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This article considers recent economic theories about guilds in the light of evidence from a German proto-industrial region. The empirical findings cast doubt on views that guilds existed because they were efficient institutional solutions to market failures relating to product quality, training, and innovation. However, guilds did generate a ‘social capital’ of shared norms, common information, mutual sanctions, and collective political action. This social capital benefitted guild members, but harmed outsiders and the wider economy. The article concludes that economic theories of collective action and interlinked markets can explain why guilds were widespread while not necessarily being efficient.