Kicking Away the Ladder. Development Strategy in Historical Perspective

List starts the book with a lengthy historical discussion. In fact he devotes the first 115 pages of his 435-page text to a review of trade and industrial policies in the major countries of the western world up to his time. Included in his survey were the experiences of Venice (and other Italian states), the Hanseatic cities (led by Hamburg and Liibeck), the Netherlands, England, Spain and Portugal, France, Germany and the USA.

Many of these accounts go almost completely against what most of us know (or think we know) about the economic histories of these countries.[6] Particularly striking to the contemporary reader are List’s analyses of Britain and the USA – the supposed homes of liberal economic policy.

List argues that Britain was actually the first country to perfect the art of infant industry promotion, which in his view is the principle behind most countries’ journey to prosperity. He goes as far as saying that we should ‘let [whoever is not convinced of the infant industry argument] first study the history of English industry’.[7] His summary of the British road to industrial success is worth quoting at length.

[H]aving attained to a certain grade of development by means of free trade, the great monarchies [of Britain] perceived that the highest degree of civilisation, power, and wealth can only be attained by a combination of manufactures and commerce with agriculture. They perceived that their newly established native manufactures could never hope to succeed in free competition with the old and long-established manufactures of foreigners [the Italians, the Hansards, the Belgians, and the Dutch] ... Hence they sought, by a system of restrictions, privileges, and encouragements, to transplant on to their native soil the wealth, the talents, and the spirit of enterprise of foreigners.[8]

This is a characterization of British industrial development which is fundamentally at odds with the prevailing view of Britain as a valiant free-trade, free-market economy fighting against the dirigiste countries on the Continent, eventually proving the superiority of its policies with an industrial success unprecedented in human history.

List then goes on to argue that free trade is beneficial among countries at similar levels of industrial development (which is why he strongly advocated a customs union among the German states – Zollverein), but not between those at different levels of development. Like many of his contemporaries in countries that were trying to catch up with Britain, he argues that free trade benefits Britain but not the less developed economies. To be sure, he acknowledges that free trade benefits agricultural exporters in these economies, but this is to the detriment of their national manufacturers and thus of their national economic prosperity in the long run. To him, therefore, the preachings on the virtues of free trade by British politicians and economists of his time were done for nationalistic purposes, even though they were cast in the generalistic languages of what he calls ‘cosmopolitical doctrine’. He is worth quoting at length on this point: