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
THE highest ultimate aim of rational politics is (as we have shown in our Second Book) the uniting of all nations under a common law of right, an object which is only to be attained through the greatest possible equalisation of the most important nations of the earth in civilisation, prosperity, industry, and power, by the conversion of the antipathies and conflicts which now exist between them into sympathy and harmony. But the solution of this problem is a work of immensely long duration. At the present time the nations are divided and repelled from one another by manifold causes; chief among these are conflicts about territory. As yet, the apportionment of territory to the European nations does not correspond to the nature of things. Indeed, even in theory, people are not yet agreed upon the fundamental conditions of a just and natural apportionment of territory. Some desire that their national territory should be determined according to the requirements of their metropolis without regard to language, commerce, race, and so forth, in such a way that the metropolis should be situated in the centre and be protected as much as possible against foreign attacks. They desire to have great rivers for their frontiers. Others maintain, and apparently with greater reason, that sea-coasts, mountains, language, and race, constitute better frontiers than great rivers. There still are nations who are not in possession of those mouths of rivers and sea-coasts which are indispensable to them for the development of their commerce with the world and for their naval power.
If every nation was already in possession of the territory which is necessary for its internal development, and for the maintenance of its political, industrial, and commercial independence, then every conquest of territory would be contrary to sound policy, because by the unnatural increase of territory the jealousy of the nation which is thus encroached upon would be excited and kept alive, and consequently the sacrifices which the conquering nation would have to make for retaining such provinces would be immeasurably greater than the advantages accruing from their
possession. A just and wise apportionment of territory is, however, at this day not to be thought of, because this question is complicated by manifold interests of another nature. At the same time it must not be ignored that rectification of territory must be reckoned among the most important requirements of the nations, that striving to attain it is legitimate, that indeed in many cases it is a justifiable reason for war.
Further causes of antipathy between the nations are, at the present time, the diversity of their interests in respect to manufactures, commerce, navigation, naval power, and colonial possessions, also the difference in their degrees of civilisation, of religion, and of political condition. All these interests are complicated in manifold ways through the interests of dynasties and powers.
The causes of antipathy are, on the other hand, causes of sympathy. The less powerful nations sympathise against the most powerful, those whose independence is endangered sympathise against the aggressors, territorial powers against naval supremacy, those whose industry and commerce are defective sympathise against those who are striving for an industrial and commercial monopoly, the half-civilised against the civilised, those who are subjects of a monarchy against those whose government is entirely or partially democratic.
Nations at this time pursue their own interests and sympathies by means of alliances of those who are like-minded and have like interests against the interests and tendencies which conflict with theirs. As, however, these interests and tendencies conflict with one another in various ways, these alliances are liable to change. Those nations who are friends to-day may be enemies to-morrow, and
vice versâ, as soon as ever some one of the great interests or principles is at stake by which they feel themselves repelled from or drawn towards one another.
Politicians have long felt that the equalisation of the nations must be their ultimate aim. That which people call the
maintenance of the European balance of power has always been nothing else than the endeavours of the less powerful to impose a check on the encroachments of the more powerful. Yet politics have not seldom confounded their proximate object with their ultimate one, and
The proximate task of politics always consists in clearly perceiving in what respect the alliance and equalisation of the different interests is at the moment most pressing, and to strive that until this equalisation is attained all other questions may be suspended and kept in the background.
When the dynastic, monarchic, and aristocratic interests of
Europe allied themselves against the revolutionary tendencies of 1789, disregarding all considerations regarding power and commerce, their policy was a correct one.
It was just as correct when the French Empire introduced the tendency of conquest in place of that of revolution.
Napoleon sought by his Continental system to establish a Continental coalition against the predominant naval and commercial power of England; but in order to succeed, it was necessary for him, first of all, to take away from the Continental nations the apprehension of being conquered by France. He failed, because on their part the fear of his supremacy on land greatly outweighed the disadvantages which they suffered from the naval supremacy.
With the fall of the French Empire, the object of the great alliance ceased. From that time forth, the Continental powers were menaced neither by the revolutionary tendencies nor by the lust of conquest of France. England’s predominance in manufactures, navigation, commerce, colonial possessions, and naval power, had, on the other hand, enormously increased during the conflicts against the Revolution and against the French conquest. From that time forth, it became the interest of the Continental powers to ally themselves with France against the commercial and naval predominance. Solely from fear of the skin of the dead lion, the Continental powers did not heed sufficiently the living leopard who had hitherto fought in their ranks. The Holy Alliance was a political error.
This error also brought about its own punishment through the revolution of Italy. The Holy Alliance had unnecessarily called into life a counter force which no longer existed, or which at least would not for a long time have revived again. Fortunately for the Continental powers, the dynasty of July contrived to appease the revolutionary tendency in France. France concluded the alliance with England in the interests of the dynasty of July and of strengthening the constitutional monarchy. England concluded it in the interest of the maintenance of her commercial supremacy.
The Franco-English alliance ceased as soon as ever the dynasty of July and the constitutional monarchy in France felt themselves to be sufficiently firmly established; but, on the other hand, the interests of France in respect of naval power, navigation, commerce, industry, and foreign possessions came again more to the front. It is clear that France has again an equal interest with the other Continental powers in these questions, and the establishing of a Continental alliance against the naval predominance of England appears to be becoming a question of the day, provided the
dynasty of July can succeed in creating perfect unity of will between the different organs of State administration, also to thrust into the background those territorial questions which are excited by the revolutionary tendencies, and entirely to appease in the minds of the monarchical Continental powers the fear of the tendencies of France towards revolution and aggression.
Nothing, however, at this time so greatly impedes a closer union of the continent of Europe as the fact that the centre of it still never takes the position for which it is naturally fitted. Instead of being a mediator between the east and the west of that continent, on all questions of arrangement of territory, of the principle of their constitutions, of national independence and power, for which it is qualified by its geographical position, by its federal constitution which excludes all apprehension of aggression in the minds of neighbouring nations, by its religious toleration, and its cosmopolitical tendencies, and finally by its civilisation and the elements of power which it possesses, this central part of Europe constitutes at present the apple of discord for which the east and the west contend, while each party hopes to draw to its own side this middle power, which is weakened by want of national unity, and is always uncertainly wavering hither and thither.
If, on the other hand, Germany could constitute itself with the maritime territories which appertain to it, with Holland, Belgium, and Switzerland, as a powerful commercial and political whole—if this mighty national body could fuse representative institutions with the existing monarchical, dynastic, and aristocratic interests, so far as these are compatible with one another—then Germany could secure peace to the continent of Europe for a long time, and at the same time constitute herself the central point of a durable Continental alliance.
That the naval power of England greatly exceeds that of all other nations, if not on the number of ships, yet certainly in fighting power—that hence the nations which are less powerful at sea can only match England at sea by uniting their own naval power, is clear. From hence it follows, that every nation which is less powerful at sea has an interest in the maintenance and prosperity of the naval power of all other nations who are similarly weak at sea; and further, that fractions of other nations which, hitherto divided, have possessed either no naval power whatever or only an unimportant one, should constitute themselves into one united naval power. In regard to England, France and North America sustain loss if the naval power of Russia declines, and
vice versa. They all gain, if Germany, Holland, and Belgium constitute together a common naval power; for while separated these last are
mere satellites to the supremacy of England, but if united they strengthen the opposition to that supremacy of all nations at sea.
None of these less powerful nations possesses a mercantile marine which exceeds the requirements of its own international trade—none of these nations possesses a manufacturing power which would maintain important preponderance over that of the others. None of them, therefore, has any ground to fear the competition of the others. On the other hand, all have a common interest in protecting themselves against the destructive competition of England. Hence it must be to the interests of all that the predominating manufacturing power of England should lose those means of access (Holland, Belgium, and the Hanse Towns) by means of which England has hitherto dominated the markets of the Continent.
Inasmuch as the products of tropical climates are chiefly paid for by the manufactured products of temperate climates, and hence the consumption of the former depends on the sale of the latter, therefore every manufacturing nation should endeavour to establish direct intercourse with tropical countries. And thus, if all manufacturing nations of the second rank understand their own interests and act accordingly, no nation will be permitted to maintain a predominant amount of colonial possessions in tropical countries. If, for instance, England could succeed in the object for which she is at present striving, viz. to produce in India the colonial produce which she requires—in that case England could only carry on trade with the West Indies to the extent to which she was able to sell to other countries the colonial produce which she now obtains from the West Indies in exchange for her manufactured goods. If, however, she could not dispose of these to other countries, then her West Indian possessions would become useless to her. She would then have no other option than either to let them go free, or to surrender the trade with them to other manufacturing countries. Hence it follows that all manufacturing nations less powerful at sea have a common interest in following this policy and in reciprocally supporting one another in it, and it follows further that no one of these nations would lose by the accession of Holland to the German Commercial Union, and through the closer connection of Germany with the Dutch colonies.
Since the emancipation of the Spanish and Portuguese colonies in South America and the West Indies, it is no longer indispensably necessary that a manufacturing nation should possess colonies of its own in tropical climates in order to put itself in a position to carry on directly the exchange of manufactured goods against colonial produce. As the markets of these emancipated tropical countries are free, every manufacturing nation which is able to
compete in these free markets can carry on direct trade with them. But these free tropical countries can only produce great quantities of colonial products, and only consume great quantities of manufactured goods, if prosperity and morality, peace and repose, lawful order and religious tolerance, prevail within them. All nations not powerful at sea, especially those who possess no colonies, or only unimportant ones, have hence a common interest in bringing about such a state of things by their united power. To England, with her commercial supremacy, the circumstances of these countries cannot matter so much because she is sufficiently supplied, or at least hopes to become sufficiently supplied, with colonial produce from her own exclusive and subject markets in the East and West Indies. From this point of view also we must partly judge respecting the extremely important question of slavery. We are very far from ignoring that much philanthropy and good motive lies at the root of the zeal with which the object of the emancipation of the negroes is pursued by England, and that this zeal does great honour to the character of the English nation. But at the same time, if we consider the immediate effects of the measures adopted by England in reference to this matter, we cannot get rid of the idea that also much political motive and commercial interest are mingled with it. These effects are: (1) That by the sudden emancipation of the blacks, through their rapid transition from a condition of disorder and carelessness little removed from that of wild animals to a high degree of individual independence, the yield of tropical produce of South America and the West Indies will be extremely diminished and ultimately reduced to nothing, as the example of St. Domingo incontestably shows, inasmuch as there since the expulsion of the French and Spaniards the production has greatly decreased from year to year, and continues to do so. (2) That the free negroes continually seek to obtain an increase in their wages, whilst they limit their labour to the supply of their most indispensable wants; that hence their freedom merely leads to idleness. (3) That, on the other hand, England possesses in the East Indies ample means for supplying the whole world with colonial products. It is well known that the Hindoos, owing to great industry and great moderation in their food and other wants, especially in consequence of the precepts of their religion, which forbid the use of animal food, are excessively frugal. To these must be added the want of capital among the natives, the great fruitfulness of the soil in vegetable products, and the restriction of caste and the great competition of those in want of work.
The result of all this is, that wages in India are incomparably lower than in the West Indies and South America, whether the
plantations there are cultivated by free blacks or by slaves; that consequently the production of India, after trade has been set free in that country, and wiser principles of administration have prevailed, must increase at an enormous rate, and the time is no longer distant when England will not only be able to supply all her own requirements of colonial produce from India, but also export great quantities to other countries. Hence it follows that England cannot lose through the diminution of production in the West Indies and South America, to which countries other nations also export manufactured goods, but she will gain if the colonial production in India becomes preponderant, which market England exclusively supplies with manufactured goods. (4) Finally, it may be asserted, that by the emancipation of the slaves England desires to hang a sword over the head of the North American slave states, which is so much the more menacing to the Union the more this emancipation extends and the wish is excited among the negroes of North America to partake of similar liberty. The question if rightly viewed must appear a philanthropical experiment of doubtful benefit towards those on whose behalf it was undertaken from motives of general philanthropy, but must in any case appear to those nations who rely on the trade with South America and the West Indies as not advantageous to them; and they may not unreasonably inquire: Whether a sudden transition from slavery to freedom may not prove more injurious to the negroes themselves than the maintenance of the existing state of things?—whether it may not be the task of several generations to educate the negroes (who are accustomed to an almost animal state of subjection) to habits of voluntary labour and thrift?—whether it might not better attain the object if the transition from slavery to freedom was made by the introduction of a mild form of serfdom, whereby at first some interest might be secured to the serf in the land which he cultivates, and a fair share of the fruits of his labour, allowing sufficient rights to the landlord in order to bind the serf to habits of industry and order?—whether such a condition would not be more desirable than that of a miserable, drunken, lazy, vicious, mendicant horde called free negroes, in comparison with which Irish misery in its most degraded form may be deemed a state of prosperity and civilisation? If, however, we are required to believe that the zeal of the English to make everything which exists upon earth partakers of the same degree of freedom which they possess themselves, is so great and irrepressible that they must be excused if they have forgotten that nature makes no advances by leaps and bounds, then we must venture to put the questions: Whether the condition of the lowest caste of the
Hindoos is not much more wretched and intolerable than that of the American negroes?—and how it happens that the philanthropic spirit of England has never been excited on behalf of these most miserable of mankind?—how it happens that English legislation has never intervened for their benefit?—how it happens that England has been active enough in deriving means for her own enrichment out of this miserable state of things, without thinking of any direct means of ameliorating it?
The English-Indian policy leads us to the Eastern question. If we can dismiss from the politics of the day all that which at this moment has reference to territorial conflicts, to the dynastic, monarchic, aristocratic, and religious interests, and to the circumstances of the various powers, it cannot be ignored that the Continental powers have a great national economic interest in common in the Eastern question. However successful the present endeavours of the powers may be to keep this question in the background for a time, it will continually again come to the front with renewed force. It is a conclusion long arrived at by all thoughtful men, that a nation so thoroughly undermined in her religious, moral, social, and political foundations as Turkey is, is like a corpse, which may indeed be held up for a time by the support of the living, but must none the less pass into corruption. The case is quite the same with the Persians as with the Turks, with the Chinese and Hindoos and all other Asiatic people. Wherever the mouldering civilisation of Asia comes into contact with the fresh atmosphere of Europe, it falls to atoms; and Europe will sooner or later find herself under the necessity of taking the whole of Asia under her care and tutelage, as already India has been so taken in charge by England. In this utter chaos of countries and peoples there exists no single nationality which is either worthy or capable of maintenance and regeneration. Hence the entire dissolution of the Asiatic nationalities appears to be inevitable, and a regeneration of Asia only possible by means of an infusion of European vital power, by the general introduction of the Christian religion and of European moral laws and order, by European immigration, and the introduction of European systems of government.
If we reflect on the course which such a regeneration might possibly pursue, the first consideration that strikes one is that the greater part of the East is richly provided by nature with resources for supplying the manufacturing nations of Europe with great quantities of raw materials and necessary articles of every kind, but especially for producing tropical products, and in exchange for these for opening unlimited markets to European manufacturers. From this circumstance, nature appears to have
given an indication that this regeneration, as generally is the case with the civilisation of barbarous peoples, must proceed by the path of free exchange of agricultural produce against manufactured goods. For that reason the principle must be firmly maintained above all by the European nations, that no exclusive commercial privileges must be reserved to any European nation in any part of Asia whatever, and that no nation must be favoured above others there in any degree. It would be especially advantageous to the extension of this trade, if the chief commercial emporiums of the East were constituted free cities, the European population of which should have the right of self-government in consideration of an annual payment of tax to the native rulers. But European agents should be appointed to reside with these rulers, after the example of English policy in India, whose advice the native rulers should be bound to follow in respect of the promotion of public security, order, and civilisation.
All the Continental powers have especially a common interest that neither of the two routes from the Mediterranean to the Red Sea and to the Persian Gulf should fall into the exclusive possession of England, nor remain impassable owing to Asiatic barbarism. To commit the duty of protecting these important points to Austria, would insure the best guarantees to all European nations.
Further, the Continental powers in general have a common interest with the United States in maintaining the principle that ‘free ships cover free goods,’ and that only an effectual blockade of individual ports, but not a mere proclamation of the blockade of entire coasts, ought to be respected by neutrals. Finally, the principle of the annexation of wild and uninhabited territories appears to require revision in the common interest of the Continental powers. People ridicule in our days the fact that the Holy Father formerly undertook to make presents of islands and parts of the globe, nay even to divide the world into two parts with a stroke of the pen, and to apportion this part to one man and that to another. Can it, however, be deemed much more sensible to acknowledge the title to an entire quarter of the globe to vest in the man who first erected somewhere on the earth a pole adorned with a piece of silk? That in the case of islands of moderate size the right of the discoverer should be respected, may be admitted consistently with common sense; but when the question arises as to islands which are as large as a great European kingdom (like New Zealand) or respecting a continent which is larger than the whole of Europe (like Australia), in such a case by nothing less than an actual occupation by colonisation, and then only for the actually colonised territory, can a claim to exclusive
possession be admitted consistently with common sense. And it is not clear why the Germans and the French should not have the right to found colonies in those parts of the world at points which are distant from the English stations.
If we only consider the enormous interests which the nations of the Continent have in common, as opposed to the English maritime supremacy, we shall be led to the conviction that nothing is so necessary to these nations as union, and nothing is so ruinous to them as Continental wars. The history of the last century also teaches us that every war which the powers of the Continent have waged against one another has had for its invariable result to increase the industry, the wealth, the navigation, the colonial possessions, and the power of the insular supremacy.
Hence, it cannot be denied that a correct view of the wants and interests of the Continent underlaid the Continental system of Napoleon, although it must not be ignored that Napoleon desired to give effect to this idea (right in itself) in a manner which was contrary to the independence and to the interests of the other Continental powers. The Continental system of Napoleon suffered from three capital defects. In the first place, it sought to establish, in the place of the English maritime supremacy, a French Continental supremacy; it sought the humiliation, or destruction and dissolution, of other nationalities on the Continent for the benefit of France, instead of basing itself on the elevation and equalisation of the other Continental nations. Furthermore, France followed herself an exclusive commercial policy against the other countries of the Continent, while she claimed for herself free competition in those countries. Finally, the system almost entirely destroyed the trade between the manufacturing countries of the Continent and tropical countries, and found itself compelled to find a remedy for the destruction of this international trade by the use of substituted articles.
That the idea of this Continental system will ever recur, that the necessity of realising it will the more forcibly impress itself on the Continental nations in proportion as the preponderance of England in industry, wealth, and power further increases, is already very clear, and will continually become more evident. But it is not less certain that an alliance of the Continental nations can only have a good result if France is wise enough to avoid the errors of Napoleon. Hence, it is foolish of France if she raises (contrary to all justice, and to the actual nature of circumstances) claims for extension of frontiers at the expense of Germany, and
thereby compels other nations of the Continent to ally themselves with England.
It is foolish of France if she speaks of the Mediterranean Sea as of a French lake, and seeks to acquire exclusive influence in the Levant and in South America.
An effective Continental system can only originate from the free union of the Continental powers, and can succeed only in case it has for its object (and also effects) an equal participation in the advantages which result from it, for in that way only, and in no other, can the maritime powers of second rank command respect from the predominant power of England in such a way that the latter without any recourse to the force of arms will concede all the just requirements of the less powerful states. Only by such an alliance as that will the Continental manufacturing powers be able to maintain their relations with tropical countries, and assert and secure their interests in the East and the West.
In any case the British, who are ever too anxious for supremacy, must feel it hard when they perceive in this manner how the Continental nations will reciprocally raise their manufacturing power by mutual commercial concessions and by treaties; how they will reciprocally strengthen their navigation and their naval power; how they will assert their claim to that share for which they are fitted by nature in civilising and colonising barbarous and uncultivated countries, and in trade with tropical regions. Nevertheless, a glance into the future ought sufficiently to console the Britons for these anticipated disadvantages.
For the same causes which have raised Great Britain to her present exalted position, will (probably in the course of the next century) raise the United States of America to a degree of industry, wealth, and power, which will surpass the position in which England stands, as far as at present England excels little Holland. In the natural course of things the United States will increase their population within that period to hundreds of millions of souls; they will diffuse their population, their institutions, their civilisation, and their spirit over the whole of Central and South America, just as they have recently diffused them over the neighbouring Mexican province. The Federal Union will comprise all these immense territories, a population of several hundred millions of people will develop the resources of a continent which infinitely exceeds the continent of Europe in extent and in natural wealth. The naval power of the western world will surpass that of Great Britain, as greatly as its coasts and rivers exceed those of Britain in extent and magnitude.
Thus in a not very distant future the natural necessity which now imposes on the French and Germans the necessity of establishing
a Continental alliance against the British supremacy, will impose on the British the necessity of establishing a European coalition against the supremacy of America. Then will Great Britain be compelled to seek and to find in the leadership of the united powers of Europe protection, security, and compensation against the predominance of America, and an equivalent for her lost supremacy.
It is therefore good for England that she should practise resignation betimes, that she should by timely renunciations gain the friendship of European Continental powers, that she should accustom herself betimes to the idea of being only the first among equals.
Mémoires de la Duchess d’Abrantès.—[TRANSLATOR.]