The division of labor , organizational control and the 1 labor process : Near - decomposability and the 2 Babbage principle

6 This paper devises a simulation model that combines insights from the evolutionary perspective 7 on the division of labor with ideas from the labor process literature. It characterizes technical change 8 and the development of a modular production process as the outcome of technological search and of 9 organizational problem solving where the conflict between workers and firms over decision rights and 10 agency problems play a central role. As a modular organization of the production process allows also 11 tightening control over workers modular organizations develop where the power of workers to oppose 12 decisions by the management is low. In these scenarios the performance of firms is also highest. 13 Therefore, a modular architecture of the organization of production does not necessarily depend on 14 the technological architecture of its products, as some authors have claimed. The model is used to 15 interpret historical evidence about different development paths in technical change in Britain and 16 the U.S. at the beginning of the 20 century. 17 Address: 18 Vienna University of Economics and Business Administration, Department of Economics, Augasse 19 2-6, 1090 Vienna, Austria. E-mail: [email protected]. 20 JEL Codes: D23 D83 L25 O33 21