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While List was certainly important, his ideas were mostly associated with the first generation of the american school. the second generation (henry carey and erasmus peshine smith among others) went far beyond him.

"Smith complained (in Greeley’s New York Tribune, April 12, 1856) that the book was too historical and empirical. In terms of actual economic theory, “all he has done is to substitute the ‘Theory of Productive Force’ for that of Values.” To be sure, Smith granted, “He shows that the European Economists overlook the truth that ‘the power of creating wealth is vastly more important than wealth itself. . . . Their system ignores what may be called virtual or latent wealth, and treats nations as if they were actually exerting the whole productive power of which they are capable; and the only question was how their forces should be directed. The moment this idea is introduced, their theory explodes.”"


read Erasmus Pehine Smith's manual of political economy. it's a great book.

List was first and foremost a German nationalist who wanted a unified Germany. His efforts succeeded in creating a free trade zone among the German states that eventually did lead to unification.

Interesting. Aside from the infant industry argument, do I detect the national defence argument too?

Apparently Mr. List was also big on the need to acquire colonies and a fleet to protect them.

That's German nationalism as it was during the 19th Century. National unification, national development, a big army, colonies and a navy.

The German nationalists achieved all of these things by 1914 and then the cataclysm came.

Though his ideas do fit current popular Chinese sentiment. China has always been one of the key centres of human civilization and activity. But by 1900 they had been overtaken by Europe.

The short story is that China entered a period of economic and cultural isolation around 1600 and this led to technological stagnation. Gunboat diplomacy and humiliating trade and legal concessions were the result of this.

So China's rise and the policies that fuel it are a reaction to this stagnation. "Make China Strong" sells in China.

On a strong navy and colonies for Germany, the Second Reich's High Seas Fleet was possibly the most disastrous strategic investment in history. Not big enough to defeat the Royal Navy but large enough to turn Britain into an enemy. Prussian success had turned on British alliance (or at least neutrality) since the Seven Year's War. Taking on Anglo-America doomed Germany twice.

Of course, 1914 was a great year for strategic errors. Enver Pasha and the Young Turks declaring war on the British Empire which had guaranteed the Ottoman Empire's existence since 1798 was probably the largest unforced strategic error. But Austria-Hungary deciding to militarily crush Serbia, who promptly crushingly defeated the Austro-Hungarian invasion, was a bit of a failure too.

On List and China, Ha-Joon Chang would probably count as a modern equivalent to List. Making neo-mercantilism "work" seems to rely on exaggerating the importance of trade policy, ignoring large numbers of failures and misreading what was significant about the selected "successes". Having polities which were "commerce friendly" to extent of paying serious attention to what one's commercial sector wanted was sufficiently historically unusual to provide significant benefits even if some policies worked better than others.

The English did not embrace free-trade with the end of the Corn Laws, those were goods they had comparative advantage in and constituted a trivial portion of their tariff revenue. Read John Nye's "War, Wine and Taxes". Or watch this episode of bloggingheads:

My impression is that the ghost of Friedrich List is very much alive in his native Germany. Intriguingly, there is a reading of the imposition of Bavarian Beer Purity law on the rest of Germany following unification as a subtly protectionist measure. The beer market in the country still bears the marks of this policy: imports, even from nearby Belgium, are hard to come by. I blame List, fairly or not.

Re: English free trade.

Douglass Irwin takes Nye's argument to the chopping block.

England and Latin America were NOT protectionist in late 1800's: they raised tariffs on goods with a high inealasticity of demand such as imported liquor and tobacco products, as well as coffee and raw sugar in order to raise revenue. The goal of these tariffs was NOT to develop coffee plantations in Birmingham or vineyards in Scotland. They also sought to equalize excie duties across domestic and imported liquor: otherwise everyone would have dropped domestic liquor for imports and the government wouldn't have raised any revenue from its alcohol taxes.

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