Table of Contents
- Summary of scientific paper 3
- Criticism of scientific paper 6
- Conclusion 9
- Bibliography 10
Summary of scientific paper
The Industrial Revolution that occurred in Great
Britain throughout 1790-1890 years had great impact on the organisation
of the working process. Prior to the 19th century it
was common to manufacture goods at home, however it has been changed
in the years of Industrial Revolution.
The work life could have been divided into two major
categories: manufactories and factories. Manufactories, widely
known as workshops, have brought minor changes to the prior system.
Even though the worker could no longer work at home, but have to rent
out a space and the equipment at the manufactory, the employees were
in total control of themselves: pace of work, working hours and conduct.
Capital owners of the workshops were indifferent to the performance
of the employees, as the main source of income was the fixed rental
payment on capital. Whereas, in the entities with imposed discipline,
the employer was the one to decide all the aspects of work. In such
conditions the reward was given not for the productivity, but the behaviour
of the individual in the working place.
There were two different opinions regarding the factory
discipline. The capitalism critics, who were opposed to the idea of
factory discipline, highlighted that capitalism failed to provide proper
working conditions and deprived freedom of the employees. The only choice
available for the worker was either to be exploited on the factory or
not to work at all. This has given rise to the coercion theory, which
suggests that disciple was able to derive more work from an individual
that one would freely contribute.
Those, with pro- capitalistic views, have argued
that this has been a necessity, triggered by the Industrial Revolution
with its technological advance. The new production patterns were based
on the labour division and broad use of machinery that resulted in the
need for coordination. Better labour organisation, timing and smaller
stock reduced the fixed costs which contributed to the wage increase.
No institution can survive any considerable time,
unless it is efficient. Factory discipline has been in use for decades,
and what is more, people were willingly accepting the deprivation of
freedom. The higher wages, which included disgust premium for working
under the restrictive set of rules, were paid. Employees were willingly
accepting the restrictive discipline, in return for higher wages. In
fact, the workers were hiring the employers, so that to derive a better
pay-off from the activity performed. And the study showed that despite
not liking the discipline, the production was higher with imposed discipline,
even though workers disliked it a lot.
At the time of Industrial Revolution the labour market
has been defined as competitive. However, Gregory Clark proved it to
be a common misconception. He argued that despite, all the studies that
had been conducted, the empirical evidence stated in favour of the spot
labour market, which is non-competitive, since the coercion theory is
only possible in the spot market. Only a few industries were actually
using the new technology in the manufacturing process.
Coordination theory originates from the wide implementation
of technological developments in the production process once the Industrial
Revolution has started. Coordination theory operates within the
competitive labour market. The principle of coordination theory lies
in the fact that indiscipline would generate extra costs. Since the
production involved expensive machinery, the attendance was important
because of the absence of a single worker the production process could
not run. Therefore, discipline in order to coordinate the workers could
be a viewed as a technical necessity to adjust for the new production
practice. The employers were forced to introduce fixed working hours,
since the cost of not coordination was high. For the employers the cost
of stock and machinery staying idle wasting its capacity was a loss.
However, coordination theory does not distorts working efforts contributes
by the employees; otherwise the capitalists’ profits would be decreased
by the employees’ wages shooting too high.
Coercion theory evolves from the notion of deriving
greater working efforts, thus greater productivity, from the employees
than they would have given willingly. In a way, this has been also the
response to the technological development. More capital was involved
in the production process in some industries once the Industrial Revolution
started. Under the coercion theory assumption, only those entities with
high capital ration per worker introduced factory discipline, since
driving the worker harder was beneficial for the capitalist. Besides,
the theory argues that the savings on the coordination cost would be
not enough to cover for the disgust premium associated with the factory
discipline. On the top of that, the factory imposed fines for the deviation
from rules that exceeded the actual cost of disobedience to the firm,
as to combat the irrational decision in favour of immediate pleasure.
This theory was only possible provided the labour market was uncompetitive
at the time, so that the worker could freely move from one sector to
another without the need to acquire highly complex skills.
Discipline is not the only solution designed to influence
the workers’ productivity. A system of incentives could have been
used instead. Discipline uses the set of strict rules to control the
employee, deviation from which results in a serious of fines, while
incentive system is encouraging people by the means of remuneration
in the end. At some factories the owner has used both systems within
the same entity just in the different parts. The studies have shown
that under the discipline, even though the worker disliked it greatly,
the productivity was the highest.
Besides, the incentive system has been proven to
be less efficient than discipline due to the human nature. One of the
imperfections of the labour market is that a worker has difficulties
in associating immediate pleasure with the punishment afterwards. It
is more straightforward in the discipline system: one got fined for
the action or inaction once has done in present. While it is harder
to relate higher work effort paid at the moment with the higher remuneration
at the end of the period.
Labour market had several imperfections, which made
coercion profitable. Firstly, in the competitive labour market the employers
could not increase the working efforts of the employees above the level
they would have contributed freely. It leads to the wages, exceeding
the workers marginal product, therefore incurred losses for the employer.
Secondly, incentives could have been used instead, provided the workers
were perfectly rational and would reproduce the same output as the disciplined
workers. However, it is problematic to establish the desirable output.
Criticism of scientific paper
Revolution has put capitalists in the position to either adopt the changes
brought to the production process and increase their comparative advantage
or stick to the original methods and gradually loose the market share.
Imposition of factory discipline has strong correlation to the machinery
advances that have been introduced to the market. Equipment required
greater specialisation of labour, in order to reduce the complexity
and increase the dexterity of the task. David Landes proposed that the
capital owner divide the labour for the primary reason so that there
would be indeed the need for the capital owner1. However, this
does not eliminate the gains from the division of labour.
Adam Smith commented on the division of labour in his work “The Wealth
improvement in the productive powers of labour, and the greater part
of the skill, dexterity, and judgement with which it is any where directed,
or applied, seem to have been the effects of the division of labour”2. Though, Smith
himself admitted that highly repetitive task might stultify one to a
great extent. A person is needed that sets the rules and directs the
flow of production. Only a person with entrepreneurial traits, which
enables to compound the factors of production in such a way so that
produce a competitive product, would be able to run an entity. This
leads to the idea that the capital owners and the management they provide
are crucial to the factories. Left without any supervision the factory
would not exist any prolonged period of time, since there would be no
one who would accumulate the revenue. Besides, the capital owners are
in such a position so that to be able to detect future trends and notions
but still close to the production to select the ones that would be beneficial.
capital owners are rational, they would try to maximise their profits.
Therefore, once the technical advances appeared the industries, these
sectors that could apply the machinery in the production, adopted the
equipment. Though for efficient use of the technology, labour re-organisation
had to be carried out.
systems have been designed to promote efficiency: factory discipline
and system of incentives. It embodies the proverbial carrot and stick
motivation techniques. Incentives model, which depicts the carrot, encourages
the worker to perform at the top of one’s abilities in exchange for
a reward. In the factories that used child labour extensively the rewards
were introduced to maintain discipline. Tangible at first, those with
the highest output, were rewarded by a doll if a girl and a rich meal
if a boy3. Though, over
time the tangible rewards transferred into intangible, such as a praise
notification on the wall in the factory. If a child did badly, a shameful
notice was hanged on the board instead.
times the combination of these methods was used by the employers in
order to achieve the desired outcome. For instance: the riddance of
“St. Monday” in exchange for Saturday’s half-holiday4. The capital
owners have given the workers half a day off on Saturday, provided Monday
would become the normal working way. So that the employers used incentive
system in order to establish discipline. The total number of working
hours not only increased due to the full working day on Monday, but
some capitalists have also reduced the meal time and prolonged the working
day. Once again the campaign was used to exploit the workers’ moment-to-moment
as the proverbial stick, was threatening the employees to increase the
working efforts. The set of rules grounded the behavioural principles
the employers though was necessary. Fines were imposed for the breach
of the rules, with the rates exceeding the cost to the entity. This
was an attempt to condition disobedience with the money losses, as well
as an opportunity to profit on the employees’ irrational behaviour
in favour of the immediate pleasure.
the fines were made the actual difference to the worker’s wage, it
wouldn’t have been noticed. Therefore, to establish such a relatively
new notion of factory discipline, the fines should have been aggressive,
as the main objective was not to leave anyone indifferent to it. Another
tool in the persuading the employees to follow the factory rules was
the threat of dismissal from the job5.
There are two
distinct views on the origins of factory discipline: the coercion and
coordination theories. The state of the labour market is essential in
the definition of the right theory, as coercion theory is only applicable
in the spot market, while in the competitive market it makes no use
at all. Despite the fact that the technological advances gave rise to
the factory discipline, the coordination theory has proved itself to
be less profitable than coercion. The revenues generated by the coerced
workers were higher than the savings from the coordination of the production
process. Even though the coordination is essential for the smooth and
efficient production, only coercion is possible of deriving greater
work efforts along with productivity, thus profitability of an entity
increase. The argument in favour of discipline, rather than incentives
is one of the inefficiencies of the labour market. The psychology of
a human being that need discipline in order to achieve high performance,
as the incentive system is not enough once related to the factory production.
D. Landes concluded that “The historical
record shows that capitalists have always been ready to lease equipment
to workers when it pays, that is, when leasing yields a secure income”. Once the incentive
system has proved itself efficient, capitalists would have eagerly adopted
the notion. Unless, the workers did not need any supervision in terms
of work conduct and their performance was acceptable, the employers
would have chosen the system of incentives instead.
that companies are enjoying at present has not always been that way.
At the time of Industrial Revolution new techniques were introduced.
System of incentives along with the factory discipline was implemented
at the factories. However, the “workshop” organisation of the
production was still used. The Industrial Revolution was actually related
only to a small number of industries in the market, leaving majority
to evolve on its own pace. This has lead to the controversial situation
in the labour market. It was regarded as being competitive, however,
due to its multiple imperfections, its true nature was still spot.
study showed that the coercion theory was more successful, which proves
the point that the labour market was not competitive, but spot, as coercion
cannot exist in the competitive labour market. One the of labour market
imperfections, which made coercion possible, was human psychology, since
for efficient performance a person needs constant supervision and deadlines.
Besides, it is relatively hard for the person to coincide the relation
between immediate sacrifice of leisure and remuneration afterwards.
discipline progressed over time, as the discipline of the 20th
century has nothing to do with the widely used in 19th. Firstly,
the labour market has evolved in totally competitive. Secondly, strong
legislative ground was established supported by the public and the government.
Though this might only be the truth for the developed countries, as
countries with emerging economies still use the remnants of the 19th
century discipline along with child labour.
Discipline brought the necessary coordination to the production process.
Not in a sense of timing everyone’s action but to coordinate the supply
relative to demand.
CLARK, GREGORY, (1994): “Factory Discipline,” The Journal of Economic History, 54(1), pp. 128-163.
S., (1986): “What Do Bosses Really Do?” The Journal of Economic History, 46(3), pp. 585-624.
(1963): “Factory Discipline in the Industrial Revolution,” Economic History Review, 16 (2), pp. 254-271.
A., (1976): “The Decline of St. Monday 1766-1876,” Past and Present, 71, pp. 76-101.
1 Landes (1986), pp. 590
2 Landes (1986), pp. 586
3 Pollard (1963), pp. 266
4 Reid (1976), pp. 86
5 Pollard (1963), pp.261