Putting-out with smartphones I

The pre-Industrial putting-out system and its parallels to the modern gig economy

The putting-out system was a pre-industrial way of organizing work. It involved workers performing small, discrete stages of work in their own homes as merchants coordinated this work across many such households. The subsequent transition to factory labor was detrimental in many ways and is decried by leftists. But the preferred putting-out system seems quite similar to the gig economy which is also poo-pooed by leftists.

Warnings: Gotcha Appearances to the contrary, this is not an attempt to "Gotcha!" leftists. I read Margolin's What Do Bosses Do long ago and was confused once I made the connection to the gig economy so decided to investigate.

[S]carcity, to a certain degree, promoted industry, and that the manufacturer (worker) who can subsist on three days work will be idle and drunken the remainder of the week… The poor in the manufacturing counties will never work any more time in general than is necessary just to live and support their weekly debauches… We can fairly aver that a reduction of wages in the woolen manufacture would be a national blessing and advantage, and no real injury to the poor. (Smith 1765

Putting-out system

Between the guild system and the full steam Industrial Revolution, England briefly used the putting-out system. Under this system, finished goods were assembled not in factories or dedicated workshops, but component-by-component in a multitude of homes and cottages.

For example (illustrative hypothetical based on Wikipedia): One worker would trundle their hand cart to the market, drop off cleaned wool in exchange for a piece rate payment, and the merchant would dispatch them with a new load of wool. That merchant would take this cleaned wool and give it to another independent worker for carding. The carder would take the cleaned wool home, the family would process it in their home, and then return to the market in a couple weeks to give the merchant carded wool. This staged process would repeat with a separate family taking home loads of inputs and returning outputs for each subsequent stage in the process—spinning, plying, weaving, etc. When the final task was complete, the merchant would take the finished goods to a market or store and sell them to consumers. In this way, the task was broken down into small components and coordinated by the merchants—somewhat like a (spatially and temporally) disaggregated assembly line.

Transition

But this system didn’t last forever. Early factories soon arose and by 1850, piece work was all but dead. (Marglin 1974) The factory had won out. To what effect?

(Mokyr 2001) highlights a number of detriments unique to factory work:

Commuting Walking to work (the only widely accessible form of transit then available) reduces time available for leisure and so reduces welfare in ways that don’t show up in the most obvious measures (e.g. GDP). Leisure-income choice In the putting out system, households (this unjustly ignores intra-household decision-making) could choose how much time they wanted to devote to work in very fine-grained increments. With the factory system, work became “all or nothing”. For many, this reduced choice would have reduced welfare. I’ve often heard even modern coworkers wish for an option to work only, say, three days a week. Multitasking The shift to factory work eliminated the opportunity for multitasking. The most important example of multitasking available in the putting-out system was looking after children while performing other work. Working environment Early factories were nasty, brutish and liable to shorten the lives of their workers.

If we listen to (Marglin 1974) tell it, factories were a disaster for workers and to the benefit of only the capitalists:

[T]he origin and success of the factory lay not in technological superiority, but in the substitution of the capitalist’s for the worker’s control of the work process and the quantity of output, in the change in the workman’s choice from one of how much to work and produce […] to one of whether or not to work at all, which of course is hardly much of a choice.

I’ll take a moment to explicitly note this for the ensuing discussion: An avowed leftist publishing in the Review of radical political economics comes out strongly in favor of putting-out over factory work. I suspect many other leftists would have similar sympathies.

The gig economy

I hope the earlier description of the putting-out system echoed. To me, it sounds a great deal like a technologically limited gig economy. In both systems, workers have considerable freedom over how much work they perform, but not which tasks. Their tasks are assigned by a central clearinghouse which also mediates their relationship with the final consumer. Unlike freelancers, workers have relationships with only one or a few buyers (monopsony/ oligopsony). Unlike modern full-time employees, in both systems, workers have very limited physical interactions with their employer.

If you accept the aptness of this analogy, we’re left with a confusion. Why was the putting-out system considered better than full-time, centralized employment while the gig economy is often considered worse? Especially from the leftist perspective?

Reconciliation

We have three ways to reconcile the apparent conflict. People are wrong about the putting-out system, people are wrong about the gig economy, or the two systems are crucially different. But that will have to wait for another day.