Trust by Francis Fukuyama

Author:Francis Fukuyama
Language: eng
Format: epub
Publisher: Simon & Schuster
Published: 2003-06-28T16:00:00+00:00

CHAPTER 21 Insiders and Outsiders

One of the great ironies of the modern German economy is that the apprenticeship system, which is broadly credited as the basis of Germany’s industrial dominance in Europe, is the direct descendant of the medieval guild system. Throughout the industrial revolution, the guilds were the bete noire of liberal economic reformers, who believed the latter represented hidebound tradition and a hindrance to modernizing economic change.

The role of the guilds in the development of free institutions in the West is quite complex. The guilds, closed corporations existing in virtually all European (and most Asian) countries, were the distant forerunners of modern organizations like the American Bar Association and the American Medical Association. With some variations, they restricted entry into a particular trade or profession by setting standards or qualifications for membership, thereby also artificially raising the income of their members. The guilds regulated the quality of products and occasionally engaged in training their members. In the late Middle Ages, they played an important part in the breakdown of the manorial system. Particularly in central Europe, the guilds sank deep roots in the imperial free cities, where they won the right to manage their own affairs and became bastions of independence from seigneurial and patrician control.1 The guilds were therefore key intermediate organizations, constitutive of the rather rich civil society of the late Middle Ages. Their existence limited the power of absolute sovereigns and therefore played an important role in the development of free Western political institutions.

The guilds, with their self-governing practices and often considerable wealth, represented a challenge to ambitious princes, who eyed them with a mixture of envy and resentment. With the rise of large, centralizing monarchies in countries like France and Spain in the sixteenth and seventeenth centuries, the guilds were seen as rivals for power. As we saw in an earlier chapter, the French monarchy succeeded in subordinating them to the goals of the state, where they became a sort of regulatory appendage to the political authorities in Paris. The situation was quite different in Germany, however, where no centralized state was established until 1871. The decentralized nature of political power in the German lands kept alive a host of feudal communal institutions like the guilds for much longer than in other parts of Europe.

While some have argued that the guilds were important in preserving craft traditions and maintaining quality standards,2 by the early eighteenth century the tide of progressive opinion in England and France had shifted decisively against them.3 Though differently motivated, early liberals carried on the work of the absolute monarchs in reducing the guilds’ power and influence. The first modern factories had to be built in the countryside, outside the cities with their guild restrictions. In England, liberal reformers pushed for abolition of the Statute of Artificers and an end to compulsory guild membership, particularly in the middle decades of the eighteenth century.4 In France and the parts of Europe occupied by the French, the guilds, whose independence had already been undermined by the Old Regime, were officially abolished during the Revolution.

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