The National System of Political Economy
By Friedrich List
MORE than thirty-three years have elapsed since I first entertained doubts as to the truth of the prevailing theory of political economy, and endeavoured to investigate (what appeared to me) its errors and their fundamental causes. My avocation (as Professor) gave me the motive to undertake that task–the opposition which it was my fate to meet with forcibly impelled me to pursue it further.My German contemporaries will remember to what a low ebb the well-being of Germany had sunk in 1818. I prepared myself by studying works on political economy. I made myself as fully acquainted as others with what had been thought and written on that subject. But I was not satisfied with teaching young men that science in its present form; I desired also to teach them by what economical policy the welfare, the culture, and the power of Germany might be promoted. The popular theory inculcated the principle of freedom of trade. That principle appeared to me to be accordant with common sense, and also to be proved by experience, when I considered the results of the abolition of the internal provincial tariffs in France, and of the union of the three kingdoms under one Government in Great Britain. But the wonderfully favourable effects of Napoleon’s Continental system, and the destructive results of its abolition, were events too recent for me to overlook; they seemed to me to be directly contradictory of what I previously observed. And in endeavouring to ascertain on what that contradiction was founded, the idea struck me that
the theory was quite true, but only so in case all nations would reciprocally follow the principles of free trade, just as those provinces had done. This led me to consider the nature of
nationality. I perceived that the popular theory took no account of
nations, but simply of the entire human race on the one hand, or of single individuals on the other. I saw clearly that free competition between two nations which are highly civilised can only be mutually beneficial in case both of them are in a nearly equal position of industrial development, and that any nation which owing to misfortunes is behind others in industry, commerce, and navigation, while she nevertheless possesses the mental and material means for developing those acquisitions, must first of all strengthen her own individual powers, in order to fit herself to enter into free competition with more advanced nations. In a word, I perceived the distinction between
political economy. I felt that Germany must abolish her internal tariffs, and by the adoption of a common uniform commercial policy towards foreigners, strive to attain to the same degree of commercial and industrial development to which other nations have attained by means of their commercial policy. [From the Preface to the First Edition]
J. Shield Nicholson, ed. Sampson S. Lloyd, trans.
First Pub. Date
London: Longmans, Green, and Co.
First published in German. First translated 1885.
The text of this edition is in the public domain. Picture of List courtesy of The Warren J. Samuels Portrait Collection at Duke University.
- Translators Preface to the First Edition
- Introductory Essay, by J. Shield Nicholson
- Extracts from the Authors Preface
- Book I, Chapter 1
- Book I, Chapter 2
- Book I, Chapter 3
- Book I, Chapter 4
- Book I, Chapter 5
- Book I, Chapter 6
- Book I, Chapter 7
- Book I, Chapter 8
- Book I, Chapter 9
- Book I, Chapter 10
- Book II, Chapter 11
- Book II, Chapter 12
- Book II, Chapter 13
- Book II, Chapter 14
- Book II, Chapter 15
- Book II, Chapter 16
- Book II, Chapter 17
- Book II, Chapter 18
- Book II, Chapter 19
- Book II, Chapter 20
- Book II, Chapter 21
- Book II, Chapter 22
- Book II, Chapter 23
- Book II, Chapter 24
- Book II, Chapter 25
- Book II, Chapter 26
- Book II, Chapter 27
- Book III, Chapter 28
- Book III, Chapter 29
- Book III, Chapter 30
- Book III, Chapter 31
- Book III, Chapter 32
- Book IV, Chapter 33
- Book IV, Chapter 34
- Book IV, Chapter 35
- Book IV, Chapter 36
- Appendix A
- Appendix B
- Appendix C
- Appendix D
THAT which has reference to the raising, the expending, and the administration of the material means of government of a community (
the financial economy of the State), must necessarily be distinguished everywhere from those institutions, regulations, laws, and conditions on which the economy of the individual subjects of a State is dependent, and by which it is regulated; i.e. from
the economy of the people. The necessity for this distinction is apparent in reference to all political communities, whether these comprise a whole nation or merely fractions of a nation, and whether they are small or large.
In a confederated State, the financial economy of the State is again divided into the financial economy of the separate states and the financial economy of the entire union.
The economy of the people becomes identical with
national economy where the State or the confederated State embraces a
whole nation fitted for independence by the number of its population, the extent of its territory, by its political institutions, civilisation, wealth, and power, and thus fitted for stability and political influence. The economy of the people and national economy are, under these circumstances, one and the same. They constitute with the financial economy of the State the political economy of the nation.
But, on the other hand, in States whose population and territory merely consist of
the fraction of a nation or of a national territory, which neither by complete and direct union, nor by means of a federal union with other fractions, constitutes a whole, we can only take into consideration an ‘economy of the people’ which is directly opposed to ‘private economy’ or to ‘financial economy of the State.’
In such an imperfect political condition, the objects and requirements of a great nationality cannot be taken into consideration; especially is it impossible to regulate the economy of the people with reference to the development of a nation complete in
itself, and with a view to its independence, permanence, and power. Here politics must necessarily remain excluded from economy, here can one only take account of the natural laws of social economy, as these would develop and shape themselves if no large united nationality or national economy existed anywhere.
It is from this standpoint that that science has been cultivated in Germany which was formerly called ‘State administration,’ then ‘national economy,’ then ‘political economy,’ then ‘popular administration,’ without anyone having clearly apprehended the fundamental error of these systems.
The true conception and real character of national economy could not be recognised because no economically united nation was in existence, and because for the distinct and definite term ‘
nation‘ men had everywhere substituted the general and vague term ‘
society,‘ an idea which is as applicable to entire humanity, or to a small country, or to a single town, as to the nation.