Henry Ford, Socialist

Ford workers on the line assemble engines in a public domain photo from Henry Ford’s 1922 memoir, "My Life and Work." A caption reads, “Henry Ford turned the thinking of employers to reduction of unit costs—not wages—and helped them to see that it is bad business to destroy customers by reducing their purchasing power.”

Henry Ford, Socialist
By John Unger Zussman

Detroit was a great town for labor when I grew up there in the ‘50s and ‘60s. While I never worked on the assembly lines—my uncle’s steel warehouse had first dibs on my summer labor—I had friends who did. The work was stultifying, but the pay was good, and they socked away money for college.

The high pay was because of Henry Ford, and it was not an accident. Ford had no love of labor unions (or Jews, for that matter, but that’s another story)—quite the opposite. Yet in 1914, he stunned the business world by offering a wage of $5 a day—more than double the prevailing rate.

Ford’s bold move did more than attract skilled mechanics and workers to Detroit and reduce Ford Motor Company’s heavy employee turnover. It spearheaded the creation of a vast middle class, including blue- as well as white-collar workers. The canny Ford realized that, if he was going to sell his mass-produced cars, his own workers (and those of other companies) had to make enough money to afford them. “I believe in the first place,” he wrote in his memoir, “that, all other considerations aside, our own sales depend in a measure upon the wages we pay.” For seventy years, American industry and the American middle class grew in tandem.

That link has now been strained to the breaking point. For the last thirty years, the American middle class has been under assault. It started with the right’s beloved Saint Reagan, whose orgy of tax cuts and deregulation spawned not only the savings and loan crisis but also a massive transfer of wealth from workers to the rich. Real middle-class incomes have stagnated since Reagan. “Morning in America”—to the extent it was ever more than a campaign slogan—was confined to the wealthy.

Corporations—no longer American but global—can afford to underpay or lay off American workers because they are no longer dependent on them either as labor or as consumers. Automation and robotics have reduced the proportion of labor costs in manufacturing. Advances in telecommunications and transportation allow corporations to relocate operations to locations where wages are lowest. And a growing global middle class provides a market of eager customers with money to spend.

All this represents capitalism in the 21st century, as companies find new ways to compete and find their market. But satisfying the market becomes almost irrelevant when big corporations can lobby the government to keep themselves solvent. Automakers make SUVs that become impossible to sell when gas prices rise, so they run to the government for bailouts. Oil companies reap generous tax breaks even when they make record profits. Food conglomerates collect extravagant farm subsidies even when their factory farming practices endanger the environment and produce food that makes us obese and sick. This is corporate socialism, showering benefits on people who decry socialism.

Nowhere has the link between wealthy corporations and the struggling middle class been severed more completely than in the financial industry. In the wake of the financial meltdown, the big banks have eliminated the need to have markets at all. Matt Taibbi’s recent exposé of the financial bailouts in Rolling Stone describes the feeding frenzy of free money and guaranteed profits that followed the financial meltdown of 2008.

In one of Taibbi’s classic examples of corporate welfare to the financial industry—though by no means the most egregious—the Fed offered loans to banks at near-zero interest rates, intending to buoy up their balance sheets and encourage lending to businesses and consumers. But because the Bush (and later Obama) administrations attached few strings to those loans, the banks simply took the money and bought Treasury bills, realizing a 2% risk-free profit for essentially lending the government back its own—that is to say, our own—money!

The strained link between corporate and middle-class prosperity is why we have another jobless recovery, why corporate profits and GDP and the stock market have been on a tear for two years while the middle class struggles. It is class warfare and we ought to call it that. Unfortunately, right-wing politicians and media—who somehow still dominate political discourse in this country despite the debacle of the Bush administration—have co-opted the term, crying “class warfare” whenever someone proposes that tax rates be returned to those of the “oppressive” ‘90s. They have somehow convinced the American middle class that their interests, as Bill Maher likes to point out, are the same as Steve Forbes’.

We need to take the term back. Class warfare is what we need to wage, and it ought to be our battle cry as we tell the American people who’s been waging war on whom.

No, Henry Ford was not a socialist. But he felt a responsibility to American workers. If he were alive today, he just might be on our side.

Additional links:

It’s telling that some of the best reporting on the financial meltdown has come from Taibbi’s groundbreaking reports in Rolling Stone, Planet Money and Pulitzer Prize-winning ProPublica’s features on public radio’s This American Life, and Charles Ferguson’s Oscar-winning documentary, Inside Job. Why have their startling revelations found so little resonance in the supposedly liberal mainstream media? Because mainstream media are big corporations too.

Update 4/21/11:

Astute reader Robert Mayer, professor of consumer studies at the University of Utah, observes that former secretary of labor Robert Reich makes similar points in his recent book, Aftershock. Reich has spoken out strongly to decry the right’s attack on the middle class. “After 1980,” he writes, “the pendulum swung backward.” Indeed.

Update 4/27/11:

A new study by the Congressional Research Office now confirms the extent to which the big banks borrowed at low interest rates from the Fed and then, instead of lending to consumers or businesses, simply turned around and bought Treasury bills. The report was requested by Senator Bernie Sanders (I-VT), who has taken a lead role in exposing such practices.

Copyright © 2011, John Unger Zussman. All rights reserved.

About John Unger Zussman

John Unger Zussman is an award-winning screenwriter, creative writer, and technical writer from Portola Valley, California. His essays have been published in The Sun Magazine. He has won a Grammy Award (as a member of the San Francisco Symphony Chorus), but there’s room on the shelf for an Oscar and a Pulitzer. John also works as a corporate storyteller in info and biotech and holds a PhD in Psychology from Stanford University.
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10 Responses to Henry Ford, Socialist

  1. k says:

    Quite disturbing, in my view, to see Ford held in such high esteem. And inaccurate. Ford was most definitely no socialist; and many would say that his wage policies, pro-nazism, and brutal anti-union tactics were not “other stories” but part and parcel of the same. His motives were very murky and not as pro-worker as the author suggests. (See also Greg Grandin’s excellent book Fordlandia). History is full of far more deserving heroes on this issue than Henry Ford. It is unfortunate that the author failed to write about them.

    Also: Rolling Stone, Pro-publica (whether it’s wrapped up in the NYT, NPR, etc.), and Planet Money are very much part of the liberal mainstream media.

  2. John Unger Zussman says:

    Thanks for your comment. Please don’t mistake historical acknowledgment for esteem. Ford was a union buster and an anti-Semite, as I mentioned. Even the high wages were dependent on workers adhering to a strict “moral” code of conduct that was paternalistic and intrusive. The point, however, is that those wages set up a kind of partnership in which corporations and the middle class prospered jointly for decades. Now, that partnership is foundering.

    Rolling Stone, ProPublica, and Planet Money are certainly liberal. Mainstream, not so much.

  3. k says:

    Thanks, John, but a “partnership” between workers and Ford? In addition to controlling workers’ personal lives Ford made humans into mechanized “speed up” workers that created a hell for many. His simultaneous $5 a day was kaput within a few years. The higher wages you speak of really came about later, and were not due to Ford, but to very hard-fought negotiations by unions. I wish Ford was all that the folktales made him out to be, but I think a more balanced historical view of the man and the company precludes invoking Ford as a model, including for wages. As for mainstream media… well, I really like a lot of Pro-publica’s investigations, but the fact is its main media outlets are as mainstream as you can get: New York Times, 60 minutes CNN, etc. NPR and Rolling Stone, mainstream? Just follow the money.

  4. Jane Churchon says:

    Not only am I incredulous that so many middle class Americans believe our best interests are aligned with billionaires’ best interests, but it makes me even more incredulous when people who earn $100,000 or $200,000 a year somehow believe that they are the wealthy in this nation. The ridiculously wealthy class has done a good job of making the middle class believe that a BMW and a pair of Ralph Lauren jeans means that we are rich. We’re not. We’re just funding lifestyles for people who would no more break bread (or God forbid, matzah) with us than eat their purebred poodle for breakfast.

    • John Unger Zussman says:

      Jane, thanks for the comment. I think you would be interested in Robert Frank’s 2007 book, Richistan. (He’s the “Wealth Report” columnist for the Wall Street Journal.) In his travelogue about the quasi-foreign country the American wealthy inhabit, he observes that a net worth of $1-$10 million doesn’t qualify you to be truly rich, merely “affluent.” Heaven forbid.

      Thank you also for sending (privately) a link to another essay that discusses the plight of the middle class over the last 30 years, with statistical backup. It’s called How the Rich Soaked the Rest of Us. It’s by Richard Wolff, emeritus professor of economics at U-Mass Amherst, and it appeared in the Guardian. I share it here to add to the discussion.

  5. Thomas Baughman says:

    Good piece, Mr Zussman. I also appreciate the link to Richard Wolff’s piece in the Guardian. He has been writing about inequality for a while now, and his pieces are usually good.

  6. Joe Mana says:

    Not buying it John. I was a fourth generation car builder from Detroit. Ford was a racist. Unions had their uses but have outlived them. President Reagan actually helped the middleclass. I know, I am one.

  7. Nicholas says:

    “savings and loan crisis”

    It wasn’t Reagan that created this one by tax cuts, it was Barney Frank that caused it when he started to force banks to lend money to people that couldn’t pay it back, it started with redlining etc, then the government created a marketplace in which the crisis could unfold. Banks become an easy scapegoat.

    • John Unger Zussman says:

      Sorry Nicholas, I’m not following you. In what piece of legislation did Barney Frank cause the S&L crisis of the 1980s by forcing banks to lend money to people who couldn’t pay it back?

      • Nicholas says:

        I don’t mean that Barney Frank was the initator of any legislation, but he was a major cheerleader for government intervention in the financial industry and low income homeownership, and now when it has gone bust, he blames the banks.

        You tell me how Reagans deregulation caused the banks to lend money to people that couldn’t pay it back. And what deregulation that would be.

        The government held the majority of these bad loans.

        Anyhow, I think there are several people that have written books that explain it much better, some time since I read these so I’m fuzzy on names right now.

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