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
HAD the great enterprise of Colbert been permitted to succeed—had not the Revocation of the Edict of Nantes, the love of splendour and false ambition of Louis XIV., and the debauchery and extravagance of his successors, nipped in the bud the seeds which Colbert had sown—if consequently a wealthy manufacturing and commercial interest had arisen in France, if by good fortune the enormous properties of the French clergy had been given over to the public, if these events had resulted in the formation of a powerful lower house of Parliament, by whose influence the feudal aristocracy had been reformed—the physiocratic system would hardly have ever come to light. That system was evidently deduced from the then existing circumstances of France, and was only applicable to those circumstances.
At the period of its introduction the greater part of the landed property in France was in the hands of the clergy and the nobility. It was cultivated by a peasantry languishing under a state of serfdom and personal oppression, who were sunk in superstition, ignorance, indolence, and poverty. The owners of the land, who constituted its productive instruments, were devoted to frivolous pursuits, and had neither mind for, nor interest in, agriculture. The actual cultivators had neither the mental nor material means for agricultural improvements. The oppression of feudalism on agricultural production was increased by the insatiable demands made by the monarchy on the producers, which were made more intolerable by the freedom from taxation enjoyed by the clergy and nobility. Under such circumstances it was impossible that the most important branches of trade could succeed, those namely which depend on the productiveness of native agriculture, and the consumption of the great masses of the people; those only could manage to thrive which produced articles of luxury for the use of the privileged classes. The foreign trade was restricted by the inability of the material producers to consume any considerable quantity of the
produce of tropical countries, and to pay for them by their own surplus produce; the inland trade was oppressed by provincial customs duties.
Under such circumstances, nothing could be more natural than that thoughtful men, in their investigations into the causes of the prevailing poverty and misery, should have arrived at the conviction, that national welfare could not be attained so long as agriculture was not freed from its fetters, so long as the owners of land and capital took no interest in agriculture, so long as the peasantry remained sunk in personal subjection, in superstition, idleness, and ignorance, so long as taxation remained undiminished and was not equally borne by all classes, so long as internal tariff restrictions existed, and foreign trade did not flourish.
But these thoughtful men (we must remember) were either physicians to the King and his Court, Court favourites, or confidants and friends of the aristocracy and the clergy, they could not and would not declare open war against either absolute power or against clergy and nobility. There remained to them but one method of disseminating their views, that of concealing their plan of reform under the obscurity of a profound system, just as, in earlier as well as later times, ideas of political and religious reform have been embedded in the substance of philosophical systems. Following the philosophers of their own age and country, who, in view of the total disorganisation of the national condition of France, sought consolation in the wider field of philanthropy and cosmopolitanism (much as the father of a family, in despair at the break-up of his household, goes to seek comfort in the tavern), so the physiocrats caught at the cosmopolitan idea of universal free trade, as a panacea by which all prevailing evils might be cured. When they had got hold of this point of truth by exalting their thoughts above, they then directed them beneath, and discovered in the ‘nett revenue’ of the soil a basis for their preconceived ideas. Thence resulted the fundamental maxim of their system, ‘the soil alone yields nett revenue, therefore agriculture is the sole source of wealth. That is a doctrine from which wonderful consequences might be inferred—first feudalism must fall, and if requisite, landowning itself; then all taxation ought to be levied on the land, as being the source of all wealth; then the exemption from taxation enjoyed by the nobility and clergy must cease; finally the manufacturers must be deemed an unproductive class, who ought to pay no taxes, but also ought to have no State-protection, hence custom-houses must be abolished.
Of the nation, and its special circumstances and condition in relation to other nations, no further account was to be taken, for that is clear from the ‘Encyclopédie Méthodique,’ which says, ‘The welfare of the individual is conditional on the welfare of the entire human race.’ Here, therefore, no account was taken of any nation, of any war, of any foreign commercial measures: history and experience must be either ignored or misrepresented.
The great merit of this system was, that it bore the appearance of an attack made on the policy of Colbert and on the privileges of the manufacturers, for the benefit of the landowners; while in reality its blows told with most effect on the special privileges of the latter. Poor Colbert had to bear all the blame of the sufferings of the French agriculturists, while nevertheless everyone knew that France possessed a great industry for the first time since Colbert’s administration; and that even the dullest intellect was aware that manufactures constitute the chief means for promoting agriculture and commerce. The Revocation of the Edict of Nantes—the wanton wars of Louis XIV.—the profligate expenditure of Louis XV.—were utterly ignored by these philosophers.
Quesnay in his writings has adduced, and replied to, point by point, the objections which were urged against his system. One is astonished at the mass of sound sense which he puts into the mouth of his opponents, and at the mass of mystical absurdity which he opposes to those objections by way of argument. Notwithstanding, all that absurdity was accepted as wisdom by the contemporaries of this reformer, because the tendency of his system accorded with the circumstances of France at that time, and with the philanthropic and cosmopolitan ideas prevalent in that century.