Friedrich List - View of Britain and World Trade

View of Britain and World Trade

While List once had urged Germany to join other 'manufacturing nations of the second rank' to check Britain's 'insular supremacy', by 1841 he considered that the United States and Russia would become the most powerful countries—a view expressed by Alexis de Tocqueville the previous year. List hoped to persuade political leaders in England to co-operate with Germany to ward off this danger. His proposal was perhaps not so far-fetched as might appear at first sight. In 1844, the writer of an article in a leading review had declared that 'in every point of view, whether politically or commercially, we can have no better alliance than that of the German nation, spreading as it does, its 42 millions of souls without interruption over the surface of central Europe'.

The practical conclusion which List drew for Germany was that it needed for its economic progress an extended and conveniently bounded territory reaching to the seacoast both on north and south, and a vigorous expansion of manufacture and trade, 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 favorable 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.

List considered that Napoleon's 'Continental System', aimed just at damaging Britain during a bitter long-term war, had in fact been quite good for German industry. This was the direct opposite of what was believed by the followers of Adam Smith. As List put it:

I perceived that the popular theory took no account of nations, but simply of the entire human race on the one hand, or of the single individual 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… 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 cosmopolitical and political economy.

List's argument was that Germany should follow actual English practice rather than the abstractions of Smith's doctrines:

Had the English left everything to itself—'Laissez faire, laissez aller', as the popular economical school recommends—the merchants of the Steelyard would be still carrying on their trade in London, the Belgians would be still manufacturing cloth for the English, England would have still continued to be the sheep-farm of the Hansards, just as Portugal became the vineyard of England, and has remained so till our days, owing to the stratagem of a cunning diplomatist. Indeed, it is more than probable that without her commercial policy England would never have attained to such a large measure of municipal and individual freedom as she now possesses, for such freedom is the daughter of industry and wealth.