Georg Friedrich List (August 6, 1789 November 30, 1846) was a leading nineteenth

century Germaneconomist who believed in the "National System" type of capitalism.

Although greatly influenced by Adam Smith's theories, List also criticized them in several
aspects. List considered that the prosperity of a nationdepended not upon the wealth that it
had amassed but upon its ability to develop "productive forces" which would create wealth in
the future, productive forces not being those involved in creating material products, but
rather scientific discoveries, advances in technology, improvements in transportation, the
provision ofeducational facilities, the maintenance of law and order, an efficient public
administration, and the introduction of a measure of self-government. List's theory of
"national economics" contrasted the economic behavior of an individual with that of a nation,
noting that the individual considers only his own personal interests but the nation is
responsible for the needs of the whole. Thus, List's view was that that a nation must first
develop its own agricultural and manufacturing processes sufficiently before it is able to fully
participate in international free trade. List recognized the existence and power of
nationalism, and that a unified world could not be quickly and harmoniously achieved until
individual nations all reached sufficient levels of development to avoid being overwhelmed
by the already developed nations. List's work, therefore, has been highly influential among
developing nations. In the era of globalization, List's understanding of national economics
may prove vital in the successful establishment of a harmonious, peaceful world.

Biography
List was born in Reutlingen, Wrttemberg, Germany in 1789. Unwilling to follow the
occupation of his father, who was a prosperous tanner, he became a clerk in the civil 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 Tbingen, but the fall of the
ministry in 1819 compelled him to resign. As a deputy to the Wrttemberg chamber, he was
active in advocating administrative reforms.
List was eventually expelled from the chamber and, in April 1822, sentenced to ten
months'imprisonment with hard labor in the fortress of Asperg. He escaped to Alsace, and,
after visitingFrance and England, returned in 1824 to finish his sentence, finally being
released on undertaking to emigrate to America.
He resided in the United States from 1825 to 1832, first engaging in farming and afterwards
injournalism. The discovery of coal on some land that he had acquired made him financially

independent. It was in America that he gathered from a study of Alexander Hamilton's work
the inspiration which made him an economist with his pronounced "National System" views.
In 1832 List returned to Germany as United States consul at Leipzig. He strongly advocated
the extension of the railway system in Germany, and the establishment of the Zollverein was
due largely to his enthusiasm and ardor. In 1841, List was offered the post of editor of
the Rheinische Zeitung, a new liberal newspaper which was being established in Cologne.
But he "declared that ill-health prevented him from accepting the post - which eventually
went to Karl Marx" (Henderson 1983, 85).
List's 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 November 30, 1846.
Early influences
List took Adam Smith as his starting point in economics, but made intelligent amendments to
Smith's views. According to Henderson, in 1827 List declared that he had once been "not
only a very faithful disciple of (Adam) Smith and (J.B.) Say, but a very zealous teacher of the
infallible (free trade) doctrine."
However, the slump in Germany that followed the collapse of Napoleon's "Continental
System" led him to revise his views on fiscal policy. When Napoleon's empire fell, the ports
of the continent were opened and British manufactured goods flooded the German market.
List had seen for himself "the admirable effects of...the Continental System" and what he
regarded as disastrous affects of its abolition.
"The contemplation of these effects induced me first to doubt infallibility of the old (free
market) theory" (List 1827). In some respects, however, he remained faithful to his earlier
convictions. He continued to believe in world free trade as an ideal state of affairs, which
might be achieved at some time in the future.
Lists main economic theories
Economics based on productive powers
List considered that the prosperity of a nation depended not upon the wealth that it had
amassed but upon its ability to develop "productive forces" which would create wealth in the
future. These forces included scientific discoveries, advances in technology, improvements
in transportation, the provision of educational facilities, the maintenance of law and order, an
efficient public administration, and the introduction of a measure of self-government.

List drew a distinction between the theory of exchange value and the theory of powers of
prediction. He argued that Adam Smith and his followers had laid too much emphasis upon
material wealth, which had an exchange value, and had not adequately appreciated the
significance of the productive powers that create wealth. He praised Adam Smith for
breaking new ground with his theory of the division of labor, but criticized him for omitting to
explain fully the role in the economy of the "productive powers of labor," which he had
mentioned in the introduction to The Wealth of Nations.
List also noted that Adam Smith had failed to assign a productive character to the mental
labor of those who maintain law and order and cultivate and promote instruction, religion,
science, and art. He thought it ridiculous that a pig breeder or a maker of bagpipes should
be regarded as a productive member of society, while a professor or a composer should not.
On the issue of law, List wrote that "while J. B. Say was right when he asserted that 'laws
cannot create wealth,' it was just as right to argue that laws could 'create productive power,'
which is more important than riches, i.e. than the possession of values of exchange"
(Henderson 1983, 177). Finally and foremost, List maintained that
The civilization, political education and power of nations, depend chiefly on their economical
condition and reciprocally; the more advanced their economy, the more civilized and
powerful will be the nation, the more rapidly will its civilization and power increase, and the
more will its economical culture be developed. (List 1856)
Stages of national development
List described four stages of economic development through which nations naturally
proceed:
In the economical development of nations by means of external trade, four periods must be
distinguished. In the first, agriculture is encouraged by the importation of manufactured
articles, and by the exportation of its own products; in the second, manufacturers begin to
increase at home, whilst the importation of foreign manufactures to some extent continues;
in the third, home manufactures mainly supply domestic consumption and the internal
markets; finally, in the fourth, we see the exportation upon a large scale of manufactured
products, and the importation of raw materials and agricultural products. (List 1956)
In the economical aspect, List's theory opposed the "cosmopolitan" (or more properly
"cosmopolitical") theory of Adam Smith and J. B. Say, and in its political and national
aspects their theory of universal freedom of trade.
The system of import duties being considered as a mode of assisting the economical
development of a nation, by regulating its external trade, must constantly take as a rule the
principle of the industrial education of the country. To encourage agriculture by the aid of
protective duties is vicious policy; for agriculture can be encouraged only by promoting
manufacturing industry; and the exclusion of raw material and agricultural products from
abroad, has no other result than to impede the rise of national manufactures. (List 1956)

This, in fact, is the central idea of List's theory, that a nation must first develop its own
agricultural and manufacturing processes sufficiently to support international free trade.
It is only when a nation has reached such a stage of development that she can bear the
strain of competition with foreign manufactures without injury in any respect, that she can
safely dispense with protection to her own manufactures, and enter on a policy of general
free trade. (List 1827)
This "economic nationalism" can be observed as permeating all List's economic writing.
Lists theory of national economics
List's theory of "national economics" differed from the views of Smith and Say. He contrasted
the economic behavior of an individual with that of a nation: an individual promotes only his
own personal interests but a state fosters the welfare of all its citizens. An individual may
prosper from activities that harm the interests of a nation, while activities beneficial to society
may injure the interests of certain individuals: "Canals and railroads may do great good to a
nation, but all waggoners will complain of this improvement. Every new invention has some
inconvenience for a number of individuals, and is nevertheless a public blessing" (List 1856).
He did, however, recognize the need for moderation, arguing that although some
government action was essential to stimulate the economy, an overzealous government
might do more harm than good:
It is bad policy to regulate everything and to promote everything by employing social powers,
where things may better regulate themselves and can be better promoted by private
exertions; but it is no less bad policy to let those things alone which can only be promoted by
interfering social power. (List 1856)
List asserted that economists should realize that since the human race is divided into
independent states:
a nation would act unwisely to endeavor to promote the welfare of the whole human race
at the expense of its particular strength, welfare, and independence. It is a dictate of the law
of self-preservation to make its particular advancement in power and strength the first
principles of its policy. (List 1856)
He claimed that a country should not count the cost of defending the overseas trade of its
merchants and "the manufacturing and agricultural interest must be promoted and protected
even by sacrifices of the majority of the individuals, if it can be proved that the nation would
never acquire the necessary perfection ... without such protective measures" (Henderson
1983, 150).
Both Adam Smith and Karl Marx adopted the hopeful view that nations and national rivalry
were a relic from the past that could be easily overcome. Smith relied on commercial selfinterest. Marx relied on class divisions erasing national differences. Both were quite correct

as to the general direction in which the world was moving. However, List was more realistic
in thinking that the excellent goal of a cosmopolitical world could not be quickly achieved
without allowing for the present existence and power of rival nations and states. Thus, List
recognized the power of national forces, while Marx and Friedrich Engels seriously
underestimated the strength of nationalism (Williams).
Disagreements with Adam Smith's ideas
List had many disagreements with Adam Smith. In the third chapter of The Wealth of
Nations, Smith mentioned the actual cause of thedivision of labor, namely the benefits
resulting from the formation of a very large economic unit. From the point of view of net
production, he argued the larger the better. List, however, was not convinced by this
argument, mainly because he asked the question: What if we suppose the large economic
unit contains several separate sovereign states? Smith did not ask this question, which may
not have occurred to him. He was a man who felt that the union within Great Britain had
been a great blessing. Did he also foresee an eventual union of Europe being brought about
by trade?
List correctly noted that Smith drew on systems of thought that were "cosmopolitical," hence
seeing national differences as a relic of the Dark Ages that enlightened politics would
eventually overcome. But List realized that there would be problems. He also had the
advantage of seeing the drastic self-destruction of eighteenth-century Enlightenment in
the French Revolution. In the European-wide struggle of the Napoleonic Wars, Britain had
backed various reactionary forces rather than let a strong empire emerge in continental
Europe.
List's answer was:
The result of a general free trade would not be a universal republic, but, on the contrary, a
universal subjection of the less advanced nations to the predominant manufacturing,
commercial and naval power, is a conclusion for which the reasons are very strong A
universal republic ..., i.e. a union of the nations of the earth whereby they recognize the
same conditions of right among themselves and renounce self-redress, can only be realized
if a large number of nationalities attain to as nearly the same degree as possible of industry
and civilization, political cultivation and power... Only with the gradual formation of this union
can free trade be developed, only as a result of this union can it confer on all nations the
same great advantages which are now experienced by those provinces and states which are
politically united... The system of protection, inasmuch as it forms the only means of placing
those nations which are far behind in civilization on equal terms with the one predominating
nation, appears to be the most efficient means of furthering the final union of nations, and
hence also of promoting true freedom of trade. (List 1844, 102-103)

Legacy
List historically has held one of the highest places in economic thought as applied to
practical objects. His principal work entitled Das Nationale System der Politischen
konomie (1841) and was translated into English as The National System of Political
Economy. This book has been more frequently translated than the works of any
other German economist, except Karl Marx.
Eugene During, of the University of Berlin, declared that List's doctrines represented the
first real advance in economics since the publication of The Wealth of Nations (by Adam
Smith)" and Marx himself wrote in his famous Anti-Duhring pamphlet: "It would be better to
read Herr Duhring's chapter on mercantilism in the 'original', that is, in F. List's National
System, Chapter 29." Thus, Marx was clearly well aware of List's work. However, he never to
deal with it directly, and because of this, List was largely ignored by later writers.
However, Lists influence among developing nations has been considerable. Despite the fact
that his National System was vigorously attacked, such was the demand for it that three
editions were called for within the space of a few months, and translations of it were
published in English, French, Russian, Swedish, Hungarian, and many other foreign
languages. Japan, in the nineteenth century, followed his model, Hungarian leader, Kossuth,
alluded to him in public as the man who had best instructed the nations as to their true
national economical interests, and it has also been argued that Deng Xiaoping's post-Mao
policies in China were inspired by List's work.
The last excerpt from The National System should forever be considered to be the manual
for all the NGOs (United Nations, World Trade Organization, etc.) in the developed world
dealing with the developing countries:
The economical education of a country of inferior intelligence and culture, or one thinly
populated, relatively to the extent and the fertility of its territory, is effected most certainly by
free trade, with more advanced, richer, and more industrious nations... Every commercial
restriction in such a country aiming at the increase of manufactures, is premature, and will
prove detrimental, not only to civilization in general, but the progress of the nation in
particular... If its intellectual, political, and economical education, under the operation of free
trade, has advanced so far, that the importation of foreign manufactures, and the want of
markets for its own products has become an obstacle to its ulterior development, then only
can protective measures be justified.... Internal and external trade flourish alike under the
protective system; these have no importance but among nations supplying their own wants
by their own manufacturing industry, consuming their own agricultural products, and
purchasing foreign raw materials and commodities with the surplus of their manufactured
articles... Home and foreign trade are both insignificant in the merely agricultural
countries ...., and their external commerce is usually in the hands of the manufacturing and
trading nations in communication with them... A good system of protection does not imply
any monopoly in the manufacturers of a country; it only furnishes a guarantee against losses
to those who devote their capital, their talents, and their exertions to new branches of
industry. (List 1856)

References

List, George F. "National System of Political Economy" in Lippincott, Philadelphia

1856. pp. 63-64, 69-70, 73, 77-81.

List, George F. 1827. Outlines of a New System of Political Economy. Lippincott,

Philadelphia.

List, George F. 1844. "The German Zollverein" in Edinburgh Review. Vol. LXXIX,
p. 105 et seq.

List, G. Fr. 1877. Vorlaufer und ein Opfer fr das Vaterland. (Anon., 2 vols.,
Stuttgart)

Biography of List by Goldschmidt (Berlin, 1878)

Biography of List by Jentsch (Berlin, 1901)

Lists influences on Chinas Deng

Henderson, William O. 1983. Friedrich List: Economist and Visionary. London:

Frank Cass.

Hirst, M. E. 1909. Life of Friedrich List. London; contains a bibliography and a

reprint of List's Outlines of American Political Economy. 1827.

List's influence on Japan (cyberzone.com)

Williams, Gwydion M. Friedrich List and the 19th century economic alternative