The Beechmont Crest Online Guide to Management Science
The Decline of the Guilds and the Industrial Revolution
In the late 1700s and early 1800s, the guild system was all but destroyed by new economic and technological forces. After a prolonged period of social upheaval and resistance, craft-based work gave way to mass production—the new economic paradigm of the Industrial Revolution.
The traditional production techniques of the craftsmen required a high degree of skill. The long learning curves involved in mastering these techniques amounted to a barrier to entry which assured each guild’s monopoly over a particular sector of the economy. In the late 1700s, however, inventors created machines that enabled non-skilled workers to perform work that had traditionally been the domain of skilled guild members. Mechanization proceeded at an especially rapid pace in the textile industry. Within a few decades, inventions like the power loom, the spinning mule, and the shearing frame made the skills of thousands of craftspeople virtually obsolete.
At the same time, a new economic entity was emerging: the mass production entrepreneur. Before the late 1700s, merchants who bought finished goods from skilled craftsmen paid minimal attention to the processes that actually produced the goods. Now, though, some merchants had become aware of the numerous markups and inefficiencies that resulted as goods and raw materials passed from one craftsperson to another. The merchants realized that by purchasing raw materials in bulk and coordinating the subsequent flow of goods between processes, they could save costs and thereby increase their process. These merchants became the first practitioners of supply chain management—which was known in the late 1700s as “factoring.”
The practice of factoring revealed the efficiencies that were possible with strategically aligned production processes. The next step would be to combine factoring with the new inventions that enabled practically anyone to do the work of a craftsman. Large numbers of workers would be gathered under a single roof to produce vast numbers of finished goods. This system--which is today taken for granted--was dubbed “the factory system.” The factory system spelled the final demise of the old guilds.
Not all guild members were willing to accept the change. In 1811, authorities in Nottingham, England received threatening letters signed by “General Ned Ludd and the Army of Redressers.” Shortly thereafter, displaced craftsmen began breaking into factories at night and destroying mass production equipment. This became known as the Luddite movement—a violent backlash against the factory system and the new realties of the Industrial Revolution. While the casualties of Luddite revolts were normally limited to machinery, people were occasionally killed in the disturbances. In 1812, a Luddite mob killed a mill owner, and the Luddites themselves were sometimes injured or killed by private security guards and police.