‘The power of producing wealth is infinitely more important than wealth itself; it insures not only the possession and the increase of what has been gained, but also the replacement of what has been lost.’
List’s magnum opus is one of the first books to systematise the arguments for protectionism and the criticisms against unconstrained free trade. With great attention to details and a thorough analysis of history, economics, and politics, List provided a powerful challenge to the orthodox economics of Adam Smith and the idea that unconstrained free trade is always beneficial to everyone involved. History, as demonstrated by List, showed that protectionism is the surest path to prosperity and the only way to build up domestic industries. The lessons of this book influenced the economic policies of the United States, Germany, Japan, and China and continue to exert influence to this day with key ideas such as “infant industry protection” still being popular among economists.
Friedrich List was a German economist who popularised the idea of using tariffs and protectionist policies to develop a nation’s domestic industries. He was also a politician actively involved in the establishment of the Zollverein, the German Customs Union that paved the way for the unification of Germany.