Journal of Economic Perspectives
ISSN 0895-3309 (Print) | ISSN 1944-7965 (Online)
The Economics of Guilds
Journal of Economic Perspectives
vol. 28,
no. 4, Fall 2014
(pp. 169–92)
(Complimentary)
Abstract
Occupational guilds in medieval and early modern Europe offered an effective institutional mechanism whereby two powerful groups, guild members and political elites, could collaborate in capturing a larger slice of the economic pie and redistributing it to themselves at the expense of the rest of the economy. Guilds provided an organizational mechanism for groups of businessmen to negotiate with political elites for exclusive legal privileges that allowed them to reap monopoly rents. Guild members then used their guilds to redirect a share of these rents to political elites in return for support and enforcement. In short, guilds enabled their members and political elites to negotiate a way of extracting rents in the manufacturing and commercial sectors, rents that neither party could have extracted on its own. First, I provide an overview of where and when European guilds arose, what occupations they encompassed, how large they were, and how they varied across time and space. I then examine how guild activities affected market competition, commercial security, contract enforcement, product quality, human capital, and technological innovation. The historical findings on guilds provide strong support for the view that institutions arise and survive for centuries not because they are efficient but because they serve the distributional interests of powerful groups.Citation
Ogilvie, Sheilagh. 2014. "The Economics of Guilds." Journal of Economic Perspectives, 28 (4): 169–92. DOI: 10.1257/jep.28.4.169JEL Classification
- D02 Institutions: Design, Formation, Operations, and Impact
- D72 Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- L14 Transactional Relationships; Contracts and Reputation; Networks
- L22 Firm Organization and Market Structure
- N40 Economic History: Government, War, Law, International Relations, and Regulation: General, International, or Comparative
- O30 Innovation; Research and Development; Technological Change; Intellectual Property Rights: General
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