The paper discusses

the growing Fergus Murray

importance of the
decentralisation of
production, as one
capitalist response
to declining profits
and workers' resist-
ance in Italian manu-
facturing industry . It
argues that decen-
tralisation and
automation have re-
duced the traditional
strength and
quantity of male
workers in large
factories and have
The decentralisation
generated new
sectors within the of production
industrial working
class . The paper
ends with the
the decline of the
suggestion that the
labour movement
needs to reshape its
mass-collective worker?
organisation and its
strategies which
erroneously still IN THIS PAPER I want to examine one of the changes that have
continue to reflect been taking place in the organisation of production and the
only the needs of the labour process since the early 1970s, that is, the decentralisation
traditional mass of production . While the geographical dispersal of production is
worker .
a long established feature of capitalism, in the last ten years
decentralisation has undergone a quantitative increase and quali-
tative change . For example, in Italy large firms have reduced
plant size, split-up the production cycle between plants, and
increased the putting-out of work to a vast and growing network
of small firms, artisan workshops, and domestic outworkers .' In
Japan large firms using advanced production techniques have
insisted that their small supplier firms raise productivity through
technological innovation, while moves are underway to link the
small firms by computer to the large ones, thereby greatly in-
creasing the control of the large corporations over production . In
America and Britain increasingly mobile international capital in
74 high technology small units has been moving into areas of high
unemployment, for example in the southern `sun belt' states of
the US and in S . Wales and Scotland in Britain, where careful
labour recruitment exploits and exacerbates the segmentation of
the labour market and divisions in the working class . And
recently a statement in the Soviet press drew attention to de-
centralisation when it criticised the way in which Russian in-
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 DECENTRALISATION

dustrialisation continues to be based on huge factories and 75

proposed a policy for the reduction of plant size and the develop-
ment of small, flexible, highly specialised and technologically
advanced production units . The article cited the example of
General Electric which continues to reduce plant size despite the
fact that all its 400,000 employees already work in factories of less
than 1,500 workers .' .
There is then a growing body of evidence which challenges
the idea that the progressive centralisation and concentration of
capital necessarily leads to a physical concentration of production
that the small production unit is the remnant of a disappearing
traditional, backward sector of production . For generations
Marxists have assumed that the tendency of capitalism was to the
greater and greater concentration of production, and massifi-
cation of the proletariat . Indeed there were excellent historical
reasons for making this assumption, as the development of both
the basic commodity industries of the first industrial revolution
and the mass production industries of the post-war boom led to a
high concentration of workers in large integrated plants in large
industrial towns .' Nevertheless the above evidence suggests that
the size and location of production cannot be drawn from theor-
etical premises but rather that they are historically determined,
depending on the particular circumstances capitalist production
faces in different periods .
This paper draws on empirical material from Italy to show
how the use of decentralisation has been intensified and has
changed through the introduction of new technology as Italy's
dominant firms have sought to restructure production in their
struggle against declining profitability . In Italy the combination
of automation and decentralisation has been specifically aimed at
destroying the power and autonomy of the most militant and
cohesive section of the Italian proletariat and this strategy has
met with considerable success . This suggests that the political
hopes pinned on the mass-collective worker in the seventies need
to be carefully reconsidered in the light of decentralisation and
the recomposition of the proletariat this implies .
The paper is organised as follows :
The first section examines the determinants of the domin-
ant organisational form of post-war industry, the large factory,
and suggests that this form is historically specific, being con-
tingent on the balance of class forces and the technologies avail-
able to capital .
Using empirical material the second section attempts to
define the different forms of decentralisation in order to bring out
the wide variety of different workplaces and workers which
decentralisation creates through its physical fragmentation of the
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 CAPITAL & CLASS

76 labour process .
The third section analyses the way in which the application
of information technology in production management not only
gives capital a greater potential control over labour in the large
factory, but also gives it the possibility of coordinating pro-
duction and labour exploitation that is increasingly dispersed in
small production units, artisan workshops and 'home-factories' .
The last part of the paper suggests that decentralisation
has created new divisions in the industrial working class by
increasing the number of workers living and working in condit-
ions that greatly differ from those of the mass-collective worker .
The transformation of the large factory and the rise of small
production units has made collective action considerably more
difficult . The paper ends by asking how both old and new
divisions can be effectively challenged by the labour movement
and the left, with a strategy and organisations that give voice to
the different needs and desires of different parts of the prolet-
ariat, while also giving them a unity that can overcome divisions
rather than exacerbating them .

The large The term `decentralisation of production' has been used in Italy
factory : Is it to describe a number of distinct features of the organisation of
inevitable? production . In general, decentralisation refers to the geographi-
cal dispersal and division of production, and particularly to the
diffusion and fragmentation of labour . However this can take
place in a number of ways :
i) The expulsion of work formerly carried out in large
factories to a network of small firms, artisans or domestic out-
workers .
ii) The division of large integrated plants into small,
specialised production units .
iii) The development of a dense small firm economy in
certain regions such as the Veneto and Emilia Romagna in Italy .
In Italy `decentralisation' has been used to cover all the
above developments . In this paper `decentralisation' is used to
refer to the expulsion of production and labour from large factor-
ies, either in the form of in-house decentralisation (splitting-up)
or inter-firm decentralisation (putting-out) within the domestic
economy . This is because the paper focuses on the way large and
medium firms in Italy have used decentralisation to reduce costs
and increase labour exploitation, rather than on the development
of districts of independent small firms that are not directly sub-
ordinate to larger firms . The analysis of this latter process has
been an important part of the Italian debate on decentralisation
(e .g . Brusco, 1982 ; Paci, 1975 ; Bagnasco et al, 1978) .
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 DECENTRALISATION

An assumption has prevailed that large corporations 77

operating in such sectors as engineering and electronics will
organise production in large factories, in that they will amass
large amounts of fixed capital and workers in particular, on any
given site . However factory size is not given, and least of all does
not necessarily correspond with the size of a firm or corporation's
turnover, or their market and financial strength . Rather it is
determined by the specific configuration of the conditions for
profitable production prevailing in any given period . For
example, the integrated car plant developed in rapidly expanding
markets, with the balance of class forces intially in capital's
favour, which made possible and profitable a particular com-
bination of technology (mechanised flow line production) and
labour domination (Taylorism) . It was the coincidence of all
these factors that made the integrated plant the most profitable
form of production organisation in the post-war consumer
durables industries . When labour rebelled and markets began to
stagnate the `efficiency' of this form of production was under-
mined and both capitalists and bourgeois economics discovered
`diseconomies of scale' . The ending of the long wave of ex-
pansion, the development of new technologies, and new manage-
ment techniques have all contributed to change the form of the
division of labour and the labour process within the large cor-
poration . Five of the more important factors that influence
factory size are the type of product being made, the technologies
available, product control, industrial relations and State legis-
lation . I shall consider the role of these factors in turn .

Product Type

Product type is important in determining the degree to

which the production cycle for a given product can be divided
between separate factories . Industries where there is a high
divisibility of the production cycle include aeronautics,
machinery, electronics, clothes, shoes, and furniture . In contrast
the steel and chemical industries tend to require a large unified
production site, although the optimum plant size is not always as
large as some people, for example BSC management, think
(Manwaring, 1981 :72) .
One particularly important development that has been
taking place in the structure of some products is a process known
as modularisation . Although there has been a diversification in
the number of models in many ranges of consumer goods, this
has been underlain by a standardisation of the major sub-
assembled parts of the product . These sub-assembled parts are
the basic modules of the product and can be made in different
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 CAPITAL & CLASS

78
factories and put together at a later date . For example, as argued
in Del Monte (1982 :154-6) at one time televisions were as-
sembled in a linear manner on a long assembly line . The frame of
the television would be put on the line, and individual parts then
added to it . In modular production each module is assembled
separately, and a much shorter process of final assembly is re-
quired . At present modular production is mainly limited to
commodities from the electronics sector, but advances in
product redesign facilitated by the introduction of micro-
electronic components suggest that it will be used elsewhere .
(See the example of Fiat later .) If we recall how the bringing
together of large numbers of workers on assembly lines in the
sixties fuelled workers' spontaneous struggles, modular pro-
duction, plus the increasing automation of the assembly areas
themselves, can serve as important weapons for capital in reduc-
ing worker militancy through decentralisation .

Technology

Brusco (1975) argues that Marx's explanation for the con-

centration of production in large factories was partly based on the
necessity of running machines from a central energy source - the
steam engine . As steam was replaced by electricity as the principal
energy source for industry this particular decentralising tendency
was weakened . Initially the expense of electric engines meant
that one central engine and a system of transmission shafts and
belts were used to drive the different machines . But as electrical
technology developed and the price of engines fell, each machine
was fitted with its own motor .' Other technological changes that
affect the product and the organisation of production include
shifts in materials, for instance, from steel to plastics, but the
most important change that has been taking place in the last
decade is the introduction of the microchip into the production of
many commodities . While the microchip tends to a lessening of
worker control over machines, it is also changing the nature of
those machines . Generally there is a trend towards a replacement
of electro-mechanical parts with microelectronic components,
and from worker control of the machine to the installation of the
unit of control in the machine which leads to changes in the
production of the product and its associated labour process .
Olivetti has been transformed from an engineering multinational
to an electrical one over twenty years, and in many engineering
firms electrical control systems are now taking over from
mechanical ones . This implies a reduction of machine shop work
in production . It is also interesting to note that electrical work,
such as wiring and the assembly of circuit boards has in some
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 DECENTRALISATION

cases proved suitable for putting-out to tiny firms employing 79

semi-skilled women workers - so suitable, according to Wood
(1980) in Japan there are an estimated 180,000 domestic out-
workers in the electrical components industry alone . Similarly, a
firm in Bologna making control units for machine tools did some
quite radical experimenting with decentralisation as it shifted
from electro-mechanical to electronic control systems . According
to the Bologna metalworkers' union (FLM Bologna, 1977 :78),
with the appearance of micro-electronics in the seventies the firm
began to run down its machine shops and progressively
intensified putting out which eventually accounted for 60% of
production costs . At this time the firm employed about 500
workers directly and over 900 indirectly as outworkers . A couple
of years later with the introduction of automation the firm re-
centralised production and an estimated 600 outworkers lost
their jobs .
There are then techological changes taking place that allow
decentralisation and falling factory sizes but it needs to be stressed
that these changes don't automatically lead to decentralisation . It
is the particular capitalist's use of technology and the conditions
of profitability that will determine how the organisation of pro-
duction changes .

Product Control

The making of many commodities requires huge amounts

of co-ordination and control of production and pressure to re-
duce dead time, stocks, and all types of idle capital has increased
markedly since 1974 . In a big plant, production is difficult to
supervise at every level and the sheer size of the factory and the
bureaucracy needed to run it can hide huge amounts of waste .
This would suggest that for the capitalist the division of pro-
duction and management into smaller and more easily controlled
units would be a cost effective strategy . 9 The introduction of
computer assisted management allows production to be split-up
by making the co-ordination of production in different plants
considerably easier . General Motor's new `S' car, for example, is
being built in GM's European production network which em-
ploys 120,000 workers split-up in 39 plants in 17 countries
(Financial Times, 28 .9 .82)

Industrial Relations

The reduction of factory size and relocation of production

are contingent upon the extent to which `unfavourable' industrial
relations are an important reason for restructuring in different
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 CAPITAL & CLASS

80 industries in different countries . Prais (1982) suggests that

factories in the UK with over 2,000 workers are 50 times more
vulnerable to strikes than those with less than 100 workers, and
he goes on to say in his academically refined union bashing tone,
that big plants in UK car assembly, steel production, and ship-
building develop endemic strikes "which impedes the pursuit of
efficiency, and leads ultimately to self-destruction" . (p . 103) .
In the late 60's labour militancy in many Italian industries
reached levels that directly threatened firm profitability and
management undertook a series of strategies designed initially to
reduce the disruptiveness of militant workers . One of these
strategies, decentralisation, was in part underlain by a manage-
ment view, typified by the director of a Bologna engineering firm
to whom I spoke, which saw a direct correlation between factory
size and industrial relations in Italy in the 1970s . This director
argued that a significant improvement in industrial relations
could be achieved in a factory employing 100 rather than 1000
workers .
This is not to say there is an automatic relationship between
industrial relations, labour militancy and factory size . Rather
large plants in the post-war boom appear to have created con-
ditions favourable to an intense and often `unofficial' shop floor
struggle that has been very disruptive for capital . It would be
wrong therefore to equate the rise of smaller production units
with the end of labour militancy on the shop floor . It seems that
capitalists expect substantial `improvements' in industrial re-
lations from smaller scale production units . Clearly this will
impose new and real difficulties for the autonomous organisation
of workers and the forms it should take in small plants . However,
the struggles at Plessey Bathgate and Lee Jeans have shown that
these are not unsurmountable .

State Legislation

Central and local state legislation will be important in

determining factory size and location in a number of ways .
Incentives, grants subsidies, and factories themselves may all be
used to persuade firms to set up additional sites, as can be seen by
the unco-ordinated efforts of the various regional development
agencies in the UK .
Employment legislation, and its implimentation, may also
be very influential . In Italy important parts of the Worker's
Statute do not apply in firms employing less than 15 workers .
And the smaller the plant the more possibility there is of using
illegal employment practices, such as the use of child labour, and
the evasion of tax and national insurance payments' .
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 DECENTRALISATION

Using empirical material from the Bologna engineering industry, Different 81

this section examines the two forms of decentralisation that have forms of
been used most extensively in Italy by large and medium sized decentralisation
firms . The intention here is to examine the way decentralisation
changes the nature of work and workers and the relationships
that exist between firms . An analysis of the relationships between
firms is important for the left, especially in view of assessing the
accuracy and implications of two trends that are supposedly
taking place, one is the vertical disintegration of many corpor-
ations and the other is the growing wave of support, in Britain
especially, for small business from the State and even the banks .
On the basis of Macrae's analysis (1982), one would, think that
the power of monopoly capital was withering away to open a new
golden age for the entrepreneur . However, while it may be true
that some corporations are withdrawing from direct control of
some production this in no way implies a weakening of their
power . Rather, through decentralisation these corporations may
maintain a strict control over production while letting the small
firm pay the costs and face the risks of production, thereby using
decentralisation as a means for reducing and shifting the cor-
poration's risks and losses . In this way corporations maintain
their ability to cover fluctuating markets while concentrating on
the most profitable areas of production . This of course, does not
mean that all small firms are subordinate to a particular corpor-
ation and manymay even find a degree of independence .'

Putting-out

Putting-out involves the transfer of work formerly done

within a firm to another firm, an artisan workshop or to domestic
outworkers . After the initial transfer, putting-out can be used to
describe a semi-permanent relationship between firms .
Within the Italian economy putting-out appears to have
contributed significantly to the rise of small firms and to the
surprising shift that has taken place in industrial employment in
the last ten years . In 197122 .9% of the total industrial workforce
were employed in `mini-firms' of less than 19 employees . By 1978
this figure had risen to 29 .4%, an expansion of employment in the
,
mini-firms' of 345,000 . Furthermore the number of men em-
ployed in these firms rose by only 8 .3% in this period, whereas
the number for women grew by 33 .8% . While it is difficult to
generalise from such disaggregated data, they do indicate a steady
growth of employment in very small production units for which
the putting-out and the geographical fragmentation of production
have been partly responsible . The period from 1974-8 is par-
ticularly interesting as a fall of employment of 52,000 occured in
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C & C 19 -
 CAPITAL & CLASS

82 firms of over 500 employees, whereas employment rose by 160,000

in the 'mini-firms' (see Celata, 1980 :85)
In the Bologna engineering industry, in the period 1968-
80, the number of artisan firms employing between 1-15 em-
ployees rose from 6,602 to 9,436, an increase of 42 .9% and nearly
a third of the Bologna engineering labour force of 88,000 was
working in these workshops in 1980 (see FLM Emilia Romagna,
1981 :18-19)
The existence of this dense network of artisans workshops
and small firms and its expansion due to an initial restructuring of
the Bologna engineering industry in the 1950s, has been one of
the vital preconditions for the development of putting-out and
the increasing division of labour between small firms . As the
example that follows suggests, decentralisation has passed
through two phases : a first phase between 1968-74 when putting-
out was used less out of choice than necessity due to intense
shop-floor struggles in the large and medium factories ; and a
second phase, since 1975, of more systematic use of decentra-
lisation, with the introduction of information technology into
production planning and the appearance of numerically con-
trolled machine tools in increasingly specialised artisan shops,
accompanined by a gradual reversal of some of labour's gains on
the shop floor . In this second phase it is possible to see an implicit
shift from the direct control of labour on the shop-floor in the
large Taylorised factory to a more articulated and flexible system
of the organisation of production where the labour process ex-
tends beyond the factory into the artisan workshop . In the artisan
workshop the unmediated forces of the market that threaten the
artisan's very existence ensure a high degree of 'self-exploitation'
often reinforced by the paternalistic despotism of the small
entrepreneur .
In the Bologna engineering industry there appear to be
three motives for putting-out : to reduce fixed costs to a mini-
mum ; to benefit from wage differentials between firms ; to maxi-
mise the flexibility of the production cycle and of labour ex-
ploitation . The nature of putting-out is examined below through
its use in a Bologna precision engineering firm .
The strategy of this firm, according to the management,
has been to invest in labour and machinery just below the level of
minimum expected demand . Any increase of production above
this level has been met by putting-out, rather than risking an
expansion of the factory or the workforce . However, contrary to
management's claims, it is not true that the size of the labour
force has always depended upon the level of demand . Until 1969,
that is until when the first big strikes occurred, the size of the
workforce grew steadily . However, after 1969, although pro-
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 DECENTRALISATION

duction output rose rapidly for a number of years, the level of 83

employment of production workers and productivity in the firm,
actually fell . It therefore appears that a decision was taken to
limit employment in the firm as militancy on the shop-floor
increased and to cover rising demand by massively raising
putting-out . In 1972 46% of production work was put-out of the
firm, employing indirectly the equivalent of 570 full-time
workers in small firms and workshops, whereas in 1969 only 10%
had been put-out . In 1974-5 production fell rapidly, and work
put-out dropped to almost nothing, resulting in the loss of
approximately 550 jobs . That is, while the level of employment in
the firms working for the company went through a massive
fluctuation, employment in the company itself was relatively
stable . The company putting the work out did not then pay a
penny of redundancy money and nor was there any disruptive
and socially embarassing struggle over job losses . This illustrates
clearly the flexibility putting-out can provide . In this instance the
reason for putting-out was not so much the exploitation of wage
differentials as the minimisation of costs and conflict over job
losses with the union .
However, the same firm does also put-out work for savings
on wages, where the outworkers are paid up to 50% less than
their counterparts in the factory . The work put-out here is not
mechanical work, but wiring and circuit board assembly and
involves women working in small firms and sweatshops where
they have no legal or union protection .
With the introduction of computer assisted management
and with the changes taking place in modular design, the firm has
recently overhauled its putting-out system . Formerly, work of a
once only basis was put-out to artisan shops the basis of very short
lived and verbal agreements . The firm now encourages these
artisans, who often employ less than five people, to group them-
selves together in order to amass the machinery and skills neces-
sary for the production and sub-assembly of modules on a more
regular basis . Meanwhile, management has won back some of its
former power on the shop-floor with the help of computer aided
production and an increase in internal labour mobility . The
introduction of the computer has given management an increas-
ingly refined control over the co-ordination of production both
within and outside the factory, and putting-out is now used more
routinely, while special and rush jobs are done in the factory due
to the increased mobility of labour, achieved after six years of
almost total rigidity .
Putting-out here has gone from a contingency solution of
special problems to a more structured system . Initially flexibility
was found in putting-out to artisan workshops to get around
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 CAPITAL & CLASS

84 rigidity in the factory . Now it is the whole system, factory

production and putting-out, that works to give flexibility .
Putting-out in Bologna engineering varies from skilled
well-paid work using advanced technology to dirty dangerous
and deskilled work . Within this there is a clear division of
putting-out based on sexual and racial divisions in the labour
market . The skilled workers and artisans are almost exclusively
middle aged men, while women, the young, and migrants from
the South of Italy and North Africa are concentrated in the
dirtiest, most precarious and worst paid work .
The other extensive form of putting-out is to domestic
outworkers in industries like clothing, electrical components,
and toys . This form of putting-out has received a good deal more
attention than putting-out to small firms (e .g . Young, 1981 ;
Rubery and Wilkinson, 1981 ; Goddard, 1981) and will therefore
not be dealt with here .
Another increasingly important type of putting-out is that
which takes place across national frontiers where either parts of
the production cycle are contracted out or the firm contracts out
the production of the finished commodity it already makes, using
its own specifications and technology for production in the sub-
contracting firm and its marketing network for the sale of the
commodity . An example of the former type of international
putting-out is cited in Frobel et al (1980 :108) and refers to the
extensive use the West German textile industry makes of textile
firms in Yugoslavia, where firms send out semi-finished products
from Germany to be worked up into the final product . And an
example of the latter can be found in Del Monte's study (1982) of
the electronics industry in Southern Italy, where, again West
German firms making televisions, contract out the production of
complete sets to medium sized firms around Naples . The firms
doing the work use the German firm's know-how and marketing
services, not being big enough themselves to break into the world
market . They, in turn, put out work to smaller firms in the area .
(pp . 150-1)
Putting-out then cannot be equated with an archaic and
disappearing system of production . Rather it seems to have been
reinforced as specific sectors of industry have faced altered con-
dition in the harsh economic and political climate of the seventies
as the long-wave of expansion ground to a halt . Therefore it
would be mistaken to continue to segment firms in terms of the
dualist opposition between large firms using high techology and
small firms using outdated technology and traditional production
techniques .'

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 DECENTRALISATION

Splitting-up production 85

The second form of decentralisation is the splitting-up of

production between factories of the same firm . Clearly firms will
relocate factories, and change the organisation of production
between them for many and inter-linked reasons . Here, I want to
look specifically at splitting-up where it has been strongly
motivated by management's desire to make the workers' organis-
ation as hard as possible, and where management has realised the
potential dangers involved in concentrating large numbers of
workers in large factories located in the large industrial town .
While, with the internationalisation of production the fate of the
domestic industrial working class is increasingly linked to the
fate of the international working class, it is important to under-
stand how the location and structure of the domestic proletariat is
changing in a period of restructuring in the national and inter-
national economy .' Here I will examine some of the ways localised
splitting has been used in the Italian economy .
In one of the Bologna engineering firms referred to pre-
viously, the upsurge of union militancy in the early seventies was
met not only by an increase in putting-out but also by a partial
splitting-up of production . While employment was allowed to
fall in one factory in the firm, another small factory employing 80
workers was established an hour's drive away in a depressed
agricultural region . Although the shop stewards were not slow to
make contact with the workers in the new factory it has been
difficult to take unified action . The workers at the small plant
came from rural areas, do semi-skilled work, and are willing to
work `flexibly', that is they are prepared to change shifts and
work over-time so that they can also work their plots of land . In
contrast, the workers in the main factory are more skilled, they
come from an urban background and are endowed with a militant
trade union tradition .
Once the small factory was set up management then tried
to put-out work from it into the surrounding area, but found that
there were not enough small firms in the area to allow this .
However, the tendency to set up `detached workshops' has been
widespread where production permits this . One of the few studies
of Fiat's decentralisation of production into Central Italy (Leoni,
1978) has shown how, in its lorry division a mixture of splitting-
up and putting-out has been used to maximise the dispersion of
the directly and indirectly employed workforce in many very
green 'greenfield' sites in a rundown agricultural area .
Another type of splitting-up is when the firm loses a central
factory to become an agglomeration of `detached workshops' .
Although this strategy is less common one example from Bologna
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 CAPITAL & CLASS

86 is striking . In this firm there are three `major' production sites,

three `minor' ones, a stores site, a research site, and an adminis-
trative site spread out in the periphery of Bologna . In all, the firm
employs 300 people dispersed in the different sites . Along with
this fragmentation of production the firm also practices a high
level of putting-out, and is progressively running down its
machine shops to concentrate only on assembly, design and
marketing activities .
A final example of splitting-up is provided by the electric
domestic appliance company belonging to Vittorio Merloni, who
is the head of the Italian employers federation, the Confindustria .
The firm employs 2,000 workers who work in nine different sites
and no factory has substantially more than 200 workers . The

Small Firms

tits,
,,,Putting-out
A schematic representation of the decentralisation of production --_

City Factory

dispersion putting-out

Formally independent firms

Rural/Third World Factories

0 putting-out

Small firms directly

created by firm A

Formally independent firm

III
sub-putting-out,
, ,

III
Domestic out workers
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 DECENTRALISATION

basis of managerial strategy is to take work to the workforce in 87

the depressed agricultural regions of Central Italy, where higher
transport costs are easily offset by the `industrial tranquility' of
the environment . One of the Merlonis specifically acknowledges
that it is "an advantage to have reduced concentrations of workers,
and where possible, to know each worker" . And he goes on to
explain that the firm has tried to create "a group spirit in and
outside the plants" to encourage workers to identify with the firm
without losing their roots in the rural community . The idea
behind this is to soften and control the traumatising and often
radicalising, transition from peasant production to work in a
capitalist factory . Meanwhile, to keep things even more `tranquil'
the Merlonis concentrate their efforts on doing pressed steel,
assembly and finishing work while the rest of production is
put-out to small firms and artisan shops often directly created by
the Merlonis, who have paternalistically handed ex-workers the
chance to `go it alone' (see Lotta Continua, 22 .5 .80 and 23 .5 .80) .
By way of ending this section on decentralisation, the
diagram below shows how different types of decentralisation
could be used by one firm to create a diffused production net-
work, or as some Italians say, a `diffused factory' .

Within any mode of production the collection, analysis and The Computer
circulation of information is vital . Within capitalism a particular in the
form of factory production has arisen where one of the functions factory
of the factory is the provision of a structure where information
can be collected, co-ordinated and controlled . As communication
technology has developed, the emergence of multi-plant and
multinational enterprises has been made possible . Although tele-
phones, telex and teletransmitters and the like are in no way
determinants of the organisation of production, they have allowed
the centralisation of control over capital to increase with the
internationalisation and geographical dispersion of production .
However, the large factory has remained the basic unit of capital-
ist production .
The structure of the factory has developed, among other
things, to ensure the free flow of information from the bottom of
a pyramidal hierarchy to its top, and the free flow of control from
the top downwards . Information, and access to it, are the key to
formulating and understanding a firm's strategy . For this reason
a firm uses a lot of people to collect and transmit information in
the factory and this information is carefully guarded . The people
who have the greatest amount of information are in a superior
position to judge and make decisions, and they will argue that
they are `objectively' correct because of their access to recorded
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 CAPITAL & CLASS

88 `knowledge' . In short, access to and the control of information is

an instrument of class and sexual power .
In an engineering firm making complex automatic
machines there may be as many as 20,000 separate pieces circu-
lating in the factory . For management, this represents big prob-
lems and costs . As orders come in and are changed, the production
of each piece must be planned and co-ordinated so that the final
product is ready on time . Fixed capital and workers must not be
allowed to stand idle, detailed plans of machine loadings, stocks
and work schedules have to be made and a change in orders, a
delay by a supplier, a strike, an overtime ban or a breakdown can
all upset these plans . At present many firms incur high manage-
ment costs to ensure the co-ordination and monitoring of pro-
duction within the factory . Traditionally this monitoring has
been carried out by people writing things on bits of paper,
passing them up the hierarchy, amassing them, analysing them
and issuing orders based on them . Yet an increasingly flexible
production orgnisation is needed to get round worker-imposed
rigidity, to ensure the full use of increasingly large amounts of
fixed capital and to cut costs `down to the bone', in the face of the
burgeoning contradictions of the system .
The introduction of computer assisted management is a
potentially valuable weapon for capital because it can increase
management's control over all aspects of production, firstly
through the further expropriation of worker's knowledge (mental
labour) and secondly, through an `objectification' of control over
labour that ensures the maximum saturation and co-ordination of
labour time .
In one Bologna engineering firm there is a computer ter-
minal for every thirteen employees . The terminals are used to
both issue orders and to collect, feed back, memorise and co-
ordinate information . The course of each part is monitored and
information about individual machines and workers, such as
work times and `performance' are constantly recorded . Infor-
mation from the four basic divisions of the factory, production,
marketing, stock control, and planning arrives at the central
computer and data base and is recorded and analysed on a
day-to-day basis . Information arriving from one department will
automatically lead to co-ordination with other departments
through the computer's central programme . This gives the man-
agement the possibility to foresee where and when bottlenecks
will occur, and allows management to experiment with `dry'
production runs on the computer to examine the ways in which
potential blockages in production, including strikes, can be over-
come through changing production plans in the factory and by
increasing or changing plans for putting-out .
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 DECENTRALISATION

I'll now briefly point to three other areas where manage- 89

ment benefits from the computer in production . Firstly, idle
capital can be reduced to a minimum, whether through a greater
control of labour or of stocks, as is achieved by the Japanese
'kanban' (just-in-time) system of stock control . This system uses
computers to co-ordinate in-house production and to link its
surrounding ring of external suppliers so that stock requirements
are calculated on an hourly and not a daily or weekly basis .
Production is maintained by
`suppliers feeding a wide array of components, in the right
order, through the right gate in the assembly complex to
reach the line at the right time' .
Secondly, automatic machines and robots can be linked
together and run by a central computer, as is beginning to
happen in the fully automated flexible manufacturing system .
For example, General Electric has recently announced a new
computerised system of information control and co-ordination
which will enable robots `to communicate with each other' and
link all machines with electrical control into an integrated system,
the remote parts of which can be connected by satellite links .
(Financial Times 30 .3 .82 .) Thirdly, computerised information
allows the decentralisation of day-to-day management decisions
while centralising strategic control in the hands of a slimmed-
down board of directors . 10
For supervisory staff the introduction of information tech-
nology makes their information gathering role potentially ob-
solete, as the factory hierarchy changes from a function of pro-
duction command to a more subtle one of political mediation .
Fiat has taken this process further and in workshops and offices
where now there are no shop stewards,
`Fiat takes care of the problem of mediation with its soci-
ologists, its new 'vaseliners' who talk to the workers about
their problems' ."
For shop-floor and office workers, computers mean stricter
control through an impersonal and distant centre, rather than
through face-to-face confrontation with the factory hierarchy .
Anything a worker does may be recorded by the computer and
used against her/him at a later date, while informal breaks won
through struggle tend to be formalised and handed out as and
when management see fit . And the versatile computer doesn't
lose its temper, can also issue orders in Swedish, Finnish, Yugo-
slavian and Turkish, as the ones used at Volvo do . (See Zollo,
1979 ; Dina, 1981 ; Ciborra, 1979)
However, a computer system is only as good as its pro-
gramme and the degree to which workers are willing to co-
operate with management . That is, the potential gains from the
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 CAPITAL & CLASS

90 introduction of information technology are contingent upon

management's ability to erode worker resistance to the technology
and prevent new forms of resistance from developing . In one
Bologna firm the introduction of terminals on the shop-floor was
met by an `information strike' where the workforce refused to
co-operate in the collection of information .
One of the major benefits for capital is that computer
assisted management can largely replace the function of the
factory hierarchy as an information collecting network . And this
in turn opens up the theoretical possibility of changing the
organisation of production radically through restructuring .
Ferraris (1981) sums up the situation well .
`The new technology of the product (modularisation), of
production (automation), and information (distributed in-
formation and telecommunications) opens up new spaces
to the process of decentralisation of work and machines,
which advances simultaneously with the concentration of
management and control . This permits the overcoming of
the historical tendency of the physical concentration of
labour and fixed capital as a necessary condition for the
centralisation of command and profits .' (p .25)
So far, I have tried to show how the tendency towards
decentralisation of production and centralisation of command is
taking place . In order to reinforce the argument put forward, I
shall cite some Italian examples where it is possible to see this
process taking place .

Olivetti

Olivetti's gradual transformation from an engineering

group to an electrical one has been speeded up rapidly in the last
few years, with the appearance of the dynamic management
techniques of C . De Benedetti . Four particular processes can be
seen at work :
i) At the financial level, Benedetti has arranged a bewil-
dering series of deals with other international electronics pro-
ducers which include, Hitachi (marketing), St . Gobain (funds
and access to the French market), Data Terminal System
(acquisition) and Hermes (take-over of a Swiss typewriter
producer) .
ii) Within Olivetti's Italian plants there is a move towards
automation, using robots and the introduction of computer con-
trolled testing of standardised modules .
iii) Most assembly work is still done manually, but the
increasing flexibility needed due to the rapid development and
obsolescence of models led management to introduce non-linear
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 DECENTRALISATION

assembly in the form of work-islands . 91

iv) While most assembly work is done in the factory some
operations like circuit board assembly and wiring are put out to
domestic outworkers in the North of Italy . This process is dis-
cussed in Pervia (1980) .

Benetton

Benetton is an Italian clothes producer with a turnover of

£250 million a year and sells under the names of Jean's West,
Mercerie, Sisley, Tomato, 012, My Market and Benetton . Pro-
duction and marketing strategies are aimed at achieving two
things, the minimisation of costs, the maximisation of flexibility
and naturally, profits . This is achieved in the following ways
i) Since the fifties Benetton has increasingly decentralised
production . It now directly employs only 1,500 workers and puts
work out to over 10,000 workers . The directly employed workers
work in small plants of 50-60 employees, where the union is
`absent or impeded' .
ii) In its marketing structure, Benetton has 2000 sales
points, but owns none of them . It gives exclusive rights to them .
This strategy effectively reduces not only the selling price of the
product by cutting the wholesaler out of operation, but it also
externalises risks ensuing from fluctuating demand .
iii) Computers are used to keep track of production and
sales and to swiftly analyse market trends . Stocks are kept to a
minimum of undyed clothes that are dyed when required . (See
Ferrigolo, 1980)

Fiat

At Fiat there are four particular things to note :

i) a massive expulsion of labour after the defeat of the 1980
strike
ii) a big move towards automation with the LAM engine
assembly plant and the Robogate body plant, both of which are
highly flexible robots operated by a centralised computer system .
iii) the introduction of work islands in the LAM system
iv) Fiat's use of decentralisation . This has taken three
forms : firstly the export of integrated production units to E .
Europe, Turkey and Latin America in the early 1970s ; secondly
the splitting-up of the integrated cycle and the creation of small
specialised plants in the South of Italy, which also began in the
early 1970s ; and thirdly, the putting-out of work from the Turin
plants to local firms, artisans and outworkers .
Following the Japanese model Fiat has recently declared
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 CAPITAL & CLASS

92 that in addition to assembly work, it will only produce the

suspension systems and technologically important parts of the
car in house . All the rest of the work is to be decentralised,
although it is unclear what form this decentralisation will take .
There has recently been a devastating rationalisation of outside
suppliers, with Fiat cutting the number of its suppliers by two-
thirds and `encouraging' the survivors to raise productivity and
begin to sub-assemble parts in their own firms . Already 40% of
the Ritmo model is sub-assembled outside of Fiat's factories .
Vittorio Ghidella, managing director of the car division says,
`What we have done is to transfer employment from Fiat to
outside companies" 2
in order to disintegrate vertically as the Japanese have done .
A worker from Fiat's Lingotto pressed steel plant said in
1978 that small is hardly beautiful when you're working in one of
the 70 firms with 30-50 employees that make parts of Fiat's
decentralised lorry bodywork, where you work Saturdays, and
do 10-12 hours overtime each week . He maintained that,
`The question of decentralisation and the lack of unity
between small and big factories has been the weakest link
in the struggles of the past years .' (II Manifesto, 5 .10 .78)
Fiat's policy then seems to be aimed at automising what
can be automised and decentralising as much as possible so that
`decentralisation is the other, almost necessary, face of robotis-
ation and the LAM .' (II Manifesto, 4 .4 .80)

The decline In Italy the increased pace of decentralisation, automation,

of the internationalisation and an eventual frontal attack on the working
mass-collective class were provoked by two principal developments - the emer-
worker? gence of a militant, well organised labour movement and the
stagnation of world markets . The heightened shop floor struggles
in the large and medium factories threatened the very `efficiency'
of Fordist production techniques, based on the maximum flexi-
bility and total subordination of labour to capital . The strength
and combatitivity of the large and medium factory proletariat
made impossible a restoration of managerial control through
economic recession and increased factory repression, as had
happened in 1963-4 . Increased competition in world markets and
the slump of 1974 made it difficult for firms to pass on the costs
imposed on them by labour's gains, while labour rigidity reduced
their ability to respond to fluctuations in increasingly unstable
markets . As a consequence large firm profit rates fell .
Decentralisation was then grasped on initially as a short-
term strategy aimed at evading the labour movement's advances,
in that it attempted to compensate high labour costs and low
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 DECENTRALISATION

flexibility in the large and medium factories by directly creating 93

or putting work out to small production units, artisans and
domestic outworkers, where the influence of the unions was
minimal (the small firms in question often being hidden in the
submerged economy) . However, the longer term aim of de-
centralisation, automation, and the over-arching control of pro-
duction by electronic information systems is the destruction of
the spontaneous organisation of the mass worker on a collective
basis . The dramatic confrontation at Fiat in 1980 hides a strategy
which implies much more than a temporary political defeat for
the large factory proletariat . Whereas decentralisation was in-
itially a short-term response, its very efficacy has largely pre-
cluded a recentralisation of production . Indeed it has been used
in conjunction with automation to begin to dismember the large
factory proletariat through the increasing division and dispersion
of into small plants and into the sweatshop where accumulation is
unrestrained by organised labour .
This is not to imply that the mass-collective worker is now
politically insignificant . Indeed the power of organised labour
based largely on the mass-collective worker is such, that Frobel
et al (1980) say,
`Any company, almost irrespective of its size, which wishes
to survive is now forced to initiate a transnational re-
organisation of production .' (p . 15)
in order to take advantage of the cheap abundant and well
disciplined labour of the underdeveloped countries . Undoubted-
ly an international reorganisation of capital is taking place but as
Graziani argues (1982 :34), decentralisation draws attention to
the fact that an abundant, potentially cheap and well disciplined
labour force is also available within some advanced capitalist
countries . In addition, decentralisation reveals how capital gains
access to that labour, while at the same time attempting to `run
down' the large factory proletariat, in an effort to restore the
competitiveness of mature technology commodities in European
markets .
If the aim of decentralisation is ultimately the destruction
of the large factory proletariat, its consequence is the recompo-
sition of the industrial working class along new lines and div-
isions . As we have seen decentralisation takes many forms and to
each of these forms correspond different and often new, types of
worker . The splitting-up of the production cycle, which is often
combined with a restructuring of the labour process creates
highly mobile small production units . As Amin (1983) shows, the
firm undertaking splitting-up may then search out a particular
labour force that embodies the socio-economic characteristics
that it considers to be optimal for profitability, taking the fixed
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 CAPITAL & CLASS

94 capital to the labour force rather than risking its `contagion'

through migration and education in the large industrial town .
Putting-out creates a whole myriad of workers who are
seldom immediately visible . In the small firm the labour process
and conditions of work vary enormously between firms in the
same industry, while the composition of the labour force, its
traditions, experience and aspirations largely remain a mystery .
An `apprentice' working in a tiny firm in Turin expresses some of
the contradictions that are lived by a small firm worker,
`The tiny firm is an inferno, but it is also a hope, and
something near to yourself . Yes, but I know . . . that here
the work is also being deskilled, but the idea still exists that
you can learn a skill here, that they'll teach you something .
You're a worker, but at least you can hope to become a
good one . Its not really like this deep-down, and everyone
knows it, but where do you go if not here? Do you think
Fiat's better? The big factory, in a certain sense, scares
everyone ; these days you only go when you've given up
hope . . . . Here they exploit you but you're part of town,
your place . You're treated badly, slapped around, but in
that place, you see yourself in the work you do .' (II Mani-
festo, 16 .5 .80)
Paternalistic relations are common on the shop-floor, with ab-
solute power resting in the hands of the entrepreneur, whereas
familial and social ties often link worker and boss outside the
factory . In the small firm the relation of labour to capital is often
unmediated by unions and labour legislation . It is factory despot-
ism without the large factory and implies the reproduction of the
mass, but non-collective, worker at a higher stage of the real
subordination of labour to capital where the labour process is
fragmented between many small production units, or into the
minute division of labour between outworkers and artisans who
supervise their own exploitation .
Graziosi (1979) who has done some fine work on restruc-
turing in Italy, makes an important point when he says,
`The kernel of the strategy of decentralisation lies in the
marginalisation, the increasing precariousness of vast social
strata starting with the young, women and the old .' (p .152)
It needs to be stressed that the marginality of these social strata is
not economic - since they play a vital role in capitalist
acuumulation - but rather it is political and social ." The Bologna
engineering industry illustrates the complexity of the composition
of just one part of the proletariat and the divisions and potential
for marginalisation that exist in it are many . In it are found so
called `unskilled' women workers doing assembly work in the
submerged economy, N . African men in small foundries, workers
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 DECENTRALISATION

in artisan shops supervising numerically controlled machine tools, 95

workers with strong economic and cultural ties with the land
working in remote rural factories, plus the workers in the larger
factories with their militant uniion tradition and relatively privi-
leged position . It is conceivable that at one time all these workers
might have been employed in the same factory and joined by the
formal and informal networks and organisations that workers
establish, from which their demands and grievances are voiced
and from which a collective response is developed . With workers
in a firm scattered territorially, socially and culturally, in different
conditions of work and often invisible from one another, the
problem of uniting a single workforce, let alone the class, is
daunting . This raises the question as to whether the shop-floor
organisation of unions - in Italy, the factory council and its
delegates - can be an effective unifying organisation if it is
confined to one factory when the production cycle is being
fragmented between plants and firms and domestic outworkers .
The recomposition of the Italian industrial working class is
then exacerbating and creating new divisions which are leading
to the growth of new sections of the proletariat and to the future
weakening of a declining and besieged large factory proletariat . A
first conclusion that can be drawn from this is that any faith in a
recuperation of the union movement `in the economic upturn' is
fundamentally misplaced and it is sadly ironic, but indicative,
that the Fiat workers were beaten when the Italian economy was
experiencing a mini-boom . A `clawback ; is made unlikely because
the mass-collective worker is being displaced and probably no
longer has the strength and cohesion to lead the industrial working
class : in future struggles . This does not imply however that the
decline of the large factory and the mass-collective worker can be
equated with the end of the shop floor or class struggle . Rather
the problem is finding the strategy and organisational forms that
will allow new and changed members of the proletariat to express
their needs and desires and unite with the older sections of the
class to fight for common ends .
The Italian experience shows that this is a difficult task and
many mistakes have been made . Unions forged out of the struggles
of the mass-collective worker have too often tried to impose
unsuited strategies and organisations on small firm and diffused
workers, while obstructing the creation of organisational forms
more suited to their particular circumstances and grievances .
This can be seen especially in the failure to form horizontal
organisations that link workers in different firms at the local level
in Italy, particularly in areas where decentralisation has led to the
weakening of informal social and political networks that link
workers and collectivise their experiences . In Britain it can be
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 CAPITAL & CLASS

96 seen by the continuing lack of official support for combine com-

mittees . (See Lane, 1982 :8)
The Italian labour movement has been quick to recognise
that `diffused' workers exist but for many reasons it has been
extremely slow to find out what these workers want from the
unions . A consequence of this is that there is a great deal of
misunderstanding between the labour movement, which some-
times seethe `diffused' workers as docile, passive and of marginal
significance, and the `diffused' workers themselves, who see the
labour movement as being deaf and blind to their grievances and
vulnerability .
Britain is not Italy and the mass-collective worker has not
dominated the British labour movement to the same extent as in
Italy, but this paper has suggested that decentralisation, auto-
mation and information technology are particularly effective
means for attacking organised labour's power and autonomy,
through the expulsion and dispersion of labour from large
factories, sites and industrial towns . In Britain, the US and
Japanese firms in S . Wales and Scotland are the result of but one
type of decentralisation, while the domestic outworkers recently
reported to be earning less than £35 a week are another . The
textile firm director who `optimistically' told the Financial Times
(4 .8 .82),
`I have this vision that St Helens could become the Hong
Kong of the North West'
is the voice of a growing submerged and dispersed economy .
The British industrial working class is iteslf being rapidly
restructured but the labour movement still largely clings to craft
organisations and traditions . Holland (1982) and Lane (1982)
have both recently drawn attention to decentralisation in Britain
and raised serious doubts about what Lane calls the unions'
attempts to,
`take themselves by the scruff of the neck and shake
themselves into the shape necessary to cope with what is
effectively a new environment .' (p .13)
This paper suggests that the reshaping of industry and the
working class may accelerate further and faster than has yet been
generally realised by the labour movement and the left in Britain .
Hopefully the issues are becoming clearer, even if the answers
seem to be a long way off.

I gratefully acknowledge the financial support of the SSRC for this

research . And many thanks to Ash Amin, Bob Mannings, Donald
MacKenzie, Mario Pezzini, Harvie Ramsay and everyone else who
read and commented on earlier drafts of this paper .
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 DECENTRALISATION

97
(1) For other articles on decentralisation in Italy in English see Amin Notes
(1983) Brusco (1982) Goddard (1981) and Mattera (1980) .
(2) "`Small is lovely' says Soviet economist" Financial Times 9 .12 .82 .
(3) Blair (1972) says, p.113
"Beginning with the new technologies of the Industrial Revolution, the
veneration of size has come to take on the character of a mystique, and,
like most mystiques, it has come to enjoy an independent life of its own ."
(4) See Brusco in FLM Bergamo (1975) p .45-7 . Prais (1976) p .52-3
Blair (1972) ch . 5 and 6 and Marx (1976) p .603-4 .
(5) see Marx (1976) p.604-5 for a discussion of the Factory Acts and
the effect they had on domestic industry .
(6) For a typology of small firms see Brusco and Sabel (1981) . They
suggest a lot of small firms in Emilia are relatively independent whereas
Del Monte (1982) is less optimistic about the position of small firms in
the South of Italy (p.125) . And many small firms in Japan are `wholly
dependent on a single buyer' Patrick and Rosovosky (1976) p .509-513 .
(7) In Japan there has been a `rather rapid filtering down' in the form
of numerically controlled machine tools from big to small firms
(Financial Times Survey (1981) . Macrae (1982) cites the example of the
small Japanese firm where a leased, second hand robot system hammers
out components in a 'backshed' workshop .
(8) For work on Britain in this area see Massey and Meegan (1982)
Fothergill and Gudgin (1982) and Lane (1982) .
(9) `us Auto makers reshape for world competition', in Business Week
21 .6 .82 . See also Griffiths (1982) .
(10) See Manacorda (1976) . See also the excellent pamphlet produced
by the Joint Forum of Combine Committees (1982) .
(11) Quote from a union militant in Turin, in Il Manifesto,
special supplement on Cassa Integrazione, 1982 .
(12) Cited in, `Fiat Follows Japan's Production Road Map' Business
Week 4 .10 .82 . See also Sunday Times Business News 10 .10 .82 and Amin
(1983) .
(13) For a discussion of Taylorism, the mass-collective worker and the
changing class composition in Italy see Ferraris (1981) Rieser (1981)
Santi (1982) and Accornero (1979) and (1981) .
(14) This process of marginalisation and division has been aided by
left analysis where `women are seen as marginal workers and hence as
marginal trade unionists' . (csE Sex and Class the labour process debate
has limited its analysis to those labour processes, that are found in big
factories largely employing men . The fact that in Britain, men have
largely theorised this labour process, while women have been largely
responsible for an analysis of domestic outwork is indicative of the
difficulties facing the labour movement and the left . It is vital that left
theorists should avoid reproducing the very divisions they are studying .

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C & C 19 - G
 CAPITAL & CLASS

98 Dependent Development in Southern Europe, Methuen, London .

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