Friedrich List - The Early Nationalist

The Early Nationalist, Friedrich List

Friedrich List was born in Reutlingen, Wurtemberg, in 1789. He entered the civil service at an early age, and by diligence and ability soon attained a very respec­table position. He heard lectures at the University of Tubingen, and in 1818 was made professor of political science in that institution. He used his professorship as a means of attacking the bureaucratic routine of the civil service in Wurtemberg, and at the same time advocated in the press the cause of consti­tutional monarchy. List opposed the union of the government of Wurtemberg with the reactionary elements of the parlia­ment, and was called to account by the government for having written opposition articles, whereupon he resigned his profes­sorship in 1819. He was then made counsel of the German Commercial and Industrial Union (Deutscher Handels- und Gewerbeverein), which he had helped to found. An object of this union was to abolish duties on goods passing from one German state to another, and to replace them by duties at the frontiers of Germany.

At about this time it is probable that List read and was influenced by Ferrier and L. Say, — especially the former, whose Du gouvernement was published in 1802, — both of which French writers favored protection.
Reutlingen sent him to parliament as its representative in 1820. At the time, he made a speech in Reutlingen, advocating reforms which were then considered very radical. Among other things, he wished to do away with tolls on roads, tithes, the greater part of the state industries, feudal burdens resting on land, and excise duties; and sought to introduce publicity and trial by jury into the judicial administration. He also favored a decided reduction in the number of civil service officers, the sale of public domains, and a single direct income tax to meet the expenses of government. This displeased the powers in authority, and a petition which he directed to the estates of the realm, in which he pointed out abuses in the administration and in the courts, met with still less favor. He was expelled from parliament, and sentenced to ten months' imprisonment. The government of Wurtemberg finally agreed to give him his liberty on condition that he should leave the country. He consented to this, and emigrated to America.

He bought a farm near Harrisburg in Pennsylvania, but later became a successful editor and a speculator in coal mines and railways. In Reading, he published the National Zeitung, and wrote a number of articles for it on free trade, which, in 1827, were published in the form of a pamphlet entitled Out­lines of American Political Economy. This was done at the request of the Pennsylvania Society for the Advancement of

Manufacture and Arts. These articles contained the leading ideas of his great work, National System of Political Economy, published fourteen years later. List's residence in America deeply colored his economic views. Some new ideas he gathered from the writings of Alexander Hamilton and more from Daniel Raymond. But chiefly he profited by observation of the young and rapidly progressing economy which surrounded him. "There only," he writes, "have I obtained a clear idea of the gradual development of the economy of a people." "There the contrasts between agricultural and manufacturing countries are exemplified in the most decided manner, and cause the most disastrous revulsions."

In 1832 he went to Germany as United States consul in Leipzig, and, though very ill-received in his native land, never returned to America.

His first literary labor after this was his work on the Rotteck-Welckersche Staatslexicon, an organ of South German liberals. He also began at once an agitation for a system of railways in Germany. With this in view, he was a frequent contributor to the press, and wrote a work called Ueber ein sachsisches Eisen-bahnsystem als Grundlage eines allgemeinen deutschen Eisen-bahnsystems (A Saxon Railway System as a Foundation of a Universal German Railway System), published in Leipzig in 1833.

About this time he wrote an essay for the French Academy on a subject which they had assigned: "What must be con­sidered by a Nation desirous of introducing Free Trade in order in the most just manner to reconcile the interests of con­sumers and producers?" List's essay did not receive the prize, but was declared by the Academy to be surtout remarquable. Finally, in 1841, he published the first volume of his great work, National System of Political Economy. It was the design of List to complete the work in three volumes, but the first alone was finished. It treated of international commerce, the functions of government in matters of trade, and the German customs union.

In his National System, List considers chiefly that part of the science which deals with international commerce. He has one distinct end immediately in view, which is to overthrow the free-trade principles of the "School," as he calls Adam Smith, Jean Baptiste Say, and their followers. Back of this, lay his desire to show the nations how they might overthrow England's commercial supremacy. He takes up the subject of international commerce, and makes his whole work center about that, be­cause of all the questions of political economy he considers it to have the preponderant interest. The prosperity and even the existence of nations may be sacrificed by a false commercial policy.

At his time, he held, it was of particular importance to devote one's attention to this matter, because the rapid progress of the era rendered it more dangerous than ever before to take any false position. In no previous period had the gap between stationary and advancing peoples increased so rapidly. In past times, it was a work of centuries for one nation to obtain a monopoly of woolen manufactures, while in his own time, he says, it required but ten years for one people to obtain control of the manufacture of cotton, and the start of a few years might enable that most dangerous country, England, to monopolize the flax industry of Europe.

List begins the Introduction to his work by calling atten­tion to the difference between science and practice in the ques­tions of political economy. He maintains that both sides have erred, though the chief error appears to be on the side of the men of theory. The men of the School, the followers of Adam Smith, have looked away from the world as it is, and built upon suppositions which do not exist, never have existed, and whose future existence is problematical. They have regarded the whole world as living in peace and harmony. The differences of nationality they have overlooked.1 The adherents of Adam Smith have, in fact, established what List calls a cosmopolite (cosmopolitan) or universal economy. Adam Smith followed his master, Quesnay, in calling his book the Wealth of Nations, — of nations in general, or mankind.

Now List does not object to inquiries of this kind, if it be understood that the principles deduced apply to an imaginary and not a real state of affairs. He even admits that the deduc­tions drawn by Smith and Say are correct, "if we assume with this School an universal association or federation of all nations as a guarantee of perpetual peace." He does maintain, however, that matters ought to be considered as they are, and not as they may become in a distant millennium. Nations do exist, they do go to war with one another, they do take advantage of one another when they can. The basis of the present life of the world is national life; the nation comes between the individual and humanity; there should be, then, a national political economy as well as a cosmopolitan.

Accordingly, List attempts to take a realistic and historical view of political economy. He wishes to build upon the world's experience, to place himself upon the same ground as men of practice, only enlarging the view they take by considering with the aid of history and philosophy "the exigencies of the future and the higher interests of the whole human race." So, immediately after his introduction, he begins a review of the history of free trade and protection in the leading modern nations. His work might, indeed, have been entitled the History of the Policy of Modern Nations with Respect to International Commerce.

He discovers that the economic life of nations, save those lying in the tropics, may be divided into five periods: first, there is the hunting or fishing or savage stage; this is followed by the pastoral stage; people continue to wander for a time, but are finally compelled by external pressure to settle per­manently somewhere and gain a livelihood by agriculture, thus entering the agricultural stage; afterwards manufactures are introduced, this constituting the agricultural and manufacturing stage; finally, commerce is added and the fifth stage, the agricul­tural, manufacturing, and commercial stage, is attained. As these stages represent a continual advancement in material life, the proper office of legislation is to aid in the transition from a lower to a higher stage.

Different measures are required in different periods. In the lowest stage, that of hunters, free trade should be en­couraged as the means of developing higher wants in the people, and thus leading them to a more advanced economic stage. As their desires increased, they would take up agriculture more extensively, and improve their cultivation, in order to obtain raw material to exchange for the manufactured articles of foreign countries. Presently, they would manifest a desire to manufacture these articles for themselves, and then it would be time for government to introduce protective measures. Only in this manner could they ever enjoy the advantages of manu­factures, even if they possessed natural facilities for them, be­cause older nations with more capital would otherwise strangle their industries in infancy. This could be done by selling even below cost for a time long enough to ruin the weak establish­ments of the new country. Navigation and manufactures should be protected, until the country might become strong enough to compete with any other country, when free trade should again be introduced to stimulate manufactures and commerce by international competition.

Thus government activity is given a large part in List's teaching.

The countries of the torrid zone, he held, had not the gifts which fitted them ever to become manufacturing nations. Nature had failed to bestow upon the people of the tropics the requisite energy. They possessed, nevertheless, a natural monopoly of many products greatly desired by northern coun­tries, and their only road to wealth lay in continuing to exchange agricultural products for manufactured commodities. Northern nations were to carry on trade freely with the countries of the tropics, but with one another they ought all to adopt protective measures.

No high state of civilization could be attained without man­ufactures, an exclusively agricultural people being necessarily rude and barbarous. Agriculture and manufactures should be side by side to stimulate each other and to save the cost of transportation. When they are together under the same political power, List said, they are disturbed by no war; they live in perpetual peace.

Besides his attacks on the cosmopolitanism and free-trade doctrines of the School, — the latter being assailed through an examination of England's own growth and the history of the United States, — List also criticized the principle of division of labor, and the emphasis laid on exchange value.

The true principle of the division of labor is the same thing as association of labor or cooperation. If a dozen men are en­gaged in work on one pair of shoes, the labor is divided, it is true, but the results of that labor are united in the one pair of shoes. The men are all working together. Adam Smith in his Wealth of Nations gives an example of division of labor in the manufacture of pins, which has become celebrated. The labor of a few men united or divided — it might be put either way — in this manner accomplishes many times more than it would if they worked separately, each for himself. But suppose that, instead of laboring in the same factory, or at any rate near together, the men who made the heads and those who made the points lived in remote countries, would it then work so well? Might not the men who made the heads manufacture too many in expectation of a greater number of points than were actually imported? Might not, in fact, their entire labor be rendered useless by a war which would cut off the supply of points al­together? Now if this process of division of labor be extended between different countries, might not war or disasters in one country produce a general commercial crash?

Perhaps List is in no place more original or successful than in the exposition of his theory of productive forces and imma­terial capital. As at other points, it corrects the one-sidedness of Smith, who had considered value in exchange with little reference to the non-material elements in productive power.

List supposes two fathers, farmers, each having five sons. Each receives an income of $1000 in excess of his necessary ex­penses. The one saves it and keeps his sons at manual labor. The other spends it in educating three sons for some profession, and in training the other two to become skilled agriculturists. Both fathers die. The first is richer in exchange values. He has left more property. His possessions are divided among five sons. In the second case, the productive powers are greater. The farm is divided between the two sons, who have become so skillful that each half yields its possessor as much perhaps as the whole did formerly. The other three sons have been so trained that they are able to take care of themselves. In the one case there is ignorance, and increasing poverty as the estate becomes more and more divided; in the other, new talents and aptitudes for the production of wealth are developed, and these go on increasing from father to son, to the benefit of society.

The mere accumulation of exchange values, then, is not all-important, but is surpassed by the increase of productive power: "The power of producing wealth is therefore infinitely more important than wealth itself; it insures not only the possession and the increase of what has been gained, but also the replace­ment of what has been lost." Thus good morals, intelligence, monogamy, and Christianity are creative of productive forces.

All those members of society who tend to develop in any way true manhood and womanhood are productive, not "sterile" or barren, as they might have been called by the Physiocrats, or "unproductive," as Adam Smith designated some of them.

It is false, List claims, to say that labor is the source of value. Whole nations may be in poverty, despite the labor of their citizens. The most depends upon society: whether sciences and arts are developed; whether good institutions, laws, religion, morality, security, and freedom exist; whether agriculture, manufactures, and commerce are harmoniously extended.

These ideas are fundamentally connected with List's theory of protection.
List's views led him to optimistic conclusions as to the future. He was opposed to the Malthusian doctrine, though more to the popular and dogmatic representations of it than to Malthus' own teachings. These List does not appear to have studied carefully.

As in Miiller's writings, one finds in those of List a protest against the absolutistic tendencies of the School. Neither one, however, is himself free from such tendencies. Muller, as al­ready observed, neglected the various developments of different times. List, on the other hand, does not consider sufficiently the diversity in the growth of countries. He lays down one rule for all to follow. He simply makes a distinction between the countries of the temperate zones and those of the tropics, a difference which, as Knies has shown, includes a new error. So he is wrong in maintaining that "the production of raw ma­terials and commodities among the great nations of temperate climes has no real importance but in regard to internal trade." The production of raw material is at present of the greatest importance for the foreign commerce of the United States. The division he makes is artificial, and cannot be supported by history. It is unreasonable to suppose that all peoples between the Tropic of Cancer and the Tropic of Capricorn should always be content to devote themselves exclusively to agriculture. And again, the history and present condition of the Orient show a considerable growth of commerce following immediately upon the'agricultural stage without waiting for the development of manufactures. Having once recognized a difference of develop­ment in place, he ought to have studied more carefully the historic order of national growth.

List is also open to criticism on the score of not doing full justice to Adam Smith. That great economist was by no means so absolutely blind to national lines, warfare, etc., as List would represent him; but made room for certain duties and bounties and held that "defence is of much more importance than opulence."

List has many followers to this day — though they have generally taken agriculture within the protective wall — and his influence is strong among German officials. German railway policy has been colored by his economic principles; and expand­ing German nationalism seized upon his arguments for a na­tional marine and a united territory bounded by sea coasts both north and south. In the United States, the platform of the Republican party for a long time was based upon his doctrines.