*The European Guilds: An Economic Analysis*

That is the new and highly comprehensive book by Sheilagh Ogilvie, and it is likely to stand as one of the more important works of economic history from the last decade.  Here is one opening summary bit:

…my own reading of the evidence is that a common theme underlies guilds’ activities: guilds tended to do what is best for guild members.  In some cases, what guilds did brought certain benefits for the broader public.  But overall, the actions guilds took mainly had the effect of protecting and enriching their members at the expense of consumers and non-members; reducing threats from innovators, competitors, and audacious upstarts; and generating sufficient rents to pay off the political elites that enforced guilds’ privileges and might otherwise have interfered with them.

And yes she really does show this, with a remarkable assemblage of data.  For instance:

…the 14 guilds in Table 2.4 devoted an average of 28 per cent of their expenditures to lobbying.  However, the average was 45 per cent across the five poor guilds and just 14 per cent across the eight rich ones.

Or:

Guild mastership fees could not be paid off in a couple of weeks of work.  Across these 1,102 observations, the average mastership fee consumed 276 days’ wages for a labourer, 215 days for a journeyman, and 1543 days for a guild master.

Operating licenses were expensive too (pp.125-126).  There are more “Ands”:

Guild entry barriers pushed people into illicit production, as emerges from 14 per cent of observations in Table 3.15.

And:

Guild members whose trades stagnated could not legally diversify to other guilded work…

On top of that, guilds typically restricted the training of women and would not let them enter the relevant sectors.  And:

The amount of attention guilds devoted to product quality in their ordinances does not suggest they regarded it as a major concern.

Ouch!  Ogilivie also concludes, and demonstrates using data, that guilds did not promote human capital accumulation or innovation.  The various revisionist defenses of guilds, as produced over the years, basically seem to be wrong.

You can pre-order the book here.

Comments

"and demonstrates using data" !!!

Wow! Well I believe everything she says then. But seriously, unions aren't all about quality control. No really? Dogs gotta stop biting men if you ask me.

Guilds (and unions) were mainly "backdoor" ploys to keep out blacks, the poor, transgender people, and women.

File under "Shocking News From The World of Science."

No wonder they voted Republican this recent political cycle.

'unions aren't all about quality control'

Unions aren't about quality control at all - that is what management is responsible for and monitoring.

And guilds aren't unions, as guilds are run by those who own the means of production and decide who may be a member of the guild, not the people doing the labor.

Yes! To the final sentence above.

So, to be clear, democratizing the means of production to a wider set of stakeholders seems to be a generally bad idea.

I thought the main value of guilds was political - they served as a countervailing force against the power of the aristocracy, and were active in numerous uprisings.

+1, I was going to say something similar: without guilds, you'd not have any free cities, any innovation. The same mistake is made with patent laws: some economists say that without patents, we'd have cheaper patented goods since people would not have to pay any patented royalty fee. But that analysis assumes inventions spontaneously appear based on something "in the air' and they would happen regardless of incentives (which does have some historical precedent). That said, I like a limited patent monopoly (not forever like guilds) and no patents on old stuff (no patents on 'common salt' for example).

Bonus trivia: John Michel, Gregor Mendel and William Gibbs were ahead of their time, had no patents, and made fundamental contributions to science unrecognized at the time. Is this a failure of society incentives? Yes I say. Allow general science and math formulae to be patented! Abolish Alice Corp. v. CLS Bank International! It's the "Dred Scott" decision of IP law!

Yes, civic militia guilds.

A precondition for "human capital accumulation or innovation" is being alive.

What would it even look like to patent genetics or general relativity? Mendel in 2018 would publish in Nature.

Yes. A necessary step along the way out of feudalism and its variants.

That's the Ankh-Morpork theory of guilds.

https://www.aeaweb.org/about-aea

Subtle.

And leads one to wonder if Bill McBride of calculatedrisk is a member, as his proven track record and ability is far ahead of basically all of those 20,000 guild members.

Dutch Golden Age. The word guild comes from Dutch. Guilds may have been an optimal way of organization around 1600-1700 and then not optimal anymore. Nothing lasts forever, strategies included.

The French Revolution ended them. M. Rousseau spoke and wrote ardently against guilds and people listened.

Back to the issue of nothing lasts forever and evolution. If there's a new thing which is better than the past ones, it doesn't make the past ones wrong because in the past there were no options to chose. The past ones are just less efficient, not wrong.

I know he was a fanatic about many things, but what was Rousseau’s specific animus against guilds?

I confused Rousseau with Diderot.

Rousseau criticized the powerful guilds in Switzerland at the time. To be part of the city council (government) you had to be a master of a trade first. So being a master was about political power, not being the best blacksmith of watchmaker. Rousseau said guilds were corrupted by politics. Guilds should focus on developing knowledge, like scientists.

Diderot, the Encyclopedia. He was one of the crazy ones that pushed for the abolition of the guilds in France. This is a extract of the definition of "Compagnie de Commerce". https://oll.libertyfund.org/titles/encyclopedic-liberty-political-articles-in-the-dictionary-of-diderot-and-d-alembert/simple

"Privileged companies or guilds are those that have received from the state special favors or rights for certain enterprises, to the exclusion of other subjects. They began in times of barbarism and ignorance, when the seas were covered with pirates, the art of navigation was crude and uncertain, and the use of insurance was not well known. At that time, it was necessary for those who tried their luck in the midst of so many perils to diminish these by sharing them, to engage in mutual support, and to band together in political bodies. The advantage that states derived from them led states to grant encouragements and special protection to these bodies; afterward, the needs of those states and the merchants’ greed imperceptibly perpetuated these privileges, under the pretext that trade could not be carried on otherwise."

M. Diderot acknowledges guilds were once useful and they survived long after their usefulness died. He wrote this on 1753.

The paragraphs quoted by Tyler make Sheilagh Ogilvie look like a Manichean teenager. It lacks the historical perspective from Diderot. Perhaps the book contains richer analysis and discussions beyond the "data" but we don't know it.

'The past ones are just less efficient, not wrong.'

See the first comment - very little that is presented here is without a broader context. Such as conflating unions with guilds, or for that matter conflating guilds with occupational licensing (which is at least more realistic, though much the same as comparing the draft to chattel slavery).

And of course, Prof. Cowen seems understandably invested in his own way of looking at things - 'The various revisionist defenses of guilds, as produced over the years, basically seem to be wrong.' One is welcome to ask whether the role of guilds in restraining feudal aristocrats is a revisionist defense or not.

Hamburg, and the Hanseatic League in general, being a historical example of how guilds played a notable role in the development of the concept of a free market, without the interference of an entrenched aristocracy.

'The Hanseatic League was a commercial and defensive confederation of merchant guilds and market towns in Northwestern and Central Europe. Growing from a few North German towns in the late 1100s, the league came to dominate Baltic maritime trade for three centuries along the coasts of Northern Europe. Hansa territories stretched from the Baltic to the North Sea and inland during the Late Middle Ages, and diminished slowly after 1450.' https://en.wikipedia.org/wiki/Hanseatic_League

And of course the Hanseatic League, in accordance with the principles espoused by public choice economists, defended its economic interests. However, intriguingly enough, the Hanseatic League was not a state, nor a confederation of states. Oddly, you rarely hear about the Hanseatic League, mainly because it does not fit too well into modern frameworks, even among those who spend so much time defending free trade without government intervention.

The New Hanseatic League is something else, and unlikely to be celebrated here, as it is an attempt to use the power of supranational institutions to restrain governments engaging in reckless spending within the context of the EU.

"you rarely hear about the Hanseatic League": oh but we did, quite a lot, at secondary school. But that was then and there, not here and now.

'Here' being the U.S.. right?

Because American schools have never spent much time dealing with Europe, much less something like the Hanseatic League.

https://en.wikipedia.org/wiki/Hansa_Brewery

Here's an example of a guild promoting "freedom". I am a lawyer. I mostly represent physicians, and restrictive covenants are often a major issue. In general, my state will enforce a restrictive covenant, even a restrictive covenant signed by a physician (provided the covenant is reasonable as to geographic cope and duration and is necessary to protect a legitimate business interest). My guild, the state bar association, has a rule that effectively prohibits the enforcement of restrictive covenants against lawyers based on the fiction that clients choose lawyers not the opposite, and to enforce the covenant would interfere with the client's "freedom". The next time someone criticizes lawyers, remind the critic that the lawyers' guild promotes "freedom" even though it may be to the detriment of the lawyer's (former) firm/employer.

the lawyers' guild promotes "freedom"

Except, of course, the basic freedom to hire somebody to give you legal advice if they are not a member of the laywers' guild. Same as doctor and dentist guilds defending their 'scope of practice' turf like bulldogs, for example:

http://www.anh-usa.org/how-a-tooth-whitening-lawsuit-landed-before-the-supreme-court/

The 21st century really isn't as different from the 14th as you might imagine.

Relevant to this is

https://books.google.co.uk/books?id=Gwe0ict60PMC&pg=PA221&lpg=PA221&dq=Every+letter,+every+telephone+call+exchanged+between+the+cooperating+%27adversaries%27+adds+another+wad+to+the+bill.+With+luck,+this+procedure+can+be+dragged+out&source=bl&ots=ov0cNHA9LV&sig=M8XWbDq60Amw7TQfP0N-28Cu_A8&hl=en&sa=X&ved=2ahUKEwi6zOidrrPfAhVxQRUIHYliBVoQ6AEwAHoECAQQAQ

where Richard Dawkins explains in "The Selfish Gene" how the legal guild (ie profession) milks people involved in civil disputes whilst appearing to support either side to the best of their ability.

"We're not as abusive as theoretically possible, therefore we're actually promoting freedom" does not pass the smell test.

Covenants not to compete simply address redistribution within the guild. As Slocum notes, lawyers are as fortified a guild as one can find these days. We get to select our own membership, and anyone attempting to work in the profession without the guild's approval will face legal sanction.

I'd rather go back to the days when healthcare was medieval. At least with blood letting, those leeches won't bleed you dry!

I suspect the fundamental truth here is that we will never accurately state what the guilds were but only our interpretation from afar and through whatever the prevailing lens might be.

The point about lobbying fee may say more about the government behavior that guild behavior -- the prince/city simply engaging in price discrimination to maximize revenues. The guilds may have been price takers in the policy space.

The bit about transferring to another guild work area or the participation of women both have some other cultural impacts that may have little to do with economics or work. It might be ease to view the numbers and letter of the rule in that light but I suspect such an approach will hide as much as it illuminates.

At the end of the day, I suspect this is more about today and how the living want to fight over who gets to "write" the history as it is about what the truths for those living at the time were.

I'll swear that Adam Smith made a pithy observation to the same effect.

"People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices."

I think there's a fundamental error in assuming that you can measure how much attention was paid to a particular aspect of any undertaking by looking at how much paperwork is associated with it. This is particularly true in a society where literacy was rare. Quality control was handled during training--you learned, painfully (corporal punishment was legally required in some cases, and ubiquitous in general), to make a product up to a certain standard in order to move up the ranks. They didn't list the specs a product had to meet, because the people doing the work couldn't read listed specs. They told the people doing the work what needed done, and punished them in various ways for failing to meet the standards required.

Writing down quality control specs is how we transfer this knowledge in our culture, but it wasn't how the Middle Ages worked. To assess what they considered important we need to put ourselves in their mindset. How did THEY think? How did THEY transfer information?

The 70's construction industry regulation in the province of Quebec had many characteristics of guilds. I worked for a fellow who experienced the last years of guilds in the Kingston Ontario area. Both were structured so that local business and labor had first opportunity when projects came along. The prices were set as well. Built in to the arrangements were means to assure payment of contract as well. Interesting that Ontario passed a law a short while ago to ostensibly assure payment of construction contracts.

I suspect that all the negatives outlined in the paper were true, but at the time a guild was a means of protection as much as city walls. The people who had money usually had armies as well; if someone wanted something built they were up against a group that was organized and with a certain amount of power to prevent being taken advantage of.

Seeing how guild like behavior is being maintained, even established in the construction industry in Canada, I suspect it is the Aristocracy who were the beneficiaries and supporters of the system. In Canada we now have privately owned law; the Canadian Electrical Code, adopted as law in almost all jurisdictions, is owned privately and copyrighted. The guilds controlled the supply chain; you couldn't buy the stuff to do the work without dealing with a Guild. A new inspector has shut down the supply chain for construction materials for specific trades. Government regulators have taken on the characteristics of Guilds, with the ability to enforce by police action.

The same thing that caused the collapse of guilds, open trade causing loss of control of the supply chains is creating situations where half or more of regulated activity is happening underground. The Guilds had to provide an economic advantage to the members. It's funny. My trade is regulated through the Canadian apprenticeship and certification system. The provincial agency from time to time tries to convince me of the value of the red sticker on a laminated card that I have in my pocket. I tell them that no, it only is something I must have to legally do the work that I do, and no, it doesn't have anything to do with qualifications or ability to do the work. It has little economic value to me.

Interesting story. One of my wholesale suppliers had a seminar with the regulator. The room was full, and after blathering on about fees and regulations, someone asked what he was going to do about the unlicensed operators in the market. He said he couldn't do anything about that. Half the room got up and walked out. That, by the way, is an indication of the health of the polity around here. Free men and women not tolerating tyranny.

"Seeing how guild like behavior is being maintained, even established in the construction industry in Canada, I suspect it is the Aristocracy who were the beneficiaries and supporters of the system."

Well....yeah. In the Middle Ages, the aristocracy was the group that mattered--even to the peasants. Peasants personally didn't like being slaughtered, but they didn't really care if other people were. When you're unlikely to ever travel more than 20 miles from where you were born, people a hundred miles away aren't really real, and the idea of "class" that we have simply doesn't translate into Medieval society.

Then you have the Church. They were the only widespread literate group in existence, so they had their hands in every pie, including guilds. Guilds had patron saints (everything did), and you donated money, goods, and services to the Church to support the worship of your patron saint. Saints being dead by definition (not sure of Mary counts on either count), the ones who really got the benefits were the Church officials--who were nobles or the equivalent.

I am a professional historian and more or less inclined to agree with this take, which is more or less aligned with what I learned in graduate school. Given that latter fact, I'm a little confused as to what makes this such a "hot" take, but it's outside my area of specialization, so maybe I just missed a fad. It sounds from the Amazon description like the author did some very cool research that will make a really substantive and useful contribution, but I'm not sure that she is turning the world on its head.

Quote: guilds tended to do what is best for guild members. In some cases, what guilds did brought certain benefits for the broader public. But overall, the actions guilds took mainly had the effect of protecting and enriching their members at the expense of consumers and non-members

You probably need to accurately model the guildless world for that to happen. Just you would if you had the statement:

"Merchants tended to do what is best for themselves. In some cases, what merchants did brought certain benefits for the broader public. But overall, the actions merchants took mainly had the effect of protecting and enriching themselves at the expense of consumers and competitors"

I don't doubt that guild members acted in their own self interest, but what is the evidence that this was detrimental to the whole?

Showing that lobbying was a significant cost isn't one of those, unless you wish to apply the same arguments to merchants and banks.

But wasn't commerce in the Middle Ages controlled as well by guilds--merchant guilds?

"The similarity that exists between the wealthy corporations of today and the merchant guilds of the middle ages is singularly striking. All laws were made by the guilds for the privileged classes, who were the members of the guilds. In the formative period of the merchant guilds, as long as freedom from the oppression of episcopal and baronial tyranny was to be obtained, the "guild brothers" were modest and benignant toward the poor. They did not then consider it humiliating to associate and fraternize with craftsmen."

"The possession of freedom and power rendered them insolent and hard; with the enjoyment of their dominion the descendants of the simple associates of the early merchant guilds became proud, ambitious and tyrannical. The freer and more independent they became the less they needed the assistance of their former associates of the crafts, and the more haughty, overbearing and contemptuous became their conduct. The accumulation of riches helped to widen the ever increasing breach. These riches were employed in the purchase of estates and lucrative privileges, which enabled the possessors to live in idleness. Idleness initially became an attribute of rank and honor."

"The laws were made to clearly discriminate between the patrician and the man "without hearth and honor who lives by his labor." The chief burden of the taxes was thrown upon the poor, while the income which they afforded and the revenues from the guild or corporation property were employed for the exclusive use of the ruling families. Laws were partially administered, redress being entirely refused to the unprivileged classes. It was feared by many that a new serfdom might arise. In some cities the craftsmen had almost become serfs to the patricians. This was especially true of the craftsmen of the city of Cologne..."

https://archive.org/details/storyofmanuallab00simouoft/page/n9

Exactly. They weren't unions, they weren't corporations, they weren't entrepreneurs. They were distinct. My point is really just that it's odd for those who propound that "It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest" to decide that this is problem when they do it in a collective.

Today we call them labor cartels... er ... unions. Go figure...

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