Saturday, October 18, 2014

Henry Ford the Epitome of American Capitalism

Henry Ford was the epitome of American Capitalism.  His rags-to-riches success story of entrepreneurialism is an inspiration to all of us.  Born and raised on a rural farm in Michigan, Ford only achieved an eighth-grade education, but he was a mechanical and industrial engineering genius.  His greatest achievement was the implementation of industrial mass production which created an economy-of-scale to build the automobile.  This made the automobile very affordable to the general public.

But working on an assembly line is repetitive, back-breaking, boring, and de-humanizing.  There was a huge turn-over in the labor force.  If the company needed one-hundred workers, they would have to hire 1000 due to attrition.  So Ford came up with another ingenious idea: incentive pay.  Workers could earn as much as $5 a day for an eight hour work day, more than double what the typical worker earned.  Paying workers more would decrease attrition and enable his workers to buy his automobiles, a win-win solution.  After it was announced, 10,000 people showed up the next day to apply for a job.  The work still sucked, but hey they were earning $5 a day!

But earning that $5 a day came with a huge price.  Workers would have to jump through ridiculous hoops to get it.  For example, the company engaged in social engineering where they demanded emigrant workers learn English and become Americanized.  The company would send their social police to their employees homes to ensure they were living wholesome American lives and not engaging in vices like smoking, drinking, or gambling.

In addition, workers were not allowed to talk while on the job.  They weren't allowed to sit down or take potty breaks.  They would have to be productive all the time even if they were ill.  And the company's security force would brutally enforce Ford's work rules.  It was classic management by fear, intimidation, and brutality.  Latter, when automobile workers tried to organize a union, Ford, through his hired thugs, brutally fought the unions tooth and nail.  The only reason Ford finally capitulated to the union's demands is because his wife Clara threatened to leave him.  Henry Ford had, in fact, become a greedy, power hungry, obsessive-compulsive control freak.

Yes in-deed, Henry Ford epitomized the best and worst in American Capitalism. He epitomized the best because of his rags-to-riches story, his pioneering implimentation of the assembly line to make automobiles affordable, and his $5 dollar a day wages. And he epitomized the worst because of his love of money, power, control, and oppression of workers. Since then, working conditions in America have improved quite a bit through legislation, unionization, and evolving social norms and mores. But the dark side of American Capitalism is still alive and well and living in the hearts of many business managers today who, like Henry Ford, still try to earn a profit at any price.


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