Friedrich List's polemic against Adam Smith, and federalism
Happy 2024. To my many new subscribers, you should be aware that most of my posts are me just nerding out over long dead authors or abstruse topics. I don’t think professional philosophers have comparative advantage in punditry, and, when I do (somewhat rarely) engage in what seems like punditry, I am usually testing or developing my theoretical views in light of contemporary events. PS If you want to comment on one of these substacks, consider taking out a paid subscription.
Recently I published a paper “Foucault on Hume: Some Preliminaries” [here (open)] access) in a special issue of Cosmos & Taxis, “Hume’s Political Epistemology” which was guest edited by Elena Yi-Jia Zeng. The paper originates in my blogging and so will feel familiar to many readers.
Today’s post is triggered by an invite by Brandon Christensen to contribute to Isonomia Quarterly, which “is a public affairs journal dedicated to two big ideas that Friedrich Hayek insisted were essential to liberal political economy but that have long been swept under the classical liberal rug: equality under the law and global federalism.” Why some of my writing is received in such a welcome fashion in Hayekian learned journals I leave as a manner of speculation to my readers.
It is fair to say that (amongst its other aims) Friedrich List’s (1841) The National System of Political (I am relying on Sampson S. Lloyd’s (1885) translation of Das nationale System der politischen Oekonomie) is one long polemic against Adam Smith.* I happen to be reading Marx’s Grundrisse, and I can assure you Marx is a lot more respectful of Smith (even when he disagrees) than List is.
Many of List’s detailed criticisms deserve close scrutiny. But List summarizes his main criticisms in Book 3, in the fourth chapter, “The System of Values of Exchange (Falsely termed by the School, the ‘'Industrial’ System)—Adam Smith.” This chapter follows the one on the Physiocratic system; this is altogether apt because List repeatedly treats Smith as derivative of the physiocrats.
Okay, so much for set up. Let me quote the first lines of the fourth chapter:
Adam Smith's doctrine is, in respect to national and international conditions, merely a continuation of the physiocratic system. Like the latter, it ignores the very nature of nationalities, seeks almost entirely to exclude politics and the power of the State, presupposes the existence of a state of perpetual peace and of universal union, underrates the value of a national manufacturing power, and the means of obtaining it, and demands absolute freedom of trade. Adam Smith fell into these fundamental errors in exactly the same way as the physiocrats had done before him, namely, by regarding absolute freedom in international trade as an axiom assent to which is demanded by common sense, and by not investigating to the bottom how far history supports this idea.
It is safe to say that List’s (caricature) presentation of Smith has been incredibly influential on the reception of Smith (and liberalism more generally). (In fact, again with a nod to the far more sophisticated treatment of Smith in the Grundrisse, I am inclined to say that List’s Smith is more influential than Marx’s Smith.)
Now, List himself appeals to Dugald Stewart’s biography, and, perhaps, some other time I will comment on List’s use of Stewart (which confirms some of Emma Rothschild’s claims about the afterlife of Stewart’s biography of Smith). But here I want to focus on something in List’s lines that is not in Stewart at all, that Smith’s system “presupposes the existence of a state of perpetual peace and of universal union.”
Contemporary and nineteenth century readers may well think of Kant here. After 1842 English readers may well think of Bentham (when Bentham’s early work on perpetual peace was published). But earlier in The National System of Political Economy, in chapter 11 of Book 2, List had suggested (again with a contextual nod to Dugald Stewart and physiocracy), “Adam Smith naturally understood under the word 'peace' the 'perpetual universal peace' of the Abbé St. Pierre.” Abbé St. Pierre inspired a famous work by Rousseau, which is (together with Abbé St. Pierre) clearly in the background of Kant’s Perpetual Peace and, as List (correctly) implies, Wealth of Nations (which probably influenced Perpetual Peace, as I suggested, while building on scholarship by Sam Fleischacker, in an earlier Digression [here]).
I mention Kant, also, because what I am about to ascribe to Smith was also how Kant (and Bentham, and Constant) read Smith on my view. Now, as is well known, Adam Smith has many reasons for defending the benefits of free trade. However, there is one that is worth quoting here in light of List’s misrepresentation. For Smith free trade generates the development of a peaceful (continental) empire: "Were all nations to follow the liberal system of free exportation and free importation, the different states into which a great continent was divided would so far resemble the different provinces of a great empire." (WN 4.5.b.39, 538) To be sure, this literally says that [I] free trade is structurally analogous to life under empire. But since in wider context he is arguing for free trade, this can also be read as: [II] if one adopts free trade, as Smith urges, the trading parties will seem transformed and politically integrated as if or structurally analogous to (“resemble”) a continent-wide empire.
Given [II], lurking in Smith’s economic arguments for free trade is a functionalist argument in which free trade leads to a kind of pacific political integration. For students of EU politics this is very familiar argument pattern. It was also very influential in List’s own time in the hands of Cobden and Bright. This functionalist argument for free trade does not presuppose international peace — in Smith it is offered in a polemic against mercantile ‘spirit of war’ and in the context of a renewal of potentially global war between France and Great Britain triggered by the ‘American disturbances’ — but is meant to generate at least regional peace.
Now, if one is not familiar with Smith’s writings, one may still suspect that List is onto something about Smith when he writes that Smith “almost entirely” excludes “politics and the power of the State.” I have addressed this charge in more general terms elsewhere (see here). But it is worth noting (as regular readers know) that Smith’s functionalist argument is accompanied, inter alia, also by specific plan for a federal parliamentary union, which he calls the "States General of the British Empire," (WN 5.3.68, 933) and presents as a “completion” of the British constitution (WN 4.7.c.77, 624). This Empire is itself meant to be a free trade area (e.g., WN 5.3.89, 944) Smith presents his proposal for federal parliamentary union as an extension of “the British system of taxation…to all the different provinces of the empire.” (WN 5.3.68, 934) That is, he projects it as an act of ongoing state-building. So rather than ignoring politics, Smith requires great statesmanship.
So, the two, the functional argument and the political project for the federal parliament, complement and strengthen each other. While modern commentators have been relatively uninterested in exploring the details, Smith’s idea for a parliamentary federalism was, in fact, debated throughout the nineteenth century in Britain and so it is a bit odd (from a scholarly perspective) that List ignores it.
*I have not checked the German, alas.
Silly, but I initally read "Isonomia Quarterly" as "Insomnia Quarterly". It would be a great alternative title for many academic journals.