The factory system.

Technology and organization.

§Need for a “nonmarginal” institutional change.

§Compare enclosure.

§Automatic machinery allows high throughput.

§But why process monitoring?

§Constant levels of effort necessary to amortize high fixed costs.

§Enforcing a “nonmarginal” wage-effort bargain.

§Creating “industrial” human capital.

§New norms of effort.

“The workers dislike discipline, but they stay in the factory because at the end of the week their wage is 60 percent greater than that they can achieve without discipline” (Clark 1994, p. 160).