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
IN society man is not merely productive owing to the circumstance that he directly brings forth products or creates powers of production, but he also becomes productive by creating inducements to production and to consumption, or to the formation of productive powers.
The artist by his works acts in the first place on the ennobling and refinement of the human spirit and on the productive power of society; but inasmuch as the enjoyment of art presupposes the possession of those material means whereby it must be purchased, the artist also offers inducements to material production and to thrift.
Books and newspapers act on the mental and material production by giving information; but their acquisition costs money, and so far the enjoyment which they afford is also an inducement to material production.
The education of youth ennobles society; but what great exertions do parents make to obtain the means of giving their children a good education!
What immense performances in both mental and material production arise out of the endeavour to move in better society!
We can live as well in a house made of boards as in a villa, we can protect ourselves for a few florins against rain and cold as well as by means of the finest and most elegant clothing. Ornaments and utensils of gold and silver add no more to comfort than those of iron and tin; but the distinction connected with the possession of the former acts as an inducement to exertions of the body and the mind, and to order and thrift; and to such inducements society owes a large part of its productiveness. Even the man living on his private property who merely occupies himself with preserving, increasing, and consuming his income, acts in manifold ways on mental and material production: firstly, by supporting through his consumption art and science, and artistic trades; next, by discharging, as it were, the function of a preserver
and augmenter of the material capital of society; finally, by inciting through his display all other classes of society to emulation. As a whole school is encouraged to exertions by the offer of prizes, although only a few become winners of the principal prizes, so does the possession of large property, and the appearance and display connected with it, act on civil society. This action of course ceases when the great property is the fruit of usurpation, of extortion, or fraud, or where the possession of it and the enjoyment of its fruits cannot be openly displayed.
Manufacturing production yields either productive instruments or the means of satisfying the necessities of life and the means of display. The last two advantages are frequently combined. The various ranks of society are everywhere distinguished by the manner in which and where they live, and how they are furnished and clothed, by the costliness of their equipages and the quality, number, and external appearance of their servants. Where the commercial production is on a low scale, this distinction is but slight, i.e. almost all people live badly and are poorly clothed, emulation is nowhere observable. It originates and increases according to the ratio in which industries flourish. In flourishing manufacturing countries almost everyone lives and dresses well, although in the quality of manufactured goods which are consumed the most manifold degrees of difference take place. No one who feels that he has any power in him to work is willing to appear outwardly needy. Manufacturing industry, therefore, furthers production by the community by means of inducements which agriculture, with its mean domestic manufacture, its productions of raw materials and provisions, cannot offer.
There is of course an important difference between various modes of living, and everyone feels some inducement to eat and drink well; but we do not dine in public; and a German proverb says strikingly, ‘Man sieht mir auf den Kragen, nicht auf den Magen’ (One looks at my shirt collar, not at my stomach). If we are accustomed from youth to rough and simple fare, we seldom wish for better. The consumption of provisions also is restricted to very narrow limits where it is confined to articles produced in the immediate neighbourhood. These limits are extended in countries of temperate climate, in the first instance, by procuring the products of tropical climates. But as respects the quantity and the quality of these products, in the enjoyment of which the whole population of a country can participate, they can only be procured (as we have shown in a former chapter) by means of foreign commerce in manufactured goods.
Colonial products, so far as they do not consist of raw materials for manufacturing purposes, evidently act more as
stimulants than necessary means of subsistence. No one will deny that barley coffee without sugar is as nutritious as mocha coffee with sugar; and admitting also that these products contain some nutritious matter, their value in this respect is nevertheless so unimportant that they can scarcely be considered as substitutes for native provisions. With regard to spices and tobacco, they are certainly mere stimulants, i.e. they chiefly produce a useful effect on society only so far as they augment the enjoyments of the masses, and incite them to mental and bodily labour.
In many countries very erroneous notions prevail among those who live by salaries or rents, respecting what they are accustomed to call the luxurious habits of the lower classes; such persons are shocked to observe that labourers drink coffee with sugar, and regret the times when they were satisfied with gruel; they deplore that the peasant has exchanged his poor clothing of coarse homespun for woollen cloth; they express fears that the maid-servant will soon not be distinguishable from the lady of the house; they praise the legal restrictions on dress of previous centuries. But if we compare the result of the labour of the workman in countries where he is clad and nourished like the well-to-do man with the result of his labour where he has to be satisfied with the coarsest food and clothing, we shall find that the increase of his comfort in the former case has been attained not at the expense of the general welfare, but to the advantage of the productive powers of the community. The day’s work of the workman is double or three times greater in the former case than in the latter. Attempts to regulate dress and restrictions on luxury have destroyed wholesome emulation in the large masses of society, and have merely tended to the increase of mental and bodily idleness.
In any case products must be created before they can be consumed, and thus production must necessarily generally precede consumption. In popular and national practice, however, consumption frequently precedes production. Manufacturing nations, supported by large capital and less restricted in their production than mere agricultural nations, make, as a rule, advances to the latter on the yield of future crops; the latter thus consume before they produce—they produce later on because they have previously consumed. The same thing manifests itself in a much greater degree in the relation between town and country: the closer the manufacturer is to the agriculturist, the more will the former offer to the latter both an inducement to consume and means for consumption, the more also will the latter feel himself stimulated to greater production.
Among the most potent stimulants are those afforded by the civil and political institutions of the country. Where it is not
possible to raise oneself by honest exertions and by prosperity from one class of society to another, from the lowest to the highest; where the possessor necessarily hesitates to show his property publicly or to enjoy the fruits of it because it would expose his property to risk, or lest he should be accused of arrogance or impropriety; where persons engaged in trade are excluded from public honour, from taking part in administration, legislation, and juries; where distinguished achievements in agriculture, industry, and commerce do not lead also to public esteem and to social and civil distinction, there the most important motives for consumption as well as for production are wanting.
Every law, every public regulation, has a strengthening or weakening effect on production or on consumption or on the productive forces.
The granting of patent privileges offers a prize to inventive minds. The hope of obtaining the prize arouses the mental powers, and gives them a direction towards industrial improvements. It brings honour to the inventive mind in society, and roots out the prejudice for old customs and modes of operation so injurious among uneducated nations. It provides the man who merely possesses mental faculties for new inventions with the material means which he requires, inasmuch as capitalists are thus incited to support the inventor, by being assured of participation in the anticipated profits.
Protective duties act as stimulants on all those branches of internal industry the produce of which foreign countries can provide better than the home country, but of the production of which the home country is capable. They guarantee a reward to the man of enterprise and to the workman for acquiring new knowledge and skill, and offer to the inland and foreign capitalist means for investing his capital for a definite and certain time in a specially remunerative manner.