History of Economic Thought Extra Credit, Essays (university) of History of Economic Thought

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A Brief History, and my

Thoughts on Friedrich List

By: Tanner C. Behr

Class: The History of Economic Thought

Professor: Birikorang Okraku

Class Time: 6pm-8pm

Friedrich List was one of the forefathers of the German Historical School. He was nationalist/romantic critic who was born in Reutlingen as the son of a tanner. At age 17 he became a clerk at Tubingen where he joined the school. He was appointed a professor of administration and politics of Tubingen University. His views were considered too liberal because List suggested certain reforms in the administration. Among these views was: his criticizing of the government for adopting free import policies, promoting a strong political and commercial union of The German States, the favoring of the abolition of tolls on roads in Germany, the favoring of strong ownership of industries, the abolition of property taxes, the favored trail by jury, favored the reduction of civil service officers, and favored single direct income tax to meet the expenses of government. The Government found these ideas to be treason and was imprisoned. Afterwards he moved to the United States, in Pennsylvania, as a farmer, a business person, and a promoter. He then moved back to Germany and killed himself in 1846. Before his tragic death, Friedrich List published a book in 1841 “The National System of Political Economy. Within his book and his own thoughts, Friedrich List explained the following thoughts which he believed had to be done: Economic unification and economic nationalism of Germany should go through protection, Free trade should run through Germany, high tariffs against imports of manufactured goods to protect newly emerging domestic industries (in todays world this would be the

lead to the regular supply and uninterrupted flow of goods and services. He believed that forces to simulate future production of a nation include the preservation of morals and social institutions. This preservation of morals and social institutions include: Liberty, freedom of thought and expression, jury by trial, freedom of conscience, Christian religion, invention of money and abolition of slavery. To List, there were many important factors of protection. These factors were: That protection should never be granted agriculture because it would increase food prices. This would lead to a higher cost of living and higher wages. This would be detrimental to the growth of industries. Protection should be adopted only when a nation cannot compete with well-established industries of other countries. After they have fully developed protection should give way to competition. Protection is justified only when it is adopted to provide industrial education to a country so that the economy may develop. Protection is or those countries which have the necessary resources and whose people have the aptitude for individual activities. Production is suitable for countries lying in the temperate zone. Protection should not be granted to all branches of industry to the same extent. Finally, List had a theory of Nationality. As a part of it, Friedrich rejected the idea of cosmopolitanism of the classicists. All individuals did not belong to one nation. Individuals belong to different nations with divergent views on economic and political matters. His economics which developed from this were based on

nations, and differed from the doctrines of individual economics and cosmopolitan economics by Adam Smith. This was stemmed from how an individual promotes his own personal interests but the state fosters the welfare of all its citizens. An individual may prosper from actions which harm the interest of a nation. Activities beneficial to society may injure the interest of certain individuals. Canals and railroads may do good to a nation but waggoneers may complain about this improvement. But what is good for a state might be harmful to an individual. What is the best way to make a country rich? Should you adopt a policy of free trade? Or is protectionism and economic nationalism the better way? This was the debate which List fought. His plot against Mercantilism and his fight against what others said reigned supreme to the previous economic thoughts, and was needed in its time. The contributions which List brought to the world of economics were invaluable.