Proto-industrialization (also spelled proto-industrialisation) was a possible phase in the development of modern industrial economies that preceded, and created conditions for, the establishment of fully industrial societies. Proto-industrialisation generally refers to the phase before industrialisation. Proto-industrialization was marked by the increasing involvement of agrarian families in market-oriented craft production, mainly through the putting-out system organized by merchant capitalists. It was an effective method of production which was controlled by merchants and had links to developing European consumerism. However, the phase was not observed across Europe, and nor did it always smoothly transition into the Industrial Revolution proper.
The term was coined by F. F. Mendels in 1972, though a UNESCO colloquium on the 10th anniversary of the deaths of Einstein and Teilhard de Chardin and published in 1971 discusses "the basis for proto-industrialization".
The applicability of proto-industrialization in Europe has since been challenged. M.J. Daunton, for example, argues that proto-industrialisation "excludes too much" to fully explain the expansion of industry: not only do proponents of proto-industrialisation ignore the vital town-based industries in pre-industrial economies, but also ignores "rural and urban industry based upon non-domestic organisation", referring to how mines, mills, forges and furnaces fit into the agrarian economy.
Initially using surplus labor available during slow periods of the agricultural seasons, proto-industrialization led to specialization - not only in industrial production but also in commercial agricultural production. This allowed reciprocal trade favored by regional economies of scale. It resulted in accumulation of capital and in the acquisition of entrepreneurial skills by merchant capitalists, which facilitated the development of large-scale, and capital-intensive production methods in the full industrialization phase that followed.
Proto-industrialization sparked social changes in traditional agrarian societies that would become more marked during full industrialization, such as greater independence of women and children, who gained a means of income separate from the family subsistence farm. During this phase of industrialisation, machines were not used. They were not even invented at that time. People could only use their hands or any hand-made material to produce required goods.
The term proto-industrialization has also been used in reference to Mughal India during the 17th–18th centuries, when the Indian subcontinent experienced a growth in manufacturing industries and its economy had similar conditions to 18th-century Western Europe prior to the Industrial Revolution.
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