"Proto-industrialization" is a term historians use to describe the phase of economic production between feudalism and capitalism. During this phase, there were no machine-based factories; instead, rural populations produced goods in their own houses in a system referred to as "putting out." In this system, merchant capitalists provided capital and goods, and workers finished crafts or products in their own houses, generally according to their schedules. Some of the workers were farmers who produced crafts or other goods during the times they were not working on their farms, while other workers were not farmers and relied on surrounding areas for their food. Women and children gained access to money that did not come from their work on farms, and many workers became specialized in their crafts. Merchants were able to accumulate capital, facilitating the growth of full-scale industrialization. The problem faced by merchants during this time was that when there was an increased demand for products in the market, the peasants working to produce the goods could not always meet this demand. The merchants found it difficult to encourage workers to produce more goods to meet demand.
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