From medieval guilds to Italy held hostage by trade unions. A chat with Sheilagh Ogilvie

Italy is held hostage by corporate interests: this is one of the causes of our economic paralysis. But how do these corporate interests arise? Where do they derive their power from? Why do they endure over time? To answer these questions, we need to retrace a history that begins in the Middle Ages. This is precisely what Sheilagh Ogilvie, an economic historian from Oxford, did a few days ago in Milan to present the Italian edition of her book "Institutions and Trade in Europe" (IBL Libri). Originally published in 2011, the book traces the function and consequences of merchants’ guilds, analysing data and financial records spanning the period from the year 1000 to the nineteenth century. One of the most striking aspects is the longevity of the merchant guilds: indeed, most economic historians have seen this as proof that they performed socially useful functions, linked, for example, to the security of trade, the effective enforcement of contracts and the transmission of knowledge. In short: the guilds emerged and remained active for so long because they were an efficient means – or, at the very least, more efficient than the alternatives – of solving practical problems and facilitating the provision of public goods. In this conversation with Il Foglio, Ogilvie explains why everything we think we know is wrong. And his lesson is highly relevant even for those who, today, govern a completely different world, yet one still characterised by the same social and political dynamics.

“There were two types of trade guilds,” explains Ogilvie. “One consisted of merchants from a particular city who were granted privileges by the local government. The other comprised guilds or associations of foreign merchants who received privileges from the local rulers.” What they had in common was a privileged status: the granting, by the political authorities, of special forms of protection reserved for members, including “a monopoly on the trade in certain goods, on certain transport routes or to certain destinations”. But the core of this privilege was the power to “restrict access” by granting authorisation to trade legally. This power was used without hesitation to exclude competitors and, in particular, “women, Jews, foreigners, artisans, peasants and, in general, the poor who could not afford to pay the membership fee”. Not everything the guilds did was harmful, of course: but their main occupation consisted of erecting barriers to growth. The result was that “consumers paid higher prices, suppliers were forced to comply with their conditions, competitors from weaker guilds had to pay higher taxes and received fewer privileges in return, and the economy as a whole suffered a negative impact due to the reduction in trade”.

The paradox is that even back then, alternative institutions existed through which merchants could have obtained the services provided by the guilds (and which they often used, considering them more effective). “The guilds were present everywhere,” continues Ogilvie, “but there were differences in the broader institutional context: in some towns, the authorities guaranteed all merchants protection, access to the courts and the enforcement of contracts; in other places, this was granted only to guild members.” The scholar cites the example of the Champagne fairs: “In the twelfth century, the Counts of Champagne protected all merchants and the fairs flourished; following their annexation by the French Crown in 1285, Philip IV targeted Flemish and Italian merchants, security broke down and, within fifteen years, the fairs lost their vitality.”

The key to understanding its success and longevity lies not in efficiency, but in what we would today call ‘relationship capitalism’. The privileges of the guilds and the exercise of political power reinforced one another: “Two social groups benefited in particular: guild members obtained monopoly rents; sovereigns received payments, loans, support in military campaigns and in clashes with political rivals, and assistance in tax collection”. At the time, many states had limited capacity to collect taxes: it therefore seemed logical for sovereigns to outsource this function to private organisations, leaving them, in return, free to accumulate ‘extra profits’. Where governments had alternative channels for raising funds, the alliance with the guilds weakened and, with it, the barriers to competition were removed.

How does Ogilvie respond to the arguments of other scholars who, on the contrary, have offered more positive interpretations of the role of the guilds? For example, in a recent book, Avner Greif, Joel Mokyr and Guido Tabellini argue that membership of a variety of ‘corporations’ is one of the key factors in understanding Europe’s economic success (Il Foglio, 30 January 2026). In their interpretation, the Oxford-based historian explains, the term ‘corporation’ takes on a very broad meaning, which, in addition to guilds, includes other organisations such as churches, universities and the cities themselves. “Guilds,” she explains, “were not exclusive to Europe: they existed in the Near East, India and China. Furthermore, even in Europe they often attached great importance to kinship ties, notably by granting preferential access to the sons and sons-in-law of master craftsmen.” But there is an even more important aspect: “They fostered trust amongst members whilst excluding everyone else; membership of guilds replaced the shared lineage that underpinned Chinese ‘clans’, but it nevertheless served to exclude outsiders.” Indeed, “economies where guilds held the greatest influence, such as Italy, Spain and German-speaking Europe, began to lag behind from the 1500s onwards. The most dynamic economies – namely the Netherlands and England – saw an early decline in the political and economic influence of the guilds”. What, then, was it that led to their decline at a certain point? According to Ogilvie, the explanation lies in a combination of institutional factors: “Parliaments placed limits on the discretion of sovereigns, legal systems became more independent; it became possible to tax a broader tax base; financial markets enabled states to finance their expenditure without having to concede privileges; cities found themselves increasingly in competition with one another; and, finally, the emergence of a new generation of merchants and industrialists prompted political systems to open the doors to greater freedom of trade.”

This leads us to compare Ogilvie’s arguments with those of Deirdre McCloskey, who maintains that the Industrial Revolution was precisely the result of the growing social legitimacy of the bourgeoisie (Il Foglio, 17 January 2024). Ogilvie makes an important clarification regarding McCloskey. It was not simply the heightened status of the bourgeoisie that was decisive, since those very same merchants and artisans formed the guilds and benefited from them. What mattered was the emergence of a different kind of bourgeoisie: one increasingly detached from guild structures and willing – or compelled – to operate within a more open and competitive economic order. “Guild-based societies,” he explains, “respected trade, but only as a privilege for insiders. The guilds punished members who circumvented the rules, stifling the entrepreneurial spirit.” It was only when they weakened that “space was created for experimentation, innovation and the establishment of impersonal trade and impartial state institutions: the foundations were laid for treating trade as a respectable activity open to all”. In short, the guilds lost ground not because alternatives emerged – they already existed – but as a result of political change: “The coalition that underpinned their power and privileges collapsed, and this is why the Netherlands and England began to grow: it is not true that the development of more efficient tools brought about the end of the guilds; the opposite is true: namely, that the end of the guilds allowed more efficient solutions to take hold, new markets to open up and, ultimately, the most creative and dynamic individuals to drive innovation and growth”.

We have reached the end of our conversation. Having spoken at length about past centuries, we cannot help but ask Ogilvie to make a small effort to bring her research up to date. If she were to give Giorgia Meloni a piece of advice, what would she suggest? The author of Institutions and Trade in Europe says: “Well, industrial policy is back in vogue, even though it didn’t work particularly well in the 1970s. When a political leader is lobbied by a pressure group complaining of market failure and asking for protection or privileges, they should bear three lessons in mind.” The first: “Look at all the activities of the group in question, not just the benefits it boasts of. Potentially useful services and privileges are inextricably linked and can hardly be distinguished.” Second: “Any request for protection is, in reality, a proposal for an agreement between the state and the protected group. The cost falls on outsiders, who are usually not present at the table.” Third: “Restricting access creates an informal economy in which it is difficult to enforce contracts, risks are high and investment is low. Never ignore what is happening beneath the surface.” However complex the world may be, “the combination of open markets, impartial administrations and a vibrant civil society is what has brought us to where we are: do not focus on a single aspect, but look at the interdependencies of the entire institutional ecosystem. Any political strategy that ignores who gains and who loses from specific policy proposals, as I demonstrate in the book, is dangerous”.