The Rise and Fallof Merchant Guilds: Re-Thinking the Comparative Study of Commercial Institutions in Premodern Europe

The Rise and Fallof Merchant Guilds: Re-thinking the Comparative Study of Commercial Institutions in Premodern Europe Regina Grafe, Oscar Gelderblom Journal of Interdisciplinary History, Volume 40, Number 4, Spring 2010, pp. 477-511 (Article) Published by The MIT Press For additional information about this article https://muse.jhu.edu/article/375929 Access provided at 1 Nov 2019 14:21 GMT from Utrecht Universiteit Journal of Interdisciplinary History, xl:4 (Spring, 2010), 477–511. THE RISE AND FALL OF MERCHANT GUILDS Regina Grafe and Oscar Gelderblom The Rise and Fall of the Merchant Guilds: Re-thinking the Comparative Study of Commercial Institutions in Premodern Europe The history of European commerce since the Middle Ages is inti- mately related to the rise, persistence, and decline of what might be the most famous of mercantile institutions—the merchant guild or association of long-distance traders. However, we still know surprisingly little about when and why merchant guilds originated and what they actually did. It seems certain that before the eighth century, merchants traded largely independently without the assis- tance and organization afforded by a guild, natie, consulado, hansa, or similar collective body. At some point, however, merchants be- gan traveling together with their ruler’s representatives, early “diplomats” who had commercial clients as well. From the tenth or eleventh century onward, formal associations emerged that helped long-distance traders solve two fundamental problems of exchange—on the one hand, protection against crime, warfare, and arbitrary conªscation and, on the other, the enforcement of contracts whenever money or goods changed hands.1 Oscar Gelderblom is Associate Professor of Economic and Social History, Utrecht University. He is the author of, with Joost Jonker, “Completing the Financial Revolution: The Finance of the Dutch East India Trade and the Rise of the Amsterdam Capital Market, 1595–1612,” Journal of Economic History, LXIV (2004), 641–672; the editor of The Political Economy of the Dutch Republic (Farnham, 2009). Regina Grafe is Assistant Professor of History, Northwestern University. She is the author of Entre el Mundo Ibérico y el Atlántico: Comercio y especialización regional 1550–1650 (Bilbao, 2005); with M.Alejandra Irigoin, “Bargaining for Absolutism: A Spanish Path to Empire and Nation Building,” Hispanic American Historical Review, LXXXVIII (2008), 173–209. The authors thank Maristella Botticini, Ann Carlos, the late Larry Epstein, Joost Jonker, Francesca Trivellato, and anonymous referees for extensive comments and criticism. They also thank participants of the European History Economics Society conference in Istanbul (2005), the Antwerp workshop on mercantile institutions (2005), the London School of Eco- nomics Global Economic History seminar, the Utrecht Global Economic History Network conference (2006), the meeting of the Allied Social Science Associations (2007), the Cliometric Conference (2007), the economic history seminar at the University of British Co- lumbia, the Institutions in Early Modern Europe workshop at California Institute of Technol- ogy (2008), and the Interuniversity Center for Social Science Theory and Methodology seminar at Utrecht University. All of the usual disclaimers apply. © 2010 by the Massachusetts Institute of Technology and The Journal of Interdisciplinary History, Inc. 1 Michael McCormick, Origins of the European Economy: Communications and Commerce, AD 300–900 (New York, 2002); Roberta Dessi and Sheilagh Ogilvie, “Social Capital and Collu- 478 | OSCAR GELDERBLOM AND REGINA GRAFE Merchant guilds, like craft guilds and guilds of local retailers, operated in commercial centers everywhere in late medieval and early modern Europe (and beyond). As an institutional response to the fundamental problems of long-distance trade, merchant guilds were clearly distinguished by contemporaries from guilds that organized the interests of such local artisans and retailers as bakers or ªshmongers. But they were never the only institutional answer to the troubles of long-distance traders. Re-invigorated towns and consolidated states at times provided similar support for commerce by building infrastructure, organizing fairs, and offering legal services, as well as protection from predation. Yet, none of these ac- tivities replaced merchant guilds altogether. Complementarity between different providers of services to merchants—for example, rulers and guilds—seems to have been the norm rather than the exception. To some extent, such complementarity would have been the obvious consequence of merchants’ transterritorial activ- ities. Because merchants often crossed political boundaries, they were unlikely to rely simply on the protective services and infrastructure provided by a single overlord. But even within a given polity, merchants used multiple institutions to solve the fundamental problems of exchange. Lane recognized this complex real- ity long ago: Merchants typically used combinations of institutions to solve one particular problem, but each of these institutions in turn contributed to solving multiple problems.2 Only in the late eighteenth century did merchant guilds dis- appear from most parts of Europe, sometimes as a result of forced dissolution. At that point, protection of traders and their goods, contract enforcement, and mitigation of risks largely became func- sion: The Case of Merchant Guilds,” Cambridge Working Papers in Economics No. 417 (Cambridge, 2004); Avner Greif, Paul Milgrom, and Barry R Weingast, “Coordination, Commitment, and Enforcement: The Case of Merchant Guilds,” Journal of Political Economy, CII (1994), 745–776; Greif, Institutions and the Path to the Modern Economy: Lessons from Medi- eval Trade (New York, 2006); Frédéric Mauro, “Merchant Communities, 1350–1750,” in James D. Tracy (ed.), The Rise of Merchant Empires: Long-Distance Trade in the Early Modern World, 1350–1750 (New York, 1990), 255–286; Greif, “The Fundamental Problem of Ex- change: A Research Agenda in Historical Institutional Analysis,” European Review of Economic History, IV (2000), 251–284; Douglass C. North, Structure and Change in Economic History (New York, 1981); Daron Acemoglu and Simon Johnson, “Unbundling Institutions,” Journal of Po- litical Economy, CXIII (2005), 949–995. 2 Frederic C. Lane, “Economic Consequences of Organized Violence,” Journal of Economic History, XVIII (1958) 401–417, repr. in Fernand Braudel (ed.), Venice and History: The Collected Papers of Frederic C. Lane (Baltimore, 1966), 50–65. THE RISE AND FALL OF MERCHANT GUILDS | 479 tions of either state activity or vertically integrated businesses. In the intervening period between the eleventh and eighteenth cen- turies, merchants used multiple combinations of institutions to cope with the perils of long-distance trade. Each of these combinations presumably reºected the intention to maximize beneªts (economic or otherwise) within a certain environment. Under- standing these multiple combinations is crucial to explain the rise and fall of merchant guilds in pre-industrial Europe. This article develops a comparative methodology to explain the rise, persistence, and decline of merchant guilds in different parts of late medieval and early modern Europe. The methodolog- ical challenge is to combine research traditions of historians and economists that so far have remained separate. Historians have de- tailed the organization of trade in towns and regions across Eu- rope, but few of them have teased out generalizations about the ability of merchant guilds, or similar institutions, to mitigate the fundamental problems of exchange.3 Economists have begun to apply micro-economic theory to the organization of long-distance trade in pre-industrial Europe, modeling the contribution that merchant guilds, informal coali- tions of traders, periodical fairs, or speciªc ªnancial contracts made to a more efªcient organization of trade. The great merit of this approach is that it forces us to abstract speciªc historical examples and make explicit the economic functions of the manifold mercantile institutions that existed across Europe. However, the modeling strategies generally employed—namely, game theory and mechanism design—require relatively restrictive ex-ante assump- tions. To meet them, most models restrict analysis to one or two often mutually exclusive solutions (like guilds or fairs) for just one problem of exchange (like protection, contract enforcement, or rent seeking). Neither the multifunctionality of mercantile organi- 3 Richard Ehrenberg, Das Zeitalter der Fugger, Geldkapital und Creditverkehr im 16. Jahrhundert, II, Die Weltbörsen und Finanzkrisen des 16. Jahrhunderts (Jena, 1896); Robert S. Lopez, The Commercial Revolution of the Middle Ages, 950–1350 (Englewood Cliffs, 1971); idem and Irving W. Raymond, Medieval Trade in the Mediterranean World (New York, 1955); Braudel, Civilisation Matérielle, économie et capitalisme, XVe–XVIIIe siècles (Paris, 1979); Peter Spufford, Power and Proªt: The Merchant in Medieval Europe (London, 2002); John H. Munro, “The ‘New Institutional Economics’ and the Changing Fortunes of Fairs in Medieval and Early Modern Europe: The Textile Trades, Warfare, and Transaction Costs,” Vierteljahrschrift fuer Sozial- und Wirtschaftsgeschichte, LXXXVIII (2001), 1–47; Stephan.R. Epstein, “Regional Fairs, Institutional Innovation and Economic Growth in Late Medieval Europe,” Economic History Review, XLVII (1994), 459–482; 480 | OSCAR

Load more