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Wednesday, October 27, 2010


Guilds in Europe

Our conversation in class regarding guilds sparked my interest. I started to wonder what exactly they were about and wondered how they impacted the communities they lived in and how they fell from ruling these towns. As I started research, I started to focus on the guilds in Europe, although there were many forms of guilds across many different geographical areas.

The definition of a guild is ‘an association of craftsmen or merchants formed for mutual aid and protection and for the furtherance of their professional interests.” The merchant guilds consisted of merchants in a particular town who sold various goods either locally or from town to town. Craft guilds were specialized for a particular industry such as wool weavers, butchers, blacksmiths etc. What surprised me when doing my research is that when guilds were first organizing, they actually helped the community in which they lived in. In Europe during the 12th to 15th centuries, guilds provided a decent form of government and supported locals by contributing to building schools, roads and churches. In a way, I suppose they had a small encompassing interest rather than being a strict special interest group (at first anyway).

Their impact in the economy as time goes on tells us a different story. They had established significant monopoly power within their communities by establishing quality standards for goods, prices, and trading practices. They would control the towns they lived in as well as the local government (if it existed) to further the interests of their members at the sake of others and to achieve their common economic goals. They were established to protect and regulate the trades of the members, which eventually lead to the establishment of a monopoly over the entire community.

Guilds were consistent with the logic in that they had selective incentives such as providing insurance and social benefits for its members. However, they tried to limit members by placing fees upon journeymen and restricting entry to descendants of those who were already members. Some merchants were discriminated against and prohibited from ever becoming a member of the guild for the trade they specialized in. They were distributional coalitions that used their power to control labor, production, distribution and trade in the towns they lived in. In the 13th century, most of the guilds were consisted of wealthy people (maybe another type of discrimination/inequality), who had eventually dominated their city governments and were able to exert power and influence over legislative issues. Olson says that guilds were more like cartels, say rather than a union, which is apparent now. They even had their own rules for participating members. They would take an individual to guild court for complaints of work ethic or competition and place fines on its own members.

The fall of the guilds occurred when towns became economically integrated. Jurisdictional integration caused the guilds to lose political influence and monopoly power. Consumers had a wider range of choices due to the free movement of production. New markets and capital resources made the guilds less and less powerful within the communities. They were unable to maintain a monopoly, and their exclusive membership base with rigid entrance policies was starting to impact the economy. They could not control the new markets and industries in a nationwide jurisdiction like they could in a local jurisdiction. Advancements in technology, transportation, and trade permitted the guilds from maintaining control and power over their communities.

Olson said that implication 4 (special interest organizations and collusions reduce efficiency and aggregate income in the societies in which they operate and make political life more divisive )and 7 (distributional coalitions slow down a society’s capacity to adopt new technologies and to reallocate resources in response to changing conditions, and thereby reduce the rate of economic growth). In researching this topic, I found that Olson was indeed consistent with these implications. The distributional coalitions of guilds clearly inhibited the towns and cities from economic growth. The ‘restrictive membership, price-fixing, long apprenticeships from which the sons or relatives of members are often exempt, and rules limiting output and innovation…[have] the same harmful effects in economic efficiency and growth whatever the culture.’ There were many different types of guilds in various countries (although I focused on Europe) and Olson’s theory holds true here, as I would also expect it to with any type of guild in any country.

Based on The Logic, we know that small groups are more able to act more efficiently. Therefore, the guilds were able to provide a form of stable government and function like government in the relatively small communities they lived in by enforcing their rules and practices. The guilds and distributional coalitions interrupted the free flow or transport of good between communities and countries. We know from Olson that the typical organization for collective action will have little or no incentive to make sacrifices in the interest of society as a whole, and individuals in a group will try to make their size of the production pie bigger at the expense of society, which is consistent with the guilds.

The coalition does not want to share their wealth, so if they discriminate and have limited entry to specific apprentices and journeymen to join their group, they do not have to share their resources with as many members. This obviously inhibits growth of the society and makes society worse off. However, it enables the coalition to be better off. This explains implication number eight, which says that distributional coalitions, once big enough to succeed, are exclusive and seek to limit the diversity of incomes values of their membership. They begin to exclude groups to maintain their own power, which is also what the guilds were able to accomplish with limiting the number of apprentices and journeymen in certain trades.

Sorry guys this is longer than I intended the guilds caught my eye and I got carried away.

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