Abstract
Indonesia's rural weaving industry, which had developed into a factory production system in the mid-1960s, declined rapidly from the end of the 1960s because foreign companies and Chinese-Indonesian capital invested massively in the textile industry.
Faced with crisis, the rural weaving industry in the area surveyed created a new division of labor in the survey village in the mid-1970s. Cheaper products made of lower quality thread were channeled by village traders to low income strata in urban and rural areas across the country. Former factory managers became traders who organized a sub-contracting system with weavers by supplying them with thread, and petty traders now buy weaving products. All weavers in the village are now petty commodity producers.
The dominance of petty commodity production in place of the factory production system can be explained firstly by the preference of low strata households who wish to be economically independent and self-employed rather than simple waged laborers. More important, however, is the fact that the factory production system cannot be maintained economically. Faced with the difficulty of securing abundant cheaper thread and enough working capital, the traders can operate more flexibly than the factory managers, whose fixed costs are too high.
The division of labor in the village is based upon the economic differentiation of the villagers. Weavers who are landless and near-landless continue to weave with minimal working capital, and have a multiplicity of occupations, consisting of petty commodity production and wage labor, including labor in the urban informal sector.
