Abstract
Institutions – the social and political ‘rules of the game’ – are widely viewed as central to economic growth. But what kind of institution makes an economy work better, and what kind mainly favours particular groups? In many European economies, guilds ruled crafts and trades from the Middle Ages to the Industrial Revolution. Did the benefits of guilds outweigh their costs? This lecture answers these questions using over 17,000 observations of guilds in 23 European economies from 1000 to 1880. Although guilds sometimes provided important services, their overall effect was harmful. Their main objective was to benefit their members, so they acted like cartels. They excluded competitors, kept prices high, capped workers’ wages, exploited consumers, and resisted innovation. Guilds persisted not because they served the whole economy but because they benefited two powerful groups—guild members and powerful elites. Understanding why this malignant collaboration was stronger in some historical societies than others can help shape policies for the present day.
See event page on the Department of Economics, University of Warwick website
