A German economist, journalist, politician, and promoter, whose arguments in favor of protective tariffs and state-sponsored economic development and against the free-trade doctrines of Adam Smith and David Ricardo, exercised great influence in Germany and the United States.
Born in Reutlingen, Georg Friedrich List pursued a highly successful career in the Württemberg civil service, which culminated in a professorship at the University of Tübingen. His activities as a liberal journalist and politician led to his dismissal from state service in 1818. He became the leader of a national organization lobbying the German states to form a customs union (Zollverein). He was charged in 1822 with political offenses, fled abroad, but returned to Württemberg for a brief imprisonment, and immigrated to the United States in 1825. While in the United States, List participated in railroad and other development projects and took part in the debates over American tariff policy. After returning to Germany in 1830, List worked as a freelance journalist promoting railway construction, the expansion of the Zollverein, and German political unification. His book Das Nationale System der politischen Ökonomie (1841) was the most important presentation of economic protectionism published in the first half of the nineteenth century. It was read widely in Germany and the United States (where its first English edition appeared in 1856). List committed suicide in Kufstein, in the Austrian Alps, in 1846.
List is an extremely important figure in the history of German economics, whose work influenced national policy from the time of his death until the end of the twentieth century. More clearly than anyone else in his time, he articulated the view that development was the central feature of modern economic life, that the process of economic development could not be entirely deduced from the analysis of free markets tending toward equilibrium as the classical economists assumed, and that successful economic development required active state participation in the economy, not simply an absence of state interference. He saw manufacturing as the key to development and tended to subordinate trade to considerations of industrial expansion, but trade nevertheless played an important role in his thinking. List agreed with the classical economists that restrictions on the free exchange of goods through trade within a marketing area created a less-than-optimal economic situation and retarded capital formation, investment, and expansion. He pointed out, however, that under most real circumstances, differences in current industrial capacity between countries and regions meant that, under conditions of unrestricted trade, areas with high levels of manufacturing capacity, like Britain in the first half of the nineteenth century, would always be able to dominate the markets of areas with less capacity such as Germany and the United States.
The assumption that industrial expansion was the core of economic development meant that less industrialized countries might never be able to create competitive manufacturing sectors and would therefore be condemned to economic underdevelopment as well as to political subordination. The solution to the problem, List argued, was to mark off large geographical areas, the boundaries of which incorporated most of the exchanges that affected most people within the areas. Inside the boundaries, free exchange was to be maintained and state resources were to be used to support the private development of manufacturing capacity and markets for industrial products. At the boundaries, state power was to be employed, mainly through the instrument of tariffs, to impose limits on the entry of manufactured goods from the outside and to ensure that the goods that were imported sold at prices with which domestic producers could compete.
This situation could be created, according to List, either through the establishment of large nation-states such as the United States that would pursue protectionist policies, or through the creation of associations among smaller states in economically coherent regions whose members would agree to a common economic and tariff policy. It was the latter course that List advocated for Germany, through the mechanism of an expanded Zollverein. That the German states might follow the former pattern, that is, unite into a single federal entity like the United States, was something that he contemplated, but it was not the main thrust of his economic writing. Because of his advocacy of regional economic unions, List is considered to be one of the forebears of the thinking that produced the European Community and other regional economic associations in modern times.
Woodruff D. Smith
See also: Free Trade; Ricardo, David; Smith, Adam.
Henderson, W.O. Friedrich List: Economist and Visionary 1789–1846. London: Frank Cass, 1983.