Medieval Guilds and Modern Occupational Licensing
Many of us will remember references to “guilds” from studying the history of medieval times. Guilds of that era have been defined as associations of artisans or merchants who oversaw the practice of a particular craft or trade in their geographic area; They often depended on the state to help enforce their legal monopolies, receiving grants of authority from the monarch or other powers to enforce the flow of trade to their members.
In the 18th and 19th centuries, social and economic philosophers as diverse as Adam Smith and Karl Marx criticized the guild system—the former arguing that guilds limited innovation and opportunity, the latter arguing that guilds created a too-rigid social rank. As society modernized and became more industrial, the power of guilds diminished.
Many—including perhaps the premier authority on occupational licensing, Professor Morris Kleiner, and the late Nobel laureate in economics, Milton Friedman—have argued that occupational licensing in America has taken on a guild-like character. These “modern guilds” have behaved much as the medieval guilds, depending on grants of authority by the state (through licensing) to control whom, and how many, may enter the occupation, and what the limits of practice are.
In 2015, a U.S. Supreme Court case, North Carolina Board of Dental Examiners v. Federal Trade Commission, brought the issue of occupational licensing to the forefront, and helped to spur the interest in job licensing reform that is spreading in statehouses throughout the country. The court’s holding suggested that states must be vigilant in supervising licensing boards to make sure that they are not in violation of anti-trust laws. Hence, bills like Nebraska’s LB 299 (2018) started being introduced, in order to assure that the state was actively overseeing the actions of licensing boards—as well as reviewing boards to assure that continued state regulation was necessary, and done in the least restrictive way possible. Organizations like the Council of State Governments (CSG), and the National Conference of State Legislatures (NCSL) published articles addressing occupational licensing for policymakers.
While most licensing boards in the United States include token membership from outside of the occupation (sometimes referred to as the “lay member” or “citizen member” of the board), most members of licensing boards are subject to board authority as practitioners in the field, and have potential vested interest in controlling competition. Since they make up the majority of the board—and are the “experts”—one has to wonder how many challenges to board authority are raised by the lay members.
If our goal is upward social mobility and continued innovation, it’s critical that we avoid returning to the old guild system, sanctioned by state licenses. States must implement strategies for oversight of licensing boards already in existence—like the review process the Nebraska Legislature enacted last year—and consider carefully whether proposals for new regulation of occupations address clear public safety needs. The goal of policymakers should be the protection of the public from well-defined harm, not the protection of guild-like occupational structures.
Laura Ebke is the Senior Fellow for Job Licensing Reform at the Platte Institute. Learn more at PlatteInstitute.org/Jobs.