Trade Associations

Trade Association History and Development

The evolution of trade associations is interwoven with the growth of modern nation-states, particularly those with a democratic capitalist system. They were formed to provide a bridge between government and business in shaping national economic policy as countries grew into industrial giants. Their growth in the United States, Germany, and Japan illustrates the differing impact of political and economic systems on their development.

Voluntary associations in the United States in the late 18th and early 19th centuries were organized to solve myriad social problems not being addressed by democratically elected local, state, and national governments. Voluntarism captured the imagination of many individual traders and shopkeepers who joined a complex network of associations to promote the public good. They recognized the power of collective action for protecting their own commercial interests [Page 2085]and organized local business associations. The American pluralistic political structure also forced the associations to promote their economic views as political interest groups. Led by prominent industrialists in the late 19th and early 20th centuries, new national associations were organized with the objective of ensuring the smooth operation of cartels within and across industries. The populist movement forced these associations to curtail “antitrust” activities and to refocus on ensuring competition within individual industries. Concurrently, local associations cooperated to build national organizations (e.g., U.S. Chamber of Commerce and National Association of Manufacturers) to represent business in Washington, D.C.

The European context, with its strong, traditional institutions, set the stage for a different path of development. Government took the responsibility for organizing and guiding the growth of emerging national economies. Public officials encouraged powerful industrialists to organize business associations to aid in these coordination efforts, particularly in mobilizing for World War I. These new national associations, decimated during World War II, were reactivated as government and business partnered to rebuild devastated societies. The German government incorporated both industry and employer associations into a national structure that included employee associations to shape economic policy. Membership was mandated by law with companies joining either a business or employer association. The coordinated market model gave trade associations a stronger role than those in America, with its free market model.

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