Works

The principal goal of Das nationale System der politischen Okonomie is to integrate the idea of the nation into political economy. The nation has to be considered an important intermediate layer between the individual and the rest of mankind, especially owing to the role of power in nation-state politics (List 1841 [1928]: 141-56).

The National System can be seen as an important precursor to the German Historical Schools (Rieter 2002: 140-41) owing to List’s conviction that the economic policy strategy for a specific country can only be chosen adequately when bearing in mind the development stage of that country. In the German debate he thus introduces the notion of the temporal and spatial relativity of economic policy recommendations, a concept which would become crucial for the German approach of “Nationalokonomie” (inci­dentally a name substantially inspired by the title of List’s book) in the second half of the nineteenth century.

According to List, the level of a nation’s economic development is characterized not only by its varying wealth but also by different stages of development or civilization, beginning with “original barbarism” and culminating, after several intermediate steps, in an interconnected “agricultural-manufacturing-commercial condition” - concepts already contained in his earlier work The Natural System of Political Economy (List 1837 [1983]). Opposed to the policy recommendation of Ricardo’s famous wine-and-cloth example, List underscores that if the wine-producing nation indeed happens to specialize in agriculture, its stage of development and particularly its power will remain low, resulting in a depend­ency (especially in military terms) on the industrialized nations.

The stark contrast in the way he sees and interprets the classical economists stems from List’s notion that it is not only material wealth which drives development but the inter­play of material and immaterial (mental) factors. This idea is at the basis of his “theory of the powers of production” and constitutes his most significant theoretical contribution. The original idea of “inner goods” and the links to material and “moral” determinants of economic development, however, had already been developed by the German-Russian classic Heinrich von Storch in his 1815 Cours d’economiepolitique whose ideas influenced many French classical economists, above all Charles Dunoyer. It is, however, surprising that despite the importance of the theory in List’s thinking, the concept is not precisely defined anywhere. The often quoted sentence that “the power of producing wealth is... infinitely more important than wealth itself” (List 1841 [1928]: 108) only implicitly circumscribes the concept of the productive powers. What can be inferred from List’s usage of the term is that it is the “mental capital” (“geistiges Kapital”) of mankind or of a specific nation which is at the center of the concept of productive powers.

Thus List can be seen as a precursor to the twentieth-century theory of human capital. With this stress on the macroeconomic aspects of human capital - as opposed to the microeconomic focus of classical economists, such as Smith and Say, as well as of modern conceptualizations - he can be seen as advocating a view similar to the later rep­resentatives of the “old” or “original institutionalism” of Thorstein Bunde Veblen and John Roger Commons.

Regarding List’s macroeconomic development perspective, secondary literature often refers to the nexus with Adam Muller. Muller formulates very similar positions in his Elemente der Staatskunst of 1809/10, in which he attributes British prosperity to the combination of human (mental) and physical capital. As already mentioned, however, Heinrich von Storch, who is referred to in the National System, certainly is the more important influence here.

In conclusion, neither the stage theory of economic development (already present in Smith) nor the protective duty argument are in a strict sense List’s inventions; the ideas of “mental capital” or “productive powers” also already existed in the earlier literature. However, to paraphrase Schumpeter, if an innovation consists of combining already known elements into a new entity, then List is an innovator par excellence. The reason for such a classification is his masterly linking of the theory of economic devel­opment with the theory of the powers of production, thus transforming the protective duty (“Schutzzoll”) argument into an argument for a development or educational duty (“Erziehungszoll”). This is more than a rhetorical achievement: while the protective duty is aimed at conserving existing structures, the development duty is targeted at enabling progress and catch-up that would otherwise not materialize.

List’s heritage is ambiguous. Even though his idea of the special role of the nation aims at a world that should become a “universal union” once - with the help of his duty system - nations have reached comparable stages of development, his work can be seen as the beginning of the German “Sonderweg” in nineteenth-century economics. His opposition to the individualism of classical economics, the endorsement of holistic notions of economy and society, and the emphasis on relativism in political economy of different nations have made him an attractive figure not just in the eyes of the Historical Schools, but also - in complete disregard of his deeply rooted democratic convictions which entailed existential difficulties during his entire lifetime - of National Socialism. This twentieth-century reception of his work lets List appear once more as a truly tragic figure.

Stefan Kolev and Joachim Zweynert

See also:

British classical political economy (II); Development economics (III); French classical political economy (II); Historical economics (II); Institutionalism (II); International trade (III); Carl Menger (I); David Ricardo (I); Jean-Baptiste Say (I); Gustav Friedrich von Schmoller (I); Barthelemy-Charles Dunoyer de Segonzac (I); Adam Smith (I); Thorstein Bunde Veblen (I).