Religion and Economic Organization: The Rise and Decline of the Medieval English Craft Guilds

Scholars have debated the manner in which religious beliefs influence economic organization. This paper examines a particular case–the craft guilds of medieval England–to show how religious doctrines influence the ability of a group to enforce cooperation. When mortality rates are high, repeated interaction alone cannot sustain cooperation, but spiritual sanctions in the afterlife can sustain cooperation in organizations that used spiritual sanctions to enforce both religious and secular cooperation. This insight explains why during the fourteenth and fifteenth centuries, when the Catholic Church promoted the doctrine of Purgatory and repeated plagues decimated urban populations, guilds evolved and industry expanded. In the sixteenth century, the Reformation, which dispelled the doctrine of Purgatory, weakened guilds, disrupted the economy, and necessitated the development of new methods of organizing industry. JEL Classifications: C70, D23, D43, D71, L10, N83, N93.