Think of a village of 100, a fixed population, and not much traffic in and out of either goods or people. There's one baker, and he keeps the place supplied with bread. A worker trained in his shop sets up another shop, and suddenly there's competition for the market of 100 bread eaters. First , prices are lowered, until both bakers are barely getting by. Then one baker begins to throw sawdust into the flour, make loaves just a tiny bit smaller. That doesn't work, so he sends his relatives to attack and smash up the other bakery. In the process, bread becomes terrible and often unavailable, and the village is divided into supporters of one or the other bakers. A baker with a larger shop miles away hears about this, and begins loading up a wagon with bread twice a week and sending it into the village: now, both of the village bakers are in trouble.

Make the village a city. Medieval trades tended to concentrate: Frankfurt had books, Nuremberg had metalworkers. Competition in a large city simply magnified all these problems. It's to avoid all of these problems that guilds were created. They would be definitely a kind of cooperative: they would try to maintain a minimum price, and in their later forms could also provide services to their members- like, making sure they had a proper burial if they died, loaning them money for materials and supplies, providing a network for obtaining and assessing apprentices, journeymen. They would typically get a charter from the local ruler or government granting them the exclusive right to practice that trade in that town, and to get that charter they would argue the need to maintain quality standards. When for example, in the 16th c. the gunmakers in London applied for a charter, to be separate from the blacksmiths guild, they pled that imperfect barrels were being made that were dangerous, and there was a need for regulation by trained gunsmiths. After getting the charter, they were in charge of proofing barrels- testing them to make sure they were safe. At a time when government was quite limited, guilds provided a way to regulate a lot of the economy without having bureaucrats.

Guilds would also be social. This was a world filled with hierarchies, and guilds had their own. They would celebrate religious holidays or have feasts. There were some guilds that went out of existence as trade groups and simply became prestigious civic organizations or philanthropic groups, like the Worshipful Company of Bowyers.

There was once a common belief that guilds discouraged technological innovation. This is not quite true- there are examples ( like the watchmakers of Geneva) where innovation happened with the support of the guild. But under it all was very much the medieval notion of a fixed market of one size, in one place: only so much room in the village for a baker. The industrial revolution changed all that in a very big way, but , even before, as trade increased and transportation improved, guilds had a harder and harder time. The Gunmakers Guild might have sway over all the guns made in London, but in 1750 someone there could simply get a gun made in Birmingham. The London and Birmingham gunmakers also would be able to load their guns onto ships and get them to distant markets. Even in the days of wagons and sails, high-value small objects were easy to move: in the 18th c. Paris watchmakers would first out-compete English watchmakers, then Geneva watchmakers out-compete Paris watchmakers, and then watchmakers next door in the Jura would provide cheaper watches than Geneva. As economies became more international, markets more reachable and it was possible for production centers to move, guilds became more irrelevant.