The essential change which the Industrial Revolution brought was not in machines but in method. The Industrial Revolution was only incidentally a change in industrial techniques; it was more profoundly a change in industrial organization, [namely, the transfer of] many of these industries from the home into the factory. Within two generations, roughly between 1760 and 1820, the customary way of running industry changed. Before 1760, it was standard to take the world to villagers in their own homes. by 1820, it was standard to bring everyone into a factory and have them work there.
[For instance, consider] the making of woolen cloth. Characteristically, this was carried out in many steps. Sheep were reared and then shorn; the wool was cleaned and combed. It was then spun into thread, and the thread went to the individual weaver, who had a weaving frame in his own home and wove the cloth on it. In principle, the weaver was a private manufacturer; that is, in principle he bought the thread, he owned his frame, and he sold the cloth himself.
This detailed procedure suffered from two drawbacks. First, not all parts of it were equally mechanized. The weaver’s frame was an effective machine, but the spinning wheel was not. Anyone could spin who had the minimum sense of touch needed to draw an even thread and, as this needs little skill, spinning was therefore only a minor occupation of women — as the word ‘distaff’ still reminds us. A weaver at work could keep many hands spinning. [...] Second, there was little money in spinning, with its low productivity, and those who could gave it up whenever possible, in order to do the necessary work of house and farm. It was a seasonal occupation, which was dropped at seed and harvest time, and was therefore a bottleneck at the mercy of its occasional workers.
Another handicap in the organization of the woolen industry was economic. In principle, the weaver was his own master: he bought the thread, he owned the frame, and he sold the finished cloth himself. But he had little to fall back on if times were bad, and he got into debt. He had to borrow, that is to say he had to ask for credit, from the man from whom he bought either the raw wool or the spun thread. The only security he could offer for the loan was his weaving frame. In practice, therefore, even in the seventeenth century many weavers were in effect merely workmen for the wool merchant to whom their frames were mortgaged.
The wool merchant commonly had his headquarters in a small town around which the weavers’ villages clustered. The weavers would come into town on a given day, often a Friday, and sell their pieces of woolen cloth. With the money, the weaver would buy fresh wool; but if times were bad and there was a surplus of cloth, he would have to ask the merchant to keep the cloth and would have to get wool on credit against it. In this way, the ownership of the wool, the weaving frame, and the finished cloth tended all to fall to the one merchant. Thus, in a practical sense, the weaver became a workman for wages — the uncertain wages made up of the difference between what he got for his cloth and what he paid for his wool.
This relationship became common in many industries: the woolen industry of Yorkshire, the cotton industry of Lancashire, nail and needle making around Birmingham, the making of gloves and stockings and hats, and many others. It became convenient for the merchant to send his agents into the working homes, to take the raw material there and to bring back the finished goods. He now had an investment in these homes, and needed to keep a sharp eye both on the tools and on the materials there. [...]
The early factories were organized in a number of different ways. In some the worker still brought his own tools — he did this in the Sheffield steel industry down to the present century — just as a skilled fitter brings his own tools today. Whatever the detailed organization, however, the factories turned out to have several advantages. They gave the owner control of the materials and the working hours. They enabled him to rationalize operations which needed several steps or several men. They made it possible to use new machines which could be worked by unskilled women and even children under supervision. And they allowed these machines to be grouped around a central source of power.
— From: Jacob Bronowski and Bruce Mazlish, The Western Intellectual Tradition: From Leonardo to Hegel (1960), pp. 308-10.