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What Do Bosses Do?: The Origins and Functions of Hierarchy in Capitalist Production
Stephen A. Marglin
Review of Radical Political Economics 1974 6: 60
DOI: 10.1177/048661347400600206

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 Stephen A. Marglin

WHAT DO BOSSES DO?

The Origins and Functions of Hierarchy

in Capitalist Production*

1. Introduction: Does Technology Shape Social and Economic

Organization or Does Social and Economic Organization Shape

Technology?

Is it possible for.work to contribute positively to individual

development in a complex industrial society, or is alienating work the
price that must be paid for material prosperity? Discussions of the
possibilities for meaningful revolution generally come down, sooner or
later, to this question. If hierarchical authority is essential to
high productivity, then self-expression in work must at best be a luxury
reserved for the very few regardless of social and economic organization.
And even the satisfactions of society’s elite must be perverted by their
dependence, with rare exception, on the denial of self-expression to
others. But is work organization determined by technology or by society?
Is hierarchical authority really necessary to high levels of production,
or is material prosperity compatible with nonhierarchical organization
of production?

Defenders of the capitalist faith are quite sure that hierarchy is

Indeed their ultimate line of defense is that the plurality
Iofinescapable.
capitalist hierarchies is preferable to a single socialist hierarchy.
To seal the argument the apologist may call on as unlikely a source of
support as Friedrich Engels. Perhaps it was a momentary aberration, but
at one point in his career at least Engels,saw authority as technologi-
cally rather than socially determined:
If man, by dint of his knowledge and inventive genius, has
subdued the forces of nature, the latter avenge themselves

··The research on which this paper reports is still1 in progress. It

is published in its present form to stimulate discussion and comment.
This paper represents my initial and in parts preliminary thinking on
this subject, and no attempt has been made to reflect the many helpful
criticisms and suggestionsI have received. Copyright by Stephen
Marglin, 1974.

60

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 61

upon him by subjecting him, in so far as he employs them,

to a veritable
despotism, independent of all social organi-
zation. Wanting to abolish authority in large-scale
industry is tantamount to wanting to abolish industry itself,
to destroy the power loom in order to return to the spinning
wheel.1
Going back to the spinning wheel is obviously absurd, and if the pro-
ducer must typically take orders, it is difficult to see how work could
in the main be anything but alienating.

Were the social sciences experimental, the methodology for deciding

whether or not hierarchical work organization is inseparable from high
material productivity would be obvious. One would design technologies
appropriate to an egalitarian work organization, and test the designs
in actual operation. Experience would tell whether or not egalitarian
work organization is utopian. But social science is not experimental.
None of us has the requisite knowledge of steel-making or cloth-making
to design a new technology, much less to design one so radically different
from the present norm as a serious attempt to change work organization
would dictate. Besides in a society whose basic institutions--from
schools to factories--are geared to hierarchy, the attempt to change
one small component is probably doomed to failure. For all its short-
comings, neoclassical economics is undoubtedly right in emphasising
general equilibrium over pa rt i a1 equilibrium.
Instead of seeking alternative designs, we must take a more round-
about tack. In this paper it is asked why, in the course of capitalist
development, the actual producer lost control of production. What
circumstances gave rise to the boss-worker pyramid that characterizes
capitalist production? And what social function does the capitalist
hierarchy serve? If it turns out that the origin and function of
capitalist hierarchy has relatively little to do with efficiency, then
it becomes at least an open question whether or not hierarchical pro-
duction is essential to a high material standard of living. And workers--
manual, technical, and intellectual--may take the possibility of egali-
tarian work organization sufficiently seriously to examine their environ-
ment with a view to changing the economic, social, and political insti-
tutions that relegate all but a fortunate few to an existence in which
work is the means to life, not part of life itself.

F. Engels,
1 "On
Authority," first published in Almenacco Republi-
, 1894; English
cano translation in Marx and Engels, Basic Writings in
Politics and Philosophy
, L. Feuer (ed.), Doubleday and Co., Garden City,
New York, 1959, p. 483. Emphasis added.

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 62

It is the contention of this paper that neither of the two decisive

steps in depriving the workers of control of product and process-- (1)
the development of the minute division of labor that characterized the
putting-out system and (2) the development of the centralized organiza-
tion that characterizes the factory system--took place primarily for
reasons of technical superiority. Rather than providing more output for
the same inputs, these innovations in work organization were introduced
so that the capitalist got himself a larger share of the pie at the

expense of the worker, and it is only the subsequent growth in the size
of the pie that has obscured the class interest which was at the root
of these innovations. The social function of hierarchical work organi-
Ization is not technical efficiency, but accumulation. By mediating
between producer and consumer, the capitalist organization sets aside
much more for expanding and improving plant and equipment than individuals
would if they could control the pace of capital accumulation. These
ideas, which are developed in the body of this paper, can be conveniently
divided into four specific propositions.

~ I. The capitalist division of labor, typified by Adam Smith’s

famous example of pin manufacture, was the result of a search not for
a technologically superior organization of work, but for an organization
which guaranteed to the entrepreneur an essential role in the production
process, as integrator of the separate efforts of his workers into a
marketable product.

II. Likewise, the origin and success of the factory lay not in
technological superiority, but in the substitution of the capitalist’s
for the worker’s control of the work process and the quantity of output,
in the change in the workman’s choice from one of how much to work and
produce, based on his relative preferences for leisure and goods, to
one of whether or not to work at all, which of course is hardly much
of a choice.

III. The social function of hierarchical control of production is

to provide for the accumulation of capital. The individual, by and
large and on the average, does not save by a conscious and deliberate
choice. The pressures to spend are simply too great. Such individual
(household) savings as do occur are the consequence of a lag in adjust-
ing spending to a rise in income, for spending, like any other activity,
must be learned, and learning takes time. Thus individual savings is
the consequence of growth, and not an independent cause. Acquisitive
societies--precapitalist, capitalist or socialist--develop institutions
whereby collectivities determine the rate of accumulation. In modern
capitalist society the pre-eminent collectivity for accumulation is
the corporation. It is an essential social function of the corporation
that its hierarchy mediate between the individual producer (and share-
holder) and the market proceeds of the corporation’s product, assigning
a portion of these proceeds to enlarging the means of production. In
the absence of hierarchical control of production, society would either

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 63

have to fashion egalitarian institutions for accumulating capital or

content itself with the level of capital already accumulated.

IV. The emphasis on accumulation accounts in large part for the

failure of Soviet-style socialism to &dquo;overtake and surpass&dquo; the capi-
talist world in developing egalitarian forms of work organization. In
according first priority to the accumulation of capital, the Soviet
Union repeated the history of capitalism, at least as regards the rela-
tionship of men and women to their work. Theirs has not been the
failure described by Santayana of those who, not knowing history,
unwittingly repeat it. The Soviets consciously and deliberately
embraced the capitalist mode of production. And defenders of the
Soviet path to economic development would offer no apology: after all,
they would probably argue, egalitarian institutions and an egalitarian
(and community oriented) man could not have been created over night,
and the Soviet Union rightly felt itself too poor to contemplate an
indefinite end to accumulation. Now, alas, the Soviets have the &dquo;catch-
up-with-and-surpass-the-U.S.A.&dquo; tiger by the tail, for it would
probably take as much of a revolution to transform work organization
in that society as in ours.

Thefollowing sections of this paper take these propositions one

by one, in the hope of filling in sufficient detail to give them
credibility.
II. Divide and Conquer

Hierarchy was of course not invented by capitalists. More to the

point, neither was hierarchical production. In precapitalist societies,
industrial production was organized according to a rigid master-
journeyman-apprentice hierarchy, which survives today in anything like
its pure form only in the graduate departments of our universities.
What distinguished precapitalist from capitalist hierarchy was first
that the man at the top was, like the man at the bottom, a producer.
The master worked along with his apprentice rather than simply telling
him what to do. Second, the hierarchy was linear rather than pyramidal.
The apprentice would one day become a journeyman and likely a master.
Under capitalism it is a rare worker who becomes even a foreman, not
to mention independent entrepreneur or corporate president. Third, and
perhaps most important, the guild workman had no intermediary between
himself and the market. He generally sold a product, not his labor,
and therefore controlled both product and work process.

Just as hierarchy did not originate with capitalism, neither

did the division of labor. The social division of labor, the speciali-
zation of occupation and function, is a characteristic of all complex
societies, rather than a peculiar feature of industrialized or economi-
cally advanced ones. Nothing, after all, could be more elaborate than

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 64

the caste division of labor and its accompanying hierarchy in traditional

Hindu society. Nor is the technical division of labor peculiar to
capitalism or modern industry. Cloth production, for example, even under
the guild system was divided into separate tasks, each controlled by
specialists. But, as we have said, the guild workman controlled product
and process. What we have to account for is why the guild division of
labor evolved into the capitalist division of labor, in which the work-
man’s task typically became so specialized and minute that he had no
product to sell, or at least none for which there was a wide market,
and had therefore to make use of the capitalist as intermediary to
integrate his labor with the labor of others and transform the whole
into a marketable product.

Adam Smith argues that the capitalist division of labor came about
because of its technological superiority; in his view, the superiority
of dividing work into ever more minutely specialized tasks was limited
only by the size of the market.2 To understand the limitations of this
explanation requires clarity and precision on the meaning of &dquo;techno-
logical superiority,&dquo; and the related ideas of technological efficiency
and inefficiency; indeed, these ideas are central to the whole story
told in this paper. We shall say, in accordance with accepted usage,
that a method of production is technologically superior to another if
it produces more output with the same inputs. It is not enough that a
new method of production yield more output per day to be technologically

superior. Even if labor is the only input, a new method of production

might require more hours of labor, or more intensive effort, or more
unpleasant working conditions, in which case it would be providing
more output for more input, not for the same amount. It will1 be argued
here that--contrary to neoclassical logic--a new method of production
does not have to be technologically superior to be adopted; innovation
depends as much on economic and social institutions--on who is in
control of production and under what constraints control is exercised.

The terms &dquo;technological efficiency&dquo; and &dquo;technological ineffi-

as used by economists, have meanings that are slightly at
ciency,&dquo;
variance with the ordinary, every-day ideas of better and worse that

The
2attribution of the division of labor to efficiency antedates
Adam Smith by a least two millenia. Plato, indeed, argued for the
political institutions of the Republic on the basis of an analogy with
the virtue of specialization in the economic sphere. Smith’s specific
arguments were anticipated by Henry Martyn three quarters of a century
. See Considerations
before the publication of the Wealth of Nations
Upon the East-India Trade (London,1701).

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 65

they evoke. A method of production is technologically efficient if no

technologically superior alternative exists. It is inefficient if a
superior alternative does exist. Thus more than one method of production
may be--and generally is--technologically efficient if one looks only
at a single product. Wheat, for example, can be efficiently produced
with a lot of land and relatively little fertilizer, as in Kansas, or
with a lot of fertilizer and relatively little land, as in Holland.

But if one views technological superiority and efficiency from

the point of view of the whole economy, these concepts reduce, under
certain circumstances, to economic superiority and efficiency. Under
text-book assumptions of perfect and universal competition, the techno-
logically efficient method of production is the one that costs least,
and cost reduction is an index of technological superiority.3 The
relationship between minimum cost and technological efficiency is a
purely logical one and does not depend at all on whether or not the
world exhibits the assumptions of the model. On the other hand, the
relevance of the identification of technological with economic effi-
ciency depends absolutely on the applicability of the assumptions of
the competitive model to the development of capitalism. In critical
respects the development of capitalism necessarily required denial,
not fulfillment, of the assumptions of perfect competition.

In a way it is surprising that the development of capitalist

methods of work organization contradicts essential assumptions of
perfect competition, since perfect competition has virtually nothing
to say about the organization of production! Indeed, even the firm
itself, a central economic institution under capitalism, plays no
essential role in models of the competitive it is merely economy;4
I
t
a convenient abstraction for the household in its role as producer
and does nothing that households could not equally well do for
themselves. Defenders of the faith from Wicksell to Samuelson have
grandly proclaimed the perfect neutrality of perfect competition--

For
3 a concise and discussion of the relationship between
elegant
technological efficiency and least-cost methods of production, see
Tjalling Koopmans, Three Essays on the State of Economic Science
,
McGraw-Hill, New York, 1957, essay 1, especially pp. 66-126.

At
4 least in the constant-returns-to-scale version of the com-
petitive economy. Any other version implies the existence of a factor
of production (like "entrepreneurial effort") that is not traded on
the market, and with respect to which the model is therefore non-
competitive.

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 66

as far the model goes, workers could as well hire capital as capitalist
as
workers!5 Alas, the failure of the competitive model to account for one
of the most distinctive features of capitalism (and of socialism imitating
capitalism)--the pyramidal work order--is for neoclassical economists a
great virtue rather than a shortcoming; it is supposed to show the great
generality of the thoery. Generality indeed: neoclassical theory says
only that hierarchy must be technologically efficient to persist, but
denies the superiority of capitalist hierarchy (workers can just as well
hire capital, remember!). This is to say very little, and that little,
it will be argued, quite wrong.

To return to Adam Smith. The Wealth of Nations advances three

arguments for the technological superiority of dividing labor as finely
as the market will allow.

(This) great increase of the quantity of work, which, in

consequence of the division of labor, the same number of
people are capable of performing, is owing to three
different circumstances; first, to the increase of dex-
verity in every particular workman; secondly, to the
saving of the time which is commonly lost in passing
from one species of work to another; and lastly, to the
invention of a great number of machines which facilitate
labor and abridge labor, and enable one man to do the
work of many.6
Of the three arguments, one--the saving of time--is undoubtedly
important. But this argument has little or nothing to do with the
minute specialization that characterizes the capitalist division of
labor. A peasant, for example,will generally plow a whole field before
harrowing it rather than alternating plow and harrow, furrow by furrow--

"We
5 may, therefore, assume either that the landowner will hire
laborers for a wage...or that the laborers will hire the land for rent."
Knut Wicksell, Lectures on Political Economy (translated by E. Classen),
Routledge & Kegan Paul, London, 1934, Volume I, p. 109.
"Remember that perfectly competitive market it really doesn’t
in a
matter who hires whom;have labor hire ’capital’ "..., Paul Samuelson,
so
"Wage and Interest: A Modern Dissection of Marxian Economic Models,"
American Economic Review
, December, 1957.
A.
6 Smith, The Wealth of Nations (Cannan edition), Random House,
New York, 1937, p. 7.

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 67

in order to economize on the set-up time. But peasant agriculture is

the antithesis of capitalist specialization; the individual peasant
normally undertakes all the activities necessary to bring a crop from
seed to marketable product. In respect of set-up time, there is nothing
to fifferentiate agriculture from industry. To save &dquo;the time that is
commonly lost in passing from one species of work to another&dquo; it is
necessary only to continue in a single activity long enough that the
set-up time becomes an insignificant proportion of total work time.
The saving of time would require at most only thot ea’:’i »iDiRer continue
in a single activity fon days at a time, not for a whoie life tin2.
Saving o’ time implies separation of tasks and diircitioi of acti~ty,
not specialization.

Smith’s third argurnent--the propensity to in/ention―is not terribly

persuasive, indeed, the most devastating criticism was voiced by Smith
himselff ii a later chapter of The Wealth of Nations:

In the progress of the division of labor, the employment

of the far greater part of those who have by labor, that
is, of the great body of the people, come to be confined
to a few very simple operations, frequently to one or two.
But the understandings of the greater part of men are formed
by their ordinary employments. The man whose life is spent
in performing a few simple operations, of which the effects
too are, perhaps, always the same, or very nearly the same,
has no occasion to exert his understanding, or to exercise
his invention in finding out expedients for difficulties
which never occur. He naturally loses, therefore, the
habit of such exertion and generally becomes as stupid and
ignorant as it is possible for a human creature to become...
It is otherwise in the barbarous societies, as they
are commonly called, of hunters, of shepherds, and even of
husbandman in that crude state of husbandry which preceeds
the improvement of manufactures. In such societies the
varied occupations of every man oblige every man to exert
his capacity, and to invent expedients for removing diffi-
culties which are continually occurring. Invention is kept
alive, and the mind is not suffered to fall into that drowsy
stupidity, which, in a civilized society, seems to benumb 7
the understanding of almost all the inferior ranks of people,.
The choice does not, however, seem really to lie between stupidity and
barbarity, but between the workman whose span of control is wide enough
that he sees how each operation fits into the whole and the workman
confined to a small number of repetitive tasks. It would be surprising
indeed if the workman’s propensity to invent has not been diminished

Smith,
7 op. cit.
, pp. 734-35.

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 68

by the extreme specialization that characterizes the capitalist division

of labor.

This leaves &dquo;the increase of dexterity in every particular workman&dquo;

as the basis of carrying specialization to the limits permitted by the
size of the market. Now if Adam Smith were talking about musicians or
dancers or surgeons, or even if he were speaking of the division of labor
between pin-making and cloth-making, his argument would be difficult to
counter. But he is speaking not of esoteric specializations, nor of the
social division of labor, but of the minute division of ordinary, run-of-
the-mill, industrial activities into separate skills. Take his favorite
example of pin manufacture:
...in the way in which this business is now carried on,
not only the whole work is a peculiar trade, but it is
is divided into a number of branches, of which the greater
part are likewise peculiar trades. One man draws out the
wire, another straights it, a third cuts it, a fourth points
it, a fifth grinds it at the top for receiving the head;
to make the head requires two or three distinct operations;
to put it on, is
a peculiar business, to whiten the pins
is it is even a trade by itself to put them into
another;
the paper; and the important business of making a pin is,
in this manner, divided into about eighteen distinct oper-
ations, which in some manufactories, are all performed by
distinct hands, though in others the same man will some-
times perform two or three of them. I have seen a small1
manufactory of this kind where ten men only were employed,
and where some of them consequently performed two or three
distinct operations. But though they were very poor, and
therefore but indifferently accommodated with the necessary
equipment, they could, when they exerted themselves, make
among them about twelve pounds of pins in a day. There
are in a pound upwards of four thousand pins of a middling
size. Those ten persons, therefore could make among them
upwards of forty-eight thousand pins in a day. Each person,
therefore, making a tenth part of forty-eight thousand pins,
might be considered as making four thousand eight hundred
pins in a day. But if they had all1 wrought separately and
independently, and without any of them having been educated
to this peculiar business, they certainly could not each of
them have made twenty, perhaps not one pin in a day...8
To the extent that the skills at issue are difficult to acquire,
specialization is essential to the division of production into separate
operations. But, judging from the earnings of the various specialists

Smith,
8 , pp. 4-5
op. cit.

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 69

engaged inpin-making, these were no special skills. At least there

were that commanded premium wages.
none in a pin manufactory for which
fairly detailed records survive from the early part of the nineteenth
century, T. S. Ashton reported wages for adult males of approximately
20 shillings per week, irrespective of the particular branch in which
they were engaged.9
Women and children, as was customary, earned less,
but again there appear to be no great discrepancies among the various
branches of pin production. It would appear to be the case that the
mysteries of pin-making were relatively quickly learned, and that the
potential increase in dexterity afforded by minute division of tasks
was quickly exhausted. Certainly it is hard to make a case for special-
ization of workmen to particular tasks on the basis of the pin industry.l0

T.S.
9 Ashton, "The Records of a Pin Manufactory - 1814-21",
Economica November, 1925, pp. 281-292.
,
For
10 another example, cotton handloom weaving, though described
by J. L. and Barbara Hammond in a volume entitled The Skilled Laborer
(Longmans Green, London, 1919), was apparently a skill quickly learned
(p. 70). A British manufacturer testified before a parlimentary
committee that "a lad of fourteen may acquire a sufficient knowledge
, (Cambridge
of it in six weeks." Duncan Bythell’s The Handloom Weavers
University Press, Cambridge, England, 1969), which is my immediate
source for the manufacturer’s testimony, is quite explicit: "Cotton
handloom weaving, from its earliest days, was an unskilled, casual
occupation which provided a domestic by-trade for thousands of women
and children..." (p. 270)

The apparent ease with which, according to the Hammonds, women

replaced male woolen weavers gone off to fight Napoleon suggests that
woolen weaving too was not such a difficult skill to acquire ( op. cit.
,
pp. 60-162). Indeed the competition of women in some branches of the
woolen trade was such that in at least one place the men felt obliged
to bind themselves collectively "not to allow any women to learn the
trade" ,ibid. p. 162), an action that would hardly have been necessary
(
if the requisite strength or skill had been beyond the power of women
to acquire. The role of war-induced labor shortages in breaking down
artificial sex barriers, and the subsequent difficulties in re-establish-
ing these barriers in reminiscent of American experience in World War II,

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 70

The dichotomy between specialization and the separate crafting of

each individual pin seems to be a false one. It appears to have been
technologically possible to obtain the economics of reducing set-up
time without specialization. A workman, with his wife and children,
could have proceeded from task to task, first drawing out enough wire
for hundreds or thousands of pins, then straightening it, then cutting
it, and so on with each successive operation, thus realizing the
advantages of dividing the overall production process into separate
tasks.

Why , then, did thedivision of labor under the putting-out system

entail well as separation of tasks?
specialization as In my view the
reason lies in the fact that without specialization, the capitalist
had no essential role to play in the production process. If each
producer could himself integrate the component tasks of pin manufacture
into a marketable product, he would soon discover that he had no need
to deal with the market for pins through the intermediation of the
putter-outer. He could sell directly and appropriate to himself the
profit that the capitalist derived from mediating between the producer
and the market. Separating the tasks assigned to each workman was the
sole means by which the capitalist could, in the days preceding costly
machinery, ensure that he would remain essential to the production
process as integrator of these separate operations into a product for
which a wide market existed; and specialization of men to tasks at the
sub-product level was the hall mark of the putting-out system.
The capitalist division of labor, as developed under the putting-
out system, embodied the same principle that &dquo;successful&dquo; imperial
powers have utilized to rule their colonies: divide and conquer.
Exploiting differences between Hindu and Muslim in India--if not actually
creating them--the British could claim to be essential to the stability
of the sub-continent. And they could, sometimes with ill-concealed
satisfaction, point to the millions of deaths that followed Partition
as proof of their necessity to stability. But this tragedy proved only
that the British had made themselves essential as mediators, not that
there was any inherent need for British mediation of communal differences.

Similarly, the development of an industrial system dependent on

capitalist integration does not prove that the capitalist division of
labor was technologically superior to integration by the producer him-
self. The putter-outer’s peculiar contribution to production was
handsomely regarded not because of any genuine scarcity of the ability
to integrate separate functions; rather the scarcity was artificially
created to preserve the capitalist’s role.

How could the capitalist withstand competition if his role was

an artificial one? What prevented each producer from integrating his
own work, and thereby coming directly into contact with a wide market?

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 71

The capitalist putter-outer, who, by hypothesis, was technologically

superfluous, would have been eliminated by such competition; for inte-
grated producers would have produced pins and cloth and pottery more
cheaply. Why didn’t some enterprising and talented fellow organize
producers to eliminate the capitalist putter-outer? The answer is that
there was no profit in such a line of endeavor. If the organizer became
a producer himself, he would have had to settle for a producer’s wage.
His co-workers might have subscribed a dinner or gold watch in his honor,
but it is doubtful that their gratitude would have led them to do much
more. To glean rewards from organizing, one had to become a capitalist
putter-outer! The point is that no collusion was necessary between the
men of talent, enterprise, and means that formed the capitalist class of

putting-out days. It was in the interest of each as well as in the

interest of all to maintain the system of allocating separate tasks to
separate workmen. Not much wit was required to see that their prosperity,
as well as their survival as mediators, depended on this system. 1
1

The advantages to the mediator of standing between the producer and

a wide market were apparently obvious for some time before capitalist
manufacture succeeded guild manufacture. George Unwin’s studies of
sixteenth and seventeenth century industry suggested to him that &dquo;the
various crafts were, in fact, engaged in a constant struggle as to
which of them should secure the economic advantage of standing between
the rest and the market.&dquo; 12 And Unwin notes--but unfortunately does
not elaborate the point--that &dquo;by this interlacing of the interests of
dealer and craftsman the way was gradually prepared for a new form of
organization, embracing both classes, which naturally sought to extend
its authority as widely over the manufacture as possible.&dquo; 13

This
11 is not to say that the putter-outer, or "master manufacturer"
never contributed anything of technological importance to the production
process. But where the capitalist did contribute a useful technological
innovation, he could effectively appropriate to himself the gains (of
what in economic terms is a "public good") by preventing others, particu-
larly his workers, from learning and imitating his trade secrets. What
better way to achieve secrecy than to insist that each worker know only
a part of the whole? The patent system was notoriously ineffective,
and the benefactions of a grateful nation all too haphazard to rely upon,
especially for the marginal improvements that are the most all but a
handful of innovators could possible achieve.

George
12 Unwin, Industrial Organization in the Sixteenth and
Seventeenth Centuries first published by the Clarendon Press, Oxford,
,
England, 1904 and republished by Cass, London, 1957, p. 96.
,
Ibid.
13 p. 96.

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 72

Hard evidence that &dquo;divide and conquer&dquo; rather than efficiency

was the root of the capitalist division of labor is, naturally
at
enough, not easy to come by. One cannot really expect the capitalist,
or anybody else with an interest in preserving hierarchy and authority,
to proclaim publicly that production was organized to exploit the worker.
And the worker who was sufficiently acute to appreciate this could, in
the relatively mobile societies in which the industrial revolution first
took root, join the ranks of the exploiters.

Nevertheless, occasional glimmer of recognition does exist.

an

One, although from slightly later epoch, supports the divide-and-

a

conquer view of specialization better than any forgery could. Henry

Ashworth, Jr., managing partner of one of the Ashworth cotton enter-
prises, noted approvingly in his diary that a competitor did not allow
any of his employees, not even his manager, to mix cotton, adding

...his manager Henry Hargreaves knows nothing about the

mixing or costs of cotton so that he can never take his
business away from him--all his Overlookers business are
quite separate from and then no one knows what
is going on but each,nther
himself.l4
This story has a recent parallel.I know a man who was for a time a
sandal maker. To learn the trade, he went to work for a &dquo;master&dquo;
sandal maker. This worthy systematically taught him all there was to
know about making sandals--except how to buy the leather. My friend
could have learned this vital aspect of the trade on his own by the
familiar and time-honored method of trial and error--if he had had
$1000 or so to set aside for the mistakes inherent in the learning
process. Lacking the capital, his boss’s unwillingness to share one
particular skill effectively obliged him to remain a worker as long as
he remained in the trade.

One other nineteenth century comment suggests that those closer to

the beginnings of industrial capitalism than ourselves were not blind
to the role of division of labor a hierarchical1 in supporting
society.
The Spectator approved of cooperation between master and men, so long
as it did not threaten capitalism. Indeed, as long as cooperation was
limited to profit-sharing and the like, it might strengthen capitalism
for profit sharing in no way meant an end to hierarchy. By contrast,
workers’I cooperatives were perceived as a distinct threat, one The
Spectator thought it necessary to exorcise before extolling the virtues
of profit sharing:

Quoted
14 in Rhodes
Boyson, The Ashworth Cotton Enterprise
, Oxford
University Press, Oxford, England, 1970, p. 52.

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 73

Hitherto that principle (of cooperation) has been applied in

England only by associations of workmen, but the Rochdale
experiments, important and successful as they were, were on
one or two points incomplete. They showed that associations
of workmen could manage shops, mills, and all forms of indus-
try with success, and they immensely improved the condition
of the men, but then they did not leave a clear place for the
masters. That was a defect, for three reasons. (Emphasis
added
It is of some interest to examine these reasons:

Firstly, money in England is held in great masses in individual

hands; secondly, there exists among us a vast mass of admini-
strative or, as we call it, business ability, which is of the
highest value in directing associated labor wisely, which can
and does add infinitely to the value of that labor, and which
is not willing to devote itself to labor in absolute or equal
partnerships. It does not pay, say Mr. Brassey, to be any-
thing but head. And lastly, cooperation among workmen is not
so consonant to the national genius as cooperation between
masters and men--limited monarchy having got into our bones--
and a system which harmonizes with the national genius is
accepted quickly, while one which does not, even if it is
superior in itself advances slowly indeed.l6
The first--that &dquo;money...is held in great masses...in individual hands&dquo;--
is a reason for hierarchical organization only if one considers the
wealth distribution inviolable. Indeed, the argument is usually put
the other way around: that the superiority of hierarchical production
requires great wealth inequalities! The second reason--that &dquo;admini-
strative...ability...can and does add infinitely to the value of...
labor&dquo; but &dquo;is not willing to devote itself to labor in absolute or
equal partnership&dquo;--is contradicted by the very successes claimed for
the Rochdale experiments. The third--&dquo;the natural genius&dquo; for &dquo;limited
monarchy&dquo;--is the last refuge of scoundrels; if on took it seriously,
one could never challenge the status-quo.

The Spectator
15 , London, May 26, 1866, p. 569.

.,
Ibid
16 p. 569.

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 74

Although the direct evidence for the divide-and-conquer view of

the capitalist division of labor is not overwhelming, it is at least
as impressive as the direct evidence for the efficiency view. And there
is some indirect evidence too. If the specialization of workmen to
tasks took place to ensure capitalist control, then where capitalist
control was for other reasons beyond challenge, there is no basis,
according to the divide-and-conquer hypothesis, to expect a minute
specialization. And so it turns out, at least in the one case of
whichI have knowledge. The British coal industry offers an example
of an industry in which the capitalist division of labor never took
hold. Under hand-got methods, as primitive in technique as the putting-
out system of manufacture, but surviving into the twentieth century,
&dquo;responsibility for the complete coal-getting task rests squarely on
the shoulders of a single small, face-to-face group which experiences
the entire cycle of operations within the compass of its membership.&dquo;17
This group contracted directly with the colliery management and &dquo;though
the contract may have been in the name of the hewer, it was regarded
as a joint undertaking. Leadership and ’supervision’ were internal
to the group, which had a quality of responsible autonomy.&dquo;18 Further-
more, &dquo;each collier (was) an all-around workman, usually able to sub-
stitute for his mate...He had craft pride and artisan independence.
These qualities obviated status difficulties and contributed to respon-
sible autonomy.&dquo;19 Presumably the mine owner felt no need to specialize
men to tasks; the scarcity of coal seams and the institution of private

property ensured that workers would not dispense with bosses.

But this is only the beginning of the story. Its most interesting
chapter perhaps is the subsequent development of work organization
under mechanized--longwall--conditions. As Trist and Bamforth tell the
story, &dquo;need arose (with mechanization) for a unit more of the size and
differentiated complexity of a small factory department.&dquo;20 On what
model? &dquo;At the time the longwall method developed, there were no
precedents for the adaptive underground application of machine technology.

E.
17 L. Trist and K. W. Bamforth, "Some Social and Psychological
Consequences of the Longwall Method of Coal-Getting," Human Relations
,
Vol. IV, No. 1, 1951, p. 6.

,
Ibid.
18 p. 6.

Trist
19 and Bamforth, op. cit.
, p. 6.

,
Ibid.
20 p. 9.

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 75

In the absence of relevant experience in the mining tradition itself,

it was almost inevitable that heavy culture-borrowing (of specialization
of men to tasks) should have taken place.&dquo;21
The basic idea of the longwall system was the division of labor by
shifts, each shift being responsible for a subset of the operations that
move the coal from pit to ground.

The work is broken down into a standard series of component

operations that follow each other in rigid succession over
three shifts of seven and a half hours each, so that a total
coal-getting cycle may be completed once in each twenty-four
hours of the working week. The shift spread of the 40 work-
men needed on an average face is: 10 each to the first
(&dquo;cutting&dquo;) and second (&dquo;ripping&dquo;) shifts; 20 to the third
(&dquo;filling&dquo;) shift.22
Mechanized methods did not, however, yield the fruits they seemed
to promise. The problem lay in the supervision of groups of specialists
each responsible for only one of the operations that constitute the
whole.23 And the solution lay in reconst;tuting work groups so that
each shift was &dquo;responsible for task continuity rather than a specific
set of tasks...with responsibility for coordination and control being
primarily in the hands of the cycle group.,,24 The distinctive features
of the new system, called the &dquo;composite longwall system&dquo; were fourfold:

The Work Method

In accordance with the tradition of composite working which

originated in the (hand got) system, the oncoming men on a
shift were to take up the work of the cycle from the point at
which it had been left by the previous shift group and con-
tinue with whatever tasks had next to be done. When the main
task of a shift was completed the men were to redeploy to
carry on with the next tasks whether they formed a part of
the current cycle or commenced a new one.

,
Ibid.
21 p. 23-24.
,
Ibid.
22 p. 11

As
23 we shall see, supervision was a problem endemic to the speciali-
zation of men to tasks under the putting-out system. The factory system
was a solution to this problem, one, it will be argued, that reflected
capitalists’ interests rather than a supposed technological superiority.
Harvard
24 Business School Case Study, "British Coal Industries (C)",
prepared by Gene W. Dalton under the direction of Paul R. Lawrence, and
based on E.L. Trist and H. Murray, "Work Organization at the Coal Face,"
No. 506, Tavistock Institute, London, England.
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 76

The Workmen

In order for this task continuity to be practiced, it was

necessary for the cycle group to include men who were at least
competent under supervision, if not always formally qualified,
to undertake the necessary tasks as they arose. It was not
essential that all members of the composite team be completely
multi-skilled, but only that as a team they should have suffi-
cient skill resources available on each shift to man the roles
1 i kel y to arise.

The Work Groups

The team manning the composite longwall was to be a self-

selected group. The cycle group was to accept responsibility
for allocating its members to the various jobs that management
specified to be filled. In order to regulate the deployment,
the team was to develop and operate some system for the rota-
tion of tasks and shifts among team members.

Method of Payment
As in (hand got) systems, there was to be a common pay-
note in which all members of the team were to share equally,
since all members were regarded as making an equivalent con-
tribution to the completion of the cycle.25

The British coal industry is one of the few places where direct
comparisons of alternative methods of organizing work have been attempted.
The tests are not absolutely conclusive, because the alternatives cannot
be applied repeattdly to one and the same coal face. Nonetheless, the
results are striking: the composite longwall method was found to produce
20 per cent more coal than the conventional longwall method.26

Ec;ually interesting for present purposes

’B
is the effect of reorgan-
ization on management:

The effects of self-regulation by the cycle group on the

management of the seam of which the composite longwall1
was a part...was that the seam management structure was

Harvard
25 Business School Case Study, ’’British Coal Industries (B),"
prepared by Gene W. Dalton under the direction of Paul R. Lawrence, and
based on E. L. Trist and H. Murray, "Work Organization at the Coal Face,"
Doc. No. 506, Tavistock Institute, London, England.
"British
26 Coal Industries op.
(C)," cit.

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 77

eventually simplified. One overman was withdrawn; it

was found that there was no job for him. (Emphasis
added.)
It is not hard to imagine the difficulties reorganization would have
encountered had it been in the hands of the redundant overman to decide
its fate.

Essential to the willingness of the overman’s superiors to allow

the reintroduction into the mines of self-integrating, non-specialized,
non-hierarchical work groups was the coupling physical scarcity
of coal seams with the institution of property. Had the miners been of the
able to set up shop for themselves, management well might have found it
necessary to rely, as did the capitalist putter-outer, on specialization
of men to tasks as a means of keeping the worker in his ’’rightful&dquo; place--
and thereby the boss in his.

The coal mine is to some extent typical of the stage in the develop-
ment of industrial capitalism that followed the putting-out system, but
it is,I think, wrong to ascribe primary importance to the growth in
fixed capital, to the high cost of the means of production, in explaining
the proletarianization of the work force. Property in machinery, like
property in coal seams, was perhaps in mid-nineteenth century England
as effective as specialization in insuring a role for the capitalist.

Machinery was too costly for the individual workman, and the group was,
for all intents and purposes, nonexistent. But before that time,
machinery was not prohibitively expensive, and since then the union has
become a force that might have offset the high cost of machinery--for
the group if not for the individual. For some time preservation of the
boss-worker hierarchy has required tacit acceptance by unions; present-
day unions lack the will for change, not the strength. This is not to
say that it is mere accident that unions have for the most part chosen
to ignore hierarchy and its effects, and have concentrated instead on
&dquo;bread-and-butter&dquo; issues. These have been the easiest to accommodate
within the framework of a growing economy and agreement to limit
conflict to these issues has been instrumental in muting the conflict
between capitalists and workers. But the price of accommodation has

Nationalization
28 did not change the concept of property; it
merely transformed title of the mines to the state.

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 78

been steep; unions have become another cog in the hierarchy, not the
workers’ defense against it.29 it is not, however, simply a matter of
reorienting priorities within the traditional framework of union
leadership. Once unions were to become interested in the relationship
of men to their work, they would find themselves in conflict with the
very principles of capitalist organization, not merely in conflict
over the division, at the margin, of the
capitalist pie. No longer
could labor’s spokesmen be pillars of the established order.

When the absolute scarcity of natural resources limits production

to few sites, the institution of property has itself sufficed to
a
maintain the workers in a subordinate position. Thus it is that in
an extractive industry like coal mining,
specialization has proved
necessary under neither a hand nor a machine technology. In manufac-
turing industry, where non-labor factors of production are themselves
for the most part produced and, therefore, in principle accessible
to groups of workers regardless of cost, specialization has continued
to sustain the illusion that hierarchy is necessary for integrating the
efforts of many into a marketable product.

Paul
29 Jacobs’ is a voice crying out in the wilderness:

If unions are going to survive and grow in the coming

period, they have to break with their old patterns. First
of all, they have to break with their pattern of not thinking
, the nature of work, their relationship to work,
about work
and what they can do about work. What do we do about work
now? Well, we say we’re going to fix the wages, we’re going
to try to establish what we think ought to be minimal working
conditions, we’re going to slow down the line, we’re going to
argue about the speed of the line. But do we ever say: Hey,
the whole concept of production of an automobile on a line
stinks; the whole thing is wrong; what we ought to be doing
is figuring out new ways of looking at the problem of work?
No, these are questions from which every union withdraws.
I heard the vice-president of Kaiser explain their new
agreement with the Steelworkers Union, and he was asked what
the union would have to say about the nature of work processes
in the plant. "Nothing," he said. "My goodness, the Steel-
workers Union wouldn’t ever dream of venturing into this area..."

(Center for the Study of Democratic Institutions, Labor Looks

, Fund for the Republic, Santa Barbara, California,
at Labor
1963, pp. 14-15).

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 79

But we get ahead of the story. At the present point in the argu-
ment, chronology suffices to refute the explanation of proletarianization
of the producers by the high cost of machinery: the transformation of
the independent producer to a wage laborer took place before machinery
became expensive. It was a direct consequence of the specialization of
men to component tasks that characterized the putting-out system. To
be sure, capital played a role in the putting-out system; the putter-
outer was after all a &dquo;capitalist.&dquo; But machinery under the putting-
out system was primitive; fixed capital was inconsequential. The capital
provided by the putter-outer was predominantly working capital--stocks
of good in process--and advances against future labor.
’
The role played by wage advances deserves more attention than it
has received, for at least in some trades it appears to have been an
important means by which the capitalist maintained his hegemony.30
Wage advances were to the capitalist what free samples of heroin are
to the pusher: a means of creating dependence. It is of little moment
that one was a legal and the other a physiological dependence. Both
represent an addiction from which only the exceptionally strong-willed
and fortunate escape.31 The point for present purposes is that the
practice of what was virtually indentured servitude (though for shorter
periods of time than were customary in the British North American and
African colonies) nicely complemented the specialization of men to tasks.
Wage advances legally bound the worker to his master, and specialization
of his activity to a small part of the whole helped to prevent the
worker from circumventing his legal obligation to work for no one else
(until his debt was discharged) by restricting the outlets for his
production to intermediaries, a much smaller &dquo;market&dquo; than the market

See
30 , Manchester
Eighteenth Century Industrialist
T. S. Ashton, An
University Press, Manchester, 1939, chapters 2-3, for an account of the
importance of wage advances in the metal trades. Advances to weavers
were in the putting-out enterprise run by Samuel Oldknow.
common How-
ever, the amounts were relatively small, of the order of a week’s wages.
(G. Unwin and others, Samuel Oldknow and the Arkwrights
, Manchester
University Press, Manchester, 1924, p. 49.) If, in
fact, wage advances
were an important instrument of capitalist control only in the metal

trades, it would be interesting to know why. George Unwin gives one

instance of a debt-employment nexus in the cloth industry as early as
the reign of Henry VIII. Industrial Organization in the Sixteenth
(
, p. 52).
and Seventeenth Centuries

It
31 is of equally little moment that the worker’s dependence was
"freely" entered into, any more than the pusher’s enticement of the
unwary is any less destructive because one has the right to refuse
the come-on.

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 80

for a finished product. It was presumably much harder to dispose

illegally of unwhitened pins than of whitened ones.32

The use of wage advances to maintain worker dependence and hier-

archical control of production, however widespread under the putting-
out system it may or may not have been, was no isolated historical
phenomenon. It has been an important feature in other kinds of market
economies where alternative means for subordinating the worker have
not been available. Perhaps the most relevant example in the American
experience was the development of agricultural organization in the
post-1865 South. The problem of the post-bellum American planter was
in many respects similar to the problem of the pre-factory British
putter-outer: how to ensure for himself an essential role in the
production process. The ex-slave was no longer legally tied to the
land, and the land, like the means of industrial production in pre-
factory days, was not sufficiently scarce or costly to maintain the
dependency of workers on capitalists. _

The problem was solved by coupling the crop-lien system of credit

to the share-cropping system of farming. The planter-capitalist
typically advanced credit in kind for food and other necessities of
life, as well as for seed, fertilizer, and implements. These advances
were secured by a lien on present and future crops, and the cultivator
was legally under his creditor’s thrall until the debt was repaid,
which could be never since the creditor kept the books. Under the
share-cropping system, the land-owner, not the tenant, controls the
choice of crops,

and he wants nothing grown except what he can sell. If the

tenant takes time to keep a garden he does so at the neglect
of his major interest, and, furthermore, he deprives the
owner of the privilege of selling him additional groceries.33
Even the nominal independence of land-ownership was rarely of any
value to the ex-slave. Debt was not a business arrangement, but sub-
jugation. And the crop lien gave the capitalist virtually the same

Though
32 presumably not impossible. Embezzlement was a continuing
problem under the putting-out system, and it will be argued presently
that the chief advantage of the factory system in its early days was
the ability to provide the supervision necessary to cure this and other
ills.

Fred
33 Shannon, The Farmer’s Last , Holt, Rinehart
Frontier and
Winston, New York, 1945, p. 88.

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 81

control over the cropping pattern as did land ownership. &dquo;The cropper
who dared to truck patch quickly warned that he was lowering
4ill a
his c red i t . &dquo;3‘’ The result was a
was
ruinous monoculture.

In the greater part of the South the merchant demanded

that cotton, more cotton, and almost cotton alone should
be grown, because...the growers could neither eat it up
behind his back nor slip it out for surreptitious sale.
...Any attempt to sequester any of the cotton for sale
elsewhere, even if beyond the amount due the storekeeper,
was visited with quick retribution. In South Carolina, if
the lien-holder even suspected such intent, he could get an
order from the clerk of the to have the sheriff confis-
cate the whole crop for sale...
court
Generously assisted by the police power of the state, cotton enabled
the capitalist to intervene between the producer and the market. Indeed,
it is fair to conclude that cotton culture was to the capitalist planter
what specialization was to the capitalist putter-outer: a choice
dictated not by technological superiority but by his interest in inter-
~posing himself between the producer and the market.
I 11.
. The Rise of the Factory

The minute specialization that was the hallmark of the putting-out

I
system only wiped out one of two aspects of workers’ control of pro-
duction : control over the product. Control of the work process, when
and how much the worker would exert himself, remained with the worker--
until the coming of the factory.

Economic historians customarily ascribe the growth of the factory

to the technological superiority of large-scale machinery, which re-
quired concentration of productive effort around newly harnessed
sources of energy--water and steam. The first factories, according
to T. S. Ashton, arose in the beginning of the eighteenth century when
&dquo;for technical reasons, small groups of men were brought together into
workshops and little water-driven mills.&dquo;3~’
But the beginnings of the
modern factory system are usually associated with Richard Arkwright,
whose spinning mills displaced the domestic manufacture of cotton yarn.

34 Ibid.
, p. 92.

Ibid.
35
T.
36 Ashton, The Industrial Revolution 1760-1830
S. , Oxford
University Press, London, 1948, p. 33 (emphasis added).

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82

I
Arkwright’s ’water f rame, ’ it is said, dictated the factory organization
of spinning: &dquo;Unlike the jenny, the frame required, for its working,
power greater than that of human muscles, and hence from the beginning
the process was carried on in mills or factories.&dquo;37 Other authorities
agree. Thus Paul Mantoux: &dquo;...the use of machines distinguishes the
factory from (the putting-out system), and gives its special character
to the new system as against all preceeding ones...&dquo;38 And, more
recently, David Landes has written
The Industrial Revolution...required machines which not only
replaced hand labor but compelled the concentration of pro-
duction in factories--in other words machines whose appetite
for energy was too large for domestic sources of power and
whose mechanical superiority was sufficient to break down
the resistance of the older forms of hand production.39

These authorities, it should be said, recognize the other advantages

the factory afforded, particularly a system of discipline and supervisior
that was impossible under the putting-out system. &dquo;It was&dquo;, as Ashton
says, ’the need for supervision of work that led Peter Stubbs to gather
the scattered filemakers into his works at Mantoux also Warrington.,,40
notes the advantages from the point of view of organization
and &dquo;obvious
supervision&dquo;~1
I of
bringing together many workers into a single
workshop. According to Landes the need for discipline and supervision
turned &dquo;the thoughts of employers...to workshops where the men would be
brought together to labor under watchful overseers.&dquo;42 And elsewhere

37 p. 72.
,
Ibid.
P.
38 Mantoux, The Industrial Revolution in the Eighteenth Century
,
Harper and Row, New York, 1962, p. 39. (First English edition published
in 1928).
D.
39 S. Landes, The Unbound Prometheus
, Cambridge University Press,
Cambridge, England, 1969, p. 81.

The
40 Industrial Revolution op. cit.
, , p. 109. See also Ashton,
An Eighteenth Century , p. 26.
Industrialist
The
41 Industrial Revolution in the Eighteenth Century
, op. cit.
,
p. 246.

Landes,
42 , p. 60.
op. cit.

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 83

Landes is even more explicit. &dquo;The essence of the factory,&dquo; he writes

in an introduction to a volume of essays on the development of capital-
ism, &dquo;is discipline--the opportunity it affords for the direction of
and coordination of labor.’’43

Nevertheless, the advantages of discipline and supervision remain,

in the conventional view, secondary considerations in accounting for
the success of the factory system, if not for the motivation behind it.
In the same breath as Mantoux notes the organizational advantages of
the factory, he concludes that factory system...was the necessary
outcome of the use of machinery. 4 &dquo;the
Similarly, while identifying
discipline as the essence of the factory, Landes attributes its success
to technological factors: &dquo;the triumph of concentrated over dispersed
manufacture was indeed made possible by the economic advantages of
power-driven equipment. The factory had to beat cottage industry in
the marketplace, and it was not an easy victory.&dquo;45
The model underlying this reasoning is easy to identify: the z
factory survived, therefore it must have been a less costly method
of pro~uction than alternatives. And in the competitive market economy,
only least-cost methods are technologically efficient, provided effi- z
ciency is defined in an economy-wide sense. Hence the factory must z
have been technologically superior to alternatives. z
However, the very mention of supervision and discipline as moti-
vations for the factory ought to put one on guard against a too-easy
i
identification of cost-minimization with technological efficiency. In z

D.
43 S. Landes (editor), The Rise of , Macmillan,
Capitalism New
York, 1966, p. 14.

Mantoux,
44 , p. 246.
op. cit.

,
Ibid.
45 p. 14. Cf. Herbert Heaton, The Yorkshire Woolen and
Industries Oxford University Press, Oxford, 1920: "the major
Worsted ,
part of the economic advantage of the factory springs from the use of
machinery capable of performing work quickly, and the use of power which
can make the machinery go at high speed." p. 352.

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 84

the competitive model, there is scope for and discipline

~

except for that imposed by the market mechanism.

no
supervision
Any recognition of ’

the importance of supervision and discipline as motivating forces behind I

the establishment of factories is tantamount to admission of important
~violations of the assumptions of perfect competition, and it follows
~ithat cost minimization cannot be identified with technological efficiency.
Thus, technological superiority becomes neither necessary nor sufficient
for the rise and success of the factory.

It will be argued presently that the agglomeration of workers into

factories was a natural outgrowth of the putting-out system (a result,
if you will, of its internal contradictions) whose success had little
or nothing to do with the technological superiority of large-scale

machinery. The key to the success of the factory, as well as its inspir-
ation, was the substitution of capitalists’ for workers’ control of
the production process; discipline and supervision could and did reduce
costs without being technologically superior. ;

That the triumph of the factory, as well as the motivation behind

it, lay in discipline and supervision, was clear to at least one con-
temporary observer. The leading nineteenth century apologist for the
factory system, Andrew Ure, quite explicitly attributed Arkwright’s
success to his administrative prowess:

The main difficulty (faced by Arkwright) did not, to my

apprehension, lie so much in the invention of a proper
self-acting mechanism for drawing out and twisting cotton
into a continuous thread, as in...training human beings
to renounce their desultory habits of work, and to identify
themselves with the unvarying regularity of the complex
automation. successful code of
To devise and administer a

factory discipline, suited to the necessities of factory

diligence, was the Herculean enterprise, the noble achieve-
ment of Arkwright. Even at the present day, when the system

Ronald
46 Coase appears to be unique in recognizing that the very
existence of capitalist enterprise is incompatible with the reliance
of perfect competition on the market mechanism for coordinating economic
activity. Coase, however, sees the capitalist firm as the means not
for subordinating workers but for saving the costs of the market trans-
actions:
...a firm will tend to expand until the costs of organizing
an extra transaction within the firm become equal to the costs
on the open market or the costs of organizing in another firm.
See "The Nature of the Firm," Economica vol. IV, 1937, pp. 386-405, re-
printed in Stigler and Boulding (eds.), Readings in Price Theory
, Irwin,
Chicago, Illinois, 1952, pp. 331-351. The quotation is from p. 341 of
Boulding and Stigler.

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 85

is perfectly organized, and its labor lightened to the

utmost, it is found nearly impossible to convert persons
past the age of puberty, whether drawn from rural or from
handicraft occupations, into useful factory hands. After
struggling for a while to conquer their listless or restive
habits, they either renounce the employment spontaneously,
or are dismissed by the overlookers on account of inattention.

factory Briareus could have been created by

If the
mechanical genius alone, it should have come into being
thirty years sooner; for upwards of ninety years have now
elapsed since John Wyatt, of Birmingham, not only invented
the series of fluted rollers, (the spinning fingers usually
ascribed to Arkwright), but obtained a patent for the inven-
tion, and erected &dquo;a spinning engine without hands&dquo; in his
native town...Wyatt was a man of good education, in a respect-
able walk of life, much esteemed by his superiors, and therefore
favorably placed, in a mechanical point of view, for maturing
his admirable scheme. But he was of a gentle and passive spirit,
little qualified to cope with the hardships of a new manufac-
turing enterprise. It required, in fact, a man of a Napoleon
nerve and ambition, to subdue the refractory tempers of work-
eo le accustomed to irregular arox sms of dili ence... Such
was Arkwright. Emphasis added.

Wyatt’s efforts, and his ultimate failure, are shrouded in mystery.

Indeed, it is impossible to sort out his contribution from the contri-
bution of his collaborator, Lewis Paul. No model of the Wyatt-Paul
machine survives, but Mantoux supports Ure’s judgment that Wyatt and
Paul anticipated Arkwright in all technical essentials. Arkwright’s
machine, according to Mantoux, &dquo;differs from that of Wyatt only in its
deta i 1 s . trifling differences cannot explain A rkwr i ght’ s triumphal1
success.&dquo;48hese

A.
47Ure, The Philosophy of Manufacturers
, Charles Knight, London,
1835, pp. 15-16. Military analogies abound in contemporary observations
of the early factory. Boswell described Mathew Boulton, Watt’s partner
in the manufacture of steam engines, as "an iron captain in the midst
of his troops" after a visit to the works in 1776. (Quoted in Mantoux,
op. cit.
, p. 376).
Mantoux,
48 , p. 223. Wadsworth and Mann differ. See Alfred
op. cit.
P. Wadsworth and Julia DeLacy Mann, The Cotton Trade and Industrial
, Manchester University Press, Manchester England, 1931,
Lancashire
pp. 482-483.

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86

Contemporary evidence suggests that the problems of organizing the

work force played a substantial part in the failure of the Wyatt-Paul
enterprises. The correspondence between the principals and their officers
suggest a continuing preoccupation with discipline. Edward Cave, a
financial backer as well as a licensee, set up shop with hand-powered
I
i

equipment in anticipation of finding a suitable water mill. Early on

he wrote to Paul: &dquo;I have not half my people come to work today, and
I have no great fascination in the prospectI have to put myself in the
power of such people.&dquo;49 Discipline did not improve once the Cave
factory became mechanized. When Wyatt visited the new spinning mill at
Northampton in 1743 he found that &dquo;only four frames were regularly at
work, since there were seldom hands enough for five.&dquo;50 The search for
new methods of discipline continued. A month later, Cave’s lieutenant
wrote Wyatt:

Ithink they (the workers) have done as much in four days this
week as they did in a week when you were here...There were not
hands enough to work all five engines but four is worked complete
which did about 100 skeins a day one with another, nay some did
130. One reason for this extra advance is Mr. Harrison (the
mill manager) bought 4 handkerchers one for each machine value
about 1/2d p. each and them over the engine as prizes for
the girls that do hung5
most ...
These crude attempts to &dquo;subdue the refractory tempers of work-people&dquo;
by judicious use of the carrot apparently came to nought. One of the
few indisputable facts about the Wyatt-Paul attempts is that they failed.
And between Wyatt and Arkwright no one managed to bring Wyatt’s inven-
tion to a successful conclusion, a remarkable failure indeed if the
defects of machine spinning were primarily technological in nature.

There is additional evidence for the assertion that factory spinning

did not depend for its success on a superior machine technology.
Factory spinning took hold in the woolen industry as well as in cotton,
and its success in the wool trade could only have been for organizational
reasons. The technology of wool-spinning for many years after the
factory made its appearance was the same in factory as in cottage; in
both the &dquo;spinninq jenny&dquo; was the basic machine well into the nineteenth

Quoted
49 in Julia DeLacy Mann, "The Transition to Machine-Spinning"
, p. 433.
in Wadsworth and Mann, op. cit.

,
Ibid.
50 p. 436.

,
Ibid.
51 p. 437.

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 87

century.52 The Hammonds suggest that factory spinning dominated by the

beginning of the century:

By 1803 the transformation was practically complete. The

clothiers had one by one introduced the system of &dquo;spinning
houses&dquo; on their own premises, and the weavers were filled
with apprehension lest they too should be forced to work
under their employer’s roof.53

At some places water power may have been used for working the jennies,54
but this does not appear to have been the general case. Benjamin Gott,
called by Mantoux the &dquo;f i rst of the great Yorkshire never spinners&dquo;55
used power in his spinning (or weaving) rooms during his quarter-century
career as factor master and nevertheless appears to have made a satis-

profit.5
.

factory Certainly Gott never abandoned spinning and weaving

to domestic workshops, although these handpowered activities could have
been carried on separately from the operations to which Gott applied
steam power--scribbling and fulling. Indeed, the customary practice
when Gott began his factory in 1793 was for scribbling and fulling to
be a trade distinct from spinning and weaving.57
In weaving the case is even clearer than in spinning. Gott’s
handloom weaving sheds were not unique. Long before the powerloom
became practicable, handloom weavers were brought together into work-
shops to weave by the same techniques that were employed in cottage
industry, Clearly, the handloom shops would not have persisted if it
had not been profitable for the entrepreneur, and just as clearly the
source of profits could not have been in a superior technology. There

"Up
52 to the close of the period (1820), and probably until after
1830, when Crompton’s mule had been made ’self-acting,’ it made no head-
way in the woolen industry." W. B. Crump, The Leeds Woolen Industry
, Thoresby Society, Leeds England, 1931, p. 25.
1780-1820
J.
53 L. Hammond and Barbara , p. 146.
Hammond, op. cit.

,
Ibid.
54 p. 148.

Mantoux,
55 , p. 264.
op. cit.

Crump,
56 op. cit.
, esp. pp. 24-25,34.
,
Ibid.
57 p. 24.

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88

is no evidence that the handloom in the capitalist’s factory was any

different from the one in the weaver’s house.

I have found no comprehensive quantitative estimates of the relative

importance of handloom factories, and it would require a major
research effort to make even a reasoned A recent study of the
history of cotton handloom weaving concludes that &dquo;although (the hand-
guess.5probably
loom weaving shed) was never anything like the predominant form of
organization in cotton weaving, it was not negligible, nor was it con-
fined...to fancy goods only.&dquo; The author of this study continues:

According to the historian of Rossendale, in the period

1815-1830, when ’the trade of cotton weavinq on the hand- ’
.

loom was at its briskest, there were at the lowest compu-

tation thirty weaving shops, apart from the looms in
I
dwelling houses, in the forst of Rossendale.’ The dis-
tinguishing feature of the sheds was that they employed
a number of weavers handlooms outside their own homes
on
and families; they substantially larger than the
were
smallI shops of four or six (looms) run by a master weaver
and apprentices in some of the more specialized lines at
Bolton or Paisley. Isolated cases have been found with as
many as 150 or 200 handlooms, quite a few with between 50
and 100, and a considerable number with 20 or more. Such
sheds were to be found in town and country throughout the
weaving area.

...For both employers and workers, the handloom shed repre-

sented a transitional stage in the organization of cotton
weaving between the true domestic system and the power driven
factory. It does not necessarily follow, however, that the
handloom shed was a comparatively late development in cotton,
or that it was a conscious imitation of the powerloom factory.
With the coming of the dandyloom (an improved handloom) in
the late 1820s, there was a probable increase in the number

Albert
58 P. Usher, An Introduction to the Industrial History of
, Houghton Mifflin, Boston, 1920, reports some statistics for
England
1840, but does not give his source: "In the Coventry ribbon district,
there were 545 handlooms in factories, 1264 handlooms employed by
capitalists outside the factories, and 121 looms in the hands of inde-
pendent masters. At Norwich 656 handlooms were in factories out of a
total of 3398 for the district as a whole." (p. 353.)

59
D. Bythell, , p. 33.
op. cit.

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 89

of such sheds, but there is some evidence from notices in

the local newspapers for their existence in the 1780s and
179os.6o
Even as late at 1838, the weaver’s animosity might, as in the case of
Thomas Exell of Gloucestershire, be directed against the handloom shop
and its owner, not against the powerloom. ’’Excell1 was,&dquo; according to
Wadsworth and Mann, &dquo;lamenting...the concentration of handlooms and
jennies in the clothier’s shop&dquo; when he wrote &dquo;They have driven us
away from our houses and work as prisoners in their factories
gardens to
and their seminaries of vice.’I &dquo;1

The early years of the nineteenth century saw the concentration

of outworkers into workshops in other trades too. Supervision appears
to have provided not only the motivation for &dquo;Peter Stubbs to gather
the scattered filemakers into his works at Warrington,&dquo; but a sufficient
economic rationale for maintaining a factory-like organization in place
of the putting-out system. Ashton’s careful study of the Stubbs enter-
prise62 does not suggest any technological argument for bringing the
filemakers together, at least none he considers to be compelling. Nor
does Ashton suggest that the new method of organizing work was ever
abandoned. On the contrary: some of the original workshops were still
standing in his own day.63
None of this is to deny the importance of the technological changes
that have taken place since the eighteenth century. But these changes
were not independent causes of the factory. On the contrary, the
particular forms that technological change took were shaped and deter-
mined by factory organization. It is not accidental that technological
change atrophied within the putting-out system after Hargreaves’s
jenny but flourished within the factory. On the demand side, the
capitalist provided the market for inventions and improvements, and
his interest lay--for reasons of supervision and discipline--with the
factory. The supply side was only slightly more complex. In principle,
an inventor might obtain a patent and license the use of his inventions
to putter-outers or, indeed, to independent producers. In practice, as
long as production took place in scattered cottages, it was difficult

60 pp.
Ibid. 33-34.
Wadsworth
61 and Mann, op. ,
cit. p. 393.

62
An Eighteenth Century Industrialist
.

,
Ibid.
63 p. 26

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90

if not impossible to detect and punish piracy of patent rights. It was

much easier to enforce patent rights with production concentrated into
factories, and this naturally channeled inventive activity into the more
remunerative market. And of course many improvements were by their very
nature nonpatentable, and their benefits were under capitalist economic
organization capturable only by entrepreneurs.
This argument may be thought to imply a dynam i c technological1
superiority for the factory system, for it may fairly be interpreted as
suggesting that the factory provided a more congenial climate for tech-
nological change. A more congenial climate for innovation does not, how-
ever, imply technological superiority, dynamic or static. For the factory’
superiority in this domain rested in turn on a particular set of institu-
tional arrangements, in particular the arrangements for rewarding inventors
by legal monopolies vested intpatents. An invention, like knowledge
generally, is a &dquo;public good&dquo;: the use of an idea by one person does not
reduce the stock of knowledge in the way that consumption of a loaf of
bread reduces the stock of wheat. It is well understood that public goods
cannot be efficiently distributed through the market mechanism; so patents
cannot be defended on efficiency grounds.

Indeed, the usual defense of patents is in terms of the incentives

afforded for invention. But the argument is hardly compelling. There
is no a priori reason why society might not reward inventors in other
ways. In the eighteenth century, for example, Thomas Lombe was voted
L14,000 in lieu of a renewal of his patent for silk-throwing machinery,
a small amount in proportion to the L120,000 he earned during the four-
teen year term of his patent, but a tidy sum nevertheless, presumably
enough to coax out the secrets of all but the most diffident
To be sure, as it was practiced in Great Britain at least, the public
genius.64
reward of inventors was a fitful and unreliable arrangement, but this
does not mean that a way could not have been found to make the system
workable had the will existed. Had the patent system not played into
the hands of the more powerful capitalists, by favoring those with suffic-
ient resources to pay for licenses (and incidentally contributing to the
polarization of the producing classes into bosses and workers), the patent
system need not have become the dominant institutional1 mode for rewarding
inventors.

There remains one loose end in this account of the rise of the fac-
tory : why did the market mechanism, which has been supposed by its
defenders from Adam Smith onwards to harness the self-interest of the
producer to the public interest, fail to provide adequate supervision

Mantoux,
64 , pp. 195-196. In the case of Lombe and his
op. cit.
brother, genius, apart from organizing talent, consisted in pirating
an Italian invention.

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 91

and discipline under the putting-out system? Discipline and suptrvision,

it must be understood, were inadequate only from the point of view of
the capitalist, not from the point of view of the worker. And though
it is true that in a sufficiently abstract model of perfect competition,
profits are an index of the well-being of society as a whole as well as
capitalists’ well-being, this identity of interests does not characterize
any real capitalist economy, no more the &dquo;competitive&dquo; capitalism of
Adam Smith’s day than the monopoly capitalism of our own. In the per-
fectly competitive model, there are no capitalists and no workers, there
are only households that dispose of different bundles of resources, all
of which--labor include°d--are traded on markets in which no one possesses
any economic power. For this reason, laborers can equally well be
thought to hire capital as capitalists labor, and the firm plays no
significant role in the analysis. By contrast, the hallmark of the
putting-out system was a specialization so minute that it denied to the
worker the relatively wide (competitive!) market that existed for
products, replacing the product market with a narrow market for a sub-
product that, in a limited geographical area, a few putter-outers could
dominate.65 This perversion of the competitive principle, which lies
at the-heart of the capitalist division of labor, made discipline and
supervision a class issue rather than an issue of technological effi-
ciency ; a lack of discipline and supervision could be disastrous for
profits without being inefficient.
The indiscipline of the laboring classes, or more bluntly, their
laziness, was widely noted by eighteenth century observers.
It is a fact well known (wrote a mid-century commentator)
...that scarcity, to a certain degree, promoted industry,
and that the manufacturer (worker) who can subsist on three
days work will be idle and drunken the remainder of the
week...The poor in the manufacturing counties will never
work any more time in general than is necessary just to

On
65 the power of bosses over workers see, among others, Landes,
, p. 56; E. P. Thompson, The Making of the English Working
op. cit.
, Random House, New York, 1963, chapter 9, especially the quota-
Class
tions on pp. 280, 297. Adam Smith was quite explicit: "Masters are
always and everywhere in a sort of tacit, but constant and uniform
combination, not to raise the wages of labor above their actual rate.
To violate this combination is everywhere a most unpopular action, and
a sort of reproach to a master among his neighbors and equals. We
seldom, indeed hear of this combination, because it is the usual, and
one may say, the natural state of things which nobody hears of." The
Wealth of Nations
, op. cit., Book I, Chapter 8,
pp. 66-67.

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 92

live and support their weekly debauches...We can fairly

aver that a reduction of wages in the woolen manufacture
would be a national blessing and advantage, and no real
injury to the poor. By this means we might keep our
uphold our rents, and reform the people into the bargain. trade.
Indiscipline, in other words, meant that as wages rose, workers chose
to work less. In more neutral language, laziness was simply a preference
for leisure! Far from being an &dquo;unreasonable inversion of the laws of
sensible economic behavior,&dquo;67 a backward bending labor-supply curve is
a most natural phenomenon as long as the individual worker controls the

supply of labor.
At least no devotee of the,conventional indifference-curve approach
to leisure-goods choices would dare argue that there is anything at all
peculiar about a backward bending labor-supply curve.68 Central to
indifference-curve analysis of consumption choices is the separation of
substitution and income effects. A rising wage makes leisure relatively
more expensive to the worker, to be sure. But against this negative
&dquo;substitution&dquo; effect must be considered the &dquo;income&dquo; effect; besides
changing the terms of trade between leisure and goods, a rising wage is
like a windfall that makes the worker able to afford more leisure. As
long as leisure is a &dquo;normal&dquo; good (one for which the income effect is
positive), substitution and income effects work in opposite directions.
And the outcome is unpredictable; certainly no neoclassical economist
worth his salt would that the substitution effect must be stronger
than the income argue
effect. 9
In a competitive market, however, the shape of the labor -supply
curve in the aggregate is of little moment. By definition, any individual

J. Smith,
66 Memoirs of Wool (1747); quoted in E. P. Thompson, op.
,
cit. p. 277.

The
67 characterization is Landes’s, Unbound Prometheus
, p. 59.

Contrary
68 to Landes’s implication, "a fairly rigid conception of
what (is) felt to be a decent standard of living" ibid. p. 59) is not
(
,
required for a backward bending supply curve of a good or service that
(like time) affords utility to the seller.

It may be slightly ironic that an important necessary condition

69
for the indifference-curve model to be applicable to one of the most
fundamental problems of economic choice is inconsistent with capitalism.
For the indifference-curve model to be applicable to goods-leisure
choices, control of the hours of work must rest with the worker. But
this is inconsistent with capitalist control of the work process, and
hence with capitalism itself.

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 93

capitalist can hire as many workers as he likes at the going wage. And
the wage he pays is reflected in the market price of his product. He
earns the competitive rate of profit, whether the going wage is low or
high. But for the oligopsonistic putter-outers, the fact that higher
wages led workers to choose more leisure was not only perverse, it was
disastrous. In 1769, Arthur Young noted &dquo;the sentiment universal&dquo;
among the cotton manufacturers of Manchester &dquo;that their best friend
is high provisions.&dquo;70
Thus the very success of pre-factory capitalism contained within it
the seeds of its own transformation. As Britain’s internal commerce
and its export trade expanded, wages rose and workers insisted in taking
out a portion of their gains in the form of greater leisure. However
sensible this response may have been from their own point of view, it
was no way for an enterprising capitalist to get ahead. Nor did the
capitalist meekly accept the workings of the invisible hand.

His first recourse was to the law. In the eighteenth century,

Parliament twice enacted laws requiring domestic woolen workers to
complete and return work within specified periods of time. In 1749
the period was fixed at twenty-one days, and in 1777 the period was
reduced to eight days.71 But more direct action proved necessary.
The capitalist’s salvation lay in taking immediate control of the
proportions of work and leisure. Capitalists’ interests required
that the worker’s choice become one of whether or not to work at all--
the only choice he was to have within the factory system.
To a great extent, supervision and discipline meant the same thing
in the factory. Under the watchful eye of the foreman, the worker was
no longer free to pace himself according to his own standards. But
supervision was important for another reason: under the putting-out
system materials inevitably came under the control of the workman
during the process of manufacture. This created a variety of ways for
the workman to augment his earnings; in the woolen trade a worker might
exchange poor wool for good, or conceal imperfections in spinning, or
wet the wool to make it seem heavier.72 Above all, there was the possi-
bility of outright embezzlement. It seems likely that these possibilities

70
A. Young, Northern Tour
; quoted in Wadsworth and Mann, op. ,
cit.
p. 389.
Heaton,
71 , p. 422.
op. cit. These laws had historic precedents.
Unwin reports municipal order dating from 1570 in Bury St. Edmunds
a

requiring spinsters to work up six pounds of wool per week. Employers

were to give notice to the constable in the event any one failed to
obey the order ( , p. 94).
op. cit.
Heaton,
72 ,
ibid. p. 418.
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94

multiplied as trade developed and grew, for disposing of illegally-

gotten goods would appear to have been easier as the channels of trade
multiplied and expanded. In any event, capitalists increasingly utilized
the legislative, police, and judicial powers of the state to prevent
workers from eroding their profits during the course of the eighteenth
century.73 Indeed, even the traditional maxim of English justice--that
a man was innocent until proven guilty--counted for little where such a
clear and present danger to profits was concerned. A Parliamentary Act
of 1777 allowed search of a workman’s home on mere suspicion of embez-
zlement. If suspicious goods were found on his premises, it was up to i

the worker to prove his innocence. he was assumed to be guilty

--even if no proof were forthcoming. 7
04herwise
’’dishonesty&dquo;, like his &dquo;laziness,&dquo; could not be cured
The worker’s
by recourse the law, however diligently Parliament might try to serve
to
the interests of the capitalist class. The local magistrates might not
be sufficiently in tune with the needs of the master manufacturers,75
particularly one would imagine, if they were members of the landed gentry.
In any event, enforcement of the law must have been cumbersome at best,
especially where manufacturing was dispersed over a relatively wide
geographical area. It is no wonder that, as Landes says, &dquo;the thoughts
of employers turned to workshops where the men would be brought together
to labor under watchful overseers.&dquo; As late as 1824, a correspondent
of the Blackburn Mail specifically urged the factory system as a means
of combatting embezzlement:
It is
high time...that should have a change either to
we

powerlooms or to (hand)
loom shops and factories, when
at least one sixth part of the of cotton goods
is effected by (embezzlement).7groduction
It is important to emphasize that the discipline and supervision
afforded by the factory had nothing to do with efficiency, at least as
this term is used by economists. Disciplining the work force meant a
larger output i n return for a greater input of labor, not more output

See Heaton, ibid.

73 , pp. 418-437 for an account of the woolen
industry, cit. pp. 395-400 for the cotton
Wadsworth and Mann, op. ,
industry.
Heaton,
74 , p. 422.
op. cit.

75 ibid., p. 428.
Heaton,
Quoted in Bythell, op.
76 , p. 72.
cit.

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 95

for the same input.77 Supervising--insofar as it meant something dif-

ferent from disciplining--the work force simply reduced the real wage;
an end to embezzlement and like deceits changed the division of the pie
in favor of capitalists. In the competitive model, innovation to improve
the position of one individual or group at the expense of another may
not be feasible. But the history of employer-worker relations under the
putting-out system belies the competitive model. Embezzlement and other
forms of deceit were exercises in &dquo;countervailing power,&dquo; and pitifully
weak ones at that.7 The factory effectively put an end both to &dquo;dis-
honesty and ’laziness.&dquo;

The factory system, then, was not technologically superior to the

putting-out system, at least not until technological change was channeled
exclusively into this mould. But was it in any event efficient? Was it
not better than available alternatives not only for the capitalist, but
for the factory worker as well, however severe the consequences (mere
&dquo;pecuniary diseconomies&dquo; in technical language) for those who persisted
in cottage industry ? After all, nobody was legally compelled to work
in a factory. The worker, no less than the capitalist, &dquo;revealed&dquo; by
the very act of entering the factory a &dquo;preference&dquo; for factory organi-
zation, or at least for the combination of factory organization and
factory pay79--or so neoclassical logic goes.

How applicable is this logic in fact?

it is a First of all,
strange logic of choice that places its entire emphasis the absence on
of legal compulsion. Judging from the sources from which factory labor
was originally drawn, the workers had relatively little effective choice.

According to Mantoux

In the early days factory labor consisted of the most ill-

assorted elements: country people driven from their villages

In
77 technical terms, the shift from workers’ control of goods-
leisure choices to capitalists’ control meant a shift along a given
production function not a shift in the function itself.

Any
78 comment on the of these defenses is
alleged immorality
probably superfluous. This was after all an era in which unions were
illegal "combinations," proscribed under common law of conspiracy (and
later, by statute).

Factory
79 wages for handloom weaving were higher than wages earned
for the same work performed in the worker’s cottage-presumably the
reward both for longer hours and for submitting to the factory super-
vision and discipline. See Bythell, op. cit., p. 134.

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96

by the of large estates (that is, by the enclosure

growth
movement), disbanded soldiers, paupers, the scum of every
class and of every occupation.80
The question is not so much whether or not factory employment was better
for workers than starving--let us grant that it was--but whether or not
it was better than alternative forces of productive organization that
would have allowed the worker a measure of control of product and pro-
cess, even at the cost of a lower level of output and But earnings.81
to grow and develop in nineteenth century Britain (or in twentieth
century America) such alternatives would have had to have been profitable
for the organizer of production. Since worker control of product and
process ultimately leaves no place for the capitalist, it is hardly
surprising that the development of capitalism, while extending the sway
of the market in labor as well as goods, and extending the range of
occupations, did not create a long list of employment opportunities in
which workers displaced from the traditional occupations of their parents
could control product and process.

Where alternatives to factory employment were available, there is

evidence that workers flocked to them. Cottage weaving was one of the
few, perhaps the only important, ready alternative to factory work for
those lacking special skills. And despite the abysmally low level to
which wages fell, a force of domestic cotton weavers numbering some
250,000 survived well into the nineteenth century. The maintenance of

Mantoux,
80 op. cit.
, p. 375.
"Better"
81 broader sense than it is conventionally
is used here in a
used by economists when comparing different bundles of commodities even
when they bother to count leisure as one of the goods. Integrity--
personal and cultural--can hardly be represented on an indifference
curve. For a discussion of the effects of economic change on cultural
integrity, see Karl Polanyi, "Class Interest and Social Change" origi-
, Rinehard, New York, 1944;
nally published in The Great Transformation
reprinted in Primitive, Archaic and Modern Economies
, edited by George
Dalton, Doubleday, Garden City, New York, 1968, pp. 38-58.

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 97

the weavers’ numbers is, in the light of attrition caused by death

and emigration, convincing evidence of persistent new entry into the t

its I
field.82 However, the bias of technological change towards improve-
ments consistent with factory
ments bias organization sooner or later took its {
or later
toll of alternatives, weaving included.83 The putting-out system, with
took
its pitiful vestiges of worker control, virtually disappeared in Great
Britain by mid-century. And weaving was about the last important hold-
out of cottage industry. Where this alternative was not available, the
worker’s freedom to refuse factory employment was the freedom to starve.

On
82the size of the labor force in domestic cotton weaving, see
Landes, op. cit., pp. 86-87; Bythell, op. cit., pp. 54-57. On wages,
see Bythell, , chapter 6 and appendices; Sydney J. Chapman,
ibid.
, Manchester University Press, Manchester,
Lancashire Cotton Industry
England, 1904, pp. 43-44.
The amazing thing is that
83 the cottage weavers held out as long
as they did, testimony as Landes says, "to the obstinacy and tenacity
of men who were unwilling to trade their independence for the better-
paid discipline of the factory." Unbound Prometheus
( , p. 86).
The reluctance of cottage weavers to submit to factory discipline
was commented upon by contemporaries. As late as 1836, a noted
widely
critic of the factory, John Fielden, wrote "they will neither go into
(the factories) nor suffer their children to go." (Quoted in Bythell,
op. cit., p. 252). Another critic testified to a Select Committee of
Parliament that a cottage weaver would not seek factory employment
because "he would be subject to a discipline that a handloom weaver
can never submit to." (Select Committee on Handloom Weavers’ Petitions,
1834; quoted in E. P. Thompson, op. cit.
, p. 307.)
Whether the cottage weavers’
inadaptability to the factory was a
matter of taste or of the lack of psychological attitudes essential to
factory discipline is a question of present as well as historical sig-
nificance. (Ure, for what his opinion is worth, clearly sides with
the view that the cottage weaver could not adapt as opposed to the view
that he would not.) For the argument that the role of schools is pre-
cisely to inculcate attitudes conducive to labor discipline see Herbert
Gintis, "Education, Technology, and the Characteristics, of Worker
Productivity." American Economic Review, May, 1971.

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98

And even where the adult male had a real choice, so that the
of &dquo;revealed preference&dquo; is conceivably more than formally logic4
applicable,
his wife and children had no such prerogatives. Women and children, who
by all accounts constituted the overwhelming majority of factory workers
in the early days,85 were there not because they chose to be but because
their husbands and fathers told them to be. The application of revealed
preference to their presence in the factory requires a rather elastic
view of the concept of individual choice.

In the case of pauper children, no amount of stretching of the

logic of revealed preference will do. Sold by parish authorities as
&dquo;factory apprentices,&dquo; for terms of service up to ten or more years in
order to save the local taxpayer the cost of food, clothing, and shelter,
these poor unfortunates had no,choice whatsoever, legal or otherwise.
Apprenticeship itself was nothing new, nor was the binding over of pauper
children to masters by parish authorities. But by the end of the eigh-
teenth century, the institution of apprenticeship was no longer a means
of limiting entry into the various crafts and trades and of ensuring
the maintenance of quality standards. It had become, in accordance with

For
84 men, factory employment could be quite attractive. Agglomer-
ation of workers did not by this one fell swoop solve all problems of
discipline. In spinning mills, for example, adult males formed a corps
of non-commissioned officers; women and children were the soldiers of
the line. And factory employment was relatively attractive for these
"labor aristocrats." To quote Ure,

The political economist may naturally ask how...the wages

of the fine spinners can be maintained at their present high
pitch. To this question one of the best informed manufac-
turers made me this reply: "We find a moderate saving in
the wages to be of little consequence in comparison of con-
tentment, and we therefore keep them as high as we can
possibly afford, in order to be entitled to the best quality
of work. A spinner reckons the charge of a pair of mules
in our factory a fortune for life, he will therefore do his
utmost to retain his situation, and to uphold the high charac-
ter of our yarn."
, p. 366.
Ure, op. cit.

For
85 example, in the Oldknow spinning mill at Mellor, only ten
percent of the workers were male heads of families, even excluding
child apprentices. G. Unwin and others, Samuel Oldknow and the Ark-
,
wrights Manchester University Press, Manchester, England, 1924, p.
167.

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 99

the exigencies of capitalist enterprise, a system of indentured servi-

tude.86 As factories became prominent features of the industrial land-
scape, an enterprising capitalist might seize upon an advertisement like
this one:

To Let, The Labor of 260 Children

With Rooms and Every Convenience for carrying on the Cotton

Business. For part i culars enquire of Mr. Richard Clough,
Common Street, Manchester.$7
Mantoux goes so far as to claim that in the factory’s early days,
no parents would allow their own children inside, so that appren-
tices were &dquo;the only children employed in the But despite factories.&dquo;8pauper
the contemporary evidence Mantoux cites to support his claim, it may be
a bit exaggerated. The Oldknow mill at Mellor appears to have relied
primarily upon family groups (mothers as well1 as children), and Unwin
suggests that the provision of employment to fathers of these families--
outside the mill in general--was a continuing concern of Samuel Oldknow.
But pauper apprentices were nevertheless a significant part of the work
force at Mellor, reaching a
the end of the eighteenth maximum of perhaps twenty-five percent at
century. 9
It is not directly relevant to the purposes of this paper to enter
into moral discussion of child labor generally or pauper apprentice-
a

ship in particular.90 Given the factory, child labor was very likely a
necessary evil, at least in the early days. As Ure wrote,

See Ashton,
86 An , p. 28 who cites
Eighteenth Century Industrialist
as his authority 0. J. Dunlop, English Apprenticeship and Child Labor
,
p. 196. See also Bythell, op. cit., p. 52; Wadsworth and Mann, op. cit.,
pp. 407-408.
Wheelers Manchester
87 Chronicle, August 7, 1784.
Quoted in Wadsworth
and Mann, op. , p. 408.
cit. If inclined to business on a more modest
scale, one might be tempted by a package offer of a factory of sixteen
looms and the labor of twelve apprentices. , December
Manchester Mercury
1, 1789. Quoted in Bythell, op. cit., p. 52.

Mantoux,
88 op. cit., p. 411.

G.
89 Unwin and others, Samuel Oldknow and the ,
Arkwrights pp. 166-175.
The
90 evils speak for themselves, and it will suffice perhaps to note
that a man like Unwin reveals more than anything else the poverty of his
own imagination when, in bending over backwards to be fair and objective,
ibid. pp. 170-175) on the grounds that it was
he defends the system ,
(
superior to the alternative of the workhouse.

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 100

...it is found nearly impossible to convert persons past I

the age of puberty, whether drawn from rural or from handi-
craft occupations, into useful factory hands. After
struqql ing for a while to conquer their listless or restive
habits, they either renounce the employment spontaneously,
or are dismissed by the overlookers on account of inattention.

This was not,as history has shown, to remain a permanent state of affairs:
the factory did, after all, survive the abolition of child labor. Not
surprisingly, recruiting the first generation of factory workers was the
key problem. For this generation’s progeny the factory was part of the
natural order, perhaps the only natural order. Once grown to maturity,
fortified by the discipline of church and school, the next generation
could be recruited to the factory with probably no greater difficulty
than the sons of colliers are recruited to the mines or the sons of
career soldiers to the army.

The recruitment of the first generation of workers willing and able

to submit to an externally determined discipline has been a continuing
obstacle to the expansion of the factory system. Even mid-twentieth
century America has had to face the problem, and here too the lack of
alternatives has had an important role to play in aiding the market
mechanism. Just after World War II, General Motors introduced machine-
paced discipline to Framingham, Massachusetts, in the form auto-
mobile assembly plant. Over eighty-five percent of a of workers of an
sample
interviewed by a team of sociologists under the direction of Charles
Walker and Robert Guest had previously worked on jobs, where they them-
selves had determined their own work pace. When interviewed by the
Walker-Guest team in 1949, half the sample cited the lack of alternatives
--termination of previous jobs or lack of steady work--as the reason for
joing GM. And about a quarter said that they would be willing to take
a cut in pay, if they could only find another Said one: job.92

The sample
91 was just over one-fifth of all the production workers.

Charles
92 R. Walker and Robert H. Guest, The Man on the Assembly
,
Line HarvardUniversity Press, Cambridge, Mass., 1952, chapter 6. A
follow-up survey of worker attitudes would be fascinating: To what
extent did those who initially resisted and resented the dehumanizing
aspects of assembly-line work come to accept them--in return for rela-
tively high pay and job security? What was the process by which workers’
values and tastes changed in response to their employment at GM? To
what extent did they eventually seek more congenial work?

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 101

l’d take almost any job to get away from there. A body
can’t stand it there. My health counts most. What’s the
use of money if you ruin your health?93
If the problems of discipline and supervision--not the lack of a
suitable technology--were the obstacles to the agglo,neration of workers,
why did the factory syste!n e!nerge only at the end of the eighteenth
century? In fact, the factory system goes back much farther, at least
to Roman times. The factory, according to Tenny Frank, was the dominant
means of organizing the manufacture of at least two commodities, bricks
and red-glazed pottery.94 Interestingly for our purposes, Roman factories
appears to have bee manned almost exclusively by workers who had the same
degree of choice as pauper children in eighteenth century England--that
is to say, by slaves. By contrast, factories were exceptional in manu-
factures dominated by freedmen. Frank lists several--clay-lamps, metal
wares, jewelry, and water pipes--in which slaves were relatively uncommon;
all were organized along small-scale craft lines.95 This dualism is not
so surprising after al 1 . I ndependent draftsmen producing directly for
the market offer no scope for supervision, whereas slave labor is obvi-
ously difficult to mobilize without supervision. The factory offered
the ancient as well gs the modern world an organization conducive to
strict supervision.9~’
,
Ibid.
93 p. 88. Sometimes, it would appear, the problem of re-
cruiting suitable labor force is resolved in ways that inhibit rather
a
than foster the work attitudes necessary for expansion of industrial
capitalism. The abundance of unemployed and underemployed workers in
India, for example, appears to have permitted foreign and Indian enter-
preneurs to graft an alien factory system into indigenous society without
developing the discipline characteristic of Western factory labor.
Indian workers are much freer than their Western counterparts to come
and go as they please, for a contingent of substitute workers stands
ready to fill in as needed. See A. K. Rice, Productivity and Organi-
, Tavistock, London, 1958, pp. 79, 118
zation: The Amhedabad Experiment
for incidentalsupport of this hypothesis.

Tenney
94 Frank, An Economic History of Rome, Second Revised Edition,
Johns Hopkins University Press, Baltimore, 1927, chapter 14.
95 chapter 14.
,
Ibid.
Freedmen, it should
96 be noted, did apparently work for wages,
though not in factories. The existence of a proletariat seems beyond
dispute. ,
Ibid. pp. 269-270 and chapter 17.

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102

The surviving facts may be too scanty to prove anything, but they -

strongly suggest that whether work was organized along factory or craft
lines was in Ro;nan times determined, not by technological considerations,
but by the relative powder of the two producing classes. Freedmen and
citizens had sufficient power to maintain a guild organization. Slaves
_I
had no power--and ended up in factories.

This reasoning bears on the development of capitalism in modern

times. Guild organization of production and distribution eventually
gave way to the putting-out system for two reasons: it was more profit-
able to the class that was able to interpose itself between the producer
and the market, and, equally important, profits provided the nascent
capitalist class with the political power to break down the institutional
arrangements of guild organization--strict rules of apprenticeship,
strict association of production with marketing, and the like--and re-
place them with institutional arrangements favorable to the putting-out ,

system--the free market in labor as well as commodities, buttressed by

strict rules of industrial discipline, with harsh penalties for embez-
zlement and other infractions. Until the political pOwer of the small
master and journeyman was broken, the putting-out system could not
flourish, for the division of labor that formed the essence of the
putting-cut system denied both the orderly progression of apprentice to
master and the union of producer and merchant in the same person.

At the same time, the putting-out system was necessarily transi-

tional. Once a free market in labor was brought into existence, it was
only a matter of time until the employer took to the factory as a means
of curbingthose aspects of freedom that depressed profits. Legal
arrangements carefully set up to buttress the employer against the
worker’s &dquo;laziness&dquo; and ’~dishonesty&dquo; were, as we have seen, never enforce-
able to the capitalist’s satisfactioi.

The factory likely would have made its appearance much sooner than
it in fact did if the smal1 master and journeyman, fighting the battle
of the guild against capitalism, had not been able for a time to use
for their own ends the strategy of divide and conquer. Taking advantage
of divisions betweer more powerful classes, the small master and journey-
man were able to forge temporary alliances that for a time at least
were successful in stalling the advent of the factory. For example,
the alliance of the small cloth-making master with the large merchant
not engaged in production maintained strict controls on apprenticeship
well into the seventeenth century.97

97 Industrial Organization in the Sixteenth

Unwin, and Seventeenth
Centuries, p. 199.

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 103

A morestriking, perhaps the most striking, example of successful

alliance with more powerful1 interests had as outcome a Parliamentary
I
prohibit ion against the loom shop. Thus runs the 4Jeavers’ Act of 1555,
two hundred years before Arkwright:

Forasmuch as the of this realm have, as wel1 at the

weavers
present Parliament divers others times, complained
as at
that the rich end wealthy clothiers do in many ways oppress
them, some by setting up and keeping in their houses divers
looms, and keeping and maintaining them by journeymen and
persons unskillful, to the decay of a great number of arti-
ficers who were brought up in the said art of weaving...itt
is therefore, for remedy of the premises and for the averting
of a great number cf inconveniences which may grow if in time
it te not foreseen, ordained and enacted by authority of this
present Parliament, that no person using the mystery of cloth-
making, and dwelling out of a city, borough, market town, or
incorporate town, shall keep, or return, or have in his or
their houses or possession more than one woolen loom at a
time...98
The main purpose of this Act may have been, as Unwin suggests, &dquo;to keep
control of the industry in the hands of the town employers (who were
exempted from its coverage) by checking the growth of a class of country
capitalists.&dquo;99 It was precisely by riding the coattails of more power-
ful interests that the small master and journeyman were able to hold
their own as long as they did.

Indeed, the important thing about the 1555 Act is not the precise
alignment of the forces for and against, but its very existence at such
an early date. Where there was so much smoke there must have been some
fire, and some powerful motivation to the agglomeration of workers--long
before steam or even water power could possibly have been the stimulus.
Witch hunts apart, important legislative bodies are not in the habit of
enacting laws against imaginary evils. To be the occasion of parlia-
mentary repression, the loom shop must have been a real economic threat
to the independent weavers even in the sixteenth century. By the same
token, there must have been a class that stood to profit from the ex-
pansion of factory organization. The difference between the sixteenth
and later centuries was in the relative power of this class and the
classes that opposed the development of capitalist enterprise.

3&
98 4 Philip and Mary, c.II. Quoted in Mantoux, op. cit., pp.
34-35.
Unwin,
99 Industrial Organization in the Sixteenth and Seventeenth
,
Centuries p. 93.

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 104

Industrial capitalism did not gain power suddenly; rather it was a

fitful and gradual process, as a history like Unwin’s makes clear.100
But by the end of the eighteenth century the process was pretty well
complete. The outright repeal of statutes limiting apprenticeship or
otherwise regulating capitalists only reflected the new realities. By
this time the process of innovation towards the form of work organization
most congenial to the interests of the capitalist class was in full sway.
steam mill1 didn’t give us the capitalist; the capitalist gave us the
lIThe
jsteam mill.

IV. Variations on a Theme

The resort of economically and politically powerful classes to

innovation in order to change the distribution of income in their favor
(rather than to increase its size) was not unique to the industrial
revolution. Marc Bloch’s &dquo;Advent and Triumph of the Water Mill&dquo; tells
a fascinating story of a similar phenomenon in feudal times.101 The
dominance of water-powered flour mills may reasonably be thought to be
a consequence of their technological superiority over handmills. But
Bloch’s article suggests another explanation: water mills enabled the
feudal lord to extract dues that were unenforceable under a handmilling
technology.
What is the evidence for the assertion that the water mill was
inspired by distributional rather than technological considerations?
First grinding at the lord’s mill was obligatory, and the milling tolls
varied inversely with the status of the owner of the grain. Justice
Fitzherbert’s Boke of Surveying (1538) noted the systematic variations:

There be many divers grants made by the lord: some men to

be ground to the twentieth part (a toll in kind of 1/20 of
the quantity ground) and some to the twenty-fourth part;
tenants-at-will to the sixteenth part; and bondsmen to the
twel fth part.102
In extreme cases, the toll on grain grown on the lord’s manor was as high
as one-third,103
which suggests that the obligation to grind at the lord’s

Ibid.
100
Reprinted
101 in Marc Bloch, , (trans-
Land and Work in Medieval Europe
lated by J. E. Anderson), Harper & Row, New York, 1969, pp. 136-168.

Quoted
102 in Richard Bennett and John Elton, History of Corn Milling
,
vol. III, Simpkin, Marshall and Company, London, 1900, p. 155.

,
Ibid.
103 pp. 221, 253.

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 105

mill (the milling &dquo;soke&dquo;) was in the extreme merely a device for ensuring
that the peasant not evade what was actually a payment for the use of
the lord’s land, by secretly harvesting and sequestering grain due the
lord. The close relationship in the minds of contemporaries between the
milling soke and land rent is indicated by an extensive controversy over
the application of the milling soke to bought Despite the grain.104
obvious possibilities for evasion of dues on home-grown grain that an
exemption for purchased grain would have provided, Justice Fitzherbert
came down firmly for limiting the soke:

To the corn mills, to the most part of them, belongeth Socone

(soke)--that is to say, the custom of the tenants is to grind
their corn at the lord’s mill; and that is, me-seemeth, all
such corn as groweth upon the lord’s ground, and that he (the
tenant) spendeth in his house. But if he buy his corn in the
market or other place, he is then at liberty to grind where
he may be best served.105

Whether the obligation to grind grain at the lord’s mill (coupled

with confiscatory tolls) was a more enforceable version of a land rent,
or whether it was an additional device for enriching the landlord at
the expense of the tenant may not be terribly important for present
purposes. Both hypotheses are consistent with the proposition that
distributional rather than technological considerations dominated the
choice of milling technique. In arguing for this proposition Bloch
finds it significant that &dquo;All the (water) mills whose hi tory we can
more or less follow were in fact seignorial1 in origin.1110
...where--as in Frisia--the community was exceptional in
managing to avoid being stifled by seignorial authority,
the peasants only took advantage of their liberty to re-
main obstinately faithful to their own individual mills.
They were not prepared to come to a friendly agreement
with one another and adapt technical progress to their
own requirements.107

,
Ibid.
104 chapter 9.
Quoted
105 , p. 242. By the time of
in Bennett and Elton, op. cit.
Henry VIII, feudal institutions had begun to decay and it is hard to
decide between the hypothesis that the learned justice’s remarks reflects
this decay and the hypothesis that the milling soke was bound up with
land rent.

106
Bloch, op. cit., p. 151.

,
Ibid.
107 p. 151.

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106

Presumably the as he gained power, would have been content

lord,
to allow peasants continue with their handmills if he could have
to -

extracted milling dues independently of milling technique. Thus, at -

certain places and times, the lords &dquo;did not so much claim to suppress I
as to make the use of them subject to the payment of a
(handmills)
due.&dquo;10 But enforcement must have posed the same problems it later
did for the putting-out master. It must have been extremely difficult
to prevent the peasant from &dquo;embezzling&dquo; the lord’s &dquo;rightful&dquo; portion
of grain if the milling operation took place within the peasant’s own
house. Bloch mentions the &dquo;lawsuits which grimly pursued their endless
and fruitless course, leaving the tenants always the losers&dquo;109--but
at great expense of time, effort, and money to the lord as well. More-
over,

In the countryside, seignorial authority, harassing though

it was, was very poorly served. It was therefore often
incapable of acting with that continuity which alone would
have made it possible to reduce the peasants, past masters
in the art of passive resistance, to complete submission.110
I
Just as later the master manufacturer’s &dquo;thoughts turned to work-
shops where the men could be brought together to labor under the eyes
of watchful overseers,&dquo; so must the feudal lord’s thoughts have turned
to a centralized water mill where grain would be ground under the watch- z
ful eyes of his bailiffs. Essential therefore to the triumph of the
water mill was not only a monopoly of the sources of water power, but
an absolute prohibition against the use of hand mills--the establishment
&dquo;

of the soke.

A very great piece of luck enables us to see the monks of

Jumierges, in an agreement dated 1207, breaking up any
handmills that might still exist on the lands of Viville.
The reason is no doubt that this little fief, Qarved out
of a monastic estate for the benefit of some high-ranking
sergent of the abbot, had in fact escaped for a long period
the payment of seignorial dues. The scenes that took place
in this corner of the Norman countryside under Philip Augustus
must have had many precedents in the days of the last Caro-
lingians or the first Capetians. But thev escape the meshes
of the historian’s net.lll

Bloch,
108 , p. 156.
op. cit.

Bloch,
109 , p. 157.
op. cit.

110
,
Ibid. p. 155.

,
Ibid.
111 p. 154.

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 107

At about the same time the milling soke was being explicitly incorporated
&dquo;
into English milling rights. ’The men shall not be allowed to possess
any handmills’--such was the clause inserted by the canons of Embsay in
Yorkshire between 1120 and 1151, in a charter in which a noble lady made
over to them a certain water mill,&dquo;112

The struggle between the lord and peasant was hardly an equal one,
and the history of grain-milling reflects this asymmetry: the handmill
gradually disappeared from the scene. But when the peasant temporarily
gained the upper hand, one of the first casualties was the lord’s mono-
poly on grain-milling--and maybe the lord and the water mill for good
measure. After recounting a half century of intermittent struggle
between the people of St. Albans and the abbot who was their lord, Bloch
nears the end of what he calls, without exaggeration a &dquo;veritable milling
epic:&dquo;113
...when in 1381 the great insurrection of the common people
broke out in England and Wat Tyler and John Ball emerged as
leaders, the people of St. Albans were infected by the same
feler and attacked the abbey...The deed of liberation which
they extorted from the monks recognized their freedom to
maintain &dquo;hand-mills&dquo; in every home. The insurrection how-
ever proved to be like a blaze of straw that soon burns it-
self out. When it had collapsed all over England, the
charter of St. Albans and all the other extorted privileges
were annulled by royal statute. But was this the end of a
struggle that had lasted over a century? Far from it. The
(monastic) chronicler, as he draws to the close of his story,
has to admit that for malting at any rate the detestable
hand-mills come into action again and have been again
fo rb i dden . 1 1h ~ve
What lessons do we draw from Bloch’s account of the conflict between
alternative milling techniques? Most important, it was not technological
superiority, but the nature of feudal power and the requisites of en- t
forcing that power that determined the replacement of handmills by water
mills. It was not the handmill that gave us feudalism, but the feudal
lord that gave us the water mill.

A model of feudalism that assumes a given distribution of power

between master and man would naturally suggest that milling techniques
should have been chosen on the basis of technological efficiency. But

Bloch,
112 , p. 157.
op. cit. Bennett and Elton denote a whole chap-
ter to the institution of soke. , chapter 8.
Op. cit.
113
Bloch, op. cit., p. 157.
,
Ibid.
114 p. 158.
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108

such a model implicitly ignores the dynamic conflict between classes

and the need of the controlling class to choose technologies that facili-
tate the exercise of its power. A static analysis of the choice between
handmill and water mill, or of feudalism generally, is as far off the
mark as an analysis of the choice between domestic and factory production,
or of capitalism generally, based on the neoclassical model of perfect

competition. The key roles played by supervision and discipline--or,

more generally, the exercise of power--in the determination of technology
require models that are grounded in the challenge-response mechanism of
class conflict, models at once dynamic and dialectic.

The collectivization of Soviet agriculture makes clear that effi-

ciency is not necessarily the determinant of technology under socialism
any more than under feudalism or capitalism. Stalin’s arguments, to be
sure, stressed the technological superiority of collective farming:

The way out (of the difficulties of the twenties) is to turn

the small scattered peasant farms into large united farms
based on the common cultivation of the soil, to introduce
collective cultivation of the soil on the basis of new and
higher technique. The way out is to unite the small and
dwarf peasant farms gradually and surely, not by pressure
but by example and persuasion, into large farms based on
common cooperative cultivation of the soil, with the use of

agricultural machines and tractors and scientific methods

of intensive agriculture.115
A different rationale emerges from the account of even the most
sympathetic of outside observers--for example, Maurice Dobb.116 The I
’
difficulty from which a way out was most urgently needed was not low
agricultural output, but the mobilization of enough surplus grain to
permit the Government both to maintain the level of real wage rates in
industry and at the same time to launch an ambitious program of capital
accumulation, which would require both exports to pay for imported
machinery and expansion of employment in capital-goods producing indus-
tries. Under the New Economic Policy of the twenties, the Soviet
Government’s ability to impose on the peasants its own conception of
the size of the agricultural surplus was limited to its control over
the terms on which grain would be exchanged for industrial products.

Report
115 to the Fifteenth Congress of the Communist Party of the
Soviet Union, December 1927. Quoted in Maurice Dobb, Soviet Economic
Development Since 1917
, Fifth Edition, Routledge and Kegan Paul, London,
1960, p. 222.

,
Ibid.
116 especially chapter 9.

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 109

Inadvertently, the Revolution had exacerbated the problem of

mobilizing the agricultural surplus. In sharp contrast with the methods
followed in reorganizing large-scale industry, the Revolution broke up
large landholdings and maintained the principle of private property in
agriculture,.117 Until the collectivization drive at the end of the 1920’s,
grain production was overwhelmingly in the hands of kulaks, sredniaks,
and bedniaks--rich, middle, and poor peasants. So when the dislocations
of civil war were surmounted and production restored to pre-war levels,
peasant producers controlled the allocation of grain between on-farm
consumption and market sales. And just as the British workman of the
eighteenth century wanted to take a significant portion of any increase
in real income in the form of leisure, so the Russian peasant of the
twentieth chose to eat better as he became the master of the grain
formerly due the landlord. However desirable this was for the peasant,
the results were disastrous for the rest of the economy. Grain produc-
tion &dquo;was (in 1925-26) nearly nine-tenths of 1913; but the marketed
surplus was less than one-half of the pre-war amount. ’’118
Of course, the Soviet Government could and did levy taxes upon the
peasant, but there remained the age-old problem of enforcement. More-
over the civil war had made the peasant-worker alliance politically
essential, which, as Lenin told the Tenth Party Congress in 1921, posed
certain constraints on agricultural policy:
The interests of these classes do not coincide: the small
farmer does not desire what the worker is striving for.
Nevertheless, only by coming to an agreement with the
peasants can we save the socialist revolution. We must
either satisfy the middle peasant economically and restore
the free market, or else we shall be unable to maintain
the power of the working class.119

As long as the market remained the principal means of mobilizing

an agricultural surplus out of the countryside, the Government could do
little more than manipulate the terms of trade. The debate that ensued

According
117 to official Soviet figures, less than two percent of
total grain production was accounted for by state and collective farms
in 1926-27, ibid., p. 217.

118
,
Ibid. p. 214.

Quoted
119 in Dobb, ibid.
, p. 130.

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110

between the proponents of high prices for agricultural1 goods (to coax
out the surplus) and those who favored low prices (to minimize the costs
in terms of industrial goods of mobilizing the surplus) was, alas, .

largely beside the point. Against the argument for high prices was ’-
first of alli the possibility that no price policy would have coaxed out
enough grain both to maintain the urban real wage and to launch an
ambitious program of capital accumulation. The supply curve for grain
under small-holder agriculture could, like the supply curve of labor
under the putting-out system, have both forward-sloping and backward-
bending ranges; there may simply have been no terms of trade at which
the peasant would have freely parted with enough grain to allow the
Government both to pay for imports and to feed a work force swelled by
the addition of workers building machines and factories, dams and high-
ways--without sharply reducing the real wages of all workers. But even
if sufficiently high would have coaxed out adequate
relative prices
supplies of grain, the cost in terms of industrial consumer goods,
domestic or imported, would probably have made capital accumulation all
but impossible--save by a reduction in the real wage. Low agricultural
’

prices were no solution, however. For, beyond a certain point at least,

lower prices would simply encourage peasants to eat more and sell less.

Faced with this dilemma, the Soviet authorities could have sacri-
ficed either capital accumulation or the real wage. But in the twenties,
at least, the Revolution was not sufficiently secure to permit a con-
scious policy of reducing real wages, whatever the convictions of the
leaders.120 As a result, capital accumulation suffered. Thus it was
that

the apparent gap in urban consumption which (the) shortage

of marketed grain supplies occasioned was met by reducing
the export of grain, which even in the peak year of the
post-war period did not exceed a third of its pre-war quan-
tity.121
And thus it was that &dquo;in the middle and late ’20’s, unemployment
(skilled and unskilled) was large and was tending to increase.&dquo;122

Abram Bergson quotes a study based on Soviet statistics to the

120
effect that real wages rose by eleven percent between 1913 and 1928.
The Structure of Soviet Wages
, Harvard University Press, Cambridge,
1944, p. 203.

Dobb,
121 cit. p. 214.
op. ,

,
Ibid.
122 p. 189.

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 111

The decision, towards the end of the decade, to double or triple

the rate of capital accumulation over a period of five years--the goal
of the &dquo;minimal&dquo; and &dquo;optimal&dquo; variants of the First Five Year Plan123
--required either a policy aimed at reducing the industrial wage rate
(though not the wage bill) or a policy designed to reduce total con-
sumption in the countryside.l24 To reduce industrial wages would have
undermined the support of the most revolutionary class--the proletariat.
Besides, such a policy would surely have made it more difficult to
recruit new entrants to the industrial labor force once the initial
backlog of unemployment had been overcome.125 This left no choice but
to break the peasants’I control over the disposition of agricultural
production. It is hard not to agree with Dobb’s conclusion: &dquo;Collective
farming was (an) expedient for solving the difficulty of
aggricultural produce to an expanding (industrial) population.&dquo;1 E’2 supplying
With collectivization, the Government at last determined not only the
terms of trade, but the quantities of agricultural and industrial pro-
ducts flowing between the countryside and the city.

The economic problem posed by peasant ownership of land was, in

short,’fiot one of insufficient production, and not necessarily one of
a surplus insufficient for feeding the nonagricultural population. It
was rather that land ownership gave the peasants too strong a voice in

determining the rate of capital accumulation. &dquo;New and higher technique&dquo;

was no more the basis of collective farming than it was, centuries

earlier, of the water mill. Had technological superiority rather than

control of the surplus really been the basis of collectivization, the

123
Ibid., p. 236.
It
124 was not necessary to reduce the average standard of living,
as the Plan’s provision for increased total consumption makes clear.
That part of the labor force that was unemployed or underemployed in
the twenties would receive employment and wages as a result of the ex-
pansion envisioned in the Plan, and the improvement in their standard
of living could more than make up for the deterioration of the standard
of living imposed on everybody else, both in terms of distributive
justice and statistical averages.
Whatever reductions in real wages accompanied the First Five Year
125
Plan were probably, as Dobb says, the unforseen result of the resistance
of peasants to collectivization and the consequent reduction in agricul-
tural output. ,
Ibid. p. 237.

Dobb,
126 op. cit., p. 225.

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112

Soviet Government would have had no more reason to renege on Stalin’s

promise to rely on &dquo;example and persuasion&dquo; to bring the peasants
aboard’27 than the feudal lord had to outlaw the handmill in order to
ensure the success of the water mill.

A due regard for the role of economic power and the institutional
constraints on the use of power are as important to understanding
socialist economic development as to understanding the development of
earlier economic systems. Under socialism (at least in its Soviet
no less than under feudalism and capitalism, the primary de-
< strain),
terminant of basic choices with respect to the organization of production
has not been technology--exogenous and inexorable--but the exercise of
power--endogenous and resistible.

Department of Economics, Harvard University; Cambridge, Massachusetts

Compare
127 Dobb, ibid.
, pp. 228-229.

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