Thursday, September 30, 2021
Episode 184: His Tomorrow Is Our Today
Play Now!Henry Ford wrote in 1926*, “The machine is a symbol of man's mastery of his environment.” He also wrote other things of “public service” and the “wage motive” you should hear. I'll share these concepts in this Episode 184: His Tomorrow Is Our Today.In this episode, I read from: a web site called the Quote Investigator concerning Walter Reuther's great retort; and Henry Ford's book 1926 book, Today and Tomorrow.Musically, I played: Podington Bear doing "Holding Hands." Representative David Cilliline opened the show talking about monopolies, backed by KMFDM, and I'm closing today with Mistle Thrush.*I said 1925 in the show by accident. Oops. I also failed to mention Sydney Greenstreet's voice talking about proven facts, that voice taken from the 1947 movie The Hucksters. I regret the errors. Oh, and I really regret forgetting to post this episode until it was two days late. My forgetful bad.
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Hey, catching up on some past episodes... This was a really good one!
ReplyDeleteHenry Ford: "We now know that business is a science, and that all other sciences contribute to it."
His quote totally reminds me of how Medieval scientists used to refer to Religious Philosophy as the "Queen of the Sciences". Not many scientists still hold that opinion today!
Own a skyscraper? "Yeah that's just silly." LOL
Seems to me like his "Wage Motive" was always wishful thinking, though. Somehow he didn't seem, to my view, to understand the recursive nature of markets, including the labor market. Or maybe he did, and I'm just too steeped in the "Profit Motive" understanding of the world. I dunno. But it just seems to me that it's not physically possible in the long run, for an industrialist to pay the workers enough to be able to afford their products, and still extract a profit. Because the money that the worker pays for the product must also pay for his own salary, plus materials. No matter how much you "reduce waste and toil," no matter what economies of scale. That's even before you consider the effect of the recursive market. Economies of scale, etc., may reduce the price of the product, but in my best understanding of Market Theory, then once the price of the product goes down, the value of the work going into it also goes down -- (as in the examples of computer programmers and cell phones you cite) -- therefore the salaries must go down, not up.
But it's pretty clear that Ford's thinking shaped American Capitalism, which now assumes that markets _must_ grow exponentially, infinitely, on a finite planet.
Hey, Kevin! Good to read you!
Delete"His quote totally reminds me of how Medieval scientists used to refer to Religious Philosophy as the "Queen of the Sciences"."
Didn't know that. Not surprised, though. The Church (that has the power to excommunicate and even execute) will not be ignored.
Henry Ford is not alone in not understanding this recursive nature of markets. He's like me in that. I missed that in the absolutely zero formal education I got in economics. Sounds interesting, though.
Still: "Because the money that the worker pays for the product must also pay for his own salary, plus materials."
Sure, but… workers are building a lot of these cars and tractors of his. They can't buy them all; but the worker only needs one or two over the years. There should be plenty of profit in mass manufacturing and plenty of cost reduction to allow a worker to buy a car every now and again. The question then becomes how many can they buy?
Ford, as I attempted to cite, was reducing costs primarily by shifting from the manual construction world to the mechanized. That example of the way they used to and later did make windshield glass hit me hard.
More than price deflation, once that process plays out——once not only Ford, but all the other manufacturers switch from people pushing products in carts to product rolled by enormous rollers, for the glass example——the wage value of the laborer will necessarily deflate.
I'll bet you're right about exponential inflation. Couple his growth example (which was limited by historical circumstance, a detail which many forget) with the demands of shareholders and the realities of avoiding monetary deflation, and yes, To Infinity, and Beyond! would certainly become the dominant mythos.
The way down, though, with some planning, might also resemble Buzz Lightyear: instead of flying, hopefully we'll be able to fall gracefully.
Later!
—Jim
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DeleteYeah it's true, I wasn't considering the idea that a worker makes a _lot_ of cars... but do they? A typical worker (in Hank Ford's time) may have _touched_ a lot of cars, but back then, I'd be willing to bet that a _single_ car took hundreds of man-hours to build. A single worker was spending only a few minutes per car, although he must have touched dozens of cars and tightened one particular screw or whatnot. But each car required many dozens of steps.
DeleteAfter rampant automation, this equation probably changed, and maybe today a car contains, I dunno, scores or dozens of man-hours instead of many hundreds, and the rest is done by machines (costing only the marginal cost of electricity). So it's probably true today that a worker's wages pay for the production of scores or hundreds of cars each year. Not sure that was true in Ford's time.
But anyway, point well taken. The other objection to my comment is the "velocity of money" argument, that money is not destroyed just because it's spent on labor or on a product. If a laborer hands Henry Ford three hundred dollars for a Model T, and then over the next month Ford pays the laborer three hundred, then the money is not "finite" and the system can remain active longer. So Ford doesn't hit a shortfall as long as money keeps flowing in _and_ out. The "Velocity of Money" argument is basically the only thing that has has kept our economy afloat since Ford's time.
But anyway, as I say, I'm not an economist, my gut feelings about economics may have been influenced by the totally bogus Econ 101 stuff that is floating around our general culture.
The other objection to my comment is the "velocity of money" argument, that money is not destroyed just because it's spent on labor or on a product.
DeleteExactly! This is Ford's Wage Motive in action. The constant circulation of money from bottom to top and back again creates an economy that functions.
Ah, but what factor could be hampering it today?
The "Velocity of Money" argument is basically the only thing that has has kept our economy afloat since Ford's time.
I would argue, not so much today. Why? Consider the gap between the lowest paid workers and today's CEOs. Our economy is far too top-heavy, too much to allow the money to even reach the lower-paid. That's why I think Ford's time was better than ours in many ways.
Ford paid his workers $6 an hour for an eight-hour day. Mal*Wart has the audacity to post a sign and a collection pot so people can give money "to support hungry associates" in "this time of need," and pay the company's CEO over 1,100 times the wage of the average store worker.
That's oligarchic huzpah.
Later!
—Jim