27 January, 2011

Quis custodiet ipsos custodes?

This article was originally published by
on 27 January, 2011

How big a town or city would we need for a guild to develop to meet the need for regulation? And how could we guarantee that they don’t act like a monopolist? Who will regulate the regulators? At what point should a guild be formed?

I would think that a guild becomes necessary as soon as two or three businesses of the same type exist in the local area. I do not pretend to have acquired as much of an understanding of the guild system as the other authors at The Distributist Review, so I will accept any correction they may have to offer. What I have read, however suggests something like the following.

The guilds were initially set up to provide mutual benefits for their members. In addition, they protected their trade or craft by setting the minimum acceptable business standards, and then providing training so those interested could meet them. The ability to enforce these standards made them laws, but enforcement was only possible by being able to require membership in the guild in order to conduct business in their area. As appalling as that may sound to today’s capitalists, it is really not so different than requiring a business license from the city or county today. In order to be a contractor, you must pass certain tests and present proof of this to the city or county. In order to open up a shop, you must purchase a business license. Both of these processes subject you to the laws and regulations governing how you must conduct business in the area of jurisdiction. These laws and regulations are the enforced standards of good business and public safety in much the same way it was with the guilds. The difference is that, in our current environment, the government sets these standards rather than those actually involved in the businesses. Just as you can take a business to court for bad practices in today’s society, people used to be able to take businesses to the court of the guild when they did sub-standard work or conducted business in some other unjust manner. The guild member would be judged by other members of the guild, whose own reputations and businesses could be jeopardized if they gave an unjust judgment.

  One thing about which the capitalists are right is the need to satisfy the customer. This is true for all small businesses, whether they exist under capitalism or Distributism. As much as possible, the guilds are self-regulating. This means that the people who actually work in the craft or trade set the standards. Because a guild only has authority in its own area, and because its members cannot conduct business in another guild’s area, the local community has a very big influence on the standards that will be set. Additionally, guilds of different areas could meet to discuss issues of concern, coordinate research and development, and share innovation. This communication would foster the wider adoption of standards without diminishing the influence of the needs and desires of the local community.

The more power gets concentrated in a single organization, and the wider its customer base grows, the less that organization needs to satisfy the customer. Some might try to say this would be as true for the guild as for the capitalist monopoly, but there is a very big difference because you could not belong to – say – the contractor’s guild in two cities. You could get permission to work in another guild’s area on contract, but you could not be a member of both guilds. This restriction is an important factor in how the guilds can protect local businesses from monopoly power. The restriction of the guild’s authority and membership to the local community means neither the guild, nor the member business, could ever grow to the same level of wide-spread economic power as can the capitalist monopoly. Without the guild, small businesses under capitalism have virtually no protection against anti-competitive monopoly power. 
Quis custodiet ipsos custodes? (Who will guard the guards?)

Big business uses its economic power to influence government and ensure that the laws favor them over their smaller competitors. Today’s monopolies have such a large customer base that they don’t have to care if one local community were to turn against them. The profits from other areas will more than make up for that loss. Since the guild and its members only operate in one area, it cannot afford to have that community turn against it. Therefore, the guild must have the same high consideration for satisfying the needs of the local community as does the capitalist small business. After all, a guild is really a group of local small businesses. This means that the community would have a strong influence over the standards (laws) set by the guild. However, because businesses and guilds are human institutions, there is always the possibility of those who will try to abuse or corrupt the intent or “ideal” of the system. This is as true for Distributism as it is for capitalism. The question is, how does one correct this? Under capitalism, we have seen that, once it gets big enough, a corporation can corrupt the processes and  institutions that exist to correct abuses up to the highest state, federal and international levels. In the comments to Kevin O’Brien’s recent article, a reader named Keith assumed that Distributism needs the “monopoly power” of the centralized government to regulate the guilds. Why would this not be the case under Distributism?

One must keep in mind that subsidiarity goes hand-in-hand with Distributism. Therefore, if a guild were to become corrupt and the citizens wanted to redress the issue, the next higher authority would hear the case. This would be the city or county. The same would be true for an appellate process regarding judgments made by a guild. Why would this work better than what we have today? Because the fact that a guild’s operation is restricted to a local area means you will quickly move beyond the sphere of a corrupt guild’s influence. It would be very difficult for a guild to be able to corrupt the appellate process beyond the city or county level, especially since the community has a large influence in setting the standards (laws) under which the local guild must operate. The same simply cannot be said regarding today’s huge, multi-national, billion-dollar corporations with their ability to influence the legislatures that make the laws under which they must operate.

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