Friedrich List in China’s Quest for Development
By Mei Junjie
Friedrich List was a leading 19th-century German political economist who put forward a theory of “national economics” based on the development of “productive power”. He believed that a nation’s true wealth lay in the profound development of its productive power rather than its current exchange values. Strongly critical of the individual-centered, laissez-faire and cosmopolitan economics of Adam Smith, List opposed the absolute doctrine of free trade and systemized the “infant industry argument” that called for trade protection for catch-up industrialization. He gave prominence to the national idea and insisted on the special requirements of each nation according to its circumstances and especially the stage of its development. With his theoretical sympathy for backward countries, Friedrich List has been highly appealing to the Chinese elites even to this date. An overview of List’s influences on the modern evolution of
Early Introduction of List into
When Friedrich List was born in 1789,
While the door of
The spread of western economic works into
Classroom notes taken in 1911 by Xiong brothers, two students at
Following all this, a full account of List and his theory came into
Appeal of List to the Chinese
The Chinese were attracted to Friedrich List primarily because of List’s emphasis on tariff protection for catch-up industrialization. As remarked by Wei Chenzu, the Chinese minister at the German legation who wrote a preface for the translated work of List, “
Those who introduced List into
List was appreciated by the Chinese also for his nationalist inclination. The Chinese economic community viewed western economics broadly in three schools: individualism represented by Adam Smith, nationalism represented by List, and socialism by Karl Marx. While each school of economic thought had its distinctive strengths, it was pointed out that the nationalist approach of List was especially applicable to
On the whole, Friedrich List had ardent followers in
Influences on the Chinese Economists
List and his theory were embraced by the Chinese just when
However, the key themes of the theory, notably industrialization, tariff protection and state intervention, cut to the very core of the challenges that
It is interesting to review in somewhat detail the thoughts of Chinese economists regarding tariff and related development issues, so as to discern the influence of List’s theory on the Chinese political economic thinking, and some of its adaptations to the Chinese context.
Firstly, Chinese economists focused more on “recovering the tariff right” than on enforcing strict trade protection. Partly due to the “reverse discrimination” against the Chinese businesses on the Chinese soil, and partly due to their conviction that Chinese businessmen were competitive enough to deal with their foreign counterparts on a level field, Chinese academics and industrialists in principle did not call for high import tariffs, and did not even believe them to be that necessary.
Secondly, Chinese economists realized in a balanced way that free trade and protection each had its application scope, with the former fit for advanced industrial powers and the latter fit for industrial latecomers.
Thirdly, considering the lack of inventive activities at home, Chinese economists knew well that imports were conducive to Chinese industrial improvement and even to social evolution, as already proven by the opening of the “treaty ports”, even though imperialist oppression was the other side of the story. For the purpose of industrialization, foreign trade should be encouraged, imports of capital goods should be greatly facilitated, and with it, export of primary products should not be restricted, at least not for the time being.
Fourthly, Chinese economists claimed that they were in theory also supporters of free trade and international cooperation, except that the practice of international trade presented all too sharp a contrast to the free trade doctrine. As argued, with the powers returning to protectionism,
Fifthly, Chinese economists noted that, given the incompleteness of the Chinese sovereignty, mass boycott of foreign goods would be a more practical and effective tool to protect the local industries. Indeed, many regarded this non-tariff means as the only feasible weapon for a weak country like
Sixthly, Chinese economists maintained that trade and economic development demanded, aside from some tariff protection, the removal of various other barriers in finance, transportation, business practices, internal governance, and so on. It was thus emphasized that any development strategy, be it trade protection, government intervention or economic planning, should not go to the extremes, particularly for a populous country like
Fruition Obstructed by Disruptions
The above overview shows that Chinese economists were obviously influenced by List on trade and development issues. Their closeness in position was surely no coincidence, since quite some Chinese held List in esteem rationally after having made comparisons between the doctrine of Adam Smith and that of List, and between the situations of China and other countries. It is undeniable that
However, neither the theoretical sophistication of the academia nor the modernization orientation of the government led to solid outcomes in
Both the achievements and difficulties of the Chinese initial development are readily seen from the statistics: in the early 1920s, modern industries and handcraft industries took up respectively 4.9% and 10.8% in the overall industrial and agricultural output, growing to10.8% and 20.5% respectively in 1936, more or less a pre-war peak year; the import of light industrial products decreased from 54.6% in 1912 to 14.3% in 1936, whereas the import of heavy industrial products increased from 13.7% to 47% during the same period; and the proportion of the urbanized population expanded slowly from 5.1% in 1843 to 10.6% in 1949, further testifying to the sluggish but undeniable advance of the modern Chinese development.
Crude Practice of Listian Strategies
The Communist takeover in 1949 altered the whole course of events. The radical regime change meant not only a breakdown of the incrementally progressing modernization, but also a total discard of the theoretical sophistication and development experience so far accumulated. It is therefore no surprise that the new leadership was basically ignorant, and perhaps disdainful, of the List’s theory or indeed any other theories labeled “bourgeois”, even though a new translation of The National System of Political Economy appeared in 1961. But ironically, due to the “delinking” from the capitalist world, the new regime quite unwittingly followed the Listian strategies of trade protection and state intervention for its catch-up industrialization.
If the previous approach to development harbored any risk of peripheralization, the Communists put an end to all this. In the meantime, their effective organization of the society gave observers an impression of a thorough clean-up in the national outlook. However, a radical revolution, though probably good at sweeping old barriers and creating new preconditions for modernization, cannot in itself create sustained modern economic growth. Development is understandably a comprehensive project of socioeconomic reengineering that demands more than what can be offered by class struggles, administrative orders or even sacrifices of the masses. The compulsory system of governance, the deprivation of the peasants, the assistance from the more developed Soviet Union, etc. could make up for gaps in development, even leading to impressive performance in low-tech areas like irrigation improvement, railway construction, industrial processing, etc, yet, they could hardly lift modernization to any substantially higher level. In fact, disasters were caused in economic and human terms when the leadership, with its power unchecked, engaged in wishful thinking as well as incessant infighting. This demonstrates, among others, that loss of sound development strategies represented by List’s theory could claim high prices.
For a fair assessment of the post-1949 performance, it should be acknowledged that
Embracing List’s Far-sighted Aspirations
List once wrote that, no matter where and when, the welfare of a nation is directly proportional to the intelligence, morality and diligence of the people, with which wealth increases or decreases. He went on to stress that, the industriousness, thriftiness, inventiveness and enterprise of individuals, will never lead to any major achievements if divorced from liberty in the domestic politics, proper public institutions and laws, state administration and foreign policies, as well as the special support from the national solidarity and power. These words from List are sufficient reasons to explain why
Over the past several decades of transformation, the Chinese people successfully resolved such typical Stalinist problems as short supply of consumables, rigidity of the planned system, cutoff from the developed economies, lack of autonomy of enterprises, dearth of infrastructural facilities, stifling of the social vitality, etc. However, new tensions have now risen related to establishing the rule of law, expanding political participation, liberalizing the monopolized sectors, deepening the domestic market, rebalancing the resource distribution between the state and the society, transforming the extensive pattern of economic growth, reducing industrial overcapacity and overdependence on export, closing the gap in income distribution, modernizing agriculture, protecting the environment, and so on. How successfully
There are heated discussions in
Clearly, List is by no means fading away in the distance in
(Dr. Mei Junjie, author of this paper, is senior fellow of international political economy at the Shanghai Academy of Social Sciences and director of the