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Friedrich List (1789-1846)
by Arno Mong Daastøl
Department of Public Economics, University of Maastricht
Private: Utsiktsveien 34, N-1410 Kolbotn, Norway
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This entry article will be published in:
The Encyclopedia of Law and Society, 2006
Edited by David S. Clark,
Maynard & Bertha Wilson Professor
Willamette University College of Law, USA
Friedrich List (1789-1846)
by Arno Mong Daastoel
(section headlines added for overview)
‘Every law, every public regulation has a strengthening or weakening effect on production or on consumption or on the productive forces’ (List, 1841, p. 307).
Friedrich List is known as a proponent of a trade protectionism and railroads. He was an early empirical critic of the Classical School of Economics. His strategy for “freedom and national unity” shaped the German Zollverein; Bismarck’s unification of Germany; and indirectly the European Union, which List repeatedly proposed.
List’s insights and method qualifies him as a noteworthy pioneer of Historical Jurisprudence; Law and Economics; the Historical School; Institutional Economics; and Development Economics.
List was educated and practised within the legal and law making system until he became a full time propagandist for improved infrastructure, including legal- and administrative reform.
The roots of List’s approach to economics and opposition to the school of Adam Smith, can only be understood when he is positioned in the tradition of German idealism, or neo-humanism. German idealism had remained loyal to its Renaissance roots and therefore differed fundamentally from the lion's share of the Anglo-French economic tradition, which was based on the materialistic Enlightenment with its hedonism and scepticism. The practical outcome of these two opposed traditions was dramatically different.
Lists’s goal was global moral refinement by promotion of political and religious freedom, welfare, security and stability and a balanced business life.
“liberty and civilisation have everywhere and at all times emanated from towns…“ (List, 1841, p. 204)
He argued that urbanisation produces tolerance, liberty, justice, democracy, innovation, entrepreneurship and industrialisation, which promotes intelligence, accuracy, diligence, wealth, and vice versa. Furthermore,
“Manufactories and manufactures are the mothers and children of municipal liberty, of intelligence, of the arts and sciences, of internal and external commerce, of navigation and improvements in transport, of civilisation and political power.” …(List, 1841, p. 140)
List comparative historical method focused on the immaterial and institutional (often legal) foundations of economics and civilization. Adam Smith confused causes and effects and overlooked long term effects and the role of institutions, such as the nation state. Smith’s materialist generalisations concealed crucial differences that made differentiated legal and regulatory interventions necessary, e.g. monetary versus non-monetary factors of production; material versus immaterial factors of production; private (often merchant) interests versus public interests; commodities versus refined goods (with increased learning, know-how and economics of scale); and different stages of national development.
List’s primary practical tool is reform of the legal and administrative system, invoking incentives for a moral and efficient economic system, and therefore investment in education, science, communication / transport, administration, manufacturing and agriculture. Justice would serve efficiency, and vice versa. Injustice was a major reason for existing economic problems and inefficiency, e.g. slavery. To restrict the undemocratic arbitrariness and excesses of the bureaucracy, law should have precedence over regulation, and the jury system, “one jewel out of the treasure house of freedom”, should have precedence over judges. A federation of nations would mean that “decisions of law can be invoked in the place of military force”, being particularly beneficial for the smaller nations. Similarly a world trade congress should tame the arrogance of the stronger nations.
“The highest aim of rational politics … the uniting of all nations under a common law of right, …” (List, 1841, p. 410).
List agreed with Smith on the desirability of global free trade but instant free trade would lead to a monopoly under the strongest. Less developed nations had to lift themselves up to provide real competition and global efficiency, gradually correcting global market imperfections. Agricultural nations will benefit from free trade, developing nations from limited protection, industrial nations from free trade, and similar nations benefit most from mutual trade. During the protective stage, temporarily, domestic goods may be more expensive than imports, but “The nation must sacrifice … some present advantages in order to insure to itself future ones.”
Pragmatic trade legislation should protect against international business crises, and promote stability, domestic competition and productive know-how, using tariffs, export subsidies, preferential interest rates, state credit, as well as patents, temporary monopolies and other property rights. Smaller nations should counter monopolies and inefficiency by creating larger markets by ‘enlarging’ the infrastructure, legally by customs unions and physically by innovative communications, in List’s time the telegraph, steam ships and railroads.
Daastoel, Arno Mong. (1999). Friedrich List, in The Elgar Companion to Law and Economics, Cheltenham (USA): Edgar Elgar, pp. 375-392, 2nd edition 2005
List, Friedrich (1841), Das Nationale System der politischen Oekonomie, Vierte Auslage, Jena: Verlag von Gustav Fisher, 1922; translated into English as The National System of Political Economy, Publishers, Fairfield NJ: Kelley, 1991. (Reprint of the first English translation and edition; London, 1985, Longman’s Green & Co., reprinted 1904).
List, Friedrich (1842), Die Ackerverfassung, die Zwergwirtschaft und die Auswanderung. Reprinted in Werke, 1927–36, vol. 5, pp. 418–547 (English translation: Agricultural constitution, small business and emigration)
List, Friedrich (1926), Grundriss des Römischen Rechts; nebst Übersicht über das Eherecht nach dem Codex juris canonici, Gießen: Roth, reprint 1962: Baden-Baden: Verlag für Angewandte Wissenschaften.