The Beechmont Crest Online Guide to Management Science
The Decline of the Guilds and the Industrial Revolution (Part 2)
The Luddites created major havoc in England for about five years, but the tide ultimately turned against them. In the early 1800s, European governments passed a series of laws that undermined the guild monopolies. Within a generation, a wide range of jobs that had once been performed by independent, self-employed craftsmen moved into massive factories.
The movement from privately owned workshops to large factories represented a major shift in economic power—and psychology about the nature of work. Despite the meddling of the guilds, the half a millennium prior to the Industrial Revolution was essentially an age of self-employment. While a craftsman needed some money to start his own workshop, the amount was small enough to be managed by a large number of independent artisans.
A mass production factory, on the other hand, required an investment on an entirely different scale. Only a small number of people had the money--or capital--to build a large factory building and stock it with expensive machinery. Around 1845, a new word entered the English language: capitalist. Capitalists became the employers of the formerly independent handicraft workers.
For the workers, themselves, the factory system was a mixed blessing. The factories provided steady work, and freed production workers from the need to secure raw materials, find customers, and manage cash flows. A worker no longer had to be a businessperson. Factory employment therefore made life more predictable: all the worker had to do was show up for each day at the factory, and steady labor would be provided at a predetermined rate of compensation.
Not everyone was enthusiastic about the change, however. Karl Marx decried the factory system because it alienated the worker from the fruits of production. While Marx, as the author of the Communist Manifesto, doubtlessly had a specific agenda, he was not the only one to note the loss of autonomy. Even Adam Smith, the eighteenth century’s most enthusiastic proponent of the factory system, acknowledged the change. Whereas the independent craftsman had acted as a business partner of the merchant, the labor of the factory employee was comparable to an asset of the factory owner. In his capacity as a worker, the individual was now a part of the factory itself. Adam Smith alluded to this transformation in the The Wealth of Nations:
“When any expensive machine is erected, the extraordinary work to be performed by it before it is worn out, it must be expected, will replace the capital laid out upon it, with at least the ordinary profits. A man educated at the expense of much labor and time to any of those employments which require extraordinary dexterity and skill, may be compared to one of those expensive machines. The work which he learns to perform, it must be expected, over and above the usual wages of common labor, will replace to him the whole expense of his education, with at least the ordinary profits of an equally valuable capital. It must do this too in a reasonable time, regard being had to the very uncertain duration of human life, in the same manner as to the more certain duration of the machine.”