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 economics 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
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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 economic 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
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 acknowledge 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.
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1

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 Marxist 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 socialproperty 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 structural 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 Regulationists’ 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 theoreticalhistorical 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 horizon for decisions about capital formation; (iii) the distribution of income among wages, profits and taxes; (iv) the volume and composition 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 structures 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 Exhaustion 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.

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relatively integrated network of institutions that reproduces the fundamental 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 conditions 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 network 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 international 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 institutional 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 network 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 regulation’ 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 development ultimately issues in a series of ever more crippling contradictions, 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 historically 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 developed regime of accumulation, makes possible a new mode of development—is the result. The Regulation School developed the foregoing battery of concepts in
5 6

Boyer, ‘Technical Change’, pp. 71–5; Lipietz, ‘Behind the Crisis’, p. 15 (quotation). R. 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.

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close connection with its ongoing investigation of the various historical phases of capitalist development. Essentially, it has come to specify 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 predominantly on the basis of artisanal productive techniques via the application of methods of lengthening the working day and intensifying labour, as well as expanding the size of the labour force. Productivity growth is therefore limited, as is the potential for mass consumption. Under the intensive regime, growth takes place predominantly 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 determination of prices and especially of wages; in the latter, there is scientific management, an oligopolistic system of pricing, and, most characteristically, the determination of wages through a complex system of capital–labour and governmental institutions—the social regulation of the mode of consumption. On the basis of this typology, the Regulationists have come to identify three successive modes of development in the economic history of Western capitalism over the last century and a half, each representing 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 accumulation. 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 accumulation. 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 flowering 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 constituted the foundations for a new mode of development called ‘Fordist’. 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
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upshot was the structural crisis of the Fordist mode of development— conceived above all as a crisis of productivity—that we are experiencing 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 Regulationists’ 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 capital. As a result, new capital investment tended to embody extant productive 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 accumulation . . . absolute surplus-value predominates’ and ‘the length of the working 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 standpoint, 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 competitive regulation that were responsible for restricted capital investment 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.
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innovations in production. Capital–capital or inter-firm relations were characterized by cutthroat competition among many uncoordinated 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 expenditures 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 relationship 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 villages. The workers’ ‘environment [was] characterized by close relationships 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 noncommodity 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 dissolved themselves exerted a downward pressure on wages. Direct producers were rendered dependent upon the purchase of commodities for their reproduction, and their separation en masse from direct nonmarket 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
Boyer, ‘Technical Change’, pp. 71–5. Aglietta, Theory of Capitalist Regulation, p. 80. Boyer comments that, ‘in the last century[,] 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.
11 10

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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 flowering 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 consequence, 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 conditions 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 department producing consumption goods unless and until there had emerged a mass market for its products; this required ‘the establishment of social controls to guarantee the formation of the workingclass norm of consumption’.15 Aglietta thus emphasizes time and again the ‘need for a comprehensive linkage between the two departments 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 punctuated growth of Department I. As Aglietta spells out the macroeconomics of the Regulationists’ first mode of development: ‘As long as capitalism transforms the labour process by the creation of collective means of production, but without reshaping the mode of consumption, accumulation still progresses only in fits and starts. The
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‘ . . . 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.
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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 development 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 relations was conditioned by relatively easy access to land, insured in the initial class and anti-colonial struggles of the new republic, and consolidated 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
Ibid., p. 79. Ibid., pp. 72–9; Lipietz, ‘Behind the Crisis’, pp. 16–17; Davis, ‘Fordism in Crisis’, pp. 217–22. 20 Boyer, ‘Technical Change’, p. 80.
19 18

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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 economic growth that result from the prevalence of capitalist socialproperty 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 institutionally insured levels of consumption? The point is not that it is conceptually 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 institutionally determined development—an entire epoch—in which capitalist social-property relations have been fully established, yet which operates predominantly by intensifying labour and lengthening the working 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 development historically emerged; and two, the structuring effects of the network 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: development on the basis of relative surplus-value; long-term capital accumulation 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 conclusions 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 justification, that certain tendencies arising from the environment constituted by the competitive mode of regulation—either its broader historically
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determined precapitalist socioeconomic setting or the historically specific structure of capitalist institutions—will have sufficient quantitative 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 decentralized, 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 significant 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 environment 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 development 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 development, largely by way of increased specialization and the reorganization of farms requiring significant but, in absolute terms, not very large capital investments. In manufacturing itself, moreover, the history 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 reorganization of production so as to make more efficient use of raw materials, tools and labour-power. (See, in the recent period, just-intime 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 investments in fixed capital.
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The really fundamental point, however, is that while the initial investment 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 disincentive 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 competitors). Simply put: the increased potential rate of return from investments 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 substantial 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. However, they see such institutional innovation as associated with, indeed dependent upon, a qualitative economy-wide institutional transformation that made for a qualitative break in capitalist evolution beyond the initial phase of merely extensive accumulation governed by competitive 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
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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 conglomerates—as requirements have increased for the mobilization of capital, the time horizon for investment, the control over the investment environment, and so forth. It is true that institutions have hardly evolved continuously or automatically, 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 specific weight. Yet, it is very difficult to understand how the Regulationists can move from propositions of this general sort to the assertion that control over the labour process exerted by craft workers constituted 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
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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 organization 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 knowhow 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 foundations 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 process 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 technical change is supposed to have occurred at the time of the Taylor– Ford revolution, enabling an epochal break to accumulation predominantly 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 obliterated 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 techniques 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
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
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21

the introduction of such techniques, in a given industry in a given locale, sometimes for a significant period; but they could not in principle—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 accompanying 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 control. In one famous formulation, ‘As long as machine production expands in a given branch of industry at the expense of the old handicrafts 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, chemical, 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.

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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 productive power, technical advances, in machinery rather than in human beings, all else being equal. This is because, given free labour, capitalists find it hard to insure that they will secure the gains from investments 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 preferred 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 transformations 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 Braverman’, 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 investment 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.

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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 revolution, 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 accumulation’ 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 depressing 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 consumption stagnated. They ascribe these effects to: (i) workers’ access to the means of subsistence through direct links to households and villages of the precapitalist countryside; (ii) the oversupply of labour resulting from wave upon wave of immigration from largely noncapitalist 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 nonmarket access to, the means of subsistence is, it must be said, especially 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 nineteenth century.24 We shall return to this point below. Moreover, even if this idea had greater purchase historically, its theoretical justification, 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 capital, 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 historical process which began at the start of the 20th century has seen the penetration of capitalist 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.
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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 nonmarket 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 wagelabour 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 normal 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 subjects 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 something like the economy that Aglietta and the Regulationists posit within the historical-institutional framework of competitive regulation. 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 capitalist 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.

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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 normally 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 relatively low industrial productivity of peasant households in comparison 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 development. 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 expulsion of agriculturalists from the land, or takes place within an environment 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.
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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 external to the institutions of capitalism itself (though not of course to the process of development) and historically contingent upon socioeconomic arrangements in the countryside at the time of industrialization? It remains, further, an open question, even where processes of socalled 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 production, 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 downward 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 demonstrating 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 workingclass consumption that are built into the normal processes of competition and capitalist accumulation over the medium term. Indeed, it has seemed a commonplace that relatively extended or long waves of capital accumulation—such as were encompassed by the Regulationists’ 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
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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 consequence of rising demand for labour. Moreover, more efficient capitalist 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 automobiles 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 justification 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 absolute, 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 competitive regulation and extensive accumulation depressed aggregate working-class demand, it would still be necessary to challenge the further notion—perhaps the conceptual linchpin of the Regulationists’ general schema of stages in which historically specific modes of consumption 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 assumption 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 production. More directly, however, it appears to derive from Aglietta’s conception 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 Department 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 calling 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.
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the limiting, and historically almost inconceivable, case of a capitalism 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, Department 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 commodity, 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. Chapman, 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.

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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 ultimately 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 productivity growth was thus restricted. According to Maddison, gross fixed non-residential investment as a proportion 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 manufacturing 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 1879–1889 1889–1899 1899–1909 1909–1914 1.05 2.66 1.53 1.22 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.
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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 1850–1859 1860–1869 1870–1879 1880–1889 1890–1899 1900–1909 10 23 2 22 27 15 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 foundations 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, productivity growth created a tendency toward—although it could not completely 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
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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 immigration 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
E.B. Hoover, ‘Retail Prices After 1850’, in Trends in the American Economy in the Nineteenth 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.
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33

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 development, conforming to what the Regulationists misleadingly call intensive 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 manufacturing productivity and wages already noted, but also in a more disaggregated 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 process 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 extensive 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 marketdependent 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 dependence, 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 Nineteenth Century, p. 373; see Table IV below, p. 83.

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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 attributable 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, meatpacking, 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
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 Education, 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 AgroIndustrial Revolution in the American Midwest’, which offers a powerful interpretation 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 subsistence, 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.
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38

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 introduction 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 timeconsuming 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. Techniques 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, manufacturers 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 commodities 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 consumption, 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, Englewood 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.
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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 production was to meet the demand of the agricultural sector, as well as the mechanized consumer-goods industries, for tools, it seems reasonable 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 consumption 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 distilling—had already experienced, or were fully in the process of experiencing, factory mechanization by the time of the Civil War or immediately after.44 As Carroll D. Wright pointed out in the introduction to the census of manufactures for 1880:45
Of the nearly three millions of people employed in the mechanical industries of this country at least four fifths are working under the factory system. 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 comparable 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
Hounshell, From the American System, pp. 153–88. 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 Business’, 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.
44 43

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of extending relative surplus-value. At the same time, lower prices resulting from productivity increases combined with workers’ bargaining 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 performance, 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 manufacturing economy secured a tremendous new source of dynamism through the application of science to technology. This ‘second industrial revolution’ 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 scientific 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 wages England Germany United States 1.00 0.59 1.08 Value added per production worker 1.00 0.66 1.57 Real social wage cost 1.00 0.90 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 economic development—rate of growth of GDP per capita, proportion of GNP devoted to fixed (non-residential) investment, rate of growth
47 48

Rosenberg, Technology and American Economic Growth, pp. 116–17ff. 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.

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of investment in fixed capital per man-hour, and the like—the dynamism 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 extensive accumulation governed by competitive regulation entirely misconceptualizes a historical process of development, and that the period in question actually seems to have been distinguished by a rather spectacular 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 regulation, their overarching interpretative schema of institutionally founded historical phases of capital accumulation is called fundamentally 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 undermined by the competitive mode of regulation; the establishment of intensive accumulation is predicated upon an at least partial transformation 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 monopolistic 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 contradiction between competitive regulation and intensive accumulation, of the fettering of the latter by the former? If there was no real contradiction 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.
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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 accumulation founded predominantly on the extraction of relative surplusvalue. 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. Nevertheless, the mode of regulation remained in the last analysis competitive because the fundamental capital–labour wage relation was still essentially unregulated and marked by untrammelled competition, with the consequence that there was no transformation in the mode of workingclass 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’ resistance, 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 acceleration of the mechanical processes of task completion (that is, an intensification of labour facilitated by time-and-motion studies); the filling up of gaps in the working day that resulted either from lack of coordination 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 transcended 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 rigorously 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 intermediate 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, ‘Technical Change’, pp. 82–3; Davis, ‘Crisis of “Fordism” ’, pp. 222–3.

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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 investment 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 competitive mode of regulation in terms of the capital–labour wage relationship, 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 accumulation 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 environment 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 experienced 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 devastating defeats that opened the way for cuts in their living and working standards during the 1920s. Finally, especially during the 1920s, technical 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 Department I rapidly increased, since the forces that were revolutionizing the labour process were also those reducing effective demand for
51 52

Aglietta, Theory of Capitalist Regulation, chapters 4 and 5. Ibid., p. 81. 53 Ibid., p. 155. Cf. Boyer, ‘Wage/Labour Relations, Growth, and Crisis’, pp. 5–6.
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commodities from Department II.’54 The general underlying structural contradiction of the mode of development based on intensive accumulation but governed by competitive regulation thus began suddenly 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 production is technically possible, but cannot be sustained since the prevailing “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 adequate 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 forever 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 determinative for the path of capital accumulation. The establishment of intensive 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 capitalism 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, however, 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.
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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 principle of mechanization [. . .] induces a rise in the organic composition 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 production 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 production 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 production 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 underconsumption 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 consumption. 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 inevitable difference between the rate of profit in Department 1 and that in Department II. The result is that Department II becomes unable to purchase 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 consumption. In these conditions, the constraint of full realization of exchangevalue 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.
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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 argument is that a capitalism developing on the basis of relative surplusvalue will experience crises of underconsumption in the absence of historically contingent counteracting tendencies—and, more specifically, in the absence of special institutional forms to maintain an adequate 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 formation 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 disproportionality between Department I and Department II, and (2) pressures against the growth of wages, leading to inadequate incomes to purchase the growing output from ever rising capital investment—are precisely the ones which advocates of the underconsumptionist position, 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 capitalgoods sector owing to increased investment opportunities, why should further investment not flow into capital goods until profit rates equalize? 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 bringing 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
‘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 exception (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.
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57

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 consumption 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 consumergoods output. The second is the assumption that increased investment, 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 consumer 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’ consumption norm, does not, in itself, constitute an adequate mechanism for determining the appearance of such problems.
6o 61

P. Sweezy, The Theory of Capitalist Development, New York 1941, pp. 186–9. 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.
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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 investment 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 historically 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 institutions 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 contrary—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:
M. Glick, unpublished manuscript (available from the authors on request). Hansen, the leader of the first generation of US Keynesians, naturally saw the underlying 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 Population’, 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.
63 62

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

Source: E.C. Budd, ‘Factor Shares, 1850–1910’, in Trends in the American Economy in the Nineteenth 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 capitalists were then installing the new technologies of Fordist mass production at an unprecedentedly rapid rate. This increased the proportion 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 disproportionality between the two departments and lack of sufficient workingclass 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.
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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 fluctuated 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.)
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 generously 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 consumption 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.
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Figure IV. Rate of profit in the United States, 1900–1929 (%)

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

CEPREMAP,

Paris,

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 construction 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 producers’ 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 68

Aglietta, Theory of Capitalist Regulation, p. 95. R. Epstein, Industrial Profits in the United States, New York 1934, pp. 18o–81.
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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 residential 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 triggered 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 following 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 regulation. 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 70

Epstein, Industrial Profits, pp. 181 (quotation), 184–5. Temin, Monetary Forces, p. 67. 71 M. Leven, H. Moulton and C. Warburton, America’s Capacity to Consume, Washington D.C. 1934, p. 2.
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competition but also, for the first time, made for significant regulation 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 capital (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 effective 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 ‘capitalist class [now] seeks overall management of the production of wagelabour 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 consumption.’75 Most pivotal in this respect was a particular form of collective bargaining in which labour ceded to management full sovereignty over the labour process in exchange for wage increases in line
72 73

Aglietta, Theory of Capitalist Regulation, p. 158, emphasis added. 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.
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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 semiautomatic labour process applied to long and standardized production 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 speaking, constituted a safety-net for the structurally or temporarily unemployed 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. Monopolistic control, by eliminating the likelihood of radical devalorization of capital consequent upon the invasion of markets by lower-cost producers, 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 signifies 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 monetary 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 Relations, Growth, and Crisis’, pp. 4–12.
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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 industry 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 investment 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-thanaverage rate of profit. First, the modern corporation itself, by increasing 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 instantiate 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 developing 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 average. 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 multitude 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 eventually 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
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.
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process of adjustment. As a result, firms may, for reasons other than sole possession of an advanced productive technique, secure monopoly 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 barriers 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 postWorld War II economy was predicated upon monopoly regulation is prima facie dubious for the simple reason that a very extended, historically 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 workingclass consumption required to establish intensive accumulation on a viable basis. There thus seems little warrant for interpreting the transcendence 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 Capitalist 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 approximation; 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, Harmondsworth 1981, p. 275.

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Monopoly

It is not possible within this compass to offer a detailed empirical discussion 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 higherthan-average rate of profit in an industry is the redirection of investment, 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 transcended 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 determined the characteristic trajectory of the US economy after World War II. The Regulationists see the New Deal as the turning point in the establishment of Fordist institutions. This may, in retrospect, have been the case. Yet it is crucial to note that, whatever their long-term significance, the developments of the 1930s had failed to establish the foundations 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 victory over General Motors in the winter of 1936–37 may perhaps have marked the breakthrough for the establishment of industrial unions in
J. Bain, ‘Relation of Profit Rate to Industrial Concentration in American Manufacturing, 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.
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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 organizing 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 utilization, 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 consumption, in demand, is incapable in itself of explaining such dramatic 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 institutionally assured mass consumption and the specific mode of development 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 postWorld 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’.

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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 maintaining 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 productivity. There was never anything resembling a generalized ‘social contract’ (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 significant 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 institutions, 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
Aglietta, Theory of Capitalist Regulation, pp. 193–5 (quotation from p. 194). 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.
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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 underconsumptionist 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 fifteen 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
M. Itoh, ‘The Japanese Model of Post-Fordism’, paper presented to Conference on Pathways to Industrialization and Regional Development in the 1990s, Lake Arrowhead/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.
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Figure VI. Consumption/GNP 1869–1985

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

CEPREMAP,

Paris,

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 comparing a series of fundamental variables: Table V. Average annual rates of growth in the United States (%)
1870–1913 GDP GDP/head GDP/man-hr Non-res. fixed cap. stock Non-res. fixed cap. stock/man-hr. Ratio of Gross Fixed Non-Residential Investment to GDP 4.1 2.0 2.0 4.7 2.6 1950–1973 3.7 2.2 2.6 4.0 2.9

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’
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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 institutional barriers supposedly built into the competitive mode of regulation—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 possible 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 development 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 differentiated, the sub-department producing actual means of production experiencing particularly fast growth sustained by the general transformation of production processes. [. . .] The result was deeply unbalanced accumulation 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 subdepartment producing means of production. 1966 saw the impending blockage of this mode of accumulation.
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.
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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 allaround 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 relations?’ 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 development manifested itself in a crisis of productivity, built into the sociotechnical 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 92

Aglietta, Theory of Capitalist Regulation, pp. 99–100, 163ff. 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.
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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 surplusvalue 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 interpret the current crisis in terms of declining marginal productivity of capital within the Fordist labour process beginning in 1966. Nevertheless, 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”, Fordism 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 experimentation [. . .] and malfunctioning along the workbenches [. . .] to obtain gains in productivity and its strict meaning (the physical efficiency of
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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 Regulationists—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 century (or perhaps two). In that case, why should machine manufacturing 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 consequence 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 process. 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
The 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 Rosenberg, Technology and American Economic Growth, pp. 113–14, n. 26.
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Regulationist idea of an exhaustion of the gains to be had from Fordism. 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 diminishing 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 processes. 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 simplification and deskilling, to Taylorization broadly conceived, but also to replacement by new products and processes, and so on ad infinitum. It is interesting to note that F.W. Taylor himself was obsessively concerned with the improvements that could be had through reorganization 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 processes by which the workers’ knowledge and energy in production are appropriated by capital under the pressure of class struggle. According to Aglietta:
[T]he capitalist mode of production has systematically brought into being systems of productive forces able to link absolute and relative surplusvalue closely together. Their basis is the principle of mechanization [Aglietta’s emphasis], which incorporates in its mode of operation the qualitative characteristics 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.)

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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 homogenization 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 productiveness 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 micropolitical 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.

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proportion of technological change has been dependent upon prior advances in systematized knowledge, based on the improved understanding of the forces of nature achieved beyond the production process itself. Today, some of the most spectacular sources of productivity increase within Fordist manufacturing itself are obviously sciencebased—cads, cams, robotics, and so on. Moreover, beyond manufacturing 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 Regulationists 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 nonFordist—built at different times, with different machinery, and with
For an extensive discussion of the increasing role of scientific discoveries in technical change over the past century and a half, see Rosenberg, pp. 113–71. 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.
100 99

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different growth paths reflecting divergent trends in demand and capital spending, should have experienced sharply declining productivity 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 productivity 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 mechanism could a decline in productivity increase that was ostensibly the result of the declining capacity of a technological paradigm to produce 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 machinery 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
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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 synchronization 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’, forthcoming in NLR.
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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 business 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 productivity actually rose by an annual average of 3.3 per cent in the manufacturing 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 productivity 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 productivity 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, Baltimore 1980, p. 35; F.M. Gollop and D.W. Jorgenson, ‘U.S. Productivity Growth by Industry, 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.

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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 1953–57 1957–60 1960–66 1966–73 .0090 .0008 –.0212 .0162 .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 preceding 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 statistically 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 Regulationists want to develop a set of historically founded concepts as intermediate 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 development, 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 production 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 constraints 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 historically 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 precapitalist (or non-capitalist), is manifest in the very modes of regulation 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 inflation.’110 But the obvious problem here is that the developmental pattern 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.
‘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.
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Prevailing not only in France before the Revolution, but also throughout 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 physical 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 subsistence’ 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 maximize 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, correlatively, unable to gain much in income and purchasing power in consequence of the high prices (as again market-dependent capitalist farmers 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 industrial demand and industrial wages fell, unemployment rose, yet agricultural prices remained high over a period of several years (the Regulationists’ ‘stagflation’).111 It should thus be evident how misleading it is to refer to an ancient or traditional ‘mode of regulation’ as conceptually 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 understood as the effect of a system of social-property relations quite distinct 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 subsistances 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.

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conceptualization of historically rather distant patterns of development. 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 Regulationists as characterized predominantly by absolute surplus value and restricted mass consumption is a socioeconomic environment composed 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 productive 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 institutions 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 determine a whole distinctive regime of capital accumulation. The Regulationists make the justifiable point that the risk associated
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 commodity), 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.
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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 mechanization 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 technological 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 durable 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 growing 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 capitalist 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 dramatically during the specified period as to demand, on even the most superficial 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
115 116

See above, pp. 55–7. See above, pp. 57–61. 117 See above, pp. 64–6. 118 See Lipietz, ‘Behind the Crisis’, pp. 16–18ff.
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environment, they can be interpreted as manifesting the same dynamics 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 institutions 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 ownerproducers 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 productivity and a mass market for Department II consumption goods, at least from the time of the Civil War. This took place despite the predominance of what the Regulationists term the institutions of competitive regulation—in the absence, that is, of the institutions establishing the (Fordist) norm of working-class consumption, supposedly indispensable for viable intensive accumulation, and in the presence of a high level of inter-capitalist competition. The socioeconomic framework 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 concerned about the distribution of international competitiveness.120 Paths of capital accumulation, it may be concluded, are simply incomprehensible apart from a specification of the broader system of socialproperty 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
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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.
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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 progression of institutionally determined, nationally situated modes of development 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 competition. Focusing as they do on the regulation of national economies as a whole, Regulation theorists have not devoted a great deal of attention to institutional innovations that take place in a partial way, at the level of individual units of capital—the corporate form, vertical integration, horizontal integration, forms of merger of bank and manufacturing 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 productive 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 competitiveness 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 distribution 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 competitiveness, 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 process 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.
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The upshot should be clear: the economic viability and effects of networks of local institutional forms (modes of regulation) will heavily depend on the stage of development of the world economy in its multiple 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 manufacturing competitiveness: variations in institutional forms across nations and regions will, in other words, have a major part in determining 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 capitalism, local, regional and national economies will differ very greatly from one another with respect to their institutional frameworks precisely 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 development—that is, epochal patterns of capital accumulation and structural 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, partook 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 understand the complex operation of its parts, it is thus perhaps still indispensable 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
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broadly, income distribution).121 In this regard, the notion of Taylorism–Fordism functions as the conceptual linchpin of the Regulationists’ 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 breakthrough beyond the regime of extensive accumulation of the Regulationists’ 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 accumulation 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 process, 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, presumably a new, post-Fordist fourth mode of development. It has been the burden of our essay that each of the foregoing propositions—deriving from the Regulationists’ one-sided concentration upon the historically specific institutions of wage-labour and associated 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 realities of capitalist development. As a result, the whole notion of Fordism, in both its supply-side and its demand-side aspects, is theoretically 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 resolving 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 Regulationists’ 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
121 122

See above, p. 48. Lipietz, ‘Behind the Crisis’, p. 13.
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that fully developed capitalism—before the Taylorist–Fordist revolution 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 process cannot function as an economy-wide institutional constraint dictating a whole regime of accumulation and mode of development; on the contrary, the labour process is itself regularly (though not continuously) transformed in consequence of capital accumulation, as technical change takes place under the impact of inter-capitalist competition, 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 making for insufficient demand and the uneven development of Department 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 underconsumption. 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 establishment 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 underconsumption, why should Fordist consumption have constituted its cure? Empirically, it is by no means clear that institutions were ever established 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 successful 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.

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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 process—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, ultimately, the primary fetter on the growth of the productive forces. Thus, from a theoretical standpoint, we have asserted that the Regulationists’ conception tends: (i) misleadingly to reduce technical advance to the appropriation by capital of workers’ shopfloor knowledge, 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 central 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 content.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 Regulationist contention that this separation constituted a barrier to technical 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 economic 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 transcending 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.
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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 development’ 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 distribution 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 Nevertheless, 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 stabilized 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, capitalists, 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 peripheralized, 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 Century’, 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

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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 securing 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 working 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 production 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 productivity 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 Technologies, 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 Statistics, News, 26 March 1991.

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enter into genuinely cooperative arrangements with labour in part because they perhaps overrate the degree to which the new, teamcentered, Japanese-style production techniques actually raise skills and thereby bring about increased dependence of employers on workers 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 antiTaylorian 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 (maintenance, 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 content, 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
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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 output gains, without itself bringing or requiring much reskilling.

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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’ production, like analogous processes of breakup and simplification of tasks historically, provides highly favourable conditions for the introduction of the highest levels of automation and new technology. It should not be surprising that, given the recent economy-wide stagnation, 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.

For the Regulationists’ idea that the choice today is between (less effective) capital intensive and (more effective) labour intensive production, see Lipietz, ‘New Technologies, New Modes of Regulation’, pp. 268–9. On team or lean production and automation 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 production. (pp. 101–2).
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