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Sunday, November 16, 2008

A critique of Adam Smith by Friedrich List (1789-1846)

This quote by List is from his The National System of Political Economy. He was one of the driving forces behind the German Zollverein (customs union), which is credited with propelling Germany's economy to world-class levels. 

"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. " 

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