Epstein S. R. (2008) Craft guilds in the pre-modern economy

Epstein Stephen. R. (2008) “Craft guilds in the pre-modern economy: a discussion”, The Economic History Review, 61/1, 155-174.

Introduction
This article of Larry Epstein is a discussion of Sheilagh Ogilvie’s article published by the review in 2004. In turn, Sheilagh Ogilve is offered to answer to professor Epstein’s comments. The result is a dynamic presentation of the current state of the research by two brilliant and passionate academics.

The historiography of guilds has for long deemed them ineffective and rent-seeking institutions. Nonetheless, a revisionist school emerged assuming – based on their impressive longevity – that, not only did they protect their members from opportunistic urban elites, but, they were also economically efficient (if not optimal) as they “responded to information asymmetries in thin markets with high transaction costs.”

Epstein defines the role of the guilds as follows: coordination of the members, bargain with commercial partners, provision of financial support and credit, enforcement of quality, reduction of information asymmetry, transmission of skills and technical innovation (155).

Political economy
Epstein starts by arguing that the commonly held belief that the most successful European economies (England and the Low-Countries) were guild-free is groundless. In England, guilds have only gradually lost their grip on production between 1675 and 1760 (depending on the industry and the region). Before that, and in some cases after, they were alive and well. He goes on remarking that the presence of strong guild in the southern Low-Countries did not prevent them to do as well as their northern guild-free counterparts (156). He does not dismiss that “guilds were successful rent-seekers and generated deadweight”, but he maintains that “their aggregate benefice outweighed their costs”.

One of the common criticism held by contemporary and modern detractors of the guilds is that they were not interested in enforcing quality control and that when they were, it was a trick to “extract monopoly rents from customers”. Epstein on the contrary remarks that guildsmen were serious on quality matters as, for instance, 71.4% of all fines levied between 1598 and 1647 by the Württemberg worsted weaver guild related to quality related infringements (158). But most of the guilds’ monitoring was exercised ex ante via apprenticeship, ex post control was mostly handed to governments and merchants (who ultimately could choose not to buy tainted products).

Furthermore, Epstein argues, guilds seldom enjoyed monopoly powers on export-oriented industries as ultimately guilds were each other’s competitors on the marketplace. Hence, fraud, lower quality or merely the lack of innovation would be promptly sanctioned (159).

Knowledge
Apprenticeship is labelled by the critics as the cornerstone of the guilds’ monopoly. They argue that it was a useless education and that it was rather a barrier of entry and the fee which the newcomer had to pay was not to pay for the skills learned but instead to ensure him a share of the guild’s rent. As an evidence of this fact they point at the fact that widows of guildsmen were often allowed in the organisation. But as Epstein remarks, it is likely that by working along their husbands these widows would have enjoyed a formation similar to apprenticeship.

Another argument of Ogilvie is that guildsmen forced non-guilded workers out of the legitimate (and often legal) workforce. This, she says, shows that the masters were concerned by the competition of workers who did not go through apprenticeship, indicating that they were indeed an alternative (and thus that apprenticeship was not necessary). But Epstein points out that the fact that untrained labourers were seen as a potential competition by the masters does not mean that both groups were perfect substitutes.

Epstein wittily points out that theoretically, were guildsmen nothing but monopolist, workers from rural areas (where guilds’ control was weaker) should be significantly more productive than urban ones. But Ogilvie’s own evidence “shows the opposite: 26 of the top 27 weavers by output lived in the more regulated Wildberg towns, suggesting that labour productivity was significantly higher were guild regulations on apprenticeship were strongest” (162).

Innovation
Contrarily to the usual assertion, craft guilds were not invariably hostile to innovation, 16th century German weavers for instance quickly adopted the English “New Draperies”. Occasionally a novelty may be opposed because it went along a worsening of the guildsmen’s position in front of the merchant. Although, a steady rise of productivity and the creation of new products often shows successful endogenous improvements (163). As an evidence of the fact that guilds mostly opposed damaging and dangerous novelties, Epstein points out that there is next to no example of techniques refused by guilds but successfully implemented elsewhere (164).

Moreover, Epstein says, guilds were an active element in the spread of technical knowledge. In particular the common travel of skilled labour allowed “the dissipation of quasi-rent captured by innovating guild members”. In other words, guilds favoured specialisation which in turn led to the creation of technical hubs which themselves induced innovation; and these innovations (as well as information about labour market) were often spread around by travelling journeymen (165).

Lobbying
Epstein doesn’t deny that fee ad apprenticeship were often used as barriers of entry, but he insist that they were mostly meant to regulated the supply side of the labour market (as in time of booming demand a great number of apprentices were welcomed as well as some foreign masters) (166).

Often the privileges ( = monopoly) granted by governments to guilds were repaid when the latter helped implementing the former’s policies (168).

Ultimately, Epstein calls for “a more sensitive and fine-grained approach to institutional, chronological and geographical conditioning” (169). He dismisses as simplistic Douglass North’s opposition between ‘liberal’ and ‘corporatist’ (170). He insists that most of the progress in every industries from the 13th to the 18th century came from a guild background, the other systems of production (concentrated plants and putting out) remaining overall marginal. He also reminds us that – unlike what Mendel once argued – guilds were not an impediment to the Industrial Revolution (171).

Conclusion

That is not to claim that craft guilds were ‘efficient’ or ‘optimal’, however we define these terms, but to suggest that between the thirteenth and the eighteenth centuries they offered a superior organizational matrix for the acquisition and deployment of skills by most urban artisans working under the prevailing technological, commercial, and political circumstances (172).

Ogilvie Sheilagh (2008) “Rehabilitating the guilds: a reply”, Economic Historic Review, 61/1, 175-182.

In Ogilvie’s view, guilds kept “the economic pie small but distribute[d] large slices to powerful groups – established masters, town officials, bureaucrats, princes” (175). She remarks that by preventing the official production of lower quality products, guilds forced poorer consumers to rely on black markets for their cheap wares, there they could be easily cheated and had no legal protection (176).

She also documents failed quality control by guilds and successful ones by non-guild systems, showing that there was “no correlation between quality and guilds – whether urban or rural.” She then proceeds to show that the acquisition of top-level skills was indeed time- and care-consuming, but that average performance could be gained quickly. She also remarks that successful crafts could be indifferently guilded or not depending on the society considered.

Epstein is also accused of forgetting the gender side of the issue. Female labourers were constantly prevented to reach the most prosperous position (weaving) and were limited to the least advantageous ones (spinning). Their wages, along those of the journeymen, were often capped by the masters who thus managed to limit this potential competition (177). Similarly, untrained and non-guilded workers were prevented from entering the top end of the labour market (178).

Ogilvie finally discusses Epstein’s timeline arguing that the weakening process of the English and Dutch guilds was well engaged already by the mid-16th century (180).

Comments
Both authors show a fair amount of bad faith in their interpretation of the other’s thesis. For instance, whether or not one untrained labourer could immediately achieve the same quality standards and hour productivity as an apprenticed guild master is not the point (it is very likely that he couldn’t). The point is that based on their political advantage (often coming from their greater human capital), the masters could prevent three or four workers to get together as a production unit and create a potential competitor.

Olgilvie is certainly wrong when she assumes that by quality enforcement Epstein meant enforcement of higher quality, top market products. A guild-based quality control was meant to ensure the homogeneity of the production, it did not mean that the quality could not be low. On the other hand, Epstein weakens his own claim when he remarks that in 18th century England, even after the disappearance of guilds, apprenticeship went on being the favourite mean of transmission of technical knowledge; this only shows that guilds were not necessary for apprenticeship to be effective.

More importantly, it seems that Epstein is mostly focussed on export-oriented guilds. However important, these were not the majority. Those strictly turned toward their local market are not submitted to the outsiders competition, as such their privileges truly amount to the form of monopoly that Turgot and Adam Smith described.

Reference

Ogilvie S. C. (2004) “Guilds, efficiency, and social capital: evidence from German proto-industry”, Economic History Review, 57, 286-333.

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