Modern History Sourcebook:
George Frederich List:
National Economy
Not all economists went along with the "classical"
free market economics of Adam Smith and David Ricardo. George
Friedrich List (1789-1846) argued that economic policy had to
be adapted to the needs of specific nations. Free trade was not
practical in Germany, he insisted, until the country had attained
a greater degree of industrial growth.
From George Friedrich List. National System
of Political Economy
Political economy, in matters of international commerce, must
draw its lessons from experience; the measures it advises must
be appropriate to the wants of our times, to the special condition
of each people, it must not, however, disavow the exigencies of
the future nor the higher interests of the whole human race. Political
economy must rest consequently upon Philosophy, Policy, and History.
For the interests of the future and the welfare of men, philosophy
requires a more intimate union and communion of nations, a renunciation
of war so far as possible, the establishment and development of
international law, transition of the jus gentium to a federal
law, freedom of communication among nations, as well in moral
as in material concerns; lastly, the union of all nations under
some rule of law, or in some aspects of the subject, a universal
association.
In the case of any particular people, a wise administration, with
extended views, pursues special objects, seeking guarantees for
independence and for duration, measures calculated to hasten progress
in civilization, well-being, and power, and to improve social
condition so that the body politic shall be completely and harmoniously
developed in all its parts, perfect in itself, and politically
independent.
History, for its part, assists in no equivocal manner in providing
for the exigencies of the future, by teaching how, in every epoch,
progress, material and intellectual, has kept pace with the extent
of political association and commercial relations. But it justifies
at the same time the exigencies of government and nationality,
showing how nations have perished for not having sufficiently
watched over the interests of their culture and power; how a commerce
entirely free with nations more advanced has been of advantage
to those still in the first phases of their development; also
how those which had made some progress have been able by proper
regulations in their foreign trade, to make still greater progress
and to overtake those which had preceded them. History thus shows
the way of reconciling the respective exigencies of philosophy
and government.
But practice and theory, such as actually exhibited, take their
sides, the former exclusively for the particular exigencies of
nationality, the latter for the absolute requirements of cosmopolitism....
The practical importance of the great question of free trade between
nations is generally felt in our day, as also the necessity of
investigating, with impartiality, once for all, how far theory
and practice have erred on this subject, and how far any reconciliation
between them is possible. It is at least needful to discuss seriously
the problem of such a reconciliation.
It is not indeed with any assumed modesty, it is with the feeling
of a profound mistrust of his power, that the author ventures
upon this attempt; it is after resisting many years his inclination,
after having hundreds of times questioned the correctness of opinions
and again and again verifying them; after having frequently examined
opposing opinions, and ascertained, beyond a doubt, their inaccuracy,
that he determined to enter upon the solution of this problem.
He believes himself free from the empty ambition of contradicting
old authorities and propounding new theories. If the author had
been an Englishman, he would probably never have entertained doubts
of the fundamental principle of Adam Smith's theory. It was the
condition of his own country which begot in him, more than twenty
years since, the first doubts of the infallibility of that theory;
it was the condition of his country which, since that time, determined
him to develop, first in anonymous articles, then in more elaborate
treatises, not anonymous, contrary opinions. At this moment, the
interests of Germany alone give him the courage to publish the
present work; he will however not dissemble, that a personal motive
is connected with those interests; that is, the necessity in which
he is placed of showing by a treatise of some extent, that he
is not quite incompetent to treat of political economy....
The civilization, political education and power of nations, depend
chiefly on their economical condition and reciprocally; the more
advanced their economy, the more civilized and powerful will be
the nation, the more rapidly will its civilization and power increase,
and the more will its economical culture be developed....
The anterior progress of certain nations, foreign commercial legislation
and war have compelled inferior countries to look for special
means of effecting their transition from the agricultural to the
manufacturing stage of industry, and as far as practicable, by
a system of duties, to restrain their trade with more advanced
nations aiming at manufacturing monopoly.
The system of import duties is consequently not, as has been said,
an invention of speculative minds; it is a natural consequence
of the tendency of nations to seek for guarantees of their existence
and prosperity, and to establish and increase their weight in
the scale of national influence....
In the economical development of nations by means of external
trade, four periods must be distinguished. In the first, agriculture
is encouraged by the importation of manufactured articles, and
by the exportation of its own products; in the second, manufacturers
begin to increase at home, whilst the importation of foreign manufactures
to some extent continues; in the third, home manufactures mainly
supply domestic consumption and the internal markets; finally,
in the fourth, we see the exportation upon a large scale of manufactured
products, and the importation of raw materials and agricultural
products.
The system of import duties being considered as a mode of assisting
the economical development of a nation, by regulating its external
trade, must constantly take as a rule the principle of the industrial
education of the country.
To encourage agriculture by the aid of protective duties is vicious
policy; for agriculture can be encouraged only by promoting manufacturing
industry; and the exclusion of raw material and agricultural products
from abroad, has no other result than to impede the rise of national
manufactures.
The economical education of a country of inferior intelligence
and culture, or one thinly populated, relatively to the extent
and the fertility of its territory, is effected most certainly
by free trade, with more advanced, richer, and more industrious
nations. Every commercial restriction in such a country aiming
at the increase of manufactures, is premature, and will prove
detrimental, not only to civilization in general, but the progress
of the nation in particular. If its intellectual, political, and
economical education, under the operation of free trade, has advanced
so far, that the importation of foreign manufactures, and the
want of markets for its own products has become an obstacle to
its ulterior development, then only can protective measures be
justified....
Internal and external trade flourish alike under the protective
system; these have no importance but among nations supplying their
own wants by their own manufacturing industry,` consuming their
own agricultural products, and purchasing foreign raw materials
and commodities with the surplus of their manufactured articles.
Home and foreign trade are both insignificant in the merely agricultural
countries of temperate climes, and their external commerce is
usually in the hands of the manufacturing and trading nations
in communication with them.
A good system of protection does not imply any monopoly in the
manufacturers of a country; it only furnishes a guarantee against
losses to those who devote their capital, their talents, and their
exertions to new branches of industry.
There is no monopoly, because internal competition comes in the
place of foreign competition, and every individual has the privilege
of taking his share in the advantages offered by the country to
its citizens; it is only an advantage to citizens as against foreigners,
who enJoy in their own country a similar advantage.
From George Friedrich List, National System of Political Economy (Philadelphia: Lippincott, 1856), pp. 63-64, 69-70, 73, 77-81.
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