Specialisation of Skills/Methods of Production

The textbook begins by contrasting two fundamentally different methods of production: the craft method and mass production. Under the craft method, factories produce only a few pieces, and each piece is made-to-order. Because each item is custom-built, the costs are high. This is the older, more labour-intensive way of making goods.

At the other end of the spectrum lies mass production. Here, large quantities of standardised parts are produced. The key feature is that each worker performs only one task, repeatedly. This division of labour allows for enormous output at a much lower cost per unit, but it sacrifices the uniqueness of craft work.

The text then clarifies what the terms ‘manufacturing’ and ‘industry’ actually mean. The word manufacturing literally means ‘to make by hand’. However, in modern usage it includes goods ‘made by machines’. At its core, manufacturing is a process that transforms raw materials into finished goods of higher value, for sale in local or distant markets.

The term industry is more comprehensive. Conceptually, an industry is a geographically located manufacturing unit that maintains books of accounts and records under a management system. In everyday language, the word ‘industry’ is often used as a synonym for ‘manufacturing’ — we speak of the ‘steel industry’ or the ‘chemical industry’, and we think of factories and processes.

However, the textbook points out a problem: there are many secondary activities that are not carried on in factories. Examples include what is now called the ‘entertainment industry’ and the ‘tourism industry’. These are not manufacturing in the traditional sense, yet they are still called industries. …