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”: A critical review of the debate Kishore Kaushalendra Date: 3rd October 2012 1. Summary of the debate I must start by saying that reviewing a debate between giants such as Marglin and Landes is a difficult task. I consider my effort as a humble attempt to try to critique some possible flaws and biases which the authors might have had. I will start by summarising the article by Marglin titled “What do bosses do?”
Marglin challenges the popular notion that organization of work has been determined by technological considerations of efficiency. In his paper, he argues that hierarchy in work did not arise for technological considerations. He says that division of labour and centralized organization which characterized the putting out system and the factory system did not happen for the reasons of technical superiority. Rather, he says that, it was merely to provide the capitalist a role in the production process: “Separating the tasks assigned to each workman was the sole means by which a capitalist could, in days preceding costly machinery, ensure that he would remain essential to the production process as the integrator of these separate operations into a product for which a wide market existed; and specialization of men to tasks at sub-product level was the hall mark of the putting out system.” Marglin gives several arguments for this. He first challenges the three reasons given by Smith in favour of division of labour leading to increase in productivity. He says it is true that time is saved in division of labour which is generally lost in passing from one species of work to another. But this time can be saved if a person continues to perform a single activity for a sufficiently long time such that the set up time becomes an insignificant portion of the total
work time. It was problems in organizing the work force and not inferior technology that played a substantial part in the failure of . The planter capitalist advanced credit to the ex-slaves for various necessities like food. rather the scarcity was artificially created to preserve the capitalist’s role. He gives another example of how the planters found a method to exploit the ex-slaves who were no longer tied to the land. These advances were secured by a lien on present and future crops. He says that the advantage of the factory was not the new technology or machine but the ability to supervise and discipline the workers. Marglin says: “The putter-outer’s peculiar contribution to production was handsomely rewarded not because of any genuine scarcity of ability to integrate separate function. then potential increase in dexterity afforded by minute divisions of tasks was quickly exhausted. He says that this capitalist division of labour as developed in putting out system was like the ‘divide and rule’ strategy. fertilizer etc. The planter developed a system of coupling crop-lien system of credit to share-cropping system of farming. but also his control of the work process and how much he would exert himself. As for Smith’s first advantage. seed. First create a problem and then become the solution to it. and the debtor would never be able to pay the debt as the books were maintained by the capitalist. But if the skills are not very special. the gain in dexterity due to practice is useful only if the tasks are complex. he says is “not terribly persuasive” because Smith himself notes that repetitive labour does not stimulate creative faculties.” He says that because of the reason that division of labour was not technologically superior. The third argument by Smith regarding encouragement of innovation. in coal producing industry where there was a natural existence of capitalists because of paucity of resources there was no division of labour in the old hand-gots method or under mechanized-longwall-conditions. Marglin then analyses the factory system which took away from the worker not just the control over the product.
In wool industry. Similarly in weaving.” He then explains why market mechanism. He gives additional evidence for the assertion that factory spinning did not depend for its success on superior machine technology. handloom weavers were brought together into workshops to weave by same technique that was employed in cottage industry. the patent system need not have become the dominant institutional mode for rewarding inventors.” On the supply side he argues that it was easier to enforce patent rights with production concentration into factories. “It is not accident that technological changes atrophied within the putting-out system after Hargreave’s jenny but flourished under the factory system.Wyatt-Paul enterprises. in particular the system of rewarding inventors through patents. Although factory is more congenial for technological change it is so only because of certain institutional arrangements. long before power loom was practicable. He then says that the particular forms of technological innovation that took place were also determined by the factory system. by favouring those with sufficient resources to pay for the licenses (and identically contributing to the polarization of the producing classes into bosses and workers). the technology of wool-spinning in factory system was same as in cottage industry. He explains that discipline and supervision were inadequate only from the . fails to provide adequate supervision and discipline under putting out system. The worker’s resentment was not towards the power loom but against the handloom shop owner. “Had the patent system not played into the hands of the more powerful capitalists. He says that a different method of rewarding inventions could have been found out but it did not happen. and this naturally channelled the innovative activity in more remunerative market. which is supposed to harness the self interest of the producer to public interest.
Marglin quotes Arthur Young: “But for the oligopsonistic putter-outers. It was difficult to organize freedmen into factories and they maintained a guild organization.” Even though the capitalists resorted to laws to check the workers. the workers tried to avoid the factory system. They worked in factories only because they did not have a choice. Factories merely gave more output for more labour. This system was only possible because the workers who worked were slaves much like the helpless pauper children worked in factories during industrial revolution.” Marglin then says: “Thus the very success of pre-factory capitalism contained within it the seeds of its transformation. it was disastrous. It was only in factories that the worker could be monitored and this put an end to his ‘dishonesty and laziness’. The factory system was thus not technologically superior to putting out system until the advanced technological changes took place. the fact that higher wages led workers to choose more leisure was not only perverse. not from the point of view of the worker. He says that factory system existed in Roman times in the manufacture of bricks and redglazed pottery. If the wages would rise worker would only want to work less. However the bias of technological changes towards the improvements consistent with factory organization led cottage weaving to gradually disappear.producer’s perspective. Where ever an alternative was feasible. these laws were ineffective under the putting out system. Cottage weaving was one of the last alternatives to factory work and in spite of low wages many stuck to it. The indiscipline and laziness of the workers were because of his backward bending labour supply curve. .
Landes disagrees with the thesis presented by Marglin and says that “such a thesis misreads history and is essentially ideological. An entrepreneur brings a lot to the table and his role in not just an artificially created role.He then says that putting out system ultimately replaced guild organization for two reasons (none of which had to do anything with technological superiority). In order to check this the feudal lords had prohibited the use of hand mills. Marglin gives another example where the economically and politically powerful classes resort to innovation in order to change the distribution of income. He says that the water powered mills came up not because they were technologically superior because it enabled the feudal lords to extract dues that were unenforceable under a hand milling system. . Under hand milling system it was easier for the producer class to cheat and not pay taxes. First it was more profitable to the putter-outer and second these profits provided the nascent capitalist class the requisite political power to break down the institutional arrangements of guild organization. I would now try to summarize the article by Landes and also the points of agreements and disagreements between the two authors. Technology also later evolved to support this system of organization as this is how the incentives were biased.” The main conclusions of the paper are that bosses do have an important role to play in the production process. Thus Marglin is trying to show that in the era when technology was not that advanced and machines were still cheap. the putter-outer system and factory system emerged not because it was technologically superior but because it gave the capitalists a way to organize production in a more exploitative way where more input would produce more output and cutting workers off from the market gave the capitalist excess surplus.
Some parts of the work might be just too trivial and easy and he would ask someone less skilled or lesser in strength to do those jobs (like his children).’ A new apprentice would learn the different components of work by first doing the simpler tasks and then the more complex ones. workers can be a source of important suggestions. On set up time he says. Thus as long as lesser skilled labour was available who would do the simpler tasks at lesser wages there would be division of labour. Maglin had also quoted Ashton (from “The records of pin factory”.1814-21) to show that children and men got paid differently. Landes then critiques Marglin’s argument that the capitalist would have no role to play in the production process if there were no specialization. On Marglin’s argument that many of the skills are so ordinary that anyone could learn them he gives an example from Ashton (from “The records of pin factory”. Manufacturer . that a skilled worked even though he might be capable of performing all tasks that went into the manufacture of a commodity would not do so for efficiency reasons. He then says that on being given proper incentives. Marglin says that if the worker could have produced the final product on his own he could have sold it to the market himself and the intermediary capitalist could have been dispensed with. He also says that specialization was not just a matter of efficiency but was at the same time ‘the vehicle for instruction and training. Landes starts by counter arguing the reasons given by Marlin. To counter argue he says the job of capitalist was to break a production process into simple tasks and then assign them to people of different skills.Marglin had said that division of labour does not add much value in terms of efficiency and had criticized the three reasons given by Smith. Landes says that this is not right as selling was a time consuming and arduous job (which required a lot of travelling in difficult weather) and which often required language skills (not found in workers). each earning a different wage.1814-21) where Ashton says that the wages of adult males were almost the same no matter which branch they were engaged in.
and producers responded to market opportunity. Landes then gives the example of lord who did not manage the whole operation taxing and there by collect more fee. This was done because of the pressure towards simplification which was the key to lowering costs. Seeing this opportunity some of the more enterprising of the shop owners would have taken to the job of merely managing.” He then gives the example of mountain Swiss which had broken the manufacture of watches into fifty components. He argues that this was done for two reasons: first the merchants knew more about the markets opportunities the other was that there were certain tasks which did not suit the gentility. Instead he allowed outside merchants to come into the business. These journeymen would have been ready to work for a master. They also needed labour which was . He gives other examples where people distribute work and let go a larger fee in order to avoid risk or for the simple preference of leisure. In that case he would have himself turned into a capitalist. On the other hand there would be more fully trained journey men than openings for masters. Some shops would have produced better quality goods and would have had excess demand. Landes explains that Merchant manufactures needed labour and this was difficult to hire in cities as there was already a guild system existing there.and this in the absence of mechanization. Landes says: “The specialization was already there. selling and supervising the workers without himself doing the actual production. the gains to specialization made the market.could sell his good to a whole seller but again he would be back to square one or he could engage a travelling sales man to sell his work but he would then have to produce enough or buy and keep a large stock to keep the sales man busy. Landes then explains the organization of a shop in clock and watches industry to explain how specialization would have emerged.
preparatory stages of manufacture (carding and slubbinbg) and aimed at ensuring throughput to the heat-intensive. have large machines etc) to say that it makes sense to bring workers together in large units. However..cheaper and for this they turned to the rural population where they got labour which was cheaper than trained journeymen and also much less skilled. and many a times producer kept working while hiring others to augment output. Gradually increased responsibility from management side pulled such people away from production (but they continued to design layouts and check quality). In wool manufacture some of the hand processes were brought into concentrated units (factories) and as per Marglin this was enough to make such units competitive. He says that the circumstances were many times fuzzy. But he disagrees with Marglin on the point that merely organization into factories gave factories an edge and made it a dominant mode of production. Landes gives the characteristics of factories (they consume a lot of energy. He says that it makes more sense to work cooperatively when one is producing ‘on speculation’. Landes disagrees on this point saying that: “. so they divided the job into simplest possible tasks which could be learnt quickly by the rural labourers. Since they wanted quick results and profits. such units were a response to introduction of machines into earlier.. He says that it was this expansion into rural areas that made European and particularly English industrial products competitive and laid the foundation of industrial revolution. He then moves on to analyse the factory system and here he says that Marglin has got the story right in the sense that the key motivation for moving from putting out system to factory system was employer’s desire to control the work process through supervision and discipline. . in textile industry the wheel and loom did not require large shops and in fact dispersed manufacture had it own advantages because of which it continued to survive in the form of cottage industry long after the factory rendered its technology uncompetitive.
And patent system existed because it favoured those who had sufficient capital to pay for licences. As discussed above. The role of entrepreneur was also crucial as he was the one who could understand the needs and opportunities of technological change. as machines got bigger and better more and more cloth was made in factories. the new technology would have made its way. with or without parish apprentices. .” Another point where Landes and Marglin disagree is the contribution of factory mode to technological change. He says that often spur of fame by the new invention dominates pecuniary self interests. Landes says that it is wrong. “The steepness of this learning curve justifies. Thus eventually machines would have taken over and the production would have got centralized.power driven finishing process (fulling. Marglin thought that factory system was more conducive to new inventions only because the patents system of rewarding inventions existed. they wanted to be able to keep the plant and equipment busy. While Marglin criticizes the entrepreneur. dyeing. moreover. which has not been empirically proven and second that it is easier to capture gains from patents in a factory.” He says that although small clothiers in woollen industry were able to survive (due to a symbiotic relationship) for quite some time.If clothiers were going to invest in factories at both end of the production process. Landes extols his virtues.first that patents were an incentive to inventions. The factory bias for technological change was that it could go a long way and make huge sums of money. The biggest motivation for innovation was to gain a ‘Schumpeterian headstart’ for one’s own enterprise. printing). the argument that even if first machines had not been dominant. It rests on two assumptions.
The debate is useful simply on the grounds that it talks of how. technical. not part of life itself. Landes says that even if Marglin is right. Organizations cannot be reverted back to non-hierarchical forms. Today human life is becoming increasing fast and busy.B. we cannot go back as we have come too far. at least not without a significant cost. it is not possible to give up the hierarchical mode of production today. In my opinion the debate has quite a bit of significance today. In such an environment where people are 1 Schor.manual. And workers. The purpose of development in a civilized society is to make a person’s life more comfortable and happy. J. at least not without a significant cost. if at all it is possible. then it becomes at least an open question whether or not hierarchical production is essential to a high material standard of living. In developing countries. Marglin writes: “If it turns out that the origin and function of capitalist hierarchy has relatively little to do with efficiency. (1993) “The Over Worker American: The unexpected decline of leisure” . can the work life of a person be improved and made more comfortable so that he finds more meaning in it and feels less alienated.may take the possibility of egalitarian work organization sufficiently seriously to examine their environment with a view to changing the economic. People are busier today than ever and working hours in many societies have increased1. occupation is shifting from villages to cities leading to a disruption of the older mechanisms of economic and emotional support. 2.” On the other hand.In the end Landes says that even if Mrglin is right. and intellectual. social and political institutions that relegate all but a fortunate few to an existence in which work is the means of life. Usefulness of the debate The authors differ on this point as well.
(2004).”2 The debate provides impetus towards existence of more of such firms. they reduced pay of all the workers.” Chapter 10 . The advent of new technology is also helping.the best estimates by Craig and Pencavel (1995). it challenges the modern day entrepreneurs to try and establish such firms which give better control of product and production process to the worker. These problems can be overcome with better financial products.spending more time in doing their job and less on leisure. Cooperatives also adjusted to insufficient product demand in a very distinctive way: rather than laying off members. One of the reasons why there are few cooperatives or labour managed firms is that labour is not able to hire capital and the reasons for this are credit constrains facing suppliers of labour and wage employment as a form of insurance. ranging from 6% to 45% depending on the method of estimation. Microfinance institutions today are trying to provide such micro credit and micro insurance products. “Microeconomics. “The total factor productivity of coops was substantially higher. They are already financing small scale independent entrepreneurs and it is quite possible that these and other more sophisticated financial products could gradually lead to more and larger cooperative firms. In a way. there by spreading the impact of negative shocks among the membership. All we need is better insurance and credit products which are suitable to the labour class. The existence of cooperative firms suggests that it is even possible. S. These firms are more productive with more motivated workers and have better mechanisms to deal with decrease in product demand. They remain connected to 2 Bowles. Behaviour Institutions and Evolutions. There are many firms which today allow employees to work from home and they need not come to office. it important that we continuously strive to make the work organizations more egalitarian and humane.
Only a capitalist can set up a firm with a long gestation period. There is no doubt that division of labour matters in complex occupations. In my opinion. One place where I feel that the debate in not of much significance is in very high capitalintensive firms like steel making. This provides the employees the control of the process of their work. My position on the debate It is hard to take a black and white stance on such a debate. I believe operate in less capital intensive industry (Plywood making. dairy etc). From anecdotal experiences I can say that such employees are happier and more committed towards the company than employees in firms which don’t allow such privilege.the office through internet and mobile phones. i. Similarly industries which have very long gestation periods. These kinds of debates will increase the pressure from the employees’ side on the employer to provide more of such privileges. So I will only consider the simple operations which involve run of the mill tasks. both the authors are right to some extent. It seems almost impossible to believe that a group of workers could get together to set up a large scale steel manufacturing plant simply because the capital per worker might be too high. 3. always hidden somewhere in between. I think in our present debate both the authors are correct in their own ways and have their own merits. Most of the cooperative. something which was lost with the coming of factory system. Whether or not division of labour adds to productivity is a difficult question. In my opinion truth is always grey in nature. To the extent that division of labour is taking place such that a newbie is . period before the firm breaks even also cannot have labour controlled firms.e. Workers cannot wait for so long and for him the risks are just too high.
But. How did the first putter-outer arrive at the scene? Landes has given the example of the watch shop and explained how the enterprising master would have become an entrepreneur hiring many other journeymen and himself resorting to only managerial and sales activities. Thus when Marglin says that the task are not very special and division of labour does not add much value he is also right. five of whom are newbies then there is not much of a value addition. I don’t agree with Marglin when he says that a capitalist can be dispensed with and that he has an artificial role in the production process. Marglin says that the putting out system evolved from the guild system because it was more profitable and these profits gave them the political power to break the old system. and when Landes says that division of labour takes place to train the trainees he is also right. The same productivity can be obtained if five newbies are doing all the five simple tasks and five experienced workers are doing all the five relatively difficult ones for sufficiently long time that set up time becomes small portion of their work time. I am trying to explain another way in which a putter-outer kind of capitalist could have emerged. Let’s consider a hypothetical task in which making a sellable product can be broken into ten separate tasks and the first five of them require relatively more dexterity than the other five. These merchants would have earned good profits and would have come to know . In my opinion the first putter outer would have been a merchant who decided to the buy the products from the existing cottage manufactures and tried to sell them in far away markets where the general guild manufacturer did not sell (as he sold only in the local markets). I think that an entrepreneur does bring in a lot of value to the business. But often this is not the case. let’s think of an existing guild system where there are no putterouters. division of labour does add to productivity. In that case if the ten tasks are performed by ten people (each one doing only one task).performing the easier tasks or men are doing the physically more demanding tasks (and children the easier ones).
Coming to the factory system where new technology was adopted. (1990) “The Lever of Riches”. My opinion is that. Market size affected both the generation and diffusion of knowledge. then the other firms is left with little choice but to copy the same strategy. This process might not have been technologically superior to the guild system. “It’s not worth my while to manufacture [your engine] for three countries only. not necessarily the existing ones who operated in guilds. In 1969 Mathew Boulton wrote to his partner James Watt. . but it was the only people could have expanded to far way markets where the guild manufacturers would not have expanded. As Landes described. J.”3 Thus in short run division of labour does add value because training takes times. to produce the sub-products.about the demands in the other markets. At least initially. Gradually he would have started making contracts with the workers. a new superior technology as well as new modes of 3 Mokyr. in the sense that Marglin might have been right. Chapter 10. he would have hired less skilled labourers. many of them coming from rural areas and this would have forced him to break the tasks into simpler parts as things had to be done quickly. If one has to compete in the market and if the rival firm is resorting to simplification of tasks which allows him to pay low wages. it was merely ‘supervision and discipline’ which led to an increase in productivity and not the new technology. it is quite possible that in many of the cases factory got its higher productivity from both. They might have also come across some of the new raw materials (say a new kind of dye) which the guild manufacturer did not use and have asked the guild manufacturer to use it. at many places Marglin says that the new technology was not necessarily efficient. but I find it worth my while to make it for the all the world.
I am not saying the new technologies were necessarily better but might have been better. but it is still possible that the water mill was technologically better. Similarly it is possible that Wyatt-Pauls technology was still superior but he had some labour management problems which led to his firm’s failure. For the factories which used the same technology as the cottage industry it is clear as Marglin points out that the added productivity came because of the extra factor of supervision and discipline.organization which ensured better discipline. There is hardly any doubt that the decisions to only use the water mill and abolish the hand mill was taken not on technological considerations but to ensure that people don’t cheat on their dues to the lord. We continuously have many worker related problems in modern world. Another example would be that of water mill. After all we have seen that there were factory modes of organization even with same equipments that were used in cottage industry. If technological advances were possible in a way that the machines sizes would have remained small and still conducive to cottage industry. Marglin concludes that the technology was not superior but what resulted in success was controlling the workers. That might not be true. it would not imply the technology they were using was not superior to older technologies of car making. To take the example of Waytt-Paul enterprises. Marglin says that technology evolved in a way that it supported the capitalist modes of production. the innovator would have adapted even that. the people who are trying to create something new are facing the most arduous challenges and they grapple on whatever figment of creative ideas they can find to solve a particular problem. just because the firm failed while Arkwright’s firm made profits. In my opinion. an example would be the one currently being faced by Maruti. At least Marglins arguments do not lead us to say conclusively that they were not at all better. The . and in case Maruti fails.
The small independent forge. making iron almost literally the building block of the Industrial Revolution” I am sure Cort. J. (1990) “The Lever of Riches”. does not matter which way it gets solved. while he was working on new techniques of how to make wrought iron was not wondering how to make the furnace bigger so that it fitted a more centralized factory system better. While I agree with Marglin that many a times 4 Mokyr. Chapter 5 . Let me take this opportunity to discuss one the developments in metallurgical industry. or those who managed to resolve one final stubborn difficulty blocking the realization of a new technique. Mokyr writes: “After several improvements in the late 1780s. After many attempts the problem was finally solved by Henry Cort in 1784 by a skilful combination of reverberatory furnace and the rolling of heated metal over grooved rollers.”4 Many of the inventions in the textile industry have been discussed in the two papers.innovators in my opinion were concerned only with solving a particular problem. The innovation just happened to be so and it replaced the old smaller furnace which was definitely technologically inferior. Cort’s success took British world of metallurgy by storm. One of the major challenges in metallurgy was to convert pig iron to wrought iron which is used to make the tools of workers like nails. “A typical innovator in those years was a dextrous and mechanically inclined person who became aware of a technical problem to be solved and guessed approximately how to go about solving it. The successful innovators were those who put the pieces together better than their colleagues. hammer etc. until then the source of all the wrought iron was replaced by the larger puddling furnaces. The supply of high quality and cheap wrought iron grew dramatically.
Behaviour Institutions and Evolutions. On this Sen had replied that of course he had made an exaggeration. He was later asked in an interview if he had exaggerated too much in the article.’ 5 Bowles. Amartya Sen had once in his article painted a very gloomy picture of India’s development making many sharp remarks on poverty.” Chapter 10 . he said that the idea of making such sharp statement is to draw the attention of the people towards the problem. have a say in the decisions of the firms and also manage the firm. I am sure that technology had sooner than later started playing a role. but only for good cause. as Marglin says. I think that Marglin has similarly exaggerated a bit. S. large parts of production still takes place in not so sophisticated manner as to require extreme and rigid hierarchies. As Bowles describes: “The structure of the typical plywood coop was both egalitarian and democratic. “Microeconomics.” 5 The article in my opinion is an appeal to the entrepreneurial and worker community to try and establish more of such high productive and yet egalitarian modes of production so that. High levels of productivity were maintained strong work ethic among workers. With few exception worker-owners received equal pay and jobs were often rotated. not part of life itself. (2004).the forms of production were so organized that they were productive only at the discomfort of the worker. The main point in my opinion is that. but the work environment even in factories can be made more participative. Management was decided by a body of worker-members. enforced by peer pressure and mutual monitoring. In my opinion it is not possible to go back to cottage industry mode of production and hierarchy is necessary. The workers can be trained to actually produce and also take a semi-managerial kind of role. But. ‘work is a means of life. He can own the firm. This will only give him more satisfaction in his work and also keep him more motivated.
(1993). J. (1990). “The Levers of Riches. J. “The Overworked American: The Unexpected Decline of Leisure” Basic Books .” Oxford University Press Schor. “Microeconomics: Behaviour. Institutions and Evolution” Russel Sage Foundation Mokyr.B. S. (2004).References: Bowles.
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