As Marx describes, in Capital I, this is merely a phase in the development of capitalist production, before all of those processes become operations within a division of labour inside manufactories, which, in turn, gives way to the creation of large-scale machine factories, and in which the division of labour gives way to machines which, themselves, perform multiple operations in one process, with the detail worker being reduced to merely a machine minder.
For the Narodniks, this relation between the large leather producers and the handicraft producers was seen as the ““typical expression of the idea of the organic connection between factory and handicraft industry to their mutual advantage” (sic!) . . . the factory entering into a correct (sic!) association with handicraft industry, with the object, in its own interests (exactly!), of developing and not reducing . . . its capacity (III, p. 3). (p 426-7) In fact, as Lenin sets out, in detail, in The Development of Capitalism in Russia, not only do these relations indicate the inevitable process by which the small producers were being proletarianised, but there was a direct correlation between their economic condition and the size of the establishment in which they were employed. The worst wages and conditions existed for those restricted to domestic production, rising for those employed in larger handicraft enterprises, improving further for those employed in manufactories, but being best for those employed as actual industrial workers in the large machine industries.
“We are now in a position to form a fairly clear idea of the economic organisation of the bootmaking and of many other allied “handicraft” industries. They are nothing but branches of large capitalist workshops (“factories,” according to the terminology used in our official statistics), performing nothing but detailed operations in the large-scale capitalist manufacture of leather goods. The entrepreneurs have organised the buying of materials on a broad scale, have set up factories for tanning the hides, and have established a whole organisation for the further processing of the leather based on the division of labour (as the technical condition) and wage-labour (as the economic condition): some of the operations (such as cutting out leather for boots) are performed in their workshops, others are performed by “handicraftsmen” who work for them in their homes, the employers determining the amount of output, the rates of payment, the kind of goods to be made, and the quantity of each kind. They have also organised the wholesale marketing of the product. Obviously, in scientific terminology this is nothing but capitalist manufacture, in part already passing into the higher form of factory industry (inasmuch as machines and machinery are used in production: the big leather factories have steam engines). To single out parts of this system of manufacture as a separate “handicraft” form of production is a patent absurdity, which only obscures the basic fact that wage-labour prevails in the leather goods production and bootmaking and that the entire trade is under the sway of big capital.” (p 427-8)
The reason some of these businesses preferred to operate on this basis of The Putting Out System are familiar today, when looking at the business model of Uber or Deliveroo. As Lenin points out, the domestic workers were atomised and so their wages and conditions were lowered. The employers saved on premises, implements and supervision, and “evade the not always welcome demands made on manufacturers (they are not manufacturers but merchants!)” (p 428) And, these handicraft producers themselves, in some instances, employed wage workers, in the same way that Marx described the sweatshops in Britain. The condition of these workers was worst of all.
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