4.2 Case Study: Cottage Industry – Global Economy

Case Study: Cottage Industry in the Global Economy

The loss of an individual's ability to earn an income is economically damaging and emotionally hurtful. Those who can no longer earn a living feel undervalued as a member of society. What a person does to make a living influences what other people think of that individual. This is called social status and very much affects how we think about ourselves. Studies in North America have shown that those with higher social status tend to be happier.

The caste system of both past and present India is the most dramatic example of the attachment of social status to an occupation. Traditionally, each Indian of the Hindu religion is born into a certain caste. As part of this caste, one is given an occupation, can marry only other members of that caste, and can share food or drink only with those members. At the top are the Brahmins, or priests, who deal with everything spiritual, followed by the warriors or servants of the king, then the farmers and merchants and, at the bottom, the labourers. Each caste is divided into sub-castes. At the bottom are the untouchables who must dispose of excrement and dead bodies.

Now, let us pretend that you are an Indian male from the potter caste. Your job is to make pots. You make them from clay using a rotating wheel. Your neighbours consider you part artist because of the way you can shape a pot as if by magic with your hands. You learned your skills from your dad who learned them from his dad who learned them from his dad. Your wife is the daughter of a potter's wife who was the daughter of a potter's wife who was the daughter of a potter's wife. You have two children, one girl age three and one boy age five.

You look forward to the day when you can teach your son how to be a potter and eventually make pots, instead of you, so he can care for you in your old age.

One day, a merchant comes into the village, and from his cart he takes pots similar to yours, but they are hard and reflect the sun on their surfaces. He explains to your neighbours that his pots are lighter to carry, will not break when dropped, and can even be placed over a fire without damage. People buy his pots instead of yours. When his cart is empty, he says he will return with more.

Your labour is no longer of value. The demand for your pots is practically zero. This is illustrated in the following graph.

Making pots for thirty cents when you were previously selling them for three dollars will not give you and your family a living income. You might be able to continue your work for a time, but your son has no reason to take up the occupation of his ancestors. He will have to find new work. He will have to move from the village and try to find work in the city. This process is called urbanization.

Urbanization, or the growing movement of people from rural areas to cities, was one result of the Industrial Revolution. Urbanization is occurring at a huge pace today, and to a large extent it is because of ... you guessed it. Globalization!