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
Book II, Chapter XVII
THE MANUFACTURING POWER AND THE PERSONAL, SOCIAL, AND POLITICAL PRODUCTIVE POWERS OF THE NATION.
IN a country devoted to mere raw agriculture, dullness of mind, awkwardness of body, obstinate adherence to old notions, customs, methods, and processes, want of culture, of prosperity, and of liberty, prevail. The spirit of striving for a steady increase in mental and bodily acquirements, of emulation, and of liberty, characterise, on the contrary, a State devoted to manufactures and commerce.
The cause of this difference lies partly in the different kind of social habits and of education which respectively characterise these two classes of people, partly in the different character of their occupation and in the things which are requisite for it. The agricultural population lives dispersed over the whole surface of the country; and also, in respect to mental and material intercourse, agriculturists are widely separated from one another. One agriculturist does almost precisely what the other does; the one produces, as a rule, what the other produces. The surplus produce and the requirements of all are almost alike; everybody is himself the best consumer of his own products; here, therefore, little inducement exists for mental intercourse or material exchange. The agriculturist has to deal less with his fellow-men than with inanimate nature. Accustomed to reap only after a long lapse of time where he has sown, and to leave the success of his exertions to the will of a higher power, contentment with little, patience, resignation, but also negligence and mental laziness, become to him a second nature. As his occupation keeps him apart from intercourse with his fellow-men, so also does the conduct of his ordinary business require but little mental exertion and bodily skill on his part. He learns it by imitation in the narrow circle of the family in which he was born, and the idea that it might be conducted differently and better seldom occurs to him. From the cradle to the grave he moves always in the same limited circle of men and of circumstances. Examples of special prosperity in consequence of extraordinary mental and bodily
exertions are seldom brought before his eyes. The possession of means or a state of poverty are transmitted by inheritance in the occupation of mere agriculture from generation to generation, and almost all that power which originates in emulation lies dead.
The nature of manufactures is fundamentally different from that of agriculture. Drawn towards one another by their business, manufacturers live only in society, and consequently only in commercial intercourse and by means of that intercourse. The manufacturer procures from the market all that he requires of the necessaries of life and raw materials, and only the smallest part of his own products is destined for his own consumption. If the agriculturist expects a blessing on his exertions chiefly from nature, the prosperity and existence of the manufacturer mainly depend on his commercial intercourse. While the agriculturist does not know the purchasers of his produce, or at any rate need have little anxiety as to disposing of it, the very existence of the manufacturer depends on his customers. The prices of raw materials, of the necessaries of life and wages, of goods and of money, vary incessantly; the manufacturer is never certain how his profits will turn out. The favour of nature and mere ordinary industry do not guarantee to him existence and prosperity as they do to the agriculturist; both these depend entirely upon his own intelligence and activity. He must strive to gain more than enough in order to be certain of having enough of what is absolutely necessary; he must endeavour to become rich in order not to be reduced to poverty. If he goes on somewhat faster than others, he thrives; if he goes slower, he is certain of ruin. He must always buy and sell, exchange and make bargains. Everywhere he has to deal with men, with changing circumstances, with laws and regulations; he has a hundred times more opportunity for developing his mind than the agriculturist. In order to qualify himself for conducting his business, he must become acquainted with foreign men and foreign countries; in order to establish that business, he must make unusual efforts. While the agriculturist simply has to do with his own neighbourhood, the trade of the manufacturer extends itself over all countries and parts of the world. The desire to gain the respect of his fellow-citizens or to retain it, and the continual competition of his rivals, which perpetually threaten his existence and prosperity, are to him a sharp stimulus to uninterrupted activity, to ceaseless progress. Thousands of examples prove to him, that by extraordinary performances and exertions it is possible for a man to raise himself from the lowest degree of well-being and position to the highest social rank, but that, on the other hand, by mental inactivity and negligence, he can sink from the most respectable
to the meanest position. These circumstances produce in the manufacturer an energy which is not observable in the mere agriculturist.
If we regard manufacturing occupations as a whole, it must be evident at the first glance that they develop and bring into action an incomparably greater variety and higher type of mental qualities and abilities than agriculture does. Adam Smith certainly expressed one of those paradoxical opinions which (according to Dugald Stewart, his biographer) he was very fond of, when he maintained that agriculture requires more skill than manufactures and commerce. Without entering into the investigation whether the construction of a clock requires more skill than the management of a farm, we have merely to observe that all agricultural occupations are of the same kind, while in manufactures a thousand-fold variety exists. It must also not be forgotten, that for the purpose of the present comparison, agriculture must be regarded as it exists in the primitive state, and not as it has been improved by the influence of manufactures. If the condition of English agriculturists appeared to Adam Smith much nobler than the condition of English manufacturers, he had forgotten that the condition of the former has been thus ennobled through the influence of manufactures and commerce.
It is evident that by agriculture merely personal qualities of the same kind are put into requisition, and merely those which combine bodily power and perseverance in executing raw and manual labour with the simple idea of order; while manufactures require a thousand-fold variety of mental ability, skill, and experience. The demand for such a variety of talents makes it easy for every individual in a manufacturing State to find an occupation and vocation corresponding with his individual abilities and taste, while in an agricultural State but little choice exists. In the former mental gifts are infinitely more prized than in the latter, where as a rule the usefulness of a man is determined according to his bodily strength. The labour of the weak and the cripple in the former is not unfrequently valued at a much higher rate than that of the strongest man is in the latter. Every power, even the smallest, that of children and women, of cripples and old men, finds in manufactures employment and remuneration.
Manufactures are at once the offspring, and at the same time the supporters and the nurses, of science and the arts. We may observe how little the condition of raw agriculture puts sciences and arts into requisition, how little of either is necessary to prepare the rude implements which it employs. It is true that agriculture at first had, by yielding rents of land, made it possible for men to devote themselves to science and art; but without
manufactures they have always remained private treasures, and have only extended their beneficial effects in a very slight degree to the masses. In the manufacturing State the industry of the masses is enlightened by science, and the sciences and arts are supported by the industry of the masses. There scarcely exists a manufacturing business which has not relations to physics, mechanics, chemistry, mathematics, or to the art of design, &c. No progress, no new discoveries and inventions, can be made in these sciences by which a hundred industries and processes could not be improved or altered. In the manufacturing State, therefore, sciences and arts must necessarily become popular. The necessity for education and instruction, through writings and lectures by a number of persons who have to bring into practice the results of scientific investigations, induces men of special talents to devote themselves to instruction and authorship. The competition of such talents, owing to the large demand for their efforts, creates both a division and co-operation of scientific activity, which has a most beneficial influence not merely on the further progress of science itself, but also on the further perfection of the arts and of industries. The effects of these improvements are soon afterwards extended even to agriculture. Nowhere can more perfect agricultural machines and implements be found, nowhere is agriculture carried on with so much intelligence, as in countries where industry flourishes. Under the influence of manufactures, agriculture itself is raised to a skilled industry, an art, a science.
The sciences and industry in combination have produced that great material power which in the new state of society has replaced with tenfold benefits the slave labour of ancient times, and which is destined to exercise on the condition of the masses, on the civilisation of barbarous countries, on the peopling of uninhabited lands, and on the power of the nations of primitive culture, such an immeasurable influence—namely,
the power of machinery.
A manufacturing nation has a hundred times more opportunities of applying the power of machinery than an agricultural nation. A cripple can accomplish by directing a steam engine a hundred times more than the strongest man can with his mere hand.
The power of machinery, combined with the perfection of transport facilities in modern times, affords to the manufacturing State an immense superiority over the mere agricultural State. It is evident that canals, railways, and steam navigation are called into existence only by means of
the manufacturing power, and can only by means of it be extended over the whole surface of the country. In the mere agricultural State, where everybody produces for himself the greater part of what he requires, and consumes
himself the greater part of what he produces, where the individuals among themselves can only carry on a small amount of goods and passenger traffic, it is impossible that a sufficiently large traffic in either goods or passengers can take place to defray the costs of the erection and maintenance of the machinery of transport.
New inventions and improvements in the mere agricultural State are of but little value. Those who occupy themselves with such things in such a State fall themselves, as a rule, a sacrifice to their investigations and endeavours, while in the manufacturing State there is no path which leads more rapidly to wealth and position than that of invention and discovery. Thus, in the manufacturing State genius is valued and rewarded more highly than skill, and skill more highly than mere physical force. In the agricultural State, however, excepting in the public service, the reverse is almost the rule.
As, however, manufactures operate beneficially on the development of the mental powers of the nation, so also do they act on the development of the physical power of labour, by affording to the labourers means of enjoyment, inducements to exert their powers, and opportunities for making use of them. It is an undisputed observation, that in flourishing manufacturing States the workman, irrespective of the aid which he obtains from better machinery and tools, accomplishes a far larger day’s work than in mere agricultural countries.
Moreover, the circumstance that in manufacturing States the value of time is recognised much more than in agricultural States, affords proof of the higher standing in the former of the power of labour. The degree of civilisation of a nation and the value of its labour power cannot be estimated more accurately than according to the degree of the value which it attributes to time. The savage lies for days idle in his hut. How can the shepherd learn to estimate the value of time, to whom time is simply a burden which his pastoral pipe or sleep alone makes tolerable to him? How can a slave, a serf, a peasant, subject to tributes of forced labour, learn to value time, he to whom labour is penalty, and idleness gain? Nations only arrive at the recognition of the value of time through industry. At present time gained brings gain of profit; loss of time, loss of profit. The zeal of the manufacturer to utilise his time in the highest possible degree imparts itself to the agriculturist. Through the increased demand for agricultural products caused by manufactures, the rent and therefore the value of land is raised, larger capital is employed in cultivating it, profits are increased, a larger produce must be obtained from the soil in order to be able to provide for the increased rent and interest of capital, and for the increased consumption. One
is in a position to offer higher wages, but one also requires more work to be done. The workman begins to feel that he possesses in his bodily powers, and in the skill with which he uses them, the means of improving his condition. He begins to comprehend why the Englishman says, ‘Time is money.’
Owing to the isolation in which the agriculturist lives, and to his limited education, he is but little capable of adding anything to general civilisation or learning to estimate the value of political institutions, and much less still to take an active part in the administration of public affairs and of justice, or to defend his liberty and rights. Hence he is mostly in a state of dependence on the landed proprietor. Everywhere merely agricultural nations have lived in slavery, or oppressed by despotism, feudalism, or priestcraft. The mere exclusive possession of the soil gave the despot, the oligarchy, or the priestly caste a power over the mass of the agricultural population, of which the latter could not rid themselves of their own accord.
Under the powerful influence of habit, everywhere among merely agricultural nations has the yoke which brute force or superstition and priestcraft imposed upon them so grown into their very flesh, that they come to regard it as a necessary constituent of their own body, as a condition of their very existence.
On the other hand, the separation and variety of the operations of business, and the confederation of the productive powers, press with irresistible force the various manufacturers towards one another. Friction produces sparks of the mind, as well as those of natural fire. Mental friction, however, only exists where people live together closely, where frequent contact in commercial, scientific, social, civil, and political matters exists, where there is large interchange both of goods and ideas. The more men live together in one and the same place, the more every one of these men depends in his business on the co-operation of all others, the more the business of every one of these individuals requires knowledge, circumspection, education, and the less that obstinacy, lawlessness, oppression and arrogant opposition to justice interfere with the exertions of all these individuals and with the objects at which they aim, so much the more perfect will the civil institutions be found, so much larger will be the degree of liberty enjoyed, so much more opportunity will be given for self-improvement and for co-operation in the improvement of others. Therefore liberty and civilisation have everywhere and at all times emanated from towns; in ancient times in Greece and Italy; in the Middle Ages in Italy, Germany, Belgium, and Holland; later on in England, and still more recently in North America and France.
But there are two kinds of towns, one of which we may term
the productive, the other the consuming kind. There are towns which work up raw materials, and pay the country districts for these, as well as for the means of subsistence which they require, by means of manufactured goods. These are the manufacturing towns, the productive ones. The more that these prosper, the more the agriculture of the country prospers, and the more powers that agriculture unfolds, so much the greater do those manufacturing towns become. But there are also towns where those live who simply consume the rents of the land. In all countries which are civilised to some extent, a large portion of the national income is consumed as rent in the towns. It would be false, however, were we to maintain as a general principle that this consumption is injurious to production, or does not tend to promote it. For the possibility of securing to oneself an independent life by the acquisition of rents, is a powerful stimulus to economy and to the utilisation of savings in agriculture and in agricultural improvements. Moreover, the man who lives on rents, stimulated by the inclination to distinguish himself before his fellow-citizens, supported by his education and his independent position, will promote civilisation, the efficiency of public institutions, of State administration, science and art. But the degree in which rent influences in this manner the industry, prosperity, and civilisation of the nation will always depend on the degree of liberty which that nation has already obtained. That inclination to become useful to the commonwealth by voluntary activity, and to distinguish oneself before one’s fellow-citizens, will only develop itself in countries where this activity leads to public recognition, to public esteem, and to offices of honour, but not in countries where every attempt to gain public esteem and every manifestation of independence is regarded by the ruling power with a jealous eye. In such countries the man of independent income will give himself up to debauchery and idleness, and because in this manner he brings useful industry into contempt, and injures the morality as well as the industrious impulse of the nation, he will radically imperil the nation’s productive power. Even if under such conditions the manufactures of towns are to some extent promoted by the consumption of the rentier, such manufactures are nevertheless to be regarded as barren and unsound fruits, and especially they will aid very little in promoting the civilisation, prosperity, and liberty of the nation. Inasmuch as a sound manufacturing industry especially tends to produce liberty and civilisation, it may also be said that through it rent itself is redeemed from forming a fund for idleness, debauchery, and immorality, and is converted into a fund for promoting mental culture, and consequently that through it the merely consuming towns are changed
into productive towns. Another element by which the consuming towns are supported is, the consumption of the public servants and of the State administration. These also may occasion some apparent prosperity in a town; but whether such consumption especially promotes or is injurious to the productive power, prosperity, and institutions of the nation, depends altogether on the question how far the functions of the consumers tend to promote or to injure those powers.
From this the reason is evident why in mere agricultural States large towns can exist, which, although they contain a large number of wealthy inhabitants and manifold trades, exercise only a very inconsiderable influence on the civilisation, liberty, and productive power of the nation. The persons engaged in those trades necessarily participate in the views of their customers; they are to be regarded in a great measure as mere domestic servants of the rentiers and public employes. In contrast to great luxury in those towns, poverty, misery, narrow-mindedness, and a slavish disposition are found among the inhabitants of the surrounding country districts. A prosperous effect of manufactures on the civilisation, the improvement of public institutions, and the liberty of the nation, is only perceptible if in a country a manufacturing power is established which, quite independently of the rentiers and public servants, works for the large mass of the agricultural population or for export trade, and consumes the products of that population in large quantities for working up in manufacture and for subsistence. The more such a sound and healthy manufacturing power increases in strength, the more will it draw to its side the manufacturing power which originated in the consumption above named, and also the rentiers and public servants, and the more also will the public institutions be regulated with a view to the interest of the commonwealth.
Let us consider the condition of a large town in which the manufacturers are numerous, independent, lovers of liberty, educated, and wealthy, where the merchants participate in their interests and position, where the rentiers feel themselves compelled to gain the respect of the public, where the public servants are subject to the control of public opinion, where the men of science and art work for the public at large, and draw from it their means of subsistence; let us consider the mass of mental and material means which are combined together in such a narrow space, and further how closely this mass of power is united through the law of the division of the operations of business and the confederation of powers; we may note again how quickly every improvement, every progress in public institutions, and in social and economical conditions, on the one hand, and how, on the
other hand, every retrogression, every injury of the public interests, must be felt by this mass; then, again, how easily this mass, living in one and the same place, can come to an agreement as to their common objects and regulations, and what enormous means it can concentrate on the spot for these purposes; and finally, in what a close union a community so powerful, enlightened, and liberty-loving, stands in relation to other similar communities in the same nation—if we duly consider all these things, we shall easily be convinced that the influence on the maintenance and improvement of the public welfare exercised by an agricultural population living dispersed over the whole surface of the country (however large its aggregate number may be) will be but slight in comparison with that of towns, whose whole power (as we have shown) depends upon the prosperity of their manufactures and of those trades which are allied to and dependent on them.
The predominating influence of the towns on the political and municipal conditions of the nation, far from being disadvantageous to the rural population, is of inestimable advantage to it. The advantages which the towns enjoy make them feel it a duty to raise the agriculturists to the enjoyment of similar liberty, cultivation, and prosperity; for the larger the sum of these mental and social advantages is among the rural population, the larger will be the amount of the provisions and raw materials which they send into the towns, the greater also will be the quantity of the manufactured goods which they purchase from the towns, and consequently the prosperity of the towns. The country derives energy, civilisation, liberty, and good institutions from the towns, but the towns insure to themselves the possession of liberty and good institutions by raising the country people to be partakers of these acquisitions. Agriculture, which hitherto merely supported landowners and their servants, now furnishes the commonwealth with the most independent and sturdy defenders of its liberty. In the culture of the soil, also, every class is now able to improve its position. The labourer can raise himself to become a farmer, the farmer to become a landed proprietor. The capital and the means of transport which industry creates and establishes now give prosperity to agriculture everywhere. Serfdom, feudal burdens, laws and regulations which injure industry and liberty, disappear. The landed proprietor will now derive a hundred times more income from his forest possessions than from his hunting. Those who formerly from the miserable produce of serf labour scarcely obtained the means of leading a rude country life, whose sole pleasure consisted in the keeping of horses and dogs and chasing game, who
therefore resented every infringement of these pleasures as a crime against their dignity as lords of the soil, are now enabled by the augmentation of their rents (the produce of free labour) to spend a portion of the year in the towns. There, through the drama and music, through art and reading, their manners are softened; they learn by intercourse with artists and learned men to esteem mind and talents. From mere Nimrods they become cultivated men. The aspect of an industrious community, in which everybody is striving to improve his condition, awakens in them also the spirit of improvement. They pursue instruction and new ideas instead of stags and hares. Returning to the country, they offer to the middle and small farmer examples worthy of imitation, and they gain his respect instead of his curse.
The more industry and agriculture flourish, the less can the human mind be held in chains, and the more are we compelled to give way to the spirit of toleration, and to put real morality and religious influence in the place of compulsion of conscience. Everywhere has industry given birth to tolerance; everywhere has it converted the priests into teachers of the people and into learned men. Everywhere have the cultivation of national language and literature, have the civilising arts, and the perfection of municipal institutions kept equal pace with the development of manufactures and commerce. It is from manufactures that the nation’s capability originates of carrying on foreign trade with less civilised nations, of increasing its mercantile marine, of establishing a naval power, and by founding colonies, of utilising its surplus population for the further augmentation of the national prosperity and the national power.
Comparative statistics show that by the complete and relatively equal cultivation of manufactures and agriculture in a nation endowed with a sufficiently large and fertile territory, a population twice or three times as large can be maintained, and maintained, moreover, in a far higher degree of well-being than in a country devoted exclusively to agriculture. From this it follows that all the mental powers of a nation, its State revenues, its material and mental means of defence, and its security for national independence, are increased in equal proportion by establishing in it a manufacturing power.
At a time where technical and mechanical science exercise such immense influence on the methods of warfare, where all warlike operations depend so much on the condition of the national revenue, where successful defence greatly depends on the questions, whether the mass of the nation is rich or poor, intelligent or
stupid, energetic or sunk in apathy; whether its sympathies are given exclusively to the fatherland or partly to foreign countries; whether it can muster many or but few defenders of the country—at such a time, more than ever before, must the value of manufactures be estimated from a political point of view.