,
10 tweets,
3 min read
Read on Twitter
I’ve just read Wrecked, a new book on the decline of the US auto industry by sociologists Joshua Murray and Michael Schwartz, and like it a lot. Let me try to write a thread about why. 1/n
The conventional understanding is that “flexible production” (just-in-time inventory management, collaborative relationships with suppliers, workers engaged in innovation process) is something invented by Toyota post-WWII. 2/n
This book argues that flexible production existed in Detroit in the 1920s. Just-in-time was called “hand-to-mouth.” There was lots of innovation. Following Ford’s $5 day, which was imitated by other producers, workers felt that they were sharing in profits and shared ideas. 3/n
The depression hit the industry hard, with mass layoffs and wage cuts, which were widely understood as necessary. But as the industry recovered, wages stayed low. Murray and Schwartz argue that management violated the implicit “effort bargain”. Workers rebelled. 4/n
A key feature of flexible production was that a well-placed strike at a “mother plant” that was the sole source of particular components could hold up production company-wide. Sit-down strikes were effective, even with small numbers of workers being union members. 5/n
In response, the Big Three gradually dismantled the flexible production system and replaced it with what M&S call “dispersed parallel production”: plants spread out geographically, many making the same components, with huge inventories of parts in case of disruptions. 6/n
This reduced the power of strikes, but also led to less innovation and lower performance in the long run. The industry was ill-prepared for the rise of Japanese producers, which took continued advantage of the innovative potential of flexible production. 7/n
The argument is overstated and under-evidenced in some places, and there’s some unnecessary Marxian rhetoric. Historians of the U.S. auto industry may find more to disagree with. 8/n
But the big point that maximizing profits is not the same thing as maximizing technical efficiency or innovation in the long run rings true and is documented here in a compelling way. Definitely worth reading. 9/n
Some related economics reading: Marglin RRPE 1974, (link: journals.sagepub.com/doi/abs/10.117…) journals.sagepub.com/doi/abs/10.117…; Stole & Zwiebel REStud 1996, (link: academic.oup.com/restud/article…) academic.oup.com/restud/article… 10/10
