
speed in history. That competition can now emerge from such a mul-
titude of points throughout the international system obviously makes
stable monopoly massively more difficult to establish.
In response to competition, firms can of course achieve temporary
monopolies (above-average rates of return) through the barrier of
cost-cutting inventions; this is what drives capital accumulation and
the development of the productive forces. But the barrier will even-
tually be dissolved by imitative competitors, who can be counted on
to secure whatever means are required to enter the field and restore
the rate of profit to average in that particular line.
It needs to be emphasized that the tendency to bring about average
rates of return in the different lines of capitalist production cannot
work itself out immediately; there is no smooth and instantaneous
79
Aglietta, Theory of Capitalist Regulation, pp. 310–12. Aglietta lists such other barriers
to entry as manufacturing secrets and control over supplies. Cf. B. Coriat, ‘Fordism
and Mass Production in the Computer Age: Issues and Perspectives’, paper presented
to UCLA Conference on Pathways to Industrialization and Regional Development in the
1990s, Lake Arrowhead, March 1990, p. 5. Marx, Capital Volume 1, p. 777.

89
process of adjustment. As a result, firms may, for reasons other than
sole possession of an advanced productive technique, secure monop-
oly profits temporarily, especially in local markets. But the point is
that those industries in which prices compared to costs yield higher
than average profit rates will attract, over time, additional investment;
supply will then go up until prices have fallen sufficiently to restore
the rate of return to the average of the economy as a whole. To achieve
long-run monopoly profit rates, industries must secure political bar-
riers to entry via support from the state; but regulated industries are,
of course, (at least in the United States) relatively few and becoming
even fewer. Contrary to the theory of the monopoly stage of capital,
which the Regulationists have more or less uncritically appropriated,
the ability of corporations to erect protective barriers to competition
actually decreases with the evolution of capitalism, for as the social
and physical barriers of the past are overcome, the conditions for the
existence of capital in the abstract are ever more fully established.80
Since monopoly would seem, in historical terms, to be increasingly
difficult, while capital accumulation would seem, over time, to have,
if anything, become more effective in almost every respect, it is
difficult to see the securing of monopoly as a central precondition for
the dynamic investment path associated with intensive accumulation
in general and the postwar economy in particular.

Above all, the Regulationist thesis that the dynamism of the post-
World War II economy was predicated upon monopoly regulation is
prima facie dubious for the simple reason that a very extended, histor-
ically spectacular process of long-term intensive capital accumulation
on the basis of relative surplus-value was obviously quite possible and
actually took place on the basis of the competitive mode of regulation.
As we have seen, moreover, the crisis of the 1920s did not result from
some ‘unviability’ of intensive accumulation based on competitive
regulation; nor was the constitution of a Fordist norm of working-
class consumption required to establish intensive accumulation on a
viable basis. There thus seems little warrant for interpreting the trans-
cendence of the crisis or the ensuing prosperity in terms of the growth
of mass consumption.

3. The Role of Monopoly Regulation in the Postwar Boom

What, then, was the place of the institutions of monopoly regulation

in underpinning the postwar boom and determining the pattern of
capital accumulation throughout the period?

80 For the critique of the ‘monopoly stage’ theory, we are greatly indebted to

S. Zeluck, ‘On the Theory of the Monopoly Stage of Capitalism’, Against the Current,
old series, no. 1, 1981; and J.A. Clifton, ‘Competition and the Evolution of the Capi-
talist Mode of Production’, Cambridge Journal of Economics, I, June 1977. Cf. Marx’s
comment: ‘In theory, we assume that the laws of the capitalist mode of production
[notably, competition] develop in their pure form. In reality, this is only an approx-
imation; but the approximation is all the more exact, the more the capitalist mode
of production is developed and the less it is adulterated by survivals of former
economic conditions with which it is amalgamated.’ Capital Volume iii, Harmonds-
worth 1981, p. 275.

90
Monopoly

It is not possible within this compass to offer a detailed empirical dis-

cussion of the nature of inter-capitalist competition in the postwar
United States. It should be mentioned in passing that the idea of an
empirical link between concentration and profit rates in an industry
was popularized by three influential studies carried out in the 1950s
and 1960s by Bain, Stigler and Mann.81 Yet, as was argued at the time, all
three of these studies were biased by the fact that they were confined to
the short term.82 Since the mechanism tending to undercut a higher-
than-average rate of profit in an industry is the redirection of invest-
ment, and since the redirection of investment requires time, any study
that wishes to establish the existence of barriers to entry must take in
the long run. Recent studies, using newly available data on industrial
profitability over the period 1948 to 1979, have concluded that when
the focus is actually on the long run, apparent industrial profit-rate
differentials do indeed tend to lessen significantly.83

The Institutions of Mass Consumption

When we turn to the role of mass consumption in the postwar boom,

two observations appear especially relevant. First, the crisis was trans-
cended well before the essential structures of monopoly regulation had
been put into place. Second, the Regulationists have yet to show in
just what way a new pattern of mass consumption per se—let alone
the Fordist institutions ostensibly accounting for it—actually deter-
mined the characteristic trajectory of the US economy after World
War II.

The Regulationists see the New Deal as the turning point in the estab-
lishment of Fordist institutions. This may, in retrospect, have been
the case. Yet it is crucial to note that, whatever their long-term signifi-
cance, the developments of the 1930s had failed to establish the foun-
dations for mass consumption by the end of the decade. At no point
during the thirties did the government adopt Keynesian methods of
stoking demand through deficit spending. Government expenditures
did grow, but the budget was generally kept in balance by means of
tax increases.84 Equally important, although the UAW’s historic vic-
tory over General Motors in the winter of 1936–37 may perhaps have
marked the breakthrough for the establishment of industrial unions in

81
J. Bain, ‘Relation of Profit Rate to Industrial Concentration in American Manufac-
turing, 1936–1940’, Quarterly Journal of Economics, LXV, 1951; G. Stigler, Capital and Rates
of Return in Manufacturing Industries, National Bureau of Economic Research, Princeton
1963; M. Mann, ‘Seller Concentration, Barriers to Entry and Rates of Return in Thirty
Industries 195o–196o’, Review of Economics and Statistics, XLVIII, 1966.
82 Y. Brozen, ‘The Antitrust Task Force Deconcentration Recommendation’, Journal of

Law and Economics, XIII, 1970; Y. Brozen, ‘Bain’s Concentration and Rates of Return
Revisited’, Journal of Law and Economics, XIV, 1971. Most modern industrial structures
discount the existence of such a relationship.
83
M. Glick and H. Ehrbar, ‘Profit Rate Equalization in the U.S. and Europe: An
Econometric Investigation’, European Journal of Political Economy, vol. IV, no. 1, 1988.
84
E.C. Brown, ‘Fiscal Policy in the ‘Thirties: A Reappraisal’, American Economic
Review, XCVI, December 1956.

91
the US, the success of their drive for recognition was by no means
assured at that point. The CIO absorbed a decisive defeat at Little
Steel in 1937 and could organize no further in either auto or steel
during the remainder of the decade. Until it could resume its forward
march, the union movement was unable significantly to affect the
course of wage growth, and further victories were not achieved until
European militarization set off the new boom. The upshot was that
neither the Roosevelt administration’s policies nor the CIO’s organiz-
ing could prevent the economy from collapsing once again in 1937–38;
the unemployment rate soon soared to 20 per cent and depression
continued until the run-up to war. The New Deal, in itself, had little
or nothing to do with the end of the depression.

In so far as a rise in demand helped pull the economy from depression

—and that was far from the full story—the impetus came not from
the institutionalization of a higher level of working-class consumption
but from massive deficit-spending on armaments. Following the war,
of course, this continued at a spectacular level, amounting to 80 per
cent of federal government purchases of goods and services and 9 per
cent of GNP through 1960.85

Still, the questions that must be raised are: (1) What made artificial
injections of demand such powerful stimuli? (2) Why did the boom
continue for a quarter of a century? Here two facts immediately
impose themselves. First, the initial exit from crisis at the end of the
1930s was marked by a vertiginous rise in the rate of profit. Equally to
the point, during the quarter-century of boom from the start of the
war until the middle 1960s, the rate of profit, adjusted for capacity utiliz-
ation, averaged more than twice the rate at which it had maintained
itself, on average, during the two interwar decades of crisis.86 That is,
the profit rate was very low during the 1920s and 1930s and very high
during the 1940s, 1950s and first half of the 1960s. Growth in con-
sumption, in demand, is incapable in itself of explaining such drama-
tic movements in this fundamental economic variable.

If Fordist institutions cannot directly account for the transcendence of

the Depression, what evidence is there of a connection between insti-
tutionally assured mass consumption and the specific mode of devel-
opment of the postwar economy, particularly the great boom? It must
be doubted, in the first place, whether the so-called capital–labour
accord—in which the unions ceded control over the labour process in
exchange for productivity deals and cost-of-living clauses—could have
played the decisive role assigned to it by the Regulationists in ensuring
that consumption kept up with investment and wages kept up with
profits. Following the United Auto Workers’ historic settlement with
GM in 1950, contractual provisions to vary wages with productivity

85
R.W. DeGrasse Jr, Military Expansion. Economy and Decline, New York 1983, pp.
20–21. Speaking more broadly, the Regulationists appear to take little note of the fact
that the share of state expenditures in national income rose precipitately in the post-
World War II period.
86
Dumenil, Glick and Rangel, ‘The Rate of Profit in the United States’, pp. 351–3. Cf.
Dumenil, Glick and Levy, ‘The Rise of Profitability During World War II’.

92
and with the cost of living did become more common. But this is in
no way to say that capital ever resigned itself to the principle of main-
taining labour’s share or failed to fight tooth and nail to limit the
degree to which wages kept up with the cost of living or with product-
ivity. There was never anything resembling a generalized ‘social con-
tract’ (à la Social Democratic Sweden) on how revenue was to be
divided between investment and consumption or between profits and
wages. To the degree that consumption and wages did keep up with
investment and profits in consequence of developments in the private
sector, it was only as an unplanned outcome of myriad uncoordinated
private decisions by firms about prices and myriad employer–labour
conflicts over the terms of employment.

Moreover, as Aglietta himself explains, the misnamed capital–labour

‘accord’ represented the outcome of management’s victory and the
unions’ defeat in an extended and very bitter process of class struggle
that had begun on the morrow of World War II. By the late 1950s, the
employers had largely succeeded in reappropriating the rather signifi-
cant degree of shopfloor control that the unions had temporarily
secured in the great struggles of the 1930s and early 1940s. In Aglietta’s
words, ‘the entire drift of the class struggle in the United States since
the war has been to transform collective bargaining into a battering
ram of the employers.’87 In light of this shift in the balance of class
forces in favour of capital, it would have been surprising indeed to find
employers voluntarily allowing contractual provisions that guaranteed
the workers’ share as the boom reached its apex.

But did real wages actually keep up with productivity? In fact, the
ratio of the wage index to the labour productivity index for the
private nonfarm economy falls fairly steadily for the entire period
from 1948 to 1970. In other words, wage growth lagged behind
productivity growth through almost the whole of the postwar boom.
As Aglietta himself notes: ‘The watershed years of 1958–61 saw an
acceleration in the fall in social wage costs [that is, in unit labour
costs] proceeding from a sudden change in the forms of class struggle
to the detriment of the wage-earners’; and the period from 1958 to
1966, the height of the boom, witnessed the ‘spectacular growth of
relative surplus-value’, as rising labour productivity outran the
growth of real wages, with the result that profitability in the corporate
sector grew by some 33 per cent or more over the period 1958–66.88
The epoch of ‘Fordist collective bargaining’, if it existed, thus lasted
for a few years in the 1950s.

What about aggregate consumption? Were the other Fordist institu-

tions, including Keynesian counter-cyclical policies and the welfare
state, more effective than the capital–labour ‘accord’ in maintaining
the level of consumption as against investment? In reality, the share of
87
Aglietta, Theory of Capitalist Regulation, pp. 193–5 (quotation from p. 194).
88
U.S. Department of Labor, Handbook of Labor Statistics, Bureau of Labor Statistics,
Washington, D.C. 1973, pp. 174–5; Aglietta, Theory of Capitalist Regulation, pp. 97, 99;
Dumenil, Glick and Rangel, The Rate of Profit in the United States, p. 339.

93
Figure V.
Real wage/productivity ratio, private nonfarm economy,
1948–1970

Source: US Department of Labor, Handbook of Labor Statistics 1973, Bureau of Labor

Statistics, Washington D.C. 1973, pp. 174–5.

consumption in GNP throughout the postwar boom was not only 20

per cent lower than it had been during the ostensibly underconsump-
tionist twenties, but perceptibly lower than at any other time since
1890 (outside of brief periods during the two World Wars).

It should be emphasized in passing that the Japanese economy,

undoubtedly the most dynamic since World War II, exhibited none of
the consumption/investment or wages/productivity patterns that the
Regulationists view as central to stable intensive accumulation. As
Itoh has shown, the average annual rate of growth of labour
productivity in Japan was between 50 per cent and 100 per cent
higher than the rate of growth of real wages throughout the period
from 1955 to 1970 (and the disparity became far greater over the fif-
teen years that followed). What allowed effective aggregate demand to
soar was not so much rising consumption as investment in new plant
and equipment, which grew at an annual pace of 22 per cent over the
years 1956–73, more than twice as fast as GDP. Clearly, there was
nothing inherently contradictory in a long-term growth trajectory
driven by what Aglietta calls ‘the uneven development of Department
I’.89

Finally, it turns out that serious problems are posed for Regulation

89M. Itoh, ‘The Japanese Model of Post-Fordism’, paper presented to Conference on

Pathways to Industrialization and Regional Development in the 1990s, Lake Arrow-
head/UCLA (March 1990), pp. 5–8. As Itoh makes clear, the growth of aggregate
demand in Japan was not dependent upon exports, which remained steady at about
10–12 per cent of GNP throughout the period 1955–85.

94
Figure VI.
Consumption/GNP 1869–1985

Source: Data appears courtesy of G. Dumenil and D. Levy, CEPREMAP, Paris,

France.

Theory even in specifying what was distinctive about the US growth

pattern during the ‘Fordist’ epoch following World War II. For the
powerful wave of growth was not of a different order of magnitude
from that achieved in the era between the Civil War and World War
I—the epoch characterized by the Regulationists in terms of extensive
accumulation and competitive regulation. This can be seen by com-
paring a series of fundamental variables:

Table V.
Average annual rates of growth in the United States (%)
1870–1913 1950–1973

GDP 4.1 3.7

GDP/head 2.0 2.2
GDP/man-hr 2.0 2.6
Non-res. fixed cap. stock 4.7 4.0
Non-res. fixed cap. stock/man-hr. 2.6 2.9
Ratio of Gross Fixed Non-Residential Investment to GDP 14.5 (1880–1910) 13.2

Source: A. Maddison, Phases of Capitalist Development, New York 1982, pp. 45, 44, 96, 100,
109, 40.

In only one significant variable—the average annual rate of growth of

productivity—are the results in the later period appreciably better.
But, even here, they are no greater on average than in the ‘pre-Fordist’
95
period from 1913 to 1950 (2.6 per cent per annum in both cases).
Besides, the discrepancy with the epoch before World War I does not
confirm the Regulationists’ argument; for what, in their view, endows
Fordist economy with its superior capacity for rapid technical change
is its facilitation of fixed capital investment by overcoming the institu-
tional barriers supposedly built into the competitive mode of regu-
lation—specifically, craft control, inter-capitalist competition, and
restricted consumer demand. And it was precisely in the rate of
growth of fixed capital that the pre-World War I economy was the
equal of the period after World War II.90

V Towards a New (Fourth) Mode of Development?

1. The Crisis of Fordism

According to the Regulationists, the Fordist settlement of the postwar

era brought stability and growth by virtue of its success in solving the
problem of realization and underconsumption, which had been
rooted in the tendency for Department 1 to grow disproportionately
vis-à-vis Department II and the inability of the interwar economy to
redistribute income toward labour and away from capital. At the
same time, precisely by allowing the intensive regime of accumulation
to reach fruition, the new mode of monopoly regulation made pos-
sible the inexorable maturation of certain fundamental contradictions
that were built into the Fordist mode of development. Nevertheless,
the Regulation School is not entirely clear, or at one, as to precisely
what these contradictions were.

Aglietta argues that the origins of the crisis beginning in the mid
1960s, as of the interwar crisis, are to be found in the uneven develop-
ment of Department 1.

The watershed years of 1958–61 saw an acceleration in the fall in social

wage costs [. . .] This inaugurated the most intense wave of accumulation
in the whole history of American capitalism, which rapidly broke the
dynamic equilibrium of expansion of the two departments. Department 1
expanded more rapidly than Department II and became more differen-
tiated, the sub-department producing actual means of production exper-
iencing particularly fast growth sustained by the general transformation of
production processes. [. . .] The result was deeply unbalanced accumula-
tion which was only maintained in so far as the relative surplus-value
produced could be accumulated at an accelerated pace. This tempo could
itself be maintained only if manufacturing processes were altered more and
more quickly to supply the growing demand addressed to the sub-
department producing means of production. 1966 saw the impending
blockage of this mode of accumulation.

90
The above remarks are not meant to imply that there were no significant alterations
in the post-World-War-II US economy, compared to what had come before. Cf. ‘[T]he
acceleration of economic growth [. . .] after World War II [. . .] I has not been true of
the United States.’ Robert A. Gordon, Economic Instability and Growth: The American
Record, New York 1974, p. i.

96
There can be no doubt as to the permanence and centrality that
Aglietta thus attaches to the problems of uneven development of
Department 1 and insufficient working-class consumption. As he
explains: whereas in the crisis of the 1920s, ‘the real issue was the all-
around establishment of the regime of intensive accumulation’, the
crisis beginning in the mid 1960s, ‘pose[s] a deeper question: are
there limits to the transformation of the conditions of existence of the
wage-earning class in the form of an extension of commodity rela-
tions?’ It is in relationship to this underlying contradiction that
Aglietta proffers a series of possible solutions to the crisis through
further ‘post-Fordist’ restructuring of working-class consumption—
most notably, the rise of a health complex.91

There is, however, a second account of the crisis to be found in

Aglietta’s work, ostensibly linked to the first, which has received
much greater emphasis in the studies of the leading continuators
of the Paris version of Regulation Theory, most prominently Boyer
and Lipietz. From this standpoint, the crisis originates when capital
accumulation slips off on ‘the other side’ of its tightrope: it now falls
prey not to the unevenness between Departments I and II but to the
tendency of the rate of profit to fall as a result of labour-productivity
growth insufficient to raise the rate of surplus-value to a degree that
can counteract the rising organic composition of capital. The current
crisis is thus ‘first of all a crisis of the mode of labour organization’,
expressing ‘the limits to the increase in the rate of surplus-value that
were inherent in the relations of production organized in this type of
labour process’.92 Fordism as a paradigm for organizing the labour
process could henceforth deliver only declining productivity growth
because, over the long term, management exhausted the gains that
could be secured from an intensification of labour through Taylorist
time-and-motion studies, job fragmentation, shopfloor reorganization
and the introduction of new machinery on the basis of existing
technology. Meanwhile, workers found themselves deskilled and
alienated to the point that they no longer delivered the on-the-line
technical innovations crucial to the growth of productiveness. As a
result: ‘The development of the department producing means of
production encounters a constraint, since it no longer gives rise to
technical mutations leading to a further mechanization of labour,
capable of generating a sufficient saving in direct labour time to
compensate for the increase in the organic composition of capital.’94
For the Regulationists, then, the crisis of the Fordist mode of develop-
ment manifested itself in a crisis of productivity, built into the socio-
technical character of the Fordist labour process itself. This led to
economic crisis by bringing about a sharp fall in the rate of profit
from 1966 onwards.

91 Aglietta, Theory of Capitalist Regulation, pp. 99–100, 163ff.

92 Ibid., p. 162.
93 As Lipietz puts it, ‘[T]he search for “the one best way” by Taylorist methods

reaches an end with the generalization of “scientific management” at the moment

where social unrest on the line and the deskilling of operatives cuts off the basis of
productivity, the ingenuity of the collective worker.’ ‘Behind the Crisis’, p. 26.
94 Aglietta, Theory of Capitalist Regulation, p. 162.

97
2. From an ‘Exhaustion of Fordism’ to Capitalist Crisis?
The relationship, in the Regulationists’ framework, between their
crisis originating in the uneven development of Departments I and II
from 1958 and their crisis originating in productivity-growth decline
from 1966 is not entirely clear. Aglietta argues that accumulation
became unbalanced in the 1958–66 period because unit labour costs
decreased too rapidly, bringing about increases in the rate of surplus-
value and the rate of profit that were too large because they involved
a rate of growth of Department I vis-à-vis Department II that required
unsustainable increases in the demand for capital goods. Yet, Aglietta
also argues that the decline in the rate of productivity growth from
1966, which reflected the failure of technical change to keep up with
the growth of capital (organic composition) and brought a slowdown
in the rate of decrease of unit labour costs, was problematic because it
resulted in a decline in the rate of profit. The immediate question,
therefore, is why the slower increase in labour productivity should not
have ultimately benefited capital accumulation by reducing the rate of
surplus-value and the rate of profit, thereby decreasing the rate of
capital accumulation and thus the level of demand for capital goods
required to maintain balanced growth of Departments I and II, in this
way resolving the problem set off by the uneven development of
Department I. Aglietta, in other words, makes a decline in the rate of
profit, resulting from lower productivity growth, problematic from
1966, when he has made an increase in the rate of profit problematic
in the period immediately before. Aglietta may be having too much of
a good thing, playing both sides of his tightrope against the middle.
The tendency of recent Regulationist writing has been to ignore the
issue of unbalanced accumulation in the years 1958–66 and to inter-
pret the current crisis in terms of declining marginal productivity of
capital within the Fordist labour process beginning in 1966. Never-
theless, the idea that the current crisis of profitability is derived from
a decline in productivity growth resulting from the exhaustion of the
Fordist technological paradigm is highly paradoxical—in view of the
Regulationists’ own characterization of the [Taylorist]–Fordist labour
process, in view of what we thought we knew about technological
change under capitalism, and in view of the actual contours of the
crisis itself, its timing, scope and intensity.
As has been seen, Aglietta and the Regulationists characterize the
Fordist labour process as a development on machine manufacturing
(or machinofacture). As Leborgne and Lipietz put it: ‘As a general
principle of organization of labour or “technological paradigm”, Ford-
ism is nothing more than Taylorism plus mechanization.’ Thus Fordist–
Taylorist principles involve:
a rigorous standardization of operating practices and a corresponding
separation between [. . .] conception (design, engineering) on the one hand
and manual manufacturing on the other hand. [. . .] This rationalization
through separation has two objectives. The first is to implement [. . .] the
most efficient method (the ‘one best way’) and to eliminate both experi-
mentation [. . .] and malfunctioning along the workbenches [. . .] to
obtain gains in productivity and its strict meaning (the physical efficiency of

98
 each operation) by the organized socialization of collective learning by
doing. The second objective [. . .] is to obtain, through knowledge of the
time needed to carry out each operation, rigorous control of the intensity
of the operative’s work [. . .] True Fordism can be distinguished from
Taylorism in the fact that these norms themselves are incorporated in the
automatic apparatus of the machine.95

But if Fordism is nothing more than mechanization plus Taylorism

plus the assembly-line—for the purposes specified by the Regulation-
ists—it is difficult to see why it should be viewed as more than an
extension of the processes of transforming technology and the labour
process that have characterized capitalist production for at least a cen-
tury (or perhaps two). In that case, why should machine manufactur-
ing suddenly, in the mid 1960s, have reached a limit and ceased to be
able to yield former levels of productivity growth, precipitating a
crisis of the whole capitalist system.

Machinofacture, it should be remembered, is itself, conceptually and

historically, the culmination of manufacture per se, the breaking up
of complex, skilled tasks into their simplified, deskilled component
parts (detailed labour). The application of manufacturing methods,
according to Adam Smith and Karl Marx, was designed to bring
about cost savings by rendering learning-by-doing easier, by making
labour more continuous, by reducing expenditures on the imparting
of skills, and by facilitating the introduction of machines in conse-
quence of the simplification of tasks. Mechanization yielded gains in
output/head not only by embodying new techniques that directly
increased the efficiency of production, but also by increasing the
intensity and continuousness of labour (filling up the pores of the
working day). The increased separation of conception and execution
would afford a higher level of capitalist domination of the labour pro-
cess. Mechanization was, moreover, itself subject to improvement
according to the principles of manufacturing in general—that is,
decomposition and simplification—which made it possible to use less
skilled labour, to train labour more easily, and to intensify the actual
performance of labour. The innovations attributed to Taylorization
by the Regulationists would seem, rather clearly, then, to represent
merely variations on a long-established and very difficult-to-exhaust
‘technological paradigm’.

In this context, it is rather difficult to know what to make of the

95The first quotation is from D. Leborgne and A. Lipietz, ‘Fallacies and Open Issues
About Post-Fordism’, CEPREMAP paper no. 9009, Paris 1990, p. 6 (emphasis added);
the second quotation is from D. Leborgne and A. Lipietz, ‘New Technologies, New
Modes of Regulation: Some Spatial Implications’, Environment and Planning D. Society
and Space, VI, 1988, p. 264. For a very similar definition/explanation of the Fordist
labour process, see Aglietta, p. 118. It might be noted in passing that Henry Ford
summarized the essential features of his new factory organization as follows: ‘[T]he
keyword to mass production is simplicity. Three plain principles underlie it: (a) the
planned orderly and continuous progression of the commodity through the shop; (b)
the delivery of work instead of leaving it to the workman’s initiative to find it; (c) an
analysis of operations into their constituent parts . . . All three fundamentals are
involved in the original act of planning a moving line production.’ Quoted in Rosen-
berg, Technology and American Economic Growth, pp. 113–14, n. 26.

99
Regulationist idea of an exhaustion of the gains to be had from Ford-
ism. That one should expect diminishing returns from the adoption of
any given machine-manufacturing technique makes a certain amount
of sense. The gains to be had by breaking down a production process
into its simplified component parts/tasks may thus tend to be dimin-
ishing for any particular technique: there is perhaps only so much one
can get from simplifying and deskilling a given labour process so as to
reduce the requisite investment in ‘human capital’; there are perhaps
only finite gains possible from the further mechanization that can
result from such simplification and deskilling. However, a great deal
of further argumentation and evidence would be required to show
that, after some given point in history, machinofacture in general—in
contrast to particular mechanized manufacturing processes—should
yield diminishing returns. It is in the essence of a capitalist economy
that, under the pressure of competition, entirely new tools,
embodying new techniques, will be brought in to carry out old pro-
cesses. It is also in the essence of a capitalist economy that entirely
new products will regularly be introduced to fulfil old or new needs,
probably involving at least some degree of innovation in production.
These new techniques will, in their turn, eventually be subject to sim-
plification and deskilling, to Taylorization broadly conceived, but
also to replacement by new products and processes, and so on ad infin-
itum. It is interesting to note that F.W. Taylor himself was obsessively
concerned with the improvements that could be had through reorgan-
ization of the labour process, rather than through the introduction of
new technology.96 But since new technologies are central to the
ongoing transformation of production, there seems no reason to
expect that an ‘exhaustion of the Fordist labour process’ would lead to
a generalized crisis bound up with declining rates of productivity
growth.
If the Regulationists continue to advance this thesis, then, it would
appear to be because they tend to interpret technological change in
general, and mechanization in particular, as if they were simply pro-
cesses by which the workers’ knowledge and energy in production are
appropriated by capital under the pressure of class struggle. Accord-
ing to Aglietta:
[T]he capitalist mode of production has systematically brought into being
systems of productive forces able to link absolute and relative surplus-
value closely together. Their basis is the principle of mechanization [Aglietta’s
emphasis], which incorporates in its mode of operation the qualitative characteris-
tics of those concrete labours previously performed by the dexterity of workers. The
machine system is a complex of productive forces in which a series of tools
is set in motion by a mechanical source of energy, the motor. [. . .] By
96 Montgomery, Fall of the House of Labor, p. 233. ‘Taylor and his disciples had virtually

nothing t0 say [at this point] about what different machinery might do for efficiency.
Their thinking was riveted on commandeering the craftsman’s knowledge.’ In
contrast, ‘[T]he Chicago-based journal Factory . . . abounded with “trips through the
world’s great factories” and articles on electric motors, new milling machines, hoists,
cranes, fire prevention, cost analysis, time card belting, and plant layouts—but not
pay systems or functional foremanship.’ (Of course, as Montgomery explains, Taylor
had himself earlier made spectacularly important technical contributions. See above,
footnote 23.)

100
 transferring the qualitative characteristics of labour to the machine, mechanization
reduces labour to a cycle of repetitive movements that is characterized
solely by its duration, the output norm. This is the foundation of the homo-
genization of labour in production. All modifications in the organization of
work represent a further expression of this principle.
More baldly put, ‘ “technology” is nothing but the embodiment of
skilled activity into machinery.’97 These formulations tend to reduce
technological change in general, and mechanization in particular, to
an aspect of the class struggle, carried out by capital for the purpose
of reducing workers’ control so as to increase workers’ exploitability,
especially through the intensification of labour (but also presumably
the limitation of wage increases).98 Such a vision helps make sense of
the Regulationists’ argument, noted earlier, that the craft-controlled
labour process could so fetter capitalist manufacturing as to prevent
significant increases in the organic composition of capital and pro-
ductiveness for three-quarters of a century, and correlatively, that,
following capital’s epoch-making victory over skilled labour, the
introduction of the Taylorist labour process could facilitate
revolutionary gains for capital. The same conception also informs the
thesis that concerns us now: namely, that the gains from Taylorizing/
Fordizing the labour process—secured largely through deskilling,
mechanization, and speedup (though also learning-by-doing)—are
exhausted. But it is, to say the least, extremely one-sided.
Mechanization has, of course, as the Regulationists emphasize, very
much facilitated increased surplus extraction through weakening
skilled workers’ power on the shop floor (and beyond), thus making
possible the intensification of labour and, more generally, capitalists’
ability to secure increased worker inputs, and thus outputs, for the
same wage. Yet, it has also introduced incalculable—and accelerating
—increases in productiveness (and thereby increases in relative
surplus-value) by incorporating advances in scientific and technical
understanding, achieved to some extent by skilled operatives, but,
increasingly in recent times, by applied scientists and engineers—an
aspect of mechanization that the Regulationists very much play down
in framing their view of the current crisis as a crisis of productivity.
Since just after the middle of the nineteenth century, an increasing
97 Quotations are from Aglietta, p. 113 (emphasis added, except as indicated); and A.

Lipietz, ‘An Alternative Design for the Twenty-First Century’, CEPREMAP, Paris, p. 14.
Mike Davis summarizes Aglietta’s position in the following way: ‘Important changes
in the work process are expressions of the class struggle. And all modifications of the
labor process which the class struggle may necessitate are extensions or reinforcements
of the global principle of mechanization, i.e. “of transferring of the qualitative
characteristics of labor to the machine”.’ ‘ “Fordism” in Crisis’, p. 222.
98 As Lipietz puts it, ‘change in the relationship of forces between classes is the goal of

technical change, and competition only the “coercive force” that obliges everyone to
conform to the general tendency.’ A. Lipietz, ‘Conflits de répartition et changements
techniques dans la théorie marxiste’, Economie Appliquée, XXXIII, 1986, p. 523–4 (our
translation). Lipietz further argues that, ‘If the Taylorist movement chose to cancel
these [intellectual] capacities [of skilled workers], it was for a political reason, a micro-
political shopfloor one, but also a macropolitical, state level one. In fact, a highly
skilled, highly conscious, highly active worker may contest the control of management
upon the intensity of his or her work on the line, of the product, or the sharing out of
gains from productivity.’ ‘An Alternative Design for the Twenty-First Century’, p. 18.

101
proportion of technological change has been dependent upon prior
advances in systematized knowledge, based on the improved under-
standing of the forces of nature achieved beyond the production pro-
cess itself. Today, some of the most spectacular sources of productivity
increase within Fordist manufacturing itself are obviously science-
based—cads, cams, robotics, and so on. Moreover, beyond manufac-
turing narrowly conceived, there have emerged a whole series of new
industries—the computer revolution, biotechnology, materials, etc.—
which can in no obvious way be seen to represent the mechanization
of production formerly done by hand. In view of the quite massive
extent to which technical change in production can be seen to be
independent not merely of the Taylorist–Fordist assembly line but of
machinofacture itself, it is hard to understand on what basis the Regu-
lationists could look to explain a productivity crisis in manufacturing
in terms of a crisis of the Fordist labour process.99

3. To What Extent Can a Crisis of Productivity, Derived

from a Crisis of the Fordist Labour Process, Account for the
Current Capitalist Crisis?

Even if we were to believe that a long-term trend toward the

exhaustion of the Fordist technological paradigm caused a decline in
productivity growth, it would still not satisfactorily explain the onset
of the profitability crisis that the Regulationists rightly see as the root
of the current situation. More specifically, it could not account for the
simultaneous and general character of the crisis on an international scale,
the suddenness of its onset, and the extreme sharpness and depth of the
fall, marking a clear discontinuity with previous trends.

All of the advanced capitalist economies began to experience the crisis

of profitability at virtually the same time, in the years between 1966
and 1970, and since then all have experienced its various stages in
virtual lockstep. The profit rate began to fall in 1966–67 in the United
States,100 and only a year or two later in both Japan and Germany.
Up to 1974–75 profits plummeted everywhere, with the drop-off in
Japan at least equalling that of the United States. Henceforward, the
successive booms and busts were likewise marked by their synchrony.
The question which must be asked of the Regulationists, then, is
whether it is at all likely that such a generalized crisis could actually
express separate but essentially identical trends of productivity, based
on essentially parallel evolutions of technology in relationship to
socioeconomic institutions in every advanced capitalist nation.101

It is not at all easy to see why different industries—Fordist or non-

Fordist—built at different times, with different machinery, and with
99
For an extensive discussion of the increasing role of scientific discoveries in tech-
nical change over the past century and a half, see Rosenberg, pp. 113–71.
100
See Dumenil, Glick and Rangel, ‘The Rate of Profit in the United States’.
101
For the international fall in profitability, see G. Dumenil, M. Glick and J. Rangel,
‘The Tendency of the Rate of Profit to Fall: Part ii’, Contemporary Marxism, no. ii, Fall
1985; and J. Armstrong, A. Glyn and J. Harrison, Capitalism Since World War II,
London 1984, pp. 255–7.

102
different growth paths reflecting divergent trends in demand and
capital spending, should have experienced sharply declining product-
ivity at the same time; nor why this should have been true of whole
manufacturing economies with such distinct postwar experiences,
structured by such specific institutional frameworks. The US economy
was essentially rebuilt during World War II and in its aftermath. In
contrast, the Japanese manufacturing economy did not really begin to
be reconstructed until the mid 1950s or so and was thus able to start
from significantly more modern techniques than were in place in
the US, not to mention its more powerful institutions supporting
capital investment and technical advance. Moreover, the Japanese
economy, over the quarter-century from 1950, and beyond, increased
its fixed capital at more than twice the US rate and its product-
ivity three times faster. If the two economies nevertheless underwent
major declines in profitability at more or less the same time, is it at
all likely that these were both caused by simultaneous large-scale
drops in efficiency?

Not only was the fall in the rate of profit synchronized internationally,
it also involved a sharp discontinuity. Between 1950 and 1966, the
manufacturing profit rate adjusted for capacity utilization was stable;
but from 1966 to 1974 it fell precipitately. By what possible mechan-
ism could a decline in productivity increase that was ostensibly the
result of the declining capacity of a technological paradigm to pro-
duce productivity growth take place so as to produce that profitability
pattern? Even if one could somehow expect similar patterns of Fordist
industrial development to lead to relatively synchronized productivity
falls across industries and across nations, it would seem reasonable to
expect that such declines would occur gradually and be spread over a
significant time period.102

Finally, manufacturing profitability in the United States was cut in

half between 1966 and 1974: that is, investments in labour plus machin-
ery plus circulating capital became fifty-per-cent less profitable than they
had been just a few years before. It is very difficult to understand how
the growth of economic efficiency could have declined so abruptly as
to cause such a huge drop in the rate of return, let alone to see it as the
result of a long-term exhaustion of the Fordist labour process.

Was There a Crisis of Productivity Growth?

In order to substantiate their case, the Regulationists would at the

very least have to show that there actually was a decline in the rate of
102 It should be noted that the Regulationists sometimes add that intensified class
struggle—resulting apparently from employers’ attempts to counteract the decreasing
returns from the old methods by stepping up their pressure on workers—helped to
bring about the productivity crisis. Here their work partially converges with that of
the School of Social Structure of Accumulation. The emphasis on class struggle might
help to account for the putative discontinuity of the productivity/profitability decline,
but it would only make more difficult the problem of accounting for its synchroniz-
ation throughout the OECD countries. The class-struggle account of the crisis will be
considered in R. Brenner, ‘U.S. Decline and the International Capitalist Crisis’, forth-
coming in NLR.

103
productivity increase behind the decline in the rate of profit. But this
is hardly borne out by an examination of the historical record in
manufacturing, necessarily the locus of any exhaustion of Fordism.
This sector suffered a decline in profitability in the first phase of the
crisis significantly greater than that for the economy as a whole: its
rate of profit fell from a peak of 12 per cent in 1965 to around 10 per
cent in 1966 and around 4 per cent in 1970, with a rise to 6 per cent
in 1973 and then a further fall to under 3 per cent in 1974; in the same
period, the average rate of return on assets in the non-financial busi-
ness sector fell from around 12.5 per cent in 1966 to around 6.75 per
cent in 1974.103 Nevertheless, figures provided by Bowles, Gordon
and Weisskopf show that, over the years 1966–73, labour product-
ivity actually rose by an annual average of 3.3 per cent in the manufac-
turing sector as compared to 2.9 per cent over the years 1948–66.104
Moreover, if one makes use of what appear to be the best available
productivity indices—the direct-quantity indices compiled by the
Federal Reserve Board only for the manufacturing sector, rather than
the deflated value indices produced by the Bureau of Labor Statistics
—the increase in the productivity growth-rate in manufacturing
during the first phase of the profitability crisis appears to be even
greater. The Federal Reserve Board’s figures show manufacturing
productivity rising at an annual rate of 4.24 per cent for the years of
rapidly falling manufacturing profitability 1966–73, in comparison
with an annual rate of 2.65 per cent over the boom period 1948–66.105
In response to the figures showing an increase in the growth-rate of
manufacturing labour productivity for the period of falling profitability,
Regulation School theorists have pointed out that the capital/labour
ratio grew even faster. Whereas the growth of manufacturing product-
ivity was about 1.6 times faster over the period 1966–73 than over the
period 1948–66, the growth of the capital/labour ratio was twice as
fast. These data could be interpreted as expressing a fall in overall pro-
ductivity growth, such that workers achieved less increase in output
than before from a similar increase of capital at their disposal.106
What, then, were the productivity trends, taking capital, not just
labour, inputs into account? Kendrick and Grossman and Gollop and
Jorgenson provide figures indicating that the rate of growth of total
factor productivity did fall significantly in the period of falling profit
rate after the mid 1960s, in comparison with the period of rising
profitability from the late 1950s to the mid 1960s.107 Nevertheless, this
103 Dumenil, Glick and Rangel, ‘The Rate of Profit in the United States’, pp. 340–42;

B.P. Bosworth, ‘Capital Formation and Economic Policy’, Brookings Papers on Economic
Activity (1982), no. 2, p. 293.
104 Beyond the Wasteland, New York 1983, p. 31, Fig. 2.4.
105 V. Perlo, ‘The False Claims of Declining Productivity’, Science and Society, Fall 1982,

pp. 298ff.
106
Lipietz, ‘Behind the Crisis’, pp. 22–6.
107
J.W. Kendrick and E.S. Grossman, Productivity in the United States. Trends and Cycles, Bal-
timore 1980, p. 35; F.M. Gollop and D.W. Jorgenson, ‘U.S. Productivity Growth by Indus-
try, 1947–1973’, in J.W. Kendrick and B.N. Baccara, eds., New Developments in Productivity
Measurement and Analysis, National Bureau of Economic Research, Studies in Income
and Wealth, vol. 44, Chicago 1988, pp. 119–20. Calculation made by aggregating figures
for individual industries in Table 1.3 on basis of capital stock figures for industries.

104
fall in measured total factor productivity growth cannot be used to
show that a decline in efficiency or productiveness actually occurred,
let alone that such a fall reflected the exhaustion of a technological
paradigm and caused a fall in the rate of profit.

Table VI.
Total Factor Productivity Growth in Manufacturing Sector

1947–53 .0090
1953–57 .0008
1957–60 –.0212
1960–66 .0162
1966–73 .0108
Source: Calculated from Gollop and Jorgenson, ‘Productivity growth in the U.S. by Industry,
1947–1973’, Table 1.3.

First of all, while it is true that growth in total factor productivity was
lower in the late 1960s and early 1970s than in the immediately pre-
ceding period of high boom, the fact is that its growth over the whole
period from 1960 to 1973 was significantly higher than in any other
period since World War II. This would seem directly to contradict the
Regulationist hypothesis that productivity decline resulted from the
growing failure of the Fordist technological paradigm. Furthermore,
the lack of correlation during the postwar period between profitability
—which was high until the mid sixties and thenceforth in decline—and
total factor productivity—which, as here measured, was low until the
early sixties and high thereafter—casts serious doubt on the whole
idea that a fall in productivity for the period immediately after 1966
was responsible for the profitability decline. In fact, when the figures
on total factor productivity are adjusted for capacity utilization—that
is, to take account of the capital actually used in production, rather
than that merely in place—there simply is no decline in total factor
productivity growth in the period of falling and low profitability from
1966 to 1974 in comparison to that in the period of increasing and
high profitability from 1948 to 1966. As Kendrick’s and Grossman’s
conclusion is that ‘the farm and manufacturing sectors showed no sta-
tistically significant decline in their productivity trends since 1966’.108

VI Conclusion

The general weakness of Regulation Theory, paradoxical though this

may seem, is its failure to take adequately into account the broader
system of capitalist social-property relations that forms the backdrop
to their succession of institutionally defined phases. The Regulation-
ists want to develop a set of historically founded concepts as intermed-
iate links between high theory and economic history and, in particular,
to demonstrate that the institutional evolution of capitalism is the key
to its history. Their key intermediate notion is the mode of develop-
ment, constituted by a mode of regulation and a regime of accumulation.

108
Productivity in the United States, p. 48 and Table 3.8.

105
But since each mode of development must represent a phase within the
evolution of, and thus a variation upon, the capitalist mode of produc-
tion per se,109 it would appear necessary to understand the emergence,
the reproduction, and the effects of the modes of regulation that guide
each regime of accumulation at least partly in terms of the general con-
straints constituted by capitalist social-property relations. This is, first
of all, because capitalist social-property relations, once established,
impose on the individual economic units or actors certain necessary
forms of economic behaviour—maximization of the price/cost ratio for
the sale of their goods by appropriately specializing, by accumulating
surpluses, and by bringing in the latest technique, on pain of going
out of business under the pressure of competition. The aggregate
developmental tendencies that result—tendencies for medium-run
prices to reflect costs of production, for rates of profit in different
lines of production to equalize, for obsessive capital accumulation,
and for the unprecedented development of the productive forces—
distinguish capitalism from all other types of economy. Secondly,
capitalist social-property relations, once established, form a sort of
field of natural selection for the emergence and reproduction of his-
torically specific economic institutions themselves. The failure of the
Regulationists, in practice, to take adequate account of these general
and distinctive features of the capitalist mode of production, lies
behind very many of the central conceptual and empirical weaknesses
in the theory that we have tried to bring out in the course of this essay.
Social-Property Relations or Institutions?
The insensitivity of the Regulationists to the distinction between the
effects on the pattern of capital accumulation that they attribute to
different institutions within capitalism and the effects attributable to
the broader framework of social-property relations, capitalist or pre-
capitalist (or non-capitalist), is manifest in the very modes of regu-
lation and development that the Regulationists identify. Although
they do not make much of it, they identify an ‘ancient’ or ‘traditional’
mode of regulation, supposedly preceding the competitive mode of
regulation, in which ‘the agricultural sector plays a dominant role,
since modern capitalist industry is only emerging. This produces a
unique cyclical pattern: every bad harvest leads to soaring prices of
corn and more generally agricultural prices; hence peasants cannot
buy industrial goods and the industrial sector is hit by the second
round of crisis; then workers are fired and the nominal wage is
lowered even if the general price level is climbing. The “regulation” is
by nature stagflationist, since it associates unemployment with infla-
tion.’110 But the obvious problem here is that the developmental pat-
tern to which the Regulationists refer—originally identified by the
French economic historian C.-E. Labrousse—is inexplicable in terms
of a properly capitalist network of institutions that could constitute a
mode of regulation.
109 ‘For the “Regulationists” the point of departure is the impact of the ensemble of
social relations—commodity and/or wage-labour—on economic regularities.’ Boyer,
Théorie de la Régulation, p. 22 (our translation).
110 Boyer, ‘Technical Change’, pp. 77–8. Cf. ‘Wage/Labour Relations, Growth and

Crisis’, p. 9.

106
Prevailing not only in France before the Revolution, but also through-
out much of Europe during the medieval and early-modern period
and beyond, the social-structural roots of the (mis-termed) ancient or
traditional mode of development were to be found in the precapitalist
social formations of that epoch, specifically in the dominance of a
structure in which peasant property was a central element. Because
peasants possessed their means of subsistence, they were not dependent
upon the market, so were not required to maximize their price/cost
ratio by specializing, by innovating, by improving, or by moving to
the line with the best rate of return. They tended instead to adopt as
their rule for reproduction ‘production for subsistence’—that is,
diversifying production to cover necessities and marketing only phys-
ical surpluses. The agricultural productive forces therefore tended to
stagnate and productivity to decline over the long run with the growth
of population. The outcome was a built-in vulnerability to harvest
failures, which tended to occur in bunches, bringing on ‘crises of sub-
sistence’ characterized by the sudden, extreme increase in prices that
are a distinctive feature of the Regulationists ‘ancient’ or ‘traditional’
mode of development. The key to the ensuing pattern of crisis was to
be found in the peasants’ response to high prices.
Since peasants were not required to increase productiveness to maxi-
mize returns, and were anyway not very capable of doing so, they did
not much raise output in response to high prices (as capitalist farmers
would have done). Producing only limited output for the market, and
purchasing only limited inputs from it, the peasants were, correlat-
ively, unable to gain much in income and purchasing power in conse-
quence of the high prices (as again market-dependent capitalist farm-
ers would have been able to do). High grain prices therefore reduced
the discretionary purchasing power of workers while failing to
increase the discretionary purchasing power of peasants; total indus-
trial demand and industrial wages fell, unemployment rose, yet agri-
cultural prices remained high over a period of several years (the Regu-
lationists’ ‘stagflation’).111 It should thus be evident how misleading it
is to refer to an ancient or traditional ‘mode of regulation’ as concept-
ually equivalent to the ‘competitive’ and ‘monopoly’ modes;112 or to
imply that the aforementioned pattern of development is explained in
terms of a historically specific network of capitalist institutions (that
could constitute a mode of regulation). The ancient or traditional
pattern of development is incomprehensible as a function of capitalist
institutional forms of any sort, but must, on the contrary, be under-
stood as the effect of a system of social-property relations quite dis-
tinct from those of capitalism.
It may seem pedantic to tax the Regulationists for this misleading
111 On subsistence crises and Labrousse’s analysis, see J. Meuvret, Le problème des subsis-

tances à la époche Louis XIV, 2 vols, Paris 1977 (esp. ‘Introduction generale’); J. Meuvret,
‘Les crises des subsistances et la démographie de la France d’ancien regime’, Population
(1946); W.G. Hoskins, ‘Harvest Fluctuations and English Economic History, 1480–
1619’, Agricultural History Review, XII, pt. 1, 1964; D. Landes, ‘The Statistical Study of
French Crises’, Journal of Economic History, vol. x, no. 2, 1950.
112 For Boyer’s conceptually confused formulation, see ‘Wage/Labour Relations,

Growth and Crisis’, p. 9.

107
conceptualization of historically rather distant patterns of develop-
ment. Their project is, after all, to demonstrate the significance of
varying networks of institutional forms for variations in the pattern of
capital accumulation within capitalism.113 The point we wish to stress,
however, is that their failure adequately to distinguish between the
economic effects of a broad framework of pre-capitalist social-property
relations and those of properly capitalist institutions undermines the
Regulationists’ entire theoretical edifice, for it leads them to propose
an untenable theorization of the history of capitalism per se from the
mid-nineteenth century to the late 1960s.
On the one hand, as we have tried to demonstrate, in so far as the
Regulationists identify historical cases of the regime of intensive
accumulation, and supply a convincing theoretical account—and they
barely begin to do so—their explanation must rely on the effects not of
properly capitalist institutions, as is called for by their theory, but on
the broader framework of pre-capitalist social-property relations that
shaped manufacturing development. What, specifically, appears
responsible for the pattern of accumulation identified by the Regula-
tionists as characterized predominantly by absolute surplus value and
restricted mass consumption is a socioeconomic environment com-
posed of only partially proletarianized peasant agricultural producers,
available for industrial employment on the basis of cheap wages. This
offered only restricted potential for the growth of collective labour,
thus of consistent productivity advance and accumulation on the
basis of relative surplus-value, and very limited possibilities for
growth of the home market.114
On the other hand, in so far as the Regulationists refer to the effects of
a specific set of specifically capitalist institutions to explain how the
competitive mode of regulation could so fetter the growth of the pro-
ductive forces as to structure a pattern of predominantly extensive
accumulation—and why a breakthrough to monopolistic regulation
was necessary to make possible stable intensive accumulation—their
arguments are vitiated precisely by their systematic neglect of the
overriding effects of the broader structure of capitalist social-property
relations, especially the built-in competitive constraint. The economic
tendencies or pressures they attribute to the presence of given institu-
tions are thus either overridden by counter-tendencies inherent in
capitalist social-property relations per se or, in consequence of those
relations, have insufficiently broad and long-lasting effects to deter-
mine a whole distinctive regime of capital accumulation.
The Regulationists make the justifiable point that the risk associated
113 Although it must be added that their positing of a ‘scarcity’ mode of regulation (to
comprehend Eastern Europe and the USSR) that possesses the same conceptual status as
the competitive and the monopoly—as well as the traditional/ancient—modes of
regulation hardly inspires confidence. See Boyer, ‘Wage/Labour Relations, Growth
and Crisis’, p. 9. It should be evident that what has obtained in Eastern Europe and
the USSR is not an institutionally specific variant of capitalism (capitalism here defined
in terms of commodity production and wage labour, with labour-power as a commod-
ity), but quite another type of system of social-property relations, which itself displays
institutional variations according to time and place.
114
See above, pp. 61–4.

108
with a highly competitive environment tends to discourage innovations
that depend on increasingly large-scale placements of fixed capital. But
they seem to ignore the equally obvious point that a highly competitive
environment will make those same investments unavoidable for firms
wishing to survive and, in the medium run, will stimulate institutional
innovations that enhance the capacity of firms to cope with risk.115
Similarly, the Regulationists not unreasonably propose that, so long as it
is maintained, the craft-controlled labour process can limit mechaniz-
ation and productivity growth. The problem is that the productive
relations of the labour process to which they here refer are constituted
within the firm, subject to competition from other cost-cutting firms. It
is theoretically conceivable that trade unions, organizing (part of ) the
working class beyond the individual units, could have secured the
reproduction of craft control within the individual units precisely by
exercising their collective power through-out the whole of an industry
and so countering the competitive pressure on firms to pursue tech-
nological rents (temporary superprofits) via innovation and to copy
innovating competitors. In practice, however, unions would have faced
insurmountable difficulties in exerting such wide-reaching and dur-
able power as to dictate predominantly extensive accumulation for a
whole economy over a whole epoch.116 Finally, and analogously, the
Regulationists emphasize that a highly competitive labour market will
tend to limit aggregate consumption by restricting wage gains, and that
restricted growth of aggregate consumption will tend to discourage
productivity-enhancing capital investments in Department II. But they
seem to neglect the equally obvious counter-tendencies for competition
among accumulating, cost-cutting firms on the product and labour
markets to stimulate the growth of mass consumption, not only by
bringing about the increased employment of wage workers and grow-
ing wages, but also by stimulating cost-cutting technical changes that
themselves widen the market by making for reduced prices.117
France and the United States
That the Regulationists’ preoccupation with middle-range theory and
the primacy of institutions actually does lead them to neglect the
historically specific framework of social-property relations in which
manufacturing develops and to misapprehend the effects of the capi-
talist institutions constituting their modes of regulation is evident in
their practical application of their own concepts—specifically, in
their rather astonishing notion that the economic histories of both
France and the United States since roughly the second third of the
nineteenth century can be grasped by the same schema of phases.118
The economic trajectories of these two nations differed so dramatic-
ally during the specified period as to demand, on even the most super-
ficial viewing, far more a theorization of their systematic divergence
than a conceptualization of an imagined commonality. Shaped by
radically different frameworks of social-property relations, not to
mention divergent responses to the same international competitive
115 See above, pp. 55–7.
116 See above, pp. 57–61.
117 See above, pp. 64–6.
118 See Lipietz, ‘Behind the Crisis’, pp. 16–18ff.

109
environment, they can be interpreted as manifesting the same dynam-
ics only in consequence of prior theoretical commitments.
In France, something resembling what the Regulationists refer to as a
regime of extensive accumulation does seem to have prevailed through
most of the nineteenth century. But there is little reason to believe that
this had anything to do with the predominance of the capitalist insti-
tutions of the competitive mode of regulation. To an important
degree, the framework for the development of French manufacturing
was a system of social-property relations in much of agriculture that
was still characterized by the preponderance of small peasant owner-
producers significantly oriented to subsistence and semi-proletarianized
peasants. This tended to limit the growth of agricultural productivity, to
restrict the increase of the home market, and to bias manufacturing
investment toward domestic industry based on semi-proletarianized
peasants. Correlatively, for much of industry until fairly late in the
nineteenth century, the manufacturing sector was only to a small
degree penetrated by mechanized factories and heavily controlled by
petty producers and small artisanal shops. The development of the
French economy was, finally, further crucially cramped throughout
the period by its inability to compete with the British hegemon on the
world market.119
In the United States, in contrast, a spectacular process of intensive
accumulation involved the rapid growth of fixed capital, labour pro-
ductivity and a mass market for Department II consumption goods, at
least from the time of the Civil War. This took place despite the pre-
dominance of what the Regulationists term the institutions of compet-
itive regulation—in the absence, that is, of the institutions establishing
the (Fordist) norm of working-class consumption, supposedly indis-
pensable for viable intensive accumulation, and in the presence of a
high level of inter-capitalist competition. The socioeconomic frame-
work for manufacturing development was a fully capitalist system of
social-property relations, above all in agriculture, which experienced
especially dynamic growth and played an especially critical role. By the
end of the century, it was the manufacturing sector located in Great
Britain, much more than that in the United States, that had to be con-
cerned about the distribution of international competitiveness.120
Paths of capital accumulation, it may be concluded, are simply incom-
prehensible apart from a specification of the broader system of social-
property relations in which they are embedded. This is not only
because those systems will define the range of economic strategies that
individual economic actors can find it sensible to adopt; it is also
because those systems constitute a field of natural selection for the
adoption of institutions and heavily determine the effect of given
institutions, once adopted, on capital accumulation. What this turns
out to mean, in practice, is that paths of industrial development can
119
On the fundamental characteristics of French economic development during the
nineteenth century, see F. Crouzet, ‘French Economic Growth in the Nineteenth
Century Reconsidered’, History, LIX, 1974; E. Berenson, Populist Religion and Left Wing
Politics in France, Princeton 1984, ch. 1.
120
See above, pp. 66–74.

110
be expected to vary fundamentally according to whether they are
framed by fully capitalist or non-capitalist agrarian social-property
relations (and, if the latter, according to what type), even in the presence
of roughly similar capitalist institutions. The contrasting evolutions,
between 1850 and 1920, of manufacturing in Russia and Japan or the
US South and the US North—or France and the United States—
provide striking illustration of this point.
Phases of National Capitalist Development? The World Economy
If one takes seriously the manner and degree to which, not only the
broader framework of social-property relations, but also the nature of
the world economy, shapes local processes of capital accumulation,
the project of conceptualizing the history of capitalism as a progres-
sion of institutionally determined, nationally situated modes of devel-
opment appears even more problematic. This is because the given
international distribution of productive power will have a central role
in determining what institutions are even viable within national
economies at a given historical juncture, as well as what will be their
effect on capital accumulation, since, unless they are shielded in some
way, these institutions must directly respond to international com-
petition. Focusing as they do on the regulation of national economies
as a whole, Regulation theorists have not devoted a great deal of atten-
tion to institutional innovations that take place in a partial way, at the
level of individual units of capital—the corporate form, vertical inte-
gration, horizontal integration, forms of merger of bank and manu-
facturing capital, and the like. But it does not seem controversial to
say that such institutions have, in an important sense, succeeded in
establishing themselves because, and worked their positive economic
effects on the development of the productive forces to the degree that,
they have made for increased competitiveness of the associated pro-
ductive units—in competitive war with other productive units shaped
by other institutional forms elsewhere. In practice, institutions
emerge and reproduce themselves within local—regional or national
—settings as a function, in important respects, of the institutions
already extant on a world scale: they are constructed so as to emulate
or surpass institutions in place elsewhere in promoting competitive-
ness in production. The same local institutional forms will constitute
either stimuli or fetters for the development of the productive forces
depending on the state of the distribution of productive power in the
world economy as a whole—by which is simply meant the distribu-
tion among nations or regions of technological capacity embedded in
fixed capital and the skilled labour and institutional ability to use it.
The reason for this is that the capacity of institutions to further the
development of the productive forces is strictly relative to their com-
petitiveness, which obviously depends not only on their own absolute
effectiveness but on institutionally based productive power elsewhere
—witness the small, specialized firms and craft-controlled labour pro-
cess emerging in Britain in the first half of the nineteenth century; the
modern vertically integrated corporation directly managing the
labour process in relationship to industrial unions that developed in
the late-nineteenth and twentieth centuries in the United States; and
the state-aided keiretsu and single-firm unions of postwar Japan.
111
The upshot should be clear: the economic viability and effects of net-
works of local institutional forms (modes of regulation) will heavily
depend on the stage of development of the world economy in its mul-
tiple relationships to the non-capitalist world. No doubt, defined within
that context, institutions have proved, and will continue to prove,
extremely important in affecting regional or national paths of growth
of the productive forces, especially through their impact on manufac-
turing competitiveness: variations in institutional forms across
nations and regions will, in other words, have a major part in deter-
mining the hierarchies of productivity and competitiveness among
regions and nations. Yet, the implications of that conclusion are not
entirely favourable to the Regulationists’ project.
The point is that, while, from this vantage point, it is reasonable to
expect that variations in the institutional framework, properly
defined, will lead to measurable variations in rates of growth of the
productive forces and relative competitiveness, it is also reasonable to
expect that, within any given historical epoch in the history of capital-
ism, local, regional and national economies will differ very greatly
from one another with respect to their institutional frameworks pre-
cisely because, as the Regulationists emphasize, these frameworks are
the outcome of quite specific processes of historical evolution. But
how, in that case, can what the Regulationists term modes of develop-
ment—that is, epochal patterns of capital accumulation and struc-
tural crisis—be understood primarily in institutional terms? For,
what is striking about the evolution of the world economy, at least
since 1900, is that its constituent local, regional and national elements
have, for the most part, simultaneously gone through the same grand
economic phases. Despite the great differences in historically given
systems of social-property relations, forms of government, economic
institutions, and levels of technological development, essentially every
part of the capitalist world took part, though not to the very same
degree, in the unprecedented economic expansion of the epoch before
World War I, was struck by the devastating interwar depression, par-
took of the great post-World War II boom, and has been weighed
down by the structural crisis that began in the late 1960s. Despite the
heterogeneous modes of regulation of its constituent parts, the world
economy as a whole has possessed a certain homogeneity, indeed
unity, in terms of its succession of phases of development. The world
economy has, it seems, been able to impose its quite general logic, if
not to precisely the same extent, on all of its component elements,
despite their very particular modes of regulation. If we are to under-
stand the complex operation of its parts, it is thus perhaps still indis-
pensable to understand the functioning of the system as a whole, and
this goes above all for the modes of development issuing in structural
crisis that are at the core of the Regulationists’ concern.
The Wage-Labour Relation and Structural Crises
What gives the Regulationists’ conceptualization of capitalist history
its apparent comprehensiveness and powerful internal logic is their
focus on the wage-labour relationship, specifically the capitalist
labour process and the system of wage determination (or, more
112
broadly, income distribution).121 In this regard, the notion of Taylor-
ism–Fordism functions as the conceptual linchpin of the Regulation-
ists’ entire succession of phases: for in each mode of development, the
institutional forms of the labour process—pre-Taylorist, then Taylorist–
Fordist—and/or the wage relation—pre-Fordist, then Fordist—first
facilitate then fetter the accumulation process, leading to structural
crisis and class conflict. It was thus the establishment of the Taylorist–
Fordist labour process during the first two decades of the twentieth
century—itself an outcome of class conflict that reversed a balance of
forces previously favourable to labour—which made possible a break-
through beyond the regime of extensive accumulation of the Regula-
tionists’ first mode of development to intensive accumulation. But the
persistence of the institutions of competitive wage determination
under the Regulationists’ second mode of development, expressing
the too great power of capital over labour, fettered intensive accumu-
lation rooted in the Taylorist–Fordist labour process and led to the
structural crisis of underconsumption and the political conflicts of the
interwar period. It was then the establishment of the Fordist mode of
consumption, manifesting a class compromise that emerged from the
sociopolitical conflicts of the thirties and forties, that allowed for the
full flowering of the Taylorist–Fordist labour process and intensive
accumulation during the postwar boom, the Regulationists’ third
mode of development. However, the Taylorist–Fordist labour pro-
cess, expressing the strength of labour vis-à-vis capital,122 ultimately
came to fetter the growth of the productive forces and issued in a new
structural crisis of productivity growth from the late sixties onwards.
It will, finally, be a newly constructed labour process, beyond
Taylorism–Fordism, built upon a new class compromise, that will
make possible an exit from the current economic impasse, presum-
ably a new, post-Fordist fourth mode of development.
It has been the burden of our essay that each of the foregoing propo-
sitions—deriving from the Regulationists’ one-sided concentration
upon the historically specific institutions of wage-labour and asso-
ciated balances of class power, to the neglect of the constraints
imposed by capitalist social-property relations in general, especially
inter-capitalist competition—flies in the face of the fundamental reali-
ties of capitalist development. As a result, the whole notion of Ford-
ism, in both its supply-side and its demand-side aspects, is theoretic-
ally incoherent and empirically irrelevant, and provides misleading
perspectives on the nature of capitalist crises, past and present, on the
historical role of class power and politics in precipitating and resolv-
ing capitalist crises, and on contemporary policy options. To begin
with: if the Regulationists are correct, the supply-side breakthrough to
Taylorism–Fordism on the shopfloor (itself perhaps dependent on an
accompanying move to intra-capitalist organization on the basis of
oligopoly) was the sine qua non for the breakthrough beyond the Regu-
lationists’ first mode of development to accumulation predominantly
on the basis of relative surplus-value, that is, intensive accumulation.
But, if this were so, we would have to accept the paradoxical conclusion
121
See above, p. 48.
122
Lipietz, ‘Behind the Crisis’, p. 13.

113
that fully developed capitalism—before the Taylorist–Fordist revolu-
tion at the level of the labour process (and the transcendence of fully
fledged inter-capitalist competition)—was incapable of developing,
did not in fact historically develop, by way of capital accumulation
based on relative surplus-value. We would also have to believe that,
for a whole long epoch, the sheer class power of labour was sufficient
to insure such a degree of craft control over the labour process as to
fetter technical change. In reality, however, the capitalist labour pro-
cess cannot function as an economy-wide institutional constraint dic-
tating a whole regime of accumulation and mode of development; on
the contrary, the labour process is itself regularly (though not con-
tinuously) transformed in consequence of capital accumulation, as
technical change takes place under the impact of inter-capitalist com-
petition, making for the revolutionizing of the productive forces and
the growth of relative surplus-value.
In the Regulationists’ second mode of development, competitive wage
regulation is supposed to have fettered intensive accumulation by mak-
ing for insufficient demand and the uneven development of Depart-
ment I, thereby precipitating structural crisis. Were this so, we would
have to reach the conclusion that capitalism, inherently and through
most of its history, confronts a structural crisis of underconsump-
tion. But we have tried to show that the Regulationists’ underlying
underconsumptionist theory is flawed, as is clear from the long history
of capitalist development on the basis of relative surplus-value in the
absence of Fordist institutions of mass consumption, notably in the
United States, as well as from statistical material on the interwar crisis.
As to the Regulationists’ third mode of development: the establish-
ment of Fordist institutions of mass consumption, especially collective
bargaining, was supposed to have made for the great post-World War
II boom. But if the source of the crisis of the 1930s was not undercon-
sumption, why should Fordist consumption have constituted its cure?
Empirically, it is by no means clear that institutions were ever estab-
lished in the United States that ensured, via collective bargaining, an
economy-wide ‘sharing out’ of productivity gains to labour, and it is
certain that in Japan, the nation which experienced the most success-
ful postwar growth, there were neither such institutions, nor such
redistribution.123 In fact the Regulationists, in all their writings, offer
no other systemic contradiction, or source of capitalist crisis, except
‘the uneven development of Department I’ and underconsumption.
The Fordist/Keynesian class-compromise might even be thought to
have solved capitalism’s problems . . . were it not for the remaining
difficulty in developing the productive forces that showed up with the
current crisis.124
Turning now to the Regulationists’ analysis of the roots of the current
economic crisis, these are supposed to be found in the ‘exhaustion of
123
See above, pp. 92–6. This is not, of course, to deny that us and Japanese workers
benefited from productivity gains, simply that Fordist institutions ensured that wage
growth kept up with productivity increase.
124
The Regulationists do find a further source of crisis in the international, that is,
multistate, organization (or lack thereof) of the world economy.

114
the Taylorist–Fordist labour process’. But this proposition suffers
from the same fundamental defect that we saw in the Regulationist
account of earlier structural crises: namely, that the form of labour pro-
cess—functioning in analogy with the social-relations-of-production
concept in the Marxian theory of modes of production—acts (along
with institutions distributing income) as the chief facilitator and, ulti-
mately, the primary fetter on the growth of the productive forces.
Thus, from a theoretical standpoint, we have asserted that the Regula-
tionists’ conception tends: (i) misleadingly to reduce technical
advance to the appropriation by capital of workers’ shopfloor know-
ledge, control and energy; (ii) to mislocate the primary source, indeed
meaning, of technical change in the struggle for class power, especially
at the point of production; and (iii) implicitly to misattribute to
capitalist-imposed technical change a unilateral or universal tendency
to deskilling, playing down the requirement of new skills that often
come with technical change. As a result, it vastly understates the cen-
tral role played by the growth of technical and scientific understanding
beyond the labour process, neglects the generalized, if not continuous,
tendency to the introduction of more efficient (increased output per
given input) techniques under the pressure of competition, and fails
adequately to acknowledge the countertendency to reskilling resulting
from technical change that is the consequence of capitalists’ desire to
adopt the most profitable technique, virtually irrespective of skill con-
tent.125 In particular, although we would not deny that workers’
separation from control over and knowledge of production, with their
consequent alienation and resistance, is a factor that affects the
growth of the productive forces, we would certainly dispute the Regu-
lationist contention that this separation constituted a barrier to tech-
nical advance sufficient to precipitate a decline in productivity
growth capable of bringing on the current crisis of capitalism. Indeed,
at least in the case of the United States, which experienced the eco-
nomic downturn earliest and perhaps most profoundly among the
OECD nations, there was no crisis of manufacturing productivity at
the time of the initial decline in the rate of profit.
Politics
Since the Regulationists find the ultimate source of the current crisis
in ‘the crisis of “informal involvement” ’ of workers in production—
the failure to secure their conscious, ‘formal’ commitment—it follows
that Lipietz should propose an ‘anti-Taylorian revolution’ as the way
out. This would bring into being a new class compromise that would
secure, simultaneously, the socio-technical requirements for transcend-
ing the productivity crisis and the economic and political requirements
for society-wide consent and stability. Workers would offer increased
involvement in, and commitment to, improving production on the basis
of the introduction of work teams; capitalists would provide guarantees
of employment, enriched jobs, and the further share-out of the gains
from increased productivity growth. Such an agreement would, the
Regulationists believe, constitute a positive-sum solution, in which
both labour and capital would benefit from a faster growing pie.
125
See above, pp. 98–102.

115
This proposal instantiates the Regulationists’ more general idea that
the resolution of secular capitalist crises requires a ‘great compromise’
among the different social classes, by which a ‘pattern of develop-
ment’ is broadly accepted as the ‘economic basis for what could be
considered the best thing humankind may expect from economic
activity [at that historical juncture] and defended from the right and
the left.’ It is analogous to the Regulationists’ understanding of the
foundations for the postwar boom as constituted by a Rooseveltian or
social-democratic compromise, in which capitalists acceded to the dis-
tribution to workers of wage gains in line with productivity increase,
as well as the consolidation of the welfare state, and secured, as a
result, the stable demand required to ward off crisis and to create a
favourable environment for massive capital investment.126 Neverthe-
less, in light especially of our argument that the crisis of the 1930s was
not a crisis of underconsumption, it would seem to us to make better
sense to say the converse: namely, that the onset and perpetuation of
the boom provided the indispensable condition for the Rooseveltian
or social-democratic compromise, which could not be forged or stabil-
ized until after the crisis had been transcended. By the same token,
because the Regulationists’ diagnosis of the current crisis is faulty,
Lipietz’s prescription will not work, and the proposed political
bargain is therefore unviable.
The fundamental point, as we have tried to show, is that the source of
the current crisis is not a problem of productivity growth: a decline in
productivity increase did not bring on the crisis, so an improved rate
of productivity increase cannot restore aggregate profitability and
prosperity. Even if workers’ involvement were increased throughout
the capitalist economy leading to increased productivity growth, capi-
talists, facing continuing pressure on their profits, could not, even if
they wished to, viably promise workers, in exchange for involvement,
secure employment and enriched jobs, or even a share of the returns
from productivity growth. This is not to deny, of course, that firms
that become relatively more productive than the average in their line
(however they do so) will be relatively better able to insure their
workers’ jobs. So will firms or units at the ‘core’ of an industry, where
work has been increasingly contracted out, or in other ways peripher-
alized, to firms with increasingly insecure (and otherwise worse-off)
workers. But in such cases, one group of workers is simply benefiting
at the expense of another, within the context—so long as the crisis of
profitability continues—of generalized, on average, deterioration.127
126 ‘New Technologies, New Modes of Regulation: Some Spatial Implications’, Society

and Space, VI, 1988, p. 271; Lipietz, ‘An Alternative Design for the Twenty-First Cen-
tury’, pp. 18–21 (quotation from p. 19). Cf. Lipietz, ‘Fallacies and Open Issues About
Post-Fordism’, p. 15. The idea of class compromise as basis for economic prosperity
appears to correspond to the Regulationist notion that the great crises have been
explicable, from one standpoint, as a consequence of an imbalance of class power,
with capital ‘too strong’ in the 1920s and labour ‘too strong’ in the 1960s.
127
It should also be pointed out that a number of manufacturing firms, notably within
the automobile industry, have been able to grant formal limits on lay-offs by means of
securing a high rate of attrition through other mechanisms, such as retirement,
workers leaving the job because the work has become too difficult, dismissals for
cause, and the like.
In passing, it should be noted that Lipietz believes that there is a further, derivative

116
Perhaps equally to the point, it is far from clear that capital today
requires a class compromise of the sort mooted by the Regulation
School to continue to secure sufficient, or even significantly to
increase, productivity growth. The Regulationists believe that secur-
ing consciously organized workers’ commitment (as opposed to the
‘informed involvement’ of the past) is the key to transcending the
productivity impasse. But they also contend that ‘an involved work-
ing class is a working class whose know-how is accumulated for the
benefit both of firms and of workers’, and that this is impossible if
there is no ‘community of destiny between firms and their workers,’
for ‘[n]o worker would exercise his or her cooperative spirit in search
of gains in productivity entailing his or her own redundancy.’128 In
this context, the Regulationists describe the United States as having
adopted a ‘flexible liberal’, as opposed to a ‘negotiated involvement’
response to the productivity crisis, seeking radically to cut labour
costs by eliminating job security, ‘by out-sourcing, by transferring pro-
duction to the Third World and increasing the level of automation’,
rather than pursuing ‘a new “social contract” ’, in which wage-earners
were called upon to join ‘the battle for quality and productivity’.129
The fact remains, however, that, despite their apparent disdain for
creating a ‘community of destiny’ between themselves and their
employees, US manufacturing firms have during the period of secular
crisis been able to increase productivity at a higher rate than at any
other time during the postwar period. Over the period 1979–89, US
firms in the manufacturing sector were able to raise labour product-
ivity an average of 3.6 per cent per annum (compared to 2.9 per cent
per annum between 1948 and 1973) and total factor productivity an
average of 2.9 per cent per annum (compared to 2.1 per cent per
annum between 1948 and 1973). This has not prevented their taking
advantage of relatively high levels of unemployment and a declining
number of decent-paying jobs, so as to secure the reduction of hourly
real wages by about 15 per cent between 1973 and the present.130 The
point is that the dichotomy between ‘flexible liberal’ and team/
cooperative as distinct and competing socio-technical forms is, to a
great degree, a false one. The sort of cooperation and teamwork
needed successfully to implement new technologies today can, at least
to an important extent, be secured through the incentives provided by
workers’ belief that they must make their firms competitive in order
to keep them in business (or they will lose their jobs), as well as the
sanctions of a loose and deteriorating labour market.
The Regulationists may overestimate the degree to which capital must
127 (cont.)

but nonetheless central, source of the crisis, namely, inadequate demand, resulting
from the cuts in wages and social spending implemented in response to the initial
decline in profitability resulting from the productivity crisis. Lipietz, ‘New Technolo-
gies, New Modes of Regulation’, p. 267; ‘The Debt Problem, European Integration
and the New Phase of World Crisis’, NLR November–December 1989, p. 38; ‘An
Alternative Design for the Twenty-First Century’, p. 9.
128
Lipietz, ‘New Technologies, New Modes of Regulation’, p. 271; Lipietz, ‘An
Alternative Design for the Twenty-First Century’, p. 19.
129
Lipietz, ‘The Debt Problem’, p. 40.
130
Figures on productivity are from US Department of Labor, Bureau of Labor Statis-
tics, News, 26 March 1991.

117
enter into genuinely cooperative arrangements with labour in part
because they perhaps overrate the degree to which the new, team-
centered, Japanese-style production techniques actually raise skills
and thereby bring about increased dependence of employers on work-
ers in the productive process. Whatever else it offers, team or ‘lean’
production does little or nothing to increase the level of workers’ skill,
let alone make them into craftspeople. Indeed, far from the anti-
Taylorian revolution that Lipietz envisions, the foundation for the
productivity gains secured on the shop floor through team or lean
production is hyperTaylorization—the super-deskilling of jobs by
means of their breakdown into their simplest possible components
(fittingly called ‘details’ by the Japanese). This is achieved through
what has been illuminatingly termed ‘management by stress’, in which
the goal is to remove, to the greatest extent possible, not only all
‘indirect’ and ‘specialist’ labour coming from off the line (mainten-
ance, repair, housekeeping, quality checking, and the like), as well as
all excess materials at work stations, but also to make sure all workers
are labouring throughout the entire time the work is at their station.
Initially, teams of managers and group leaders actually work on each
job and provide, from above, a highly detailed specification of its con-
tent, the details composing it. The workers themselves then carry
through their tasks under conditions in which, to the greatest extent
possible, all ‘safety nets’ in the form of surplus materials and adjunct
workers have been removed. Workers and their teams are not allowed
to let defects pass, to be dealt with at the end of the line, but are
required to take responsibility for quality control by fixing each one
at the time it is discovered and, in particular, by tracing the problem
back to its source. In this situation, workers, as well as managers, are
able to discover which tasks need more (or less) time and which jobs
need to be redesigned, so that the labour force can be allocated in the
most efficient possible manner.131
It is because workers themselves in this way make an independent
contribution to the rationalization of work that they can rightly be
said to be using their talents for increasing productivity. It is because
jobs have been so highly simplified that workers can be asked to
master all, or almost all, of the jobs done by the members of the team.
This does make for greater flexibility and higher quality, as well as for
the ‘filling of the pores’ of the working day, bringing about increased
output both by raising efficiency and intensifying effort per unit time.
But, the so-called polyvalence that is achieved does not bring much
increase of workers’ skill, except in a highly attenuated sense of the
131
For an excellent account of the Japanese-style labour process and team production,
on which we have heavily relied, see the very important study by Mike Parker and Jane
Slaughter, Choosing Sides. Unions and the Team Concept (A Labor Notes Book), Boston
1988, esp. ch. 3. See also J.P. Womack, D.T. Jones, and D. Roos, The Machine that
Changed the World, New York 1990, esp. chs 3 and 4. These two studies, despite their
very different attitudes toward team or lean production, offer very similar, mutually
corroborating accounts of just what is involved in it. It should be made clear that we
are not denying that certain institutions—lifetime employment, single firm unions—
can provide a more favourable environment for investment in skills and that such
investment has had important effects on productivity growth in, say, Japan. We are
simply saying that Japanese-style team or lean production can achieve important out-
put gains, without itself bringing or requiring much reskilling.

118
term. Nor do workers secure increased control: as time goes on, their
jobs are ever more fully defined from above to the smallest detail by
engineers and managers, and they retain the initiative primarily in
helping the company further identify slack and waste in the system. At
the same time, precisely because team or lean production does make
for the hyper-simplification of tasks, it is no way instantiates an
ostensible choice of technique embodying higher skill (human capital)
but lower fixed capital, as Lipietz suggests. On the contrary, as has
been very well evidenced, the implementation of ‘team’ or ‘lean’ pro-
duction, like analogous processes of breakup and simplification of
tasks historically, provides highly favourable conditions for the intro-
duction of the highest levels of automation and new technology. It
should not be surprising that, given the recent economy-wide stagna-
tion, to the extent that this has issued in increased productivity, the
outcome has been a massive reduction in jobs and thus even greater
insecurity for US automobile workers.132

In this situation of ongoing economic crisis, for workers further to

involve themselves in ‘the team concept’ is merely to tie their fortunes
ever more closely to ‘their own’ firms, to set themselves ever more directly
against their fellow workers across the industry, and to undermine what
is left of their collective union power. If the crisis deepens, no amount
of goodwill on the part of their employers will save their jobs. And to
the extent they have ‘involved’ themselves with their own companies, to
that extent they will destroy their own ability to defend their condition.

132
For the Regulationists’ idea that the choice today is between (less effective) capital
intensive and (more effective) labour intensive production, see Lipietz, ‘New Technol-
ogies, New Modes of Regulation’, pp. 268–9. On team or lean production and auto-
mation and robotization, see Womack et al., The Machine that Changed the World, pp.
94, 102. These authors explicitly (and unfavourably) contrast the revival of what they
call ‘neocraftsmanship’ in Swedish Volvo plants with Japanese team or lean produc-
tion. (pp. 101–2).

119