CHAPTER VII

PRINCIPAL FORMS OF THE ECONOMIC ORGANIZATION OF INDUSTRY ¹

We understand by industry the transformation of raw materials; thus the extractive operations and mining are excluded from the concept. However, the latter will be treated in connection with industry in what follows, so that the designation “industry” embraces all those economic activities which are not to be viewed as agricultural, trading, or transportation operations.

From the economic standpoint industry—in the sense of transformation of raw materials—developed universally in the form of work to provide for the requirements of a house community. In this connection it is an auxiliary occupation it first begins to be interesting to us when production is carried beyond household needs. This work may be carried on for an outside household, especially for a seigniorial household by the lord’s dependents; here the needs of the one household are covered by the products of other (peasant) households. Auxiliary industrial work may also be performed for a village, as in the case of India. Here the hand workers are small farmers who are not able to live from the product of their allotments alone. They are attached to the village, subject to the disposal of anyone who has need of industrial service. They are essentially village serfs, receiving a share in the products or money payments. This we call “demiurgical” labor.

The second mode of transforming raw materials, for other than the needs of a household, is production for sale—that is, craft work. By craft work we understand the case in which skilled labor is carried on to any extent in specialized form, either through differentiation of occupations or technical specialization, and whether by free or unfree workers, and whether for a lord, or for a community, or on the worker’s own account.

It will be seen that industrial work for the needs of the worker originally appears in the closed house community. In general the oldest form of specialization is a strict division of labor between the sexes. To the woman exclusively falls the cultivation of the fields; she is the first agriculturist. She is by no means given such a high position as Tacitus, who here waxes fanciful, represents in the case of the Germans. In ancient England the seduction of a wife was regarded as a mere property damage to be compensated by money. The woman was a field slave; upon her lay the entire work of tillage and all activity connected with the utilization of the plants grown upon the land, as well as the production of the vessels in which cooking was done, and finally the broad category of textile work—braiding of mats, spinning, and weaving. As to weaving there are indeed characteristic exceptions. In Egypt, Herodotus was rightly impressed by the fact that men (servile) worked at the looms, a development which took place generally where the loom was very heavy to manipulate or the men were demilitarized. To the man’s share on the other hand fell everything connected with war, hunting, and livestock keeping, as also work in metals, dressing of leather, and preparation of meat. The last ranked as a ritualistic act; originally meat was eaten only in connection with orgies, to which in general the men alone were admitted, the women receiving what was left over.

Industrial work in communal form is found in occasional tasks, especially in house building. Here the work was so heavy that the single household and certainly the single man could not carry it out. Hence, it was performed by the village as invitation work on a mutual basis, enlivened by drinking, as is still done in Poland. Another example in very early time is work for the chieftain, and another is ship building, which was done by communal groups voluntarily formed for the purpose and which had a good chance of taking up piracy. Finally, it may happen that a number of free men join together for work in the production of metals, though the production of iron is a relatively late phenomenon. Originally houses were built without metal nails; the Alpine house has a flat roof in spite of the burden of snow, because there are no nails for a sloping roof.

As will be seen from the spread of invitation work, the earliest specialization by no means implies skilled trades. The latter are related in primitive lands to magical conceptions ; the belief in things which can be achieved by the individual only by magical processes had to develop first. This was especially true of the medical calling; the “medicine man” is the earliest profession. In general every highly skilled occupation was originally regarded as influenced by magic. The smiths especially were everywhere viewed as characterized by supernatural qualities because a part of their art appears mysterious and they themselves make a mystery of it. The skilled occupations developed within the large household of a chieftain or landed proprietor, who was in a position to train dependent persons in a special direction, and who possessed the needs for which skilled work was requisite. The skilled occupation may also have evolved in connection with the opportunity for exchange. The decisive question in this connection is, has the industry access to a market? and also, who sells the final product after it has gone through the hands of the various producers? These questions are also vital for the struggles of the guilds and for their disintegration. A specialized skilled craftsman may produce freely for stock and for the market, selling his product as a small enterpriser. This extreme case we shall call “price work”; it presupposes command over raw materials and tools. One possibility is that the raw materials, and under some circumstances the tools, are provided by an association. Thus the medieval guild as a group bought and distributed certain raw materials, such as iron and wool, in order to safeguard the equality of the members.

The opposite extreme is that the craftsman is in the service of another as a wage worker. This appears when he is not in possession of raw material and tools but brings to the market his labor only, not its product. Between the two extremes stands the craftsman who works on order. He may be the owner of the raw materials and tools, giving rise to two possibilities. Either he sells to the consumer—who may be a merchant ordering from him; in which case we speak of free production for a clientele, or, he produces for an entrepreneur who possesses a monopoly of his labor power. The latter relation often results from indebtedness to the entrepreneur, or from the physical impossibility of access to the market, as for example in the export industries in the middle ages. This is called the “domestic” system, or more descriptively, the putting-out system or factor system; the craftsman is a price worker on another’s account.

The second possibility is that raw material and tools— one or the other or both—are provided by the one who orders the work, the consumer. Here we shall speak of wage work for a clientele. A final case is that in which the person ordering the work is an entrepreneur who has production carried on for gain; this is the case of domestic industry, the putting-out system. Here are associated on the one hand a merchant entrepreneur (Verleger) who commonly, though not always, purchases the raw materials, and under some circumstances also provides the tools, and on the other hand the wage worker on order in his home, who cannot bring his own product to the market because the requisite organization of craft work is absent.

With regard to the relation of the worker to the place of work, the following distinctions may be made. 1. The work is done in the worker’s dwelling. In this case the craftsman may be a price worker who independently fixes the price of his product; or he may be a home worker for wages for a clientele, producing on the order of consumers; or finally, he may be a home worker for an entrepreneur. 2. On the other hand the work may take place outside the worker’s dwelling. Here it may be itinerant work, work done in the house of the consumer, as is still common with seamstresses and dressmakers; such work was originally done by “wandering” laborers. On the other hand the work may be brought to the worker, but may be of such a nature that it cannot be carried on in his own house, as in the case of the whitewash industry. Finally, the work place may be an “ergasterion” or work shop, and as such separate from the dwelling of the worker. An ergasterion is not necessarily a factory; it may be a bazaar-shop where work place and place of sale are combined. Or, it may be leased in common by a number of workers; or finally, it may belong to a lord who puts his slaves to work in it, either selling the product himself or permitting the slaves to sell it on condition of a specified payment. The character of the ergasterion is most clearly seen in the modern shop enterprise where the conditions of work are prescribed by an entrepreneur who pays wages to the worker.

The appropriation of the fixed investment, under which the work place and means of work are included insofar as the latter do not come under the head of tools, may also be effected in various ways. There may be no need for a fixed investment, in which case we have to do with pure craft work, as in the medieval guild economy. The absence of fixed capital is characteristic of the latter to the extent that as soon as such capital appears the guild economy is in danger of dissolution. If there is a fixed investment it may be provided and maintained by an association, —village, town, or workers’ organization. This case is common, and especially is met with repeatedly in the middle ages, the guild itself providing the capital. In addition we find seigniorial establishments which the workers are allowed to use for a payment; a monastery, for example, establishes a fulling mill, and grants free workers its use. Again it is possible that the seigniorial establishment may be not only placed at the disposal of free workers but used in production by workers under the dominium of the owner and whose product he himself sells. This we call “oikos,” or villa, craft work. Originated by the Pharaohs, it is found in the most varied forms in the establishments of the princes, landed proprietors, and monasteries of the middle ages. Under oikos craft work, however, there is no separation between the household and the enterprise, and the latter ranks only as an auxiliary interest of the entrepreneur.

All this is changed in the capitalistic establishment of an entrepreneur. Here work is carried on with means provided by the entrepreneur, and discipline is necessary. The entrepreneur work shop counts as fixed capital, forming an item in the accounting of the entrepreneur; the existence of such capital in the hands of an individual is the fact which brought about the downfall of the guild system.