Deindustrialization

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Deindustrialization

• From the Long Boom to the 1980s
• February 03, 2005

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Deindustrialization
What is it?
By Deindustrialization is meant a
widespread systematic disinvestment in the
nations basic productive capacity.
(Bluestone and Harrison 1982, 6).
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Deindustrialization
Two stories

• Macro (national level) Narrative
• Micro (firm level) Narrative

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Macro Story

• U.S. As World Leader after WWII.
• Military Leadership
• Geopolitical Leadership
• Economic Leadership
• PAX AMERICANA

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Macro Story

• U.S. As World Leader after WWII.
• Military Leadership
• Geopolitical Leadership
• Marshall plan
• Development
• Bretton Woods
• IMF/WB/GATT
• Economic Leadership
• PAX AMERICANA

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Macro Story

• The Long Boom (late 1950s to mid 1960s)
• Out Put UP
• Productivity UP
• Wages UP

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Macro Story

• Virtuous Circle of Growth
• High mass-consumption
• Stable Labor Relations
• Social/wage safety Net

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Macro Story

• Crisis (Late 1960s to Mid 1970s)
• Competition UP
• Market Stagnant
• Profit Rates Down

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Micro (firm level) Story

• Corporate Response to the Economic Crisis of 1970
• Diversification into more profitable industries
• Foreign Direct Investment (FDI)

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Micro (firm level) Story

• Technological Development Facilitates
• Transportation (air transport/containerization)
• Communication
• Deskilling of production

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Micro (firm level) Story

• Organizational Change
• MNC/TNC firm
• Conglomerate firm

Both lead to dis-investment in older plants and
industries
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Micro (firm level) Story
Vertical/Horizontal Integration
Conglomerate Firm
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Macro/Micro Story in relation to US Steel
Post WWII Industry Dominance Crisis in the
1970s Change in firm structure (USS to USX)
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Impacts of Deindustrialization

• Personal
• Job Loss
• Income loss/
• under-employment
• Loss of Family Wealth
• Impacts on Physical and Mental Health

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Impacts of Deindustrialization

• Community Level Impacts
• Negative Multiplier effect
• Charitable giving decreases
• Public Sector (tax) revenues decrease