It does not seem that they were. Neither of the two countries which have remained faithful to a thoroughgoing Protection any longer needs industrial education. Both of them have long since arrived at that complex state which, according to List, is necessary for the full development of their civilisation and the expansion of their power. Germany and the United States have no longer any cause to fear England. Their commercial fleets are numerous, their warships powerful, and their empires are every day expanding. Were he to return to this world to-day, List, who so energetically emphasised the relative value of the various commercial systems, and the necessity of adapting one’s method to the changing conditions of the times and the character of the nation, but always laid such stress upon the essentially temporary character of the tariffs raised, would perhaps find himself ranged on the side of those who demand a lowering of those barriers in the interest of a more liberal expansion of productive forces. Has he himself not declared that “in a few years the civilised nations of the world, through the perfection of the means of transport, through the influence of material and intellectual ties, will be as united, nay, even more closely knit together, than were the counties of England a hundred years ago”?[599] Even the profound changes in the international economic situation during the last sixty years fail to supply a serious justification for the Protectionist policy of the great commercial nations, and the essential traits of this new régime differ toto cælo from the outlines supplied by List. Far from allowing agriculture to develop naturally, there has arisen the cry for some protection for the farmer, which has served as a pretext for a general reinforcement of tariffs in a great number of cases, notably in France and Germany. The competition of American corn has hindered European agriculture from benefiting by the advancement of industry as List had predicted. Modern tariffs, involving as they do the taxation of both agricultural and industrial products, imply a conception of Protection entirely different from List’s. He would have confined Protection to the most important branches of national production—to those industries from which the other and secondary branches receive their supplies. Only on this ground would he have justified exceptional treatment.[600] It is an essentially vigorous conception, and what he sought of Protection was an energetic stimulant and an agent of progress. But a tariff which indifferently protects every enterprise, which no longer distinguishes between the fertilising and the fertilised industries, and increases all prices at the same time, can have only one effect—a loss for one producer and a gain for another. Their relative positions remain intact. It is no longer a means of stimulating productive energy; it is merely a general instrument of defence against foreign competition, and is essentially conservative and timorous.
To speak the truth, tariff duties are never of the nature of an application of economic doctrines. They are the results of a compromise between powerful interests which often enough have nothing in common with the general interest, but are determined by purely political, financial, or electoral considerations. Hence it is futile to hope for a trace of List’s doctrines in the Protective tariffs actually in operation. His influence, if indeed it is perceptible anywhere, must be sought amid the subsidiary doctrines which uphold them.
The only complete exposition of Protectionism that has been given us since List’s is that of Carey,[601] the American economist. Carey was at first a Free Trader, but in 1858 became a Protectionist, and his ideas, which were expounded in his great work The Principles of Social Science, published in 1858-59, bear a striking resemblance to those of his German predecessor.
Carey, like List, directs his attack against the industrial pre-eminence of England, and substitutes for the ideal of international division of labour the ideal of independent nationality, each nation devoting itself to all branches of economic activity, and thus evolving its own individuality. According to him, Free Trade tends to “establish one single factory for the whole world, whither all the raw produce has to be sent whatever be the cost of transport.”[602] The effect of this system is to hinder or retard the progress of all nations for the sake of this one. But a society waxes wealthy and strong only in proportion as it helps in the development of a number of productive associations wherein various kinds of employments are being pursued, which increase the demand for mutual services and aid one another by their very proximity. Such associations alone are capable of developing the latent faculties of man[603] and of increasing his hold upon nature. These two traits help to define economic progress. Under a slightly different form we have a picture of the normal nation or the complex State so dear to the heart of Friedrich List—an ideal of continuous progress as the object of commercial policy being substituted for one of immediate enrichment.
Following List, but in a still more detailed fashion, Carey sought to show the beneficial effects that the proximity of protected industry would have upon agriculture. But unfortunately there are other arguments upon which Carey lays equal stress that are really of a much more debatable character.
Protection, according to Carey, by furnishing a ready market for agricultural products, would free agriculture from the burden of an exorbitant cost of carriage to a distant place. This argument, which List[604] merely threw out as a passing suggestion, continually recurs with the American author. But, as Stuart Mill justly remarked,[605] if America consents to such expenditure it affords a proof that she procures by means of international exchange more manufactured goods than if she manufactured them herself.
Another no less debatable point: The exportation of agricultural products, says Carey, exhausts the soil, for the products being consumed away from the spot where they are grown, the fertilizing agents which they contain are not restored to the earth; a manufacturing population in the immediate neighbourhood[606] would remedy this. But, as John Stuart Mill again remarks,[607] and justly enough, it is not Free Trade that forces America to export cereals. If she does so, it is because exhaustion of soil appears to her an insignificant inconvenience compared with the advantage gained by exportation.
Carey, finally, was one of the first to discover in Protection a means of increasing wages. Once the complex economic State is established there arises a keen competition between the entrepreneurs who require the service of labour—a competition which naturally benefits the workman. But this advantage, granting that it does exist, is more than counterbalanced by the increased price of goods.
We see that Carey, although sharing the fundamental conceptions of List, employs arguments that are much less valid. Both in power of exposition and in the scientific value of his work, the German author shows himself vastly superior to his American successor. He is also much more moderate. Carey is not content with industrial Protection; he demands agricultural Protection as well, and the duties, though a little higher than those proposed by List, seem hardly sufficient for him.