Friedrich List (1789-1846) was a German economist who spent several years in the United States in the late 1820s, during which time he both studied and further contributed to the American System of economic thought. In his polemics against the British imperial free trade system, which was crushing industry in countries throughout the world, List argued that the key to economic prosperity was not to “gain matter, in exchanging matter for matter” (material gain), but to “gain productive and political power.” The productive powers of a nation depend on three kinds of capital, he wrote—the capital of nature, the capital of mind, and the capital of productive matter. Translated into modern terminology, these categories are basically the equivalent of 1) available natural resources; 2) society’s organization of the productive process, including hard and soft infrastructure and culture; and 3) the technology being used to produce.
In his National System of Political Economy, published in 1841, List systematically developed the concept of an economy based on the nation state, as opposed to what he called the “private economy” (the household or individual enterprise) or the “cosmopolitical economy (the world taken as if a unified whole).” It is through the nation state that conditions for increasing the “power of producing wealth” (which List says is much more important than wealth itself) are created. He writes: “The present state of the nations is the result of the accumulation of all discoveries, inventions, improvements, perfections, and exertions of all generations which have lived before us; they form the mental capital of the present human race, and every separate nation is productive only in the proportion in which it has known how to appropriate these attainments of former generations and to increase them…”
List thus has taken up Hamilton’s concept of the productive powers of labor, and made even more explicit the powers of mind which determine them.
List is famous for his development of the Customs Union in Germany, which contributed to the unification of the German nation so that its people could defend and develop their society from the depredations of the British Empire. Less well known is his role is helping establish the Reading Railroad in Pennsylvania, as a boon to the nascent coal industry at that time.
List’s writings were widely translated and read around the world; he thus played a major role in spreading the ideas of the American System internationally.
