A New Interpretation of Guilds, Tariffs, and Laissez Faire

Abstract

This Chapter theoretically derives and tests a new explanation of historically observed variations in guilds, tariffs and laissezfaire policies. The traditional view, based upon classical economics, is that guild and tariff policies have been unambiguously inefficient, and that the political associations formed to effect such redistributional policies represent a net drain on society’s resources. In contrast, our view, based on a new theory of political association formation in investor-democracies and a more realistic model of collective defense than that implicit in the traditional analysis, is that such institutions have been rapidly evolved and efficiently retained by naturally selected, legislatively pragmatic, states whenever the institutions have been vital to the state. Conversely, such a salutary evolutionary pattern has failed to occur in legislatively ideologized states, wherein producer interest groups have been systematically damaged in the name of laissez faire efficiency or social justice and the entire citizenry has substantially suffered as a consequence.

An analogous pattern will be found in the rise and unnecessarily painful decline of ideologically defended medieval political institutions