Transport Liberates the Individual - Karl Bücher's contribution
Arno Mong Daastøl,
University of Maastricht, Department of Public Economics,
P.O.Box.616, NL-6200 Maastricht, The Netherlands.
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Jürgen Backhaus (ed.), Karl Bücher. Theory, History, Anthropology. Non Market Economics,
Marbrug: Metropolis, 2000
Transport Liberates the Individual - Karl Bücher's contribution
Precisely as Friedrich List (List, 1827, 1837 a, 1837 b, 1841) emphasised the role of communication in all his writings, Karl Bücher (Bücher, 1893) points to the crucial role of communication for economic activity and, in particular, for a community’s cultural life and the liberation of the individual.
Bücher's article on transportation is historically descriptive in a categorising way. Essentially, he gives a classificatory historical exposition of transportation. His referenced historical sources are works in German in the period 1855-1915 by E. Curtius, E. Hahn, M. M. v. Weber, R. Bergenhaüser, and Renner. I will give a personal summary of Bücher’s ideas on transport and comment upon and criticise these views along the way. Much of it is translated more or less directly from Bücher’s German text and suffers under my poor abilities to do so. Therefore no part of the text is portrayed as being quotes.
After pointing to the strong interdependency of economics and the transport system he writes that, a number of economic phenomena have been transformed in their essence throughout the historical development. They have taken over entirely new tasks than what seemed natural at the outset, new tasks that nobody thought of originally. This applies also to the transport system. Originally, it did not seem to be of any economic significance, as opposed to its role in modern times. With time, transport has received an immense economic importance that it did not have.
Transport concerns spatial transferral, overcoming hindrance to human satisfaction of needs, in particular concerning the circulation of goods. Four things have to be differentiated.
First, there are transportation objects and the main forms are persons, goods and news (information / intelligence). Secondly, there are transport paths (wege). These are natural (given) and artificial (manmade) as well as wet (waterways like oceans, lakes, rivers and canals) and dry (roads, streets, railways, telegraph- and telephone lines). Thirdly, there are means of transportation that correspond to the type of paths referred to above, wet (ships, riverboats) and dry (messenger, carrier, riding and carriage animals, horse and ox carriages, horse rails, railways, street cars, bicycles, cars, airships, aeroplanes). Fourthly, there are transport forces like men, animals, waterpower, wind, steam and electricity. Sometimes these categories combine into one and the same, like a river - both path and force. Normally some means and forces are restricted to certain paths etc.
There are two categories of transport that are crucial to its development:
Free v. organised transport (“Freien Transportleistungen” v. “Transport-Anstalten”), with the characteristics of being individual and open to everybody at their wish on the one hand (i.e. universal, AMD), and restricted, regulated and periodical (i.e. particular, AMD), on the other hand. Historical experience shows that organised transport has had a far larger and broader influence on the development of trade, even when taking into consideration the most perfectly free transportation forms, like the bicycle, car and aeroplane. The organised transport institutions are local or urban (Örtliche) as Bücher names it (messengers, streetcars, taxies, telephone, tubepost) and regional or as Bücher writes "inter-city" (Zwischen-Örtliche) (messengers, wheel-wagons, post, railways, shipping, telephone, automobiles) and international. The latter types also serve international purposes. Shipping is the only form of transport that is restricted to international transport.
With time, combinations of the various forms of these categories appear; Objects, paths, means and forces; Wet and dry; Free and regulated. This has created a highly specialised differentiation and an accompanying wide scope of possibilities. Within transport there is a richness of forms in excess of any other economic activity and even the most perfect expressions are not able to displace the most imperfect expressions. Therefore they co-exist - like the aeroplane and the donkey.
In the beginning, transportation was not characterised by the economic principle, and this principle has only had limited influence in the origin of transport. Little by little, this principle has always has enabled Man to overcome the fear of new solutions. With the development of a new phenomenon of transport the implications, applicability, and importance of it were seldom noticed, concerning for instance the bicycle, the car, the railroads and the aeroplane. Therefore it is not easy to achieve any perspective of the development of transportation and one cannot hope to command this vast substance through an establishment of a theory of development stages.
A far more important question forces its way to the surface, and that concerns the implications and importance for the prevalent (“damalige”) economy of any individual phenomenon of transportation, like ships for the Greek or roads for the Romans. The exact data of transport in history is hidden to us. But one thing is certain, nowhere are the means of false generalisation and exaggerated modernisation used so unwittingly as in the history of transportation.
With the nature-people (tribal people) transportation is a public activity and besides this type of economy is closed (autarchic). Therefore transportation is only occasionally used for exchange of goods, people and news. Roads will only be found on the best land and seldom take the shortest distance since every hindrance is evaded. The only artificial means of land transportation are primitive bridges or ferries. Only where water itself furnished a path of transportation did nature-people produce means of transportation. Still they were used for fishing, pirating and war and not for transport of persons or news. When used for the latter, news, it was only in the service of public violence: War and conquest. Transport was mainly a political instrument.
Later in ancient time, road transport also had military-administrative purposes as in the Persian Empire, the Roman Empire and the Baghdad Caliphate or religious as in Greece. Roman streets were only used by privates with an occasional Imperial permission. Private news was transported by slaves or later by hired people and animals.
Any trace of such activities is extinct in the early medieval time. Only with the emergence of the state structure do we find the beginnings of organised transport, but even roads used for pilgrimage were primitive. The first signs were organised around the large estates (as in Roman times, AMD) and later with Monasteries and Universities. Many larger estates had a semi-public character but transport was in large limited to the estate. However, weekly town-markets developed local transport to and from the towns. With this taxation of transport emerged as well as messengers, riding animals and ships in service of mayors, estate owners and aristocracy. Transport is about to emerge, get liberated, as an individual activity.
Messaging experienced a break-though in the 14th Century with estate- and town based services also for private purposes. These were irregular and of a handicraft and occasional character. Only later were they established as regular services. From estate based services emerged state messaging services in the 15th Century in the Persian and Roman style for military-administrative purposes. With time private messages were taken along, and at the end of the 16th Century everybody could send their messages with the Royal post.
Transport of persons followed much slower. Finally transport of goods developed as an internal merchant firm activity, first by water and then by land. River based transport was developed in inhabited areas and served educating purposes for the regularity of transport. Land transport of goods was developed in connection with large fairs. Special freight people emerged in the 14th Century in connection with the fairs paid by river and road tariffs.
Only the modern state advanced beyond this level merging the interests of different parts of the countries. It is descriptive that the great Mercantilist, Colbert, laid the foundations of a net of canals and “waterstreets”. Later roads followed. After some time the idea matured that roads were a task of the state. This was favoured from political and military reasons and also from financial reasons (road tariffs). Later one succeeded in understanding that it served the general welfare of the country.
Nevertheless, roads remained in a sorry state until the 19th Century until the invention of better road construction (Mac Adam) in connection with military considerations of the Napoleonic period. Since then complete road systems were constructed everywhere in order to unite the political and industrial parts of the countries.
One did not go beyond, however, the idea of free transport thereby restricting the state’s task to supply roads for everyone. The completion of transport was left to private undertakings. Even shipping was restricted in this way. Postage was an exception.
The large inventions of the 19th Century therefore found an unwilling sentiment with the State. Private undertakings must therefore be thanked for developing railroads, and in many countries also the telegraph and telephone. But the difference was that these demanded an institutional organisation and that only industrial concerns decided their direction. Later nationalisations did not manage to change this. The emergence of the bicycle, car, aeroplane and Zeppelin boded the coming time of free transport.
The development of transport relies on 2 laws of transport: Those of mass and of direction.
1. Law of Mass
Organised transport is only possible with a relatively high amount of transport, in order to reduce costs. In short, costs are inversely proportional to the amount of transport (i.e. economics of scale, AMD). It is the same law that rules industrial production of goods. Bücher then describes how first the utilisation of an investment in transport, such as railroads, legitimise the costs - as in trade or production in general. For every unit transported until the investment costs are covered a traditional means of transport would be cheaper. Above this borderline, for every unit transported, transport of each (unit) becomes cheaper until the medium of transport is fully utilised. Then capacity must be increased, and the above repeats itself.
This goes also for the telegraph, telephone, trams and omnibus. Under these circumstances the structure of needs plays a crucial role. A company has 3 means to fully utilise a means of transportation:
1) Speed – which multiplies transport
2) Cheapness – which makes transport more accessible in wider circles
3) Regularity – makes loss of time less likely for most
Larger utilisation is mainly due to cheaper rates, in postage, telegraph, and trams: Price decides costs.
Without any doubt, the reason for growth of transport is population growth and industrial redirection of people within a country. A result is higher speed and exactness in all social affairs. The most precious good of the human being, time (as F.List said, AMD), is thereby better used and the ability of every individual increases.
Means of transport continue to exist as such, but it is more descriptive of the essence of transport that they receive other tasks and functions with time and adapt to the achievements of transport institutions. The latter take command forcing free types of transport into their service. In addition the law of direction comes into action:
2. Law of Direction
A perfect means of transport attracts transport and determines the direction for this transport - also for nearby towns to certain limits. Needs are thereby concentrated both as goods and in geographical terms. Every new railroad leaves nearby canals and roads empty. Then, however, new transport develops on these paths and in new directions, such as feeding lines for the new types of transport. This combination may be less expensive than alternative free transport. Therefore, the direction of trade and transport is determined by transport services, redirecting old services. This combination promotes decline of the old ways of production and emergence of new branches of production. At the same time transport increases at the end and transit points, and demand higher contributions from the free transport services.
The results of a complete and differentiated transport network are
1) Increased production – in particular of natural resources that could not be utilised before.
2) Lower production costs – due to cheaper supply of raw materials and faster capital circulation.
3) Increased area of goods circulation and connected concentration of needs – which in the end lead to lower production costs.
4) Price equalisation including wages and land rent.
5) Better distribution of population according to geographically distributed employment.
All points above increase the transported amount of information, goods, and persons, which in turn leads to a more perfect transportation system. In general one may say that a well developed and multifarious transportsystem serves the industrial unification, utilisation of natural resources and human powers. It also liberates production from its spatial restrictions and thereby may give the individual a richer and more secure supply of goods. Displacement of one type of transport with another does not always mean that the older is harmed, decreases or disappears. No one knows, one may only say with safety that they depend on each other.
Nevertheless, one would be wrong if one thinks that the effects of transport on economic system are limited. As we have shown it is in essence not at all an economic phenomenon and treating transport as a part of economics has only served to limit the scope of view. Therefore, transport starts not with transport of goods and people. Rather, the early instances serve State purposes.
Transport with natural peoples is alone an instrument of state that serves administration, war, looting, subjection, and sometimes religious purposes. In the first millennia of our time, it had hardly any other character. The first lasting and organised instances of transport in the ancient and medieval time only served public institutions and large estates. General access to transport arrives first with mercantilism and only for transport roads on water and land that were regulated by the Crown. The first transport institution, the post, was reserved for the state. The free economy of the modern time belongs to the transport institutions of the railroad, telegraph, telephone, trams, omnibus and service institutions that establish general access to transport institutions and powers. Precisely in the general access for everyone lies the difference from earlier economic periods.
A history of transport must differentiate between 3 stages (“stufe”). During the first and by far the longest, transport was governmental and clerical and a part of public administration. The second and far shorter, was the time of private transport. The third period belongs to public transport. Bücher lays out the similarity of certain areas of the contemporary world to the first period. In the second stage, transport took place as part of singular economic affair but did not loose total importance to the state. Nevertheless, the social forces became so strong that the state had to retreat. The state now only had the possibility of making private institutions serve its purposes as with nationalisation.
As individual enterprises, transport first succeeded in shipping of the late medieval age and the confined state activities of the mercantilist age but only as free transport. In modern times, private enterprise is also to be found with organised transport and many technical inventions and scientific advances gave opportunities to establish these institutions. Ever more transport liberates itself from other economic activities. Transport that was a part of other activities becomes a function of the complete economic system by itself and creates a large playing field for the private entrepreneurial spirit.
Nationalisation and “city-sation” set in soon, however, from postage, telegraph, telephone, to railroads and trams (and thereby started the third stage). Ever more it becomes a general opinion that in order to work well and be shielded from misuse public ownership is best for organised transport. This opens the door for the two legal laws that succeeded in educating the transport institutions: Duty to transport and equal treatment - concerning all transport contributions of the institutions. Both were valid from the start for the state as well as for the modern period’s nationalised transport. They also spread to private enterprise and gave these a public character.
Bücher then gives some examples of this. Everyone knows, however, that a paying a fee is necessary to use the means of transport. Even state run transport institutions are under the same necessity and even they are organised as private enterprises and follow the same consideration to profitability.
When private transport institutions have become nationalised without having become state or communal property (post, telegraph, railroads) a private user-right has been developed. This economic picture functions as if it was one economic sphere without any special consideration to property rights. These mutual approximations of both types of transport institutions express an affiliation with the former stage of private transport institutions: There are private companies with a public character and state- or communal companies with a private shape. In both have the state tendency of the first stage stepped into the background as concerns their importance for private trade.
The present transport system consists of a multifarious large number of private undertakings and public institutions. With its increasing independence and with universal access it has first of all become an enormous culture shaping power, which so often is praised. Not only has it reshaped company structure of industry, agriculture, handicraft, mining, trade, banking and insurance, it has permeated the whole of human society and let it grow tightly together. This has increased the capacity of every individual, increased his perspective, revolutionised the thought and opinions of people and even their daily living habits, as well as changed the state and the family. Its existence is today the precondition for every individual, it so to say pushes the blood faster through the social body. It is no more isolated. Whether we want to or not, its influence is the foundation of even the smallest utterance of our life. This as well as an increase of every individual’s power that in sum lifts modern society above every former gives an infinite enrichment of the human existence. We find the disruption of transport one of the most painful effects of the last war (WW 1, AMD), and one of the foremost blessings of the new peace must be a free working transport system.
With time the opinion, that formerly concerned road construction in the mercantilist period, has gripped transport institutions: It is seen as a task of the state to spread it all over the country and make every state employee accessible. The increased financial needs after the war should contribute to this in order to make this (the transport system, AMD) contribute to a far wider income to the state, as before. No one should overlook the fact that the development so far concerning unification of world postage and of the telegraph has favoured the capitalist transport interests, and their telephone and telegraph tariffs only to a small degree fulfil the demands of justice. No reason exists why some classes should be favoured at the expense of the whole. Therefore, the transport system should in the future consciously be transferred back to its origin and win new importance for the state in quite new ways.
Also publication of news belongs to the realm of transport. The combination of public news with private interests in the publishing business is generally damaging. A cure is only possible though a separation of the advertisement business from the editorial publications of the news press. Only thereby can one of our most important cultural institutions become sounder. The advertisement business must become a public affair and then the discussion of matter of public interest can as earlier be left to the private business. As long as they are united there can be no honest talk of freedom of the press.
Viewed as a transport institution, newspapers are similar to the post concerning publication of news of general interest, which it originally served. But unlike the post it is not directed to an individual receiver but instead to an unlimited circle of receivers (the public). If the advertisement business became a public concern and if the editorial content of the newspaper was reserved even more for the private establishments, then the public institutions for private intelligence and private establishments would serve publication of public concerns. Then, hardly anyone would understand anymore that both instances of news publication once were united with each other.
3. Comments to Bücher’s text
First a small philosophical note. Bücher claims that transport concerns spatial transferral, overcoming hindrance to human satisfaction of needs, in particular concerning the circulation of goods. Then we may think of transport as the special instrument to overcome the limitations connected to the physical nature of man. We may in fact thereby approach more perfectly the spiritual nature of man, by communicating instantly over large distances. In principle, time travel and de- / re-materialisation would be the ultimate extensions of this development. By approaching perfect information through the means of communication we may also be said to approach more perfectly the spiritual nature of man.
Bücher’s angle is a descriptive view mainly of Europe and seems to be less reliable on ancient Middle East and Asia. He writes that transport is such a complicated matter that any stage theory of development is likely to fail. Still he establishes a stage theory with 3 levels:
1) Ancient: Public: State and church: military administrative (intelligence) and religious.
2) Medieval: Private enterprises: Estates, monasteries, and universities.
3) Modern times: Public: State mercantilism of the 14th and 15th Centuries with strong elements of stage 2 in that enterprises are run as if they were private.
As any model trying to describe reality this one is likely to fail. Early records, even of Norse trade (The Norwegian Commonwealth), show that private trade by ship dominated until around 1300 at which time the state nationalised and severely regulated the private business and trade. A second example: Charlemagne focused on transport in the 8th Century, the brightest project being the canal between Europe’s two grandest rivers: the Rhine and the Danube.
Bücher claims that the principle of economy within the sphere of transportation emerged late in the 19th century. But, some evidence does not suit this model. For instance, the Norse tradesmen were ousted in the 14th century on the London fur market by cheaper Russian fur from the Baltic. Also Norse ships were ousted by a more efficient ship for trading, the Hanse “kogg” ship, in the 13th Century.
Still, his stage theory may give us what a model usually does give, a rudimentary heuristic structure through which we may organise our ideas of the past. Nevertheless, somewhat lacking is references to the general history of Europe in that he does not relate the intermediary stage 2 to the temporary dissolution of the great empires before the erection of modern nation states. A part from references to the Baghdad Caliphate, he does not refer to the temporary European empires in the mean time – of Charlemagne and Constantinople for instance.
Bücher claims that, historical experience shows that organised transport has had a far larger and broader influence on the development of trade. He does not give any reason for this except for his pointing to “Historical experience shows”.
He also claims that, shipping is the only form of transport that is restricted to international transport. He is apparently speaking of German circumstances.
In this text Bücher shows understanding of several crucial sides to the role of transport but with the limited space he gives to them his exposition is of course somewhat lacking. He does mention that investment into transport increases production and decreases production costs. He thereby hints at the role of transport investments as a productivity-enhancing and price-reducing (deflationary) locomotive for general investment. This induces other investment into production of heavy goods and consumption goods, thereby increasing employment, wages, and widening the tax revenue base.
This concern the two focuses of transport which crudely put may categorised as follows:
1) In Europe to meet demand.
2) In USA to create demand.
One point is severely lacking and that is his treatment of transport as if it was similar to any other kind of business undertaking in one important respect. He does not seem to have an understanding of transport as a public good as concentrated costs and dispersed benefits resulting in a sub-optimal investment level from the social point of view. There is no mentioning of external effects, whether positive or negative (such as knowledge enhancement v. pollution), that are economically important. Rather, he seems to focus more on the cultural aspect of transport, which he explicitly finds to be of far greater importance than the economic side to transport. These are indeed external effect of great importance but he does not pull these into an economic argument. He leaves these in the cultural sphere, so to speak.
Furthermore, he gives no indication that he is aware of the inclination of transport to become natural monopolies: That the share size of the investments in many instances rule out private initiatives - and if possible may establish private monopolies and accompanying pricing characteristics.
In short, he shows no understanding of transport in this regard as different from private goods, and by making the same demand of private profitability he shows no understanding of the difference between private business economics and national economics - as Roscher and List surely did. This is in fact the main core of List’s criticism against Adam Smith. Bücher discusses these phenomena from an organisational point of view and not from an economic point of view.
Roscher claims in this regard that (§8), that value in exchange only has an interest from the point of view of the private business man and no interest from the national point of view (§10). Roscher’s view of the different origins of different economic traditions is revealing as it indicates much of the Italian-English’ tradition preoccupation with monetary phenomena such as prices – as opposed to “real phenomena” as opposed to the German preoccupation with law and administrative taxation:
§19:"Political Economy in Germany developed out of the science of law and the cameralistic sciences, while in England and Italy it had its origin chiefly in the study of questions of finance and foreign commerce."
List claims that Smith's and Cooper's conscious confusion of private and public interests is a reason for his downplaying of the role of public regulation and therefore the role of the nation. But there are often contrasting interests, List claims,
“…Individuals may become rich by hazardous bank schemes, but the public may loose by them.
Without interference of national power there is no security, no faith in coined money, in measures and weights... no patents, no copyright, no canals and railroads, no national road. Industry entirely left to itself, would soon fall to ruin, and a nation letting everything alone would commit suicide. (* 1827 a, Letter VI, p.87, Cf. 1841, pp.166)
In a thousand cases the power of the State is compelled to impose restrictions on private industry. (* 1841, p. 166)
“… For similar reasons the State is not merely justified in imposing, but bound to impose, certain regulations and restrictions on commerce (which is in itself harmless) for the best interests of the nation.” (* 1841, p.167)
List points out in his preface to Das Nationale System, that:
"There are consequently one cosmopolitical and one Political Economy, one theory of value in exchange and one theory of productive forces, doctrines which, very different from each other, must be developed independently." (* 1841, German ed. p.66)
Concerning communication and innovation, they have in common that they are perhaps the most important types of public goods that distribute their benefits widely throughout the economies, both nationally and internationally. They also work mutually reinforcing each other and this is also true for also for the machine tool industry. As communications, it distributes innovations throughout the economies. Innovative transport technology, as with the steam-powered locomotive at List's time, combines communication and innovation and thereby plays an immense productivity-increasing role. England showed the way List claims,
“England gave the civilised world the first complete national network of
highways and canals and so showed how truly remarkable are the results of constructing an efficient transport system. Such a system of communications vigorously stimulates all the productive powers of the nation. … England has produced new sources of energy, new machines, and new manufacturing processes which have greatly increased the efficiency of transport facilities and the output of labour.” (* 1837 a, pp.136-137)
List comments his personal experience with construction of the first railroad in the US such:
“Only now did I recognise the reciprocal relationship which exists between manufacturing power and the national system of transportation, and that the one can never develop to its fullest without the other.” (* 1841, § 22)
Neither does Bücher mention the fact that transport investments as well as the size of the market promote division of labour, but perhaps this is too obvious for him to mention?
Roscher, however, is explicit when he repeats the claims of A.Smith but goes further by focusing on the means of transport:
§60: "But it is the extent of the market especially which determines the limits of the division of labor; for there is a direct and necessary relation between the division of labor and the exchange of its surplus. Hence, the division of labor may be carried farthest in the case of those products which are most easily transported from place to place, and which at the same time, possess the utility that is most widely recognized. The smallness of the market may depend upon the scantiness of the population, or upon its scattered condition; ... upon their smaller ability to pay, or upon the bad means of communication at their disposal. ... The real wonders produced by the division of labor and the employment of machinery we must look for in the manufacture of the cheapest and commonest of commodities."
§ 61: "Whoever, therefore, would increase the division of labor among the people, first of all, extend their market; and this is done most efficiently by improving the means of communication."
Roscher is implicit on the question of population on many occasions. He often reflects on the different characteristics of lower and higher cultures, civilizations and finds that a higher standing civilizations has developed a higher division of labour. This will, as mentioned, only be allowed by a larger economic market that again is established by a more effective infrastructure especially concerning transportation technology.
Bücher claims that population growth and industrial redirection of people is the reason for growth of transport. This is similar to Roscher’s view (Roscher, 1877) of the prime mover in economics. But this may be mistaking the result for the cause. There are many factors that promote population growth - such as increased technological knowledge for instance in the field of transport. And then again an elevated cultural standard may be the cause of this technological lift. And ultimately these factors and many more are all interconnected and it is impossible to tell which is the hen and which is the egg.
Bücher’s exposition of the universalisation and socialisation of transport to the benefit of the freedom of every individual is close to Friedrich List’s claim that transport would serve the liberty of the individual citizen. The purpose of the huge investments in infrastructure was in some ways similar to the purpose of the city-states itself. As List notices, infrastructure allowed for greater communication between citizens, which implied less possibility for political control of the individual and therefore greater political freedom. Only in densely populated areas, a critical mass of public opinion could acquire enough strength to develop into democracy. (List, 1837 b, p. 131)
Bücher seems unaware of the phenomenon that transport technology redefines the optimum size of a nation – or geographical-administrative unit as List is. The nation-building aspect of the European Union comes close to this phenomenon today.
Neither does he mention the strategic role of modern transport such as List (List, 1837 b, p. 135 and Earle, 1944) and Mackinder (Mackinder, 1904) does concerning Germany and Russia, namely that the invention of efficient land transport redefined the power balance between land states and sea states creating fortresses out of the former battlegrounds of Europe.
Bücher writes nothing of a very crucial factor in European transport history, namely simulation of population growth and population density through transport. In the Mercantilist conception of economics there was an increasing returns to the size of nations. Whereas city-states had a population density that created economics of scale and diversity that promoted innovation nation-states did not. Recreating and extending this urban advantage to the whole nation-state was a central challenge to Mercantilist rulers. Both List and Immanuel Wallerstein (Wallerstein, 1978) point out that while England achieved this national unity, Holland did not develop beyond a collection of city-states. This was a main reason for Holland’s loss of leadership.
Early municipal (city-state) mercantilists observed the beneficial effects of denser populations clustered in towns giving rise to productive synergetic effects through differentiation, personal and political freedom as well as economics of scale. Having a large population was therefore regarded as a great benefit to any nation. Later, state mercantilists tried to emulate the same positive mechanisms on a national scale by state initiated construction of various means of communication and transportation. Mercantilist politicians and economists tried ‘artificially’ to reap the observed benefits of the cities of the cities’ high population densities - in geographical areas with sparser population densities.
List was fairly explicit and argued that nation-building was generally a continuation of the principles of city-building,
“The agricultural-manufacturing-commercial State is like a city which spreads over a whole kingdom... “ (* 1841, p. 339)
These city-states mostly functioned as enclave economies, which functioned relatively, isolated from the hinterland. The first volume of Heckscher’s (Heckscher, 1931) Mercantilism is appropriately entitled ‘Mercantilism as a Unifying System’ following Gustav Schmoller’s first focus on this side to mercantilism (Schmoller, (1884). In its pursuit of power and wealth, state mercantilism fused the monarchic and municipal mercantilist traditions. This alliance between the King and the middle class - opposed to the feudal aristocracy - created a powerful instrument: The Nation-State.
At the same time the expansion of markets through improved communication allowed for greater possibility of economics of scale, higher diversification and production for niche markets and higher production for a monetary market - as opposed to the barter market. The economies of scale allowed for improved technology and made it possible for a higher percentage of the population to engage in new activities, again contributing to diversity, division of labour and economics of scale in a positive feed back circle. The mercantilists’ promotion of manufacturing also intended to emulate these positive effects of the city modelled as a huge productive machinery: the factory.
In sparsely populated areas a policy of corridor development was pursued, similar to the old silk-road caravan tracks between the Roman and Chinese empires. By artificially creating dense populations in areas along the transport routes the construction of these arteries was made economically more worthwhile. Additionally, this strategy opened up marginal areas for development. These social aspects go unnoticed with Bücher - a part from the comment concerning transport that “it has permeated the whole of society and let it grow tightly together”.
As with List, the negative ecological aspect of increased transport is neither mentioned. He seems unaware that that there are cycles of infrastructure investment and that certain types of infrastructure investment promote certain kinds of economic activities. Nevertheless, he does observe that new ways of transport promote new branches of industry and lead to a decline in other branches.
4. Summing up
I would hold the prime feature of Bücher’s contribution to be precisely the (rudimentary) 3 stages, his exposition of the universalisation and socialisation of transport benefiting of the freedom of every individual both concerning the material and immaterial aspects.
Another prominent German thinker, author and propagandist, especially on the role of transport, Friedrich List, has many insights to offer that are not covered by Bücher. On the other hand this is visa versa, so Bücher and List complement each other very well in several ways. For instance: Bücher is descriptive and List advocates remedies.
Bücher, Karl. Die Entstehung der Volkswirtschaft. 7th ed. 1922, Tübingen: Verlag der H.Laupp’schen Buchhandlung, Book II, Chapter VII, pp.195-218: “Der Transport”, 1893
Earle, Edward Mead. (ed. with the coll. of Gordon A.Craig and Felix Gilbert). Makers of Modern Strategy. Military Thought from Machiavelli to Hitler. Princeton: Princeton Univerity Press. (1943), 1944
List, Friedrich. Outlines of American Political Economy. Newly edited and published with a parallel translation in German, Wiesbaden: Dr.Böttiger Verlag. Edited by W.H.Henderson, 1827 a and 1997
List, Friedrich. The Natural System of Political Economy. Totowa, N.J.: Frank Cass. Edited by Michael Liebig, 1837 a and 1983
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