What happens in the Putting-out system?

During the seventeenth and eighteenth centuries, the putting-out method was a type of household manufacturing that was common in rural parts of western Europe. It arose from an early stage of autonomous commodity production, serving as a bridge between what German social theorist Karl Marx (1818–1883) referred to as “formal” labour subordination to capital.

A trading agreement between weavers and merchants is known as the Putting out system. The weaver acquires the raw material from the merchant without having to invest any money. The weavers hand over the ‘finished goods’ to the merchant, and the weaver is fully reliant on the merchant in this arrangement.

What happens in the Putting-out system?

The arrangement between the merchant and the weavers is an example of a putting-out system, by which the merchant supplies the raw material and receives the finished product. The merchants purchase the raw material and give instructions to the weavers about the kind of cloth that is to be made. This arrangement is prevalent in the weaving industry in most regions of India.

For the weavers, this arrangement has two advantages:

1. Weavers are not required to spend their money on yarn purchases.
2. Weavers are not required to consider the sale of completed cloth.

There are a few disadvantages to for the weavers:

• Merchants become more powerful as their reliance on raw materials and marketplaces grows.
• Weavers are paid a pittance to weave the fabric.

The market favors merchants more than consumers. The merchant and the weavers’ arrangement is an example of a putting-out system, in which the merchant delivers the raw material and the weavers get the finished product. A garment exporting manufacturer buys the cotton cloth produced by the weavers from the merchant. The fabric is used to produce shirts at the garment exporting facility. The shirts are sold to people in other countries. Foreign purchasers are businesspeople from the United States and Europe who own a network of stores and operate on their own terms:

• They put pressure on the provider to give them the best deal possible.
• They established high criteria for manufacturing quality and on-time delivery.
• Any flaws or delivery delays are properly dealt with.

Sample Questions

Question 1: What ended the putting out system?

Answer: 

After the invention of sewing machine and employment in factories, the putting out system fell.

Question 2: What is basic unit of production in putting out system?

Answer: 

The manufacturers supplied the raw materials to the families working at home.