Feudalism, Guilds, and the Moral Economy of the Middle Ages

The Medieval Economic Structure

Feudalism and the Agricultural Economy

During this period, society had an agricultural-based economy, combined with a feudal system. This system consisted of a king served by vassals (like dukes, counts, or barons) who gave him an oath of fealty in homage.

The Role and Regulation of Medieval Guilds

Industry revolved around guilds. These were centers of medieval "industrial" production—trade, professional, and craft organizations of Roman origin—and served as the "business units" of the Middle Ages. They functioned as a kind of exclusive union, though they were unions of masters, not workers.

Guilds regulated production and social conduct. Unlike a modern firm, the primary purpose of a guild was not first and foremost to make money, but to preserve a certain orderly way of life.

Guild Practices and Economic Misconduct

Guilds strictly monitored internal conduct, punishing members for practices deemed disruptive to the established order:

• A guild member who cornered the supply of an item was guilty of forestalling.
• One who bought wholesale to sell at retail was punished for the fault of engrossing.

Morality and Economics in Medieval Society

Economic activity was inextricably mixed with social and religious life. In medieval society, economics was a subordinate, not a dominant, aspect of life.

The Catholic Church, the great pillar of stability in an age of disorder, constituted the ultimate authority on economics, as on most other matters.

R.H. Tawney observed:

"Their fundamental assumptions were that economic interests are subordinated to the real business of life, which is salvation, and that economic conduct is one aspect of personal conduct, upon which rules of morality are binding."

The Just Price and the Condemnation of Usury

The primary technique used to regulate transactions was the concept of the Just Price—selling an item for what it was truly worth (no more, no less). This concept was supported by theologians like Thomas Aquinas.

Moneylending was regarded as a parasitic activity, and usury (lending money at interest) was decreed to be a mortal sin.

Static Economic Thought: Perpetuation, Not Progress

Another reason underlying the disrepute of gain and profit was the static organization of economic life. The idea of an expanding economy, a growing scale of production, or increasing productivity was foreign to the guild master, the fair merchant, the serf, and the lord alike.

The economic motto of the age was perpetuation, not progress.