After reading this article you will learn about the various stages in the evolution of industry.

Since the early middle ages there were not many kinds of industries, because the needs of the people were limited. They were only interested in meeting the basic necessities of life such as food, clothing and housing. The people were not much literate and liked a static life.

There were three principal industries in various part of the country. As the means of communication were few there was no scope of development The first kind is handicraft system closely associated with the Craft Guild and prevailing all over the world till 15th century.

The second type was home industry, the domestic system which introduced industrial capitalism and was prevalent up to 18th century. The third is the factory system which first of all arose in England during the beginning of second half of 18th century and spread all over the world by the middle of 19th century.

Handicraft System:


In the early middle ages, handicraft system was spread all over the world. Articles of all kinds were made by hand. The capitalistic element did not exist at all. Under the handicraft system a family with a small number of helpers was the unit of industrial organisation. The raw materials of manufacture were obtained locally.

The production was for local needs. The crafts were essentially separated, one from another. In each craft the individual group of workers carried the work of manufacture through all the required stages from the acquisition of raw material to the placing of the product in the market. Because the mediaeval society did not move from place to place, too often the supply and demand position was maintained well.


The most noteworthy feature of the mediaeval industry was the organisation of the craftsmen.

It developed into two forms:


(i) Merchants Guild:

The Merchants Guild was the association of traders, viz., all those who bought and sold goods in the town. It ensured a fair price to the consumers and fair reward to the seller.

(ii) Craft Guild:

By the 12th century, Craft Guild also came into existence and was established throughout the world within the century. A craft guild was an association of artisan in a town or district engaged in the same occupation. Normally, there were several craft guilds in a town, viz., every separate craft had its own separate association. The membership of a craft guild was compulsory. The craft guild ensured fair living to the craftsmen and a good standard of craftsmanship. Mutual help in adversity was the main function of the association.


In the middle ages, there were three categories of workers, viz., masters, journeymen and apprentices. The master craftsman had a workshop of their own in which he worked assisted by his family members and assisted by one or two journeymen and by apprentices. Anyone who desired to start a new venture had to undergo training as apprentice for seven years with a master craftsman.

After the completion of training he became a journeymen, i.e., a travelling workman practising his craft for remuneration. After accumulating the modest funds necessary for establishing a workshop of his own and after gaining admission into the guild of his craft at a place where he proposed to settle he became a master.

The guild in those days proved very useful because it protected interests of both producers and consumers, afforded ample opportunities for training to workers, maintained standard of manufacturing, and it subordinated the interests of individuals to welfare of the community. It perished by the end of fifteenth century.

The main reasons for its extinction were the following:


(i) The adoption of the exclusion policy of member craftsmen which tended to restrict entry of fresh members.

(ii) The consequent opposition from journeymen who formed their own ‘journeymen guild’.

(iii) The growth of capitalism and increasing use of capital to industry which removed industry to new places free from guild authority.

(iv) The decline of international commerce in the 17th and 18th centuries.

Domestic System:


The merchants considered it necessary to get the production geared to the increased needs of market with the decline of craft-guilds and rise in the demand of goods. Accordingly, the merchants started giving work to the craftsmen who worked in their homes. The merchants supplied them raw materials and even the tools to the needy and pay the workers piece wages. When the goods were procured from the craftsmen they sold the finished products in different markets.

This system came to be known as Domestic system or Putting-out system, as the materials were supplied to the artisans in their homes and the artisans worked in their homes. In this way, the merchants played the part of entrepreneur and the middleman that of producers and consumers.

End of Domestic System:

In 18th century, some machines were invented such as ‘knitting machine’ and ‘stock framing’ etc. As the machines could not be purchased by the artisans, the merchants supplied machines and tools to the artisans. This led to the installation of machines in the house of merchants when the hired workers worked under the supervision of employers.

In this way, the domestic system vanished and gave rise to the capitalism and the present-day factory system as well as the emergence of entrepreneur. The consequence of this change was that the artisans lost their independence of working and also the ownership of tools and became the employee of merchants and had to abide by the rules and conditions of service.