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Guilds and Competition: A Response to Objections of Laissez Faire

Author

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  • Lukáš Augustin Máslo

    (Vysoká škola ekonomická v Praze)

Abstract

This paper offers a critique of laissez-faire objections to the guild system from the perspective of Catholic social teaching a presents the economic reasons for a restoration of the guild system as a functional economic model. The laissez-faire argument is that 1) the free competition on the supply side is in the best interest of the consumer, 2) each member of the society is a consumer, 3) ergo: free competition on the supply side is a common good, i. e. a goal which the state should follow. The author argues that 1) unlike majority of goods and services, two goods are becoming scarcer as a result of free competition on the supply side: time and land, 2) consumers which prefer consumption of leisure time and land are worse off as a result of free competition on the supply side, 3) ergo: the conclusion that free competition on the supply side is always a common good is invalid. According to the author, leisure time and land are essential for a good operation of a well-functioning family which is essential for a well-functioning state. In this connection, the author contends that the primary goal and raison d’etre of the guilds is control of the entrance of new producers to the industry, so that the incumbents who want to pay just (family) wages and/or prefer leisure time necessary for operation of a well-functioning family are not forced to change their behavior by the competitive pressure of the newcomers. Besides, a control of the entrance will limit the pressure to lowering wages below the level of the just (family) wage. To the objection of “no free lunch” the author responds: yes, the employers are facing a trade-off. In exchange for a possibly high but uncertain profit margin they will receive a lower but certain profit margin. To the objection of allocational inefficiency and economic stagnation resulting from suppressing external innovations, the author responds: 1) an external innovator can have his discovery patented and instead of the transitory entrepreneurial profit enjoy the incomes from the licenses; 2) the competitive pressure is only one possible drive of the economic growth, another drive is the human laziness which is constant across the economic systems.

Suggested Citation

  • Lukáš Augustin Máslo, 2021. "Guilds and Competition: A Response to Objections of Laissez Faire," International Journal of Social Sciences, European Research Center, vol. 10(2), pages 1-14, September.
    • Handle: RePEc:aop:jijoss:v:10:y:2021:i:2:p:1-14
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    References listed on IDEAS

    as
    1. Epstein, S. R., 1998. "Craft Guilds, Apprenticeship, and Technological Change in Preindustrial Europe," The Journal of Economic History, Cambridge University Press, vol. 58(3), pages 684-713, September.
    2. Irit Keynan, 2016. "Is neoliberalism consistent with individual liberty? Friedman, Hayek and Rand on education employment and equality," International Journal of Teaching and Education, International Institute of Social and Economic Sciences, vol. 4(4), pages 30-47, December.
    3. Douglas A. Abbott, 2019. "Subjective Values versus Objective Science," International Journal of Social Sciences, International Institute of Social and Economic Sciences, vol. 8(2), pages 1-13, September.
    4. Sheilagh Ogilvie, 2014. "The Economics of Guilds," Journal of Economic Perspectives, American Economic Association, vol. 28(4), pages 169-192, Fall.
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    More about this item

    Keywords

    consumer; competition; structural changes; guilds; laissez faire; social justice; just wage;
    All these keywords.

    JEL classification:

    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • P41 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Planning, Coordination, and Reform

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