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Friedrich List

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FRIEDRICH LIST (1789-1846), German economist, was born at Reutlingen, Wurttemberg, on the 6th of August 1789. Unwilling to follow the occupation of his father, who was a prosperous tanner, he became a clerk in the public service, and by 1816 had risen to the post of ministerial under-secretary. In 1817 he was appointed professor of administration and politics at the university of Tubingen, but the fall of the ministry in 1819 compelled him to resign. As a deputy to the Wurttemberg chamber, he was active in advocating administrative reforms. He was eventually expelled from the chamber and in April 1822 sentenced to ten months' imprisonment with hard labour in the fortress of Asperg. He escaped to Alsace, and after visiting France and England returned in 1824 to finish his sentence, and was released on undertaking to emigrate to America. There he resided from 1825 to 1832, first engaging in farming and afterwards in journalism. It was in America that he gathered from a study of Alexander Hamilton's work the inspiration which made him an economist of his pronounced "National" views. The discovery of coal on some land which he had acquired made him financially independent, and he became United States consul at Leipzig in 1832. He strongly advocated the extension of the railway system in Germany, and the establishment of the Zollverein was due largely to his enthusiasm and ardour. His latter days were darkened by many misfortunes; he lost much of his American property in a financial crisis, ill-health also overtook him, and he brought his life to an end by his own hand on the 30th of November 1846.

List holds historically one of the highest places in economic thought as applied to practical objects. His principal work is entitled Das Nationale System der Politischen Okonomie (1841). Though his practical conclusions were different from those of Adam Muller (1779-1829), he was largely influenced not only by Hamilton but also by the general mode of thinking of that writer, and by his strictures on the doctrine of Adam Smith. It was particularly against the cosmopolitan principle in the modern economical system that he protested, and against the absolute doctrine of free trade, which was in harmony with that principle. He gave prominence to the national idea, and insisted on the special requirements of each nation according to its circumstances and especially to the degree of its development.

He refused to Smith's system the title of the industrial, which he thought more appropriate to the mercantile system, and designated the former as "the exchange-value system." He denied the parallelism asserted b y Smith between the economic conduct proper to an individual and to a nation, and held that the immediate private interest of the separate members of the community would not lead to the highest good of the whole. That the nation was an existence, standing between the individual and humanity, and formed into a unity by its language, manners, historical development, culture and constitution. That this unity must be the first condition of the security, wellbeing, progress and civilization of the individual; and private economic interests, like all others, must be subordinated to the maintenance, completion and strengthening of the nationality. The nation having a continuous life, its true wealth must consist - and this is List's fundamental doctrine - not in the quantity of exchange-values which it possesses, but in the full and many-sided development of its productive powers. Its economic education should be more important than the immediate production of values, and it might be right that one generation should sacrifice its gain and enjoyment to secure the strength and skill of the future. In the sound and normal condition of a nation which has attained economic maturity, the three productive powers of agriculture, manufactures and commerce should be alike developed. But the two latter factors are superior in importance, as exercising a more effective and fruitful influence on the whole culture of the nation, as well as on its independence. Navigation, railways, all higher technical arts, connect themselves specially with these factors; whilst in a purely agricultural state there is a tendency to stagnation. But for the growth of the higher forms of industry all countries are not adapted - only those of the temperate zones, whilst the torrid regions have a natural monopoly in the production of certain raw materials; and thus between these two groups of countries a division of labour and confederation of powers spontaneously takes place.

List then goes on to explain his theory of the stages of economic development through which the nations of the temperate zone, which are furnished with all the necessary conditions, naturally pass, in advancing to their normal economic state. These are (t) pastoral life, (2) agriculture, (3) agriculture united with manufactures; whilst in the final stage agriculture, manufactures and commerce are combined. The economic task of the state is to bring into existence through legislative and administrative action the conditions required for the progress of the nation through these stages. Out of this view arises List's scheme of industrial politics. Every nation, according to him, should begin with free trade, stimulating and improving its agriculture by intercourse with richer and more cultivated nations, importing foreign manufactures and exporting raw products. When it is economically so far advanced that it can manufacture for itself, then a system of protection should be employed to allow the home industries to develop themselves fully, and save them from being overpowered in their earlier efforts by the competition of more matured foreign industries in the home market. When the national industries have grown strong enough no longer to dread this competition, then the highest stage of progress has been reached; free trade should again become the rule, and the nation be thus thoroughly incorporated with the universal industrial union. What a nation loses for a time in exchange values during the protective period she much more than gains in the long run in productive power - the temporary expenditure being strictly analogous, when we place ourselves at the point of view of the life of the nation, to the cost of the industrial education of the individual. The practical conclusion which List drew for Germany was that she needed for her economic progress an extended and conveniently bounded territory reaching to the sea-coast both on north and south, and a vigorous expansion of manufactures and commerce, and that the way to the latter lay through judicious protective legislation with a customs union comprising all German lands, and a German marine with a Navigation Act. The national German spirit, striving after independence and power through union, and the national industry, awaking from its lethargy and eager to recover lost ground, were favourable to the success of List's book, and it produced a great sensation. He ably represented the tendencies and demands of his time in his own country; his work had the effect of fixing the attention, not merely of the speculative and official classes, but of practical men generally, on questions of political economy; and his ideas were undoubtedly the economic foundation of modern Germany, as applied by the practical genius of Bismarck.

See biographies of List by Goldschmidt (Berlin, 1878) and Jentsch (Berlin, 1901), also Fr. List, ein Vorldufer and ein Opfer fiir das Vaterland (Anon., 2 vols., Stuttgart, 1877); M. E. Hirst's Life of Friedrich List (London, 1909) contains a bibliography and a reprint of List's Outlines of American Political Economy (1827).