But what are these productive forces which constitute the permanent source of a nation’s prosperity and the condition of its progress?
With particular insistence List first of all mentions the moral and political institutions, freedom of thought, freedom of conscience, liberty of the press, trial by jury, publicity of justice, control of administration, and parliamentary government. All these have a stimulating and salutary effect upon labour. He is never weary of recalling to mind the loss of wealth caused by the Revocation of the Edict of Nantes, or by the Spanish Inquisition, which, says he, “had passed sentence of death upon the Spanish navy long ere the English and the Dutch fleets had executed the decree” (p. 88). He unjustly[582] accuses Smith and his school of materialism, and condemns them for neglecting to reckon those infinitely powerful but perhaps less calculable forces.
But of all the productive forces of a nation none, according to List, can equal manufactures, for manufactures develop the moral forces of a nation to a superlative degree. “The spirit of striving for a steady increase in mental and bodily acquirements, of emulation and of liberty, characterise a State devoted to manufactures and commerce.… In a country devoted to mere raw agriculture, dullness of mind, awkwardness of body, obstinate adherence to old notions, customs, methods, and processes, want of culture, of prosperity, and of liberty prevail.”[583] Manufactures permit of a better utilisation of a country’s products than is the case even with agriculture. Its water-power, its winds, its minerals, and its fuel supplies are better husbanded. The presence of manufactures gives a powerful impetus to agriculture, for the agriculturist profits even more than the manufacturer, owing to the high rent, increased profits, and better wages that follow upon an increased demand for agricultural products. The very proximity of manufactures constitutes a kind of permanent market for those agricultural products, a market which neither war nor hostile tariffs can ever affect. It gives rise to varied demands and allows of a variation of cultivation, which results in a regional division of labour. This enables each district to develop along the most advantageous line, whereas in a purely agricultural country each one has to produce for his personal consumption, which means the absence of division of labour and a consequent limitation of production.[584]
Industry for List is not what it was for Smith. For him it is a social force, the creator of capital and of labour, and not the natural result of labour and saving. It deserves introduction even at the expense of a temporary loss, and its justification is that of all liberal institutions, namely, the impetus given to future production. In a beautiful comparison which would deserve a niche in a book of classical economic quotations he writes as follows: “It is true that experience teaches that the wind bears the seed from one region to another, and that thus waste moorlands have been transformed into dense forests; but would it on that account be wise policy for the forester to wait until the wind in the course of ages effects this transformation?”[585] The tariff, apparently, is the only method of raising the wind.
By placing himself at this point of view List is able to defeat the most powerful arguments used by his opponents. All we can say in reply is that manufactures will not produce these effects if they have not already a raison d’ètre in the natural evolution of a nation—that is, if they do not demand too costly a sacrifice. The land on which the settler sows his corn can scarcely be regarded as ready to receive it if it lacks the power to make it grow.
List’s Protectionism, as we may guess from what precedes, possesses original features. It is not a universal remedy which may be indifferently applied to every country at any period or to all its products. It is a particular process which can only be used in certain cases and under certain conditions. Subjoined are some of the characteristic traits of this Protectionism which List himself has neatly described.
(1) The Protectionist system can only be justified when it aims at the industrial education of a nation.[586] It is thus inapplicable to a nation like the English, whose industrial education is already complete. Nor should it be attempted by countries that have neither the aptitude nor the resources necessary for an industrial career. The nations of the tropical zone seem destined to the pursuit of agriculture, while those of the temperate zone are accustomed to engage in many and varied forms of production.[587]
(2) But a further justification is also necessary. It must be shown that the nation’s progress is retarded by the competition of a powerful manufacturing rival which has already advanced farther on the industrial path.[588] “The reason for this is the same as that why a child or a boy in wrestling with a strong man can scarcely be victorious or even offer steady resistance.”[589] This was precisely the case with Germany in her struggle with England. (It is interesting to come across a full account of the process of “dumping” in List’s letters to Ingersoll. “Dumping,” which has received much attention lately in connection with the trust movement, consists in selling at a low price in foreign markets in order to keep up prices in the home market.[590])
(3) Even in that case Protection can be justified “only until that manufacturing Power is strong enough no longer to have any reason to fear foreign competition, and thenceforth only so far as may be necessary for protecting the inland manufacturing power in its very roots.”[591]
(4) Lastly, Protection ought never to be extended to agriculture. The reasons for this exception are that on the one hand agricultural prosperity depends to a great extent upon the progress of manufactures—the protection of the latter indirectly benefits the former—and on the other hand an increase in the price of raw materials or of food would injure industry. Moreover, there exists a natural division which is particularly advantageous to the system of cultivation pursued by each country, a division dependent upon the natural qualities of their soils, which Protection would tend to destroy. This territorial division does not exist for manufactures, “for the pursuit of which every nation in the temperate zone seems to have an equal vocation.”[592]