Eric Wilhelm, a new scholar-in-residence at the Stephenson Institute, recently discussed his research on medieval guilds and their impact on economic growth with Marcus Shera of The Econ Playground.
Wilhelm explained that European guilds existed from 1000 to 1800 AD, from the “late medieval to pre-industrial era.” Craft guilds had “both a commercial component involved with some sort of production process” and had social aspects similar to “clubs.” These tradesmen such as blacksmiths, masons, weavers, or bakers were organized into “ranks of apprentice journeyman to master,” who were trained in this way “all the way back into the medieval era.” Wilhelm emphasized “the variety of organizations, variety of industries, types of crafts, and structures that they were involved with.” Stressing that guilds were not “a purely private order institution,” they “typically shared religious practices” as well.
One key historic question for Wilhelm dates to Adam Smith: Did guilds hinder growth through restrictive practices like long apprenticeships and setting prices? Or did they solve market failures such as asymmetric information and foster social cohesion? Wilhelm noted that proponents on both sides “can even accept many common facts and interpret them in different ways.” Craft guilds were involved with “human capital formation and specialized their production processes. As these organizations acquired both knowledge and power within the city, they were able to regulate those larger spheres of economic activity.”
His research, detailed in chapter two of his dissertation, found that “cities with craft guilds were larger and grew faster than cities without guilds.” Specifically, “Guilds raised the steady-state population equilibrium of cities by 70% and were associated with 7-9% higher rates of urban growth per century.” Wilhelm clarified that “craft guild presence for an entire century contributed roughly 7% growth for that city in the subsequent century.” This positive relationship was strongest “in that earlier period from 1000 to 1300 AD” but “after the Black Death that relationship was not as strong.”
Guilds also played a significant role in local governance and finance. Wilhelm found that “city-states with higher measures of craft guild activity and guild assembly representation had lower nominal interest rates on their public bonds.” He explained that “those city states that had higher guild representation or had a guild constitution were able to issue government debt municipal bonds and issue them at a lower rate of interest compared to other city states in a sense much lower cost of borrowing.” Municipal governments also leveraged guilds to “offload the cost of enforcement onto the guilds.”
Thus Wilhelm’s research provides a nuanced view of medieval guilds, demonstrating their complex roles in fostering urban growth and public finance—especially prior to the Black Death—while also acknowledging their potential for coercive power.
For more information, watch the video here at The Econ Playground or contact Eric Wilhelm directly.
