[OPE-L:7447] reposting John Milios on buyer up

From: Rakesh Bhandari (rakeshb@stanford.edu)
Date: Tue Jul 23 2002 - 14:32:38 EDT

I am going to repost John Milios' very valuable OPE-L 7440 because 
the way in which it is formatted in the archive makes it near 
impossible to read, and it would shame if it were not read for that 
reason. I hope that this will be easier to read in the archive.
John, didn't you write a paper in Rethinking Marxism on this topic? 
Perhaps you could provide the cite; I would be happy to receive the 
paper offline if this is possible; or I'll track it down in the 
library next time I am there.
All the best, Rakesh

From: "jmilios" <jmilios@hol.gr>
To: <ope-l@galaxy.csuchico.edu>
Subject: [OPE-L:7440] The buyer-up as informal owner of the artisan's 
M. o. Production
Date: Mon, 22 Jul 2002 20:49:16 +0300
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  Following Rakesh and Gil, I would like to add some thoughts on the 
putting-out system discussion and to stress the contribution of 
Lenin's early economic writings to the subject.

             So long as the artisan or the farmer could sell his 
commodities to different merchants he/she could retain the economic 
status of an independent commodity producer. However, the 
diversification of demand and consequently of production, along with 
the need to produce not for a local but for various distant markets, 
historically made the producer increasingly dependent on one merchant 
in particular, who would supply him with raw materials and become 
thus BUYER-UP of the producer's total output. Since the buyer-up is 
now the economic agent who places the product on the different 
markets, he determines the type of product, and the quantity of 
products, that each artisan or farmer working for him is to produce. 
He places advance orders for the wares he requires, and in many cases 
begins to supply the direct producer with raw materials.

             In this way the buyer-up in effect acquires control over 
the production process of the individual producers, I.E. OF THEIR 
MEANS OF PRODUCTION. It is he who decides the extent of output and 
its degree of diversification as well as establishing the division of 
labor among the separate producers who are under his control, 
according to productivity criteria which he sets and changes in 
demand which he follows. The buyer-up can now lower the prices of the 
commodities he purchases (buys up) from direct producers to a level 
which yields for the producer an income not higher than a worker's 

             There thus emerges what Rubin in his HISTORY OF ECONOMIC 
THOUGHT (1989) calls "the cottage or domestic or decentralized system 
of large-scale industry" which "paved the way for the complete 
reorganization of industry on a capitalist basis" (p. 155).

             It was Lenin who clearly comprehended and pointed out 
firstly the capitalist character of an economy based on the buyer-up:

  "Nothing could be more absurd than the opinion that working for 
buyers-up is merely the result of  some abuse, of some accident, of 
some 'capitalization of the process of exchange' and not of 
production. () In the scientific classification of forms of industry 
in their successive development, work for the buyers-up belongs to a 
considerable extent to capitalist manufacture, since 1) it is based 
on hand production and on the existence of many small establishments; 
2) it introduces division of labor between these establishments and 
develops it also within the workshop; 3) it places the merchant at 
the head of production, as is always the case in manufacture, which 
presupposes production on an extensive scale, and the wholesale 
purchase of raw material and marketing of the product; 4) it reduces 
those who work to the status of wage-workers engaged either in a 
master's workshop or in their own homes () This  form of industry, 
then, already implies the deep-going rule of capitalism, being the 
direct predecessor of its last and highest form - large scale machine 
industry. Work for the buyer-up is consequently a backward form of 
capitalism, and in contemporary society this backwardness has the 
effect of seriously worsening the conditions of  the working people, 
who are exploited by a host of middlemen (the  sweating  system), 
are disunited,  are  compelled  to content  themselves with  the 
lowest  wages  and  to  work under the most  insanitary  conditions 
and for  extremely long hours,  and -what is most  important- under 
conditions which render public control of production extremely 
difficult" (LCW Vol. 2, pp. 434-35).

      Lenin considers the social relations created when the merchant 
takes control of the craftsmen's production to be already capitalist 
relations of production, i.e. a preliminary form of piece-wage labor, 
a preliminary form of surplus-value extraction. According to his 
approach, by taking control over the craftsmen's production process, 
merchant capital takes control over their means of production, albeit 
in an informal or indirect way. Consequently, Lenin conceives 
industrialization as a transition from one (the underdeveloped) 
capitalist form to another (the developed).

     I believe that Marxist development economics has much to gain if 
it takes seriously into consideration this theoretical interpretation 
of the producer-merchant class relations: the enormous spread of 
cottage industries and sub-contracting relations in most LDCs (but 
also the rise in faon-production and sub-contracting in the 
developed capitalist countries, as on the one hand "labor 
flexibility" rises, while on the other an increasing number of 
enterprises engage primarily in marketing commodities produced for 
them by sub-contractors) can in many cases comprehended as 
alternative (to formal wage-labor relations) forms of capitalist 


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