The Neomercantilists: A Global Intellectual History 9781501760136

The Neomercantilists shows how we might construct more global approaches to the study of international political economy

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The Neomercantilists: A Global Intellectual History

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A Global Intellectual History Eric Helleiner


Copyright © 2021 by Cornell University

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First published 2021 by Cornell University Press

Library of Congress Cataloging-in-Publication Data

Names: Helleiner, Eric, 1963– author.

Title: The neomercantilists : a global intellectual history / Eric Helleiner.

Description: Ithaca [New York] : Cornell University Press, 2021. | Includes

bibliographical references and index. Identifiers: LCCN 2020057759 (print) | LCCN 2020057760 (ebook) | ISBN 9781501760129 (hardcover) | ISBN 9781501760136 (pdf) | ISBN 9781501760143 (epub) Subjects: LCSH: Mercantile system—History—Philosophy. | Mercantile system— History—18th century. | Mercantile system—History—19th century. | Mercantile system—History—20th century. | Mercantile system—Political aspects. Classification: LCC HB91 .H435 2021 (print) | LCC HB91 (ebook) | DDC 330.15/13—dc23 LC record available at LC ebook record available at Cover image: Utagawa Hiroshige III / Arthur M. Sackler Gallery, Smithsonian Institution, Washington, D.C.: Gift of the Daval Foundation, from the Collection of Ambassador and Mrs. William Leonhart, S1991.151a-c (detail)

For Georgia


Par t I



Introduction: Neomercantilism’s Diverse Intellectual Origins



Some Pioneers in List’s German-US-French Context



Friedrich List’s Idiosyncratic Synthesis



Some List-Inspired Contributions across the World



List-Inspired Neomercantilism beyond the Nation-State



The Emergence of Henry Carey’s Distinctive Vision



The Global Influence and Adaptation of Carey’s Ideas



Local Origins in Japan



Some Neglected Chinese Pioneers



Another Chinese Contribution and Korea’s Gaehwa Group



Early Theorists in Russia and the Canadian Backwoods



Practitioners in Egypt, Poland, and Latin America



The Asante and the Pan-African Movement


Conclusion: What Legacies?


References Index





This is not a book I planned to write. It emerged from a broader project analyz­ ing ideological debates about international political economy around the world from the late eighteenth century to World War II. Neomercantilism was one of the major ideologies in those debates. But the more I researched this ideology, the more I was struck by the absence of a comprehensive analysis of its intellectual origins. I also came to see many flaws in existing understandings of its history, including my own. I gradually began to realize that I could not write a book on the broader project without first addressing these issues. This work is the result. Ironically, this book is much longer than the other one that I am writing about the larger global ideological landscape in this time period. I have taken much time trying to make this book shorter, trimming the historical analysis in vari­ ous ways to bring the length down. Specialists on the topics I cover may wish that I had not done this. Indeed, there is so much more to be said on many of the issues that I address. I ask these specialists to sympathize with the tradeoffs I have been forced to make between detail and larger synthesis, and encourage them to improve on my analyses where improvements are needed. For readers who would have preferred a shorter book, I ask them to forgive the length. It seemed such a shame to cut out material when the story was so interesting. The emergence of neomercantilist thought is also a complicated story that requires space to explain. Indeed, this complexity may help to explain why no one has attempted to write this history before. I can only hope that readers will share my fascination with the history as well as my belief that it deserves to be better known. Although the book is lengthy, let me highlight to readers who are short on time that they can pick and choose to read parts of the book according to their interests. The introductory chapter is key to the whole story and should not be skipped. After that, each of the four main sections of the book can be read inde­ pendently without great difficulty. Even within those sections, many of the chap­ ters (particularly those in part IV) do not rely on detailed knowledge of the rest of the section. The concluding chapter draws on issues analyzed throughout the book, but its core messages can also be understood fairly well if readers have read the introductory chapter. For their support of this work, I am extremely grateful to the Killam Fellow­ ship Program as well as to the Social Sciences and Humanities Research Council ix



of Canada (grant #435-2015-0571). There is simply no way that a book of this kind could have been written without their backing. Many thanks are also due to the University of British Columbia’s Green College and Liu Institute for Global Issues (and to especially Mark Vessey and M. V. Ramana) for hosting me during the time I that was writing up some of this book. I am also enormously grateful to Emily Andrew and Roger Haydon at Cornell University Press for their interest in this project, their advice, and their patience. I also thank Monica Achen for her very careful and helpful editing work. For their incredibly useful comments on the entire project, I offer profuse thanks to Jennifer Clapp, Derek Hall (who also very kindly provided some Japa­ nese translations), John Hobson, and one anonymous reviewer. I am also very grateful to my coauthors on publications related to this project, from whom I learned an enormous amount: Antulio Rosales, Hongying Wang, and Hyoung­ kyu Chey. For triggering my initial interest in neomercantilist thought many years ago, I thank two outstanding teachers of mine, James Mayall and Gau­ tam Sen. Many others have offered me very helpful advice, comments, and/or research assistance, including Rawi Abdelal, John Abraham, Jeremy Adelman, Cornel Ban, Fernando Barcellos, Rachel Beal, Nick Bernard, Ricardo Bielschosky, David Blaney, Dorothee Bohle, Mauro Boianovsky, Mehmet Bulut, Greg Chin, Judy Clapp, Katharina Coleman, Peter Dauvergne, Sarah Eaton, Jane Forgay, Marc-André Gagnon, Andrew Gamble, Ilene Grabel, Stephan Haggard, Gerry Helleiner, Emma Huang, Harold James, Jeremiah Johnson, Juliet Johnson, Miles Kahler, Yarlisan Kanagarajah, Saori Katada, Deniz Kilinçoğlu, Amy King, Jona­ than Kirshner, Seçkin Köstem, Amitav Kutt, Genevieve LeBaron, Mario Alfonso Lima, Jane Lister, Joseph Love, Laura Macdonald, Jamie Martin, Sarah Martin, Mauricio Metri, Mark Metzler, Rana Mitter, Mary Morgan, Manuela Moschella, Isabela Nogueira de Morais, Andreas Nölke, Raphael Padula, Şevket Pamuk, Rosario Patalano, Yuri Pines, Andrés Rivarola Puntigliano, Vikram Raghavan, Syahirah Abdul Rahman, Leonardo Ramos, Salim Rashid, Lena Rethel, Adrienne Roberts, Cristina Rojas, Aditi Sahasrabuddhe, Quinn Slodobian, Irene Spagna, Frances Stewart, Lisa Sundstrom, Masayuki Tadokoro, Cemal Burak Tansel, Yves Tibergen, Ernani Torres, Diana Tussie, Oscar Ugarteche, Heather Whiteside, Guo Wu, Sandra Young, Ali Zaidi, and Shizhi Zhang. I am sure that I have overlooked others who provided helpful comments and questions during presentations I gave at various places and I thank all those whom I have not been able to remember from talks at the Balsillie School of International Affairs, Boston University, Carleton University, Cornell University, Duke University, École nationale d’administration publique, Institut Barcelona D’Estudis Internacionals, Princeton University, Scuola Normale Superiore, Shef­ field University, Tulane University, Universidad de Buenos Aires, Universidade



Federal do Rio de Janeiro, Université de Montréal, University of British Colum­ bia, University of California, Santa Barbara, University of Manchester, University of Oslo, and University of Southern California, as well as at meetings of the Cana­ dian Political Science Association, History of Economics Society, and Interna­ tional Studies Association. I am also very grateful to many anonymous reviewers of articles I have written related to this project who provided excellent comments. Thanks, too, to Zoe and Nels for their editing support. To them and Jennifer, I am also grateful for many other things, including listening patiently to many hours of discussion about this history, which I know interested me more than them. My most profound gratitude is to Georgia, to whom this book is dedicated. She gave me the gifts of life, happiness, music, and love in ways that cannot be expressed in the words of this world. Her life will remain a source of inspiration for all who knew her.



Free trade has attracted growing opposition in countries around the world in the early twenty-first century. Prominent among its critics have been neomercan­ tilists who back strategic protectionist policies and other forms of government economic activism to promote state wealth and power. Some free traders have been caught off guard by the neomercantilist attacks on their ideas. But neo­ mercantilist reactions against free trade are hardly new. Indeed, they have a long intellectual history dating back to early opposition to Adam Smith’s advocacy of economic liberalism in The Wealth of Nations (1776). What does existing scholarship tell us about this deep history of neomercan­ tilist thought? Much less than the intellectual history of other prominent ideolo­ gies of international political economy (IPE).1 Many books trace how the modern liberal case for free trade evolved out of the writings of Smith and subsequent liberal political economists of the nineteenth and early twentieth centuries. Uni­ versity libraries are also full of tomes that trace the birth of Marxist understand­ ings of IPE issues back to the ideas of Karl Marx and early twentieth-century Marxist theorists of imperialism. But I am not aware of any book that provides

1. Although the term “IPE” was not widely used before the 1970s, I use the phrase to refer to political economy with an international or global focus in earlier eras as well. I have followed Gilpin (1987, chap. 2) in describing competing worldviews in IPE as “ideologies.” 1



a comprehensive analysis of the neomercantilist ideas that emerged in this same period as an alternative to both economic liberalism and Marxism.2 In the first few decades after World War Two, the relative lack of scholarly attention to this topic may have been a product of the Cold War, which was framed as an ideological struggle between capitalism and communism. In this context, scholars tended to depict ideological division in political economy in binary terms, as one between economic liberalism and Marxism. The neomer­ cantilist perspective was marginalized in this framing, despite the fact that it had been an influential third position in ideological debates about IPE issues in many countries before World War Two. In the 1970s and 1980s, scholars began to show more interest in neomercan­ tilist thought in the context of debates about declining US power and Japan’s post-1945 state-led development model. Still, none attempted to analyze in a comprehensive way the historical lineages of this ideology in the pre-1939 era.3 The task then remained neglected after the end of the Cold War, when trade liberalization and other liberal economic policies were increasingly embraced around the world. In the context of those policy trends, it hardly seemed a priority to analyze the history of an ideology that looked just as outdated as Marxism. As neomercantilist ideology attracts growing political support, scholars need to take it more seriously. With that goal in mind, this book aims to improve understanding of the intellectual history of this ideology by analyzing its emer­ gence in the pre-1939 period. In so doing, it also advances an interpretation of this history that differs from the dominant focus of the limited work on this topic. That focus has been heavily skewed toward the ideas of the German thinker Friedrich List outlined in his 1841 work Das Nationale System der Politischen Ökonomie (The national system of political economy).4 Responding to Smith’s

2. As subsequent discussion in this book highlights, there are important books about specific neomercantilists, particularly Friedrich List. Some histories of liberal thought about free trade con­ tain useful discussions of neomercantilist critics of free trade, particularly Irwin 1996. Irwin focuses on “economic arguments” relating to “whether a particular policy will increase aggregate economic wealth” (Irwin 1996, 4), but notes that critics of free trade invoked many arguments that do not fall in this category. This book includes analysis of these wider arguments. 3. Within IPE scholarship, Gilpin’s (1975, 1976) important work identified mercantilism as one of the three major worldviews in IPE (alongside economic liberalism and Marxism). Johnson’s (1982) key study of Japan’s state-led development (which included some analysis of its pre-1939 origins) also brought attention to the “developmental state” as an alternative to economic liberalism and Marxism. 4. The lifespans of the main figures noted in this introductory chapter are listed in their index entries.



critique of seventeenth- and eighteenth-century European mercantilism, List’s book is well known for advancing a more sophisticated intellectual defense of protectionist trade policies than mercantilists had offered. In a detailed analysis, List explained how targeted trade barriers could foster national industrializa­ tion by supporting local manufacturers and attracting foreign capital and skilled labor. List also famously attacked the hypocrisy of British free traders of his age who discouraged other countries from pursuing protectionist policies that had built up Britain’s wealth and power in the past. As he put it in one of his bestknown passages, “It is a very common device that when anyone has attained the summit of greatness, he kicks away the ladder by which he has climbed up, in order to deprive others of the means of climbing up after him.”5 Existing discussions of the history of neomercantilist thought usually focus heavily on List, placing him in the kind of central position that Smith and Marx have in histories of liberal and Marxist thought about international political economy, respectively.6 In some ways, this focus is understandable. His 1841 work was one of the most sophisticated early neomercantilist critiques of eco­ nomic liberalism and it soon attracted attention in many places across the world. In this book, however, I argue that the history of neomercantilist thought needs to be told in a much wider way that recognizes this ideology’s more diverse intel­ lectual origins in the pre-1939 period.

What Is Neomercantilist Ideology? Before explaining the case for this wider approach, I need to clarify the meaning of “neomercantilism,” because the word is used by scholars and commentators in inconsistent ways and often without a precise definition. This weakness in existing literature no doubt reflects the lack of clarity that often characterizes

5. List [1841b] 1909, 295. 6. See, for example, the way in which List is featured in IPE textbook discussions of the history of neomercantilist thought (sometimes called “nationalist” thought, as I note later in this chapter), such as Cohn 2016, chap. 3; and Watson 2020, 31. I hasten to add that I also featured List in this way in past work completed before I began this research project (e.g., Helleiner 2015). See also the similar prominence of List alongside Smith and Marx in the field of comparative political economy (Clift 2014, chap. 3). In other fields, such as development studies, List’s work is also often depicted as the foundation for the closely related concepts of “statist” or “developmentalist” perspectives (for recent examples, see Selwyn 2014, 30; Tijerina 2020, 486; Zhang 2018, 742). Influential analyses of the List’s thought include Szporluk 1988; Senghass 1991; Levi-Faur 1997. For a useful recent contribution that also surveys earlier work, see Ince 2016. For an influential biography of List, see Henderson 1983b. For more recent biographical work, see Wendler 2015, 2016.



discussions of the term “mercantilism” itself.7 Building on scholarship that has attempted to refine understanding of the latter, I define neomercantilist ideology in the pre-1939 period as a belief in the need for strategic trade protectionism and other forms of government economic activism to promote state wealth and power in the post-Smithian age. This definition identifies the core goals of pre-1939 neomercantilists to have been the same as those of earlier mercantilists: the promotion of state wealth and power. Both mercantilists and neomercantilists saw the wealth and power of a state as intricately interconnected; strengthening the power of a state would boost its wealth, and vice-versa.8 Neomercantilists in this period also shared with earlier mercantilists the belief that the best means to cultivate state wealth and power were strategic trade protectionism and other forms of government economic activism. Within the broad category of government economic activ­ ism, my definition gives particular weight to policies of trade protectionism, because neomercantilists themselves usually emphasized their opposition to free trade.9 My definition also stresses the strategic nature of neomercantilists’ trade pro­ tectionism.10 From their standpoint, raising tariff revenue was not the central purpose of protectionist policies. Nor was promoting economic autarky; indeed, they depicted trade restrictions as fully compatible with their country’s broader participation in an open world economy. Instead, the goal was to boost the wealth and power of a state within an integrated world economy through trade restrictions of a selective kind that were strategically designed to support specific domestic economic sectors, particularly local industry. Indeed, more than many earlier mercantilists, most neomercantilists empha­ sized the importance of industry. List, for example, argued that industrialization was crucially important for boosting both a state’s political and military power and its wealth. Regarding the latter, he anticipated many specific economic ben­ efits, such as productivity gains, more diverse employment opportunities, an

7. For a useful overview of discussions about the meaning of mercantilism, see Magnusson 1994. 8. For this focus in mercantilist thought, see, for example, Magnusson 1994, as well as Viner’s (1948) classic analysis. 9. Of the thinkers discussed in this book, Marcus Garvey was a key exception because of his dis­ tinctive style of “diasporic neomercantilism,” (discussed later in this introduction and in chapter 12). Another partial exception was Wei Yuan, who I describe as a protoneomercantilist (see chapter 8). Some thinkers, such as Alexander Hamilton (discussed in chapter 1), expressed more tentative sup­ port for protectionist policies than others did. 10. For discussions of strategic trade policies, see, for example, Hart and Prakash 1997; Milner and Yoffie 1989.



enhanced domestic division of labor, more reliable and growing domestic mar­ kets for farmers, and savings on trade-related transportation and commercial costs. He also associated industrialization with the broader advance of a country’s civilization and its “productive powers”.11 Other neomercantilists cited many or all of these same rationales for promoting industrialization and sometimes added others, such as the need to overcome poor international terms of trade faced by commodity-exporting countries. My definition of neomercantilism also includes an important temporal dimension: a focus on thinkers in the post-Smithian age. This temporal divide stems from the significance of the Smith’s The Wealth of Nations in transform­ ing the discourse of political economy. All the neomercantilists discussed in this book were aware either of Smith’s work or of post-Smithian liberal eco­ nomic ideas more generally. In other words, neomercantilists were differen­ tiated from mercantilists because they existed in, and responded to, the new intellectual environment that Smith’s work helped bring into being. The tempo­ ral part of my definition is not meant to refer to any post-1776 thinker whose ideas match the other parts of the definition. Instead, the focus is only on those who were aware of the new liberal economic ideology that became increasingly prominent in the wake of the publication of The Wealth of Nations. That aware­ ness came later in some places than others. Post-1776 thinkers without this awareness who fit the other parts of the definition are referred to in this book as “mercantilists.” Many neomercantilists engaged directly with Smith’s ideas. In so doing, they sometimes also went out of their way to praise certain aspects of his analysis. For example, while attacking Smith’s ideas, List made a point of acknowledging weak­ nesses in earlier mercantilist thought that Smith’s analysis had exposed. Other important neomercantilists, such as the United States’ Henry Carey, went further, arguing that their endorsement of selective protectionism was quite compatible with a certain reading of Smith’s work. The fact that Smith’s analysis could be cited in this way highlights the ambiguity of the IPE content of The Wealth of Nations. Although framed as a critique of European mercantilism, Smith’s book acknowl­ edged the promotion of state wealth and power as an important goal. Despite his well-known advocacy of free trade, Smith also supported selective protectionist policies in some specific circumstances. Smith is, thus, a complex figure in the history analyzed in this book. Although his work served as an inspiration for later economic liberals who promoted free trade, Smith himself retained one foot in

11. List’s concept of “productive powers” is described in chapter 2.



the mercantilist world, providing some arguments that neomercantilists could use to critique their liberal opponents. In his thinking about IPE, Smith can be seen as a transitional figure between mercantilism and the more cosmopolitan and forceful economic liberalism of nineteenth-century advocates of free trade such as Richard Cobden.12 Smith’s work is also important to the history of neomercantilist ideology because of its role in identifying mercantilism itself. No one in the pre-Smithian era described themselves as “mercantilists.” Smith recognized and named this school of thought through his analysis of what he called the “mercantile system.”13 Smith’s classification was influential and it encouraged some of the thinkers dis­ cussed in this book to embrace the idea that they were neomercantilists. But it is also worth noting that many did not use this label, even when they explicitly invoked earlier mercantilists and practices as inspirations. Their reticence to embrace the term may have reflected the fact that Smith’s work gave mercantilism a bad name. Because of Smith’s critique, it was seen in many intellectual quarters as an outdated approach to economic thinking that did not match the analytical rigor of more modern liberal political economy.14 For this very reason, some who began to embrace the term “neomercantilism” in the late nineteenth century also sought to reinterpret European mercantilism in a more positive light.15 Their reinterpretations and subsequent scholarship highlighted limitations in Smith’s original analysis. For example, Smith argued that mercantilists falsely equated wealth with specie, such as gold and silver, lead­ ing them to prioritize a positive balance of trade to import these precious metals. But historians note that this belief was not, in fact, typical of mercantilists.16 List made a similar point.17 Readers familiar with Smith’s work might assume that the neomercantilists discussed in this book shared this belief ascribed to mercantil­ ists in The Wealth of Nations. But a number of the thinkers I analyze registered

12. See also Earle 1986; Kirshner 1999, 38; Wyatt-Walter 1996; Harlen 1999. For Cobden’s views, see, for example, Cain 1979. Smith was also more skeptical than many nineteenth century economic liberals of the prospects for free trade: “To expect, indeed, that the freedom of trade should ever be entirely restored in Great Britain, is as absurd as to expect that an Oceana or Utopia should ever be established in it” (Smith [1776] 1909, 351). 13. Smith [1776] 1909, book 4. 14. For example, even List applauded Smith for being “the first who successfully applied the analytical method to political economy” and for making “it possible to constitute a science of politi­ cal economy” (List [1841b] 1909, 280). List himself did not use the label neomercantilist, a choice no doubt influenced also by the fact that he thought Smith’s label of “the mercantile system” had “falsely termed” its practices. In his view, that system should have been called “the Industrial System” (269). 15. See chapter 3. 16. See, for example, Magnusson 1994, 75–77, 212. 17. List [1841b] 1909, 271–72.



their strong agreement with Smith’s critique of it. For this reason, it is not part of my definition of neomercantilism. As a way of summing up this definitional discussion, neomercantilist priori­ ties can be compared very briefly to those of the two other well-known leading ideologies of IPE in this era mentioned earlier: economic liberalism and Marx­ ism.18 Whereas neomercantilists urged strategic trade protectionism and other forms of government economic activism to promote state wealth and power, economic liberals called for policies of free trade and free markets to boost indi­ vidual freedom, international peace, and global prosperity. Marxists differed from both of them in seeking to challenge and overthrow capitalism in order to end class-based inequality and exploitation. Of course, there was much variation within, and even some overlap among, these three ideologies.19 Indeed, one of my goals in this book is to highlight the considerable diversity that existed in the content of neomercantilist ideology in the pre-1939 period. Given this diversity, some readers might question whether the label “neomer­ cantilist” lumps together too many diverse thinkers into too large a category. I understand this potential critique but ask readers to remember the enormous differences that existed within the broad ideological camps of economic liberal­ ism and Marxism in the pre-1939 era. In spite of these differences, however, the thinkers within each of those two camps prioritized some common core policies and goals that differed from those prioritized by thinkers in the other. The same is true of the figures I describe in this book vis-à-vis both economic liberals and Marxists. The summary above attempts to capture in a very succinct manner how the core priorities of these three prominent pre-1939 ideological camps in IPE were distinct. One final terminological issue needs to be addressed. Given the historical bag­ gage and debate associated with the word “mercantilism,” is there a term other than “neomercantilism” that might better describe the thinkers discussed in this book? I have toyed with some alternatives, but each has important limitations. For example, the term “protectionist” would describe a wider group of thinkers

18. As I have noted elsewhere, there were also other ideologies of IPE beyond these three that were prominent in various contexts in this period (Helleiner 2020, 2021). 19. For an example of potential overlap, some economic liberals—such as John Stuart Mill— endorsed infant industry protectionism. Instead of prioritizing this policy, however, Mill reluctantly accepted it as a deviation from his general support for free trade. Mill’s endorsement took up just one page in his two-volume work Principles of Political Economy, which was over a thousand pages long. Mill also did not link this endorsement to the goal of maximizing state power in the way that neomercantilists did (Mill 1848, 2:495). Moreover, even Mill’s limited endorsement of infant indus­ try protectionism proved very controversial among economic liberals, and Mill himself eventually backed away from the endorsement, as I discuss in chapter 10.



that could include both advocates of autarky and those who support protectionist policies that are not strategic in the sense described above.20 IPE textbooks some­ times identify “realism” as a third alternative perspective to Marxism and eco­ nomic liberalism within the field. Imported from the discipline of international relations, realism is a theoretical paradigm that sees world politics as driven by states pursuing national interests in an international environment of anarchy.21 There is a strong overlap between realism and neomercantilism, and many of the thinkers described in this book embraced a realist perspective on world politics. But as Daniel Drezner notes, realism can also be compatible with a preference for free trade and other liberal economic policies.22 The label is, thus, not quite right for the thinkers I discuss. IPE textbooks sometimes describe List and others analyzed in this book as “economic nationalists.”23 Many of these thinkers certainly were economic nationalists in the sense that they wanted the economy to serve nationalist goals. But the term is problematic for my purposes in this book for two rea­ sons. First, nationalism can be identified with advocacy of a range of eco­ nomic policies beyond neomercantilist ones, including both autarky and the free trade.24 Neomercantilist economic nationalism, in other words, is just one strand within a wider set of economic nationalisms. Second, not all the thinkers described in this book endorsed nationalist worldviews. Just as all economic nationalists are not neomercantilists, not all neomercantilists are economic nationalists. Another possibility might be to invoke the concept of the developmental state, which has become popular in modern IPE scholarship.25 Given that neomercan­ tilists often had views similar to those of advocates of the developmental state in the late twentieth and early twenty-first centuries, perhaps they could be called advocates of “statism,” “developmentalism,” or even “developmental statism.”26

20. According to Todd (2015, 3–4), the term “protectionist” was first used in 1834 by a British writer to describe French opponents of free trade. It gained widespread popularity in European coun­ tries by the late nineteenth century. 21. Kirshner 2009. For a recent example of an IPE textbook that uses the label “realism,” see Paquin 2016. 22. Drezner 2010. As Drezner highlights, one of the pioneers of a realist approach to modern IPE, Robert Gilpin, noted his normative commitment to policies of free trade. 23. This approach is used in classic textbooks such as Gilpin 2001 as well as in more recent ones such as Watson 2020, 31. 24. Helleiner 2002. This point was also noted in earlier literature, such as Johnson 1982, 26. 25. For a recent survey of literature on this topic, see Haggard 2018. 26. For recent examples of the use of “statism,” “developmentalism,” and “developmental statism,” see, for example, Selwyn 2014, chap. 2; Bresser-Pereira 2017; and Bluhm and Varga 2020, respectively.



But these terms also have weaknesses for my purposes. “Statism” can be associ­ ated with a much wider range of goals and policies than those that are the subject of my analysis. “Developmentalism” is problematic because policies of free trade and free markets can be backed for developmentalist reasons. “Developmental statism” (or “statist developmentalism”) is the best of these three terms, but it has the limitation of speaking more to the pursuit of wealth than that of power. It could also include thinkers who favored developmentally oriented, activist economic policies domestically while still supporting free trade at the border. Indeed, many thinkers in poorer regions of the world in the nineteenth and early twentieth centuries combined those policy preferences. Finally, some scholars have suggested the term “Renaissance economics” to encapsulate the ideas of some of the figures in this book as well as those of some pre-Smithian European thinkers with similar views dating back to Antonio Serra in the early seventeenth century.27 From my perspective, one limitation of this term is that it covers a longer temporal span than is occupied by the postSmithian thinkers I am examining. Another is that the term suggests that this tradition of thought had only European origins. One of the key goals of this book is to challenge that idea. Although there are reasons not to embrace any of these alternative labels, some readers may still be wary of the term “neomercantilist” because of the imprecise ways in which it has often been used in the past.28 Given that the word already has wide currency in current scholarly and public discourse, however, I think the task of trying to bring greater precision to the term is a more worth­ while than trying to wish it away. The term also has the analytical benefit of call­ ing attention to the way in which many neomercantilists invoked pre-Smithian mercantilist ideas. Indeed, one of the key arguments of this book is that varying degrees of familiarity with earlier mercantilist intellectual traditions—both in Europe and elsewhere—help to explain why neomercantilist ideology emerged more strongly in some parts of the world than in others from the late eighteenth century onward. Let me emphasize that I use the term “neomercantilism” in the same spirit that Eli Heckscher employed the word “mercantilism” in his famous study of the policies of many early modern European states. At the start of that work,

27. See, for example, Reinert and DaastØl 2004. 28. This wariness may also be felt by some historians who question the usefulness of the term “mercantilism” to describe early modern European economic thought; see, for example, Soll (2020, 550) who suggests abandoning the term altogether (but also has trouble coming up with a satisfac­ tory alternative label).



Hechscher argued that mercantilism was “only an instrumental concept which, if aptly chosen, should enable us to understand a particular historical period more clearly than we otherwise might.” He continued: “Thus, everybody must be free to give the term mercantilism the meaning and particularly the scope that harmonize with the special tasks he assigns himself. To this degree there can be no question of the right or wrong use of the word, but only of its greater or less appropriateness.”29 My hope is that the meaning I have given to the term neomercantilism as an ideology helps to shed light on an important episode in the intellectual history of IPE.

The Need for a Wider History With this book’s object of study clarified, let me return to the need to move beyond List-centric understandings of the intellectual history of pre-1939 neo­ mercantilist ideology. This book highlights four reasons why this wider approach is necessary, each of which can be summarized briefly.

Many Contributors The first reason is the most straightforward. The focus on List has steered atten­ tion away from many other thinkers who also contributed to the emergence of neomercantilist thought from the late eighteenth to the early twentieth century. Some of these pioneered early neomercantilist ideas before or alongside List within the same German-US-French context that shaped his ideas. They included Alexander Hamilton, Daniel Raymond, Mathew Carey, Julius von Soden, Fran­ cois Ferrier, Jean Antoine Chaptal, Charles Dupin, Louis Say, and Adolphe Thiers (discussed in chapter 1). Most of these thinkers were cited by List and all of them were likely familiar to him and influenced his thought at least to some extent. Also important were a number of later thinkers who were inspired by List’s ideas (which are analyzed in chapter 2) but who went beyond the latter in cre­ ative, yet underappreciated, ways (explored in chapters 3 and 4). Some of their ideas, such as those of Germany’s Gustav Schmoller and Romania’s Mihail Man­ oilescu, became very well known internationally. Others achieved a high profile in domestic settings, including the ideas of Sergei Witte (Russia), Ziya Gökalp (Turkey), Matsukata Masayoshi (Japan), Mahadev Govind Ranade and Benoy

29. Heckscher 1935, 19.



Kumar Sarkar (India), Alfredo Rocco (Italy), Alexandru Xenopol (Romania), Vicente Fidel López, Carlos Pellegrini, and Alejandro Bunge (Argentina), and William Ashley, William Cunningham, and William Hewins (Britain). Contributions to neomercantilist thought were also made by many thinkers who neither influenced List nor engaged much, if at all, with his thought. The fact that the bulk of this book (chapters 5–12) is devoted to thinkers of this kind high­ lights how neomercantilism emerged in a much more decentralized intellectual manner than economic liberalism and Marxism. Put simply, List was a far less central figure to the emergence of neomercantilism than Smith and Marx were to the rise of economic liberalism and Marxism, respectively. A few of the figures discussed in these later chapters did cite some of the thinkers in the broader List­ ian intellectual world described in the first part of the book (chapters 1–4) who had either influenced List or were inspired by him. But they did not show much, if any, direct interest in List’s ideas themselves. The most influential of the thinkers discussed in the second, third and fourth parts of the book was Henry Carey. Carey’s significance to the history of neo­ mercantilist thought (discussed in the second part of the book) has been vastly underrecognized in existing IPE literature. If he is mentioned at all, Carey is sometimes depicted as a follower of List.30 His ideas, however, were quite differ­ ent from List’s and developed without much reference to List’s work (chapter 5). I also highlight the underappreciated global influence of Carey’s distinctive ideas in the late nineteenth and early twentieth centuries (chapter 6). For example, his ideas were more important than List’s in mobilizing support for two of the most important challenges to free trade during the second half of the nineteenth cen­ tury: the United States’ turn to greater protectionism after 1860 and Germany’s in 1879. They were also cited more prominently than List’s ideas by leading neomercantilist thinkers in places as diverse as early Meiji Japan, mid to late nineteenth-century Canada and Australia, and early twentieth-century Ethio­ pia. In these various places, Henry Carey’s ideas were also adapted in interest­ ing ways by many of these thinkers, including Simon Patten (United States), Wilhelm von Kardorff (Germany), Wakayama Norikazu (Japan), Isaac Buchanan (Canada), David Syme (Australia), and Gabrahiwot Baykadagn (Ethiopia). The third section of the book analyzes a number of prominent East Asian thinkers who developed neomercantilist ideas without much or any engagement with List’s work. Despite the strength of neomercantilist thought in modern East Asia, IPE scholars rarely mention thinkers from the region when discussing

30. See discussion at the start of chapter 5.



the pre-1939 origins of this ideology. One reason may be that neomercantilist thought is often assumed to have been imported to the region from the West.31 Although Western neomercantilist thought did shape the ideas of some pre-1939 East Asian neomercantilists, it was not the decisive influence for many of the most prominent pioneers of neomercantilist thought in the region, including Japan’s O ¯ kubo Toshimichi, Fukuzawa Yukichi, and Maeda Masana (chapter 7), China’s Wei Yuan, Zheng Guanying, and Sun Yat-sen (chapter 8), and Korea’s Yu Kil-chun and his fellow Gaehwa (enlightenment) thinkers (chapter 9). The neomercantilist ideas of these thinkers had stronger local and regional intel­ lectual origins. Even prominent East Asian importers of Western neomercan­ tilist thought—such as Japan’s Matsukata Masayoshi (discussed in chapters 3 and 7) and China’s Liang Qichao (chapter 9)—were heavily influenced by local and regional intellectual traditions. In short, East Asian neomercantilism had important endogenous intellectual roots that deserve better recognition in the IPE field. The fourth and final section of the book examines some other significant neomercantilists whose ideas emerged quite independently from those of List. Two early examples were Nikolai Semenovich Mordvinov in Russia and John Rae in colonial Canada, each of whom published important neomercantilist works in advance of the publication of List’s 1841 book (chapter 10). Others included a number of policymakers who pursued innovative neomercantilist initiatives in early nineteenth-century Egypt (Muhammad Ali), Poland (Xaw­ ery Drucki-Lubecki), and Mexico (Lucas Alamán); mid-nineteenth-century Bolivia (Manuel Isidoro Belzu); and early twentieth-century Uruguay (José Batlle y Ordóñez) and Mexico (José Manuel Puig Casauranc) (chapter 11). Some final examples involved the late nineteenth-century neomercantilism of Mensa Bonsu and Agyeman Prempeh in the Asante Empire in West Africa, as well as the creative ideas of the early twentieth-century Jamaican Pan-Africanist Marcus Garvey (chapter 12).

Many Varieties of Neomercantilism List-centric understandings of the origins of neomercantilist thought also over­ look the diverse content of this ideology in the pre-1939 era. Many of the lesserknown figures mentioned above developed versions of neomercantilist thought that were quite different from that outlined by List in his famous 1841 book in

31. For examples of this view, see discussion at the start of chapter 7.



both their conceptualization of the goals of promoting state wealth and power and their choice of policies needed to promote those goals (see table 1 for a summary).32 Indeed, scholars often overlook just how idiosyncratic List’s 1841 book was in the context of broader neomercantilist thought in this period. Take, for example, List’s conceptualization of the pursuit of state wealth. In his 1841 book, List wrote about this goal primarily in aggregate terms, without showing much interest in domestic distributional issues or the specific challenges facing poorer people within a state.33 Critics of List and neo-Listian thought, par­ ticularly from the Marxist camp, have strongly criticized this approach.34 But it was hardly typical of broader neomercantilist thought in this period. Many other neomercantilists embraced a more social kind of neomercantilism that combined the pursuit of state wealth and power with an expressed desire to address domes­ tic inequalities and/or the economic and social conditions of disadvantaged domestic groups.35 List has also been criticized for endorsing the cultivation of state power for more than just defensive purposes. Specifically, critics have noted his enthusi­ asm for Western imperialist expansion.36 But this enthusiasm was not a general characteristic of pre-1939 neomercantilist ideology. Many other neomercantilist thinkers sought only to protect their state’s sovereignty against foreign threats and influences. These exclusively defensive versions of neomercantilism were also sometimes accompanied by views of imperialism that were strikingly dif­ ferent from List’s, such as Ranade’s harsh criticism of the costs of British colonial rule in India or Henry Carey’s condemnation of Western imperialism and aggres­ sion (including that of his own country). Some neomercantilists who endorsed

32. There were additional differences between List’s thought and those of other neomercantilists that were not related directly to neomercantilist goals and policies. These are mentioned as they arise in the various chapters. 33. As I note in chapter 2, List did show more interest in these issues in other writings. 34. See, for example, Selwyn 2009, 2014. 35. My category of “social” neomercantilism is inspired by Wilson (1959, 98). Some of the neo­ mercantilists mentioned in this chapter whose ideas fit in this category include M. Carey, Dupin, and Say (chapter 1); Schmoller, Gökalp, Ashley, Cunningham, and Hewins, (chapter 3); Ranade and Sarkar (chapter 4); H. Carey (chapter 5); Patten, Kardorff, Isaac Buchanan, Syme, and Gabrahiwot (chapter 6); Maeda (chapter 7); Zheng and Sun (chapter 8); and Belzu and Batlle (chapter 11). These thinkers did not agree, however, on how to address domestic social issues. For example, H. Carey emphasized that protectionism itself was the main tool for addressing them, whereas many others were more focused on the role of activist domestic social policies. In the case of H. Carey (and of oth­ ers who followed him such as Buchanan, Gabrahiwot, and Wakayama), protectionism was also a way to address environmental concerns relating to soil erosion (see chapters 5 and 6). 36. My distinction between “defensive” and “offensive” neomercantilism overlaps to some extent with Gilpin’s (1987, 32) distinction between “benign” and “malevolent” versions of this ideology, but Gilpin mistakenly places List in the former category.



the offensive projection of state power, such as Wei Yuan and Sun Yat-sen, also did so in a manner that explicitly rejected the kind of imperialist policies prac­ ticed by Western states. List also endorsed some long-term aspirations that appealed to few other neomercantilists. In his 1841 book, List argued that neomercantilist goals and policies should be embraced as just one step on a longer path toward “the future union of all nations, the establishment of perpetual peace, and of universal free­ dom of trade.”37 It is ironic that the neomercantilist thinker best known to mod­ ern IPE scholars endorsed such a liberal cosmopolitan long-term future for the world. Most other neomercantilists did not share List’s view on this issue, mak­ ing no distinction between their short-term and long-term goals. Even when they did draw such a distinction, some neomercantilists expressed support for a postneomercantilist long-term future that was quite different from that endorsed by List. For example, some East Asian neomercantilists hoped for a cosmopoli­ tan world over the longer term that was informed by ancient Confucian values rather than liberal ones.38 Yet another distinct long-term vision was put forward by Henry Carey, who vaguely anticipated a distant liberal nationalist future in which global free trade was implemented not by List’s union of all nations but by peaceful, sovereignty-respecting nation-states. Another feature of List’s thought that was not shared by all neomercantilists was his focus on the wealth and power of nation-states. List was deeply commit­ ted to a nationalist ontology and he argued forcefully that a spirit of nationality was needed for the successful cultivation of state wealth and power.39 List’s views on this subject were more typical of those of many other thinkers discussed in this book. But some neomercantilists aimed instead at cultivating the wealth and power of states that were not conceptualized as nation-states, such as the subimperial state of Ottoman Egypt (Ali), the Chinese Empire (Wei), the Asante Empire (Bonsu and Prempeh), or the British Empire (Hewins).40 Others who were

37. List [1841b] 1909, 272. 38. See, for example, Fukuzawa (chapter 7), Zheng, and Sun (chapter 8). 39. List’s nationalist worldview is sometimes seen as a way in which he moved beyond earlier mercantilist thought, but some European mercantilists in the seventeenth and eighteenth centuries also embraced nationalist ontologies (Magnusson 1994, 213; Greenfeld 2001, chap. 1). Indeed, List himself praised mercantilist thought for being “based on the idea of ‘the nation,’ and regarding the nations as individual entities” (List [1841b] 1909, 271–72). 40. Some other examples discussed in the book include late nineteenth-century Ottoman thinkers (see chapter 3) who focused on promoting the wealth and power of the Ottoman Empire. Although many thinkers discussed in this book shared List’s nationalist ontology, they did not all agree with his conceptualization of nations. List defined nations primarily by their shared language, culture, and history, whereas some later thinkers, such as Bunge and Rocco (chapter 3), Liang and Yu



more interested in nationalist ideas also departed from List’s focus through their promotion of the wealth and power of the colonies in which they lived (Ranade, Buchanan, and Syme).41 These alternative kinds of neomercantilism should not be surprising in the era being studied, when formal empires remained the key political entities within which many people across the world lived. Even more unique, however, was Garvey’s Pan-African goal of bolstering the wealth and power of Africans and the African diaspora via a political entity that was con­ ceptualized as an embryo for a future independent African state. I refer to this as a kind of diasporic neomercantilism. If many aspects of List’s neomercantilist goals were distinctive, so were many aspects of his views about the policies needed to promote state wealth and power. When calling for strategic protectionist policies, List carefully insisted that trade barriers should be temporary, moderate, and specifically targeted to support local industry (including shipping, which he considered part of the “industrial power” of a nation).42 Other neomercantilists, however, urged more ambitious protectionist policies that were longer lasting, more extensive, and/or support­ ing a wider range of sectors such as agriculture or commercial activities beyond shipping.43 In so doing, they also sometimes advanced rationales for strategic protectionist policies that List’s 1841 book did not discuss, such as those relating to domestic social issues, the terms of trade facing commodity exporters, and/ or the use of protectionism as a weapon for negotiating trade treaties.44 Some neomercantilists also called for innovative nonstate forms of protectionism,

(chapter 9), and Garvey (chapter 12), embraced more racialized conceptions of political community (often alongside social Darwinist ideology). 41. Rae was also living in a British colony, but as I show in chapter 10, his views about the rel­ evance of neomercantilist policies to colonial Canada were a little unclear. 42. Quote from List [1841b] 1909, 88. 43. For those backing agricultural protectionism, see Chaptal (chapter 1); Schmoller, Witte, López, Pellegrini, Bunge, Ashley, Cunningham, and Hewins (chapter 3); Manoilescu (chapter 4); and Kardorff (chapter 6). Henry Carey also did not rule this policy out (chapter 5). For some who backed wider commercial protectionism, see Fukuzawa (chapter 7); Ali and Belzu (chapter 11); and some Gaehwa thinkers (chapter 9). 44. Those whose advocacy of protectionism to address domestic social issues is discussed in this book include M. Carey, Dupin, Say (chapter 1); Schmoller, Ashley, Cunningham, and Hewins (chap­ ter 3); H. Carey (chapter 5); Kardorff, Buchanan, Syme, and Gabrahiwot (chapter 6); and some of Belzu’s supporters (chapter 11). The use of protectionism as a weapon was mentioned by Schmoller and Ashley (chapter 3), and the terms-of-trade issue was discussed by many thinkers (not all of whom advocated more ambitious protectionist policies than List), including Hamilton (chapter 1), Bunge, Xenopol (chapter 3), Manoilescu (chapter 4), H. Carey (chapter 5), Gabrahiwot (chapter 6), Fukuzawa, Maeda (chapter 7), Sun (chapter 8), and others not noted in this chapter, such as Alexander Everett, whose ideas are mentioned briefly in chapter 2. These latter thinkers did not entirely agree on why agri­ cultural exporters experienced poor terms of trade or even whether this situation was likely to persist.



including consumer boycotts of foreign goods and other societal-based initia­ tives to boost local businesses.45 Further, many neomercantilist thinkers went beyond List in their advocacy of other kinds of government economic activism that could support neomercantil­ ist goals. In his 1841 book, List focused primarily on the need for strategic trade protectionism, and noted only in passing the potential usefulness of other activist policies such as attracting foreign skilled workers, cultivating trading partners, investing in education and infrastructure, offering financial support and spe­ cial privileges to strategic industries, and creating what he called an independent domestic “durable system of credit.”46 Other thinkers gave much greater emphasis to these policies and called for broader types of government economic activ­ ism in foreign economic policy, such as managed foreign borrowing,47 controls on foreign investment and imported skilled labor,48 exchange rate policy,49 new kinds of multilateral cooperation,50 and more aggressive promotion of exports and local merchants in international markets.51 In addition, some neomercantil­ ists urged wider government economic activism at the domestic level than List in areas such as government procurement policies,52 the creation of state-owned firms (including banks),53 social policies,54 policies toward land ownership,55 and national economic planning.56

45. Examples include Ranade (chapter 4), Sun (chapter 8), some Koreans (chapter 9), Rae (chap­ ter 10), and Garvey (chapter 12). Maeda (chapter 7) also endorsed a different kind of nonstate initia­ tive: the creation of producer cooperatives and trade associations that were designed to boost the power of local farmers, industrialists, and merchants vis-à-vis foreign merchants. 46. List [1841b] 1909, 232. 47. See Ranade (chapter 4), Sun (chapter 8), some Korean Gaehwa thinkers (chapter 9), and Drucki-Lubecki (chapter 11). Some, such as Matuskata (chapter 3) and Ali (chapter 11), were simply wary of foreign borrowing. 48. For investment, see Sarkar (chapter 4), some Korean Gaehwa thinkers (chapter 9), and Ali (chapter 11). To address concerns about foreign investment, some neomercantilists urged the pro­ motion of nationally run firms in key sectors. Among them were Gökalp and Xenopol (chapter 3); Gabrahiwot (chapter 6); Sun (chapter 8); and Drucki-Lubecki and Batlle (chapter 11). For controls on foreign skilled labor, see Maeda (chapter 7); Sun (chapter 8); and Ali (chapter 11). 49. See Pellegrini (chapter 3); H. Carey (chapter 5); and Buchanan (chapter 6). 50. See Sarkar and Manoilescu (chapter 4); Sun (chapter 8); and Puig (chapter 11). 51. See Matsukata (chapter 3); O ¯ kubo, Fukuzawa, and Maeda (chapter 7); Zheng (chapter 8); and Liang and some Korean Gaehwa thinkers (chapter 9). 52. See Hamilton (chapter 1) and Ranade (chapter 4). 53. See Gökalp (chapter 3); Ranade (chapter 4); O ¯ kubo and Maeda (chapter 7); Sun (chapter 8); Mordvinov (chapter 10); and Ali, Drucki-Lubecki, Alamán, Belzu, and Batlle (chapter 11). 54. See, for example, the advocacy of activist state welfare policies by Schmoller, Gökalp, Ashley, Cunningham, and Hewins (chapter 3); Patten (chapter 6); Sun (chapter 8); and Batlle (chapter 11). 55. See Syme Gabrahiwot (chapter 6); Sun (chapter 8); and Ali (chapter 11). 56. See Witte, Gökalp, and Rocco (chapter 3); Sarkar (chapter 4); and Sun (chapter 8).



One of the most idiosyncratic dimensions of List’s thought was his strong view that many parts of the world should not pursue neomercantilist policies. Modern followers of List often gloss over the fact that he insisted that these policies were relevant only for a small group of states, namely those with a “temperate” climate, “far advanced agriculture,” “a high degree of civilization and political develop­ ment,” “an extensive and compact territory,” a “large population,” and “natural resources.”57 In List’s analysis, only a limited number of countries, such as the United States, German states, and France, met these criteria (although he allowed that some other temperate countries might meet them in the future). List advised all other regions of the world to embrace free trade for reasons that echoed some of those put forward by economic liberals in his era. Few other neomercantil­ ists in this book—including those inspired by List’s work—shared List’s unusual ideas on this subject. Most simply ignored them, whereas others, such as Manoi­ lescu and Ranade, directly challenged his logic.

TABLE 1. The idiosyncratic nature of List’s neomercantilist goals and policies LIST’S 1841 BOOK


Goals State wealth


Social neomercantilism

State power

Defensive and offensive

Only defensive

Long-term vision

Liberal cosmopolitanism

Neomercantilism; Confucian cosmopolitanism; liberal nationalism

Type of state


Subimperial states; empires; Garvey’s embryonic state

Policies Strategic trade protectionism

Other government

Temporary; moderate;

Longer lasting; extensive; wider

industry-focused (plus

commercial and primary product


focus; nonstate forms


More extensive

Only in some temperate


economic activism Geographical relevance Broader political

countries Liberal


57. List [1841b] 1909, 154, 247.

Conservative; left-wing



One final distinctive feature of List’s thought was the way he associated neomercantilist policies with liberal politics. List praised how state-led indus­ trialization would grow hand in hand with expanding political liberty. Other neomercantilists, however, were much more politically conservative, including some who backed authoritarianism (e.g., Ali, Ferrier, and Witte) and nonliberal corporatist and/or fascist politics (e.g., Gökalp, Rocco, and Sarkar and Manoil­ escu in their later writings). Still others (e.g., Sun, Belzu, Batlle, and Puig) linked neomercantilism with more left-wing politics. Although neomercantilism has sometimes been described as a “centrist ideology,” it was, in fact, compatible with a wide range of political orientations.58

The Complexity of the International Circulation of Neomercantilist Thought A third limitation of List-centric understandings of the pre-1939 origins of neo­ mercantilist ideology concerns the international circulation of neomercantilist ideas. Existing scholarship has focused on how neomercantilist thought dif­ fused globally through the embrace of List’s ideas in many different parts of the world in the late nineteenth and early twentieth century.59 This book reinforces that important insight, providing many examples of countries in which List’s ideas attracted attention (and were also modified). But I also highlight that List’s ideas were not the only neomercantilist ones to circulate across borders in this period. The global diffusion of Henry Carey’s ideas has already been noted. The ideas of other neomercantilist thinkers cited by Carey or influenced by him also traveled across borders in the nineteenth century, including those of Buchanan and Syme. Schmoller’s distinctive version of neomercantilism also found a wide international audience in the late nineteenth and early twentieth centuries. In the 1930s, Manoilescu’s ideas attracted attention beyond his native Romania, includ­ ing elsewhere in Eastern Europe as well as in Latin America. Rae’s earlier Cana­ dian ideas spread internationally through the unusual channel of the writings of British liberal John Stuart Mill. Further examples include the intraregional circulation of East Asian neomercantilist thought in the nineteenth and early

58. For example, Henley (1993) describes neo-mercantilism (a term he uses interchangeably with “economic nationalism”) as a “centrist ideology” in the title of his article. 59. For important analyses of this phenomenon, see Boianovsky 2013; Goswami 1998; Metzler 2006; Wendler 2015.



twentieth centuries as well as the growing transnational popularity of Garvey’s message among Africans and the African diaspora around the world in the interwar years. Even List’s ideas themselves emerged in the context of a cross-border flow of ideas among German, US, and French neomercantilists in the early nine­ teenth century. There is no question, then, that the international circulation of ideas played an important role in fostering of the growth of neomercantilist thought in vari­ ous part of the world in the nineteenth and early twentieth centuries. But it was a more complex phenomenon than List-centric analyses suggest. The latter over­ look the diverse versions of neomercantilist thought that spread across borders in this era, often simultaneously. They also miss how neomercantilist ideas moved in diverse directions in this period. Whereas Listian ideas diffused within the North Atlantic region and from there to the rest of the world, the cross-border flows of some other versions of neomercantilism followed quite different geo­ graphical patterns. What were the mechanisms by which the various strands of neomercantilist thought circulated internationally? Like the ideologies of economic liberalism and Marxism, neomercantilist ideas spread across borders via people and texts, encouraged by growing international migration and commerce during the era examined in this book. The international diffusion of economic liberalism and Marxism was also promoted by transnational bodies such as Cobden Club (cre­ ated in 1866 by economic liberals) and First, Second, and Third Socialist Inter­ nationals (in the case of Marxists).60 No equivalent transnational organization existed to promote the neomercantilist ideas of thinkers such as List or Henry Carey. Only the Garveyite movement created a formal body of this kind to pro­ mote its distinct diasporic neomercantilist vision. The relatively weak transnational organization of neomercantilists was partly a product of the content of the ideology itself. Economic liberals in the Cobden Club had cosmopolitan aspirations that the embrace of free trade worldwide would promote international peace. Marxists worked internationally to cultivate solidarity among workers of the world to accelerate the overthrow of the global capitalist system. With their focus on boosting the wealth and power of their own state, however, advocates of neomercantilist thought did not have a strong incen­ tive to promote their ideology across borders. Indeed, that promotion might even be counterproductive if it boosted the power of a foreign state or encour­ aged other countries to raise tariffs in ways that cut off lucrative export markets.

60. For the Cobden Club, see Palen 2016, 60.



Some neomercantilists did, however, push their ideas abroad for some specific reasons. For example, both List and Henry Carey did so as part of their efforts to strengthen resistance to what they perceived as Britain’s oppressive empire of free trade. Japan’s Fukuzawa briefly encouraged Koreans to embrace neomercantilism as part of his efforts to confront Western power in East Asia.61 Garvey, too, was deeply committed to promoting his ideas internationally, because this activity was key to the success of his distinctive diasporic political project. For the most part, however, the supply-side promotion of the cross-border spread of neomercantilism was generally much weaker than in the case of eco­ nomic liberalism and Marxism.62 This contrast was reinforced by the absence of the support of a major state for the export of this ideology around the world. There was, for example, no equivalent to the British government’s promotion of free-trade ideas in the nineteenth century, or the post-1917 efforts of the Soviet Union to foster the spread of Marxist thought around the world. In those two instances, the dominant state derived clear benefits from the spread of these ideas: new markets for British exports and new political allies for the Soviet Union in its efforts to weaken global capitalism. Dominant states saw much less reason to promote neomercantilist policies internationally.63 As noted above, such a policy might even generate costs if it encouraged the emergence of rival power centers or a loss of export markets. In the absence of a strong supply-side push, the international circulation of neomercantilist thought was usually driven by a demand-side pull.64 The ideas of List, Henry Carey, and other neomercantilists usually diffused across borders for the simple reason that foreigners found them appealing. In other words, the key agency in the diffusion of neomercantilist ideology was exercised by those on the receiving—rather than sending—end of the phenomenon. This agency consisted not just of the decision to embrace foreign neomercantilist thought but also of the choice between the diverse versions of this ideology that were

61. Another neomercantilist not mentioned in this chapter but discussed in chapter 9, China’s Huang Zunxian, also promoted neomercantilist ideas in Korea in 1880 as part of trying to strengthen China’s traditional ally in the face of rising Japanese and Russian influence in the region 62. I have borrowed the supply-side versus demand-side distinction from Todd 2015, 236. 63. There were some exceptions. For example, in the late 1930s, at the very end of the period being studied, major powers such as Germany and the United States began to support state-led indus­ trialization in some poorer regions of the world (see, e.g., Fertik 2018; Helleiner 2014). But even then, the support was inconsistent (as Manoilescu’s Romania discovered in the case of German policy, as noted in chapter 4) and often linked quite heavily to strategic concerns. 64. Reinert’s (2011) analysis of the earlier international circulation of mercantilist ideas within Europe also suggests that it was heavily shaped by demand.



often circulating internationally in a simultaneous fashion. Agency was also involved in the frequent adaptation—or localization—of foreign ideas to better fit domestic priorities.65

Building on Many Mercantilist Traditions Although the emergence of neomercantilist thought was encouraged by the cross-border circulation of ideas, it was also often a product of independent intellectual innovation informed more by local mercantilist tradition than by imported thought. The fourth and final limitation of List-centric understand­ ings of neomercantilism’s history is their neglect of the diverse mercantilist intel­ lectual traditions that helped to inform the emergence of this ideology. Whereas List drew inspiration from some well-known European mercantilists such as France’s Jean-Baptiste Colbert and Italy’s Antonio Serra, other neomercantilists build upon quite different mercantilist traditions that receive much less attention in modern IPE scholarship.66 The East Asian experience highlights this point particularly well. Many neo­ mercantilists in Japan, China, and Korea drew directly on vibrant mercantilist traditions within their own countries that are rarely mentioned in IPE literature (or even in much of the scholarship on the origins of East Asian developmental states). These traditions included Japan’s kokueki ideology, which first emerged in the early eighteenth century, China’s statecraft school from the early nine­ teenth century, and Korea’s late eighteenth-century Bukhak thought. In all three countries, neomercantilist thinkers also were inspired by much older Chinese mercantilist texts, such as The Book of Lord Shang from the Warring States era (453–221 BCE). The latter’s slogan, “rich state, strong army,” became a rallying call for nineteenth-century neomercantilists across the region, some of whom also explicitly compared the conflictual world politics of their era with that of the Warring States period.67 It is no coincidence that a region with this kind of rich mercantilist intellectual history was the place with some of the most dynamic, endogenously generated neomercantilist ideas in the pre-1939 period outside Europe and North America. Some of the distinctive content of East Asian neomercantilism also reflected this

65. For “localization,” see Acharya 2004. 66. For List’s citing of European mercantilists, see, for example, List [1841b] 1909, book 1, book 3 (especially chaps. 28–29). 67. Quote from Shang 2017, 174.



history, such as its often heavy export-orientation, its frequent endorsement of ambitious government economic activism, and its Confucian content. Although this book is focused on the history of neomercantilist thought, I devote space in the third part of the volume to providing a brief overview of some of these East Asian mercantilist traditions in order to highlight their significance and because they are less well known than their European counterparts. That poor knowledge of East Asia’s mercantilist past has contributed to the common but mistaken argument that East Asian neomercantilism is simply a derivative ideol­ ogy imported from the West. Non-European mercantilist intellectual traditions also informed the emergence of pre-1939 neomercantilist thought beyond East Asia. In early twentieth-century India, Sarkar supported his neomercantilist views by citing the Arthashastra, an ancient South Asian mercantilist text from a similar age as The Book of Lord Shang (to which it is sometimes compared).68 In West Africa, Asante neomercantilism in the late nineteenth century emerged directly from a mercantilist tradition that had been pioneered earlier in the century. In Egypt, Mohammad Ali’s neomercantilism followed in the footsteps of Ottoman mercan­ tilist ideas that had emerged in the late eighteenth century. Even the European mercantilist traditions that helped to inform neomercan­ tilist thought were wider than those that inspired List. For example, Drucki­ Lubecki’s neomercantilist initiatives in early nineteenth-century Poland built on some unique mercantilist ideas in his own country, to which List made no refer­ ence. The initiatives of some Latin American neomercantilists in the nineteenth century drew inspiration from another strand of European mercantilist thought that List did not discuss: that associated with reforms within the Spanish Empire in the second half of the eighteenth century. Another example may have been Mathew Carey’s American neomercantilism, whose characteristics bore some similarities to a little-known eighteenth-century mercantilist tradition in Ire­ land, the country of Carey’s birth, where he first expressed his skepticism of free trade.

Scholarly Contributions In sum, this book shows that the intellectual origins of neomercantilist ideology in the pre-1939 period were more diverse than List-centric discussions suggest. List was a key figure in this history, but many other thinkers contributed to the

68. For a comparison, see, for example, Spengler 1969.



emergence of this ideology in this era, including many from outside the West. The content of the ideology also included many varieties of neomercantilism whose content differed from List’s neomercantilism in important ways. Further, neomercantilist thought emerged in the context of a complex international cir­ culation of ideas involving more versions of neomercantilist thought than just List’s and more diverse geographical movements than his ideas’ journeys. Even the mercantilist intellectual history that informed neomercantilist thought was more diverse than that cited by the German thinker. With these arguments, I seek to provide a more comprehensive intellectual history of the emergence of neomercantilist ideology in the pre-1939 period than presently exists. I need to highlight, however, that this book still falls short of providing a comprehensive survey of this topic. For reasons of space, I have focused only on thinkers whose ideas were politically influential. And even within this restricted focus, some readers may object to my omission of certain thinkers.69 At the same time, I am aware that others may see my choices as too wide because I have not focused solely on authors of scholarly treatises. Also included are the ideas of politicians, government officials, and activists whose neomercantilist thought was not always expressed in a sophisticated way but who promoted innovative and politically important neomercantilist initiatives. In addition to building a more comprehensive intellectual history of the emergence of neomercantilist ideology before World War Two, this book aims to contribute to four other bodies of scholarly literature. The first is lit­ erature trying to create a less Western-centric approach to the study of IPE. Many IPE scholars have been calling for their field to foster a greater “global conversation”—to use Mark Blyth’s term—that is more inclusive of nonWestern voices and experiences.70 Despite these calls, both teaching and research about the historical foundations of IPE thought in the pre-1939 period have continued to focus heavily on European and US thinkers.71 This book

69. For example, I have not included John Maynard Keynes, who made some short positive com­ ments about mercantilist thought in his 1936 General Theory of Employment, Interest, and Money. These comments focused, however, not on the benefits of strategic protectionism but on potential virtues of a positive trade balance for domestic investment. Indeed, Keynes (1936, 338) went out of his way to note that his views did not necessarily translate into a preference for trade restrictions. 70. See, for example, Blyth 2009, Tussie and Riggirozzi 2015; Hobson 2013, 2020; Vivares 2020. These calls overlap with work that is seeking to “decolonize” the field of IPE (e.g., Mantz 2019). 71. Broader scholarship on the history of economic thought also remains quite Western-centric. In this book, the term “the West” refers to Europe, the US, and Canada. It is important to remember Osterhammel’s (2014, 86–87) caution that “the category of the ‘the West’ or ‘the Western world’ does not appear as a dominant figure of thought before the 1890s.” He notes that the term presupposed that



broadens these foundations by highlighting the important contributions made by many non-Western thinkers to the emergence of neomercantilist thought. Second, this book intends to further the study of global intellectual history by analyzing an ideology that has received limited attention in that field. The phrase “global intellectual history” can have multiple meanings.72 I use it here primarily in what Frederick Cooper describes as a relatively “soft” way, to refer to an intel­ lectual history of neomercantilism that is inclusive of thinkers from across the globe than one that focuses on thinkers from only one country or region.73 But I am also interested in a second meaning of the phrase: the way that the intel­ lectual history of neomercantilism is connected to the international circulation of ideas. In trying to tell the history of pre-1939 neomercantilist thought from a more global perspective, I have faced the challenge that Sanjay Subrahmanyam has identified of “striking an appropriate balance between what are normally the more familiar elements (that is established thinkers and trends of the Western pantheon) and the less familiar ones, whose works are considered to be obscure and arcane because they have not been in any way canonized beyond their imme­ diate contexts.”74 In this work, I have tried to manage this balancing act by com­ bining the study of List’s better-known ideas with analyses of the ideas of many lesser-known thinkers (both Western and non-Western). For scholars of global intellectual history, this book also makes a deeper point about the origins of political economy itself. These origins are usually assumed to be rooted in European thought, even by those who are committed to a more global approach to intellectual history. For example, Andrew Sartori argues for a “Europe-centered account of the emergence of political-economic discourse” on the grounds that “one must recognize the sheer force of the fact that there was no parallel development of political-economic discourse remotely commen­ surable with that in seventeenth- and eighteenth-century Europe.”75 This book highlights, however, how neomercantilists outside the West often drew on rich mercantilist traditions of thought that emerged independently from, and some­ times even earlier than, those of Europe. Satori suggests that the birth of political economy required “capitalist social relations” because they were “the object for which political economy was developed.”76 But European political economy was

“Europeans and North Americans rank equally in global culture and politics. Such symmetry was not assured in European eyes until the turn of the twentieth century.” 72. See, for example, the discussions in Moyn and Sartori 2013. 73. Cooper 2013, 283. 74. Subrahmanyam 2017, 34. 75. Quotes from Sartori 2013, 122, 118. 76. Sartori 2013, 120.



born in the seventeenth and eighteenth centuries in response not just to emerg­ ing capitalist social relations but also to interstate power struggles.77 Contexts of interstate competition also encouraged the independent appearance of mercan­ tilist discourses outside Europe. Third, this analysis seeks to add to scholarly literature analyzing the interna­ tional circulation of economic ideas (which includes the work of scholars from the field of global intellectual history).78 The international circulation of neomer­ cantilist thought in the pre-1939 era has been much less studied than that of other economic ideas, including economic liberalism and Marxism in the same era. In addition to helping fill this gap, this book reinforces scholarship that has called for greater attention to be devoted to the local adaptation of foreign economic thought and the agency of the importers of ideas.79 It also strengthens literature challenging the predominant scholarly focus on vertical flows of economic ideas from powerful to less powerful parts of the world.80 Although pre-1939 crossborder flows of neomercantilist ideas often did follow this pattern, they also involved horizontal ideational movements among less powerful regions as well as even some uphill movements of ideas from less powerful to more powerful ones.81 More generally, the book also calls attention to the limits of the influence of international ideational flows by showing how the emergence of neomercantil­ ist thought was often a product of independent intellectual innovation in local settings.82 The fourth and final body of scholarship to which this historical analysis aims to contribute is literature analyzing the politics of the world economy since World War Two. The concluding chapter highlights how the history analyzed in this book left legacies that informed both the construction of the post-1945 international economic order and the content of neomercantilist ideologies that subsequently became prominent in various countries in the postwar years. It shows that legacies of this pre-1939 intellectual history have endured into the early twenty-first century, including in the two dominant economic powers of China and the United States. I emphasize that these legacies can only be fully

77. See, for example, Reinert 2011, Hont 2005. 78. For wider literature in political economy on this topic, see Ban 2016; Hall 1989. 79. See, for example, Ban 2016. 80. See, for example, Bockman 2011; Helgadóttir 2016; Helleiner 2014. I have borrowed the idea of “vertical” versus “horizontal” flows from Todd 2012. See also Metzler 2006, 116–7. 81. Examples of uphill flows included the diffusion of the ideas of List and Schmoller to Britain (chapter 3). Garvey also took his ideas from Jamaica to the United States (chapter 12). 82. For the importance of local context to the emergence of distinct national traditions of eco­ nomics more generally, see Fourcade 2009.



understood by moving beyond List-centered understandings of the intellectual origins of neomercantilism. The wider approach offered in this book is, thus, designed to shed new light not only on a neglected aspect of pre-1939 intel­ lectual history but also on subsequent ideational currents in the global political economy.

Some Caveats Before proceeding to the detailed historical analysis, I need to note some caveats. The first concerns research sources. This book examines thinkers who expressed their ideas in many different languages. To understand all these ideas, I have often had to rely on translations or secondary accounts. In those instances, I have also benefited enormously from the insights of colleagues and research assis­ tants with linguistic skills that I do not have. But the analysis still remains less thorough in some of these cases than I would like. I can only hope that future researchers will improve on what I provide here. Second, although I emphasize the diverse intellectual roots of neomercantilist thought in the pre-1939 period, that diversity was extremely limited in one key respect. Influential neomercantilist thought in this time period was dominated by men. This phenomenon was partly a product of broader male dominance of political-economic thought and policymaking during this period. But women made influential contributions to other IPE ideologies of the time, such as Rosa Luxemburg in the case of Marxist theories of imperialism. A female thinker of this prominence did not emerge in neomercantilist circles. Perhaps the best-known woman in the neomercantilist intellectual movement in this period was Kate McKean, who published A Manual of Social Science in 1864. This work was a “condensation” of Henry Carey’s three-volume Principles of Social Science into a more readable single volume.83 McKean’s Manual was republished in multiple editions and her book was often the one read and trans­ lated by followers of Carey around the world rather than Carey’s sprawling origi­ nal. Her role in popularizing Carey’s ideas was similar to that of women such as Jane Marcet and Harriet Martineau vis-à-vis the ideas of well-known economic liberals in the nineteenth century.84 Her Manual, however, was an edited-down version of Carey’s work rather than the kind of independent texts written by

83. Quote comes from the subtitle of her work: A Manual of Social Science: Being a Condensation of the “Principles of Social Science” of H. C. Carey, LL.D 84. For their work see, for example, Becchio 2020.



Marcet and Martineau. As McKean noted in her preface, her book was “little more than a selection from the great work above referred to [Carey’s Principles] the words of which have been as far as possible preserved.”85 Very little is known about McKean, although she appears to have been a rela­ tive of Carey. Even McKean’s preface gives away little about her identity beyond her location in Cumberland, Maryland.86 But the preface is interesting in show­ ing that she felt the need to justify her female presence in the neomercantilist intellectual project. Here is the case she made: “It is under the impression that the most certain mode of spreading a knowledge of truths which lie at the root of all national progress, is by making them a part of the instruction of the young, that the editor [McKean] has ventured, encouraged by the appropriation of the author, to undertake a work more suited to a masculine than to a feminine intel­ lect.” McKean’s identification of the subject of her work as “masculine” may help to explain why more women were not prominent in the neomercantilist intel­ lectual movement.87 Their relative absence did not preclude many male neomercantilists from discussing the place of women in their policy agendas. As was the case within liberal and Marxist circles, the views of neomercantilists were quite varied on this topic.88 Some appeared to be interested mainly in how women might instru­ mentally serve neomercantilist priorities.89 Others showed more interest in the goal of improving women’s position in society for its own sake. This latter goal was sometimes conceptualized in only limited ways, but some neomercantilists advanced more ambitious ideas on this topic, particularly Henry Carey, who

85. McKean 1864, vi. Carey’s close friend William Elder ([1880] 2006, 18) noted that “Miss McKean” did the work “under the author’s [Carey’s] supervision.” 86. Anthony Wallace reports that Henry Carey drafted a will in 1864 that left a life annuity to his “cousin” Catherine McKean. According to Wallace, a relative of Carey’s claimed that she was, in fact, his granddaughter via “a woman who eventually married a ‘drunken Irishman’ in Maryland” (Wallace 1988, 59). 87. The issue was also raised in the context of mercantilist thought. Take, for example, the case of the Japanese writer Tadano Makuzu, who authored a mercantilist treatise in 1817–18 (the first known treatise on political economy by a Japanese woman). She noted that it was taboo for women to address the topic, but justified her writing in a number of ways, including by suggesting that she was fulfilling her filial duty of carrying on the legacy of her father, who had been a prominent mercantilist thinker. Readers of her work praised her for “thinking like a man” and for having a “manly” mind (quoted in Gramlich-Oka 2006, 4, 177). 88. For a recent overview of this topic in economic liberal and Marxist thought, see, for example, Becchio 2020. 89. See, for example, Hamilton (chapter 1) and Rae (chapter 10), who argued that industrializa­ tion could provide new paid employment to women in ways that boosted national wealth. As I note in chapter 2, List made a similar argument in his 1841 book, but he also showed more interest in improving women’s working conditions as a social goal in other writings.



argued that neomercantilist goals could not be effectively realized without pro­ moting greater gender equality, and vice versa.90 The third caveat concerns my motivation in writing this history of neomer­ cantilist thought. I should clarify that I have not been driven to analyze this his­ tory because of any particular affinity to this ideology; indeed, a number of the thinkers I examine expressed views with which I strongly disagree. I have been motivated instead by a scholarly frustration with the limited and narrowly Listcentric understandings of this topic in an era when neomercantilist ideology is increasingly politically consequential. My goal, in other words, is to improve aca­ demic understanding rather than to promote any of the ideas discussed in this book. Of course, I have opinions about the ideas of the thinkers I describe, but I have tried to keep these views to myself as much as possible in order to let read­ ers make their own judgments. I should, however, be upfront about an analytical bias that encouraged me to pursue this research project. It is the belief that ideas can have an important impact on the politics of the world economy. Perhaps not surprisingly, many of the thinkers discussed in this book shared this view. Indeed, they often ascribed to ideas much more political influence than I would. For example, Sun Yat-sen wrote in 1918 that “mind is the beginning of everything that happens in the world.”91 Fukuzawa made a similar point in 1875, invoking the example of Adam Smith: “Once some truth is discovered and announced to others, in no time at all it moves the minds of a whole nation. If the discovery is very great, the intel­ lectual power of a single man can change the face of the entire world. . . . Adam Smith discovered the laws of economics, and world commerce took on a new dimension.”92 Ironically, however, the pre-1939 neomercantilist thinker whose thought is best known to modern IPE scholars, List, downplayed the political sig­ nificance of ideas: “[Customs tariffs] are not, as is asserted, the invention of some theorist, they are the natural result of a nation’s endeavors to secure its existence and well-being, or to obtain supreme power.”93 Although I have focused on neomercantilists whose ideas were politi­ cally influential, I should clarify that this book does not attempt to provide a

90. For an example of a limited conception, see Schmoller’s views (chapter 3). Others whose interest in improving women’s position in society is mentioned in this book include M. Carey and Dupin (chapter 1); Gökalp (chapter 3); Ranade and Sarkar (chapter 4); Zheng and Sun (chapter 8); and Belzu and Batlle (chapter 11). 91. Quoted in Kinderman 1989, 53. 92. Fukuzawa [1875] 2009, 107. 93. List [1841a] 1909, 305.



comprehensive analysis of the causal relationship between ideas and political outcomes. It is primarily a history of ideas rather than a history of their politi­ cal influence. To judge which thinkers were influential, I have relied heavily on existing scholarship. At the same time, I challenge conventional understandings of the political influence of specific neomercantilist ideas in some circumstances where I believe conventional wisdom is misplaced. To back up my claims in these cases, I have drawn on a combination of primary evidence and careful reading of relevant secondary literature. A further caveat relates to the fact that I make a number of claims about the influence—or absence of influence—of the ideas of some thinkers on others. These claims draw on both evidence in secondary literature and my reading of texts and the references made within them. I am fully aware, however, that there are clear limitations to the latter strategy, given that thinkers might not have acknowledged explicitly all the ideas and thinkers who influenced them. This problem is compounded by the fact that some of the thinkers examined in this book, including List, did not make extensive use of formal citations to other work. Indeed, List explicitly highlighted this point at the start of his 1841 book: “I have not followed the prevailing fashion of citing a multitude of quotations. But I may say that I have read a hundred-fold more writings than those from which I have quoted.”94 Some of my claims are, thus, not definitive, and I have tried to make this clear to the reader in various relevant places in the text. The final caveat is that this book does not discuss in any great detail the nonin­ tellectual sources of the ideas it examines. Intellectual historians have highlighted the difficulties of trying to understand ideas without in-depth knowledge of the historical environment in which they emerged and the intentions of the thinkers themselves.95 To provide a detailed analysis of these issues vis-à-vis each thinker discussed in this book, however, would have required a much longer study, and this book is already long enough. As partial compensation for this weakness of the volume, I provide some brief biographical information for the more influ­ ential thinkers as well as some brief description of the broader circumstances in which many of these thinkers developed their ideas. I can also offer here—as a final point in this introductory chapter—a few generalizations about the types

94. List [1841b] 1909, xliii. 95. For a recent overview of debates on this topic in international relations, see Ashworth 2019.



of circumstances that encouraged the birth of neomercantilist ideas in so many different places in the world in this time period. Two intellectual circumstances have been noted already; neomercantilist thought often emerged where there was familiarity with earlier mercantilist tra­ ditions and/or where thinkers were exposed to foreign neomercantilist ideas. It also arose in circumstances where states were experiencing heightened geo­ political and/or economic vulnerability. The reasons for this vulnerability were often locally specific, but some had a common international dimension. One such dimension was the international structural circumstance of the uneven progress of industrialization across the world in this era.96 Specifically, many neomercantilist ideas—including those of List—emerged in places with limited or less advanced industry and where thinkers were becoming concerned about the relative decline in the wealth and power of their state vis-à-vis more advanced industrializing countries. Neomercantilist ideas also sometimes gained political prominence in the latter countries when they faced new foreign indus­ trial competitors. Neomercantilist thought was also encouraged by some common interna­ tional conjunctural circumstances that intensified concerns about state wealth and power. Particularly important were circumstances of growing geopolitical uncertainty and/or intensifying economic integration and economic disloca­ tion. Some of these conjunctural trends were experienced regionally, such as when China, Japan, and Korea were all forcibly opened economically by exter­ nal powers between the 1840s to the 1870s. Others were experienced collectively in a wider international way. For example, many early neomercantilist ideas— including, once again, those of List—appeared in the immediate aftermath of the Napoleonic Wars when, with the sudden expansion of international trade, scores of countries faced the prospect of deindustrialization in the face of new competitive pressures, particularly from British firms.97 Another widespread surge of interest in neomercantilist thought occurred in the increasingly uncer­ tain global economic and political environment of the late nineteenth century, which featured growing trade and geopolitical rivalries among leading powers, intensifying global economic integration, and the depression of the 1870s and

96. My distinction between structural and conjunctural circumstances is inspired by Metzler 2006, 118. 97. See also Metzler 2006, 118; Batou 2006, 45–46. As we shall see, in addition to influencing List in his German context, this circumstance encouraged neomercantilist thinking elsewhere in Europe as well as in Russia, Ottoman Egypt, Latin America, and the United States. In an earlier era, Euro­ pean mercantilism emerged partly out of concerns about new competitive challenges arising from an influx of products from Asia (see, e.g., Szlajfer 2012; Berg 2005).



1880s. Yet one more international neomercantilist moment emerged during and after World War One in the context of heightened international economic dis­ location and geopolitical uncertainty. I suggest in the concluding chapter that another international neomercantilist moment may be emerging in the early twenty-first century. Once again, neomer­ cantilist thought is being encouraged by the fact that many states are experienc­ ing heightened economic and geostrategic vulnerabilities. These vulnerabilities are partly a product of intensified global economic integration and the broader erosion of the post-1945 global political and economic order, including its liberal, multilateral economic framework. They are also exacerbated by the accelerated and uneven progress of industrialization in key parts of the world. In the context of this combination of global conjunctural and structural circumstances, it is my hope that this wider history of the intellectual origins of neomercantilist thought in the pre-1939 period can help to shed some light on the roots and content of this ideology.



This book encourages readers to see the history of neomercantilist thought in a less List-centric way. It might seem odd, then, that the book begins with a section of four chapters focused on what I have called the Listian intellectual world. As I note in the introductory chapter, however, List’s ideas are important to any his­ tory of the emergence of neomercantilist thought. Readers need an understand­ ing of them and this section serves that purpose. But it also begins to develop my case for a wider history in two ways. First, it highlights how some thinkers inspired by List went beyond his ideas in ways that made important contribu­ tions to neomercantilist thought. Second, it shows how List himself built on the ideas of a number of earlier neomercantilists. This chapter examines the ideas of these earlier neomercantilists, while largely leaving the question of how List’s work was influenced by them until the next chapter.1 These thinkers came from three places in which List lived for extended periods of time: the German-speaking world (where he was born in 1789 and lived until 1822 as well as during 1831–37 and 1840–46), the United States (where he resided during 1825–30), and France (where he lived briefly in the early 1820s,

1. In this chapter, I do not address nonneomercantilists who influenced List. Some of these wider influences are noted in the next chapter as well as in chapter 10.




1830–31, and 1837–40).2 Their ideas provide the first examples in this book of important contributions to neomercantilist thought beyond List. They also offer some initial evidence that there were many varieties of this ideology beyond List’s version, that the international circulation of neomercantilist thought involved more than List’s ideas, and that neomercantilist thought built on wider mercantil­ ist traditions than those cited by List.

Hamilton’s Tentative Neomercantilism Of the thinkers discussed in this chapter, the best known among modern IPE scholars is US politician Alexander Hamilton. Indeed, some IPE textbooks identify Hamilton’s 1791 Report on Manufactures as a pioneering neomercantil­ ist work alongside List’s 1841 book.3 In one sense, this reputation is deserved, because Hamilton was the first prominent thinker to challenge Adam Smith’s ideas on trade policy from a sophisticated neomercantilist perspective. At the same time, it is important to recognize that Hamilton’s endorsement of strategic protectionism was much more lukewarm than that of List and many other early neomercantilists. Hamilton came to the topic of trade policy with considerable commercial experience. Born on the Caribbean island of St. Croix, he began working for a trading company in the Caribbean region as a young teenager. In 1772, he moved to the United States to pursue education before joining the revolution­ ary war three years later. After rising quickly to become an aide-de-camp to George Washington, he then went on to become one of the country’s founding fathers, author of a majority of the Federalist Papers, and first treasury secre­ tary of the United States. It was in this latter capacity that he wrote his 1791 report. Although the report was a policy document responding to a Congressional request, it contained detailed theoretical engagement with Smith’s The Wealth of Nations, which had quickly become widely known in the United States after its publication. Hamilton was particularly interested in the Scottish thinker’s advice that an independent United States should continue to focus its economy on agri­ culture and resist protective measures designed to build up local manufacturing. Although acknowledging Smith’s logic, Hamilton argued that it still made sense

2. For useful discussions of List’s life and how his experiences in these three countries influenced him, see Hagemann 2019; Henderson 1983b; Todd 2015; Wendler 2015, 2016. 3. See, for example, Cohn 2016, chap. 3.



for the government to take an active role in promoting manufacturing “in certain cases, and under certain reasonable limitations.”4 The reasons outlined by Hamilton anticipated many of the arguments that List and other later neomercantilists would make. To begin with, Hamilton argued that local manufacturing was needed to bolster the “independence and security” of the new country. As he put it, “Every nation, with a view to those great objects, ought to endeavour to possess within itself all the essentials of national sup­ ply. These comprise the means of Subsistence, habitation, clothing, and defence.” Hamilton highlighted how the experience of his country’s revolutionary war had brought this point home; the “extreme embarrassments of the United States dur­ ing the late War, from an incapacity of supplying themselves, are still matter of keen recollection.”5 Indeed, Hamilton’s views on this subject were widely shared, including by his mentor Washington, who had argued in his first state of the union address to Congress in 1790 that a “free people . . . should promote such manufacturies as tend to render them independent of others, for essential, par­ ticularly military, supplies.”6 Hamilton’s emphasis on the need to protect US sovereignty reflected his concern about the conflictual nature of international relations as well as his skepticism of liberal arguments that the expansion of international commerce would lead to a more peaceful world. In other writing a few years earlier he argued, “Men are ambitious, vindictive, and rapacious,” and asked, “Has com­ merce hitherto done anything more than change the objects of war?”7 Although Hamilton considered political economy questions from a nationalist perspec­ tive rather than a broader cosmopolitan one, his 1791 report did not discuss the relevance of nationality to his economic thought in the detailed way that List would later do.8 In addition to arguments about bolstering his country’s sovereignty, Ham­ ilton outlined many economic reasons for the active government promotion of manufacturing. Some of these related to economic benefits arising from reduced reliance on foreign markets. For example, Hamilton noted that the growth of domestic manufacturing would provide farmers with new local markets, including ones that allowed them to diversify beyond a focus on

4. Hamilton [1791] 1964, 118. 5. Quotes from Hamilton [1791] 1964, 161–62. 6. Washington 1790. 7. Quoted in McNamara 1998, 109. 8. In earlier critiques of free trade from the 1780s, however, he did, like List, advance the idea that trade policy needed to be adjusted to each nation’s specific nature (McNamara 1998, 104).



export crops. He also suggested that demand from these local markets would be steadier for farmers than foreign demand, which was often adversely affected by conditions of foreign harvests or obstacles to international trade. The country’s wealth as a whole would also be boosted by lower transportation costs, as more agricultural products were sold locally and more manufactured goods were purchased from domestic suppliers. Hamilton highlighted other economic benefits that would stem from a more diversified domestic economy. The greater domestic division of labor would allow an increase in “productive powers of labour, and with them, the total mass of the produce or revenue of a Country.” Hamilton also noted that manu­ facturing would boost “the total mass of useful and productive labour” in the country by providing new employment opportunities for various groups, including farmers who were not fully occupied all the time and those “who would otherwise be idle (and in many cases a burden on the community) either from the bias of temper, habit, infirmity of body, or some other cause, indispos­ ing or disqualifying them for the toils of the Country.” In the latter category, he added, “it is worthy of particular remark, that, in general, women and Chil­ dren are rendered more useful, and the latter more early useful by manufactur­ ing establishments, than they would otherwise be.” Hamilton argued that the greater diversity of employment opportunities would furnish “greater scope for the diversity of talents and dispositions which discriminate men from each other.” A more diverse economy would also expand “the spirit of enterprise,” enable domestic businesses to increase exports, attract more foreign custom­ ers to local markets, and cope better with sudden drops in demand in specific sectors.9 Hamilton also pointed to some inherent economic benefits of manufacturing production. Citing the invention of the cotton mill in England two decades ear­ lier, he noted “the advantages accruing from the employment of Machinery” in manufacturing in terms of boosting productivity. Hamilton argued that “manu­ factures open a wider field to exertions of ingenuity than agriculture” and that labor in this sector was more “constant and regular, extending through the year, embracing in some instances night as well as day.” More generally, he suggested that countries reliant on just agricultural exports were subject to disadvanta­ geous terms of trade vis-à-vis manufacturing countries because of the greater “unsteadiness” of foreign demand for their exports.10

9. Quotes from Hamilton [1791] 1964, 128, 125, 131, 128, 133. 10. Quotes from Hamilton [1791] 1964, 130, 122, 121, 159.



If these various benefits would stem from the growth of manufacturing, why did Hamilton think its cultivation required active government measures? One reason was that locals might be discouraged from setting up manufacturing on their own by “the strong influence of habit and the spirit of imitation” or “the fear of want of success in untried enterprises.” A second reason concerned the “intrinsic difficulties” experienced by a new venture that competed with estab­ lished businesses. Finally, Hamilton noted that foreign governments were sup­ porting their own industries with “bounties premiums, and other aids” in ways that undermined the ability of new US manufacturers to succeed.11 To support the growth of manufacturers, Hamilton highlighted the role that moderate tariffs and targeted bans on imports could play. Although a tariff would raise prices in the short term, he argued that it would lower prices over the lon­ ger term, as transportation costs were reduced and local competition increased. Hamilton also noted that trade barriers might encourage a European manufac­ turer to consider “transfer of himself and his Capital to the United States,” espe­ cially if there was the prospect of a growing domestic market to serve. In contrast to some later neomercantilists, Hamilton welcomed this kind of foreign invest­ ment: “Instead of being viewed as a rival, it [foreign capital] ought to be Consid­ ered as a most valuable auxiliary; conducing to put in Motion a greater Quantity of productive labor, and a greater portion of useful enterprise than could exist without it.”12 At the same time, however, Hamilton thought that there should be sufficient domestic capital to fund local manufacturing, particularly if the financial reforms he proposed to Congress were implemented fully. These reforms included the creation in 1791 of the Bank of the United States, which was to assume central banking functions and act as a commercial bank that could lend to businesses. In justifying this institution, Hamilton highlighted the significance of bank credit to his broad economic goals: “By contributing to enlarge the mass of industri­ ous and commercial enterprise, banks become nurseries of national wealth.”13 His financial reforms also consolidated various official debts accumulated dur­ ing the revolutionary war into a system of long-term public debt. Hamilton was familiar with the post-1688 English financial revolution, which had encouraged the emergence of that country’s system of funded long-term public debt and the growth of new credit instruments and active secondary markets. Hamilton

11. Quotes from Hamilton [1791] 1964, 140–41. 12. Quotes from Hamilton [1791] 1964, 149, 148. 13. Hamilton 1790, 2085.



hoped that his reforms would have the same effect, boosting his country’s wealth and power, including the power to fight wars and to protect itself in a hostile international environment. As he put it, public credit was key to “the strength and security of nations.”14 These various activist financial reforms, in other words, reinforced the core neomercantilist goals of his proposals for promoting domes­ tic manufacturing. Although Hamilton is known as a critic of free trade, his support of trade protectionism was quite tentative. Protectionist policies should only be used, he argued, if there was enough domestic competition to prevent a monopoly. Hamilton also highlighted the benefits of using temporary government subsi­ dies as an alternative way to encourage manufacturing. This policy would not only avoid causing higher short-term import prices (as well as scarcity and smuggling) but also boost exports in ways that tariffs would not (although Hamilton did not see exports as a leading source of economic growth). More generally, Hamilton noted that “it is a species of encouragement more posi­ tive and direct than any other, and for that very reason, has a more immediate tendency to stimulate and uphold new enterprises, increasing the chances of profit, and diminishing the risks of loss, in the first attempts.”15 Hamilton also endorsed other government activities to support manufacturing, such as public procurement policies, quality inspections, improvements in infrastructure to encourage domestic commerce, and the use of monetary rewards or exclusive privileges to encourage domestic invention and the introduction of foreign inventions. Although Hamilton’s report offered only tentative support for protectionist trade policies, it represented the most politically prominent and sophisticated expression of neomercantilist ideology of his time. His ideas were informed by both his commercial experience and the conditions of economic and geopoliti­ cal vulnerability in which the new American republic found itself. Hamilton was also familiar with prominent European mercantilist ideas and policies, as was his assistant Tench Coxe, who helped him draft the report and who had already been promoting similar ideas in various writings.16 But Hamilton’s report went beyond mercantilist writings through its careful engagement with Adam Smith’s work. His familiarity with Smith’s critique of mercantilism not only helped inform his cautious views about trade restrictions and his endorsement of only limited

14. Quoted in Edling 2007, 295. See also Tonks 2011, 84, 87–88. 15. Hamilton [1791] 1964, 168–69. 16. See for example Peskin 2003, 93–98, 114; McNamara 1998, 102; Austin 2009, 37, 57; Irwin 1996, 122.



forms of activist government economic management. It also earned him a place as a key pioneer of neomercantilist thought.

Theorists of the American System Although Hamilton’s report helped to build support for the introduction of new modest US tariffs in 1792, calls for more extensive US protectionist poli­ cies intensified in the wake of Napoleonic Wars. The growth of US manufactur­ ing had been encouraged by the introduction of a US embargo against trade with Europe in 1807. When the wars ended in 1815, however, US industry suddenly faced new foreign competition, particularly from highly competitive British manufacturers.17 In this context, many politicians took up the protec­ tionist cause with growing success in the 1816–28 period. The protectionists were led in Congress by Henry Clay, who depicted protectionism as a “genuine AMERICAN SYSTEM.”18 The US protectionist cause in this period was supported by some thinkers who built on Hamilton’s arguments. One of them was List himself, who emerged as a leading intellectual critic of US free traders after his arrival in the United States in 1825. Three years earlier, List had left his place of birth, the Duchy of Württemberg, where he faced persecution. He then spent some time in France and Switzerland before emigrating to the United States and settling in Pennsylva­ nia (and even becoming a US citizen in 1830). In 1827, he wrote a series of letters in defense of the “American system” that were collected together in a publication titled Outlines of American Political Economy.19 This published work made List into a public figure in his new country, and it outlined core themes that would appear in more detailed form in his more famous 1841 book. Although his criti­ cisms of free trade drew partly on ideas he had developed before coming to the United States, List noted that he was deeply influenced by his life in the United States.20 That experience included his immersion in US protectionist circles and their intellectual environment. Indeed, List made a point in 1827 to praise Ham­ ilton’s ideas.21 But two other US neomercantilists, List’s contemporaries, also deserve particular mention.

17. Hudson 2010, 39; Onuf and Onuf 2006, 256. 18. Clay [1824] 1963, 701. 19. List 1827, 6. 20. List [1841b] 1909, xlii. 21. List 1827, 13; Hirst 1909, 284. Although Hamilton’s work is not cited in List’s 1841 book, it is mentioned in List [1837] 1983, 172. For Hamilton’s influence on List, see also Henderson 1983b, 155, 157.



The first was Daniel Raymond, who was a supporter of Clay and whose 1820 book, Thoughts on Political Economy, included strong criticism of Smith. Although Raymond’s work was not cited explicitly by List, his ideas foreshadowed some of List’s, often in quite close ways that strongly suggest List drew on them.22 Many of Raymond’s ideas were also similar to those of Hamilton, but he devoted more attention to the significance of nationalism to political economy. For example, he urged Americans “to break loose from the fetters of foreign authority—from for­ eign theories and systems of political economy.” He also insisted, “A nation is one, and indivisible; and every true system of political economy must be built upon this idea, as its fundamental principle.” In addition, he was critical of economic liberals who did not recognize that governments needed to steer individual eco­ nomic behavior to serve the national interest because “individual interests” were “perpetually at variance with national interests.”23 List would make very similar points. As List would later do, Raymond also reprimanded Smith for failing to rec­ ognize that national wealth needed to be seen in a broad way as “a capacity for acquiring the necessaries and comforts of life.” This capacity, he argued, stemmed above all from “the industrious habits of the people” but also from many other things, ranging from the country’s climate and soil to “the degree of perfection to which the arts and sciences had been carried” and “the nature of the government” (like List, he argued that a “free” government boosted capacity). Because many of these things had no “exchangeable value,” he was critical of Smith and others who sought to measure national wealth by that rubric: “According to my notion, national wealth is altogether invaluable—it transcends all price.” He further criti­ cized Smith for declaring some labor “unproductive” that did, in fact, contribute to the national wealth in this broad sense. Raymond argued that the boosting of national wealth required the augmentation of the “powers” of labor in ways that would “develope [sic] the faculties of man, and stimulate his native energies.” In the realm of trade policy, Raymond argued that protectionist policies could boost national wealth by supporting the growth of employment in local industry and the associated acquisition of skills.24 The second US neomercantilist at the time who deserves mention was Mathew Carey. Carey was a well-known figure in US protectionist circles, and

22. Henderson 1983b, 155, 252n37; Neil 1897, chap. 4; Hagemann 2019, 61; Szporluk 1988, 109; but note also Notz 1926, 263. 23. Quotes from Raymond 1820, v, 27, 34, 35. 24. Quotes from Raymond 1820, 85, 38, 37, 47, 66, 279. For his discussion of the benefits of trade protectionism, see 345–82.



List met him and was influenced by his ideas.25 Carey’s ideas are also impor­ tant because he was the father of Henry Carey, who would later become a major international figure in neomercantilist circles. Born in Dublin, Mathew Carey fled to the United States in 1784 at the age of twenty-four to escape arrest for his dissenting political views. Settling in Philadelphia, he estab­ lished what became the country’s leading publishing firm from the 1780s to the 1820s. Even before coming to the United States, Carey was skeptical of free trade, outlining a case for infant industry protectionism in the Irish context in 1784 that echoed local mercantilist tradition.26 Soon after arriving in his new country, Carey threw his energies into the US protectionist cause, working closely with Tench Coxe and reproducing Hamilton’s 1791 report in a journal he published at the time. Carey remained a passionate defender of protectionism for the rest of his life, acting as a patron for other thinkers, including Raymond, and playing a major role in mobilizing support for Clay’s American System in the 1810s and 1820s.27 Despite his longstanding interest in protectionism, Carey claimed that he did not engage seriously with formal political economy theory until a severe eco­ nomic crisis in 1819 prompted him to spend several weeks reading theoretical work such as Smith’s The Wealth of Nations.28 This experience did not change his views, but led him to target Smith’s ideas more strongly than before as the cause of his country’s economic troubles. As he put it in 1829, the works of Smith and his prominent French supporter Jean-Baptiste Say were designed “to paralyze our [US] industry, and, to a certain degree, to render the United States virtually colonies of the manufacturing nations of Europe.”29 Carey argued that free trade made dominant foreign manufacturing countries richer while undermining the industries of other countries. He warned his US audience of the destruction of industry in places where free trade had been implemented, such as his native Ire­ land, Portugal after it had signed a trade treaty with England in 1703, and Russia after the Napoleonic Wars.30

25. Wendler 2015, 122; Henderson 1983b, 155, 157. 26. Meardon 2013. For his Irish activism, see Bric 2013. For the rich tradition of Irish mercantilist thought in the first half of the eighteenth century, see Rashid 1985. 27. Green 1951, 6–7; Matson 2013, 483; Meardon 2013; Peskin 2003, 63–70. 28. Matson 2013, 476. Meardon (2013) is skeptical of his claim, noting the sophistication of Carey’s economic arguments as far back as 1784, when he was still in Ireland (just before he left for the United States). 29. Quoted in Calvo 2012, 99. 30. Calvo 2012; Hudson 2010, 63; Matson 2013, 475; Clay [1824] 1963, 716–17 (where Carey’s arguments about Russia’s experience are cited).



In critiquing free trade, Carey echoed many of Hamilton’s themes, and even used his name—as well as that of the famous seventeenth-century French mer­ cantilist Jean-Baptiste Colbert—as a pen name in many publications.31 But his endorsement of protectionism was much stronger than that of Hamilton and he emphasized how protectionist policies could foster a greater harmony of interests within the United States between agriculture, manufacturing, and commerce.32 His arguments, like Raymond’s, were also infused with a much more explicit nationalist sentiment than Hamilton’s 1791 report. That approach had roots in Carey’s Irish past; before leaving for the United States, a newspaper he published had associated the “spirit of patriotism” with the development of Irish manufac­ turing.33 Indeed, debates about trade policy in Ireland at that time had become closely tied to broader questions of political independence from Britain.34 Carey’s ideas also represented a more social kind of neomercantilism than that of Hamilton, speaking to domestic inequalities and portraying tariffs in a more populist fashion as a policy that served the common person. This focus was char­ acteristic of a sophisticated mercantilist school that had emerged in the first half of the eighteenth century in Ireland, where Carey had first expressed his views on trade policy.35 It resonated, too, with Carey’s new democratic US political con­ text, particularly in the early decades of the nineteenth century, when Jacksonian Democrats emerged as lead opponents of tariffs, arguing that they benefited the rich at the expense of the poor.36 Carey countered these arguments by stressing that he sought to support small independent producers rather than the kind of large, elite merchant-manufacturers with whom Hamilton had been closely asso­ ciated. As part of his more populist focus, Carey’s monetary and financial views also differed from those of Hamilton (and List). Although he supported Hamil­ ton’s First Bank of the United States, he wanted it to be complemented by many smaller banks that could assist smaller producers and entrepreneurs. He also did not think that the supply of bank notes should be strictly regulated by specie values that were influenced by external markets. To maintain a flexible money supply that met domestic needs, he encouraged local banks to suspend the con­ vertibility of their notes into specie temporarily in times of financial stringency and to lend unbacked paper.37

31. 32. 33. 34. 35. 36. 37.

Peskin 2003, 191, 205. Matson 2013, 472; Peskin 2003, 5, 66. Quoted in Peskin 2003, 66. Meardon 2013. Rashid 1985. Belko 2015. Matson 2013.



Carey also spoke to the social and economic conditions of disadvantaged groups more than Hamilton did. For example, in the 1819 economic crisis, he called attention to the plight of manufacturing workers thrown out of work and was critical of free traders who suggested that they could simply shift to other lines of work.38 He also expressed concerns about women’s working conditions and their relatively low wages vis-à-vis those of men, a situation that he described in 1810 as an “unjust arrangement” that “diminishes the importance of women in society” and “renders them more helpless and dependent.”39 In his 1841 book, List shied away from this more social version of neomercantilism as well as from Carey’s populist orientation and his distinctive monetary and financial ideas. As we shall see in chapter 5, however, Mathew Carey’s more famous son Henry would later reiterate these themes of his father.

Early German and French Neomercantilists List was also influenced by some early German and French neomercantilists. He had become familiar with some of their views before his flight into exile in 1822. Although he had no university education, List assumed a position as a professor teaching political economy at the University of Tübingen during 1817–19. By his own account, he had initially been “a very faithful disciple” and even “very zeal­ ous teacher” of Adam Smith’s ideas, like many other German intellectuals at the time.40 But he noted that his views of free trade began to change because of con­ cerns about how the restoration of open trade after Napoleon’s downfall allowed British manufacturing exports to undermine German industry. As he noted, the latter had been fostered by Napoleon’s Continental System of 1806–14, which banned the import of British manufactures and colonial goods into the parts of continental Europe under Napoleon’s control.41 List’s early interest in protection­ ism, thus, had a similar source as that of many Americans after the end of the Napoleonic Wars. By 1819–20, List had emerged as a leading critic of free trade with Britain (while urging a commercial union among German states that would have a

38. Matson 2013, 476; Hudson 2010, 63. 39. Quote is from a one page publication in 1810 titled “Female Labour” that is republished in Carey 1830, 352. See also Carey 1830, 266–72; Matson 2013, 484; Hudson 2010, 65. Mathew Carey published an edition of Mary Wollstonecraft’s (1794) A Vindication of the Rights of Women in Phila­ delphia shortly after it appeared in Europe. 40. List 1827, 13. For Smith’s reception in Germany, see Tribe 1988, chap. 7. 41. List 1827, 13.



common external tariff).42 When retrospectively discussing his conversion to the protectionist cause, List made a point of praising support he received at the time from a man he described in 1827 as “the most celebrated German author in political economy,” Julius von Soden.43 Soden was a prominent German intel­ lectual who had initially earned a reputation in political economy through his 1806 work Die National-Ökonomie (The national economy). The work acknowl­ edged the insights of economic liberals, but made a case for the use of tempo­ rary and limited tariffs to cultivate infant industries. Soden argued that a nation would be rewarded for this government economic activism because the growth of local industry would generate benefits such as reduced dependence on foreign countries, higher employment, and cheaper goods over time. He insisted that protectionism was necessary because local industrialization might otherwise be inhibited by factors such as lack of capital, local preferences for foreign goods, and natural human concerns about the risks and uncertainties involved in new ventures. Soden’s book also urged governments to encourage national produc­ ers by cultivating a sense of patriotism.44 Soden’s work built on a well-known German tradition of cameralist political economy, which was also familiar to List and which shared with various strands of European mercantilism the goal of cultivating state wealth and power.45 List had also become aware of some French neomercantilists before he left his German-speaking homeland. He then became more familiar with them dur­ ing his brief time in France in the early 1820s as well as in the late 1830s, when he became involved in French debates about trade policy.46 Indeed, his second major work of political economy—after his 1827 letters that were addressed to a US audience—was aimed at French readers. It was a manuscript that he sub­ mitted in 1837 to a French essay competition on the question of free trade.47 While preparing this work—titled Le Système Naturel de l’Économie Politique (The natural system of political economy)—he consulted writings of French neomercantilists, some of whom he also became close to personally. When the manuscript did not win, he set out to revise and expand it into what became his famous 1841 book. This revision was conducted mostly while he was living in

42. List 1827, 13–14; Lambi 1963, 4; Henderson 1989, 134–35; Hagemann, Seiter, and Wendler 2019. 43. List 1827, 14. 44. Soden 1806. See also Tribe 1988, 172–73. 45. Tribe 1988; Reinert and Rössner 2016. 46. Todd 2015, 15, 125, 146–53; Wendler 2015, 95. 47. List [1837] 1983. Henderson (1983b, 156) notes that List wrote very little about political economy during 1827–37.



Paris in 1839–40, and List’s initial goal was for the book to be published simul­ taneously in French and German.48 The thinkers who pioneered neomercantilist thought in France in the early nineteenth century were reacting against how Smith’s ideas had been popu­ larized in their country through texts such as Jean-Baptiste Say’s 1803 Traité d’Économie Politique (Treatise on political economy).49 Building on a strong French mercantilist tradition dating back to the ideas and policies of Colbert, these figures developed new defenses of protectionism that responded to the ideas of Smith and his supporters. One of the earliest of these French neomer­ cantilists was Francois Ferrier, whose work was known to List (as well as to Soden, who cited it in his 1806 book).50 A conservative who was more skepti­ cal of political liberalism than List (and who admired Napoleon’s authoritari­ anism), Ferrier worked in French customs during the Napoleonic period. In 1805, he published a book that, as David Todd notes, “made a powerful and lasting impression as one of the first systematic attacks on Smithian political economy.”51 Ferrier’s critiques of free trade anticipated some of List’s later argu­ ments; indeed, Marx later accused List of having plagiarized Ferrier.52 As List would do, Ferrier argued that the liberal theory of free trade was not a universal science but a cover for British interests. He accused Smith of having a “secret goal” of spreading ideas which “as he very well knew, would hand over the mar­ ket of the universe to his country.” In a later 1829 book, he also anticipated List when warning that free trade with Britain would turn continental Europe into an industrial “desert” and leave France with only industries such as “silk, gild­ ing, [and] fashion” of a “luxury” kind.53 A more important influence on List was the work of Jean Antoine Chaptal. Initially a chemistry professor, Chaptal became involved in French policymak­ ing after the French revolution, rising to the position of minister of the interior under Napoleon. In his official roles, Chaptal actively promoted spending on public works, modern scientific and technical education, and efforts to encour­ age French industry, including through the importation of British engineering

48. Todd 2015, 13, 125, 146–52; Coustillac 2019; Henderson 1989, 139. List’s essay for the French competition was written “with the help of his daughter Émilie, who had a perfect command of French” (Todd 2015, 151n99). It would not be published until 1927, after it was discovered in French archives (Henderson 1983a). 49. Say [1803] 2011. 50. For List, see Henderson 1983b, 157. 51. Todd 2015, 26. 52. Although List was familiar with Ferrier’s ideas, Henderson (1989) argues that Marx’s charge was overstated. See also Todd 2015, 151. 53. Ferrier quotes from Todd 2015, 26, 85.



talent. After the fall of Napoleon, he continued to promote industry through business ventures, and published an important book in 1819, De L’Industrie Fran­ coise (On French industry), that defended the need for tariffs to support French industry.54 In addition to providing a detailed account of French industrialization since the country’s 1789 revolution, Chaptal’s book highlighted the need for French manufacturing to catch up with that of Britain. As in Germany and the United States, the issue was pressing after the end of the Napoleonic Wars because of the exposure of French industry to new British competition after Napoleon’s Continental System had been dismantled. When industrial firms went bank­ rupt, Chaptal noted the costs in terms of unemployment and the loss of large amounts of invested capital. More generally, Chaptal highlighted the significance of industrialization and innovation as drivers of economic growth. Discussing the human “creative faculty,” he argued that “it is to this faculty that we owe successive advances in agriculture, commerce, industry and civilization.” Along­ side these economic concerns, Chaptal also highlighted the need to build up the “industrial independence” of France.55 Many of these arguments would be echoed in the work of List. Influenced by the ideas of Smith and Say, Chaptal also applauded the role of competition in stimulating industrial progress, and he opposed direct state ownership of industry. But he was critical of advocates of free trade for being overly theoretical and failing to recognize many circumstances in which protec­ tionism was justified to support local industry. Chaptal described good customs legislation as serving a number of purposes, including some relating to domestic social goals that might require long-lasting trade restrictions: “It compensates the disadvantages of higher wages of labor and of higher prices of fuel; it protects arts and industries in their cradle until they at length became strong enough to bear foreign competition; it creates an industrial independence of France and enriches the nation through labor.” Chaptal also argued that protectionism was justified where it served as “retaliation” against foreign governments that “refuse [France’s] main product” from being exported to their countries.56 Fur­ ther, Chaptal endorsed a policy that List would reject in his 1841 book: duties on imported raw materials. Chaptal’s book had a large print run and was influential in France as well as internationally. List himself cited it as early as 1820, before he left his homeland,

54. Chaptal 1819a. See also Bolado and Argemí 2005, 223, 237; Henderson 1989, 120–21. 55. Chaptal quotes from Bolado and Argemí 2005, 223; List [1841b] 1909, 301. 56. Chaptal quotes from List [1841b] 1909, 301; Bolado and Argemí 2005, 235.



and recommended it to US protectionists after he had crossed the Atlantic.57 Many of the latter were already familiar with Chaptal’s ideas because Mathew Carey had published one part of the Frenchman’s book in Philadelphia in 1819.58 Indeed, the work was cited in the US Senate as early as 1820 as an approach to political economy competing with that of Smith.59 These intellectual links among neomercantilists in France, Germany, and the United States at this time were also evident in the fact that Chaptal was aware of Hamilton’s 1791 report and, accord­ ing to Elsa Bolado and Lluis Argemí, even gave a copy of it to List.60 Other French neomercantilists cited by List also deserve a brief mention. One was Charles Dupin, whom List praised for having, together with Chaptal, “the deepest insight into the condition of industry.”61 An engineer and mathematician, Dupin was, in fact, the person who had set the question for the 1837 essay prize competition to which List applied.62 He was a passionate advocate for French industrialization and argued that his country’s material and moral progress mutually reinforced each other. He published a book in 1827 that updated Chap­ tal’s work, tracing the growth of what he called the “productive and commercial forces” of France since the end of Napoleon’s rule. Dupin defined the latter as “the combined forces exercised by men, animals and nature and applied to work in agriculture, workshops and commercial enterprises.”63 After 1830, Dupin combined his advocacy of industrialization with growing support for protectionism, showing particular concern for the social effects of free trade. At the same time that he urged industrialization and the cultivation of French wealth and power, Dupin noted the terrible conditions of British work­ ers and warned that the “terrifying struggles between industries from different nations” would force industrialists to treat workers badly. He highlighted the employment benefits of protectionism, noting that “our protective legislation is intended to reserve for the French people the largest amount of work that the French can do.” He also backed the creation of savings banks for French workers, efforts to improve working conditions—including for women—in factories, and France’s first social legislation that limited child labor, in 1841.64

57. List 1827, 15; Henderson 1989, 121–23; Todd 2015, 149; Hagemann 2019, 63. 58. Chaptal 1819b. An English translation of this (Chaptal 1821) was published in Philadelphia. 59. Liu 2018, 215. The English translator of his work also stressed this point in Chaptal 1821, iii. 60. Bolado and Argemí 2005, 217. 61. Quote from List [1841b] 1909, 301. See also Henderson 1983b, 252n33, 253n53; 1989, 126–27. 62. Henderson 1989, 127. 63. Quotes in Hatekar 2003, 474. 64. Dupin quotes from Todd 2015, 145; 2012, 1. See also Todd 2015, 96, 143–45; Henderson 1989, 124–28.



Another French figure praised by List was Louis Say, a businessman who became quite critical of his famous brother Jean-Baptiste’s preference for free trade. List read Louis Say’s work as early as 1822, at which time he even consid­ ered translating it into German.65 While rejecting earlier mercantilist ideas that equated wealth with precious metals, Louis Say was critical of liberal advocates of free trade for seeing wealth only in terms of the exchange value of material goods. In his view, the wealth of nations stemmed from their capacity to produce goods continuously. Say argued that the benefits of trade should, thus, be evaluated not by the monetary values of goods exchanged but according to “whether the mass of objects imported has more utility as means of production and as means of con­ sumption, than the mass of objects this nation exports.”66 Say combined this focus on national wealth with a concern for domestic distributional issues. For example, he was critical of how free trade in unequal societies such as Russia and Poland could undermine the position of poor peasants in export agriculture while ben­ efiting the rich who reaped profits from those exports and imported luxuries.67 During his time in France in 1837–40, List also became close to the politician Adolphe Thiers, who at this time emerged as a prominent French nationalist critic of free trade.68 Like List, Thiers was a political liberal who had earlier sup­ ported free trade. But after traveling to Britain and witnessing its industry first­ hand (and after marrying the daughter of a textile manufacturer that same year), he worried that free trade would leave France with only “one or two industries” and he began to support protectionism. Thiers argued that free traders failed to recognize that modern nation-states were competing for wealth and power in the industrial realm by using tariffs and trade bans. Thiers cited not only the cases of his own country and Britain (which he argued used tariffs to get “cotton spinning and weaving from the Indians”) but also US, Russian, and German practices. At the same time, like the other thinkers described above, Thiers was careful to highlight that he was not an opponent of trade in general. He also insisted that industrial tariffs be temporary, although he noted that the time needed for “the industry’s education” might involve several decades, as had been the case with British cotton textiles and iron.69 List’s views emerged from this wider German-US-French intellectual environ­ ment in which neomercantilist ideas were already in the air. He directly cited

65. 66. 67. 68. 69.

Henderson 1983b, 256n141; Wendler 2015, 58. Quoted in Adamovsky 2010, 366. Adamovsky 2010, 366–68. Wendler 2015, 164; Todd 2015. Thiers quotes from Todd 2015, 126–27.



most of the thinkers discussed in this chapter and was very likely influenced at least to some extent by all of them. But their thinking also differed from List’s in certain respects. For example, some advanced more social versions of neomer­ cantilism than List would promote in 1841 book, combining the goal of boost­ ing state wealth and power with a desire to address domestic inequalities and/ or improve the economic and social conditions of disadvantaged social groups domestically. Chaptal also supported protectionist measures against imported primary products in a way that List did not. Both Hamilton and Mathew Carey showed more interest in the monetary and financial dimensions of neomercantil­ ism than List did. Ferrier’s conservative politics contrasted with List’s support for political liberalism. These differences would also appear among later neomercan­ tilists who adapted List’s ideas (discussed in chapters 3 and 4), as well as among other thinkers (analyzed in parts 2, 3, and 4 of this book). In addition to providing early examples of the diversity in the content of neomercantilist thought, the thinkers discussed in this chapter showed how the international circulation of neomercantilist thought involved much more than Listian ideas. Even in this early period, other neomercantilist ideas—such as those of Hamilton and Chaptal—were circulating in the German-US-French intellectual environment described in this chapter. List himself was influenced by what David Todd calls this “transnational French-German-American debate” and also contributed to it by the cosmopolitan nature of his life.70 The ideas of Mathew Carey also provide a first tentative piece of evidence that neomercantilist thought was sometimes informed by mercantilist traditions beyond the well-known European ones cited by List. In this case, the relevant tradition was a sophisticated eighteenth-century Irish mercantilist school that was not widely known outside of Ireland and to which List made no reference. As noted earlier, Carey’s criticisms of free trade were initially developed in Ireland and some of the distinctive features of his version of neomercantilism, such as its patriotic and social content, echoed this tradition. I have not been able to find enough evidence to draw a conclusive link between the two, but some scholar­ ship about Carey has placed Irish opposition to free trade during the time he was writing in the early 1780s in the context of earlier protectionist campaigns dating back to the 1720s.71

70. Quote from Todd 2012. See also Todd 2015, 153. 71. Magennis 2015, 178.



List’s 1841 book is the pre-1939 neomercantilist work best known to IPE scholars and students in the early twenty-first century.1 Its core arguments built directly on the work of the thinkers noted in the previous chapter. But List did more than simply repeat their ideas. He synthesized and went beyond them in creative and innovative ways. The result was a new version of neomercantilist ideology that soon attracted supporters around the world. This version had a number of idiosyncratic features that are not always fully understood. Particularly striking was the extent to which List embraced some of the ideas of economic liberalism. Although List has a reputation as an aggressive critic of nineteenth-century economic liberals, he was more sympathetic to their ideas than is often recognized. This characteristic of his thought, as well as many others, would be modified by later neomercantilists who built on his work.

The Importance of Industrialization The first way in which List echoed the thinkers discussed in the previous chapter was his prioritization of industrialization. Many of List’s arguments

1. This chapter quotes from the 1909 version of the 1885 English translation by Sampson Lloyd (List [1841b] 1909). A key limitation of that version is its omission of List’s important introduction to the book. An English translation of the introduction can be found in Hirst 1909, 297–318. 52



for industrialization were similar to those outlined by Hamilton and others. To begin with, List warned that countries whose economies were focused only on agriculture were “always more or less economically and political dependent” on industrial countries because they risked “failing to obtain the supplies of the manufactured goods which they require” in the event of wars or foreign trade restrictions. Their independence was also compromised by their vulner­ ability to sudden changes in demand for their agricultural exports because of these and other circumstances. List further argued that industrialization strengthened independence by bolstering military capacity in areas such as naval power. By contrast, he suggested that the “powers of defense” of a purely agricultural nation were “hampered.”2 Like Hamilton, List prioritized the cultivation of national independence because he was concerned about the conflictual nature of international relations in the absence of “the existence of a universal union and a state of perpetual peace.” He criticized liberals for presuming the latter, arguing that they “assumed as being actually into existence a state of things which has yet to come into existence.” But List also went beyond the defensive neomercantilism outlined in Hamilton’s 1791 report to highlight how the power acquired by industrialization could be projected externally by a state to promote foreign commerce and colonize other countries. Indeed, List lamented that a purely agricultural country would never be able to “form colonies of its own,” and he displayed a particular enthusiasm for Western imperialism in tropical regions of the world, arguing that colonies there would help to secure new markets and resources for a country’s manufactur­ ing firms as they grew. More generally, List contended that “civilised countries” had “a duty incumbent on them all alike” to promote “civilisation of barbarous nations, of those distracted by internal anarchy, or which are oppressed by bad government.”3 List’s interest in this more offensive style of neomercantilism appears to have emerged after he left the United States. While defending the “American” approach to political economy when he was still in that country in 1827, List had gone out of his way to praise its defensive character in contrast to the aggressive nature of English goals: “English national economy is predominant; American national economy aspires only to become independent.”4 His subsequent years

2. Quotes from List [1841b] 1909, 145–46; [1841a] 1909, 307. For naval power, see List [1841b] 1909, 31. 3. Quotes from List [1841b] 1909, 102, 145, 102. 4. List 1827, 12. In his writings, List often switched back and forth between using “English” and “British.” In describing various passages of his writings, I have tried to be consistent with his usage in each specific context.



in France, however, seem to have led him to endorse more offensive power goals and imperialist practices. This shift may have been encouraged by the growing French support for imperialism after 1830, triggered by the country’s conquest of Algiers. Indeed, Onar Ince notes that List himself showed “enthusiastic support for the French occupation of Algeria.”5 In addition to these arguments about power, List highlighted a number of rea­ sons why local manufacturing would increase a country’s wealth. Like Hamilton, he argued that local farmers would find new domestic markets for their produce that were more reliable than foreign markets and that enabled a wider range of crops to be grown. Farmers’ increasing prosperity would, in turn, create larger domestic markets for manufacturing, generating self-reinforcing growth: “Agri­ cultural and industrial productive power will increase reciprocally, and indeed ad infinitum.”6 He argued that this pattern of growth would also save on traderelated transportation and commercial costs and render both agriculture and manufacturing less economically vulnerable to foreign disruption. List also highlighted the economic costs of relying on unstable foreign markets for agricultural exports. Because foreign demand for agricultural products was “neither certain nor uniform,” agricultural-exporting coun­ tries experienced sudden payments deficits and outflows of precious metals that caused enormous disruption to their domestic economies. Although the outflows of precious metals would unleash market forces that restored pay­ ments equilibrium, List noted that this was not “any great consolation” for the country affected because “the destruction and convulsions of commerce and in credit, as well as the reduction in consumption are attended with dis­ advantages to the welfare and happiness of individuals and to public order, from which one cannot very quickly recover and the frequent repetition of which must necessarily leave permanently ruinous consequences.”7 In critiqu­ ing countries’ reliance on agricultural exports, List did not discuss the terms of trade between agricultural and industrial exporting nations, an issue that was mentioned by Hamilton and that interested some other thinkers in the protectionist circles that List encountered in the United States.8

5. Ince 2016, 396n30. For growing French support of imperialism, see Pitts 2009; Coller 2011. 6. List [1841b] 1909, 126. 7. Quotes from List [1841b] 1909, 210, 220–21. 8. See, for example, the views of the US protectionist Alexander Everett, who advanced a differ­ ent argument than Hamilton about the terms of trade, arguing that they went against agricultural countries because of diminishing returns in agriculture (Hudson 2010, 107). List would not have been sympathetic to this argument, because he thought there was an unlimited potential to enhance the productivity of agriculture.



List pointed to other economic gains arising from a more diversified economy comprising both industrial and agricultural activity. Whereas agriculture pri­ marily valued bodily strength, List argued, “every power, even the smallest, that of children and women, of cripples and old men, finds in manufactures employ­ ment and remuneration.” He also highlighted the productivity gains arising from the use of machines across many sectors, including agriculture and transporta­ tion. In addition, he noted that a more diverse economy would enable greater division of labor in the domestic economy, contributing to what he called “a confederation or union of various energies, intelligences, and powers on behalf of a common production.” List asserted that countries with manufacturing were “richer in capital than agricultural states,” a fact that lowered the cost of capital domestically in ways that boosted the competitiveness of local business against those based in primarily agricultural countries.9 Although many of these arguments echoed those of Hamilton, List wanted manufacturing to occupy a more prominent role in the economy than Ham­ ilton did. He also went further in outlining broader domestic benefits of cul­ tivating manufacturing. In countries devoted only to agriculture, he argued, there was a prevalence of “dullness of mind, awkwardness of body, obstinate adherence to old notions, customs, methods, and processes, want of culture, of prosperity, and of liberty.” By contrast, industrialization was associated with growing political liberty (which he valued, as a political liberal), intelligence, and sociocultural progress. He concluded that “a manufacturing power devel­ oped in all its branches forms a fundamental condition of all higher advances in civilisation” (alongside its impact on “material prosperity and political power”), whereas an agricultural nation could never “make notable progress in its moral, intellectual, social, and political development.”10 These criticisms of agriculture were quite different from the views of Hamilton, who had argued that farming was “a state most favorable to the freedom and independence of the human mind.”11 These broader benefits of industrialization mattered not just in and of them­ selves but also because they contributed to what List called the “productive pow­ ers” of the nation-state. This concept was central to List’s work and his criticism of Smith. Like figures such as Daniel Raymond and Louis Say, List argued that Smith focused too narrowly on “exchangeable value” in the marketplace when discussing the wealth of nations. This approach, he argued, overlooked how the

9. Quotes from List [1841b] 1909, 161, 121, 86. 10. Quotes from List [1841b] 1909, 159, 117, 145. 11. Hamilton [1791] 1964, 118.



prosperity of the nation was linked to deeper productive powers deriving “from mental and physical powers of the individuals; from their social, municipal, and political conditions and institutions; from the natural resources placed at its dis­ posal, or from the instruments it possesses as the material products of former mental and bodily exertions (material, agricultural, manufacturing, and com­ mercial capital).” As he put it, “The power of producing wealth is therefore infi­ nitely more important than wealth itself.”12 List was not the first to use the phrase “productive power.” Smith himself had discussed the “productive power of labor” (as had Hamilton).13 But that con­ cept was a much narrower one than List’s. In List’s view, Smith’s analysis was “limited to that human activity which creates material values” and thus did “not even assign a productive character to the mental labours of those who maintain laws and order, and cultivate and promote instruction, religion, science, and art.” Relatedly, he criticized Smith for focusing only on “material capital” while miss­ ing the importance of “mental capital” involving “the moral and physical pow­ ers which are inherent in individuals, or which individuals derive from social, municipal, and political conditions.” More generally, he argued that Smith over­ looked how labor’s productive power was strongly influenced by “the conditions of the society in which the individual has been brought up.” As he put it, “History everywhere shows us a powerful process of reciprocal action between the social and the individual powers and conditions.” He continued: “In the Italian and the Hanseatic cities, in Holland and England, in France and America, we find the powers of production, and consequently the wealth of individuals, growing in proportion to the liberties enjoyed, to the degree of perfection of political and social institutions, while these, on the other hand, derive material and stimulus for their further improvement from the increase of the material wealth and of the productive power of individuals.”14 List’s wide conception of national productive powers was close to Raymond’s ideas about “national wealth” as a “capacity” that stemmed from wide sources. Like Hamilton, however, Raymond did not endorse either manufacturing or pro­ tectionism with the same enthusiasm as List.15 List’s arguments about national productive powers also built directly on Chaptal’s ideas about the significance

12. Quotes from List [1841b] 1909, 181, 108, 181, 108. As noted in the next section, List argued that the boosting of productive powers contributed not just to a country’s prosperity but also to its defense. 13. See Smith [1776] 1909, 9; Hamilton [1791] 1964, 128. 14. Quotes from List [1841b] 1909, 111, 181, 111, 87. 15. For example, Raymond argued that agricultural labor was not necessarily less productive than industrial labor. In contrast to List, he also argued: “Agriculturalists are a superior class of men



of the human “creative faculty” in economic and civilizational advancement. In addition, they resembled Dupin’s conception of the “productive and commercial forces” of France, although List had used the term “productive powers” as early as 1820 and developed his ideas on the topic in his 1827 letters, which he finished writing before reading Dupin’s work.16 Thinkers outside the neomercantilist camp may also have influenced List’s concept of productive powers. For example, in the context of urging a neofeudal regime of national self-sufficiency, Adam Müller, a German conservative critic of Smith, highlighted in 1808–09 the economic significance of immaterial capital such as religion, morality, science, technical knowledge, and national conscious­ ness.17 List did not refer to Müller’s ideas in his 1827 letters, his 1837 manuscript, or his 1841 book, but he had met Müller in 1820 in Vienna.18 List did cite another thinker—Heinrich von Storch from Russia—whose theory of “internal goods” may have influenced List’s concept of productive powers. I discuss Storch’s ideas and possible influence on List in chapter 10. Joachim Zweynert highlights that the term “productive forces” was also “quite common in mercantilist and cam­ eralist literature” and that the prominent eighteenth-century German cameralist Johann Gottlob von Justi had distinguished in 1756 between material and imma­ terial goods.19

List’s Case for Strategic Trade Protectionism If industrialization was needed to cultivate both the wealth and power of a nation-state, why did List think trade restrictions were needed to promote industrialization? Once again, List built on the arguments that Hamilton and others had advanced. To begin with, he noted that English manufacturers had “a thousand advantages over the newly born or half-grown manufactories of other nations.” In addition to having access to more skilled workers and better and cheaper machinery, transportation, and credit, they had “greater commercial experience, better tools, buildings, arrangements, connections, such as can only

to manufacturers. They enjoy more vigorous wealth, and possess more personal courage. They have more elevated and liberal minds” (Raymond 1820, 120). 16. Henderson 1983b, 253n52; 1989, 126–27; Todd 2015, 149. 17. For his possible influence on List, see DaastØl 2011, 211; Notz 1926, 262; Szporluk 1988, 100. For Müller’s views, see also Turunen 2016; Greenfeld 2001, 196–99. 18. For their links, see Hagemann 2019, 60; Wendler 2015, 33. One German supporter of Smith accused List in 1845 of plagiarizing Müller (Colwell note in List [1841c] 1856, 404n). 19. Quotes from Zweynert 2004, 540.



be acquired and established in the course of generations.” They also benefited from the fact that they could sell to colonial markets as well as to “a larger home market of their own, which enables them to manufacture on a larger scale and consequently more cheaply.” In this context, industries in other countries faced little chance when competing with their English counterparts, just as “a child or a boy in wrestling with a strong man can scarcely be victorious or even offer steady resistance.”20 List also warned that England’s objective was “to monopolise the manufac­ turing power of the whole world,” echoing the kind of rhetoric that Mathew Carey and Ferrier had used.21 Because English firms were more competitive, List argued, the English promotion of free trade had the effect of wiping out foreign industrial competitors. He also noted that English firms often benefited from government subsidies as well as from protection of their home market. He fur­ ther highlighted that some English politicians encouraged English firms to sell goods abroad cheaply at a loss to destroy foreign competition and “stifle in the cradle the foreign manufactures.”22 To support his case that protection was needed in the context of this unbal­ anced competition, List invoked England’s own experience. Earlier in its history, England had supplied resources in exchange for manufactured goods vis-à-vis more advanced continental European powers, just as other countries now did vis-à-vis England. But List noted how English authorities had then cleverly used protectionism to build up their country’s manufacturing sector. In one of his most famous passages (that I have already partially quoted in the introductory chapter), List critiqued Smith and later British thinkers and officials who advo­ cated free trade for ignoring this historical experience: It is a very common device that when anyone has attained the summit of greatness, he kicks away the ladder by which he has climbed up, in order to deprive others of the means of climbing up after him. . . . Any nation which by means of protective duties and restrictions on navigation has raised her manufacturing power and her navigation to such a degree of development that no other nation can sustain free competition with her, can do nothing wiser than to throw away these ladders of her greatness, to preach to other nations the benefits of free trade, and to declare in

20. Quotes from List [1841b] 1909, 240–41, 150–51, 240. 21. List [1841b] 1909, 297. 22. English member of parliament Henry Brougham in 1815, quoted in List [1841b] 1909, 70.



penitent tones that she has hitherto wandered in the paths of error, and has now for the first time succeeded in discovering the truth.23 List also noted that Adam Smith himself had outlined three situations in which protectionism was justified. First, Smith had suggested that if a coun­ try’s exports were being restricted, retaliatory protectionism could be used to encourage those restrictions to be lifted. On this point, List was, in fact, more cautious than Smith: “The principle of retaliation is reasonable and applica­ ble only if it coincides with the principles of the industrial development of the nation, if it serves as it were as an assistance to this object.” As we shall see, later neomercantilists who built on List’s ideas, such as Gustav Schmoller, advanced more ambitious ideas about how protectionism could be used as a weapon to secure trade advantages abroad. Second, List noted that Smith had endorsed the use of tariffs to equalize competition when foreign goods were taxed lower abroad than those of domestic producers. In this case, List went further than Smith: “Why should not also the other disadvantages to which our manufactur­ ing industry is subjected in comparison with that of the foreigner afford just grounds for protecting our native industry against the overwhelming compe­ tition of foreign industry?”24 Finally, Smith had endorsed protectionism for the purpose of defense, including one of England’s most famous mercantilist policies, the Navigation Acts, on the grounds that defense was “of much more importance than opulence.”25 List argued that this line of reasoning justified his entire proposed system of trade protectionism because the growth of manu­ facturing contributed to national defense in many ways, including by foster­ ing the broad productive powers of a country: “[It] tends to the augmentation of the nation’s population, of its material wealth, of its machine power, of its independence, and of all mental powers, and, therefore, of its means of national defence, in an infinitely higher degree than it could do by merely manufactur­ ing arms and powder.”26 In addition to using and modifying some of Smith’s arguments, List also cri­ tiqued the liberal case for free trade directly. One of its weaknesses, he argued, was its failure to recognize the political nature of international trade. Free trade made sense, he argued, within a nation or among countries bound together in a global political federation. But trade between independent nations had quite

23. 24. 25. 26.

List [1841b] 1909, 295–96. Quotes from List [1841b] 1909, 255. Smith [1776] 1909, 344. List [1841b] 1909, 255. See also 37.



different dynamics, being regulated not by what free traders called “the natural course of things” but instead “mostly by the commercial policy and the power of the nation, by the influence of these on the conditions of the world and on foreign countries and peoples, by colonial possessions and internal credit establishments, or by war and peace.”27 In this context, governments had to look after the national interest more actively than supporters of free trade sug­ gested, including by countering the effects of other governments’ interventions in markets. List also critiqued liberal advocates of free trade for overlooking how com­ petitive advantages could be cultivated over time in manufacturing with stra­ tegic protectionism and other forms of government economic activism. List acknowledged that competitive advantages had a natural basis in agriculture, where “production depends for the most part on climate and on the fertil­ ity of the soil.” But he argued that manufacturing was different: “All nations inhabiting temperate climates have equal capability provided that they possess the necessary material, mental, social, and political qualifications.” What was needed, he argued, was the use of protective barriers to act as an incentive for entrepreneurs to establish new industries in an agricultural country. As he put it, “[These barriers] guarantee a reward to the man of enterprise and to the workman for acquiring new knowledge and skill, and offer to the inland and foreign capitalist means for investing his capital for a definite and certain time in a specially remunerative manner.”28 List further argued that economic liberals overlooked how any short-term economic costs of protectionism would be offset by the gains realized from boosting the productive powers of the entire nation over the longer term: “If, therefore, a sacrifice of value is caused by protective duties, it is made good by the gain of a power of production, which not only secures to the nation an infinitely greater amount of material goods, but also industrial independence in case of war. Through industrial independence and the internal prosperity derived from it the nation obtains the means for successfully carrying on foreign trade and for extending its mercantile marine; it increases its civilisation, perfects its institu­ tions internally, and strengthens its external power.”29 In discussing how protectionist policies contributed to a country’s productive powers, List focused primarily on their role in cultivating new industry. But he also noted briefly the importance of defending established industries in cases

27. List [1841b] 1909, 219. 28. Quotes from List [1841b] 1909, 309, 246. 29. List [1841b] 1909, 117–18.



of a temporary loss of competitiveness caused by a foreign dominant industrial power “striving after monopoly” or declaring “a war of extermination against the manufacturers of all other countries.” If these industries were undermined, the costs to the nation could be very high. Here is how he described the impact of an “interruption” in manufacturing production: By it, machinery and tools are reduced to the value of old iron and fire­ wood, the buildings become ruins, the workmen and skilled artificers emigrate to other lands or seek subsistence in agricultural employment. Thus in a short time a complex combination of productive powers and of property becomes lost, which had been created only by the exertions and endeavors of several generations. Just as by the establishment and continuance of industry, one branch of trade originates, draws after it, supports and causes to flourish many others, so is the ruin of one branch of industry always the forerunner of the ruin of several others, and finally of the chief foundations of the manufacturing power of the nation.30 In another passage, List also criticized free traders for neglecting the costs involved in shifting resources from one sector to another and argued that a nation might be justified in using protectionist policies to avoid “sacrificing a large portion of its material and mental capital.”31 These arguments echoed points that Chaptal made about the impact of British competition after the end of the Napoleonic Wars. They also reflected List’s own experience of lobbying for the protection of established German industries at that time.32 List offered one other rationale for protectionism that is often overlooked by those who describe his ideas. Like Hamilton, List argued that trade protection­ ism could not only protect local firms but also help to attract mobile foreign capital and skilled labor to support national industrialization. In his words, it served to “stimulate foreigners” to bring “their productive powers” to the country. He added an interesting argument for why “a mass of foreign capital, mental as well as material” might be attracted to a nation that imposed trade restrictions. Protectionism, he suggested, would generate not just a pull factor, luring foreigners to produce in a protected market, but also a push factor as they were indirectly encouraged to leave their home country as it lost export markets: “By gradually excluding foreign manufactured articles from our

30. Quotes from List [1841b] 1909, 240, 239. 31. List [1841b] 1909, 189. 32. See also List 1827, 33.



markets, a surplus would be occasioned in foreign nations, of workmen, tal­ ents, and capital, which must seek employment abroad.”33 List justified his focus on attracting foreign capital and skilled labor by highlighting the growing mobility of these factors of production in his era. List pointed to “those unalterable laws of nature by which civilised nations are driven on with irresistible power to extend or transfer their powers of produc­ tion to less cultivated countries.” In this context, states needed to use protec­ tionist trade policies to try to lure mobile capital and labor to their territory. He made this point particularly strongly for German and French readers, who were the main intended audience of his 1841 work. List warned them that their countries were at an inherent disadvantage in the task of trying to attract skilled English workers or wealthy English investors: “If the Englishmen took it into his head to emigrate, or to invest his capital elsewhere than in England, he would as he now does prefer those more distant countries where he would find already existing his language, his laws, and regulations, rather than the benighted countries of the Continent.” In a striking passage, List argued that this situation should deeply trouble government officials in continental Euro­ pean countries: Asia, Africa, and Australia would be civilised by England, and covered with new states modelled after the English fashion. In time a world of English states would be formed under the presidency of the mother state, in which the European Continental nations would be lost as unim­ portant, unproductive races. By this arrangement it would fall to the lot of France, together with Spain and Portugal, to supply this English world with the choicest wines, and to drink the bad ones herself: at most France might retain the manufacture of a little millinery. Germany would scarcely have more to supply this English world with than chil­ dren’s toys, wooden clocks, and philological writings, and sometimes also an auxiliary corps, who might sacrifice themselves to pine away in the deserts of Asia or Africa, for the sake of extending the manufactur­ ing and commercial supremacy, the literature and language of England. It would not require many centuries before people in this English world would think and speak of the Germans and French in the same tone as we speak at present of the Asiatic nations.34

33. Quotes from List [1841b] 1909, 135, 183, 107. 34. Quotes from List [1841b] 1909, 102, 106.



List saw protectionism as a way to prevent this scenario from unfolding. As he put it, “It would be most unjust, even on cosmopolitical grounds, now to resign to the English all the wealth and power of the earth.” List hoped the protectionist trade policies of continental European countries could help lure mobile English capital and skilled labor away from the English-controlled regions of the world toward their own territories: “In order that, through that cosmopolitan tendency of the powers of production to which we have alluded, the more distant parts of the world may not be benefited and enriched before the neighboring Euro­ pean countries, those nations which feel themselves to be capable, owing to their moral, intellectual, social, and political circumstances, of developing a manu­ facturing power of their own must adopt the system of protection as the most effectual means for this purpose.”35

The Limits of List’s Strategic Protectionism At the same time that List outlined these various rationales for protectionist trade policies, he also placed clear limits on their use. To begin with, he suggested that these policies should be only temporary applied and specifically targeted, arguing that they were “justifiable only until that manufacturing power is strong enough no longer to have any reason to fear foreign competition, and hence­ forth only so far as may be necessary for protecting the inland manufacturing power in its very roots.”36 He also insisted that these policies should be moderate and carefully introduced. As he put it, “Manufacturing power embraces so many branches of science and knowledge, and presupposes so much experience, skills, and practice, that national industrial development can only be gradual. Any exaggeration or hastening of protection punishes itself by diminished national prosperity.” List also included a further warning: “Excessively high import duties, which entirely cut off foreign competition, injure the country which imposes them, since its manufacturers are not forced to compete with foreigners, and indolence is fostered.”37 List also strongly opposed all protectionism of raw materials and agriculture not motivated by revenue, a view that left him disagreeing with earlier thinkers such as Chaptal (as well as with many later neomercantilists). As he put it, “The

35. Quotes from List [1841b] 1909, 106–7. See also List’s (1827, 23) advice to his US audience. 36. List [1841b] 1909, 144; see also 249–51. 37. Quotes from List [1841a] 1909, 312–13.



system of protection can be justified solely and only for the purpose of the indus­ trial development of the nation.” In criticizing trade restrictions vis-a-vis “raw products,” List invoked liberal logic, arguing that they would be detrimental to individuals and would divert capital and labor into a “less useful channel.” He also argued that they would hurt domestic manufacturing as well as “the prosper­ ity and progress of the whole human race.”38 List also suggested that agricultural protectionism—a policy he described as “madness”—was unnecessary because agriculture “is sufficiently protected against foreign competition by the nature of things.”39 Indeed, despite his reputation as a protectionist, List supported the most famous free-trade initiative of his era: the abolition of the Corn Laws in Britain.40 In addition, List endorsed industrial protectionism only for a specific group of countries: those with a “temperate” climate that were “retarded in their prog­ ress by the competition of a foreign manufacturing Power” which was “already farther advanced than their own.” Even among such countries, List was selective in choosing which should embrace protectionism. He argued that industrial pro­ tection was justified “only in the case of nations which through an extensive and compact territory, large population, possession of natural resources, far advanced agriculture, a high degree of civilisation and political development, are qualified to maintain an equal rank with the principal agricultural manufacturing com­ mercial nations, with the greatest naval and military powers.”41 Countries without these characteristics, he argued, would be better served by free trade. They included Britain because it was the dominant economic power of his age. For a country that had reached “the highest degree of wealth and power,” he argued, free trade was the best policy because it would ensure that the country’s “agriculturists, manufacturers, and merchants may be pre­ served from indolence, and stimulated to retain the supremacy which they have acquired.” He also argued that Britain should embrace free trade unilaterally rather than “lecturing” other countries to dismantle “systems of protection”

38. Quotes from [1841b] 1909, 152, 175, 152. 39. Quotes from List [1841a] 1909, 311; [1841b] 1909, 272. In notes accompanying the 1856 French translation of List’s 1841 book, Henri Richelot reported that List later showed some flexibility in his opposition to agricultural protectionism after being criticized: “He says that he allows to this general rule exceptions which he had not specified in his National Economy” (List [1841c] 1856, 301n). See also Henderson 1989, 130n17. 40. List ([1841b] 1909, 297) argued that the Corn Laws should have been abolished after peace was restored in 1815. In an 1846 essay, he boasted that he had “defended the complete freedom of trade with food and raw materials, before any Corn League existed” (quoted in Reinert 2019, 264). See also Reinert 2019, chap. 7. 41. Quotes from List [1841b] 1909, 144, 247.



that they employed. He explained: “England will be able to compensate herself for the losses which she suffers from foreign systems of protection, in respect of her export trade in manufacturers of every-day use, by a greater export of goods of finer quality, and by opening, establishing, and cultivating new mar­ kets for her manufactures.”42 List mentioned a large number of other countries that should not pursue industrial protectionism: “Spain, Portugal, Naples, Turkey, Egypt, and all bar­ barous and half-civilised or hot countries.” For them, he argued that “the foolish idea will not be held any longer, of wanting to establish (in their present state of culture) a manufacturing power of their own by means of the system of protec­ tion.” Instead, they should export raw materials in exchange for manufactured goods from industrialized countries in conditions of free trade. He argued: “Under the influence of such an exchange of the native products for foreign fab­ rics, a nation so situated will attain to civilisation and development of its produc­ tive powers more quickly and safely than when it has to develop them entirely out of its resources.” In addition to generating economic gains, this trade—and the growing prosperity that arose from it—would have a broader social impact on the country as “its mental and social powers continue to be awakened and increased.”43 List asserted that Britain itself had benefited in these ways from free trade in the early stages of its development.44 Only once temperate countries had sufficiently “far advanced agriculture” and a “high degree of civilisation and political development” should they consider protectionist policies to cultivate local manufacturing. Even then, List insisted that some countries should resist the idea. He argued that the introduction of protectionist policies in a “small State” made little sense because it “can never bring to complete perfection within its territory the various branches of pro­ duction. In it all protection becomes mere private monopoly.” Industrial protec­ tionism was also deemed inappropriate for states without a “compact” territory because a “nation not bounded by seas and chains of mountains lies open to the attacks of foreign nations, and can only by great sacrifices, and in any case only very imperfectly, establish and maintain a separate tariff system of its own.” List argued that countries could try to remedy their “territorial deficiencies” by “means of hereditary succession . . . by purchase . . . or by conquests.” But “in modern times,” he noted, it was better to create a “union of the interests of vari­ ous States by means of free conventions” such as the German states’ Zollverein, of

42. Quotes from List [1841b] 1909, 93, 153. 43. Quotes from List [1841b] 1909, 152, 125. 44. List [1841b] 1909, 90.



which List had been an early advocate.45 Relatedly, List argued that jurisdictions in a political union would always benefit from free trade among themselves. As examples, he cited the unions among not just “the various German allied states,” but also “the different states included in the United States,” the “various depart­ ments of France,” Ireland and Great Britain, and the Canadian and Australian colonies within the British Empire.46 List also insisted that countries in the “tropics”—or what he sometimes called the “torrid” zone of the world—should never try to cultivate manufacturing with protective measures. As he put it, “Any attempt to found a native manufacturing power would be most injurious to the tropics.” His reasoning was that they were “[u]nfitted by nature for such a course.” By contrast, he argued that countries in the “temperate” zone of the world were “specially fitted by nature for manufactur­ ing” for the following reason: Countries with a temperate climate are (almost without exception) adapted for factories and manufacturing industry. The moderate temperature of the air promotes the development and exertion of power far more than a hot temperature. But the severe season of the year, which appears to the superficial observer as an unfavorable effect of nature, is the most powerful promoter of habits of energetic activity, of forethought, order, and economy. A man who had the prospect before him of six months in which he is not merely unable to obtain any fruits from the earth, but also requires special provisions and clothing mate­ rials for the sustenance of himself and his cattle, and for the protection against the effects of cold, must necessarily become far more industri­ ous and economical than the one who merely requires protection from the rain, and into whose mouth the fruits are ready to drop during the whole year.47 List’s 1841 book, in fact, suggests that countries in the tropics were des­ tined forever to be exporters of raw materials and agricultural products and

45. Quotes from List [1841b] 1909, 142–43. For List’s early support of a commercial union between German states, see previous chapter. 46. Quotes from List [1841b] 1909, 100; see also 219, 231. 47. Quotes from List [1841a] 1909, 309; [1841b] 1909, 154, 172. Interestingly, List did not incor­ porate this idea into his thinking in his 1827 letters or his 1837 manuscript (except for one brief comment: List [1837] 1983, 183). The idea that a tropical or temperate climate could have a decisive influence on politics and society was common among European Enlightenment thinkers, including Charles-Louis de Secondat, Baron de La Brède et de Montesquieu, whose ideas List often cited favor­ ably (Brading 1991, 429, chap. 19; Boianovsky 2013, 657, 678–79). This idea could also be found in earlier European analyses of political economy, such as Kaempfer [1692] 1906, 314.



importers of the manufactured goods of temperate countries. Even India was to suffer this fate, despite List’s acknowledgment that it had developed cotton and silk industries more competitive than those of Britain in the past.48 As he put it, “This exchange between the countries of the temperate zone and the countries of the torrid zone is based upon natural causes, and will be so for all time. Hence India has given up her manufacturing power with her inde­ pendence to England; hence all Asiatic countries of the torrid zone will pass gradually under the dominion of the manufacturing commercial nations of the temperate zone; hence the islands of the torrid zone which are at present dependent colonies can hardly ever liberate themselves from that condition; and the States of South America will always remain dependent to a certain degree on the manufacturing commercial nations.” As this quote makes clear, List’s concept of the geography of the tropics was unusually wide, including all of South America.49 List argued that, although tropical countries would never become manufacturing powers, they would benefit by exporting commodities to tem­ perate-zone countries in exchange for the latter’s manufactured goods.50 He also suggested that the tropical regions of the world could benefit from colo­ nization if the colonizer provided a secure export market, military protection, capital, knowledge, and people.51 His arguments about the benefits of European imperialism for the colonized were often infused with a strong Eurocentric civilizational discourse: A nation so thoroughly undermined in her religious, moral, social, and political foundations as Turkey is, is like a corpse, which may indeed be held up for a time by the support of the living, but must none the less pass into corruption. The case is quite the same with the Persians as with the Turks, with the Chinese and Hindoos and all other Asiatic people. Wherever the mouldering civilisation of Asia comes into con­ tact with the fresh atmosphere of Europe, it falls to atoms; and Europe will sooner or later find herself under the necessity of taking the whole of Asia under her care and tutelage, as already India has been so taken in charge by England. In this utter chaos of countries and peoples there exists no single nationality which is either worthy or capable of main­ tenance and regeneration. Hence the entire dissolution of the Asiatic

48. 49. 50. 51.

See, for example, List [1841b] 1909, 34, 310. Quote from List [1841b] 1909, 217; see also 151. List [1841a] 1909, 309. See, for example, List [1841b] 1909, 231.



nationalities appears to be inevitable, and a regeneration of Asia only possible by means of an infusion of European vital power, by the gen­ eral introduction of the Christian religion and of European moral laws and order, by European immigration, and the introduction of European systems of government.52 The Eurocentrism of List’s thought was reinforced by the fact that his views about non-Western parts of the world were not accompanied by much serious analysis of the history of their political and economic systems. The first part of his 1841 book was devoted to history, but List included chapters only on the experiences of Europe (including Russia) and North America. The inference seemed to be that the history of other regions of the world was not relevant for developing a theory of political economy. Like many other European thinkers at this time, he also made little effort to engage with thinkers outside the European and North American intellectual world. Because of these various qualifications to his advocacy of trade protection­ ism, List was left with only a tiny number of countries that met his criteria for adopting neomercantilist policies. He clearly saw the three regions in which he had lived—the German-speaking world, the United States, and France—as prime examples of places that should pursue these policies. He left open the possibil­ ity that other temperate countries might meet his standards in the future once they developed “far advanced agriculture” and a “high degree of civilisation and political development.” But even then, he suggested that they would only qualify if they had “an extensive and compact territory,” “large population,” and “posses­ sion of natural resources.” Even for countries that did meet his criteria, List was careful to note that free trade might be beneficial in some circumstances. For example, he backed treaties of free trade among countries that stood “at about the same degree of industrial development.” In his view, competition among them was “not overwhelming, destructive, or repressive, nor tending to give a monopoly of everything to one side, but merely acts, as competition in the inland trade does, as an incentive to mutual emulation, perfection, and cheapening of production.” As examples, he cited trade treaties between continental European countries and between them and Russia. List even argued that two nations that stood “at different stages of industrial cultivation” could “with mutual benefit make reciprocal concessions by treaty in respect to the exchange of their various manufacturing products.” He continued: “The less advanced nation can, while it is not yet able to produce for

52. List [1841b] 1909, 336.



itself with profit finer manufactured goods, such as fine cotton and silk fabrics, nevertheless supply the further advanced nation with a portion of its require­ ments of coarser manufactured goods.”53 In keeping with this advice, List near the end of his 1841 book called for a “Continental alliance against the British supremacy,” which would include France and German states and would “reciprocally raise their manufacturing power by mutual commercial concessions and by treaties.”54 The idea built directly on his efforts after the end of the Napoleonic Wars to encourage freer trade among Ger­ man states at the same time that he urged higher tariffs against Britain. Indeed, in 1820 he had even proposed to the influential Austrian diplomat Klemens von Metternich a European “commercial congress” to lower trade barriers across the entire continent.55

Other Kinds of Government Economic Activism In addition to strategic trade protectionism to support industrialization, List praised other kinds of government economic activism that England and other countries had used historically to build up their productive powers. One has already been noted: the use of protectionist navigation laws to foster domestic shipping firms. In List’s view, navigation was, in fact, “part of the industrial power of a nation,” and he applied all the caveats about industrial protection­ ism noted above to this kind of protectionism.56 Unlike other neomercantil­ ists noted later in this book, List did not discuss the role of protectionism in supporting broader commercial services in the nation. He also did not men­ tion regulations on foreign direct investment, but rather seems to have simply assumed that these investments would flow to sectors that supported his goals.57 In his 1841 book, List also did not show much interest in the role of exchange rate policy as a tool for protecting local firms or enhancing their international competitiveness. In terms of other aspects of foreign economic relations, List praised gov­ ernment efforts to attract foreign skilled workers and to cultivate trading part­ ners via the promotion of emigration and transportation links as well as the

53. 54. 55. 56. 57.

Quotes from List [1841b] 1909, 260. Quotes from List [1841b] 1909, 340, 339. Quoted in Todd 2015, 148. List [1841b] 1909, 88. See also Szlajfer 1990, 68.



establishment of consulates and diplomatic services.58 To foster trading partners abroad, he also suggested that “companies should be founded and supported by actual share subscription, and taken under special protection.” Among those companies would be those fostering emigration through foreign land purchases, those “for commerce and navigation” to promote industrial exports and steam­ ship lines, and those for engaging in foreign mining operations.59 The role of the government in the creation and support of these companies was left vague for the reader. List was particularly interested in the benefits for temperate countries of cultivating trade with tropical countries that could supply raw materials in exchange for manufactures. For example, he advised German states to foster economic ties of this kind with the Americas, the West Indies, and “European Turkey and the Lower Danubian territories.” Although he supported the cre­ ation of preferential trading areas with countries or colonies in the tropical zone, List argued that it would be better if England took the lead “to introduce in the law of nations the maxim: that in all such [tropical] countries the com­ merce of all manufacturing nations should have equal rights.” He argued that this kind of zone of free trade in tropical countries would not only accelerate their “civilization,” with benefits for all, but also reduce “jealousy” in interna­ tional relations. It would also bring clear advantages for “civilised” countries: “Both the civilisation of barbarous and semi-barbarous nations, and of those whose culture is retrograding, as well as the formation of colonies, offer to civilised nations a field for the development of their productive powers which promises them much richer and safer fruits than mutual hostilities by wars or restrictions on trade.” He anticipated that “civilised countries” would increas­ ingly “comprehend that the civilisation of barbarous nations, of those distracted by internal anarchy, or which are oppressed by bad government, is a task which offers to all equal advantages—a duty incumbent on them all alike, but one which can only be accomplished by unity.” He insisted more generally that “the civilisation of all nations, the culture of the whole globe, forms a task imposed on the whole human race.”60 Although List noted these ways in which governments might try to cultivate trading partners, his comments about these kinds of foreign economic poli­ cies were extremely brief in comparison to his discussion of trade protection­ ism. He was also much less focused on export promotion than were some other

58. See, for example, List [1841b] 1909, 12–13, 345, 347. 59. Quotes from List [1841b] 1909, 347. 60. Quotes from List [1841b] 1909, 347, 153–54, 101–2.



neomercantilists. Indeed, he argued emphatically that domestic markets were much more significant than foreign ones: “The internal market of a nation is ten times more important to it than its external one, even where the latter is in the most flourishing condition . . . it is ten times more important to cultivate and secure the home market, than to seek for wealth abroad.”61 List also commented on foreign economic policy in the financial realm, although once again without much detail. He noted the dangers of foreign bor­ rowing, arguing that English holdings of US stocks and government securities rendered the United States “dependent on their [English] money institutions and drawn into the whirlpool of their agricultural, industrial, and commercial crises.” He highlighted how English investors pulled funds back to their home country when the Bank of England raised interest rates, triggering financial instability in the United States. More generally, he noted that England was “a treasure-house of all great capital—a banking establishment for all nations, which controls the circulating medium of the world, and by loans and the receipt of interest on them makes all the peoples of the earth her tributaries.”62 To resist English financial power, List advised countries such as the United States, German states, and France not just to industrialize (and thus minimize the risk of trade deficits that needed to be financed with external borrowing) but also to pursue domestic reforms that created “a self-supporting system of com­ merce and credit which is independent of the world outside.” In his 1841 book, however, List did not follow Hamilton’s lead in discussing any details of how these countries could create what he called a “durable system of credit of their own.” But he did make the following general comments about public credit: “The system of State credit is one of the finest creations of more recent statesmanship, and a blessing for nations, inasmuch as it serves as the means of dividing among several generations the costs of those achievements and exertions of the present generation which are calculated to benefit the nationality for all future times, and which guarantee to it continued existence, growth, greatness, power, and increase of the powers of production.” He argued that public debt only became “a curse” only if it paid for “useless national expenditure” or “if the burden of the payment of interest of the national debt is thrown on the consumptions of the working classes instead of on capital.”63 List’s 1841 book also does not contain much discussion about other kinds of government economic activism at the domestic level. He supported the liberal

61. List [1841b] 1909, 150. 62. Quotes from List [1841b] 1909, 225, 293. 63. Quotes from List [1841b] 1909, 232.



notion that a vibrant market economy rested on the existence of institutions such as a strong system of law, policing, property protection, money, weights and mea­ sures, public control of state administration, and political freedoms.64 He also supported the spending of public money “for improvement of the means of trans­ port” because this increased “the powers of production of future generations” of the nation. List pointed to the example of England’s “extraordinary facilities for her inland transport afforded by public roads, canals, and railways” and noted that his experience in the United States had also taught him “the importance of means of transport, and their effect on the mental and material life of the people.”65 List was also open to considering “direct support of the State” for key strate­ gic industries such as “machine manufactories,” which had “great influence on the whole manufacturing power,” if they “should not be able under moderate import duties to meet competition.” He argued that subsidies could be justified “as temporary means of encouragement, namely, where the slumbering spirit of enterprise of a nation merely requires stimulus and assistance in the first period of its revival, in order to evoke in it a powerful and lasing production and an export trade to countries which themselves do not possess flourishing manufactures.” But even in these cases, List argued that might be better for the government to offer interest-free loans or special privileges, or to encour­ age the creation of new companies in which a portion of their share capital could be advanced from state funds and private investors could be offered a “preferential interest” in the enterprise. He also applauded the promotion of industry through the creation of “educational establishments (especially tech­ nical schools), industrial exhibitions, offers of prizes, transport improvements, patent laws, &c.”66 Once again, however, these comments were extremely brief in comparison to his discussion of trade policy. And beyond these tasks, List did not favor further intervention. He generally preferred free markets domestically, urging the dismantling of domestic barriers to trade and agreeing with the liberal case for free economic competition “between those who belong to one and the same nation.” He also made a point of praising how trade restrictions achieved results without government micromanagement of the domestic economy: “By prohibi­ tions and protective duties it [the state] does not give directions to individu­ als how to employ their productive powers and capital (as the popular school

64. See for example List [1841b] 1909, 113. 65. Quotes from List [1841b] 1909, 238, 39, xlii. 66. Quotes from List [1841b] 1909, 252, 251, 252, 247.



sophistically alleges); it does not tell the one, ‘You must invest your money in the building of a ship, or in the erection of a manufactory;’ or the other, ‘You must be a naval captain or a civil engineer;’ it leaves it to the judgment of every individual how and where to invest his capital, or to what vocation he will devote himself.”67

Importance of Nations and Nationality The final element of List’s thought that deserves attention was his emphasis on the significance of nations and nationality for political economy. Like some of the other thinkers noted in the previous chapter, List put this issue front and center in his analysis: “I would indicate, as the distinguishing characteristic of my system, NATIONALITY. On the nature of nationality, as the intermediate interest between those of individualism and of entire humanity, my whole struc­ ture is based.” He contrasted his approach to that of the Smithian school, which, he argued, “took no account of nations, but simply of the entire human race on the one hand, or of single individuals on the other.” He suggested that Smithian thought suffered both from a “boundless cosmopolitanism” and from a “dead materialism” that portrayed “individuals as mere producers and consumers, not citizens of states or members of nations.”68 In critiquing the Smithian school on this point, List acknowledged that Smith had invoked the wealth of “nations” in the title of his most famous work. But List argued that Smith had meant the wealth of “all nations of the whole human race.” List also suggested that Smith’s doctrine “ignores the very nature of nationali­ ties, seeks almost entirely to exclude politics and the power of the State, [and] presupposes the existence of a state of perpetual peace and of universal union.”69 These arguments misrepresented Smith’s work and were inconsistent with List’s own praise for Smith’s endorsement of the Navigation Acts as well as the latter’s idea that defense was more important than opulence.70 But List was on stron­ ger ground in critiquing some of Smith’s followers, including Thomas Cooper, a leading US free trader, who had referred to the nation as “a grammatical inven­ tion” (and who was a key target of List’s 1827 letters).71

67. 68. 69. 70. 71.

Quotes from List [1841b] 1909, 139, 135. Quotes from List [1841b] 1909, xliii, xl, 141, 140. Quotes from List [1841b] 1909, 97, 277. See Watson 2012 for List’s broader misinterpretations of Smith. Quoted in List [1841b] 1909, 99. See also List 1827, 6, 9, 13, 28–29; Henderson 1983b, 16, 154.



In the following famous passage, List outlined his conception of nations, one which focused not on ethnicity or race, but rather on language, culture, and history: Between each individual and entire humanity .  .  . stands THE NATION, with its special language and literature, with its peculiar origin and history, with its special manners and customs, laws and institutions, with the claims of all these for existence, independence, perfection, and continuance for the future, and with its separate terri­ tory; a society which, united by a thousand ties of mind and of inter­ ests, combines itself into one independent whole, which recognizes the law of right for and within itself, and in its united character is still opposed to other societies of a similar kind in their national lib­ erty, and consequently can only under the existing conditions of the world maintain self-existence and independence by its own power and resources.72 Why was it so important to focus on nations in the study of political economy? List’s passage above highlights one key reason. Political economists needed to recognize that the world was likely to be characterized by international conflict, as each nation sought to “maintain self-existence and independence by its own power and resources.” In List’s view, nations were also significant to political economy because “the unity of the nation forms the fundamental condition of lasting national prosperity.” Indeed, List cited weak national unity as a key factor that helped to explain the failure of the Italian city-states, the Hanse­ atic League, and the Dutch to sustain their respective economic dominance in Europe in earlier times. By contrast, he praised the strong sense of nationality of the English, arguing that it had helped to mobilize their successful challenge of the Dutch because they “became animated by a sentiment of shame” at their subordination to such a small country and because “when the conflict came, it became evident that the English nationality was of far larger caliber than that of the Dutch.”73

72. List [1841b] 1909, 141. Szporluk (1988, 128) argues that “[t]here is no trace of racism in List’s world view,” but see List’s (1827, 24) comments about US emigration. See also List’s ([1841b] 1909, 335–36) views about the emancipation of US slaves. Noting List’s heavy emphasis on the influence of climate, Hobson (2013, 1033) places List in an “interstitial zone” between “Eurocentric institution­ alism” (which locates difference in institutions and culture) and “scientific racism” (which locates difference in genetics and biology). See also Hobson 2012, 5n3. 73. Quotes from List [1841b] 1909, 132, 26.



The importance of a sense of nationality to economic development, List argued, related to the point Raymond had made; the interests of individuals often did not align with those of the nation. For List, a national spirit was par­ ticularly important for cultivating the productive powers of a nation, a process that required sustained collective action over time. As he put it, “Only where the interest of individuals has been subordinated to those of the nation, and where successive generations have striven for one and the same object, the nations have been brought to harmonious development of their productive powers.” List rein­ forced this idea with the following metaphor: “Above all things we must have enough national spirit at once to plant and protect the tree, which will yield its first richest fruits only to future generations.”74 Finally, List insisted that nationality was important because the advice of political economists needed to be adjusted to distinct national circumstances. As noted above, these circumstances related to issues such as a country’s terri­ tory, population, natural resources, as well as the degree of its advancement in agriculture, civilization and political development. As List put it in his 1827 work, “Every nation must follow its own course in developing its productive powers; or, in other words, every nation has its particular Political Economy.” List was par­ ticularly critical of those free traders who believed that their advice had univer­ sal relevance without recognizing any “distinction between nations which have attained a higher degree of economical development, and those which occupy a lower stage.”75 Underlying the latter criticism was List’s adaptation of the stage theory of eco­ nomic development that Adam Smith had advanced in The Wealth of Nations. List argued that nations had to pass through the following stages: “Original bar­ barism, pastoral condition, agricultural condition, agriculture-manufacturing condition, and agricultural-manufacturing-commercial condition.” In his view, England was the only place that had advanced fully to the last stage. France was almost there, whereas German states and the United States were on the cusp of the second-to-last stage. List argued that other nations could follow England’s model of advancement through these stages by following the right policies: “Just as England herself has raised herself from a condition of barbarism to her pres­ ent high position, so the same path lies open for other nations to follow.” In this sense, this harsh critic of England’s empire of free trade was also a deep admirer of its accomplishments, seeing it as “an example and a pattern to all nations.”

74. Quotes from List [1841b] 1909, 132, 156. 75. Quotes from List 1827, 24; [1841b] 1909, 139.



Indeed, after criticizing England’s economic supremacy in another passage, List noted that “it must be at the same time admitted that England, in striving for this supremacy, has immeasurably increased, and is still daily increasing, the produc­ tive power of the entire human race.”76 Although List discussed how countries should try to move through the stages he outlined, he made a large exception for the tropical regions of the world, which were never to industrialize in his scheme. Indeed, List explicitly argued that trop­ ical regions, in their enduring role as commodity exporters, would be left in a subordinate position—what List called “a state of dependence” or “a tributary in a certain measure”—to countries in the temperate zone.77 There was, however, one scenario under which List suggested that the “state of dependence” might change: “This policy [of focusing on commodity exporting], of course, leaves the tropics in a state of dependence. But this dependence will be harmless, indeed it will disappear, when more of the nations of the temperate zone are upon an equality in manufactures, commerce, shipping, and political power; when it is both advantageous and possible for several manufacturing countries to prevent any of their number from misusing their power over the weaker nations of the tropics. Such power would only be dangerous and harmful if all manufactures, commerce, shipping, and seapower were monopolized by one country.”78 With this argument, List tried to suggest that his project to promote the industrializa­ tion of temperate countries such as German states, France, and the United States would have wider benefits for tropical regions even as they remained commodity producers. There is one final aspect of List’s discussion of nations that deserves men­ tion: his endorsement of a cosmopolitan future. Despite his criticism of the “cos­ mopolitan” sentiments of the Smithian school, List endorsed the long-term goal of a “union of whole human race” or “confederation” of all nations. He argued: “Unquestionably the idea of a universal confederation and a perpetual peace is commended both by common sense and religion.” List also argued that the prospects for this future were growing, as technology created rising “material and mental interchange” among nations and as people recognized the increasing destructiveness of war in the industrial age.79 Indeed, he suggested that “in the

76. Quotes from List [1841b] 1909, 143, 294, 293, 260. 77. Quotes from List [1841a] 1909, 309; [1841b] 1909, 131. Ince (2016, 396n33) also notes “List’s consistent referral to colonial populations as ‘peoples’ rather than ‘nations.’” 78. List [1841a] 1909, 309. 79. List [1841b] 1909, 101, 105, 100, 101. For ideas he developed along these lines elsewhere in 1837, see Coustillac 2019, 79–80. It is also noteworthy that List began his 1841 book with an appeal not just to “la patrie” (country) but also to “l’humanité” (humanity).



congresses of the great European powers Europe possesses already the embryo of a future congress of nations.”80 List depicted his neomercantilist advice as supporting this long-term goal. In his words, neomercantilist policies would help to prepare countries “for admission into the universal society of the future.” By this, he meant that these policies would enable other countries to catch up to Britain, thereby bringing greater equality among nations. In his view, that equality was a precondition for a confederation of nations: “A universal republic . . . can only be realized if a large number of nationalities attain to as nearly the same degree as possible of industry and civilisation, political cultivation, and power.”81 Because List argued that tropical regions could never industrialize, his vision of equality was a highly selective one. As Onar Ince puts it, “Not everyone was invited to List’s ‘univer­ sal society of the future’ on equal terms.”82 But List argued that for temperate countries, his proposed protectionist policies were “the only means of placing those nations which are far behind in civilisation on equal terms with the one predominating nation.” He concluded: “The system of protection regarded from this point of view appears to be the most efficient means of furthering the final union of nations, and hence also of promoting true freedom of trade.”83 This last quotation highlights how List’s cosmopolitan vision was also a lib­ eral one that included free trade. This feature of List’s thought provides one final example of the extent to which List’s version of neomercantilism was sympathetic to some of the ideas of economic liberalism. Indeed, the argument List used to explain why his cosmopolitan future should include free trade was one that any nineteenth-century economic liberal would have fully endorsed: “The less every individual is restrained in pursuing his own individual prosperity, the greater the number and wealth of those with whom he has free intercourse, the greater the area over which his individual activity can exercise itself, the easier it will be for him to utilize for the increase of his prosperity the properties given to him by nature, the knowledge and talents which he has acquired, and the forces of nature placed at his disposal.”84 With these arguments, List built on many of the ideas of the thinkers discussed in the last chapter but also went beyond them in a number of ways. The result

80. 81. 82. 83. 84.

List [1841b] 1909, 100–1. List [1841b] 1909, 103. Ince 2016, 377. List [1841b] 1909, 103. See also List [1841a] 1909, 302. List [1841b] 1909, 100.



was a version of neomercantilism that was quite idiosyncratic in comparison to those discussed in the prior chapter as well as those of other neomercantilists discussed in later chapters. For example, List’s conception of the goal of promot­ ing state wealth extended beyond that of some other thinkers with his focus on “productive powers.” For him, strategic protectionism and other forms of gov­ ernment economic activism were doing much more than simply cultivating an infant industry. They were building the broader and long-term capacity of a state to produce wealth, a capacity that he argued would emerge from a broad eco­ nomic, political, social, and cultural transformation unleashed by the policies he recommended. Whereas List’s concept of “productive powers” was ambitious, his analysis of state wealth in his 1841 book was more limited in another respect. It paid very little attention to the kinds of domestic distributional and social issues that inter­ ested Mathew Carey and some of the other thinkers discussed in the last chapter (as well as many subsequent neomercantilists). His critique of free trade was cen­ tered on its implications for aggregate productive powers, with little mention of inequality within the nation or the economic and social challenges facing disad­ vantaged domestic groups.85 In other contexts, List devoted more attention to the living standards and employment conditions of workers, particularly women and children.86 But in his best-known 1841 book, this social kind of neomercantilism received little attention.87 List’s 1841 work was also distinctive in other ways. For example, whereas some neomercantilists sought to maximize state power only for the defensive purpose of protecting sovereignty, List also had more offensive goals in mind, including imperialist ones. His views also differed from some thinkers examined in later chapters in emphasizing the wealth and power of nation-states. List’s version of

85. See also Henderson 1989, chap. 8; Todd 2015, 151; Szporluk 1988, 145. One exception came in a paragraph where List ([1841b] 1909, 208) noted that merchants might be accomplishing their purposes “at the expense of agriculturalists and manufacturers.” Two pages later, he also warned that countries specializing in agricultural exports suffered from the fact that “the trade in mere prod­ ucts is always a matter of extraordinary speculation, whose benefits fall mostly to the speculating merchants, but not to the agriculturists” (210). But these comments were brief and peripheral to his analysis (although they received more attention in List [1837] 1983, chap. 20). As noted earlier, List also expressed a brief concern for how the burden of public debt might fall on workers. See also List [1841b] 1909, 44n1. 86. Wendler 2015, 190–1; 2019, 12–43; Henderson 1983b, 159. 87. Wendler (2015, 86, 113–14) notes that List had showed interest in the ideas of some utopian socialists earlier in his life. In his 1841 book, however, List criticized the followers of Charles Fourier for “their annihilation of individual freedom and independence” and for overlooking the pressing need to bolster national wealth and power to avoid being conquered (List [1841b] 1909, 287).



neomercantilism also stood out for its support of political liberalism as well as its longer-term liberal cosmopolitan vision. In addition, List was more cautious than many others in his support for trade protectionism and other forms of gov­ ernment economic activism as well as in his view of which countries should pur­ sue these policies. When justifying some of these stances, List went further than most other neo­ mercantilists in expressing his sympathy for the goals and policies of economic liberalism. Indeed, although List highlighted that he was building on earlier European mercantilist thought, he also emphasized that he was influenced by some of the critiques of it made by Smith and the economic-liberal school: “I have adopted in my theory merely the valuable parts of that much-decried [mer­ cantile] system, whilst I have rejected what is false in it.” He emphasized three “valuable” aspects of mercantilism (or what he preferred to call “The Industrial System”): its recognition of “the value of native manufactures and their influence on native agriculture, commerce, and navigation, and on the civilisation and power of the nation”; its emphasis on trade protectionism as the means to culti­ vate national industry; and its focus on nations, national interests, and national conditions. At the same time, he criticized mercantilists for many weaknesses, including their failure to create a “science of political economy” in the way that Smith did; their advocacy of “prohibitory” trade restrictions rather than “mod­ erate” ones; their overlooking of the benefits of free trade for many countries and in sectors such as agriculture and raw materials; and their “utterly ignoring the principle of cosmopolitanism” in ways that failed to recognize “the future union of all nations, the establishment of perpetual peace, and of universal freedom of trade, as the goal towards which all nations have to strive, and more and more to approach.”88

88. Quotes from List [1841b] 1909, xliii, 271, 280, 272.



List’s 1841 book attracted attention not just in the German-speaking world but also in many other parts of the globe in the nineteenth and early twentieth cen­ turies. Indeed, the extent of the book’s global reach is not always fully appreci­ ated. One indicator was the fact that it was translated into many languages, such as Hungarian (1843), French (1851), English (1856 in the United States, 1885 in Britain), Romanian (1887), Swedish (1888), Japanese (1889), Russian (1891), Bulgarian (1926), Chinese (1927), Bengali (1932), Finnish (1935), and Spanish (1942).1 Spread through the movement of texts and people, Listian ideas were embraced in many places around the world because they resonated with local concerns and aspirations.2 But the resonance of Listian ideas also involved much more than a simple embrace of List’s thought. In many cases, those who were inspired by List’s ideas went beyond them in various ways to develop distinct varieties of neomer­ cantilism. Their contributions to the history of neomercantilist thought deserve more recognition than they often receive.

1. These dates come from Todd 2015; Wendler 2015, 212; and my own research. 2. I have borrowed the concept of resonance from Todd 2015, 236–7. 80



Schmoller’s Contributions from Germany The first thinker who deserves attention came from the same German-speaking part of the world as List. Gustav Schmoller was a professional economist who received his doctorate in 1861 and worked as a professor from 1864 to 1913 in Halle, then Strasburg and finally Berlin. Around the time of German unification in 1871, he emerged as an important public intellectual in the new country as well as the central figure in what some scholars have called the “younger Ger­ man historical school” of economics.3 In the words of Mark Blaug, Schmoller then “literally presided over all that passed for economics in Germany in the last quarter of the nineteenth century.”4 Although Schmoller initially had been an economic liberal, he became in this period the leading advocate of neomercantil­ ist ideas. Schmoller was familiar with List’s work and drew some inspiration from it, as did other members of the younger German historical school.5 But the kind of neomercantilism he developed differed from that of List in important ways. The first key difference was Schmoller’s strong interest in creating what I describe in the introductory chapter as a social version of neomercantilism. This focus was evident from the moment that Schmoller first became a prominent public figure. After publishing a study in 1870 that highlighted the distress and poverty experienced by many small-scale German manufacturers and artisans, Schmoller took a lead role in creating the Association for Social Policy (Verein für Socialpolitik), which began to criticize laissez-faire policies and call for “state welfare.”6 He endorsed welfare policies not just because of his social concerns but also out of a conservative desire to preempt workers from supporting more radi­ cal and revolutionary politics.7 His conservative reformism was also evident in his views of gender relations. He supported improving women’s access to univer­ sity education, while resisting broader calls for women’s equality and emphasiz­ ing women’s role in the household.8 The Association for Social Policy quickly became an important intellectual force in the country and helped to set the stage for new social programs intro­ duced in the 1880s by Germany’s chancellor, Otto von Bismarck, for workers,

3. See, for example, scholars in Shionoya 2001. Grimmer-Solem (2003) warns against overstat­ ing the unity of the “German historical school,” given the disagreements among the people allegedly involved. In this analysis, I focus just on Schmoller’s thought. 4. Blaug 1992, ix. 5. For the links between List and the German historical school, see, for example, Shionoya 2001; Koot 1987, 35. 6. Quoted in Herbst 1965, 144. See also Grimmer-Solem 2003, 144–47. 7. Balabkins 1988, 19–20, 31; Ascher 1992, 77. 8. Van Zee 2010; Veblen 1901, 88.



including accident and medical insurance, health care, and old age pensions.9 Schmoller also lent his support to Bismarck’s famous 1879 decision to raise Ger­ man tariffs, but I have seen no evidence that Schmoller influenced Bismarck’s thinking on the issue.10 Still, Schmoller’s support was notable because many other German economists opposed the new protectionism, including some within the Association for Social Policy. In addition to noting that tariffs would enable improvements to industrial production techniques, Schmoller once again raised social concerns, arguing that free trade generated competitive pressures that undermined efforts to introduce new worker-friendly factory laws. Schmoller also defended the fact that Bismarck raised tariffs not just on imported manufactures but also on agricultural imports. His support for agricultural tariffs highlighted a second way in which Schmoller’s version of neomercantilism differed from that of List. Whereas List had strongly opposed agricultural protectionism in his 1841 book, Schmoller argued in 1882 that agricultural protectionism would provide farmers with useful breathing room to improve their competitiveness against growing imports arising from lower international transport costs and other dramatic changes in world agricultural markets. If temporary tariffs enabled German farms to shift to more modern, entrepreneurial, and intensive farming practices, Schmoller suggested, the country could avoid widespread farm bankruptcies that would generate rural poverty, land concentration, and threats to Germany’s security arising from growing dependence on agricultural imports.11 In 1884, Schmoller provided further support for the new direction of German policy by writing a revisionist history of European mercantilism that directly challenged Smith’s negative depiction. A major contribution to neomercantilist literature, this work was titled Studien über die Wirtschaftliche Politik Friedrichs des Grossen (Studies on the political economy of Frederick the Great). It was partially translated into English in 1896 under the title The Mercantile System and Its Historical Significance. In this work, Schmoller acknowledged that mer­ cantilist European governments had been “led by theories that were only half true, and gathered riches by violence and exploitation.” But he argued that the core goal of mercantilism was a necessary “state-making and national-economy making” that responded to “the innermost need of the higher civilisation itself that such enlarged and strengthened forms of social and economic community should come into existence.” Economic liberals, he argued, failed to recognize

9. Pflanze 1990, 289; Grimmer-Solem 2003, 212, 220–21; Ascher 1992, 80. 10. For a discussion of the influences on Bismarck, see chapter 6. 11. Grimmer-Solem 2003, 200, 205, 224–28.



that the nineteenth-century world of free trade could never have emerged with­ out this prehistory of mercantilist state-building and the construction of national economies “which created a new division of labour, a new prosperity, and which liberated a thousand forces of progress.”12 Whereas liberals assumed there was a natural harmony of the economic inter­ ests of all states, Schmoller also applauded mercantilists for recognizing the need for the cultivation of national wealth and power in the context of interstate rival­ ries: “In such a time of harsh international and economic struggles, he who did not put himself on his defence would have been remorselessly crushed to pieces.” He argued that mercantilist governments gave their countries “the lead in the struggle and in riches and in industrial prosperity . . . they gave the economic life of their people its necessary basis of power, and a corresponding impulse to its economic movement; they furnished the national striving with great aims; they created and liberated forces which were absent or slumbered in the states they outstripped.”13 Schmoller made clear that his historical analysis had an important message for his own age. Unlike List, Schmoller embraced the term “neomercantilism” in his later writings. For example, in 1901, he defended rising protectionism in Ger­ many and elsewhere as a kind of “neomercantilism” that responded to “natural nationalist tendencies.”14 He went out of his way to note that he was not calling for a full return to the mercantilist policies and rivalries of the past. Instead, he applauded how “eighteenth century ideas of a humane cosmopolitanism began to instill into men the thought of a change of policy in the economic struggles of European states.” In addition to noting the progress of international law and the throwing off of colonial rule by the United States and Latin America that century, he singled out for praise the doctrine of mutual gain in international trade. Placing these developments in the context of “the progress of civilization,” he noted: “We must regard this movement—which reached its great high-water mark, though accompanied by excessive and one-sided eulogy, in the Free Trade period 1860–1875, as one of the great advances in mankind. One might say that the seventeenth and eighteenth centuries created the modern national econo­ mies, and that the nineteenth has humanized their relations to one another.”15 After praising economic liberalism in this way, Schmoller then attacked it for outlining “Utopias” that were “very remote from real life.” Like List, he criticized England’s hypocrisy in promoting an ideology of free trade, individual egoism,

12. 13. 14. 15.

Quotes from Schmoller [1884] 1910, 72, 50, 49, 51. Quotes from Schmoller [1884] 1910, 72–73. Quoted in Kahan 1967, 23–24 Quotes from Schmoller [1884] 1910, 78–79.



and cosmopolitan harmony after it had “reached the summit of its commercial supremacy by means of its tariffs and naval wars, frequently with extraordinary violence, and always with the most tenacious national selfishness.” Whereas mer­ cantilists had been wrong to assume that one state’s economic gain was always another’s loss, he argued, liberals overlooked the tight link between national wealth and power, which created exploitative and dependent economic relations between states: “Even to-day, the great economic Powers seek to utilize their eco­ nomic superiority in all their international relations, and to retain weaker nations in dependence.” In his view, economic liberals also ignored the central role of the national community in shaping the economic arrangements of society and the fact that “the struggle for existence, in economic life in particular, as in social life in general, is necessarily carried on at all times by smaller or larger groups and communities.” Despite its problems, mercantilism had answered to “this univer­ sal tendency” and thus was “nearer reality than the theory of Adam Smith.”16 Schmoller added Friedrich List’s theories were, too.17 This reference to List highlighted the relationship that Schmoller saw between his analysis and that of the earlier German thinker. In addition to their common interest in neomercan­ tilist goals and policies, the two shared a methodological preference for historical and interdisciplinary analysis. Schmoller also echoed List in his support for impe­ rialism, arguing that colonies could boost German power and wealth by provid­ ing resources, markets for Germany’s exports, and places to which Germany’s expanding population could emigrate. Unlike List, however, Schmoller linked these benefits of imperialism to workers’ interests, arguing that Germany’s failure to acquire colonies would result in a “lowering of wages . . . a proletarianization of the masses.” Although Schmoller recognized that colonization would subor­ dinate foreign peoples, he argued that the character of the German people and their government institutions would prevent “exaggerated colonial expansion.”18 Two final differences between Schmoller’s and List’s versions of neomercan­ tilism need to be mentioned. At a theoretical level, Schmoller was committed to a more relativist approach to political economy than List was. Although the latter endorsed the notion that each country’s political economy was distinct, his analysis was underpinned by a stage theory of societal progress that claimed uni­ versal validity (although in the fullest form, only among countries in temperate

16. Quotes from Schmoller [1884] 1910, 79–80, 63, 59–60. See also O’Brien 1991, 139–40. 17. Schmoller [1884] 1910, 60. 18. Schmoller quoted in Ascher 1992, 81, 84. See also Pflanze 1990, 118.



regions).19 Schmoller was more skeptical of the idea of a universally valid theory and endorsed inductive and context-specific approaches to analysis.20 At a policy level, Schmoller also went beyond List was in endorsing the idea that protectionist policies could be useful “international weapons” in forging trade trea­ ties with foreign countries that served the national interest. He highlighted this differ­ ence with List when defending the “new era of Protection” at the turn of the century: “It does not only rest—in many cases it does not primarily rest—on List’s doctrine of educative tariffs (the ‘productive powers’ or ‘infant industries’ argument); it arises from a motive which is rather instinctively felt than clearly understood, viz., that tariffs are international weapons (Machtmittel) which may benefit a country, if skill­ fully used.” Schmoller acknowledged the potential for the abuse of this more aggres­ sive protectionism: “This new mercantilism often overlooks . . . that these weapons may, as often as not, be used unskillfully. And thus Russia, the United States and France, have fallen back on an extravagantly high protective system.” But he argued that the actions of these states forced others to follow suit: “Their action drives all other states to a certain amount of tariff regulation, if only not to be quite defenceless. Without such weapons we cannot expect to make commercial treaties.”21 Scholler’s ideas became influential not just in Germany but also in many other countries in the late nineteenth and early twentieth centuries. In this way, they became another strand of neomercantilism that circulated internationally along­ side that of List in that era. Schmoller’s international influence stemmed in part from prestige of German universities in this period. As discussed below, stu­ dents from many parts of the world came to study in Germany in the pre-1914 years. There, they picked up Schmoller’s ideas, and then brought them home. The international appeal of Schmoller’s ideas may also have been bolstered by the fact that—like List—he discussed the relevance of his ideas for other coun­ tries. Indeed, his relativist approach to political economy actively encouraged his followers to devote careful attention to the distinctive conditions of their own countries, rather than blindly following the policies of dominant powers.

Matsukata’s Financial Neomercantilism Japan was one of the countries whose students picked up Schmoller’s ideas when they attended German universities in growing numbers after the early 1880s.22

19. 20. 21. 22.

See also Metzler 2006, 105. See, for example, Shionoya 2001. Schmoller quoted in Ashley 1904, 30–31. Pyle 1974; Metzler 2006, 115; Ericson 2019.



Indeed, some of these students soon established a Japanese organization mod­ eled on Schmoller’s Association for Social Policy that subsequently served as the only professional organization for Japanese economists during 1900–24. Those associated with it had a large influence within the Japanese bureaucracy in the early twentieth century.23 But List’s ideas found supporters in Japan even earlier. The precise timing of the importation of List’s ideas into Japan remains a little unclear. Knowledge of Western political economy was very limited in Japan before the country was forcibly opened economically by US force in 1853–54. But it grew rapidly as the Japanese started to travel abroad in growing numbers and Westerners entered the country. It was also encouraged after 1868 by the new Meiji government, whose Charter Oath of that year famously included the following line: “Knowledge shall be sought throughout the world so as to strengthen the foundations of impe­ rial rule.”24 Indeed, the government assembled an enormous collection of foreign books, including volumes on political economy. One survey in 1882 counted 2,170 volumes on this subject in Japanese government offices.25 During 1867–97, 274 books of Western economic thought were translated into Japanese.26 Initially, the Western literature on political economy that attracted most attention had a liberal economic perspective. But knowledge of Western neo­ mercantilist work also began to grow in this era. As I show in chapter 6, Henry Carey’s work was cited as early as 1871. Some scholars have also suggested that ¯ kubo Toshimichi, who launched the country’s state-led List’s ideas influenced O industrialization drive in the early 1870s. I argue in chapter 7, however, that the evidence to support that case is weak. Sydney Crawcour argues that List’s ideas were “reflected in Japanese writings as early as the mid-1870s,” and Tessa Morris-Suzuki notes that students at the University of Tokyo were exposed to his thought in a political economy course taught by a US professor, Ernest Fenollosa, in 1878–83.27 When the government’s large book collection was sur­ veyed in 1882, List’s 1841 book—or to be more precise, an English translation published in the United States in 1856 (see chapter 5)—was on the list.28 In the

23. 24. 25. 26. 27. 28.

Pyle 1974; Sugiyama 1994, 11. Quoted on Jansen 2000, 338. Sagers 2006, 98. Izumo and Sato 2014, 214. Crawcour 1997, 104; Morris-Suzuki 1989, 47. Sugihara 1988.



1880s, List’s ideas began to be invoked more frequently, and his 1841 book was finally translated into Japanese in 1889.29 The most important example of the early influence of List’s ideas in Japa­ nese policymaking circles involves Matsukata Masayoshi, who became finance minister in 1881 and then remained a dominant figure in Japanese policymak­ ing through the 1890s. Matsukata is best known for economic reforms that he introduced in the early 1880s. He assumed his ministerial position at a time when the country was experiencing inflation and currency depreciation linked the government’s ambitious state-led industrialization drive that had begun in the early 1870s. To address Japan’s economic difficulties, he launched reforms that included austerity measures, the privatization of state-owned firms, and the creation of a new central bank. His dramatic economic policies were associated with a sharp deflation during 1881–85, but they are often credited with setting the stage for Japan’s rapid economic growth in the late nineteenth and early twen­ tieth centuries.30 Matsukata is sometimes depicted as an economic liberal because of his endorsement of austerity and privatization. As Steven Ericson shows, however, this depiction is misleading, not least because Matsukata was a consistent skeptic of free trade. For example, at the time of a high-profile Japanese public debate about free trade in 1874–75, Matsukata sided with the protectionists, arguing that Japan needed higher tariffs to protect local industry. He reiterated this position subsequently, noting that Adam Smith’s ideas of free trade were not appropriate for his country given the weak state of its industry.31 When challenging Smith’s advice, Matsukata often invoked List’s thought. As Haru Matsukata Reischauer puts it, “Throughout his life, Matsukata often referred to the protectionist poli­ cies of the German economist Friedrich List as more suitable then for Japan than Adam Smith’s ideas.”32 Because of the constraints of trade treaties imposed on the country by Western powers, however, Matsukata was unable to include higher tariffs in his reform package.33

29. Morris-Suzuki 1989, 60. It was translated from the 1885 English translation of List by Samp­ son Lloyd rather than from the German original (Sugiyama and Mizuta 1988, 297). 30. Ericson 2019, 2. 31. Ericson 2019, 36–37. See also Reischhauer 1986, 84. 32. Reischhauer 1986, 84. Matsukata may have first become aware of List’s ideas in the 1870s (Ericson 2019, 6, 36–37). His support for protectionism in the 1874–75 debates, however, does not necessarily provide evidence of that awareness because, as I note in chapter 7, Matsukata’s protection­ ist ideas also had earlier local roots. 33. Japan would not recover full tariff autonomy until the very end of the Meiji period in 1911, after which it raised tariffs rapidly (Chang 2002, 17, 42).



Given that Matsukata embraced Listian criticisms of liberal trade policy, what explains his famous financial stabilization program? Ericson provides the answer, showing that the content and goals of the program were quite different than liberal interpretations suggest. On the fiscal side, Matsukata’s commitment to balanced budgets was far from rigid. As the country slid into an economic depression and faced external military threats in the early 1880s, Matsukata actu­ ally increased government spending, generating fiscal deficits that were paid for by domestic borrowing. On the monetary side, he pursued what Ericson calls a policy of “expansionary austerity,” combining monetary restriction with state-led export promotion via initiatives such as lending to export merchants from the Yokohama Specie Bank (which had been created in 1880) and even direct export­ ing of select commodities by the government. Ericson also shows that privatiza­ tion played only a “minimal role” in Matsukata’s reforms in 1881–85: “At best, industrial policy shifted in a quasi-laissez-faire direction under Matsukata, as the government continued to pour money into railroads, military-related facto­ ries and shipyards, and eventually Japan’s first integrated steelworks and as the imperial household and the peers served as state investors in a range of private joint-stock companies.”34 More generally, Matsukata saw financial stabilization as a nationalist tool for protecting Japan’s sovereignty.35 Just before he became finance minister, the Japanese government held a heated debate about an alternative strategy for addressing the country’s economic problems put forward by Matsukata’s pre­ ¯ kuma Shigenobu. This strategy involved using a massive loan from decessor, O Britain to stabilize the currency in a way that avoided deflation and allowed the government to continue its state-led industrialization drive. In some versions of the plan, a central bank would have been created that was modeled on the Bank of England and even headed by a British banker.36 Matsukata was a vociferous opponent of this plan, partly because of the loan’s high interest rate, but also because it would undermine the country’s sovereignty. He saw his alternative financial stabilization strategy as a nationalist strategy to avoid the fate of debtor countries such as Egypt and the Ottoman Empire that were falling under the grip of Western lenders at the time.37 As Ericson puts it, Matsukata’s program

34. 35. 36. 37.

Quotes from Ericson 2019, 137–38, 8, 136; see also 65–67; and Johnson 1982. See also Hall 2005, 126; Samuels 2003, 85. Ericson 2019, 4, 25, 27, 89–91. Sagers 2006, 112, 122.



was “a made-in-Japan reform rather than one supported by foreign loans and foreign advisors” as proposed by others.38 Matsukata’s nationalist orientation was also apparent in the kind of central bank he created in 1882. Rather than emulating the liberal Bank of England and involving British bankers, Matsukata’s new Bank of Japan was set up as a statecontrolled bank that was empowered to lend directly to commercial firms.39 Along with the Yokohama Specie Bank, the Bank of Japan became an important source of funding for Japanese merchants, reducing their need to borrow from the foreign merchant community.40 When creating the Bank of Japan in 1882, Matsukata also initially intended that it would work alongside two other gov­ ernment financial institutions: a savings bank (to encourage “the spirit of thrift among the poorer classes of the population”) and an industrial bank.41 In addi­ tion, Matsukata hoped the Bank of Japan would support the country’s economic development by strengthening and modernizing public finance as well as by fos­ tering national monetary and financial integration and management through its monopoly note issue, its lender of last resort function, and its centralized reserve holdings. He also noted how the centralization of the country’s specie would pro­ vide a tool for a goal that List did not devote much attention to: the management of the country’s exchange rate.42 In these various ways, Matsukata’s financial reforms were fully consistent with a neomercantilist worldview. Indeed, they represented an innovative financial neomercantilism that went beyond List’s analysis (as did Matsukata’s optimism about the prospects for successful neomercantilist policies in his Asian country). As noted in the previous chapter, the German thinker did not devote much atten­ tion to financial policies beyond some general comments about the dangers of foreign borrowing, the value of public debt, and the need to create an indepen­ dent “durable system of credit.”43 Matsukata’s reforms were certainly in keeping with these general sentiments, but he developed the financial side of neomercan­ tilist ideology in much greater depth. In so doing, he was following in the footsteps of Alexander Hamilton, whose financial initiatives were driven by the same kind of state-building and nationalist

38. 39. 40. 41. 42. 43.

Ericson 2019, 137. Matsukata 1899, 49–50. Ishii 2009, 215–16. Quote from Matsukata 1899, 66. For the latter, see Matsukata 1899, 59–60. List [1841b] 1909, 232. For List’s views of Asia, see chapter 2.



objectives, as noted in chapter 1.44 As Ericson notes, however, the intellectual inspiration for Matsukata’s financial reforms did not come not from the US found­ ing father but rather from distinctive mercantilist traditions in the East Asian region. The same was true of some of the other policies Matsukata endorsed, including forms of government economic activism that went well beyond List’s ideas, such as his stronger emphasis on export promotion, state trading activities, and large-scale state lending and investment in industrial firms. I return to the local roots of these aspects of Matsukata’s neomercantilism in chapter 7.

Witte’s Russian Contributions One of the more ambitious efforts to implement List-inspired neomercantilist ideas was led by another finance minister: Russia’s Sergei Witte, who held this position in his country from 1892 to 1903.45 Before joining the government, Witte had been a businessman who, like List, had been involved in railway promotion. In the late 1880s, he became interested in List’s ideas and was so enthused that he summarized them in a pamphlet that was published in 1889 by the Russian finance ministry, where he began to work.46 The pamphlet presented Bismarck as an example of a leader who had followed List’s advice in ways that generated eco­ nomic prosperity for his country.47 Witte urged Russian authorities to do the same. Witte then had an opportunity to implement a Listian strategy when he became finance minister three years later. Lamenting his country’s “two hundred years of economic sleep,” he told Russians that state-led industrialization would boost living standards and the productive powers of the country over time, as labor became more productive and agriculture became more prosperous with a larger domestic market. It would also enable Russia to bolster its economic and political independence and escape its role of exporting cheap raw materials to western Europe in return for expensive manufactured goods, a role that made its economic relations “fully comparable to the relations of colonial countries with

44. The US minister to Japan in 1885, in fact, compared Matsukata to Hamilton (Ericson 2019, 7). 45. Before Witte came into office, the Russian finance minister from 1882 to 1886, Nikolai Bunge, had also promoted neomercantilist ideas. His ideas were more influenced by Schmoller, whose work had begun to be translated into Russian in the early 1870s (Sheptun 2005; Avtonomov and Burina 2019, 199–201; Balabkins 1992, 186). 46. Von Laue 1963, 62. 47. Avtonomov and Burina 2019, 204. As I note in chapter 6, it is unclear whether Bismarck was, in fact, influenced by List’s ideas.



their metropolises.”48 Witte linked his goals to a “positive” kind of nationalism that he associated with List and Bismarck and that was compatible with the wider needs of humanity. As he put it in the early 1890s, “Every nation must develop all its faculties in order to contribute, in the free give and take with other nations, as much as it can, to the treasure chest of mankind.”49 To realize his Listian goals, Witte supported a high tariff regime that had already been introduced for fiscal reasons in 1891. Although he stated publicly that tariffs would be abandoned once local industries had been built up, privately he noted that they might be needed for “decades in order to lead to positive results.”50 He also pursued a project of ambitious state-led railway building, argu­ ing that it would stimulate private industry in related sectors and foster wider industrialization over time. In addition, Witte followed List’s lead in encouraging industrialization with new patent laws, improvements in technical and commer­ cial education, and the attraction of foreign capital and skilled labor.51 Because many Russians were wary of foreign capital, Witte was forced to defend its benefits in more depth than List had. Like List, he emphasized that high tariffs were explicitly designed to attract foreign capital.52 In his view, foreign capital was needed to reduce the burden on the domestic population of financing industrialization through heavy domestic taxation. He also argued that it would usefully undermine domestic monopolies, forcing them to improve their pro­ ductivity and lower domestic prices of manufactures. To critics who argued that foreign investors exported profits, Witte noted that money also flowed abroad when Russians imported manufactures, but without the country acquiring ben­ efits that foreign investment brought, such as the creation of new jobs, local spi­ noffs, and lower domestic interest rates. He also challenged those who argued that foreign capital threatened Russian culture: “Historical experience shows that those human energies which accompany foreign capital are a useful creative fer­ ment in the mass of the population of the most powerful nation and that they become gradually assimilated; mere economic ties change into organic ones. The imported cultural forces thus become an inseparable part of the country itself. Only a disintegrating nation has to fear foreign enslavement. Russia, however, is not China!”53

48. 262. 49. 50. 51. 52. 53.

Witte quotes from Von Laue 1963, 190; 1954, 63, 66–67. See also Von Laue 1963, 2–3, 184, Witte quotes from Avtonomov and Burina 2019, 202; Von Laue 1963, 189. Quoted in Von Laue 1954, 67. See also Von Laue 1963, 28, 109, 183. Von Laue 1963, 77, 82, 99, 185–87, 192; Avtonomov and Burina 2019, 203. Von Laue 1954, 73. Quoted in Von Laue 1954, 72; see also 63, 69–71, 73.



Witte went beyond List’s ideas in several other areas as well. Like Schmoller, he showed some interest in agricultural protectionism, endorsing higher tariffs on imported cotton in order to foster domestic cotton production.54 He also did not share List’s enthusiasm for imperialism, arguing that Russia was different from western European powers that pursued imperialist policies. In his words, Russia did not have “a colonial cultural character” and did not require expand­ ing international trade to survive because it was “spread over a huge expanse, on contiguous territory, equipped with all that is necessary for reaching the highest stage of economic development.”55 Particularly important was the fact that Witte did not share List’s commit­ ment to political liberalism. List himself had argued explicitly in his 1841 book that Russia’s “further industrial and commercial progress” depended on liberal political reforms.56 But Theodore Von Laue notes that “in all Witte’s comments one will not find a word of List’s liberalism nor of the larger social and politi­ cal implications to Russia of his advice.” Instead, Witte had what Von Laue calls an “almost fanatic loyalty to autocracy,” associating this with Russia’s distinctive nationality.57 Von Laue highlights how Bismarck’s Germany provided a useful model for him in this area.58 In a private report to the emperor in 1899, Witte also went beyond List (as well as Bismarck and Schmoller) in one final way by suggesting that national eco­ nomic planning could help support neomercantilist goals. Later neomercantilists would address this idea in more detail. Here is the case that Witte made for an integrated national economic “plan”: Now all organs and branches of our national economy are drawn into a common economic life, and all its individual units have become far more sensitive and responsive to the economic activities of the govern­ ment. . . . As a result of such fundamental transformation of the eco­ nomic interests of the country, every major measure of the government more or less affects the life of the entire economic organism. . . . In view of these facts, the minister of finance concludes that the country, which in one way or the other is nurtured by the commercial and industrial policy of the government, requires above all that this policy be carried out according to a definite plan, with strict system and continuity.59

54. 55. 56. 57. 58. 59.

Von Laue 1963, 115. Quoted in Von Laue 1951, 182. Quote from List [1841b] 1909, 75. Quotes from Von Laue 1963, 62, 49. Von Laue 1951, 179. Quoted in Von Laue 1954, 64–65.



Gökalp’s Turkish Neomercantilism The idea that national economic planning could serve neomercantilist goals also appealed to another List-inspired thinker, whose thought became prominent in newly independent Turkey in the 1920s: Ziya Gökalp. Gökalp was a teacher and intellectual who emerged as a prominent member of the Young Turk movement before World War I. He played the central role in developing the ideology of “Turkism” of the new republic, an ideology outlined most systematically in his 1923 book, Türkcülüg˘ün Esaslan (The principles of Turkism) published one year before his death. As a sign of his intellectual stature at the time, his funeral was a national event and the Turkish parliament gave a pension to his widow and daughters.60 When the new republic’s first minister of economy, Mahmut Esat Bozhurt, declared in 1923 that the country would follow the “New Turkish Eco­ nomic School,” he was invoking Gökalp’s notion that Turkey needed to develop its own national approach to economics.61 Gökalp’s broader ideas about society were heavily influenced by Émile Dur­ kheim’s thought, particularly the latter’s notion that societies move through stages culminating in one where the people are united by culture rather than religion.62 Emphasizing that the world had entered into “the Age of Nations,” Gökalp argued that a strong “independent culture” was needed for the construction of a modern Turkish nation. Gökalp’s initial interest in political economy emerged from this commitment to “cultural Turkism,” a commitment that led him to begin in 1916 to explore the ideal of a “national economy” as another important basis for the Turkish state.63 As he put it in 1916, “One of the factors which will give to the Turks the character of a nation and contribute to the formation of a Turkish cul­ ture is the national economy.”64 Gökalp’s thinking about “national economies” was deeply influenced by List’s thought.65 He noted that List’s 1841 book had been recommended by Durkheim as “the first book on economy written objectively and based on facts.”66 List’s emphasis on the relationship between nationality and the economy resonated with Gökalp’s interests, as did the German thinker’s focus on the

60. See, for example, Heyd 1960; Parka 1985. 61. Hale 1984, 154. For his influence on economic policy, see also Heyd 1960, 148; Ahmad 1980, 341. 62. Heyd 1960, 59–60. 63. Quotes from Gökalp 1959, 72, 182, 66; see also 316n11; Heyd 1960, 147. 64. Quoted in Ahmad 1980, 339. 65. As I note in chapter 10, he also mentioned John Rae’s ideas, but seemed to have a poor under­ standing of them. For the influence of List, see Özveren, Erkek, and Ünal 2016, 201. 66. Durkheim quoted in Gökalp 1959, 66.



cultural—rather than racial—basis of nations. Gökalp may also have become interested in List’s ideas through local channels. In 1899, an Ottoman econo­ mist, Kazanli Akyig˘itzade Musa, produced an economics text that promoted Lis­ tian ideas. Because Musa assumed a teaching role at the Imperial War College, many Ottoman officers were exposed to Listian economics in the final years of the Ottoman Empire.67 Gökalp may also have been influenced by the ideas of Ahmed Midhat Efendi, who developed arguments that closely resembled those of List in the late 1870s, although without citing him explicitly.68 Midhat was one of the most famous intellectuals in the late Ottoman Empire, supporting and collaborating with the sultan Abdülhamid II, who was committed to developmentalist ideas and fascinated by Japan’s success in cultivating wealth and power (as were the Young Turks, including Kemal Atatürk, who became Turkey’s first president).69 It is important to note, however, that these emerging kinds of late Ottoman neomercantilism differed from those of Gökalp and List in one major way. They sought to promote the wealth and power of the sprawling multiethnic Ottoman Empire rather than of a nation-state. Gökalp strongly endorsed List’s emphasis on industrialization, arguing that “if we want to be a modern nation, we have to be industrialized.” Lamenting that so many Turks worked as either farmers or government officials, he echoed List in suggesting that expanding employment in manufacturing would promote “the growth and development of the mental faculties, of will and character.” He also repeated List’s broader case that industrialization and economic develop­ ment would result in higher levels of civilization, suggesting that the “economic miracle . . . will lay the foundations of the civilization of our nation.” As he put it, “The non-existence of great scientists, artists, and philosophers in Turkey is due to the backwardness of our economic life.”70 To skeptics of the prospects for Turkish industrialization (who included List himself, as noted in the previous chapter), Gökalp invoked his country’s past before the Tanzimat era (1839–76), when Ottoman authorities had first embraced policies of free trade: “Before the Tanzimat era, we had a rich industry. We had developed aesthetic crafts, such as tile works, rug weaving, dye techniques, book­ binding, gilding, iron work, carpentry, etc. Each of these constituted a field of

67. Özavci 2012, 146; Kaynar 2014; Kilinçog˘ lu 2015, 65–67. 68. Saraçog˘ lu 2006, 32. For Midhat, see Kaynar 2014; Kilinçog˘ lu 2015, 49–53. 69. Kilinçog˘ lu 2015, 2, 32; Ahmad 2000; Haniog˘ lu 2011, 39, 66. For a discussion of late “Ottoman imperial developmentalism,” see Schayegh 2018. For the interest in Japan among the Young Turks, see Ahmad 1980; 2000, 10; Haniog˘ lu 2011, 39, 66. 70. Quotes from Gökalp 1959, 313, 73, 309.



aesthetic creation that could be an object of honor for a great nation.” Gökalp argued that this local industry had been undermined by free trade during the Tanzimat era. In his view, Turkey needed to revive its pre-Tanzimat economic success, which included the fact that “the main trade routes between China, India, Iran, Russia, and Byzantium were dominated by Turks.”71 To do so, Gökalp argued, Turkey needed to throw off the ideology of “English” economic liberalism and its advocacy of free trade. He noted that economists of many nations had followed List’s lead in developing theories of “national econ­ omy” for their own countries, while bemoaning the fact that “it was only we poor [Turks] who remained captives of British economic theory.” Gökalp outlined what he called in 1923 “economic Turkism” to replace the system of “English political economy” in Turkey. One pillar of this system was protectionism. Citing the German and US examples, he argued: “A national economy and large-scale industry can be achieved only through a protectionist policy.” In keeping with the advice of List, Gökalp also argued that Turkish economic development would need the help of foreign experts and capital (although he warned in 1924 that the latter should not have any “political conditions” attached).72 Although Gökalp followed List’s advice in many areas, he departed from the German thinker’s ideas in some important ways. One departure has already been noted; he rejected List’s skepticism of the prospects for industrialization in Turkey. Like Witte, Gökalp also did not share List’s enthusiasm for political liberalism, preferring corporatist political arrangements. In addition, he went well beyond List in his conception of government economic activism, calling for “state capi­ talism” in which both private and state-run enterprises existed and in which the state played a large guiding role, including through national economic planning. Gökalp argued that state capitalism was needed because Turks often lacked the “spirit of enterprise” as well as the knowledge and skills to set up new industrial firms. As he put it, “Turks are temperamentally étatists. They expect the state to take the initiative in everything new and progressive.” Gökalp further argued that a large state role would “perform a moral service because the rise of a new class of speculators will be prevented.” In addition, he was concerned about the influence of European capitalists: “Present-day European imperialism is based on private capitalism. If we accept the system of state capitalism, we will be able to prevent the rise of those insatiable and predatory capitalists in our country.”73 This latter

71. Quotes from Gökalp 1959, 307–8, 311. 72. Gökalp quotes from Gökalp 1959, 307; 1968, 121–24; 1959, 313; Parka 1985, 111. For his earlier support of free trade, see Parka 1985, 107, 111 (quote). 73. Quotes from Gökalp 1959, 311, 309, 310–11.



argument highlighted another difference from List; Gökalp had a more wary attitude toward foreign direct investment than the German thinker. Gökalp also noted that state capitalism would enable the profits of publicly owned industrial firms to be shared across the whole nation, including to serve social and redistributive goals. As he put it, these profits would “be spent to build houses and schools for the poor, orphans, widows, the sick, invalids, the blind and deaf, to found public gardens, museums, theatres, libraries, hygienic housing for peasants and workers, for the electrification of the whole country, in short for everything that will ensure the prosperity of the people and put an end to all kinds of misery.”74 Gökalp’s commitment to social and redistributive goals rep­ resented another way in which he departed from the ideas List expressed in his 1841 book. But this commitment should not be overstated. Like other neomer­ cantilists, he prioritized national unity over ideas of class struggle. He was also deeply skeptical of the materialism of Marxism and of the new Soviet regime’s political oppression.75 In place of socialism or Marxism, he advocated an ideol­ ogy of “solidarism,” which he argued was more compatible with Turkish national culture: “As Turks love freedom and independence, they cannot be communists. But as they love equality, they cannot be individualists. The system most suited to Turkish culture is solidarism.”76 As part of his social version of neomercantilism, Gökalp devoted much more attention to the need to improve women’s position in society than List did in his 1841 book. He argued that women had held important roles in ancient preIslamic Turkish society, which had then been undermined because of Persian and Arabic influence. Lamenting the latter trend, Gökalp argued that women needed to be given better access to education and employment as well as equal legal and political rights. These reforms would enable them to earn their own living and play more prominent roles in public life. More generally, he argued that nuclear families centered on an egalitarian partnership between husband and wife would form a key foundation of the new Turkish state, just as they for pre-Islamic Turk­ ish society. From Gökalp’s standpoint, these reforms were central to Turkey’s abil­ ity to progress as a nation-state.77

74. 75. 76. 77.

Gökalp 1959, 312. Heyd 1960. Gökalp 1959, 312. Heyd 1960; Atamaz-Hazar 2010, 69.



Argentine Neomercantilists: López, Pellegrini, and Bunge In the late nineteenth and early twentieth centuries, List’s ideas also found influ­ ential supporters in Latin America.78 Particularly interesting were some figures in Argentina, where List’s ideas found considerable support. List’s ideas were likely first introduced to that country in the 1860s by Vicente Fidel López, a profes­ sor of political economy in Buenos Aires.79 When the country suffered an eco­ nomic downturn in the early 1870s, López became involved in the trade-policy debates that ushered in a higher import tariffs in 1876.80 In a Listian fashion, López argued for infant industry protection on the grounds that industrialization would help break Argentina’s economic dependence as an agricultural exporter to Britain as well as create “industrial labor which is the only one that can bring us [Argentines] the true organic transformation and constitute in that manner a rich and civilized society.”81 In the political arena, López’s key ally was Carlos Pellegrini, who had been introduced to the Listian worldview when he was López’s student. Pellegrini sub­ sequently became a prominent politician associated with the conservative Par­ tido Autonomista Nacional and he emerged in the mid-1870s as the leader of the protectionist forces in the Argentine legislature. Echoing List, he argued that every country needed national industry as “the basis of its wealth, of its power” and he warned that Argentina risked remaining “the farmyard of the great indus­ trial nations” if it did not cultivate local manufacturing with protectionist poli­ cies.82 Pellegrini went on to become Argentina’s president in 1890–92, with López serving as his finance minister. After leaving office, he continued to be major player in Argentine politics, promoting his industrial protectionist views, includ­ ing via a policy that List had not mentioned: exchange-rate manipulation. Pellegrini’s promotion of this latter policy came during his leadership in crafting the proposal that brought Argentina onto the gold standard in 1899. Although the gold standard was often associated with liberal economic ideology, Pellegrini’s support for this monetary reform stemmed from what Steven Bryan calls his “Listian developmentalism.” At the time, Pellegrini was worried about how the appreciation of Argentina’s currency was undermining efforts to promote

78. For interest in List’s ideas in Latin America, see Boianovsky 2013; Bryan 2010, chap. 4; Curi 2017; Love 1996, 201; Lucchini, Blanco, and Cerra 2000; Popescu 1997, chap. 14. 79. Boianovsky 2013, 670; Woźniak 2014; Bryan 2010; Popescu 1997, 248. 80. Guy 1979. 81. Quoted in Popescu 1997, 245–46. 82. Quotes in Popescu 1997, 246; and Guy 1979, 126.



industrialization. In Pellegrini’s mind, the introduction of a gold standard would create not just a more stable exchange rate but also one that could be deliber­ ately pegged to gold at a depreciated value to foster industrialization. As Bryan puts it, Argentina’s new gold standard was thus rooted in a “model of Listian development and, more specifically, in the desire to devalue the peso and protect domestic industry.”83 Although Pellegrini’s commitment to industrial protection­ ism was Listian, this specific use of exchange-rate manipulation as a tool to serve neomercantilist goals went beyond the ideas in List’s 1841 book. Another conservative, List-inspired thinker in Argentina who deserves men­ tion is Alejandro Bunge. He became interested in List’s work when studying engi­ neering in Germany in the early 1900s. He went on to become an influential professor of political economy in Argentina as well as director of the country’s National Statistical Office during 1915–20 and 1923–25.84 In analyses during and after World War I, Bunge highlighted the importance of industrialization as a strategy to boost the country’s economic independence and end its status as a “satellite” to the “stars” that were the leading economic powers.85 He applauded Argentina’s industrialization during the war, but argued that protectionist poli­ cies were required in the postwar context to sustain this progress in the face of competition from firms in the major powers once the war ended.86 Bunge’s appeal for protectionism in these circumstances was similar to that of List in the post–Napoleonic Wars context. Indeed, Bunge appealed to this history as well as to the United States’ situation in the late nineteenth century in making his case. As he put it 1922, “We find ourselves in an economic moment similar to Germany at the time of the economist List and to the United States forty years ago.”87 He also compared Argentina to Canada, noting that the latter’s protection­ ist policies since 1879 (discussed in chapter 6) had cultivated industry in a way that his own country had failed to do.88 In addition, Bunge echoed List in calling for regional trade cooperation to challenge a dominant power. He proposed a customs union of Southern Cone countries (Argentina, Chile, Uruguay, Bolivia, and Paraguay) that could help to challenge US power in South America.89 Echoing List’s arguments for industrialization, Bunge noted that his coun­ try’s dependence on agricultural exports and imported manufacturers left

83. 84. 85. 86. 87. 88. 89.

Quotes from Bryan 2010, 11, 12. Boianovsky 2013, 670; Dosman 2008, 30; Solberg 1979, 30. Quoted in Solberg 1979, 30. Szlajfer 1990, 118; Dosman 2008, 26–27. Quoted in Boianovsky 2013, 670. Dosman 2008, 31. Boianovsky 2013, 670–71.



it vulnerable to wartime trade disruptions as well as postwar protectionism against Argentina’s primary exports by the United States and Britain.90 But Bunge also called attention to an issue that received no attention in List’s analysis: the poor terms of trade faced by countries exporting agricultural goods and raw materials. As noted in chapter 1, Alexander Hamilton had also been interested in this issue and blamed it on the greater “unsteadiness” of foreign demand for agri­ cultural exports. Bunge, however, appeared more interested in the role played by the market power of industrial exporters. In 1917–18 and the immediate postwar context, he argued that the standard of living in agricultural exporting countries was being undermined by the efforts of the leading economic powers to lower the prices of their food and raw-materials imports, while keeping the prices of their manufactured exports relatively high.91 Bunge also went beyond List—as did López and Pellegrini—in calling for tariffs on both industrial and agricultural imports.92 All three of these figures departed from List’s ideas in one further way; they simply ignored his suggestion that no South American countries should try to industrialize. As noted in the previous chapter, List’s view stemmed from his unusual assumption that the entire South American continent was in the world’s “tropical” climate zone. Argentine thinkers understandably ignored this assump­ tion. Interestingly, however, Bunge had some sympathy for List’s case vis-à-vis other South American countries, some of which, he argued, were unfit for indus­ trialization. His rationale, however, was related not just to their climate but also to what he called the “mediocre ethnic type” of these countries. Bunge’s com­ ments reflected the preoccupation with race of many Latin American conserva­ tives at the time.93

Contributions from Europe’s Periphery: Xenopol and Rocco List’s ideas also inspired thinkers in European countries that were on the periph­ ery of the continent’s major industrializing regions, some of whom also adapted

90. Solberg 1979, 30; Díaz-Alejandro 1967, 92. For an overview of the similarities between the ideas of List and Bunge, see Araya 2016. 91. Asiain 2014; de Imaz 1974; Bunge 1940b, 235. 92. Boianovsky 2013, 670; Díaz-Alejandro 1967, 94n3; Araya 2016, 18. 93. Quote from Boianovsky 2013, 671. For Bunge’s preoccupation with race, see also Bunge 1940a, 1940b.



his thought in interesting ways. One was Alexandru Xenopol, a Romanian who studied in Berlin during 1867–71 and then became a professor and magistrate in his home country as well as a major figure in Romania’s Liberal Party. After the country gained its full independence from the Ottoman Empire in 1878, he pub­ lished some key writings in 1879–82 advocating industrial protectionism. His ideas helped build support for the introduction in 1886 of a tariff against indus­ trial imports from Romania’s main supplier at the time, Austria-Hungary (which had introduced a tariff against Rumanian grain exports in the previous year).94 Xenopol’s case for industrial protectionism reiterated many of List’s views, including about the links among industrialization, nation-building, and civi­ lizational advancement.95 But Xenopol also went beyond List in his analysis of why free trade benefited industrial countries at the expense of agricultural ones. He highlighted the different labor productivities that existed in agricul­ ture and industry arising from the fact that the former used largely unskilled labor, whereas the latter drew mainly on skilled labor. In this situation, Xeno­ pol argued, the exports of agricultural countries embodied more labor than the manufactured goods they imported, creating a situation of unequal exchange in which the former were effectively being exploited by the latter. Xenopol argued that this exploitative relationship was only made worse by the issue that Bunge had pointed to, namely that industrial countries had greater power in setting the prices of both their manufactured exports and their agricultural imports. He concluded that the agricultural exporting countries in Europe, Asia, Africa and Latin America were “slaves whose labor built the civilized fortress of [western] Europe” in his day96 To end this exploitative relationship, Xenopol argued, these countries needed to build up large modern industries with the help of tariffs, just as many domi­ nant powers themselves had done. He also recommended that the Romanian government cultivate manufacturing with tax concessions, subsidies, and guar­ anteed purchases. List himself would no doubt have been skeptical of Xenopol’s goals, given List’s views about the capacity of these states to pursue state-led industrialization. Like Gökalp, Xenopol also departed from List in his wariness about the role of foreign direct investment, advocating that modern factories in sectors such as textiles be run by Romanians. He expressed concerns about

94. See Love 1996. 95. See Love 1996; Psalidopoulos and Theocarakis 2011, 171. 96. Quoted in Love 1996, 74.



how foreigners were increasingly taking over Romanian industry and commerce, leaving Romanians to work only in agriculture and government.97 Another List-inspired thinker in nearby Italy, Alfredo Rocco, went beyond List’s thought in different ways. A prominent nationalist professor in the early twentieth century, Rocco had initially been a socialist before changing his views and emerging after 1913 as a key intellectual leader of the Italian nationalist movement. Many of his ideas about political economy were taken up in the early 1920s by Benito Mussolini, who combined them with his new style of fascist poli­ tics. Rocco went on to serve as a minister in Mussolini’s government.98 As part of his conversion to the nationalist cause, Rocco promoted List’s ideas, arguing that Italy needed to develop its productive forces via state-supported industrialization if it was to fend off the wealthier “plutocratic” nations and com­ pete with them for survival and power. Like List, he endorsed imperialism, argu­ ing that “for Italy, a nation without raw materials, lacking in capital, but under enormous population pressure, only an expansive foreign policy [could] resolve the . . . fundamental problems of economic life.” To carry out this program, Rocco argued that Italians needed embrace discipline, sacrifice, and strong national consciousness.99 But Rocco also departed from List’s ideas in some important areas. To begin with, like many others discussed in this chapter, he wanted the state to play a larger role in the domestic economy than List had proposed. In addition to tariffs and state-supported infrastructure, he called for state capitalism and extensive “collaboration of industry and the state” as well as an “organic plan” to promote energy self-reliance, heavy industry and agricultural modernization. In Rocco’s words, Italy needed “work, work, and more work, production, production and more production.”100 Rocco also criticized political liberalism for focusing excessively on individual rights and liberties at the expense of national unity: “Individualism predicated on the absence of social solidarity is the affirmation of individual egoism. It pul­ verizes society.” He advocated instead for “national syndicalism” that organized the country’s interest groups and productive sectors along corporatist lines to promote national goals. His prioritization of national unity also led him to be

97. Montias 1978, 60, 68; Love 1996. 98. Gregor 1979; Rosa 2000, 180, 185–86. 99. Quotes from Gregor and Chang 1979, 27, 34. See also Gregor 2005, 37, 43–49. List’s ideas and those of the German historical school had been actively debated in Italy since the 1870s (e.g., Szporluk 1988, 200). 100. Rocco quotes from Gregor and Chang 1979, 27.



critical of socialists for prioritizing domestic class struggle instead of the national solidarity that was necessary for Italy to defend and project power. He argued that redistributive policies distracted from the task of national industrial develop­ ment and wasted Italy’s limited capital on “demagogic” programs. More gener­ ally, Rocco argued that the industrialization of the country would bring more benefits to the people over time than the redistributive initiatives of socialism.101 Rocco also went further than List in highlighting the special difficulties faced by late developers such as Italy in a context of what he called the “superimpe­ rialism” of dominant European powers. In his view, Italy’s economy was being undermined not just by policies of free trade but also by the dominant pow­ ers plundering the country by extracting capital from it (via interest payments on loans and profits from investments) and by luring Italians to work abroad. In this context, Rocco argued that Italy was engaged in a high-stakes struggle for survival in which reform was needed “if the Italian race [was] not to perish.”102 His depiction of the Italian race’s struggle for survival echoed social Darwinist ideas that became quite popular in many parts of the world in the late nineteenth and early twentieth centuries.103 This racialized conception of the nation repre­ sented another way in which Rocco’s version of neomercantilism differed from that of List.

The British Tariff Reformers List-inspired neomercantilists could also be found in Britain in the late nine­ teenth and early twentieth centuries. Because List was so critical of British domi­ nation, it may seem unusual that his ideas were positively received by some in that country. But this support emerged in this period as British industry and farmers experienced new competitive challenges from abroad and free trade became more controversial in the country.104 In this context, a Birminghambased banker, manufacturer, and politician, Sampson Lloyd, produced in 1885 an English translation of List’s 1841 book.105 His goal was to enhance British knowledge of List’s ideas, which he argued provided “a definite scientific basis

101. Rocco quotes from Gregor and Chang, 30; Gregor 1979, 135. See also Gregor 2005, 50–51, 58–60; Rosa 2000, 185. 102. Rocco quotes in Gregor and Chang 1979, 27, 28; see also 34–35; Gregor 2005, 42. 103. See, for example, Bayly 2012, 252. 104. See, for example, Koot 1987, 6–7; Zebel 1940. 105. As noted in chapter 5, an earlier English translation had already been published in the United States in 1856.



for those protectionist doctrines which . . . have hitherto been only partially and inadequately formulated by English writers.”106 Along with other industrialists and conservatives, Lloyd had been a founder in 1881 of the National Fair Trade League, which called for a moderate duty on food imports as well as industrial tariffs against countries—such as Germany—that had imposed tariffs against British industrial exports. In the case of the industrial tariffs, the League argued that they were needed to end “one-sided free trade” by retaliating against foreign protectionism with the goal of forcing trade liberaliza­ tion abroad. The League was also interested in cultivating a preferential trading system within the British Empire, arguing that members of the Empire should be exempt from any new British tariffs on food duties. When justifying the proposal, the League noted its goal to “develop the Resources of our own Empire, and to determine the flow of British capital, skill, and industry henceforth into our own dominions, instead of into Foreign Protective States, where it becomes a force commercially hostile to us.”107 The idea that an imperial trading bloc would steer “the flow of British capital” was directly relevant to List’s case that protectionist measures in France and Germany would help to divert British capital to those countries instead of its empire. In effect, the founders of the League were suggest­ ing that an imperial protectionist bloc could help to counter that trend. Although the League failed to generate significant political support (and was disbanded in 1892), some of its ideas reappeared in a prominent debate about tariff reform that emerged in the early twentieth century. This debate was trig­ gered when Britain’s colonial secretary, Joseph Chamberlain, called in 1903 for higher tariffs against both industrial and agricultural imports from non– British Empire countries and for the negotiation of preferential duties for colonial agricultural products. Although Chamberlain had been a prominent member of the free-trading Cobden Club until 1886, he gradually changed his views as his industrial hometown of Birmingham experienced growing US and German competition.108 Because Chamberlain acknowledged privately that he did “not pretend to be an economic expert,” the task of providing a detailed justification for his proposals fell to a group of conservative economists who had already been developing similar ideas, particularly William Hewins (who became his top eco­ nomic adviser and helped to write his speeches in the early 1900s), William Ash­ ley, and William Cunningham.109

106. 107. 108. 109.

Lloyd 1885, vi. League quotes from Trentmann 2008, 136; Zebel 1940, 169. See also Brown 1943. Zebel 1967. Quote in Koot 1987, 176.



These tariff reformers cited List’s ideas, noting his theory of “productive pow­ ers,” his ideas about prioritizing national power, his focus on balanced economic growth, and his historical approach to the study of political economy.110 They argued that policies of free trade had served British national interests in the past but did not do so any longer in its new historical stage of development. As Cun­ ningham put it in 1895, “No economic principles have [the] mathematical char­ acter of being true for all times and places alike.”111 The British interest in List’s ideas at this time was also evident from a 1904 reissuing of Lloyd’s 1885 trans­ lation of List’s work as well as the publication of the first substantial Englishlanguage biography of List five years later (which also reproduced his 1827 volume of letters).112 If these British tariff reformers at this time found some inspiration in List’s ideas, they also adapted them in some significant ways. To begin with, their focus on protectionism as a mechanism for addressing new competition from abroad did not follow List’s advice noted in the last chapter: that Britain use a unilateral policy of free trade to maintain the competitiveness of its firms. Their departure from List’s advice was understandable, given that Britain’s dominant economic position was much less clear in the era they were living through than it was in List’s time. Indeed, Ashley noted that List had underestimated the foreign chal­ lenges that British would face, citing manufacturing competition not just from the United States and Germany, but also from tropical locations such as India, Brazil, and Mexico that List had thought would never industrialize.113 In rationalizing the need for protectionism, these British thinkers cited unfair competition arising from foreigners’ use of tariffs, subsidies, trusts, and dump­ ing.114 The issue of foreign dumping attracted particular attention in Britain in the early twentieth century, with protectionists demonizing German “dumpers” and displaying cheap foreign goods in “dump shops” and traveling caravans.115 Ashley argued that dumping had become more pervasive because of growing fixed capital and increasing returns to scale in manufacturing, both of which prompted firms to continue to produce at full capacity even when domestic mar­ kets contracted.116 He argued that in countries with cartels, such as Germany, manufacturers were able to keep domestic prices high while dumping excess

110. 111. 112. 113. 114. 115. 116.

See, for example, Ashley 1904, 23–25; Koot 1987. Quoted in Green 1988, 608. See also Koot 1987, 152. Hirst 1909. Ashley 1904, 71–72. Chamberlain 1903, ix. Trentmann 2008, 93, 117. Ashley 1904, 114.



product in foreign markets.117 Like the National Fair Trade League, Ashley com­ plained that foreign protectionism had encouraged British capital to invest in other countries in ways that helped build up their industries. Like Schmoller, the British tariff reformers also went beyond List in seeing protectionism as a weapon that could be used to forge favorable commercial treaties with foreign countries. Indeed, Ashley quoted Schmoller’s ideas on this point.118 Ashley, Hewins, and Cunningham were, in fact, all heavily influenced by Schmoller’s ideas.119 It was Ashley who translated part of Schmoller’s 1884 work on mercantilism for an English-language audience in 1896.120 These economists followed Schmoller in finding explicit inspiration from earlier mercantilist ideas and practices, including those of their own country, whose significance they highlighted. Indeed, their German counterparts described these British thinkers as “neomercantilists” for this reason, a label with which they seemed to be quite comfortable.121 Like Schmoller, the British tariff reformers at the turn of the century also departed from the content of List’s 1841 book in their endorsement of agricul­ tural protectionism and in emphasizing a more social version of neomercan­ tilism. Regarding the latter, Chamberlain argued that free trade was creating unemployment as well as competitive pressures that undermined wages and the prospects for domestic social reforms he had long supported.122 By contrast, he noted that revenue from his proposed tariffs could be used to support social reforms such as old-age pensions.123 The conservative economists who supported Chamberlain advanced similar arguments, often invoking the Bismarckian example of combining protectionism with domestic welfare policies.124 When defending agricultural protectionism, these British tariff reformers also cited social concerns, arguing that free trade in food was undermining farmers’ liveli­ hoods and rural communities (and associated rural industries).125 One final difference from List was the fact that some tariff reformers empha­ sized that they sought to bolster the wealth and power of the British Empire

117. 118. 119. 120. 121. chap. 7. 122. 123. 124. 125.

Chamberlain 1903, 55; see also 125–26. Ashley 1904, 77, 30–31. See also Zebel 1967, 149; Chamberlain 1903, ix. Koot 1987, 36; Green 1995, 178. Schmoller [1884] 1910 (original edition in 1896). Koot 1987, 5, 175, chap. 8; Hewins 1929, 50. See also Green 1995, 163–64; Koot 1987, Chamberlain 1903, viii, 53–54, 133. Trentmann 2008, 29. Green 1995, 174–76; Ashley 1904, vi, 118, 189–92; Koot 1987, 116–17, 154–55. Ashley 1904, 37; Koot 1987, chap. 8.



as a whole rather than that of a single nation. For example, in a 1901 volume (produced by Schmoller), Hewins emphasized this goal when clarifying how his views differed from those of pre-Smithian mercantilists. As he put it, earlier mer­ cantilists had focused on how authorities should promote “national” strength and efficiency, but he was interested in the same goals at an “imperial” level.126 Like advocates for the fair trade movement of the 1880s, the tariff reformers at the turn of the century were committed to strengthening imperial commercial ties. But their ideas were more ambitious, including the notion that tighter commer­ cial ties might help to foster an eventual imperial political federation involving Canada, Australia, South Africa, and New Zealand.127 At the same time, however, the distinction between imperial neomercantilism and a more national version was blurry. Rebuilding ties with the empire was also a strategy for preserving and strengthening British power in a world of intensifying colonial expansion and geopolitical rivalries. It further served national economic interests by ensuring access to resources and markets in a context where world markets were being carved up into imperial blocs.128 The tariff reformers’ focus on the national interest was also clear in their appeal to countries such as Canada and Australia, which had their own ambitions to industrialize (as described in chapter 6). The British neomercantilists recognized that policymakers in these countries were unlikely to agree to abandon their own protective duties against industrial imports from Britain, but hoped the latter might consent to what Ash­ ley called “a certain slackening in the progress of industrialization.” Indeed, to encourage this outcome, Ashley urged these policymakers to recognize that their countries had “already reached a stage in which they sufficiently enjoy the advan­ tages of diversity of employment.” He also tried to convince them—in a very un-Listian way—that more extensive industrialization of the kind experienced in Europe and the United States would only bring negative “social results,” such as “the constant accumulation of ever-greater masses of urban population, with their stunted physique and their limited outlook.”129 These arguments did not make much headway in these countries. Even at home, the tariff reformers did not succeed in gathering enough sup­ port for their cause in the early twentieth century, leaving Britain as the only

126. Quoted in Koot 1987, 167, 176. 127. Chamberlain 1903, ix; Koot 1987, 118. India had an unclear place in their vision, despite its importance as a market for British exports at the time (Trentmann 2008, 169). 128. Green 1995, 180. 129. Quotes from Ashley 1904, 158–59.



major European country at the time that resisted rising protectionism.130 Freetrade ideology retained wide appeal in British society at this time. Given British trade patterns, critics also noted that an imperial preference zone would have hurt British industrial exporters and raised food prices.131 Not until the early 1930s did Britain endorse more protectionist policies and a system of imperial preferences in response to the upheavals associated with the Great Depression.132 List’s ideas resonated in many countries around the world in the late nineteenth and early twentieth centuries. Those inspired by his work also went beyond his thought in interesting ways that contributed to the diversity of neomercantilist thought in this era. One contribution involved taking on a task that List had not attempted in any detail: the reinterpretation and partial rehabilitation of the European mercantilist experience. Through this task, Schmoller and the British tariff reformers came to embrace the label “neomercantilist” in a way that List had not. List-inspired thinkers also developed different ideas about neomercantilist goals. Although they all prioritized the promotion of state wealth, some com­ bined this focus with an interest in domestic social issues (Schmoller, Gökalp, and British tariff reformers). Other List-inspired thinkers, such as Witte, did not share List’s interest in the projection of state power internationally via imperial­ ist policies. Some of these figures (e.g., Rocco, some British tariff reformers, and Bunge) also invoked more racial concepts of nationhood than List did, or focused on promoting the wealth and power of an imperial state rather than a national one (Hewins). Many (Witte, Matsukata, Gökalp, the Argentines, Xenopol, and the British tariff reformers) also chose to overlook the fact that List had argued that his protectionist advice was not relevant to the places where they lived. In addition, some developed different ideas about the kinds of countries that should industrialize by invoking race (Bunge) or by challenging List’s climatic determinism (Ashley). List’s views about the positive links between industrializa­ tion and the growth of greater political liberties were also swept under the rug by some of his more conservative followers (e.g., Witte, Gökalp, and Rocco). Other departures from List’s ideas related to specific neomercantilist policy ideas. Although all the thinkers discussed in this chapter endorsed industrial protectionism, some advanced different rationales for this policy than List did, including arguments about the terms of trade faced by their countries (Bunge

130. Trentmann 2008, 11. 131. Trentmann 2008, 164. 132. Zebel 1940.



and Xenopol). Some supported protectionism for wider purposes, such as to protect agriculture (Schmoller, Witte, Bunge, and the British neomercantilists) or to serve as a weapon in negotiating trade agreements (Schmoller and Ashley). In addition, some List-inspired thinkers called for greater government economic activism at the domestic level (Schmoller, Witte, Gökalp, Rocco, and Ashley), such as national economic planning, state-owned firms, development-oriented central banking, and regulated capitalism more generally. In foreign economic policy, some also went beyond List’s ideas in their emphasis on export promotion (Matsukata), exchange rate policy (Pellegrini), or the potential costs of foreign direct investment (Gökalp and Xenopol). In these various ways, the thinkers discussed in this chapter highlighted how neomercantilist ideology—even within the Listian intellectual world—came in many varieties. The fact that Schmoller’s neomercantilism attracted a wide international audience in the late nineteenth and early twentieth centuries also underscores a second theme of this book; the international circulation of neo­ mercantilist ideas in this era extended beyond List’s thought. Matsukata’s inter­ est in East Asian mercantilist thought also highlights the third theme that some neomercantilists drew inspiration from different mercantilist traditions than the European ones that informed Listian thought. Each of these themes is reinforced in the next chapter, which examines some further examples of contributions made by List-inspired thinkers.



Not all of the thinkers inspired by List’s ideas were focused on the pursuit of neo­ mercantilist goals and policies in the context of a nation-state. The last chapter showed how some conceptualized neomercantilist goals for larger imperial enti­ ties such as the Ottoman Empire (in the case of Kazanli Akyig˘itzade Musa) or the British Empire as a whole (in the case of William Hewins). This chapter begins by examining another distinctive form of neomercantilism promoted by Mahadev Govind Ranade, the leading advocate of List’s work in India in the late nineteenth century. Ranade adapted List’s ideas to increase the wealth and power of the Brit­ ish colony in which he lived. In pioneering this innovative neomercantilism of the colonized, Ranade also challenged List’s view that neomercantilist goals and policies were not relevant to India as well as the German thinker’s positive assess­ ment of British imperialism in India. Subsequent Indian neomercantilists echoed Ranade’s ideas, and some also moved beyond them in interesting ways. I then turn to examine another innovative kind of neomercantilism beyond the nation-state developed by Mihail Manoilescu, a Romanian whose 1929 book became the best-known neomercantilist work published in the interwar years. Like Ranade, Manoilescu found some inspiration in List’s work but also went beyond it in many ways, including to address an issue that other List-inspired thinkers did not speak to: the relationship between multilateral institutions and neomercantilist policies. Although List himself outlined some vague ideas on this topic in his 1837 unpublished manuscript, Manoilescu addressed the issue




more squarely and clearly in the context of his frustrations with the free-trade orientation of the League of Nations.

Neomercantilism of the Colonized: Ranade and Other Indian Contributions In her important 2004 book Producing India, Manu Goswami notes that List’s work served as a “foundational text” for the emerging Indian nationalist movement of the late nineteenth century. She highlights how Mahadev Govind Ranade, in par­ ticular, was the “the chief exponent of List” within the movement.1 A founding member of the Indian National Congress, Ranade had a distinguished career in colonial India as a scholar, writer, and judge. He was also interested in political economy, and even taught the subject at Elphinstone College in Bombay (where he had also been a student).2 When Ranade studied Western political economy, he was drawn to critics of British economic liberalism, particularly List. As he put it in a prominent 1892 lecture on Indian political economy, he felt that List had given “the fullest expression to this rebellion against the orthodox creed.”3 A number of themes in List’s writings appealed to Ranade. For example, he approved of List’s argument that “national well-being” was linked to “the full and many-sided development of all productive powers.” Like List, he also highlighted the benefits of industrialization in developing these productive powers over time and in cultivating the broader power and independence of a state within the competitive state system. In addition, Ranade noted List’s view that “in a purely Agricultural Country there is a tendency to stagnation and absence of enterprise and the retention of antiquated prejudices.”4 To foster productive powers, Ranade also applauded List’s idea that, in Ranade’s words, “the permanent interests of Nations were not always in harmony with the present benefit of individuals” and that “the function of the state is to help those influences which secure National Progress through the several stages of growth.”5 In addition to calling for the modernization of agriculture, Ranade argued that

1. Quotes from Goswami 2004, 215, 221. For List’s influence on Ranade, see also Bach 2018; Hatekar 2003. 2. See, for example, Ganguli 1977. 3. Ranade 1906, 20. Although Ranade featured List this way, I note at the end of chapter 6 that he also drew on Henry Carey’s ideas and that the latter were in some ways closer in content to his thought than List’s. 4. Quotes from Ranade 1906, 20–21; see also [1881] 1990, 149. 5. Ranade 1906, 20–21.



India’s manufacturing needed to embrace modern machinery to become more competitive against foreign firms. When promoting these economic reforms, Ranade echoed the lack of attention to domestic class conflict that characterized List’s 1841 book. As Bipan Chandra notes: “He did not show much awareness of the class dimension of, or the class division and exploitation within, Indian society.”6 He was, however, interested in addressing some other domestic social issues, such as the disadvantaged position of women in Indian society. Arguing that foreign rulers had undermined the role of women in India, he called for this situation to be reversed through reforms in areas such as women’s education and laws concerning marriage and inheritance.7 Ranade argued that one of the key economic roles of the state was to pro­ tect infant industries from what he called “the hostile Competition of Advanced Races, whose industrial organization has been completed under more favorable conditions than our own.”8 In the context of British colonial policy toward India, Ranade’s call for industrial protectionism was radical, because the British had long cultivated a market for their manufactured goods in the colony. Indeed, when many other countries were raising industrial tariffs in the late nineteenth century, British authorities lowered India’s tariffs from 1883 to 1894, leaving the colony with one of the most liberal trade policies in the world at the time.9 Even when tariffs were raised for revenue reasons in 1895, colonial authorities imposed a significant cotton excise duty on Indian textile producers to pacify Manchester export interests back in Britain. When calling for protectionist policies, Ranade did not reject liberal trade theory entirely. Instead, like List, he acknowledged its merits but argued “that its practical application must be sub-ordinated to the varying condition of dif­ ferent countries.” When discussing these varying conditions, Ranade—like Schmoller—went further than List in embracing a quite relativist approach to political economy. For example, in his 1892 lecture, Ranade went out of his way to highlight a number of assumptions in British liberal political economy that were inapplicable to Indian conditions and called for the development of an alternative “Indian” approach to political economy. In other writings, he highlighted how the creation of “Indian political economy” would echo the emergence of “American,

6. 7. 8. 9.

Chandra 1990, lxxxiiii–lxxxiv. Ranade 1915, 76, 85, 144. Ranade 1906, 128. Chandra 1966, 221; Goswami 2004, 227.



Australian and Continental Political Economy,” each of which challenged British liberalism by highlighting the distinctiveness of their specific context.10

The Colonial Context Ranade’s analysis also went beyond List’s ideas because he sought to boost the wealth and power of a political entity that was a colony rather than a nation-state. Although Ranade promoted India’s national interests, he was loyal to the British Empire and saw himself as an imperial citizen. Like many other Indian nation­ alists of his generation, Ranade was focused on reforming imperial policies to benefit India as a colony rather than on the cause of political independence.11 Indeed, alongside his many criticisms of the economic consequences of colonial­ ism, Ranade expressed some praise for British rule: “As a compensation against all these depressing influences, we have to set off the advantage of a free contact with a race which has opened the Country to the Commerce of the world, and by its superior skill and resources has developed communications in a way pre­ viously unknown. If we wish to realize our situation fully, we may not overlook this factor, because, it represents the beam of light which alone illumines the prevailing darkness.”12 When Ranade called for imperial reforms that would enable India to imple­ ment infant industry protection, he departed from List’s views in another key way. Recall that List had argued that India—like other parts of the tropical zone— was best served by embracing free trade and commodity exporting. Ranade chal­ lenged this view directly. Although List-inspired thinkers in many other regions of the world simply ignored List’s ideas on this topic, Ranade went out of his way to criticize those who “assign to the backward Torrid Zone Regions of Asia the duty of producing Raw Materials, and claim for the advanced European Tem­ perate Zone Countries, the work of transport and manufacturers.” Interestingly, however, he linked this view to economists of “the orthodox English doctrine,” while suggesting—misleadingly, in the case of List—that “modern European thought” critical of that doctrine had a divergent opinion.13

10. Quotes from Ranade [1881] 1990, 154; 1906, 96; see also 1906, 1–2. 11. Chandra 1990, xii–xiii; see also Bayly 2012, 194. 12. Ranade 1906, 25. 13. Quotes from Ranade 1906, 25–26. Although he referred to “European” critics of free trade, he may have had in mind Henry Carey (whose views were discussed a few pages earlier in Ranade’s text). For the ways in which Carey’s views differed from those of List on this issue, see chapter 5. See chapter 6 for ways that Ranade may have drawn on Carey.



Ranade advanced several important arguments against the idea that torridzone regions were destined by nature to be only commodity producers. To begin with, he invoked India’s history: “The Torrid Zone people may fairly appeal to past history, when their skilled products found a ready market in temperate king­ doms, and excited such jealousy as to dictate prohibitive sumptuary laws both in ancient Rome and in modern England.”14 As noted in chapter 2, List himself had acknowledged that India’s cotton and silk industries had in the past been more competitive than English ones. Ranade’s appeal to India’s industrial past implic­ itly challenged List’s stage theory of societal development.15 Second, Ranade made the following observation: “The differences in favour of temperate regions are all modern growths due to the employment of Steam Machinery, and the abundance of cheap Iron and Coal.” He continued, “This is a real advantage, and has to be faced, but if it can be faced, there is no natural incongruity in an arrangement by which Industry would return to its ancient home with a double saving in time and cost.” Ranade also argued that “the natu­ ral fitness of things requires that the manufacturers should spring up where the raw materials grow, and where, besides, there is demand for the manufactured produce, rather than that bulky goods should be transported many thousands of miles over land and sea, and re-consigned the same way back.”16 Finally, Ranade critiqued the idea that an exclusive focus on agricultural pro­ duction was beneficial for countries in the torrid zone. Because agriculture was subject to “the Law of Diminishing Returns” and manufacturing was not, he argued that free trade thus “condemns the poor to grow still poorer, and helps the rich to become richer.” He also noted that “the Agricultural Industry in the Torrid Regions has to work under the disadvantage of an uncertain rainfall, and suffer from famine visitations, which, when they come, paralyze Production, and condemn millions to violent or slow death.” By contrast, a more diversified economy with industry would serve as “a permanent National Insurance against recurrent dangers, and as such is economically the most beneficial course in the interests of the Community.”17 Given Ranade’s rejection of List’s views about the torrid zone, it is not surpris­ ing that he also did not share the German thinker’s positive view of the impact

14. Ranade 1906, 26. 15. In appealing to India’s precolonial history, Ranade did not cite specific leaders who had pro­ moted manufacturing via mercantilist policies, such as Tipu Sultan in Mysore from 1782 to 1799 (see, e.g., Yazdani 2017; Hobson 2020, chap. 12). 16. Quotes from Ranade 1906, 26–27. 17. Quotes from Ranade 1906, 27–28.



of British imperialism and free trade on India. Indeed, he developed some of the most important economic critiques of colonialism from a thinker living in a colonized region of the world in this period. Under British rule, Ranade argued, India’s indigenous industry had been undermined, forcing the country into a position of being primarily an agricultural exporter. This “ruralization” had been made worse by the building of the railroads, which had “only made competition with Europe more hopeless over larger areas, and facilitated the conveyance of Foreign Goods, to an extent not otherwise possible.” As he put it, “Every class of artisans, the Spinners, Weavers, and the Dyers, the Oilsmen, the Paper-makers, the Silk and Sugar and Metals workers, etc., who are unable to bear up against Western competition, resort to the land, leave the Towns and go into the Coun­ try, and are lost in the mass of helpless people who are unable to bear up against scarcity and famine.”18 Whereas List suggested that India had gained from its increasingly agricultur­ ally focused economy, Ranade highlighted the costs of this transformation. In addition to the costs noted above, Ranade pointed to the absence of “a healthy proportion between the Rural and Urban Populations” and the growing “depen­ dence of multitudes on the soil exhausted by over-cultivation.” He also noted the following: “The progress of ruralization in modern India means its rustica­ tion, i.e. a loss of power, and intelligence, and self-dependence, and is a distinctly retrograde move.” More generally, Ranade was concerned about India’s loss of economic independence, as Indians had been turned “into drawers and hew­ ers of wood to the civilized nations of the world.” Their loss of independence was compounded by the growing British domination of India’s commerce: “This Dependency has come to be regarded as a Plantation, growing raw produce to be shipped by British Agents in British Ships, to be worked in Fabrics by British skill and capital, and to be re-exported to the Dependency by British merchants to their corresponding British Firms in India and elsewhere.” Ranade was con­ cerned about foreign control of not just India’s external commerce but also its internal trade: “The Foreign Merchant’s hand is seen trafficking direct with our producers in the remotest and smallest Villages.”19 In Ranade’s view, growing foreign dominance of India’s manufacturing and commerce was “transferring the monopoly not only of wealth, but what is more important, of skill, talent, and activity to others.” Ranade also highlighted the links between economic and political monopoly: “The increased Trade and

18. Quotes from Ranade 1906, 106, 93, 29, 19. Quotes from Ranade 1906, 71, 28–29; [1881] 1990, 152; 1906, 106, 199.



Commerce of the Country represents a steadily diminishing proportion of Native enterprise and skill engaged in it, and the monopoly of Political power is made more invidious by the monopoly of commercial Wealth and manufac­ turing activity.” Indeed, he argued that the consequences of British economic domination were even worse than those of its political domination: “The politi­ cal domination of one Country by another attracts far more attention than the more formidable, though unfelt domination which the Capital, Enterprise, and Skill of one Country exercise over the Trade and Manufactures of another. This latter domination has an insidious influence which paralyzes the springs of all the varied activities which together make up the life of a Nation.” Ranade argued that Britain’s economic dominance of Indian manufacturing and commerce also reinforced India’s political subordination: “Commercial and Manufacturing pre­ dominance naturally transfers Political ascendency, and in this our collapse has been even far more complete.”20 In critiquing the economic impact of colonial rule, Ranade also argued from the early 1870s onward that the British were draining capital from India.21 Argu­ ments of this kind were not new; they had been advanced by British thinkers as far back as the late eighteenth century as well as by Indian reformers in the 1830s and 1840s.22 In Ranade’s time, they were developed in much more detail and pop­ ularized by the prominent liberal nationalist Dadabhai Naoroji, who attributed much of India’s poverty and lack of economic development to capital exports associated with colonial rule.23 This “drain theory” assumed a less prominent place in Ranade’s analysis. Indeed, Ranade argued that some exports of capital were understandable, such as when the colonial government paid for supplies that India could not produce or when interest was being paid abroad on British capital. Regarding the latter, he even argued that “so far from complaining, we have reason to be thankful that we have a Creditor who supplies our needs at such a low rate of interest.” Ranade also noted that British rule enabled India “to levy an equivalent tribute from China by our Opium Monopoly.”24

20. Quotes from Ranade 1906, 197, 71, 105, 199. 21. See, for example, Ranade [1881] 1990, 151; 1906, 24–25. 22. See, for example, Ganguli 1977. 23. Mehrotra and Patel 2016. I have not discussed Naoroji’s views further here because he was not a devotee of List. He was a member of the Cobden Club, signaling that he associated himself with the liberal political economy tradition (see, e.g., Jha 1981, 121; Singh 1975, 30). 24. Quotes from Ranade 1906, 200. Naoroji did not dispute that some export of capital was legiti­ mate in the context of the expenses of British rule, but he argued that the colonial authorities could reduce it greatly by reforms, such as raising public debt in India, increasing local purchasing, and employing more Indians in the colonial civil service (which would also retain skills and knowledge locally) (Mehrotra and Patel 2016).



Innovative Neomercantilist Policies To buttress his case for tariffs in India, Ranade invoked the fact that protection­ ism was gaining support in many European countries, the United States, British colonies such as Australia, and even Britain itself.25 Ranade praised how these trends were reviving some of the valid ideas of mercantilism (whose reputation he felt had been unfairly tarred by an excessive focus of critics on the notion that mercantilists equated wealth with bullion): “The State is now more and more recognized as the National Organ for taking care of National needs in all mat­ ters in which individual and cooperative efforts are not likely to be so effective and economic as National effort.” But Ranade and other supporters of Indian protectionism were also forced to recognize that the abandonment of free trade in the colony was not politically realistic. Whereas colonies such as Australia had responsible government and control over their tariff policy, trade policy in India lay in the hands of the British, who saw protectionist policies as “heresies.” As Ranade put it in 1890, “It is not open to us to adopt certain plans of operation, which, however much they might be condemned on abstract grounds, have been followed with practical success in many of the most enlightened Countries of Europe and America.”26 If British authorities would not raise Indian tariffs, what could be done? Ranade advanced some innovative strategies to pursue neomercantilist goals in this constrained political situation. To begin with, Ranade appealed to Brit­ ish colonial authorities to support the growth of industrial enterprises through other kinds of government economic activism. He mentioned policies such as improved education and infrastructure, the “guaranteeing or subsidizing [of] such Enterprises in their pioneering stage,” the “pioneering of new enterprise,” and government procurement from local “State Factories” or from local private producers. Ranade also argued that official mobilization and direction of capital in support of large industrial firms was important in India because of distinctive conditions such as the low savings of the population and the lack of familiarity with joint-stock companies.27 For those who might object that some of these practices were also heresies from the perspective of liberal economic theory, Ranade noted that the Indian colonial government had already contravened liberal principles in many areas. In addition to monopolizing ownership of India’s lands, the colonial government

25. Ranade 1906, 12, 27, 72, 96; [1881] 1990. 26. Quotes from Ranade 1906, 34, 202. 27. Quotes from Ranade 1906, 203, 34, 36; see also 98–99.



guaranteed and subsidized agricultural and resource projects as well as railway and canal construction. Since 1870, it had even shifted from guaranteeing railway construction to becoming its own railway contractor. Ranade emphasized that he was simply calling for these interventionist practices to be extended to the culti­ vation of Indian industry. He also noted that India’s shortage of capital could be addressed through borrowing by the Indian government, as it had already done to finance railroad and canals.28 In an 1890 publication, Ranade pointed to colonial practices in the Dutch East Indies as an example for British colonial authorities to follow. In both contexts, “a civilized European Power was entrusted with the rule of vast Territories inhab­ ited by a comparatively barbarous people.” In contrast to their British counter­ parts in India, however, the Dutch authorities had implemented the “Java Culture System” from the early 1830s through the 1860s. He argued that this system had successfully promoted both agriculture and manufacturing through government loans, supervision, and purchases. Although the motivation for the Dutch system had been primarily revenue generation for the state, Ranade argued that “indi­ rectly it helped the Netherlands East Indies to attain a high degree of material prosperity.”29 More specifically, Ranade used the Dutch example to recommend that the Indian colonial government encourage local industry by borrowing funds from abroad that could be lent at low interest rates to local entrepreneurs. Under his scheme, the latter would commit, subject to supervision, to build up industrial sectors chosen by the government, starting with iron and coal before moving on to other sectors, such as sugar refineries, oils, beer, woolens, tanning, paper, and glass. If the central government was not willing to take on this task, he noted, it could at least empower lower levels of government or even special corporate boards of trade to take on this role. When endorsing the Dutch model, Ranade also insisted that some of its flaws would need to be remedied if it was applied to India, such as its use of forced labor and monopoly purchasing as well as the fact that loans went only to Europeans rather than locals.30 In stressing the need to draw on foreign capital, Ranade echoed List’s empha­ sis on this strategy as a way of fostering the productive powers of the nation. But Ranade advocated a more interventionist model in which the state—in this case,

28. Ranade 1906, 35, 93, 203. 29. Quotes from Ranade 1906, 72–73, 83, 85. For a discussion of this system, see, for exam­ ple, Fasseur 1986. As I note in chapter 7, the Japanese neomercantilist Maeda Masana in 1884 also invoked Java’s economic record. 30. Ranade 1906, 99–100, 103.



the colonial state—acted as a mediator between local manufacturers and foreign lenders. Because Indian had no tariffs, he could not assume—as List had—that foreign investors would have an incentive to establish manufacturing operations in the country. Indeed, most of the foreign capital that flowed into colonial India after 1858 went into infrastructural projects and the resource sector, with very little invested in manufacturing. The small foreign private investments in manu­ facturing also undermined Indian firms in ways that concerned Indian nation­ alists.31 Ranade noted one other innovative way in which local manufacturing might be encouraged in India’s distinctive colonial context. In a lecture in 1872, he noted that Indians themselves could support local firms by buying locally made products instead of foreign ones, even if the latter were cheaper.32 This strategy was reminiscent of George Washington’s effort to support local manufacturing by encouraging Americans to wear clothing made from American cloth, as he did at his presidential inauguration. In his 1841 book, List noted Washington’s gesture in passing, but did not comment on it.33 Ranade was more supportive of this strategy of supporting local manufacturing through individuals’ consump­ tion behavior. In addition to calling for local consumption, Ranade became an active spon­ sor and promoter of local industry and thus helped to encourage the growth of a swadeshi (“own country”) movement within Indian society committed to sup­ porting local manufacturers in these nonstate ways. In the wake of the unpopu­ lar 1905 partition of Bengal, this movement briefly attracted mass support and was endorsed by the Indian National Congress for the first time. At this time, the movement also moved beyond consumption-based strategies to set up what Manu Goswami called “parallel, competing institutions” to those of the colo­ nial state with goals that included the fostering of local capital and enterprise.34 Other prominent Indian supporters of the swadeshi movement compared it to protectionist movements in other parts of the world at this time. One such supporter was Romesh Chunder Dutt, who served as president of the Indian National Congress in 1899 and whose 1902 Economic History of India provided

31. Chandra 1966, 92–93. 32. Chandra 1966, 124. Ranade was not the first to call for local purchasing. In 1849–50, the prominent social reformer Gopal Hari Deshmukh had called for a boycott of foreign goods as a means of reducing imports and promoting local industrialization and employment (Singh 2016, 220; Apte 1973). A movement to promote swadeshi also emerged in Bengal in the 1860s (Ganguli 1977, 202; Chandra 1966, 122). 33. List [1841b] 1909, 788. 34. Goswami 2004, 244. For Ranade’s support, see also Ganguli 1977, 203.



a detailed analysis of the economic costs of British colonial rule that reinforced the earlier analyses of Ranade and Naoroji.35 In 1903, he praised the swadeshi movement, even invoking Chamberlain’s tariff reform proposals as a parallel: “The Swadeshi Movement is one which all nations on earth are seeking to adopt in the present day. Mr Chamberlain is seeking to adopt it by a scheme of imperial Protection.” He also cited the examples of protectionist policies in France, Ger­ many, the United States, and other British colonies, but then noted that India was forced into its distinctive nonstate approach because “we have no control over our fiscal legislation.”36 Some Indian writers, such as Jadunath Sarkar, even argued that swadeshi was “much better than protection.” In the 1911 edition of his book Economics of British India, Sarkar praised how swadeshi was “entirely voluntary” and did not “artificially” force higher prices on all consumers. He also applauded that it did not inhibit foreign competition, which kept firms efficient. More broadly, Sarkar highlighted the broader “ethical value of Swadeshi” in the following way: “To hardly one in a million, comes the chance of doing a great deed for his country, or sacrificing his all before the nation’s eyes. But each one of us, however poor his means, can make a small silent sacrifice for his country every time he goes to the market. . . . The wider outlook and spirit of broader sympathy which is fostered by such acts, knits provinces together as a nation.”37 Sarkar’s last comment highlighted how the swadeshi movement of the early 1900s assumed a strong nationalist content. As Andrew Sartori notes, it com­ bined a “neomercantilist political economy” with emerging Hindu cultural nationalism.38 The most popular swadeshi text was a 1904 book titled Story of the Nation by Sakharam Ganesh Deuskar that summarized the ideas of Ranade and Naoroji while linking them to the protection of the nation depicted in religious terms.39 Many swadeshi activists also looked to Japan as a model of a country that industrialized while keeping its distinct values, and some even sought out Japanese support for their movement.40

35. See especially Dutt 1902, 256–69, 293–302. 36. Quoted in Goswami 2004, 272. Interestingly, in the wake of the failure of the early twentiethcentury tariff reform movement in Britain, British protectionists also turned to consumptionbased campaigns in the 1920s to encourage purchases of British and empire goods (Trentmann 2008, 229–36). 37. Quotes from Sarkar 1911, 272–73. 38. Quote from Sartori 2008, 23. See also Goswami 2004, 12. 39. Goswami 1998, 624. 40. Goswami 2004, 254; Sartori 2008, 166; Manjapra 2012, 57; 2014, 41.



Toward Independence By 1908, however, the swadeshi movement had lost its momentum. When it revived under the leadership of Mohandas Karamchand Gandhi after World War I, the ideas that inspired the movement increasingly shifted away from the neomercantilist orientation of Ranade and others. Gandhi gave greater emphasis to autarkic goals and a critique of materialism and modern industrial develop­ ment.41 In this period, the swadeshi movement also became tied more strongly to the antiimperialist goal of overthrowing British colonialism and achieving Indian independence. Although the latter political goal was increasingly embraced by Indian nationalists in the interwar years, Gandhi’s economic vision was rejected by many who remained committed to neomercantilist objectives. One prominent example was the Cambridge-educated economist Jehangir Coyajee, who was chosen to be a member of the Indian Fiscal Commission of 1921–22. In the context of rising Indian nationalism and the growth of Indian industry dur­ ing World War I, this commission was established by the British to review India’s tariff policy. Coyajee backed its recommendation of a new policy of “discriminating protection” for India, which colonial authorities subsequently implemented.42 When defending the commission’s support for infant industry protection, Coyajee invoked Ranade’s concerns about the “ruralization” of India as well as the arguments of List.43 Another thinker to cite List and Ranade was Vaman Kale. In his widely read 1918 Introduction to the Study of Indian Economics, Kale promoted their argu­ ments, while critiquing those in the Gandhian wing of the Indian nationalist movement who attacked modernity and who contrasted the “spiritualism of India” with the West’s materialism: “Because India is poor . . . it does not follow that she is more spiritual and dreamy than the west or that she is of a weaker mould. There is abundant evidence to prove that India was once rich in the goods of this world as well as in spiritual and cultural wealth; and that her people desired and enjoyed material pleasures.”44 Finally, the ideas of Benoy Kumar (B. K.) Sarkar deserve more detailed atten­ tion, not least because he was, in Goswami’s words, “the most prominent social

41. See, for example, Trivedi 2007. These goals had already been prominent among some swadeshi activists in the early twentieth century (Sartori 2008). 42. Quoted in Chandavarkar 1989, 51. 43. Coyajee [1924] 2009, 73. He also noted Alexander Hamilton’s arguments. 44. Quotes from Goswami 2004, 236.



scientist in interwar colonial India.”45 Sarkar’s ideas about political economy had initially been forged in the swadeshi movement of 1905–08, after which he fled into exile. He traveled widely abroad during 1914–25, including to the United States, where he became acquainted with a prominent protégé of Schmoller, the US economist Edwin Seligman.46 After Sarkar returned to India, he took up a position as an economics professor at the University of Calcutta. Sarkar was inspired by List and even produced the first translation of the Ger­ man thinker’s 1841 book into Bengali in 1932 (after translating parts of it for Bengali journals from 1914 to 1923).47 He was also a fan of Ranade, dedicat­ ing his 1926 book Economic Development to him (and to Dutt).48 Sarkar echoed Ranade’s calls for strategic protectionism and the use of foreign capital to pro­ mote industrialization that could boost India’s wealth and power. Like Ranade, he was also interested in improving the position of women in Indian society. He suggested that India needed to follow the West’s example of encouraging women’s paid work outside the home to boost their economic independence and India’s national wealth.49 B. K. Sarkar’s ideas also went beyond those of List and Ranade in some inter­ esting ways. For example, though highlighting India’s need for foreign capital, he argued that the Indian government should regulate private foreign invest­ ment to make certain that India benefited from it. Specifically, he urged public officials to negotiate with foreign private investors to ensure that they partnered with local capital, brought Indians in the directorate and higher management, and treated Indian workers well, including training and promoting them. From the mid-1920s onward, Sarkar also combined his neomercantilist views with a growing interest in fascist movements and their conceptions of economic plan­ ning. For example, in a speech in 1931, he compared the swadeshi movement with the “economic patriotism of Fascist Italy,” arguing that they were “going to be appraised in the annals of world-economy as belonging in the same rank.”50 B. K. Sarkar also countered the antimaterialism of the Gandhians by invok­ ing a text from South Asian deep history: the Arthashastra (Science of wealth). Likely written by a number of people sometime between 300 BCE and 300 CE,

45. Goswami 2012, 1464. 46. Goswami 2012, 1465, 1482. 47. Dutt 1939, 28. 48. Sarkar 1926a. 49. Dutt 1934, 183–86. 50. Quoted in Dutt 1934, 219. He also put “the industrial nationalism of the Russian Gosplan” in the same category in this passage. For Sarkar’s views, see, for example, Manjapra 2014, 153–54; Dutt 1934, chaps. 5–7. For his views on foreign capital, see Sarkar 1926a, 395–97.



its initial author is usually identified as Kautilya, who served as an adviser to the founder of the Maurya Empire that dominated South Asia from 322 to 187 BCE. The work was lost around 500 CE, but then rediscovered in 1905 and published in 1908–09, after which it was translated into English and Hindi in 1915. It was immediately recognized as one of the most important works of political economy from precolonial India.51 The appeal of the Arthashastra to Indian neomercantilists such as B. K. Sarkar was obvious. It advised rulers how to maximize the power of their state in a world of competing kingdoms and put enormous emphasis on the need to promote wealth. To realize these mercantilist goals, it called for extensive regulation of the domestic economy and foreign economic relations in ways that promoted economic development, international trade, and the people’s welfare. The Artha­ shastra was also a largely secular work, representing a contrast to the ancient religious and philosophical texts to which Gandhi appealed and thus calling into question Gandhi’s emphasis on the deeply rooted spiritual nature of Indian civi­ lization. Not surprisingly, Gandhi gave the work little attention, but Indians such as B. K. Sarkar were able to cite it as evidence of the local historical roots of their neomercantilist aspirations for a future independent India.52 Sarkar described Kautilya in 1922 as the “Bismarck of the first Hindu Empire,” and he dedicated one of his books to his spirit, arguing that “the logical apparatus of international diplomacy and the machinery of thinking in regard to the philosophy of foreign politics remain the same as in the days of our old Kautilya.”53 One final aspect of B. K. Sarkar’s thought deserves mention: his interest in the role that industrialized countries could play in supporting the industrialization of poorer regions of the world. After traveling through Europe during 1929–31 at the height of the Great Depression, he published a detailed study of the “world­ crisis” arguing that the industrialization of poorer regions would create new markets for industrialized countries that were suffering from high unemploy­ ment. As manufacturing of “commonplace goods” in those poorer regions grew, Sarkar suggested, the wealthier countries of the world could accelerate their own “Second Industrial Revolution” that was focused on “specialized industries” and higher-end products. To facilitate this complementary economic transition in both parts of the world, Sarkar called on “the unemployment-stricken countries of the world” to “export capital to those regions which are seeking to industrialise themselves.” He criticized international organizations he had visited in Geneva

51. See, for example, Jha 1981; Misra 2016; Skare 2013. 52. Misra 2016, 320. 53. Quotes from Sarkar 1922, 151; [1926c] 1938, x.



for their lack of attention to the possibilities for this kind of international coop­ eration: “It is curious that the League of Nations and the International Labour Office have bestowed hardly any attention on these aspects of the worldeconomy while discussing the present crisis.”54

Multilateral Institutions and Manoilescu’s Neomercantilism This general issue had also attracted the attention of Manoilescu a few years ear­ lier. In a more detailed way, Manoilescu developed innovative ideas about how multilateral institutions could support the neomercantilist goals of poorer coun­ tries. To understand his ideas on the topic, it is necessary first to understand the distinctive nature of his broader neomercantilist thought.

Manoilescu’s Case for Strategic Protectionism Born into a modest family in Romania, Manoilescu studied engineering before entering government and political life. Although Manoilescu had no formal training in political economy, he became interested in trade policy while study­ ing Romania’s tariff structure in 1927.55 In 1929, he published a French-language book in Paris titled Théorie du Protectionisme et de l’Échange International (translated into English in 1931 as The Theory of Protectionism and International Trade), which quickly earned him an international reputation. Indeed, by the late 1930s, Manoilescu’s book had been published in six European languages.56 In Eastern European countries such as Bulgaria and Poland, his ideas were invoked in the 1930s by politicians, government officials, and industrialists to support industrial protectionism.57 Manoilescu’s work also attracted interest in Brazil, where his book was translated into Portuguese in 1931 through the sponsorship of a prominent local advocate of industrialization, Roberto Simonsen, who was also a fan of List’s work.58 Officials in Mexico’s central bank also became

54. Sarkar 1932, 269, 297, 290–91, 297n33. In an article published in 1926, Sarkar had made a similar argument about how Britain would benefit from exporting more capital to India and other poor countries because British exports of machinery and higher-end goods would expand to those places (Sarkar [1926b] 1938, 72–75). 55. Love 1996, Schmitter 1978. 56. Love 1996; Kofman 1990, 29; Szlajfer 2012, 113. 57. Kofman 1997, 15, 30, 104. 58. Szlajfer 1990, 119; 2012, 325–36; Curi 2017.



interested in his ideas.59 Another sign of the prominence of his ideas was the fact that they were critiqued by leading Western economists of his day, including Bertil Ohlin and Jacob Viner.60 In his book, Manoilescu noted the disjuncture between the increasingly wide­ spread use of trade protectionism after World War I and the enduring prestige of liberal theories of free trade, particularly in League of Nations circles. As he put it, trade protection had become “one of the most notable phenomena of modern life,” but “it seems bereft of any theoretical basis.” As a result, he argued, tariffs were introduced “in an arbitrary manner,” often merely reflecting “various capi­ talist and political influences” rather than any theoretical principle. The goal of his book was to develop a theory that would show how protection could be used “according to certain scientific criteria.”61 When lamenting the absence of protectionist theory, Manoilescu acknowl­ edged List’s work and praised him for showing “that the power of multiplying capital consists largely in transforming natural forces into material capital” and the importance of industry in this process.62 More generally, Manoilescu applauded the importance List gave “to the moral and material productive forces of a nation.” He noted, “[List’s] famous sentence ‘The capacity to produce wealth is much more important than wealth itself ’ remains a vade mecum for econo­ mists and statesmen of all time.” He also appreciated how List had “transferred, in a wonderful manner, the idea of nationality from ideology to economics.” Manoilescu echoed List with the following sentiment as well: “The interests of a nation must not be considered as the interests of a private person, and must not be referred to in a certain moment only. The life of nations is eternal.” Manoilescu also appreciated how List located his nationalist views within a wider cosmopoli­ tan focus: “It is not permissible to anyone, however good a defender of the rights of his own country, to deny a place for humanity in any doctrine or system, and

59. Gootenberg 2004, 247. 60. Love 1996. 61. Quotes from Manoilescu 1931, xx, 4, 6, 9, xxiii. For the League’s support of free trade, see Clavin 2013, 39–46. B. K. Sarkar ([1926c] 1938, 216) had also commented that the League’s member nations were “mostly ‘protectionist’ in the politics of tariff,” whereas “the general assembly of the nations as assembled in Geneva happens to be pronouncedly ‘free trader.’” 62. Manoilescu 1931, 251. From his references, Manoilescu was clearly familiar with other neo­ mercantilist work, but he did not discuss it in detail. For example, when discussing why Romania should protect its textile sector, he quoted Schmoller’s warning that for countries such as Romania, free trade might “very easily rob them of their industries, or even, in certain circumstances, of part of their population” (Manoilescu 1931, 165n2). Manoilescu also made some scattered mentions of Carey’s work, but never engaged with his ideas in any depth.



not to try to find the supreme road which leads to the conciliation of national interests with the general interest of the Society of Nations.”63 In addition to praising List, Manoilescu criticized him for his caution in advocating “provisional (education) protection only for industries and for certain countries which are passing through a certain phase of their economic and social evolution.” He also disapproved of the vagueness of List’s advice on this issue: “Who shall say when an industry may be considered as having passed out of its infancy?” In addition, he questioned the relevance of List’s theory to much mod­ ern protectionism: “The almost universal and permanent protection of to-day is not only outside List’s theory, but appears just as its contrary. If List were still liv­ ing, he would demand the abrogation of protection in the United States—where there is almost no young industry—the reduction of customs taxes almost every­ where, and the suppression of barriers for agricultural products.” More generally, Manoilescu found List’s approach disappointing because he “presents protection as the exception, and grants the character of general validity to the free-trade sys­ tem.” Manoilescu’s goals were more ambitious: “Our theory of protection is a general theory, applicable to any country, without distinction of its state of develop­ ment or economic structure.”64 Although Manoilescu sought to develop a “general theory” of protection­ ism, he also emphasized that his theoretical ambition was limited in one respect: “Our theory of protection intends to put forward only the direct and present economic advantages of protection, leaving aside any social, indirect, and future advantages.” He acknowledged that List and others had put forward noneconomic rationales for protectionism and he noted that he agreed with many of them, such as “the moral necessity of varying the occupations of a nation, the need of education and intellectual development of a nation by the aid of a national industry, and the exigencies of national defence.” Indeed, like other neomercantilists, he emphasized the importance of objectives relating to state power in various passages such as this: “Protection represents freedom and independence. The real independence of a nation is only obtained by cre­ ating industrial means which secure national defence and national wealth.” In general, however, Manoilescu saw his main contribution as showing “by economic arguments aiming exclusively at the economic point of view the value of protection under certain conditions.” Manoilescu also made clear that he preferred to focus on “the interests of a nation considered as a whole” while

63. Quotes from Manoilescu 1931, 242, 250, 244n1, 250. 64. Quotes from Manoilescu, xxii, 243, 249, xxii, ix.



discussing “only on a secondary plane the influence of the protectionist system on the classes and individuals of each nation.”65 In developing his economic case for protectionism, Manoilescu criticized David Ricardo’s theory of comparative advantage. Although Ricardo’s 1817 the­ ory represented a major contribution to the economic case for free trade, many of the neomercantilists examined in this book—including List—did not engage with it at all.66 At the core of Manoilescu’s critique was the idea that national economic progress depended on boosting overall labor productivity in a country. To achieve this goal, Manoilescu argued, workers needed to move out of agri­ culture to industry, where capital per worker was usually higher. His critique of Ricardian theory and free trade flowed from this idea. If protection supported the growth of sectors with higher labor productivity than the national average, he argued that it could immediately benefit the national economy, even if it resulted in higher domestic prices. As he put it, “A new factory, even from its inception and even if it is inferior to a foreign one, brings net and certain profit to a country.”67 His case went beyond infant-industry arguments that focused on short-term sacrifice for long-term gains achieved once manufacturing firms were able to lower their costs to become internationally competitive. Manoilescu’s focus on labor productivity issues also encouraged him to describe the trade relations between agricultural and industrial countries as exploitative. When agricultural countries exported their commodities for industrial goods, he argued, they were usually exporting products that embod­ ied more labor than the ones being imported. The result, he argued, was not favorable to these countries: “When a people exports the produce of the work of ten of its workmen in order to buy the produce of the work of a single foreign workman, this exchange can be only disadvantageous.” Manoilescu described this trade relationship as a form of “exploitation” by industrialized countries that was “invisible”: “The industrial export products allow them to make more men work for them abroad than are put to work at home to create these prod­ ucts. At the time of slavery this result came through compulsion; at the present time it is obtained by the free exchange of products.”68 Manoilescu’s arguments

65. Quotes from Manoilescu, 57, 59, 227, 59, 250; on defense, see also 245n1. 66. Ricardo [1817] 1948. Izumo and Sato (2014) also note that Ricardo’s arguments had a remark­ ably low profile in debates between free traders and protectionists in Japan in the late nineteenth century. 67. Manoilescu 1931, 241. 68. Quotes from Manoilescu 1931, xiv, viii.



on this topic were likely influenced by the earlier Romanian thinker Alexandru Xenopol, whose ideas are described in chapter 3. These arguments led Manoilescu to conclude that protection had “a much wider extension than List believed.” Protectionism was justified, he argued, for any sector whose “productivity surpasses the average productivity of the coun­ try,” including agriculture. In his theory, protection was justified even if a pro­ tected local firm did not become internationally competitive; the key issue was whether it boosted national labor productivity. His logic also led him to be much less concerned than List had been about the severity of protectionist measures: “There is no a priori limit for the degree of protection.” Manoilescu’s argument also meant that protectionism need not be only temporary; it could be justified for a long time. Indeed, he did not share List’s long-term goal of a world of free trade: “Protection will always be necessary . . . the part played by protection will never end, since there will never be a perfect levelling of the productivity of all industrial and agricultural branches of a country’s production.”69 Manoilescu’s theory led him to reject another of List’s ideas: that protection­ ism was justified only for a select group of countries. For example, he thought that even very poor countries should embrace his principles: “Even at the first degrees of civilization there are elementary industries which may arise, the pro­ ductivity of which is greater than the very small average productivity of so little advanced a country.” Similarly, he argued that protectionism was “not a system applicable only to rising nations” but also to “great industrialised countries” such as Britain: “A temporary decline in a branch of industry of large productivity may make it advantageous for a nation [such as this] to help this industry by protec­ tion.” Manoilescu also did not share List’s view that small states should resist pro­ tectionism. Although he acknowledged that protectionism should not be used to try to cultivate a sector such as machine tools, which required large markets, Manoilescu argued that there was no reason why other kinds of protection would not be justified: “A political entity, however small, may always profitably apply a certain rational protection.”70 Although he supported a much wider use of protectionism than List, Manoil­ escu went out of his way to stress that he was no supporter of autarky, noting that protection should only be used selectively to support sectors whose productivity was above the national average. Indeed, he argued that his advice would result in a more economically interdependent world: “The tendency to concentrate

69. Quotes from Manoilescu 1931, 240, xi, 137, 147; see 246–47 for his criticisms of List’s opposi­ tion to agricultural protectionism. 70. Quotes from Manoilescu 1931, 248, 226, 176.



upon certain activities of large productivity leads rather to specialized systems of production, often insufficient for the integral needs of a country. . . . Therefore our conception leads toward interdependence and not towards autarchy.”71 Man­ oilescu also predicted that the industrialization of agricultural countries would boost international trade, because industrial countries tended to trade more with other industrial countries. He also endorsed the promotion of industrial exports once the home market’s needs had been met, including selling products abroad below cost if the larger export market enabled local firms to improve their pro­ ductivity via larger-scale production.72 In addition, Manoilescu insisted that his system of protection would not hinder “the free circulation of raw materials” and that “the circulation of foodstuffs in the world for better distribution to consum­ ers is inevitable.”73

A Role for Multilateral Institutions In addition to advancing these novel ideas about protectionism, Manoilescu went further, outlining an innovative vision of how a multilateral institution such as the League of Nations might support the neomercantilist policies and goals of national policymakers. This vision emerged from his frustration with the League’s free-trade orientation. In his view, the League should have been taking a different approach that recognized the use of protectionist policies as a “reason­ able and legitimate” right of nations.74 Manoilescu was not, in fact, the first to try to locate neomercantilist trade policy within a wider multilateral institutional framework. Almost a century ear­ lier, List had outlined some tentative ideas on the subject. They did not appear in his famous 1841 book, where multilateral institutions entered the analysis only in his future “universal confederation of nations,” in which neomercantilist policies were no longer needed. Instead, List’s ideas on this topic appeared in the unpublished manuscript he submitted to the French essay competition of 1837 where he briefly mentioned “a somewhat daring suggestion” for a “world trade congress” involving all countries. List hoped this congress would deliberate on topics such as “universal free trade in raw materials and agricultural products,” “the freedom of the seas,” and “uniform import duties on manufactured goods” among “all industrialised” countries. But he also emphasized that the congress

71. 72. 73. 74.

Manoilescu 1931, 211. Manoilescu 1931, 170–71. Quotes from Manoilescu 1931, 218, 194. Manoilescu 1931, 222.



should take into consideration the special needs of less industrialized countries: “The congress should consider the varied interests of regions and societies at dif­ ferent stages of economic development—such as industrialised, agrarian, colo­ nial, and primitive societies. It should examine the needs of countries which have reached the second or the third stage of industrial development in relation to the world’s leading manufacturing country.” In discussing the kinds of commercial treaties that countries could sign, List also noted the following: “Care must of course be taken not to conclude treaties by which one nation enjoys the oysters while another has to be content with the shells. Commercial treaties must give equal advantages to all the countries which sign them. All countries must secure guarantees for the future survival and prosperity of their industries.”75 List’s ideas about this “world trade congress” remained unknown to the wider world until his 1837 manuscript was discovered much later in the French archives and published in 1927.76 Manoilescu’s book was published just two years after this, but I have seen no evidence that Manoilescu was aware of List’s 1837 work. Even if he had been, it is unlikely that List’s ideas about the relationship between neomercantilist trade policies and a world trade body would have inspired him, because those ideas remained somewhat vague. Manoilescu outlined a much clearer vision in which the League of Nations would recognize countries’ right to use protectionism. In his view, this right con­ stituted “an elementary right for national progress.” At the same time, he sug­ gested that it would also serve the interests of humanity as a whole by bolstering the prospects for international peace and cooperation. In his view, free trade was a “system of slavery” linked to industrial nations’ monopoly power and their exploitation of agricultural countries. The resulting international inequalities, he suggested, were provoking “antagonism toward certain privileged domains of production” and were not politically sustainable because “nothing that is unjust can last.” By contrast, he argued, the kind of protectionism he advocated would usher in a more just world by fostering greater equality between nations through the decentralization of the world’s industry. As he put it, free trade “accentu­ ates the difference between the standards of living of different nations,” whereas “protection may appear as the Socialism of Nations.” He added that “nobody, up to the present, has shown any coincidence between protection and political aggressiveness.”77

75. Quotes from List [1837] 1983, 125–27. 76. Henderson 1983a. 77. Quotes from Manoilescu 1931, 222, 221, 213, xv, 226, 218.



Because free trade exacerbated international inequality, Manoilescu argued, it could only be justified at the international level if it were accompanied by “conscious” redistributive initiatives at the same level. But Manoilescu argued that this kind of international redistribution could only take place in the context of a world political union, because it was “impossible to regulate distribution among different nations.”78 His idea that free trade was only sustainable within an integrated political unit was reminiscent of List’s argument, except that List’s rationale was different. For the German thinker, the absence of such a federation forced countries to resort to protection in order to look out for their national interests and to address the fact that trade was inevitably infused with power and politics in ways that prevented international markets from operating in the way that liberals suggested. For Manoilescu, a global federation was needed to compensate countries that lost out from the uneven outcomes left by free trade. Both thinkers shared the view, however, that protectionism would boost international solidarity by reducing intercountry inequality. Manoilescu also argued that international solidarity would be boosted as rich countries benefited from the industrialization of poorer countries that protectionism supported. He noted that the largest export market for industrial countries was other industrial countries, whereas agricultural countries had “rather a small buying capacity.” For this reason, like B. K. Sarkar, Manoilescu suggested that industrial countries had a strong interest in encouraging industrialization elsewhere: “By stimulat­ ing the industrialisation of those countries, raising their buying capacity and improving their standard of living, there will be created for countries at the highest industrial development a sure basis of prosperity and constant progress.” He concluded: “Real solidarity does not mean to let rich countries live on the poverty of poor countries, but the enrichment of poor countries and inciden­ tally also of rich ones.”79 Interestingly, Manoilescu argued that international inequalities were likely to diminish over time even if industrialized countries did not support protec­ tionism in poorer countries. One reason was simply that “industrial decen­ tralization of the world” had already begun, including with the growth of manufacturing places in places such as India and China. But Manoilescu also

78. Quotes from Manoilescu 1931, 222. 79. Quotes from Manoilescu 1931, 199, 200, 218; see also 183, 208–9. In some ways, Manoilescu’s argument was reminiscent of List’s ([1841b] 1909, 102, 153) suggestion—noted in chapter 2—that “civilized nations” cooperate to promote “the civilisation of barbarous nations” in ways that would benefit the former economically and reduce “jealousy,” except that List saw that cooperation taking the form of promoting free trade and commodity exporting in poorer countries rather than support­ ing their industrialization behind tariff barriers.



argued that agricultural countries would gain over time from the “general ten­ dency for industrial articles to reduce in price as compared with agricultural articles.” This argument that the terms of trade for agricultural countries would improve over time contrasted with the more pessimistic views of some other neomercantilists. Manoilescu anticipated this trend because agriculture was “limited by the actual conditions of its production” whereas industrial goods had no limits. In addition, he noted the general tendency “for industrial productivity to equalise with agricultural productivity” because the former “increases more slowly” and the latter “increases more rapidly”80 Though believing that the trend of diminishing international equality was unstoppable, Manoilescu urged the international community to help accelerate it. In addition to calling for an international recognition of the right of poorer countries to use protection, he—like B. K. Sarkar—hoped industrialized coun­ tries could be encouraged to export capital to support poorer countries’ indus­ trialization. As he put it, “Newly created capital in rich and industrial countries must not remain there in order to augment a production apparatus already far too developed, but must migrate into poorer countries and assist their industri­ alization.” By supporting the industrialization of poor countries, wealthy coun­ tries would not only address international inequality but also boost markets for their exports. Unlike some neomercantilists who will be examined later in this book (such as Sun Yat-sen and José Manuel Puig Casauranc), Manoilescu did not discuss how international financial flows from rich to poor countries might be publicly managed by a multilateral institution. He simply noted on the last page of his book that foreign capital could help “give free scope to industrial develop­ ment before national capital has sufficiently accumulated.”81 After the publication of his book, Manoilescu had an opportunity to press for the kinds of international reforms he outlined when he rose to the position of a Romanian government minister in 1930 and then governor of the country’s National Bank in 1931.82 At this time, he became involved in unsuccessful efforts to improve prices for agricultural exports and to ask via the League of Nations for a preferential tariff and quota regime in Europe for Eastern and Central European countries.83 After leaving office, he continued to press for international economic reform. For example, in a 1935 essay for a leading German journal of interna­ tional economics, he reiterated his 1929 ideas in a blueprint for nonexploitative

80. 81. 82. 83.

Quotes from Manoilescu, xvi, 225, 197, 225, 201–2; see 183–84, 201. Quotes from Manoilescu, 210, 251; see also xviii. Schmitter 1978. Love 1996.



economic relations between Eastern and Western Europe that would respect the right of the former to protect local industry that produced for the domestic mar­ ket.84 By the end of the decade, however, Manoilescu appeared to turn his back on these economic ideas when he became foreign minister in 1940 and accepted the German vision for his country as an agricultural exporter.85 Manoilescu’s new stance, as well as his growing attraction to fascist politics, undermined the appeal of his ideas in many places.86 Both Ranade and Manoilescu drew on List’s ideas but also conceptualized neo­ mercantilism beyond the nation-state. Ranade developed a strand of neomer­ cantilism that was concerned with boosting the wealth and power of his British colony via the initiatives of colonial authorities and Indian societal actors. In so doing, he also called attention to many economic costs of imperialism from the standpoint of the colonized that List did not discuss. Manoilescu also addressed an issue that had briefly intrigued List in 1837 but which had no place in his 1841 book: how multilateral institutions might support neomercantilist goals. These and other thinkers discussed in this chapter went beyond List’s thought in other interesting ways as well. For example, they all rejected List’s view that only a small number of countries should pursue neomercantilist policies, with Ranade and Manoilescu explicitly attacking List’s arguments about this issue in different ways. Manoilescu also endorsed much more extensive and long-lasting strategic trade protectionism across more sectors than List did. Ranade and B. K. Sarkar went further than List in backing nonstate swadeshi forms of protection­ ism as well as other activist foreign economic policies such as state-mediated foreign borrowing and the regulation of foreign investors. B. K. Sarkar and Man­ oilescu also called attention to the role that wealthier countries could play in supporting the industrialization of poorer countries through capital exports. At the domestic level, Ranade and B. K. Sarkar showed more interest in improving women’s position in society than List had in his 1841 book, and both endorsed more extensive forms of government economic activism, such as state-owned firms (Ranade) and economic planning (Sarkar). Departing from List’s political liberalism, both B. K. Sarkar and Manoilescu also became increasingly interested in fascist political thought. In addition to highlighting distinctive versions of neomercantilism, the analysis in this chapter reinforces two other themes of this book. First, the fact

84. Fertik 2018, 247–49. 85. Love 1996, 78, 94–95. 86. For his changing politics, see Schmitter 1978.



that Manoilescu’s ideas found an important audience abroad provides a further example of a version of neomercantilism that circulated internationally alongside List’s in the pre-1939 era. Second, B. K. Sarkar’s invocation of the Arthashastra demonstrates once again that neomercantilists derived inspiration from mercan­ tilist traditions beyond the European ones that List cited. His appeal to such an ancient source found a parallel in East Asia, where neomercantilist thinkers drew on local mercantilist ideas from a similar time period as the Arthashastra, as is discussed in the third section of the book.



Although List’s 1841 book attracted attention across the world, we have already seen that he was not the only neomercantilist thinker whose ideas circulated internationally in the nineteenth and early twentieth centuries. In this section, I explore another such thinker: the American Henry Carey. Among neomercan­ tilists, only Carey exerted an international influence that came close to matching that of List. Despite his importance, however, Carey is a much less well-known figure among modern scholars of political economy than List.1 Carey’s relative obscurity might be related to the fact that his most important book—the three volume Principles of Social Sciences published in 1858–59—is not an easy read. It stretches over almost 1,500 pages with argumentation that is often repetitive and not always clear. Even a condensed version published by Kate McKean under Carey’s supervision in 1864 was over 500 pages.2 Carey’s low profile among modern scholars might also be related to harsh criticism his work received from earlier prominent political economists. Take, for example, the assessment made by Joseph Schumpeter in his influential 1954 history of economic thought. After noting that Carey “had no doubt the gift of grand vision in the same sense as had List,” Schumpeter criticized him for

1. For example, his name rarely even appears in IPE textbooks. For some specialist scholarship on Carey’s work, see Conkin 1980, chaps. 10–11; Huston 1983; Morrison 1986; Meardon 2015. 2. As noted in the introductory chapter, not much is known about McKean. 137



“deplorable analytic implementation.” He then added a further unflattering com­ parison to List: “List made no original contribution to the analytic apparatus of economics. But he used pieces of the existing analytic apparatus judiciously and correctly. . . . Carey’s case differs from both [List and free traders] in that he made negative contributions to analysis.”3 Carey was also strongly criticized by political economists in his own day. John Stuart Mill described Carey’s book privately in 1870 as the “worst book of political economy I ever toiled through.”4 In his first volume of Capital in 1867, Karl Marx described Carey as “a man with such an atrocious lack of the critical faculty, and such spurious erudition.”5 And yet, many people around the world were inspired by Carey’s ideas. Car­ ey’s work is interesting not just for that reason but also because he developed a version of neomercantilism with quite distinct content from that of List. The distinctiveness of his ideas is underplayed by those who have described him as a “Listian thinker” or as having a “Listian nationalist ideology.”6 To be sure, there were some similarities between the ideas of the two thinkers, but Carey’s ver­ sion of neomercantilist thought departed from List’s in some important ways that deserve recognition. Further, these differences were not a product of Carey’s adaptation of List’s work. Carey was not, in fact, much interested in List’s ideas, but instead drew his main inspiration from other thinkers, each of whom also developed their ideas quite independently from Listian influence.

Intellectual Influences on Carey Carey’s journey to his neomercantilist ideas was an interesting one. He left school at age twelve and thus—like List—received no formal academic training in political economy. Instead, his initial teacher in this subject was his father, Mathew Carey, the prominent US neomercantilist whose views were discussed

3. Schumpeter 1954, 516–17. 4. Quoted in Schumpeter 1954, 516n5. Carey also did not think much of Mill. One of Carey’s contemporaries noted, “[Carey] is a man of plain speech, and swears like a bargeman whenever Mill’s name is mentioned” (quoted in Morrison 1986, 2). The two men met on one of Carey’s trips to Europe in the late 1850s (Green 1951, 22). 5. Quoted in Dawson 2000, 482n53. In 1852, however, Marx had described him as “the only American economist of importance” (465). 6. Quotes from Cumings 1999, 61; and Palen 2016, 10. In the late nineteenth century, scholars such as Schmoller and Alfred Marshall also suggested that Carey’s ideas were inspired primarily by List (although Marshall acknowledged in 1907 that this was a disputed issue). See Hirst 1909, 118; Baird 1891, 170.



in chapter 1.7 The son worked for his father’s publishing business from a young age and then ran the business, after which he retired from its daily operations in 1834 to devote his time to political economy while living off his investments.8 Given his father’s ideas, Henry Carey’s initial writings about political economy had surprising content. As Rodney Morrison puts it, “Throughout the early years of his career in political economy, he was an ardent free trader and an advocate of laissez faire—stands which caused his father, a leader of protectionist forces, no end of embarrassment.”9 The publication of his book The Past, the Present and the Future in 1847, however, signaled his conversion to the protectionist cause. Carey himself described this intellectual change as one that came suddenly to him one morning: “I jumped out of bed, and, dressing myself, was a protectionist from that hour.”10 Carey pointed to his country’s economic troubles since its 1837 financial crisis as the key factor that encouraged him to reconsider his views.11 A more imme­ diate catalyst may have been two developments in 1846 that he subsequently criticized: the passage of the liberal Walker tariff (which signaled the unraveling of Clay’s protectionist American System) and the US declaration of war against Mexico.12 Influenced by his close friend Stephen Colwell, his moral and religious views also strengthened at this time in ways that may have led him to become more critical of the materialism of some supporters of free trade.13 Some ana­ lysts have suggested that Carey’s views may also have been influenced by his investments in local industries that benefited from protectionism as well as by the interests of Philadelphian industrialists in whose social circles he moved.14 Indeed, Andrew Dawson describes Carey as “the ideologist of manufacturers,” although he insists that Carey was “not their unthinking stooge.”15 Carey’s support for protectionism was also clearly influenced to some degree by his long familiarity with the arguments of critics of free trade dating back to his education from his father. Many of Carey’s neomercantilist ideas, in fact, bore a close resemblance to those of his father. One of his biographers even sug­ gests that “Henry Carey’s career may be interpreted as the fulfillment of this

7. 8. 9. 10. 11. 12. 13. 14. 15.

Green 1951, 15. Dawson 2000, 470; Wallace 1988, 55. Morrison 1986, 36. Quoted in Baird 1891, 171. Conkin 1980, 280. Meardon 2015. Conkin 1980, 280–81. Conkin 1980, 280; Dawson 2000; Morrison 1986, 83. Quotes from Dawson 2000, 478.



intellectual legacy from his father.”16 In his 1858–59 book, Carey also referenced figures who had been prominent in his father’s era, such as Hamilton and the French neomercantilists Chaptal and Dupin.17 The references in Carey’s Principles of Social Sciences show that he was also familiar with a number of critics of free trade in the United States and abroad who have not yet been discussed in this book. Although these writers sometimes referenced figures described in chapter 1, their arguments were not influenced much, if at all, by List’s work. Some of them did, however, reference each other, and they would also be cited by followers of Carey around the world. One of the writers cited most frequently by Carey was Samuel Laing, who began a career as a travel writer at the age of fifty-six after trade liberalization undermined his farming business in the north of Scotland. In describing his trips across continental Europe (beginning with a book on Norway in 1836), Laing made many observations about the political economy of the countries he visited, and his analyses attracted the attention of prominent thinkers such as John Stuart Mill and Stanley Jevons.18 Carey was interested not just in Laing’s comments about foreign countries but also in his sharp criticisms of growing inequality within Britain itself. He cited Laing’s critiques of the growing “power of great capital” in English manufacturing and commerce, and the fact that industrial workers in new large factories were having their wages pushed “down to the lowest rate.” In Laing’s view, England was becoming “a Genoa in large, with one small class liv­ ing in almost royal splendor and luxury, and the great mass of the community in rags and hunger.”19 Although Laing was supportive of industrialization, he—like Carey’s father—favored small-scale manufacturing and the kind of locally selfgoverned small landholders that he saw in countries such as Norway. In his view, large-scale manufacturing and modern bureaucratic government undermined individual liberty, popular self-rule, and social stability and cohesion. These values led Laing to express support for strategic protectionist policies in some writing. For example, in an analysis from 1852 praised by Carey, Laing applauded Denmark’s high tariffs on manufacturing imports for cultivating local small manufacturers that provided wider employment opportunities, including for women. He emphasized more generally how protectionist policies would also

16. Green 1951, 1; see also 144, 158–59. 17. Carey 1858a, 255; 1859, 46, 147, 307; 1858b, 183n. As I note in chapter 10, Carey also praised the work of an early Russian neomercantilist, Nikolai Semenovich Mordvinoff. 18. See for example Betts 2018; Porter 1998; Jevons 1876, 621. As Osterhammel (2014, 21) notes, “Travel literature was an indispensable source of knowledge about the world for the nineteenth cen­ tury.” 19. Laing quoted in Carey 1859, 343n, 345, 345n.



protect a state’s autonomy and placed a high emphasis on this goal. Referring to longstanding corporate guild practices in local manufacturing, he noted that Danish tariffs helped to protect “ancient social arrangements and regulations to which their populations are accustomed, and regard not merely with favour, but as rights.” Laing argued that these and other social benefits outweighed some of the economic costs of trade restrictions and led to a higher “national well-being.” In making this argument, Laing stressed, “Every country has a political economy of its own, suitable to its own physical circumstances of position on the globe, climate, soil, products, and to the habits, character, and idiosyncracy [sic] of its inhabitants, formed or modified by such physical circumstances.”20 In his 1858–59 book, Carey also cited the work of John Barnard Byles, a con­ servative British barrister who outlined neomercantilist ideas in his 1849 book Sophisms of Free Trade. The book quickly became quite influential in British pro­ tectionist circles and was republished in many subsequent editions, including as late as 1904, at the time of the British tariff reform debate. Although Carey did not agree with all of Byles’s ideas (such as the latter’s support for British impe­ rialism), he appreciated the British thinker’s critique of free trade. Byles argued that free trade undermined his country’s industry as well as its broader pros­ perity and power that had been built up in the past by strategic protectionist policies. He also argued that free trade generated competitive forces that drove British wages downward and inhibited the introduction of factory laws designed to improve working conditions. In addition, Byles looked beyond Britain to cri­ tique the impact of free trade on other countries, such as Ireland and Turkey, and he praised foreign advocates of protectionism, such as Clay, Dupin, and Thiers (but not List).21 Many of Byles’s views were, in fact, quite typical of a strand of British eco­ nomic conservativism in the post-Napoleonic period up until the early 1850s. As Anna Gambles shows, many British conservatives resisted the growing influ­ ence of economic liberalism in this period, favoring instead policies such as trade protectionism (including for agriculture), the strengthening of the empire, and monetary reform designed to insulate the domestic market from international bullion flows and deflationary pressures. Like Byles, they expressed concerns about the protection of the living standards of workers in face of international

20. Laing 1852, 306, 293; see also 299–300. For Carey’s citation, see Carey 1858b, 112–17. 21. For these various points, see Byles 1849, 51, 61, 111–12, 136–49, 164, 171, 210, 218. For Carey’s citing of his work, see, for example, Carey 1858a, 323n. For the link between the 1904 edition and the tariff reform movement, see Gambles 1999, 220.



competition.22 In his initial protectionist writings of the late 1840s, Carey cited some of these other British conservatives, such as Thomas De Quincey.23 Carey’s writings began to attract attention from thinkers in the same British conservative circles in the early 1850s, including Byles.24

Carey’s US Contemporaries Carey also cited some contemporary US protectionists in his Principles of Social Sciences. One was Horace Greeley, who had become well known for his role as editor of the New York Tribune.25 During 1849–57, Carey worked closely with Greeley as an editorial writer for the paper.26 A supporter of Clay, Greeley backed strategic protectionism before Carey. For example, in an 1843 publica­ tion (that was republished in 1850 under the title “Labor’s Political Economy”), Greeley outlined a case for infant-industry protection (without referencing List) that highlighted benefits not just for the country as a whole but also for labor specifically. In his view, protectionism could discourage “ruinous fluctuations and competition, whereby thousands of producers are frequently thrown out of employment, and thence out of bread” as well as help to “counteract the effect of different standards of money values and different rates of wages for Labor.” In critiquing free trade from this social angle, Greeley invoked not just the US experience but also the poor conditions of workers in free-trading Britain as well as the plight of Indian laborers faced with the onslaught of English machinemade textile imports. In discussing the latter, he also went further than Ranade later did by highlighting the benefits to India of industrial protectionism intro­ duced by an “independent” Indian government.27 In his 1858–59 book, Carey drew particularly extensively on the ideas of another American: Eramus Peshine (E. P.) Smith. After working as a lawyer and newspaper editor, Smith became a professor of math and natural philosophy at University of Rochester from 1851 to 1853. During this time, he wrote A Manual

22. Gambles 1999, 77–84, 211–12, 215–22. 23. Gambles 1999, 209. De Quincey’s ideas were also cited and praised by Carey’s close friend Stephen Colwell (1856, xviii–xix). 24. Gambles 1999, 208–12, 221. Carey’s work is cited several times in Byles 1849. 25. For examples of his citation, see Carey 1858b, 68–69, 155. 26. Lee 1957; Morrison 1986; Elder [1880] 2006; Green 1951, 25. Carey left the paper after Gree­ ley supported a legislative act that lowered US tariffs in late 1857 (Green 1951, 25–26). 27. Quotes from Greeley 1850, 246, 238, 251; see also 249. Greeley was also critical of the effec­ tiveness of any nonstate, society-based strategy for supporting India’s textile producers. Greeley’s was not the only foreign analysis to highlight the plight of Indian textile workers at this time. See Todd (2015, 14) for interest in the issue among French protectionists in the early 1840s.



of Political Economy, which was published in 1853. Reprinted many times up to the 1890s, this book attracted attention not just in the United States (where it was used as a text in prominent US universities such as Princeton and Cornell) but also internationally (where it was translated into French, Italian, and German).28 As noted in the next chapter, Smith also directly promoted protectionist ideas in Japan when he worked as an adviser to the Japanese government in the 1870s. Carey first became acquainted with Smith in 1850 after the latter had praised Carey’s The Past, the Present and the Future. They then became friends, and many of the ideas that Smith outlined in his 1853 book reappeared in Principles of Social Sciences.29 Smith’s 1853 work defended strategic protectionist policies as tools for cul­ tivating state wealth and power by developing an alternative to David Ricardo’s approach to political economy that would have universal relevance.30 Whereas Ricardo had analyzed how trade could be influenced by factor productivity dif­ ferentials, Smith was interested in how trade policy itself influenced the produc­ tivity of land and labor. In addition to citing Carey’s work as well as that of Byles and Laing (but not List), Smith drew key insights from the German scientist Justus von Liebig who had done pioneering work in soil chemistry, showing the significance of fertilizers and crop rotation in improving land productivity. In a book published in 1843, Liebig had highlighted the dangers of the depletion of soil nutrients and declining land fertility in export-oriented agriculture.31 Building on these arguments, Smith argued that Ricardo had overlooked how international trade generated large costs in the form of declining agricultural productivity arising from exhausted soils: “Nature is an easy creditor, and pres­ ents no bill of damages for exhausted fertility. We are, therefore, little accustomed to take account of what is due to the earth.”32 If protectionism could build up local industry, Smith argued, US agriculture could become more productive by apply­ ing modern industrial knowledge, equipment, and fertilizers, as well as by crop rotation aimed at serving local rather than distant foreign markets.33

28. For the use in US universities, see Church 1978; Hudson 1968; 2010, 172. 29. Carey 1858a, vi; Hudson 2010, 155–57, 170; Calvo 2012, 127n14. 30. For a useful discussion of Smith’s ideas, see Hudson 2010, 155–72. 31. Hudson 2010, 263; Ron 2015. In his history of the invention of the concept of ecological sustainability, Paul Warde (2011, 170) argues that Liebig played a central role in pioneering “the modern concept of sustainability.” 32. Smith 1853, 204. 33. Some British conservative protectionists also began to cite Liebig’s work in order to argue that domestic agricultural productivity could be improved scientifically as a better alternative to embracing the importation of food from abroad via free trade (Gambles 1999, 66–67). List, too, was interested in the ideas of Liebig (whom he knew personally). Although he made no reference to the



Smith was also interested in Liebig’s ideas about how labor productivity was influenced by workers’ standards of nutrition, clothing, and housing.34 If labor productivity could be increased by improving workers’ living standards, Smith concluded, US competitiveness could be based on rising wages and living stan­ dards rather than declining ones. In his view, tariffs could encourage the growth of profitable and ever more sophisticated industry, with higher wages and liv­ ing standards being sustained in ways that reinforced industrial productivity in a virtuous circle. Rising wealth would also improve labor productivity, he sug­ gested, as it allowed greater spending on education both by workers and public authorities.35 Although advocating protectionism for these reasons, Smith made clear that he was not opposed to all international trade. He recognized the “undeniable truth” of natural differences between countries that gave rise to the need for international trade. He also made the following point: “It is the interest of every people, after its own wants are supplied, that the surplus of its productions should be exchanged at the least possible expense, for the surplus, which other com­ munities may have for barter, of other kinds.” But he argued that trade was most beneficial when it involved high-value-added products. To be able to produce high-value-added goods efficiently and competitively, countries needed to first build up their domestic capacity with protectionism: “The true way to extend and increase foreign trade is to foster the domestic, which, in the order of Nature, precedes it, and from whose overflowings it must be fed.”36 The ideas of Carey’s close friend Stephen Colwell also deserve mention. Although Carey did not reference Colwell’s work in his Principles of Social Sci­ ences, he noted after Colwell’s death that the his friend’s “views of social and eco­ nomic theory . . . so nearly coincided with those which I had been led to form.”37 Colwell was an industrialist involved in iron manufacturing and railways and, like Carey, a member of the Philadelphia elite. Colwell also had enormous exper­ tise in political economy, having assembled a huge private library with over 2,500 titles devoted to the subject, including many in foreign languages. After using the

scientist in his 1841 book, List’s optimism about boosting domestic agricultural productivity may have been influenced by Liebig’s work (Wendler 2015, 188). 34. Hudson 1968, 86–87. 35. For a discussion of Smith’s ideas, see Hudson 1968; 2010, 155–72. 36. Quotes from Smith 1853, 219, 220. 37. Carey 1871, 4. In his history of US economic thought, Joseph Dorfman (1946, 789) even refers to a “Carey-Colwell School” of political economy.



library, one Swiss scholar commented that it was “the largest on the subject of Political Economy I have seen in Europe or America.”38 Colwell was an advocate of protectionist policies to build up a local “industrial system” that could promote “human comfort and human advantage, national wealth and national strength.”39 From the early 1840s onward, Colwell’s writings on political economy warned that policies of free trade left the United States dependent on unreliable and unstable foreign markets and were also hurting workers, fostering inequality and eroding “civilization” and Christian values.40 Colwell was particularly interested in the conditions of labor, an interest that initially grew from seeing the appalling conditions of the European working class during a trip he had taken before beginning his business career.41 His later writ­ ings were often critical of the inequality of English society and England’s drive for global manufacturing competitiveness, which he argued was based on low wages. In the following passage from 1851 (which Carey later quoted), Colwell outlined his concerns about the relationship between free trade and labor: “The doctrine that trade should be entirely free . . . may suit very well for merchants, making them masters of the industry of the world; but it will be giving a small body of men a power over the bones and sinews of their fellow men, which it would be contrary to all our knowledge of human nature if they do not fatally abuse, because they are interested to reduce the avails of labor to the lowest attainable point, as the best means of enlarging their business and increasing their gains.”42

What About List? In addition to drawing on the ideas of thinkers such as Laing, Byles, Greeley, Smith, and Colwell, to what extent did Carey engage with List’s work? Carey was certainly aware of it, given that he owned a copy of the 1851 French transla­ tion of List’s 1841 book and that, as I note below, his friend Colwell sponsored the first English translation of the book. Carey may also have come across List’s early views in the late 1820s, when the latter had become prominent in the US

38. G. A. Matile in List [1841c] 1856, vi (note). See also Carey 1871, 13; Davenport 2008, 110. Dorfman (1946, 810) also notes that it was “the finest library in the country on economics and related subjects.” 39. Colwell 1856, 417n. 40. Colwell quote from Davenport 2008, 113. 41. Davenport 2008, 110–11. 42. Quoted in Carey 1871, 21–22. See also Colwell’s comments in List [1841c] 1856, 139n. Col­ well’s concern for workers, however, was combined with a proslavery position before the US civil war (Davenport 2008).



protectionist circles in which his father moved. But it is important to note that Carey did not show much interest in List’s ideas. He cited List’s work just once in Principles of Social Sciences. And even there, he simply quoted an historical pas­ sage from List about the growth of German manufacturing. This historical pas­ sage also included a footnote in which Carey chastised List for attacking Adam Smith unfairly: “In no part of the work from which this extract is taken, does its author [List] do justice to Adam Smith. . . . Dr. Smith was not always right, but he was very generally so.”43 I describe Carey’s distinctive views of Smith below. Here, the key point is that Carey’s only direct engagement with List’s ideas in his entire three volume work was a critical comment. Carey’s limited engagement with List in Principles of Social Sciences was not accidental. Carey’s nephew Henry Carey Baird noted the following in 1891: “Carey had but a poor opinion of List’s ‘National System of Political Economy,’ for the very good reason that it lacked just what he had aimed to present in his own books . . . broad, deep and enduring fundamental principles, interlocked and interwoven into one grand and harmonious whole.” Baird also remarked that Carey’s penciled notes in his copy of List’s 1841 book “clearly prove that he made but little use of it.”44 It is also noteworthy that Carey’s close collaborator E. P. Smith was critical of List’s work in a review he wrote of the 1856 English transla­ tion of The National System of Political Economy. Although praising List’s histori­ cal focus, Smith complained that “he certainly contributed little to the abstract principles of economy.”45 Another indication of the view of List’s work in Carey’s circles comes from Colwell. Although Colwell sponsored the 1856 translation of List’s 1841 book, he noted in an introductory essay to the work that it was “imperfect and inartificial in many respects.”46 He made extensive comments on List’s ideas in footnotes to the volume, many of which criticized List’s ideas. Colwell’s criticisms touched on many issues, including List’s Eurocentrism.47 Particularly noteworthy was Colwell’s view that List did not go far enough in opposing the doctrine of free

43. Carey 1858b, 127n; the full passage of List is on 125–29. 44. Baird 1891, 171–72. Baird went further to suggest that Carey might not have even been famil­ iar with List’s work at the time of his conversion to the protectionist cause, because he could not read German and the French translation of List’s book was not available until 1851. But others note that Carey was probably familiar with List’s 1827 English-language letters (Hirst 1909, 120–21; Levermore 1890, 559). 45. Smith 1856, 9. 46. Colwell 1856, lx. 47. Colwell challenged List’s suggestion that Adam Smith had discovered the principle of the division of labor, arguing that this principle had been noted by many previous thinkers, including the ancient Chinese sage Mencius (from whom he quoted) (List [1841c] 1856, 210n).



trade: “It seems, indeed, to be the opinion of List that in certain conditions of the world free trade may be assumed as a sound doctrine in the sense in which it is supported by the school which maintains it as a fundamental principle. We deny that it ever can be sound doctrine in their sense.” Colwell also did not like List’s insistence on free trade in agriculture and raw materials, and he suggested the following rule for deciding what sectors should be protected: “It should, in regard to every and each commodity, be a subject of special and sound discretion what should be done for the interests of labor and national independence.” Colwell also excoriated List’s lack of focus on social issues in the context of discussions of free trade, an omission that Colwell believed led List to mistakenly argue that free trade would be beneficial among equal states: “We do not believe that under any probable circumstances it [free trade] could be the policy of all civilized nations; for if all now possessed equal advantages with Great Britain, a severe and destruc­ tive competition would take place, making it necessary to resort again to the protection of the laborers of each nation . . . the welfare of the masses has no place in the theory of the free-trade school.”48

Carey’s Social Neomercantilism When one examines Carey’s ideas, it quickly becomes clear why he found so little inspiration in List’s thought; he differed from List on many points.49 Before describing these differences, however, it is important to note points on which they agreed. Carey shared with List the idea that trade barriers were needed to protect infant industries from English competition. Like List, Carey also emphasized that these barriers were needed particularly in a context where English capitalists had been known to deliberately accept losses in order to destroy foreign competi­ tion and monopolize foreign markets.50 Carey further held the view, similar to List’s, that trade barriers would not just foster local industrialists but also attract

48. Colwell quotes from List [1841c] 1856, 184n, 388n, 185n; see also 146n, 199n, 249n, 339n, 388n, 423n; for other examples of Colwell’s criticism of List’s lack of social focus, see 139–40n, 195–96n. 49. To isolate the distinctiveness of the content of his neomercantilism, I focus primarily on the text that was his most famous and most frequently invoked by his followers: Principles of Social Sciences. Carey wrote many other things; according to one estimate, he wrote close to 3,000 pages of material in pamphlets and perhaps double that in newspaper articles, in addition to nine books (Elder [1880] 2006, 16). 50. See, for example, Carey 1859, 442. Like List (as noted in chapter 2), Carey switched back and forth between referring to “England” and to “Britain” in his analysis. I have tried to be consistent with his usage in each specific context described in this chapter.



foreigners to set up new manufacturing operations.51 When describing the impor­ tance of promoting local industrialization, Carey also noted many benefits that List did, such as strengthened national independence, reduced transportation costs, widened employment opportunities, and improved domestic agriculture (which would have better access to machinery and closer, more reliable domes­ tic markets). The two men also agreed about the threat that England’s growing manufacturing monopoly posed to the world. As Carey put it, “Limit to a single one [nation] the command of steam, or the power to convert wool into cloth, coal and ore into iron, or grain into flour, and it would assuredly become the tyrant of the world, to the injury of all, itself included.”52 Alongside these similarities were many differences. Among the most striking was that Carey put a much stronger emphasis on the domestic distributional and social costs of free trade than List did. He was particularly concerned about how free trade benefited a trading class at the expense of other domestic groups. In his 1841 book, List did note in one brief passage that free trade benefited mer­ chants in ways that might be contrary to the interests of other domestic groups, such as farmers and manufacturers.53 But as I noted in chapter 2, List’s volume devotes very little attention to domestic inequalities or the specific economic and social conditions of disadvantaged domestic groups. By contrast, Carey gave these issues a very prominent place in his critique of free trade. Carey’s analysis rested on a distinction he drew between “commerce” and “trade.” Whereas the former involved the direct “exchange of services, products, or ideas, by men, and with their fellow-men,” the latter consisted of “the perfor­ mance of exchanges for other persons” by a class of traders who acted as interme­ diaries.54 In his category of traders, he included many groups, such as shippers, brokers, letter-carriers, commission merchants, and financiers. Carey applauded “commerce” for fostering “association” among people that would allow them to realize their individuality and to generate wealth by harnessing nature through collective action and the accumulation of knowledge, skill, and technology. But he was critical of “trade” and the related power of traders. In Carey’s view, free trade unleashed large-scale markets that widened the distance between producers and consumers in ways that led both groups to need traders’ services more. As their services were demanded, traders found growing opportunities to enrich themselves by manipulating prices, creating monopolies,

51. 52. 53. 54.

See for example Carey [1847] 1889, 449–51; 1858a, 397. Carey 1858a, 392. List [1841b] 1909, 208–10. Carey 1859, 74.



and putting communities across the world in competition with each other. The rootless nature of merchants led them to focus only on the pursuit of their own power and wealth without any sense of responsibility to a community: “The trader, in pursuit of power, is animated by no other idea than that of buying in the cheapest market and selling in the dearest—cheapening merchandise in the one, even at the cost of starving the producers, and increasing his price in the other, even at the cost of starving the consumers.” In their efforts to maximize profits, merchants enlisted the help of soldiers: “Look where we may, throughout history, the trader and the soldier are found marching by each other’s side.” For this reason, Carey rejected the liberal argument that free trade would bring an era of universal peace: “We seem to be further removed from it than we have ever been. English armies are now greater than they ever were before, in time of peace, and wars more frequent.”55 Free trade thus generated growing inequality as traders gained wealth while other social groups fell into poverty and became dependent on, and vulnerable to, the “trader’s power” in global markets. As Carey put it, “Of all oppressions, there is none that is at all comparable with that resulting from trading centraliza­ tion.” He used the metaphor of a wheel in which the activities of the traders in its hub had huge implications for the lives of those at the ends of the spokes: “The farmers and planters, throughout the world, find their commodities rising and falling in price from day to day, and from year to year exactly in accordance with the more or less motion at the centre, on which they are so much dependent.”56

Who Bears the Costs? Like other thinkers on whom he drew, Carey devoted much attention to implica­ tions for labor. In particular, he highlighted that free trade would unleash inter­ national competitive pressures that would drive down workers’ wages: “This is slavery, and of the worst kind, and the longer the system shall be maintained, the more oppressive must it become—the foundation of the system .  .  . being found in the idea of cheapening labor, and all other raw materials of manufacture. The more that prices are reduced in England, the greater must be the tendency towards reduction in America . . . the tendency of the modern free trade system

55. Quotes from Carey 1858a, 218; 1859, 220. 56. Quotes from Carey 1858a, 213; 1859, 220, 222.



being that of increasing the dependence of the laborer, and making of her that mere instrument to be used by trade.”57 As discussed previously, Carey was not the first US thinker to link protec­ tionism to a defense of US workers’ wages. This argument had become increas­ ingly prominent after the country’s 1837 economic crisis and the resulting labor discontent, which highlighted growing social divisions emerging from US industrialization.58 Carey made this argument, which he argued was relevant to workers in all countries, a central part of his case for tariffs. Carey’s concern also extended to the farmers in countries across the world caught up in the system of free trade: The men of India and of Ireland, of Turkey and of Portugal, of Jamaica and of Brazil—though claiming to be free—have no power to determine how they will employ their land or their labor. The price of all their commodities is fixed in the great central market, filled, as it is, by men who desire that corn and flax, sugar and coffee, cotton and indigo, may be cheap, and cloth and iron dear. They are thus kept so poor as to be unable to help themselves, and to be forced to rely upon advances made to them by the trader, who exacts, of course, a lion’s share of the prod­ uct of their efforts; and the larger his share, the greater is his power to compel them to remain dependent upon his favor.59 Drawing on E. P. Smith’s work, Carey also warned that farmers were forced to leave their land as soil exhaustion grew in many regions of the world that had been transformed under free trade into agricultural exporting zones. In places such as Ireland, Portugal, Turkey, Jamaica, India, Brazil, Mexico, Virginia, and the Carolinas, Carey argued, soil nutrients were being depleted without adequate replenishment by monocrop agriculture serving foreign markets. As soil exhaus­ tion led to the abandonment of land, farmers became destitute and often decided to leave their country, further undermining local economies: “The purely agricul­ tural country must export raw produce and must exhaust its oil; and such export must bring with it a necessity for the export of man.” Carey highlighted that liberal theories of free trade entirely neglected this environmental issue: “It is singular that modern political economy should so entirely have overlooked the

57. Carey 1859, 382. In the US context, Carey also argued that protectionism would accelerate the end of formal slavery because free trade had encouraged it in the US South (Meardon 2011). 58. Huston 1983. See, for example, the arguments of Calvin Colton, who emerged as one of the lead defenders of Clay’s American System in the 1840s (Conkin 1980, 191; Hudson 2010, 140). 59. Carey 1858b, 220.



fact that man is a mere borrower from the earth, and that when he does not pay his debts, she does as do all other creditors—expelling him from his holding.”60 In addition to undermining the livelihoods of farmers and workers in these ways, free trade was, according to Carey, encouraging economic “centralization” in ways that threatened the survival of small landowners and firms. Even gov­ ernments themselves were becoming dependent on the increasingly powerful traders. Writing about Portugal, Jamaica, and Turkey, Carey argued the follow­ ing: “The government, as weak as the people, is so entirely dependent on the will of domestic and foreign traders, that they may be regarded as the real owners of the land.”61 Carey’s social concerns, like those of his father, included a focus on the condi­ tion of women. When arguing that the British system of free trade represented a kind of “warfare” on the world, he asserted that this warfare was being waged “chiefly” against women. In all countries that suffered social breakdown from adopting free trade, he argued, it was “the woman who suffers most.” Women were abandoned when the deterioration of local soils in places such as Ireland, India, and the United States prompted men to emigrate. Women working in tex­ tile factories also suffered from either lost employment or a decline in wages when British competition generated new competitive pressures. If they were fired, women had few other job prospects in economies that were increasingly specializing in agricultural and resource exports because of free trade: “Unfit to dig the earth, they find themselves driven from the light labor of conversion, in every country subject to the system [of free trade]. . . . What, then, remains to them? In millions of cases, little else than prostitution; yet are we constantly assured of the civilizing effects of that trading system.”62 Whereas List argued that Britain benefited from free trade at the expense of others, Carey insisted that social problems arising from free trade also afflicted British citizens. Within England, for example, large traders were increasingly enriching themselves “at the cost of both consumer and producer.” Indeed, Carey argued that of all the places in the world, England was “the only one whose policy has looked wholly to the advancement of the trader’s interests . . . by none has the power for oppression been so great.” He warned that the downfall of states such as Spain, Portugal, Holland, Venice, and Genoa had all been caused by their traders

60. Quotes from Carey 1858a, 145, 336. His environmental credentials should not be overstated. He also urged humans to “acquire power over nature” (Carey 1859, 21) and argued that “the earth is a great machine given to man to be fashioned to his purpose” (Carey 1858a, 183). 61. Quotes from Carey 1859, 228; 1858a, 318; see also Carey 1858b, 117, 312. 62. Quotes from Carey 1859, 377, 375, 377; see also Carey 1858a, 368.



abusing monopoly power. He argued that large English manufacturers and farm­ ers were also squeezing out smaller firms and small landholders in the country. In order to keep English manufacturing competitive in global markets, wages were lowered, resulting in growing poverty for English labor and increasing use of child labor in terrible conditions. The result was that “the gulf dividing the higher and lower classes of English society had greatly widened.” Carey warned that England was experiencing growing political instability because of strikes and the conflict between classes.63 He also pointed to the deteriorating condition of women in Britain: “The world presents to view nothing that is more sad, than the condition of the female portion of the British population.” As small proprietors were driven from the land, Carey argued, women lost their rights to property and were forced to work in terrible conditions in factories and mines. He also quoted from Charlotte Elizabeth Tonna’s The Wrongs of Women (1843–44) to highlight the terrible social and employment conditions of English working women. Noting that efforts to improve their work environment in factories were resisted for competitiveness reasons, Carey asked: “What, however, is the object of this competition? That of preventing the women of India, of Ireland, and of America, from finding purchasers for their taste or talent, their labor, whether physical or mental. The English woman is thus degraded to the condition of a mere instrument for crush­ ing her fellow-women throughout the world.” Carey also noted that British men were emigrating to colonies, “leaving wives, daughters, and sisters, behind, to provide for themselves as they may.”64 Given these conditions, Carey—unlike List—did not see Britain as a model society for others to follow. In addition to the problems just noted, he suggested that its moral condition was declining as working conditions deteriorated, edu­ cational and employment options narrowed, and economic imperatives came to dominate social life. In fact, Carey was critical more generally of how free trade was leading to “barbarism” in all countries of the world because it eroded the kinds of strong social association that existed in more healthy, diversified economies. In his view, humans’ “greatest need” was “association” with other humans. It was critical, he argued, not only to their material well-being but also to the development of their

63. Quotes from Carey 1858a, 261, 372–73, 423; see also 56, 59, 249–52, 260, 424; 1859, 343, 462. In one passage, List (1827, 12) briefly suggested that not everyone in Britain was benefitting from free trade: “‘English national economy, has for its object to manufacture for the whole world, to monopolize all manufacturing power, even at the expense of the lives of her citizens.” But List did not return to this idea in his 1841 book. 64. Quotes from Carey 1859, 382, 379–80, 382; for his use of The Wrongs of Women, see 379–80, 396.



individuality and sense of social responsibility. By eroding the power of association, free trade left countries heading toward a state of barbarism. In Carey’s view, many modern English political economists ignored this broader implication of free trade because of their narrow focus on material wealth and their conception of a human being as “only an animal that will procreate, that must be fed, and that can be made to work—an instrument to be used by trade.”65 Some of those English thinkers took note of Carey’s broad critique about the importance of association. John Stuart Mill summarized the views of Carey and his US supporters as follows in his prominent textbook Principles of Politi­ cal Economy: “[They] deem it a necessary condition of human improvement that towns should abound; that men should combine their labor, by means of interchange—with near neighbors, with people of pursuits, capacities, and men­ tal cultivation different from their own, sufficiently close at hand for mutual sharpening of wits and enlarging of ideas—rather than with people on the opposite side of the globe. They believe that a nation all engaged in the same, or nearly the same, pursuit—a nation all agricultural—cannot attain a high state of civiliza­ tion and culture.” Mill even noted in the next sentence, “For this there is a great foundation of reason.”66 But he questioned why Carey’s logic led him to call only for protectionism at the US border and not also within the country, such as the protection of Ohio and Michigan from Massachusetts. The answer was that Carey prioritized the national community.67 Unlike List, however, Carey made little effort in his 1858–59 work to discuss clearly how nationality was relevant to political economy. Nevertheless, Carey’s thought was strongly informed by nationalist values. Indeed, scholars have highlighted how he was “an ardent nationalist” and how “passionate, intense nationalism domi­ nated his entire thinking.”68

Toward a Harmony of Interests Carey argued that, whereas free trade generated a wide range of domestic social problems, protectionism would enable a “harmony” of interests to

65. Quotes from Carey 1858a, 41; 1859, 250; 1858a, 470. Green (1951, 150–52) speculates that Carey may have picked up the term “association” from Greeley, who took it from Fourierite move­ ment. 66. Mill [1885] 1936, 925. 67. Morrison 1986, 78. Interestingly, Colwell did address the issue that Mill raised when he noted that Southern states within the United States would benefit by restricting trade with Northern states in order to build up local industry. In the absence of that policy, he argued, “some device should be sought as a compensation for the evils inflicted on the South by free trade with the North” (List [1841c] 1856, 197n). 68. Quotes from Morrison 1986, 7; Lee 1957, 300.



be re-established within each country. It would permit industry to flourish, workers’ wages to increase, and farmers to benefit from expanding domestic markets as well as from using human waste produced in thriving nearby towns to restore nutrients to their soils. In addition, when selling to local markets instead of distant ones, they could engage in more diverse farming, including raising cattle whose manure would be useful to the soil.69 Alongside these benefits, the power of traders would also be constrained. A more diversified economy would also boost gender equality by creating more employment opportunities for women: “The road towards elevation of the [female] sex, lies in the direction of that varied industry which makes demand for all the distinctive qualities of woman.” Carey suggested that a more diversi­ fied economy would also bring greater equality in interpersonal relations: “Brain then taking the place of mere muscle, the weak woman finds herself becoming more and more the equal of the man who is strong of arm—passing by slow degrees, from the condition of man’s slave towards that of his companion and his friend.” Greater gender equality, in turn, would boost growth: “The more perfect the diversification of employments, the greater, therefore, must be the tendency to equality between the sexes. . . . The greater the tendency towards equality, the more continuous and rapid becomes the motion of society, and the greater the power of accumulation.” Carey further argued that improved female employ­ ment in one country would benefit the position of women in others: “Were the labor of the English people more productive, English women could make more demand for the products of the skill and taste of the women of France; and were the American women enabled to find, in the making of cloth, a demand for their peculiar powers, they could become better customers for the taste and skill of the women of both France and England.”70 Carey’s focus on domestic social “harmony” included a frontal attack on Ricardian rent theory, which assumed growing social conflict as population growth led to the farming of more marginal land and declining returns in agri­ culture. Carey saw greater potential for harmony arising from the growing agri­ cultural productivity that would be fostered by the clustering of manufacturers and farmers side by side. He criticized Ricardo for assuming that fertile land was farmed first, arguing that the opposite was the historical norm. Carey also argued that productivity of existing land could be improved with the modern

69. Ron (2015, 272) notes that Carey’s views on the latter point were already being overtaken at the time he was writing by the availability of new fertilizers that were more easily transported long distances, such as Peruvian guano. 70. Quotes from Carey 1859, 470, 369, 53, 383.



agricultural science promoted by Liebig (with whom he corresponded and whom he met on a European trip in the late 1850s) and others.71 List, too, had rejected the pessimism of Ricardian rent theory, noting the pos­ sibilities of rising agricultural productivity. But he had not devoted much atten­ tion to this issue or its broader significance, focusing more on the importance of manufacturing. Carey placed this issue at the core of his analysis. He saw pro­ ductive agriculture as the base of healthy economies, on top of which manufac­ turing was built, with trade (and war) playing only a small role on top of them. He argued that free trade encouraged the opposite: an unstable, inverted economic pyramid in which trade (and war) were valued most, with manufacturing and agriculture in a subordinate role. Carey argued that, whereas his proposed system would foster social harmony, Ricardo’s was “one of discords.”72 Although Carey’s social concerns often echoed those of people on the political left, his emphasis on a domestic harmony of interests stemmed from conservative political values. Despite his concern for workers, Carey did not have strong ties to the US labor movement, many of whose members were skeptical of Carey’s pro­ fessed interest in their well-being and his emphasis on the harmony of interests between industrialists and labor.73 He socialized with Philadelphian industrialists who felt threatened by growing local labor discontent and radical critiques of industrial capitalism. Like these industrialists, Carey was an opponent of com­ munist ideas and a strong supporter of individualism, property rights, and free markets domestically.74 He saw protectionism as a solution to labor’s problems that would not threaten these domestic values and structures. Indeed, Carey did not say much in his 1858–59 book about government economic activism to serve social goals beyond trade protection. In this sense, Carey’s version of social neomercantilism was quite different from that of Schmoller and others who backed state welfare policies. Indeed, the next chapter shows how followers of Carey in the United States castigated late nineteenth-century US thinkers who began to support the social policies advocated by Schmoller after returning from their studies in Germany. From a Careyite standpoint, such policies assigned the state too large a larger domestic economic role. They saw trade barriers at the border instead as the main tool for defending workers’ interests.

71. 72. 73. 74.

Ron 2015; Hudson 2010, 318; Warde 2018, 348. Carey 1859, 154; see also Carey 1858b, 263. Dawson 2000, 469, 483. See for example Carey 1858b, 163–64.



Some Other Differences from List Carey’s social focus was not the only way in which his neomercantilist views differed from those of List. In addition to his lack of detailed discussion of the relationship between nationality and political economy, another difference has been mentioned briefly already: his view of Adam Smith. Whereas List went out of his way to attack the Smithian school, Carey rarely criticized the Scottish thinker, who had influenced him greatly in his younger years. Instead, Carey praised many of Smith’s ideas: his concern for “moral and intellectual improve­ ment” as an appropriate subject of political economy, his interest in “local selfgovernment,” his critique of the focus of some mercantilists on “converting a whole nation into a mass of mere traders in the products of other lands,” his “admiration of local centres of action in which agriculture and manufacturers were happily combined,” his support for protectionist measures aimed at selfdefense, such as the Navigation Acts, and especially his idea that the development of domestic commerce was a prerequisite for beneficial foreign trade.75 Carey even suggested that Smith’s ideas followed the admirable legacy of the mercantil­ ist Colbert, whom Carey praised for his role in breaking down internal obstacles to trade and in cultivating a more diversified and productive economy with pro­ tectionist barriers.76 Some further differences between Carey and List relate to the specific benefits each saw emerging from the cultivation of local manufacturing. More than List, Carey emphasized that exporters of raw materials were likely to experience trade deficits because their products earned lower prices than finished goods. These deficits would, he argued, cause a drain of money and higher domestic inter­ est rates, which would undermine economic progress.77 Carey also stressed to a greater degree than List how the broader employment opportunities accompany­ ing industrialization would enable people to develop their “individuality,” a goal that he valued highly. Indeed, along with “association,” Carey saw it as crucial for economic growth: “Wealth grows with the growth of the power of association and the development of individuality.” He also linked growing “individuality” to

75. Quotes from Carey 1858a, 192n, 196, 470; 1859, 425; for the last two points, see Carey 1858a, 284n; 1858b, 70, 104; 1859, 425–46, 452n. 76. See, for example, Carey 1858b, 70, 272–73; 1859, 251, 424. He was, however, critical of Col­ bert’s ban on the export of artisans and corn (Carey 1859, 424). 77. Carey 1858b, 313–16. In commenting on List’s work, Colwell (in List [1841c] 1856, 116–17n) also spoke to the power of industrial England in setting terms of trade vis-à-vis US agricultural exporters.



the defense of the nation, arguing that it would strengthen individuals’ “power of resistance to assaults from without.”78 Carey also combined his support for protectionism with promotion of a decentralized economic vision within countries that did not make an appear­ ance in List’s 1841 book. Carey’s ideal domestic economic order, like those of his father and Laing, consisted of small, locally owned independent proprietors and farmers operating in decentralized markets.79 This vision echoed that of other supporters of the new Republican party in the United States, with which Carey became closely identified after its creation in 1854 (see next chapter). As Heather Richardson puts it, Republicans shared “a worldview that they had inherited from the rural antebellum world of farming and small towns from which most of them had come.”80 Carey also endorsed decentralized domestic politics in a way that List did not. In Carey’s view, centralized power in both the economic and political realm within a country undermined political participation, intellectual and economic vibrancy, equality, and, more generally, the power of association. Although a central government was necessary to prevent internal conflict and protect from external threat, Carey preferred to balance its power with strong decentralized “local centres of attraction.” He made the case as follows: “Where such local cen­ tres most exist, there, invariably, is found the greatest tendency to the devel­ opment of individuality, and the combination of action—and the most rapid progress in knowledge, wealth, and power.” As examples, he cited Norway, the federal system of the US North, precolonial self-governing villages in India, and the German Zollverein. He was also critical of how earlier European mercantil­ ism had often been associated with an excessive centralization of power within countries.81

What Policies? Carey’s preferred policies for promoting local manufacturing also differed from those of List in two ways. First, Carey’s Principles of Social Sciences did not fol­ low List in discussing (even if only briefly in List’s case) government economic activism at the domestic level to promote local manufacturing. Second, his sup­ port for protectionism was stronger than that of List, including fewer caveats.

78. 79. 80. 81.

Quotes from Carey 1858a, 190; 1858b, 166. Conkin 1980, 293–94. Richardson 1997, 2. Quotes from Carey 1858a, 45, 190; see also 47–48; 1858b, 102, 177, 338.



For example, when endorsing temporary infant-industry tariffs, Carey made no effort to specify the specific conditions for their use, as List did.82 In Principles of Social Sciences he also did not explicitly restrict the use of tariffs to the manu­ facturing sector. Like Colwell (and much later, Manoilescu), Carey seemed to be open to the idea that protectionism could be extended to any sector. Because Carey endorsed protectionism more fulsomely than List, some have suggested that he had autarkic goals.83 But this depiction is hard to square with his arguments in Principles of Social Sciences. Like E. P. Smith, Carey emphasized that countries would engage in more international trade if they followed his pro­ tectionist advice. As evidence, he cited countries such as France, whose external commerce had grown considerably as it had built up a more diversified economy behind protectionist barriers. As countries’ economies became wealthier and more productive, Carey argued, they became better markets for foreigners and were able to export more to them.84 In addition, Carey did not embrace List’s idea that protectionist policies should be pursued by only a small number of countries. Instead, he suggested that these policies would benefit all countries, including Britain. Whereas List—like Laing—emphasized the need to differentiate policy advice according to coun­ tries’ distinct circumstances, Carey sought to build a universal science of politi­ cal economy that was applicable to all. In advancing this case, Carey implicitly rejected List’s views about the impact of climate on development as well as List’s Eurocentric skepticism about the capacity of many non-Western peoples to pur­ sue independent industrial development successfully. To be sure, Carey shared with List (and Adam Smith) a belief in a stage theory of progress in which soci­ eties moved from a “barbarous” state of “savages” engaged in hunting to a more “civilized” state of societies with modern industrial economies. But he believed that, with the right policies, all peoples could move fully through the stages to an industrial civilization. The key to social progress, for Carey, was the cultiva­ tion of strong bonds of “association” among people. As he put it, “Barbarism is a necessary consequence of the absence of association.”85 Carey saw protectionist policies as crucial for fostering these bonds, including in the early stages of soci­ etal progress, when List argued that free trade was needed to advance a society.

82. For his support of infant-industry protection, see Carey 1859, 442. 83. See, for example, Dawson 2000, 484n43; Hudson 2010, xvii, 118. This depiction of Carey’s ideas started early on; see, for example, Held 1866, 156, 163. 84. Carey 1858b, 102, 137–38, 174, 272; 1859, 245, 252, 453. 85. Carey 1858a, 52.



In keeping with this argument, Carey—unlike List—firmly opposed British policies of free trade in places such as Ireland, Jamaica, and India.86 Given how strongly Britain was committed to those policies, his inference was that political independence from Britain was the only way that these places could advance economically. Indeed, Carey insisted on this point explicitly in his 1847 book: “India will grow rich, and rapidly grow, when India shall become independent, and shall protect herself against the radical error of the English system; but until she shall do so: until she shall acquire power to place the consumer by the side of the producer: she must remain poor. In few countries of the world would popu­ lation and wealth grow so rapidly, were she left alone: but so long as she must remit twenty millions to pay interest, and raise so many other millions to pay armies and officers, while compelled to cultivate the poorest soils with the worst machinery, neither can increase.”87

Anti-Imperialism and Defensive Neomercantilism These criticisms were part of Carey’s wider disapproval of Western imperialism. Once again, this feature of his thought contrasted sharply with List’s views. For example, whereas List was inspired by the French colonial expansion into Algeria, Carey criticized France for having “engaged in the destruction of life and prop­ erty in Northern Africa.”88 As just noted, Carey also did not share List’s admira­ tion for British imperialism in India. In addition to his views of Britain’s trade policies there, he critiqued its colonial taxes, its colonial monopolies in trade and salt production, and the centralized power of its colonial rule.89 More generally, Carey highlighted England’s hypocrisy in claiming to promote freedom abroad while being “totally forgetful of the extermination of the population of the Scot­ tish Highlands, of the annihilation of the Irish nation, of the entire disappearance of the millions of blacks that should now be found in the British islands, and of the conversion of millions of small proprietors in India into mere laborers.” As he put it, “Modern colonization . . . is based upon the idea of cheapening labor, land, and raw materials of every kind—thus extending slavery throughout the earth.”90 Carey also did not follow List in praising the “civilizing” mission of West­ ern imperialism. In his view, Britain had often brought “barbarism” rather than

86. 87. 88. 89. 90.

Carey 1858a, 295–96, 425; 1859, 323, 335. Carey [1847] 1889, 407; see also 446–47. Carey 1858a, 256. Carey 1858a, 338–64. Quotes from Carey 1859, 241n, 335.



civilization to its colonies. Carey was also explicitly critical of those who blamed the failure of places such as India, Ireland, Portugal, or Turkey to improve their economic condition on the “uncivilized” character of their people. The culprit, instead, was free trade: “There lies the difficulty, and not in the character of the people.” As he put it, “The powers of the Hindoo are as great now as they were when Europe was indebted to India for all the fine commodities she used; and as regards his moral qualities, all unite in giving him the highest character.” In con­ trast to List’s opposition to Indian industrialization, Carey also argued: “The Hin­ doo was as capable of applying the machinery of Arkwright as the Englishman.”91 Indeed, whereas List saw European civilization as setting a standard for the rest of the world to meet, Carey was critical of it and willing to cite non-Western societies as models, such as the precolonial self-governing villages of India. In contrast to List, Carey included detailed analyses of the history and economies of countries beyond Europe and North America. Carey’s wider outlook was not a product of direct experiences; aside from three brief trips to Europe in 1825, 1857, and 1859, Carey lived his whole life in the United States.92 Instead, Carey’s writings about the world at large were informed by his wide reading of newspa­ pers, books, and pamphlets (including those from Colwell’s extensive collection), as well as by his conversations with foreign visitors to his Philadelphia home. In his Principles of Social Sciences, Carey’s anti-imperialism was part of a broader defensive style of neomercantilism that prioritized the cultivation of national power for “self-protection,” rather than List’s more aggressive style that also valued the projection of power abroad. In keeping with this approach, Carey condemned how European traders and soldiers had pressed for colonization in the mercantilist era and he criticized his own country’s external aggressions in Mexico, Cuba, China, and Japan. He lamented that “Indian tribes” had “been annihilated” and that “the poor remains of the native tribes” had been plundered and oppressed. Carey blamed US aggression on economic interests, lumping the country in with Britain: “More than any other countries of the world, Great Brit­ ain and the United States devote themselves to the advancement of trade.”93 Carey’s defensive neomercantilism extended to the monetary and financial realm. Here, too, his ideas went beyond those of List. Like the German thinker, Carey was concerned about the international power of British finance. For exam­ ple, he argued that every major financial crisis since the early nineteenth century had originated in England, “injuring the farmers and planters of the world to the

91. Quotes from Carey 1858a, 367, 374, 375, 363. 92. Elder [1880] 2006. 93. Quotes from Carey 1859, 468, 225; 1858a, 372; 1859, 229; see also Carey 1859, 241, 372.



extent of thousands of millions.” He suggested that England’s financial instability stemmed from the fact that that the privately owned Bank of England had a direct interest in generating it: “By doing so, they lessen the public confidence, and thus increase the necessity for looking to their own vaults as the only place of secure deposit.” In addition, Carey went further than List in warning about not just England’s financial power but also its monetary influence: “Trading centraliza­ tion . . . seeks to render the English currency—ever varying as it is—the measure of values for the world at large!”94 Like List, Carey suggested that countries try to insulate themselves from England’s influence in this sphere, arguing that “nations prosper least whose dependence upon it is greatest.” But he advocated for some policies that List had not prioritized in his 1841 book. One was the creation of a monetary system that was not tied to a metallic standard. In his Principles of Social Sciences, Carey men­ tioned the issue briefly, noting that raw material exporters might need to “aban­ don the idea of using gold and silver coin as a standard of value” when persistent trade deficits led to loss of precious metals and deflationary pressures.95 Carey then said much more about this issue during and after his country’s civil war, when he became a prominent supporter of the greenback movement. In addition to recognizing that a depreciated US dollar provided useful protection for US manufactures against foreign imports, Carey opposed the deflationary measures needed to restore gold convertibility after the war.96 Carey also expressed support for decentralized banking and monetary systems within countries, arguing for free banking rather than a monopoly note issue controlled by central banks. He contrasted England’s centralized monetary systems organized around the Bank of England’s monopoly position with more decentralized systems such as the United States’ and Scotland’s, which he praised for being “more localized and more free.”97

Long-Term Goals Carey also did not share List’s view that long-term peace would best be promoted by a world federation of nations. Instead, he appeared to believe that the reforms

94. Quotes from Carey 1858b, 409, 383, 409. 95. Quotes from Carey 1858b, 409, 436. 96. Conkin 1980, 301–3; Dawson 2000, 484n43; Levermore 1890, 571–73; Morrison 1986, 69; Unger 1964, 53–54. 97. Carey 1858b, 405. See also 366, 386, 425, 434. For the same reason, Carey opposed his own country’s 1863 National Bank Act for monopolizing the currency system (Morrison 1986, 52n30).



in each nation that he advocated were key to establishing a more peaceful world. Whereas traders promoted war to open new markets and bolster their global power, their diminished influence in a world of more diversified national econo­ mies (including that of Britain itself) would encourage peace. He also suggested that the emergence of a harmony of interests domestically would have positive international spin-offs: “Peace and commerce would take the place of trading jealousy and universal discord. The harmony of classes thus begetting a harmony of nations, the love of peace would diffuse itself throughout the earth.” Carey further argued that the growing independence of countries in his preferred world would foster better relations among them.98 In his 1847 work, Carey in fact assigned the United States a lead role in usher­ ing in this new world order. As he put it, “Let but the people of the United States set the example of a determined resistance to the system, and it will be followed by all Europe. . . . The people of the United States owe this to themselves, and to the world.” He also suggested that US protectionism might have a direct impact on British policy and power in ways that could help usher in a global transforma­ tion. By reducing imports of British manufacturing and exports of agriculture to Britain, US protectionism could trigger a political upheaval in England that would bring down Britain’s oppressive system of trade, colonies, and military force: “The [English] machine is top-heavy. It rests on the shoulders of the very poor: upon those of the little children and poor women of Manchester: and at the slightest disturbance there, it will topple over. Such will be the case when the people of the United States shall determine that they will place the consumer of food by the side of the producer of food and cotton.”99 Although Carey rejected List’s ultimate goal of a universal republic, he included one brief passage in Principles of Social Sciences that suggested a similarity to List’s interest in how protectionism might encourage free trade over the longer term. The passage stated that the ultimate objective of a protectionist system might “be defined as being, that of establishing perfect freedom of commerce among the nations of the world.” In contrast to List, however, Carey did not explain clearly how a future world of free trade would emerge from the protectionist policies he advocated. He merely noted that the necessity for the latter policies would gradually fade away, as more diverse domestic economies emerged in each coun­ try. He also did not say much about why a world of free trade would serve his broader goals. Instead, he simply noted briefly that this future world would be

98. Quote from Carey 1859, 153–54; see also 464. 99. Quotes from Carey [1847] 1889, 446, 453. These arguments were not included in his 1858–59 work.



very different than the system of free trade that Britain had ushered in. Instead of a world dominated by “centralization,” all countries would have diversified domestic economies, and commerce across borders would be largely made up of finished products. As he put it, “Real freedom of trade consists in the power to maintain direct commerce with the whole of the outside world.”100 Whereas List’s future utopia was a liberal cosmopolitan vision, Carey’s appeared to be more of a liberal nationalist one of free trade among nation-states that carefully guarded their sovereignty. The fact that he devoted so little space to this issue in his massive three-volume work, however, suggests that he did not assign much importance to this aspect of his argument. Indeed, it is significant that the passages relating to the long-term goal of free trade were excised from the condensed version of his book that was produced by Kate McKean under Carey’s supervision.101 Carey’s biographer Arnold Green also suggests that Car­ ey’s views on this subject were ambivalent: “That he ever foresaw a time when protective duties would have fulfilled their function is debatable—his own state­ ments can be quoted on either side and the qualification became increasingly weak in his later writings.”102 The idea that free trade might be a desirable long-term goal was not one that some others in Carey’s circle endorsed. Just before Carey’s Principles of Social Sci­ ences was published, his close friend Colwell had, in fact, explicitly disagreed with List’s view on this issue in his footnotes to the 1856 translation of List’s 1841 book: “We must not shape out present policy with a view to ultimate free trade. . . . It must never be admitted that the policy of a people can be developed from free trade; and it must never be lost sight of, that free trade among merchants may be contemporaneous with the most degraded condition of the people.”103 This state­ ment appears more consistent with Carey’s argumentation than his own short comments about an eventual future involving free trade. In contrast to the thinkers described in the last two chapters, Henry Carey devel­ oped his version of neomercantilism without much reference to List’s ideas. Some of the people who influenced him were discussed in chapter 1, most notably his father, Mathew. Others, such as Byles, Greeley, Laing, and E. P. Smith, have not made an appearance in the book until this chapter because they, too, were not much influenced by List (and did not influence him). Even Colwell, who

100. 101. 102. 103.

Quotes from Carey 1859, 453. McKean 1864, 520. Green 1951, 140–41. Colwell in List [1841c ]1856, 415n.



sponsored the first English translation of List as part of his general interest in political economy, was critical of List’s work. Some of these British and US thinkers referenced each other and some were also invoked by the followers of Carey whom I discuss in the next chapter. The cross-border movements of their ideas provide further examples of the complexity of international circulation of neomercantilist thought in this era. The content of Carey’s version of neomercantilism differed from that of List across many dimensions. Particularly important was the strong emphasis Carey placed on social neomercantilism. His social critique of free trade, in fact, went beyond that of most other neomercantilists in the pre-1939 era by examining the implications of free trade for women and the environment, emphasizing the power of “association,” and critiquing the “trader’s power” and Ricardian rent theory. Unlike List, Carey also advanced a primarily defensive version of neomercantilism that was combined with strong criticism of Western imperial­ ism (including that of his own country). He also challenged List’s views with his insistence that all states across the world—including even Britain—should pursue neomercantilist policies and with his long-term vision that prioritized sovereignty rather than a universal confederation of nations. In addition, Car­ ey’s case for promoting local manufacturing stressed some benefits that List did not emphasize, such as an improved trade balance arising from higher prices received for manufactured exports as well as the value of individuality arising from employment diversification. Carey was also much less cautious than List in his endorsement of protectionism, and he criticized metallic monetary stan­ dards. Further, he was less interested than List in government economic activism at the domestic level, promoting a distinctive vision of a decentralized, marketoriented domestic political economy. More generally, Carey was less Eurocentric and less explicitly focused on the issue of the relationship between nationality and political economy than List was.



Carey’s ideas initially attracted attention mostly in the United States, but they soon picked up supporters in many other countries, too. Indeed, an observer at the turn of the century claimed that Carey’s reputation abroad was “greater than among his own countrymen.”1 One indicator of the international reach of Careyite thought was the fact that his Principles of Social Sciences (or in some cases, McKean’s abridged version) was translated into French (1861), German (1863), Russian (1866–69), Hungarian (1867), Japanese (1884–85), and Spanish (1888). Other works of his were translated into Italian, Portuguese, and Swedish before 1880.2 The global influence of Carey’s ideas has been much less studied than that of List. This relative neglect is surprising because Carey’s thought played an important role in building support for protectionism in many countries after the mid-nineteenth-century highpoint of enthusiasm for free trade across the world. Rising protectionist sentiment after that point is often attributed in part to the growing popularity of Listian thought, but observers at the time recog­ nized that the ideas of both List and Carey played a role in generating this trend.3

1. Quoted in Morrison 1986, 6. 2. See for example Elder [1880] 2006, 18; Boianovsky 2013, 666; and the original texts cited in this chapter. 3. See, for example, Fisher 1896, 341. 165



Carey’s ideas were, in fact, more important than List’s in mobilizing support for protectionist policies in two of the most important late industrializing states in the second half of the nineteenth century: the United States and Germany. They were also cited more prominently than List’s by leading neomercantilist thinkers in places such as early Meiji Japan, late nineteenth-century Canada and Australia, and early twentieth-century Ethiopia. In all these cases, Carey’s ideas were not just embraced but also adapted in interesting ways to local circumstances.

US Republican Protectionism For many neomercantilists around the world in the late nineteenth and early twentieth centuries, the protectionist policies of the United States in this period served as an inspiration, not least because they seemed to be associated with the country’s rapid industrialization. After moving in a liberalizing direction from 1833 to 1846, US trade policy became more protectionist with the introduction of the 1861 Morrill Tariff (which included both industrial and agricultural tariffs) just before Lincoln assumed the office of the presidency. The Lincoln adminis­ tration then backed further tariff increases during the country’s civil war and, its high wartime tariffs were retained after the end of the war.4 The next major reform of the US tariff regime came with the McKinley Tariff Act of 1890, which introduced even higher tariffs. Despite many controversies over trade policy in subsequent decades, the United States remained a quite protectionist country until the 1930s.5 Many scholars have noted that Henry Carey was the key intellectual leader of those who supported the revival of US protectionism after the mid-nineteenth century. As Paul Conkin puts it, Carey “became something of a cult figure to many businessmen, politicians, and journalists” in US protectionist circles in this period.6 His criticisms of free trade became widely known through his various publications and writings for the New York Tribune during 1849–57. Carey also became influential in the economic-policy debates of the new Republican Party, and he played the key role in securing an endorsement of protectionism in its

4. See, for example, Richardson 1997, chap. 4. Carey’s friend Colwell helped to establish the post–Civil War tariff regime through his position as commissioner of revenue. 5. See, for example, Irwin 2017. 6. Conkin 1980, 309. For Carey’s influence, see also Goldstein 1993, 38; Huston 1983; Lee 1953, 1957; Morrison 1986; Calvo 2012, 124; Meardon 2015; Peskin 2003, 225; Rossi 2019, 2; Richardson 1997, 19–20, chap. 4.



1860 platform.7 His ideas were also prominently invoked during the passage of the 1861 tariff, including by its author, Justin Smith Morrill who, according to Heather Richardson, “maintained contact with Carey through the debates.”8 Indeed, after the 1860 election, members of the new Congress received copies of Carey’s books, courtesy of one of his supporters.9 Carey also advised Lincoln and his treasury secretary Salmon Chase on economic policy during the Civil War.10 Although his advocacy of greenbacks was controversial in Republican cir­ cles, Carey’s ideas continued to provide the main intellectual defense in the late nineteenth and early twentieth centuries of US trade protectionism, a policy that was closely associated with the Republican Party in this period. As one critical observer, Charles Levermore, put it in the wake of the 1888 presidential election in which trade policy was a key issue, “The arguments to which Carey gave form and eloquence are in the mouths of more than half the business men and farmers of our country; and, in the last Presidential campaign, the Republican party re­ affirmed the extremist principles of the Carey school.”11 List’s ideas were some­ times invoked alongside Carey’s by Republican protectionists, but the latter drew much more heavily on Carey than on List.12 Particular prominence was given to Carey’s argument that protectionism defended US labor against low-wage com­ petition from Europe, an argument that was quite absent from List’s 1841 book.13 In the late nineteenth century, some Republicans began to express support for a more offensive style of neomercantilism that was closer to List’s than to the defensive style that Carey had endorsed in his 1858–59 work. In addition to back­ ing US imperial expansion, they called for preferential trade agreements with poorer countries that would enable US manufacturing firms to gain an advan­ tage over their European competitors in those markets. A leading early supporter of these agreements was James Blaine, who had been a prominent member of Carey’s circle before the latter’s death in 1879.14 To encourage countries to sign up to these agreements, the McKinley Tariff Act of 1890 even empowered the US president to raise duties against commodity imports from countries that were

7. Lee 1953, 1957; Dawson 2000, 470; Huston 1983, Rossi 2019, 2; Green 1951, 35. 8. Richardson 1997, 105; see also Rossi 2019, 2; Green 1951, 190–91. 9. Lee 1953, 167–68; 1957. 10. See, for example, Calvo 2012, 124; Rossi 2019, 2. 11. Levermore 1890, 573; see also Goldstein 1993, 38; Irwin 2017, 247–48; Huston 1983, 55. 12. For an example of both List and Carey being invoked, see Kelley 1882, 295. Palen (2016, xvi) emphasizes that US protectionism at this time was informed by “Listian nationalism” but uses the label in a wide way to include Carey’s views (see especially 9–10). 13. Goldstein 1993, 92; Irwin 2017, 242, 247–48; Palen 2016, 123, 181–82. 14. Meardon 2011, 327n22; 2017; Palen 2016.



not treating US exports well (although this retaliatory provision was repealed in 1894).15 Interestingly, in 1876, Carey himself began to endorse the idea that reciprocity agreements with tropical countries could be mutually beneficial; the United States would receive imported goods it could not produce at home for climatic or other physical reasons in exchange for exporting to tropical countries manufactures that they needed.16 Although this position was compatible with his longstanding assertion that some forms of international trade were desirable, it was less consistent with his earlier views of what was best for tropical countries themselves. Not all US protectionists followed Carey in suggesting that tropical countries would benefit from this exporting role. Take, for example, Simon Patten, whose 1890 Economic Basis of Protectionism is described by Judith Goldstein as the only serious scholarly work defending US protectionism between Carey’s death in 1879 and the Great Depression.17 Patten had become a professor in 1888 at the University of Pennsylvania’s Wharton School, which had been explicitly estab­ lished in 1881 by the industrialist Joseph Wharton (who had been part of Carey’s social network) to support the protectionist cause.18 In addition to echoing many other Careyite positions, Patten’s book argued that countries in tropical regions would be better off if they were less dependent on commodity exporting. In Pat­ ten’s view, the world would not benefit from US initiatives to open up its markets in the way that Britain had, and he suggested that the United States could reduce imports from tropical countries by encouraging the cultivation of more crops in the US South. As he put it, “The world’s progress is now dependent upon the development of internal resources, and not of external trade.”19 Patten’s high-profile work was also interesting because it provided further evidence of the limited influence of List’s ideas in the United States in the late nineteenth century. Patten began his book with an explicit rejection of the Listian rationale for US protectionism: “I do not advocate protection in the case of our own nation, for example, because we are a backward country needing a special means to bring us up to the level of more progressive nations. In this respect I differ from the older economists who advocated a protective policy.”20 Patten’s insistence on this point was particularly noteworthy because he had studied in

15. 16. 17. 18. 19. 20.

Meardon 2017, 92. Meardon 2011, 329–30; 2017. Goldstein 1993, 90. Green 1951, 175–76; Hudson 2010, 25, 182. Patten [1890] 1974, 15; see also 88, 92, 139. Patten [1890] 1974, 8.



Germany with members of Schmoller’s German historical school. Although he did not think List’s infant-industry ideas were relevant to the United States, Patten did embrace Schmoller’s view that the state had an important domestic economic role in social policy and in curtailing unrestrained individualism and competi­ tion.21 Patten encountered hostility to these ideas from his Careyite colleagues at the Wharton School, most notably the school’s first dean, Robert Thompson, who attacked him for harboring socialist views.22 Thompson’s criticism highlighted well how most Careyites thought the state should play only a limited domestic economic role, and how the social neomercantilisms of Carey and Schmoller had quite different content.

Bismarck, Kardorff, and Germany’s 1879 Protectionist Turn Carey’s views had a higher profile than List’s in encouraging protectionist senti­ ment in the late nineteenth century not just in the United States but also in Ger­ many. To be sure, List’s ideas had been widely known in Germany after the publi­ cation of his 1841 book, and Ivo Lambi notes that they quickly formed “the basis of the German protectionist position.”23 By the early 1870s, however, German protectionists recognized that List’s infant-industry case had lost its relevance as German industry had become more advanced. As Lambi puts it, “As a theory, protectionism had fallen into such disrepute that many industries wanting to benefit from tariffs represented themselves as moderate free traders.”24 In the mid-to-late 1870s, however, support for protectionism grew in Ger­ many, culminating in the key policy decision mentioned in chapter 3: Bis­ marck’s boosting of tariffs on both industrial and agricultural imports in 1879. Although Germany’s new protectionist policies inspired neomercantilists in other countries, the man at the center of this policy shift was no ideologue when it came to discussions of political economy. Indeed, like many other German nationalists, Bismarck had previously backed policies of free trade, which had helped to bring the Germans closer together during the years lead­

21. Hudson 1974; Balabkins 1988, 98–99; Green 1951, 178. 22. Hudson 2010, 259. 23. Lambi 1963, 8. For the initial reception of List’s work in Germany, see also Henderson 1983b, chap. 5, 100, 237n379; Wendler 2015, 211. 24. Lambi 1963, 91. See also Pflanze 1990, 311; Szporluk 1988, 195. List’s 1841 book was, how­ ever, reprinted in 1877 and 1883 (Henderson 1983b, 214; see also Lloyd 1885, v).



ing up to the unification of the country in 1871.25 His endorsement of pro­ tectionism in 1879 reflected many pragmatic political goals, including raising revenue and enabling him to forge a new domestic alliance between leaders of heavy industry and the landed aristocracy, both of whom had been increas­ ingly drawn to protectionism since the mid-1870s in the context of the global economic slowdown and rising imports.26 Lambi and other historians emphasize that, to the extent that ideas were sig­ nificant in building support for protectionism within Germany in the 1870s, Carey’s thought was more important than List’s.27 Carey’s 1858–59 book had attracted German attention soon after its publication, with a German translation being published as early as 1863. By 1867, free traders were already complaining that Carey’s ideas had been accepted “with extraordinary warmth and rash recog­ nition” and that they had given “protectionists a philosophical rationalization for their standpoint.”28 Otto Pflanze notes that the translated version of Carey’s work already “was widely read and quoted by the end of the decade.”29 Carey’s work found diverse sources of support. One of his most enthusi­ astic initial backers was the prominent left-wing German intellectual Eugen Dühring, who began to promote and defend Carey’s work in publications in the 1860s.30 More politically consequential support came from figures whose political leanings were closer to those of the conservative Carey himself. Par­ ticularly important in popularizing the work of Carey after the mid-1870s was the prominent conservative politician and industrialist Wilhelm von Kardorff. Kardorff was the leader of the Free Conservatives, a party whose ideas were near to those of Bismarck. Since entering politics in 1866, Kardorff had been a strong supporter of Bismarck, and he had become close to both the Ger­ man leader and his influential banker, Gerson Bleichröder. In the wake of the 1873 crash (in which he lost considerable money), Kardorff published a fortysix-page pamphlet titled Gegen den Strom! Eine Kritik der Handelspolitik des deutschen Reichs an der Hand der Carey’schen Forschungen (Against the tide! A critique of the trade policy of the German Empire based on Carey’s research). As the subtitle of this 1875 pamphlet made clear, Kardorff sought to promote

25. Lambi 1963, 35. 26. See, for example, Pflanze 1990, 450, 455; Lambi 1963, chap. 6; Craig 1978, 91–92; Hobson 1997, chap. 2. 27. Lambi 1963, 226; see also Pflanze 1990, 311–12; Craig 1978, 87. 28. Quoted in Lambi 1963, 92. 29. Pflanze 1990, 311. 30. Reinert and Rössner 2016, 64.



Carey’s views and apply them to German conditions.31 The pamphlet cited List just once, whereas it invoked Carey’s ideas in great detail. In this work, Kardorff acknowledged that he had previously been a very keen supporter of free trade but stated that Carey’s work had been recommended to him by an American who had declared that the theory of free trade was “the greatest humbug ever invented.”32 After reading the work, Kardorff had been convinced that protectionism was needed to prevent Germany from becoming impoverished as well as defenseless, because national wealth had become a pre­ condition of national power in his era. Following Carey, he emphasized that the main source of national wealth was internal trade and that tariffs would build up a secure domestic market that was protected from foreign competition and dumping practices, particularly those of English companies. With protection, he argued, domestic industry and agriculture would flourish, higher wages could be paid to workers, and dynamic local centers of association between producers and consumers could be fostered. He also echoed Carey’s view that a more diversified economy was necessary for the intellectual development of the nation and that German industry would be able to export more from the foundation of a strong home market. While highlighting the success of US, French, and Russian protec­ tionism, Kardorff cited Carey’s descriptions of the terrible results of free trade in places such as Turkey, Portugal, and Ireland as well as in Britain itself, where, he argued, inequality and social tensions were growing. In addition, he critiqued free traders for assuming an international community of interests and for overlook­ ing how Britain had used protectionism to build up its industries while actively suppressing industrial activity in its colonies.33 Lambi notes that Kardorff ’s pamphlet was “extremely influential” in Ger­ many and that even prominent free traders praised it.34 Kardorff quickly emerged as the leader of protectionist forces inside and outside the Reichstag. To build support for the cause, he organized and became the first president of the Central Federation of German Industrialists, an organization that assumed a key role in mobilizing political support for protectionism based on Carey’s arguments. He also cultivated the support of agrarian interests, who began to demand protection after the mid-1870s in the context of falling prices and new competition from US and Russian grain. The explicit endorsement of

31. Lambi 1963, 92. 32. Kardorff 1875, 5. 33. Kardorff 1875. 34. Lambi 1963, 92. It also attracted the attention of analysts back in Carey’s state of Pennsylvania (J. G. R. 1876).



agricultural protection by Kardorff and his supporters went further than Car­ ey’s Principles of Social Sciences. But Carey’s ideas were more useful than List’s in making this case because the latter explicitly opposed agricultural protec­ tionism, whereas the former did not.35 A number of historians have argued that Bismarck’s conversion to protection­ ism was influenced at least in part by Kardorff ’s arguments.36 Indeed, Bismarck made a point of telling Kardorff in early 1878 that, although he had earlier sup­ ported free trade, “now I am a complete convert and want to make good my earlier errors.”37 Bismarck’s conversion to protectionism had apparently also been encouraged by some focused reading he did on the topic in 1878. This reading included not just trade statistics and chambers-of-commerce reports but also publications of the Central Federation of German Industrialists, which was pro­ moting Kardorff ’s ideas at the time.38 Bismarck’s public arguments for protectionism also repeated various Careyite rationales of Kardorff ’s, such as the national unity of industry and agriculture as well as the protection of national labor.39 In 1882, he also depicted free trade as a tool of the dominant state: “I believe the whole theory of free trade to be wrong. England abolished Protection after she had benefitted by it to the fullest extent. . . . That country used to have the strongest protective tariffs until it had become so powerful under their protection that it could step out of those barriers like a gigantic athlete and challenge the world. Free trade is the weapon of the stron­ gest nation.”40 This speech might be interpreted as evidence that Bismarck was influenced by List, but the language was also fully consistent with Carey’s views. Although List’s ideas had lost favor in German protectionist circles at this time, some scholars have suggested that Bismarck was interested in them.41 This view was encouraged early on by a French writer, Jules Domerge, who claimed in 1884 that Bismarck had read List and followed his advice carefully.42 But I have seen no clear evidence support this view. To be sure, a copy of List’s book was sent

35. Lambi 1962, 67; 1963, 91–92, 116, 136, 164–65, 178; Pflanze 1990, 311, 315, 454–55, 466, 483; Stern 1977, 184, 190. 36. Lambi 1963, 164–65, 178; Zeller 1976, 150; Pflanze 1990, 454–55; Craig 1978, 90. 37. Quoted in Pflanze 1990, 454. 38. Pflanze 1990, 465–66. See also Lambi 1963, 164. 39. Pflanze 1990, 467–68, 482–83; Zeller 1976, 138; Craig 1978, 90. 40. Quoted in Hammond and Hammond [1925] 2006, 246. 41. This portrayal is widespread in scholarly literature. For older prominent expressions of this view, see Hayes [1931] 1968, 272; Carr 1945, 25. For more current examples, see Selwyn 2014, 31; Gerybadze 2019, 227. I have also repeated this argument in past work (Helleiner 2015, 80), but I no longer think there is clear evidence to support it; mea culpa. 42. Wendler 2015, 214; Daastøl 2016, 103.



to Bismarck in 1877 by List’s daughter. But she did not receive a reply and Eugen Wendler notes that there is no evidence that Bismarck read the book. Based on extensive research, Wendler concludes more generally that “we still do not know if or to what extent Otto v. Bismarck was familiar with the ‘National System’ and to what extent it might have influenced his policy or guided him in some way.” If List’s ideas were known to Bismarck, they do not seem to have made much impression on the man. As Wendler notes, “List’s name is never mentioned in Bis­ marck’s 15-volume literary estate.”43 It is also noteworthy that Bismarck departed significantly from the ideas in List’s 1841 book in supporting agricultural tariffs and an activist domestic role for the state in social policy.

Carey’s Influence in Early Meiji Japan A third case where Carey’s ideas had higher political profile than List’s was in early Meiji Japan. The state-led development strategies of Meiji Japan are often associated with Listian thought.44 As I noted in chapter 3, it is certainly true that List’s ideas were invoked by figures such as Matsukata, who became a very promi­ nent Japanese policymaker in the 1880s and 1890s. It is not clear, however, that List’s ideas were known in Japan before the mid-1870s or that they were influen­ tial in Japanese policymaking circles before Matsukata became finance minister in 1881 (see chapter 7 for a more detailed discussion). By contrast, there is plenty of evidence that Carey’s views were known in Japanese policymaking circles as early as 1871. Carey’s thought was introduced to Japan in that year through two channels. The first was a publication titled Hogozeisetsu (On protective duties) authored in the fall of 1871 by an employee at the Ministry of Finance, Wakayama Norikazu.45 Wakayama’s familiarity with Carey appears to have emerged from the fact that he had worked as an English interpreter and had been trained in some aspects of Western knowledge through what was called Dutch learning (Rangaku).46 In his 1871 publication, Wakayama cited Carey’s ideas and called on the government “to prohibit the export of agricultural products and thereby to recover the fertility

43. Quotes from Wendler 2015, 213. 44. This association is very common in existing scholarship and was popularized above all by Fallows (1993, 1995). 45. Sugiyama 1994, 8, 98; Braisted 1976, 307; Kumagai 2001, 205; Lee 2008, 512. 46. Callaghan 2012, 176–78. The phrase stemmed from the fact that, before Japan’s economic opening in the 1850s, most knowledge of the West had been imported via the Dutch at Nagasaki.



of the soil, to prevent the activities of cunning merchants and thereby to rescue trade from decay, to prohibit the import of, or levy heavy duties on, foreign goods, and thereby to encourage useful industries.”47 He argued that free trade was not appropriate for a poor country such as Japan, where many people did not have much experience with commerce and industry and also did not understand the public interest.48 Wakayama’s publication was produced in the context of high-profile discus­ sions about revising the trade treaties that had been imposed on Japan after the country had been forcibly opened by the United States in 1853–54. First signed in 1858, the treaties opened up five ports to foreign residence and trade, constrained Japan’s use of trade restrictions, set rates for its tariffs, imposed extraterritorial provisions (under which people from treaty countries were judged by their own consular courts in Japan), and included nonreciprocal most-favored-nation clauses (under which Japan had to extend trade concessions to other treaty pow­ ers without getting similar concessions from those powers).49 One of the first major diplomatic issues to be faced by the new Meiji government after it assumed power in 1868 concerned the future of these treaties, because they were subject to revision on July 1, 1872, with a year’s notice being given. In early 1871, the government established a committee to study the issue, and Wakayama’s publi­ cation was commissioned as part of this process. In this way, Carey’s ideas were inserted directly into one of the most high-profile policy discussions of the early Meiji years. They also entered these discussions through a second channel involving Car­ ey’s close colleague E. P. Smith, who arrived in Japan in late 1871 as a paid advisor on international law to the Japanese government. As part of the treaty revision process, the Japanese government had asked the US government for legal assis­ tance, because the United States had been the only treaty power sympathetic to Japan’s views of its jurisdictional rights. Smith arrived in the country just as the government was making its final preparations for a major diplomatic mission that was sent to the United States and Europe from late 1871 to 1873. Led by the imperial prince Iwakura Tomomi, the mission included many top government officials who hoped to use it both to press for treaty revision and to learn from the West.50 After arriving in Japan, Smith immediately began reviewing drafts that had been prepared for treaty revisions and became involved in discussions

47. 48. 49. 50.

Wakayama quoted in Sugiyama 1994, 8. Sugiyama 1994, 8. Hiroshi 2006, 287, 292; Church 1978. Iwata 1964, 149–50.



about the issue with top leaders such as Itō Hirobumi, Fukuchi Gen’ichirō, and Kido Kōin.51 Given Smith’s own views, it is not surprising that his advice to these leaders had strong Careyite protectionist content. In a letter he wrote to Carey in March 1872, Smith applauded the Japanese government’s desire to protect local industry and stated the following: “We mean to utterly reject commercial trammels unless we get some distinct consideration for submitting to them. I trust also to get rid of the ‘most favored nation’ clause so that we can retaliate upon those who treat us in a supercilious and unfriendly way, without the necessity of physical warfare.”52 Smith was also critical of the extraterritorial principles of the treaties and he quickly became well known in the foreign community for his low opinion of Western merchants and other foreigners in Japan, many of whom seemed like “unprincipled, rapacious thieves” to him.53 In addition, Smith scandalized many in the foreign community by wearing samurai clothes, and his letters home dis­ missed negative Western stereotypes of the Japanese.54 Smith remained in Japan until August 1876 and continued to lobby for revisions to the treaties throughout this period.55 Because of Wakayama and Smith, many of the important policymakers par­ ticipating in the 1871–73 Iwakura Embassy were already familiar with Carey’s views before they left the country. They probably heard more about Carey’s views on the mission itself, because Wakayama was a participant. The embassy mem­ bers were also likely exposed to Careyite ideas when some of them visited Carey’s hometown of Philadelphia in July 1872. Andrew Dawson reports that local man­ ufacturers during the visit of the delegation “expressed sympathy for its country’s decision to close its borders; Japan was justified, businessmen felt, because of

51. Yedonami 1938; Kido 1985, 105–6; Church 1978, 80–81. 52. Quoted in Hudson 2010, 168–69. Smith’s views were not inconsistent with US policy at the time; when the Iwakura Embassy visited the United States, top US officials declared their support for Japan’s right to tariff autonomy (Church 1978, 228). The US soon recognized this right formally in a bilateral treaty with Japan in 1878, although this treaty would not come into effect until other Western countries also revised their treaties. 53. Quoted in Murphy 1994, 97. See also Church 1978, 112. In 1872, Smith also drafted papers associated with Japan’s first successful challenge to the expansive way in which the treaties had been interpreted by Western powers. In what became known as the “María Luz incident,” the Japanese government was able to reassert its jurisdiction over foreigners from countries without treaties with Japan (who had previously been regulated by foreign consulates). 54. Hudson 2010, 169; Church 1978, 111–14. 55. Even when he returned to the United States, Smith continued to lobby for treaty revisions, calling for the United States to abandon its policy of coordinating with the other treaty powers. For this history, see Church 1978, chap. 2, 149.



the arrogance of British monopolists determined to secure an advantage.”56 In Kume Kunitake’s detailed records of the Iwakura Embassy, there is also an inter­ esting entry from late 1872 following a discussion of how Britain imported raw materials from its colonies around the world and re-exported some of them as manufactured goods: “An American has criticised this state of affairs, saying that the British live like ants in their little islands, owning fields in India, where they squeeze the fat from its people while growing fatter themselves. They extract profits from their colonies just as one extracts juice from a lemon; they squeeze with all their strength until not a drop is left, and only then do they stop.”57 The content of this passage suggests that the “American” may have been Carey or one of his supporters. Whether Kune picked up this idea from the Philadelphia visit, Wakayama, or elsewhere is unclear.58 Although Carey’s ideas were clearly known in Japanese policymaking circles at this time, it is important not to overstate their influence. Even E. P. Smith him­ self recognized that his advocacy of protectionism was merely reinforcing exist­ ing Japanese views on the subject.59 As I note in chapter 7, before Smith arrived and before Wakayama wrote his report, top Meiji policymakers had already made clear their frustrations with the trade treaties for constraining Japan’s tariff autonomy as well as for imposing extraterritoriality and nonreciprocal obliga­ tions. In that chapter, I also highlight how their views were shaped by domestic ideational influences rather than imported neomercantilist thought. The Iwakura Embassy was not able to revise the treaties to allow Japan to pursue more protectionist policies. In this context, Japanese advocates of indus­ trialization turned to forms of government economic activism at the domestic level that had no place in Carey’s analysis. Even supporters of Carey, such as Wakayama, strongly supported these initiatives. His views were evident in the preface to an 1877 translation he published of J. B. Byles’s 1849 Sophisms of Free Trade. In the preface, Wakayama argued that Japanese economic development required not just trade protectionism but also government activism domesti­ cally, such as providing instruction to artisans and farmers. As noted in the next chapter, this latter advice overlapped with the ideas of Japan’s most influential neomercantilist policymaker in the 1870s, Ōkubo Toshimichi. In the preface,

56. Dawson 2000, 480. 57. Kume 2002, 2:20–21. 58. Kume’s detailed records of the Iwakura Embassy do not mention these views in his descrip­ tion of the visit to Philadelphia, but they do note US protectionist practices (e.g., Kume 2002, 1:53, 330). 59. Hudson 2010, 168–69; Church 1978, 80–81.



Wakayama also supported other ideas that departed from those of Carey, such as a heavy emphasis on export promotion and a rejection of the idea that political economy could generate “a general rule which applies in any country.”60 Wakayama’s preface to the Byles translation was also interesting because it provided a further clue about the low profile of List’s work in the late 1870s. Wakayama explained that he translated Byles’s work to make the views of West­ ern critics of free trade better known. Wakayama also noted that he had settled on Byles’s book for this task after concluding that other Western work of this kind had limitations for his goal. For example, he judged Carey’s book too long and E. P. Smith’s work too specific. When discussing various Western protectionist works, Wakayama did not even mention List’s book.61 Carey’s ideas continued to have a higher profile than List’s in Japan for some time after their introduction by Wakayama and Smith in early 1870s. Indeed, Chūhei Sugiyama argues that Carey’s work—not List’s—“gave the greatest sup­ port to the Japanese protectionists” during the entire first two decades of the Meiji era.62 One reason why Carey’s thought was well known was its prominence at this time in the United States, where many Japanese traveled and studied. Carey’s ideas may also have held more appeal for Japanese thinkers because he displayed much greater sympathy than List for non-Western countries, including Japan. Indeed, in the same year that the trade treaties were signed, Carey criticized his own country’s forced opening of Japan and made the following warning: “Trade sweeps off the aborigines of the West, and it will do with the Japanese, when once it shall have been admitted, precisely what it has already done with the people of the Sandwich Islands and of India.”63 By contrast, List applauded European efforts to enforce free trade in Asia and to colonize the region. Who were the promoters of Carey’s thought in the 1870s and 1880s beyond Wakayama and Smith? One was Tomita Tetsunosuke, who assisted the Iwakura Embassy’s visit to the United States and was then named Japanese vice-consul in New York. In the latter role, he visited Carey in Philadelphia in 1875 and was impressed by their discussion, which included Carey’s criticism of Japan’s opening and his advice to be wary of the West. Tomita had earlier traveled to the United States in 1867–69, when he studied political economy at a com­ mercial college in Newark, New Jersey, and may have first encountered Carey’s

60. Quotes from Sugiyama 1994, 9; see also 99–101. 61. Sugiyama 1994, 99. 62. Sugiyama 1994, 10. For the interest in Carey, see also Cumings 1999, 61–62; Metzler 2006, 100, 113. 63. Carey 1858a, 370; for his criticism of the opening, see 237–38.



ideas. At their 1875 meeting, Carey gave Tomita a copy of his 1858–59 book and asked him to translate it.64 A translation of Carey’s work—or more accurately, of McKean’s abridgment— did eventually appear in 1884–88. The first half was translated by a friend of Tomita’s, Inukai Tsuyoshi, who had already cited Carey’s ideas a few years earlier. The second half was translated by Inukai’s colleague Machida Chūji. This trans­ lation was subsequently published in many further editions, including one for which Tomita wrote a preface where he noted Carey’s warning to him that Japan should be wary of the West.65 It is worth noting that the translation of Carey’s work was published before the translation of List’s 1841 book, which appeared in 1889 (also with a preface by Tomita, who had encouraged the translation).66 The way that List’s translator, Ōshima Sadamasu, used List’s work soon after this translation provides another reason to be skeptical that List’s views were significant in encouraging interest in neomercantilist policies in the early Meiji period. In 1891, Ōshima invoked List’s stage theory of development to defend, rather than criticize, the policies of free trade that had been imposed on Japan by foreign powers after its initial economic opening. As he put it, countries needed to develop by embracing a trade policy of “freedom first, followed by protection, and eventually back to freedom.”67 Only by the time he was writing in 1891 did Ōshima think Japan had advanced economically to a stage where it would be appropriate to have tariffs. He put the issue particularly bluntly in 1896: “We were fortunate that it was British liberalism that first entered Japan after the opening of the country in the Ka’ei era. Had American protectionism or German eclecti­ cism been first to arrive on the scene, these would not have been enough for us to break through our obstinacy.”68 The invocation of List to defend liberal policies was certainly consistent with List’s schema, but it was a far cry from the usual way in which scholars depict List’s influence in Japan in this period. Another promoter of Carey’s ideas in this period deserves mention: Shiba Shirō. Shiba studied political economy in the United States during 1879–85, including at Harvard and then the Wharton School in Carey’s hometown of Philadelphia where he was in the first graduating class (of five students) earning a bachelor of finance. At Wharton, he was taught by Robert Thompson, the Carey

64. Sugihara 1988, 245. 65. Sugihara 1988, 246; Sugiyama 1994, 71, 94, 96; Kumagai 2001, 205; Oka 1986, 128; Metzler 2006, 128n58 66. Sugihara 1988, 242; Sugiyama 1994, 71. 67. Quoted in Sugihara 1988, 243. 68. Quoted in Metzler 2006, 116.



supporter noted earlier in this chapter (whose work was also translated into Japa­ nese in 1878).69 On his return to Japan, Shiba wrote a preface for the first edition of the translation of Carey’s book. Shiba noted in the preface that, although he had arrived in Philadelphia after Carey had died, he had “visited Carey’s house, sat in his library, consulted the books belonging to Carey, and studied in the private school there.”70 Shiba also wrote one of the most popular political novels of Meiji Japan, Kajin no Kigū (Strange encounters with beautiful women), which appeared in a serial­ ized fashion from 1885 to 1897 and sold seven million copies.71 The novel centers around four characters from Japan, China, Spain, and Ireland who meet in Phila­ delphia, and it includes criticism of free trade in places such as Egypt, India, and Turkey, as well as a strong Carey-like, anti-imperialist message about the terrible treatment of weaker nations by European powers. Shiba’s discussion of foreign countries’ experience was enriched by his participation in an official Japan mis­ sion abroad in 1886–87, during which he met political leaders in Egypt, Turkey, Hungary, and Poland.72 There were other mechanisms by which Carey’s ideas were transferred to Japan. One was through the University of Tokyo’s political economy course, men­ tioned in chapter 3, whose professor, Ernest Fenollosa, discussed Carey’s ideas alongside those of List and other Western thinkers during his 1878–1883 teach­ ing.73 In addition, Meiji government offices already included seven English-lan­ guage works of Carey in their collection by 1882.74 Even those who read the one work of List’s that was in that same collection at that time gained an introduction to Careyite ideas. The work was the 1856 English translation of his 1841 book, which included Colwell’s extensive comments in the footnotes. Many Japanese readers were, thus, first introduced to List’s ideas through this critical Careyite intellectual filter.75 Some of the Japanese figures involved in the propagation of Carey’s ideas in Japan went on to prestigious careers in Japanese politics. For example, Tomita

69. Kumagai 2001; Miyakawa 1999, 98; Sugiyama 1994, 10. 70. Quoted in Sugihara 1988, 245. 71. Sakaki 2000, 84. 72. Sakaki 2000, 86n7; Mori 2009, 5–6. 73. Mizuta 1988, 31. 74. Sagers 2006, 98. 75. In this context, it is also noteworthy that Colwell was more supportive than Carey of govern­ ment economic activism at the domestic level, such as the provision of assistance “by loans or other­ wise” to manufacturers as well as spending on infrastructure and education (quote from Colwell in List [1841c] 1856, 414n; see also Colwell 1856, lxii–lxiii).



helped Matsukata create the Bank of Japan, becoming its first vice-governor in 1882 and then its governor in 1888, after which he became governor of Tokyo. Inukai became deeply involved in electoral politics, rising to the position of prime minister in the early 1930s. Machida became an elected official and served in sev­ eral cabinet roles during the interwar years. Their political prominence suggests that Careyite ideas continued to have some influence in Japan well beyond the early Meiji years.

Buchanan’s Canadian Neomercantilism Carey’s ideas were also invoked prominently by critics of free trade in Canada during the lead-up to that country’s 1879 National Policy, which raised tariffs on imports of both industrial and primary products. The architect of this policy was the country’s conservative prime minister, John A. Macdonald, who embraced protectionism for many tactical political reasons, just as Bismarck did in the same year in Germany.76 But as in the German case, ideas also played a role in building support for protectionism at this time. Macdonald himself invoked the defense of infant-industry protectionism earlier developed by the Canadian John Rae, as well as its acceptance by the prominent British liberal John Stuart Mill. I will dis­ cuss their views in chapter 10. Here, I focus on the ideas of Isaac Buchanan, who was the leading Canadian advocate of protectionism from the late 1850s onward and who helped to mobilize domestic support for Macdonald’s policy. After immigrating from Scotland in 1830, Buchanan emerged as one of the leading export-import merchants in Canada and became actively involved in politics. In the political arena, he pressed for higher tariffs through lobby groups such as the Association for the Promotion of Canadian Industry, which he helped to create in 1858.77 Because the Province of Canada was a British colony before 1867, Buchanan’s initial neomercantilist ideas represented an example—like Ranade’s—of neomercantilism in a colonial context. But the context was also dif­ ferent from that faced by Ranade, because Buchanan’s colony had gained control over its own tariff policy in the 1840s.78 Buchanan did not produce any single lengthy treatise, but many of his writings and speeches up until the early 1860s were published together in a rather sprawl­ ing and disorganized 1864 book titled The Relations of the Industry of Canada

76. For a comparison of the two countries’ experiences, see Zeller 1976, chap. 4. 77. Goodwin 1961, 50. 78. Buchanan 1864, 125; Goodwin 1961, 42.



with the Mother Country and the United States. In this volume (which stretches over five hundred pages), Buchanan mentioned List just once, citing the latter’s description of the negative effects of free trade in countries such as Russia and the United States.79 Much more extensive were his references to Carey, from whose work he included long excerpts and with whom he corresponded.80 Part of the appeal of Carey’s work may have been that the US thinker discussed the nega­ tive impact of Canada’s free trade with Britain: “Canada has been deprived of all power to diversify her industry, and now presents to view vast bodies of people who are wholly unable to sell their labor—her power of attraction, as a corrector of the evils attendant upon transatlantic centralization, having, therefore, wholly ceased.”81 By contrast, List suggested that the free-trade relationship between Britain and Canada was a mutually beneficial one.82 Buchanan also cited other writers in Carey’s intellectual world, such as Byles, E. P. Smith, and especially Greeley. The latter’s “Labor’s Political Economy” was even republished in full in Buchanan’s 1864 book as well as by the Association for the Promotion of Canadian Industry in 1858.83 The ideas of Carey, Byles, and Greeley were also invoked by other Canadian supporters of higher tariffs at the time of the National Policy, as were those of Laing.84 List’s work was occasionally mentioned, but it had a relatively low profile in Canadian protectionist circles at this time.85 The influence of Carey’s work on Buchanan’s thought was clear in the case that the latter made for protectionism. Buchanan highlighted some benefits of fostering local industry and a more diversified economy that could be found in both Carey’s and List’s work, such as wider employment opportunities, new and more reliable local markets for farmers, and reduced transportation costs. But he also emphasized distinctive Careyite themes about how protectionism would end soil erosion associated with export-oriented crops and be especially helpful to labor. Regarding the latter, Buchanan described himself as a “social economist” who identified with “labour-power” in contrast to those “cosmopolitan” political economists who were tied to “money-power” and who focused on “the creation of wealth, without any regard for its distribution.” He emphasized that this approach

79. Buchanan 1864, 88. 80. For his correspondence with Carey, see Helleiner 2019a, 536n4. 81. Carey 1859, 335–36. 82. List [1841b] 1909, 231. 83. Buchanan 1864, 30, 40–41, 74, 128. 84. Dominion of Canada 1876, 80, 136–37; 1878, 158, 327, 1014, 1052, 1056; Goodwin 1961, 47, 52, 57n46, 69, 200; Hurlbert 1870; Maclean 1868, 56–58; Neill 1991, 48, 83. 85. Helleiner 2019a.



to political economy was a “patriotic” one that was centrally concerned with the “employment of our own people.” He also cautioned Canadians that countries embracing free trade, such as Mexico, had “fallen under the trader’s power” and that Britain’s poor were being squeezed under the regime of free trade, resulting in “pictures of vice, crime, and degradation, not to be exceeded in the world.”86 Buchanan’s social style of neomercantilism earned him a reputation in Cana­ dian working-class circles as a friend of labor, a reputation reinforced by his sup­ port for labor reforms such as shorter working hours.87 Buchanan’s concern for distributional issues, like Carey’s, stemmed from a conservative rather than a radical political position, one that followed Carey in emphasizing the “harmony of interests” between workers, industrialists, and farmers.88 Indeed, Bryan Palmer argues that Buchanan’s economic ideas need to be seen in the context of his desire to “siphon off the discontent capable of mounting a revolutionary working-class upheaval.” The risk of domestic discontent had concerned him since he fought against a significant rebellion in 1837 in Upper Canada. From Buchanan’s per­ spective, protectionism could help prevent future domestic political upheavals by providing employment and binding labor and capital together through what Palmer calls a “national producer” ideology.89 This ideology may have found par­ ticular resonance in his home city of Hamilton, where, as Robert Kristofferson notes, artisan-led “craft capitalism” remained prominent into the 1870s, encour­ aging a more optimistic view of industrial capitalism among workers as well as opportunities for cross-class alliances.90 Buchanan also approved of Carey’s idea that raw material exporting coun­ tries might need to introduce currencies that were not convertible into gold or other precious metals. Indeed, he had promoted this idea as early as the finan­ cial crisis of 1837, when he played a central role (as president of the Toronto Board of Trade) in convincing local authorities to allow banks to suspend con­ vertibility.91 In the late 1870s, he reiterated his call for an inconvertible currency, arguing that it would complement the National Policy’s tariff by discouraging imports and enabling public authorities to expand the money supply to meet domestic employment and development goals without increasing external debt or facing an externally imposed financial constraint. Buchanan’s interest in

86. 87. 88. 89. 90. 91.

Quotes from Buchanan 1864, 445, 33, 78, 79. Palmer 1979, 102; Henley 1989, 110, 113. Buchanan 1864, 79. Quotes from Palmer 1979, 102, 98. Quote from title of Kristofferson 2007. Shortt 1986, 554; Neill 1991; Buchanan 1864, 498.



promoting development without relying on foreign borrowing was also apparent in his advocacy of the creation of agricultural banks across the country that could help mobilize capital for farmers and public works. Drawing inspiration from the suspension of the convertibility of the US currency during 1861–79 (which Carey had strongly supported), Buchanan suggested that his proposed currency be called “beaverbacks.”92 Buchanan’s ideas on this topic attracted the attention of US greenbackers, highlighting how the flow of ideas went in more than one direction.93 In contrast to Carey, however, Buchanan did not favor free banking but rather a government-issued inconvertible currency that could be managed actively to serve public goals. Buchanan also differed from the US thinker in some other ways. Like Wakayama, Buchanan argued against a universal science of political economy, contending that the subject was always context-specific.94 Other conservative Canadian protectionists at this time echoed this line, invoking the idea from Laing that “every country has a political economy of its own.”95 In terms of policy preferences, Buchanan also endorsed an agreement that Carey deeply opposed: the Canada-US Reciprocity Treaty of 1854–66, which provided freer trade between Canadian colonies and the United States in primary products. Despite his protectionist views, Buchanan argued that this specific treaty was beneficial because it enabled Canadian farmers to boost exports to the US market at a time when they were suddenly facing new competition in the British market after the abolition of the Corn Laws. Without the treaty, he argued, support for annexation by the United States might have grown in Canada. He also praised how the treaty enabled the Saint Lawrence River to act as “the great highway of America.”96 At the same time, Buchanan emphasized that he only endorsed freer trade with the United States as a “temporary relief ” measure until the Canadian domestic market could be built up.97 When it became clear that the Reciprocity Treaty would end in 1866, he advocated for the creation of the 1867 Canadian Confederation, which created a wider domestic market for all Canadian pro­ ducers. Even before this moment, he trumpeted the following motto: “A Home

92. Quoted in Helleiner 2006, 34; see also 32–35; Buchanan 1864, 15; Palmer 1979, 115; Shortt 1986, 708–9. 93. Palmer 1979, 113–14. 94. Buchanan 1864, 145–46, 229–30. 95. Dominion of Canada 1878, 327. See chapter 5 for Laing’s quote. 96. Buchanan 1864, 20. For Carey’s opposition to the treaty, see Meardon 2011; Morrison 1986, 71–76. 97. Buchanan 1864, 20–21.



Market for the Farmer, Our Best Reciprocity.”98 In this sense, his views were less different from those of Carey than they appeared. In the early 1850s, Carey had acknowledged that Canadian producers would benefit economically from selling to the closer US market rather than to distant Britain, but he argued that this could only be a temporary solution to Canada’s economic troubles at the time. As Stephen Meardon puts it, he argued that “neither in Canada nor in the United States was reciprocity a substitute for the home market that could be secured by protection.”99 During the time of the Reciprocity Treaty, Buchanan put forward another proposal, which contrasted with Carey’s views more sharply. He proposed that the treaty with the United States be broadened to a common market—what he called an “American Zollverein”—in order to “get for Canada a greatly extended market” for its manufacturing sector. This arrangement would, he argued, encourage “decentralizing the manufacturers of the Empire” as British industri­ alists established operations in Canada to sell to the US market.100 Buchanan’s critique of Britain’s centralization of world manufacturing was very Carey-like, but Buchanan used it to defend a policy—freer trade within North America— that Carey opposed. Underlying their difference was a deeper disagreement. Like other English Canadian conservative nationalists at the time, Buchanan was com­ mitted to the British Empire, a sentiment that Carey could never share. Indeed, when opposing reciprocity, Carey had worried about whether it would provide an opening for British influence in the United States.101 It is worth noting that Buchanan’s proposal also contrasted sharply with the goals of the British tariff reformers examined in chapter 3 who saw the Brit­ ish dominions and colonies as markets for their manufactured exports, rather than a place to which British industry could relocate. Buchanan anticipated British opposition to his ideas, but argued that the British government should “look without jealousy” on his proposal because it would “aggrandize the Brit­ ish Empire, and be of incalculable benefit to the working classes in England, Ireland, and Scotland.” He argued in 1863 that the latter could move to Can­ ada and produce manufactured goods that could be sold to the US market on terms that could not be achieved from Britain itself. To reinforce his case, he even invoked a Carey-like critique of the British Empire in 1863: “To preserve the Empire, Britain has to yield the selfish principles of centralizing, which has

98. 99. 100. 101.

Quoted in Helleiner 2019a, 530; see also Buchanan 1864, 42. Meardon 2011, 322. Quotes from Buchanan 1864, 45, 513. Morrison 1986, 71–76.



ruined Ireland and India, so far as such countries could be ruined, and costs us the old American colonies.”102 By the time he was lobbying for the National Policy of 1879, Buchanan ideas about freer trade with the United States were behind him. He focused on the need for higher tariffs and financial reform to build up Canada’s wealth and power. His advocacy played an important role in mobilizing support for the new protec­ tionist policies of the Macdonald government.103 But Macdonald himself refused to endorse Buchanan’s proposals for an inconvertible currency and a system of agricultural banks, seeing them as too radical a reform (just as many Republicans did not share Carey’s enthusiasm for the greenback movement). The result was that Buchanan’s neomercantilist reform program was only partially introduced.

Syme’s Australian Neomercantilism Australia was another agricultural exporting zone where Carey’s work attracted interest in protectionist circles. Before Australian independence in 1901, neo­ mercantilist thought found its strongest support in the colony of Victoria, which became well known for embracing protectionist policies, first in 1866 and then with rising tariffs until 1880.104 As in Canada, British authorities had increas­ ingly given the Australian colonies control over trade policy after the creation of responsible government in the 1850s.105 List’s work was cited by some protection­ ists in Victoria.106 But the most prominent and consistent protectionist thinker in Victoria in this period, David Syme, drew more on Carey (although to a much lesser extent than Buchanan did). Scottish-born like Buchanan, Syme initially studied theology before traveling to Germany and Austria in the late 1840s, then to the California gold fields, and finally joining his brother in Melbourne in 1852. He quickly became well known in Victoria for his leadership of The Age, a prominent newspaper that campaigned for various causes, such as land reform and electoral and constitutional change. Dubbed the “father of protection” by his biographer, Syme began to back higher tariffs in the 1860s but met strong opposition from the import-focused merchant

102. 103. 104. 105. 106.

Quotes from Buchanan 1864, 19. Helleiner 2019a. Macintyre 1991, 91–95, 102–7. Patterson 1968; Zebel 1940, 163n11. See, for example, Macintyre 1991, 91; Palen 2016, 221; Henderson 1983b, 214.



community.107 Dissatisfied with the limited nature of a tariff introduced in 1866, he pressed for stronger protectionism, outlining his views most clearly in an 1873 article titled “Restrictions on Trade from a Colonial Point of View” and an 1876 book, Outlines of an Industrial Science.108 Syme’s arguments remained influential in the Victorian colony in the years leading up to the creation of the Federation of Australia in 1901.109 They also attracted attention abroad, making Syme one of the few Australian political econ­ omists to gain an international profile in the nineteenth century.110 His 1876 book was published by a British publisher, translated into German, and reprinted in the United States by the publishing house of Henry Baird Carey (Henry Carey’s nephew). In the United States, it was praised and cited by leading political fig­ ures in Carey’s close circle, such as William Kelley.111 Syme’s 1873 article also appeared in the prominent British journal Fortnightly Review, after which, Peter Groenewegen and Bruce McFarlane note, it was reprinted in US publications and even “circulated in large numbers as a pamphlet in the United States.”112 Syme’s methodology was strongly influenced by Thomas Cliffe Leslie, an Irish political economist who had begun in the late 1860s to critique British political economy for its focus on deductive logic. Given that Cliffe Leslie did not develop arguments for protectionism, however, Syme’s ideas on that topic drew on other thinkers. Stuart Macintyre notes that Syme read List, but the German thinker seems to have left little impression, given that he is cited neither in Syme’s 1873 article nor in his 1876 book.113 Syme did, however, cite Laing’s work as well as Mill’s argument that infant-industry protectionism could help address the fact that “the superiority of one country over another in a branch of production often arises only from having begun it sooner.”114 But Syme was much more concerned about the ways that dominant British firms maintained their monopoly position in global markets through their large capital and manipulation of markets: The manner in which English capital is used to maintain England’s manufacturing supremacy is well understood abroad. In any quarter of the globe where a competitor shows himself who is likely to interfere

107. 108. 109. 110. 111. 112. 113. 114.

Pratt 1908, chap. 6; Macintyre 1991. Syme 1873, 1876. Chomley 1904, 127–30. Groenewegen and McFarlane 1990, 30. Kelley 1882, 293, 297; on the German translation, see Macintyre 1991. Groenewegen and McFarlane 1990, 33. Macintyre 1991. Mill quoted in Syme 1876, 186; for Laing, see 148n2.



with her monopoly, immediately the capital of her manufacturers is massed in that particular quarter, and goods are exported in larger quantities, and sold at such prices, that outside competition is effectively crushed out. English manufacturers have been known to export goods to a distant market, and sell them under cost price for years, with a view to getting the market into their own hands again.115 To support this argument, Syme drew on Carey’s work, which cited an 1854 British government report admitting this practice.116 Syme also cited examples from Australia, where local firms had been driven out of business by British companies with this method as well as through a mechanism not mentioned by Carey: the exportation of fraudulent imitations of local goods. In addition, he invoked India’s experience in support of his view that “England’s commercial policy is, and always has been, the extension of this manufacturing monopoly.”117 Syme argued that free trade “means monopoly for English manufacturers,” whereas the goal of tariffs was “to put down monopoly, by extending the sphere of competition.” He invoked the following metaphor: “It would be folly to expect young trees to thrive side by side with old ones, if the latter cover the ground with their roots, and extract all the nourishment from the soil.” He argued that protectionism would not just encourage local manufacturing firms but also lead to “fresh capital and labor flowing in from abroad.” Like other protectionists, he criticized free traders for focusing exclusively on individual interests without rec­ ognizing the need to “subordinate the interests of the individual to those of the community if the wellbeing of the latter requires it.” Even if tariffs might “entail a little temporary self-sacrifice on the part of the public” in the form of higher prices, he argued, they would generate a “public benefit” over the long term.118 What was the long-term public benefit that would flow from cultivating local industries? To begin with, he cited Hamilton’s 1791 argument that consumers would benefit from lower prices over time as domestic competition increased. He also argued that lower prices would result from the fact that goods were made locally from abundant raw materials and without paying transport-related costs. He further highlighted how local production would eliminate other costs associated with dependence on imports, such as the time involved waiting for products to be sent, the risk that wrong or fraudulent products were delivered,

115. 116. 117. 118.

Syme 1876, 68–69; see also 180–81. Syme 1876, 69–70. Quote from Syme 1876, 70; see also 75, 88. Quotes from Syme 1873, 191, 184; 1876, 100, 186–87.



price manipulation by international merchants, and the expenses associated with ordering extra parts. Like Carey, he also noted that Adam Smith had highlighted the benefits of focusing on domestic markets. More generally, Syme argued that “a nice-balanced industrial community” would help to create “a self-contained, selfsupporting, independent nation” and that Australia should try to “rival” rather than “fall behind” European countries.119 Like Carey, Syme also placed particular emphasis on the social benefits of pro­ tectionism for labor. Victoria had experienced a huge influx of immigrants during the gold-mining boom of the 1850s, many of whom struggled to find employment and avoid destitution when the boom subsided.120 Syme showed strong concern for these workers, including those who were forced to accept work at very low wages. The latter situation he considered not only unjust but also unhelpful for ameliorating poverty and building a more productive labor force in the colony. In addition to supporting policies to improve working conditions, Syme saw the cultivation of local manufacturing—and its associated employment—as a way to address these social problems: “For years past the great difficulty has been to provide employment for the rising generation. The question of tariffs there has been eminently a social one.”121 He highlighted how manufacturing would pro­ vide “in-door” employment that was more stable than “out-door” work and how a more diverse economy would expand employment opportunities, including for “the young, the old, the weak and infirm of both sexes.” Noting that economies focused on commodity exporting would not provide jobs for all types of people, he also challenged free traders with a creative argument: “If nature ever intended, as modern theorists would have us believe, that the principles of the division of labor should be carried to the extent of one country growing the produce for another to manufacture, we should expect to see population arranged on a some­ what different plan from what it is at present. Unfortunately for the theorists, we find all classes of population pretty equally represented in every country.”122 More generally, Syme argued that “increased employment of labor and capi­ tal” would benefit the public as a whole. Higher employment would generate “a whole army of taxpayers” that would benefit the public treasury and lower taxes for others. In making these arguments, Syme challenged those who argued that protectionism would divert capital and labor to less productive sectors. This line

119. 187. 120. 121. 122.

Quotes from Pratt 1908, 124, 120; for the other points, see 126; Syme 1873; 1876, 81, 88–89, Patterson 1968, 9, 16; Pratt 1908, 116. Syme 1873, 190; see also 45; Pratt 1908, 127. Quotes from Syme 1873, 188–89.



of argument, he noted, assumed that “the whole capital and labor of the country were already fully and remuneratively employed (a supposition never yet realized in any country).”123

Gabrahiwot’s Use of Carey in Ethiopia A final example of an influential neomercantilist thinker who drew more on Carey’s ideas than on List’s was Ethiopia’s Gabrahiwot Baykadagn.124 In the early twentieth century, a number of foreign-educated Ethiopian intellectuals became interested in state-led economic modernization as a way to boost their country’s wealth and preserve its political independence in a context where Ethiopia was surrounded by European powers and their colonies. Included among these intel­ lectuals was Haile Selassie, who became the crown prince in 1916 and Ethiopia’s emperor in 1930.125 Gabrahiwot was the key figure within this group to develop the political economy case for Ethiopian neomercantilism. Born in 1886 near Adwa in the north of the country, Gabrahiwot attended a Swedish mission school in Eritrea and then secretly stowed away on a German ship that took him to Europe, where he was adopted by an Austrian family. He subsequently went to Berlin to study medicine before returning to Ethiopia in the early twentieth century, when he became private secretary and translator to Emperor Menelik (who ruled the country from 1889 to 1913). After leaving the country briefly for Sudan in 1909–11 because of political difficulties, he returned as an adviser to the government, including as inspector of the country’s only railway in 1916 and as customs collector in 1917 in Dire Dawa. Although he died of the flu two years later in the global pandemic of that time, his ideas continued to have influence in Ethiopia, particularly after Selassie assumed the throne in 1930.126 Zinabu Rekiso notes that Gabrahiwot was “one of the first African intellectu­ als to advocate for a coherent and comprehensive program of industrialization and to analyze the nature and impacts of economic integration of late-develop­ ing nations with more advanced ones.”127 Gabrahiwot published two books in

123. Quotes from Syme 1873, 192, 187, 184. 124. Other spellings exist in the literature. I have followed the lead of the translator of his key book: Gabrahiwot [1924] 1995. 125. Naoko 1998, 51–52. 126. Zewde 2002; Salvadore 2007, 562; Rekiso 2019. 127. Rekiso 2019, 2.



Amharic that outlined neomercantilist ideas. Atse Menilik ena Ethiopia (Emperor Menelik and Ethiopia, 1912) compared Ethiopia unfavorably to its colonized neighbors, arguing that Ethiopia needed to modernize its economy to maintain its political independence. The work was critical of the emperor for not following Japan’s example of acquiring power by learning from the West.128 His more substantial and better-known work was published posthumously in 1924 with the financial support of Selassie under the title Mengistina YeHizb Ast­ edader (Government and public administration). This work was a lengthy trea­ tise of political economy outlining a detailed rationale for a national economicdevelopment strategy that would cultivate local manufacturing with strategic protectionism in order to improve the living conditions of the people and boost Ethiopia’s “power and wealth” so as to earn “great respect among the nations of the world.”129 In the work, Gabrahiwot continued to praise Japan, but he did not invoke any Japanese thinkers or even specific policies. Instead, the main thinker cited in the work was Carey.130 Indeed, Rekiso notes that “many of the passages” in the book “appear to be shorter and contextualized versions of passages in Carey.”131 I have been unable to discover where or when Gabrahiwot became familiar with Carey’s work, but it may well have been in Germany where, as discussed previously, Carey’s thought was widely known. It is also important to note that Gabrahiwot’s text suggests that he was quite familiar with other theoretical tradi­ tions in political economy. As Rekiso puts it, “His choice of the work of Carey as the foundation of his own work was not due to ignorance of alternative intel­ lectual traditions but was intentional and deliberate.”132 The work contains no reference to List’s ideas. What aspects of Carey’s work did Gabrahiwot find attractive? To begin with, he repeated Carey’s argument that humans became wealthy by local association that allowed a division of labor and exchange as well as by harnessing nature through the accumulation of knowledge, skill, and technology. He highlighted how Europe and the United States had become wealthy in these ways and noted

128. Zewde 2002, 51, 110. For the broader admiration of Japan among young Ethiopian reform­ ers at this time, see Naoko 1998, 51–52. 129. Gabrahiwot [1924] 1995, 136, 154. 130. Indeed, because the manuscript was not fully completed at the time of his death, it con­ tained references to only two thinkers: Carey and “Estier-Somlo” (who was probably the Austrian­ German-Hungarian scholar Fritz Stier-Somlo) (Rekiso 2019). The manuscript was pulled together by his friend Paulos Menameno. 131. Rekiso 2019, 235. 132. Rekiso 2019, 237.



that their wealth had given these parts of the world enormous power over others: “The whole world has now bowed to them. Except for Japan, Turkey, China, Siam and Ethiopia, all of the world has become their colonies. Of these countries which have maintained their independence, except for Japan, the independence of the rest is only in name.”133 Gabrahiwot was also drawn to Carey’s critique of free trade. He noted that Ethiopia’s low import tariffs had enabled foreign products to wipe out local arti­ san manufacturing in sectors such as clothing, furniture, and utensils, thereby undermining the self-sufficiency of the country and leaving people unemployed and “subservient to foreigners.” He highlighted how difficult it was for Ethio­ pian manufacturers to compete with cheap European and US imports made with advanced machinery, and worried that the building of roads and railways was making this situation worse: “In countries where there is no education, the build­ ing of railways and roads will hasten the poverty of the people rather than being useful.”134 Following Carey, Gabrahiwot also argued that countries that exported unpro­ cessed commodities in exchange for manufactured goods lost out in the trade relationship, suffering from trade deficits and the loss of specie. Like Xenopol and Manoilescu, he identified a key cause of this unequal exchange in the fact that the agricultural exporter was “compelled to surrender many days of his labor power for something made in a very short period of time.” Although trade among those with equal knowledge and technology was beneficial, trade between “people without knowledge” and those who were “technologically advanced” was not: “The harm befalling those without knowledge is tremendous.”135 Like Carey, he also lamented the costs of transportation involved in selling to and buying from distant markets. These costs, he argued, lowered the prices paid to farmers for their crops and raised the prices charged for manufacturing products. He further warned that Ethiopian soils would become exhausted from agricultural exporting and that farmers had become dependent on uncertain and volatile foreign markets, which left them living “as the servant of luck” and without a “well secured life.”136 Gabrahiwot also followed Carey in arguing that international trade concen­ trated wealth in a small group of wealthy merchants at the expense of local pro­ ducers and consumers. Although he applauded merchants who exchanged locally

133. 134. 135. 136.

Gabrahiwot [1924] 1995, 114–15. Quotes from Gabrahiwot [1924] 1995, 116, 111. Quotes from Gabrahiwot [1924] 1995, 90, 104; see also 154, 157. Quotes from Gabrahiwot [1924] 1995, 133.



made goods within the country, he condemned those involved in international trade. Some of the latter were foreign traders whom he accused of “living in good buildings and better houses without ever undertaking anything worthwhile.” He was equally critical of local merchants involved in foreign trade, including for their lack of patriotism in taking “their silver and gold to another country where they can live better.” More generally, he warned about the political consequences of rising inequality: “The poor without food or clothing will have no reason to love their country of birth. They will not care whether their government is strong or if it perishes. . . . In a country where the gap in the living conditions of the poor workers and the rich is very wide, it is a demonstration of the fact that the government is on the verge of collapse.”137 All of these problems would be reversed, Gabrahiwot argued, with a differ­ ent trade policy. If manufacturing could be fostered locally behind protective tariffs, farmers could buy directly from domestic industry as well as sell to it in ways that strengthened both parties while cutting out the merchant margins. He also highlighted how this local economic interdependence would bring broader benefits of association, including a reduced role of soldiers in Ethio­ pian society: “Since the cooperation between the people will enable them to defend themselves, the officers and the soldiers will become the servants of the people rather than their masters. Recognizing that they will not be attacked, the peoples will not aspire to become soldiers and officers of the people.” He even reproduced Carey’s diagram in which a poor country’s economy resembled an inverted triangle with “commerce and military” at the top, dominating manu­ facturing production in the middle and agriculture at the bottom. The goal, he argued, was to construct an economy with the opposite structure, founded on a large base of healthy agriculture and with commerce and the military playing only a tiny role at the top.138 For all these reasons, Gabrahiwot argued that Ethiopia needed to impose high tariffs on cloth and yarn imports in order to encourage modern factories to spring up to produce these goods locally. He hoped these factories could be supplied by local cotton farms; indeed, he suggested that the government give land for cotton production to manufacturers as well as special tax and regulatory treatment so that the cotton would be used in the new factories rather than for export. Although he focused on these sectors, Gabrahiwot seemed to anticipate broader initiatives to boost self-sufficiency: “Everything can be grown in our

137. Quotes from Gabrahiwot [1924] 1995, 163–64; for his support of traders conducting domes­ tic trade, see 173. 138. Quotes from Gabrahiwot [1924] 1995, 124, 138–39.



country. All things can be made.” At the same time, he did not endorse autarky. In addition to supporting some kinds of imports, such as machinery that could help build up local industry, Gabrahiwot looked forward to a future in which Ethiopia increased “the value added” on its exports.139 In addition to these measures, Gabrahiwot outlined a somewhat more activist domestic role for the state than Carey laid out in his 1858–59 book. Gabrahi­ wot urged the government to strengthen education because of the importance of knowledge for building wealth and power. He also suggested that it recruit skilled workers to assist in textile and cotton-farm production and to pursue infrastruc­ ture improvements to integrate the nation economically in a more effective man­ ner. Although the building of roads and railways in a country with free trade and poor education contributed to poverty, it would bring great advantages, he argued, in a country with strong education and strategic tariffs. He also called for a more equitable distribution of land as well as for peasants to be able to own and sell their land.140 Gabrahiwot also highlighted the importance of banking institutions in mobi­ lizing domestic capital and making sure that money would “not be idle.” In addi­ tion, he shared Carey’s dislike of bank monopolies. In the Ethiopian context, his criticism was directed at the foreign-owned Bank of Abyssinia, which had received a fifty-year monopoly in 1905 from Menelik. Gabrahiwot’s critique of its monopoly power went beyond Carey’s arguments by highlighting the dangers of the bank’s foreign ownership. He noted that the bank did most of its lending to foreigners whose profits, in turn, were “repatriated to their respective coun­ tries rather than being invested in ventures beneficial to the Ethiopian people.” Because the bank was foreign run, Gabrahiwot noted, “the Ethiopian people do not believe in the bank” and thus did not deposit with it.141 There was one other way in which Gabrahiwot’s ideas were different from Carey’s. Whereas Carey insisted on political decentralization, Gabrahiwot emphasized the need for strong centralized power. He was concerned about banditry and civil war, both of which had plagued Ethiopian history and undermined the country’s economic progress. Indeed, he argued that “banditry and war” posed much greater “impediment to progress” than issues relating to the soil or climate. He particularly devoted attention to the economic costs of

139. Quotes from Gabrahiwot [1924] 1995, 154, 135. 140. Gabrahiwot [1924] 1995, 54, 102–3, 111, 136, 140. 141. Quotes from Gabrahiwot [1924] 1995, 172, 196; see also 173, 178. Following up on criti­ cisms of the Bank of Abyssinia, Selassie bought it out to create the Bank of Ethiopia in 1931 (Schaefer 1992, 386).



civil war, including not just the direct death and destruction they caused but also people’s loss of hope in the security of the results of their work.142 At the same time as he urged centralized power for these reasons, Gabrahiwot insisted on a meritocratic civil service and a constitutional government.143 It is surprising that so much less attention has been paid to the global influence of Carey’s ideas than of List’s. Carey’s ideas had a higher profile in many parts of the world in the late nineteenth and early twentieth centuries, including in some of the most powerful rising states of that era. The global nature of Carey’s influence reinforces this book’s theme that the international circulation of neo­ mercantilist ideas involved much more than just List’s thought. Like List’s ideas, Carey’s were also often adapted in creative ways as they circulated around the world, underscoring the diversity of the content of neomercantilist thought in the pre-1939 period. The places examined in this chapter were not the only ones where Carey’s ideas had influence in the pre-1939 period. Carey’s ideas were invoked in many other regions, including Latin America and Eastern Europe.144 They were also cited by some of the List-inspired thinkers examined in chapters 3 and 4, such as López in Argentina, Xenopol and Manoilescu in Romania, the British tariff reformers, and Ranade in colonial India.145 List was clearly a more important intellectual reference than Carey for many of these thinkers. For example, Man­ oilescu cited Carey only occasionally, commenting in a footnote: “We admit we were disappointed in Carey’s work. It contains no new arguments.”146 Even in his case, however, it is worth asking whether Carey left some intellectual legacy. For example, seventy years before Manoilescu argued that rich countries would benefit from supporting protectionism in poorer countries, Carey made the case that Britain should have encouraged protectionism in places such as Ireland, India, Portugal, Turkey, and Jamaica to allow them to boost industry: “Producing

142. Quotes from Gabrahiwot [1924] 1995, 71; see also 74–80. 143. Rekiso 2019; Zewde 2002, 118. 144. For other interest in Carey in Eastern Europe, see the Serbian case noted in Josifidis 2002, 159, 162, 164, 167, 169n14. See also cases in Brazil (Boianovsky 2013, 666, 668) and Argentina (Popescu 1997, 248). 145. For López, see Plotkin and Caravaca 2009, 91. For Xenopol, see Love 1996, 72; Psalidopou­ los and Theocarakis 2011, 171. For Manoilescu, see various citations throughout Manoilescu 1931. For the British, see Koot 1987, 35; Ashley 1904, 74. For Ranade, see Ranade 1906, 19–20. 146. Manoilescu 1931, 249n1. Manoilescu seems not to have spent much time trying to under­ stand Carey’s work:“The basis of his argument is the question of transport.”



much, they would have much to sell—becoming better customers to the people of England, from year to year.”147 Ranade is a particularly interesting case to examine when considering the relative importance of the influence of List and Carey. Although Ranade praised List for giving “the fullest expression” to the rebellion against liberal orthodoxy, many of his ideas were closer to Carey’s than List’s, particularly his arguments about the economic costs of British colonial rule.148 As noted in the last chapter, Carey critiqued Britain’s role in India—particularly its policies of free trade—for undermining local manufacturing and commerce, eroding dynamic and diversi­ fied village economies, exhausting local soils, and leaving Indians vulnerable to the power of distant traders, monopolies, and centralized power. As noted in the last chapter, as early as 1847, Carey was also critiquing British rule in India for extracting wealth from the colony over the previous half century, including “for the payment of interest on loans made to their masters by English subjects, and dividends on stock held by absentee landlords.”149 As Ranade would also later do, Carey blamed British railroad construction for reinforcing the negative eco­ nomic impacts of British rule: “Railroads are now being made for, but not by, the people of India. . . . The object for the attainment of which they are being made, is the further promotion of the export of the raw produce of the soil, and the further extension of the centralizing power of trade; to be followed by increased exhaus­ tion of the land, declining power of association among its occupants, and more rapid decay of commerce. The little that yet remains of Indian manufactures must speedily disappear.”150 Given that Ranade highlighted his familiarity with Carey’s work, it is possible that some of the Indian thinker’s critiques of British colonial rules may have been inspired by Carey (or even by others in Carey’s network, such as Greeley). But there were also some important differences between them. For example, Carey’s interest in developing a universal approach to political economy did not sit well with Ranade’s call for a distinctive Indian political economy. Carey’s emphasis on domestic class divisions when critiquing free trade was also not echoed in Ranade’s writings. As noted in the previous chapter, Carey also went further than Ranade in his calls for Indians to reject British colonial rule entirely and pursue industrial protectionism in an independent Indian state.

147. 148. 149. 150.

Carey 1859, 245; see also 252. Quote from Ranade 1906, 20. See chapter 4 of this book for Ranade’s views. Carey [1847] 1889, 425; see also 407. Carey 1858a, 368.



This chapter has focused on Carey’s influence, but it is important to ask one final question: Why did the influence of Carey’s ideas dwindle in the early twentieth century, especially in the interwar years? The weaknesses in his work no doubt contributed to this outcome. For example, the loosely structured and sometimes difficult-to-follow nature of Carey’s analysis did not help, particularly at a time when the professionalization of economics led to rising expectations for scholarly rigor.151 It is no accident that the best known neomercantilist work of the interwar years was Manoilescu’s 1929 book, which explicitly sought to emu­ late the more deductive style of logic of the mainstream economics of his time. Fans of Manoilescu—including those sympathetic to List’s arguments—appreci­ ated how he appeared to have established the case for protectionism on a more scientific foundation than earlier thinkers had done.152 Even keen supporters of Carey in earlier times acknowledged the weaknesses in his work. The author of the United States’ 1861 tariff, Justin Morrill, noted that Carey’s ideas were less popular than they could be because of his “diffuse” argu­ mentation.153 In Germany, Kardorff admitted to his readers that he had initially been turned off by Carey’s work because it sprawled over three volumes.154 As noted earlier in this chapter, Wakayama also chose not to translate Carey’s work for a Japanese audience because of its length. In a memoir of Carey one year after his death, his close friend William Elder lamented that no one had distilled Carey’s insights in a more accessible form “for common use” in the way that Jean-Baptiste Say had done for Adam Smith’s Wealth of Nations. McKean’s version of Carey’s Principles of Social Sciences had reduced its length, but Elder noted dip­ lomatically that the condensed version was still marked by Carey’s “method and manner” because it was done under Carey’s “supervision” and was “not so much an extract of the essence as a contraction of the text.”155 As we have seen, these limitations of Carey’s work did not prevent his ideas from attracting many supporters across the world. But Elder’s comments do raise the question of why one of these supporters did not try to improve on Carey’s work by summarizing its key points in a newly written text with improved argumentation and clearer presentation. Even harsh critics of Carey like Joseph Schumpeter asked this question: “Plenty of people admired Carey’s diagnosis of American reality and shared his views on economic policy and

151. 152. 153. 154. 155.

Hudson 2010, 182. See Boianovsky 2013, 672 for this view among Brazilian supporters of Manoilescu. Quoted in Irwin 2017, 717n51. Kardorff 1875, 6. Quotes from Elder [1880] 2006, 18.



his enthusiasms. A prize, in terms of success and reputation, awaited the man who could have weeded the errors from his volumes and put his system into a defensible shape.  .  .  .  Why did nobody try?” The answer to this question would help explain why Carey’s ideas did not have a more lasting influence into the twentieth century. I have no specific insights, but here is the answer that Schumpeter offered: “The brains that could have done the job were pro­ ducing boots.”156

156. Schumpeter 1954, 518.



In the early twenty-first century, neomercantilist ideology is often associated strongly with the East Asian region. Scholars highlight the strength of “develop­ mental states” and “developmental mindsets” in countries such as Japan, South Korea, Taiwan, and China.1 The historical roots of East Asian neomercantilism are often located outside the region. The most common story is one in which Western neomercantilist ideas—particularly List’s—were imported to Japan after the Meiji Restoration and then exported from there to other East Asian countries who sought to emulate Japan’s developmental success after 1945, culminating with China’s post-1978 embrace of neomercantilist policies.2 In previous chap­ ters, I have provided some evidence for this story by showing how some Japanese thinkers in the Meiji era drew on the ideas of List, Schmoller, and Carey (while also emphasizing their agency in adapting Western thought). In this section of the book, however, I turn the tables to highlight some important limitations of this Western-centric diffusion narrative.

1. Quotes from the titles of Haggard 2018; Thurbon 2016. 2. As noted in the last chapter, the argument about List’s influence in Japan was popularized above all by Fallows (1993, 1995). For some recent examples of this common line of argument for Japan and/or the broader East Asian region, see Das 2017, 61; Gerybadze 2019, 227–29; Pettis 2013, 30–31; Selwyn 2014, 39. Austin (2009) suggests a similar line of argument focused on the influence of Hamilton’s ideas in Japan and East Asia, but I did not find supporting evidence convincing. 201



Specifically, the narrative overlooks the local and regional origins of East Asian neomercantilist thought in the pre-1939 era. Many East Asian pioneers of neomercantilist thought were more inspired by local and regional mercantil­ ist traditions than by engagement with the ideas of List, List-inspired thinkers, or other Western neomercantilists such as Carey. As I show in this chapter, this was the case for three of the most prominent Japanese neomercantilists in the early Meiji years: Ōkubo Toshimichi, Fukuzawa Yukichi, and Maeda Masana. The same was true for some influential Chinese and Korean thinkers described in the next two chapters who developed important neomercantilist ideas in those countries during the nineteenth and early twentieth centuries. As we shall see, even some East Asian thinkers who drew more extensively on Western neomer­ cantilist ideas—including Matsukata Masayoshi, discussed in chapter 3—were strongly influenced by local and regional mercantilist intellectual traditions. In short, East Asian neomercantilist thought is not merely derivative of Western ideas; it also has deep and strong endogenous roots in the region.

Japanese and Chinese Mercantilist Traditions To understand Japanese neomercantilist ideology in the Meiji period, it is impor­ tant to recognize that much of it built on mercantilist thought from Tokugawa Japan (1603–1867) as well as older Chinese mercantilist ideas.3 Because these intellectual traditions are less well known than their European mercantilist coun­ terparts, they require a brief discussion. Mercantilist ideas emerged in Tokugawa Japan in a political environment where the shogunate shared authority with many local lords (daimyō) who gov­ erned close to 250 separate jurisdictions, or what are often referred to as domains (han). Under what Mark Ravina calls Tokugawa Japan’s “compound state,” the shogunate governed the external affairs of Japan as a whole, while the daimyō retained enormous autonomy within their domains in many other areas, includ­ ing economic policy (even issuing their own paper money).4 Because of this autonomy of the domains, Mark Metzler suggests that Tokugawa Japan “can in fact be thought of as a small interstate system.”5 In the context of this system, a number of Japanese thinkers began in the early eighteenth century to urge local daimyō to enhance the wealth and power of their domains vis-à-vis others

3. For some authors who emphasize these roots of Japanese neomercantilism (on whose work I have drawn extensively), see, for example, Metzler and Smits 2010, 5 (and other authors within their volume); Metzler 2006; Sagers 2006; Roberts 1998. 4. Quote from Ravina 2017, 237. 5. Quote from Metzler 2006, 108.



through activist policies designed to boost exports of agricultural and manufac­ tured goods to central markets in Osaka and Edo while discouraging imports. These mercantilist policies included the creation of government-owned firms and monopolies to manage production and external trade, the importation of artisans, and/or other kinds of financial and nonfinancial support for local arti­ sans, farmers, and merchants. The thinkers wrapped their advice in an appeal to kokueki, a word that translates as “national profit” or “prosperity of the country.”6 The mercantilist policies of various daimyō also responded to the fact that Japan was rapidly becoming one of the most commercialized and urbanized societies in the world during the Tokugawa period.7 As competitive pressures grew in markets across the country, local merchants sought out the help of local authorities to boost their competitive position vis-à-vis their counterparts in other domains or to protect themselves against competition from the latter. Indeed, merchants were the first to promote kokueki mercantilist ideology in the 1720s; they saw it as a way of appealing for support for their local daimyō.8 Local authorities themselves were also increasingly aware that their domains needed to be competitive in the new economic environment or risk marginalization. Indeed, leading kokueki thinkers such as Kaiho Seiryō warned of this. As he put it in 1813, “This is an age when one must not let his guard down toward other domains and must carefully cultivate his own country. One must be on guard not from his neighbor’s violent attack, but rather from loss through trade. . . . If a domain does not innovate to increase its land’s produce relative to its neighbors, the neighbor will grow rich and the domain will grow poor. And if the neighbor becomes prosperous and the domain is impoverished, gold and silver will flow to the prosperous land.”9 Local authorities also derived direct fiscal benefits from mercantilist policies that drew specie to their coffers. The specie was particularly useful in a context where they faced large fiscal burdens, particularly those arising from the require­ ment that they maintain costly residences in the capital city of Edo.10 Indeed, these burdens led many daimyō to borrow from Osaka credit markets and fall into deep debt.11 One particularly effective way of securing specie to repay these debts was to create trading monopolies that collected local products and sold

6. Quotes from Metzler 2006; Roberts 1998, 1; see also Gramlich-Oka 2010; Sagers 2006; Metzler and Smits 2010, 5. The reference to “country” is because many of the “domains” were referred at the time as kuni (which translates today as “country”). 7. Metzler and Smits 2010; Ravina 1999. 8. Roberts 1998, 10, chap. 6; Sagers 2006, 27–28. 9. Quoted in Sagers 2006, 27. 10. Toby 2001; Ravina 1999; Sykora 2010. 11. Roberts 1998.



them outside the domain for a profit that was returned to the public coffers. These institutions were sometimes combined with production monopolies and were often managed in exploitative ways.12 Once a daimyō had committed to mercantilist policies, kokueki ideology also provided an important legitimizing function in an intellectual environment dominated by Confucian thought. Many Confucians placed merchants at the bottom of the social hierarchy (below samurai, peasants, and craftspeople) and viewed the pursuit of commerce and private profit as undermining public mor­ als. Kokueki thought enabled the daimyō to depict their mercantilist policies as serving the higher ethical purposes of constraining the power of greedy private merchants while performing their Confucian duty to “order the realm and save the people” (keisei saimin) by enriching both the state and the people.13 More generally, kokueki ideas helped to justify policies—such as high taxation and the creation of monopolies—that might be unpopular with the people by linking them to the interest of the political jurisdiction as a whole.14 Kokueki thinkers also drew a strong connection between the cultivation of a domain’s wealth and its power, invoking the phrase fukoku kyōhei (“rich state, strong army”). This phrase had first appeared in the period of Warring States in China (453–221 BCE) in The Book of Lord Shang. Written in the 4th century BCE, this work noted: “He who rules the state well consolidates force to attain a rich state and a strong army.”15 Shang Yang was one of the most famous members of a Legalist school of thought in China that challenged Confucianism at the time.16 Whereas Confucian scholars stressed the value of propriety and frugality, Shang and other Legalists emphasized the need to learn the art of maximizing state power in the context of the Chinese interstate rivalry at the time. As part of that process, they argued, rulers needed to cultivate their country’s wealth. Begin­ ning in the middle of the fourth century BCE, Shang himself oversaw dramatic reforms that famously boosted the wealth and power of his state of Qin to such an extent that Qin eventually defeated all its rivals.17 Shang himself did not support the kind of procommerce policies that later Japa­ nese kokueki thinkers recommended. Instead, he suggested that merchants should be heavily taxed, humiliated, and discriminated against to encourage them to shift

12. See, for example, Smith 2012. 13. Quote from Sagers 2006, 25; see also Gramlich-Oka 2006, 267, 283; 2010; Roberts 1998; Crawcour 1997, 74; Sykora 2010, 165. 14. Ravina 1999. 15. Shang 2017, 174; see also Pines 2017, 3, 68. 16. Schwartz 1985, chap. 8. 17. Ming 2012, 153; von Glahn 2016, 46–56.



to agriculture (which he regarded as the key foundation for a country’s wealth).18 But other Legalist texts from the Warring States period advanced a more favorable view of commerce, including Guanzi, a treatise that was written by various authors over several centuries. As Richard von Glahn puts it, the treatise’s key economic essays (which were probably written in the second and first centuries BCE) had a “decidedly mercantilist” outlook that endorsed the promotion of foreign com­ merce.19 In the famous Iron and Salt Debates of 81 BCE, supporters of the Legal­ ist position also urged mercantilist ideas such as the promotion of state-managed domestic and foreign commerce as well as technological development and military expansion as means of boosting China’s wealth and power.20 This early Chinese mercantilism differed from that which emerged later in Europe in some important respects that had legacies across the East Asian region. One difference is noted by von Glahn: “In contrast to the mercantilist states of early modern Europe, which deployed state power to support and protect the privileges of the domestic merchant class, Chinese mercantilists aspired to sup­ planting private commerce with state-run institutions managed by enterpris­ ing merchants recruited to government service.”21 Another difference was that ancient Chinese mercantilism engaged with Confucianism. Although Legalists challenged Confucian thinkers, their ideas influenced Confucian thought in the late Warring States period in ways that served as a key precedent for the Japanese kokueki thinkers who were committed to Confucian ideals. Prominent Con­ fucians such as Xun Kuang (also known as Xunzi) in the second century BCE endorsed the goal of state enrichment by linking it to the Confucian notion that the material welfare of the people was a responsibility of rulers (and that the morality of the people could not be boosted without it). In Xunzi’s formulation, the promotion of the state’s wealth could thus serve Confucian goals by improv­ ing both the revenue of the state treasury and the people’s livelihood. As Zhao Jing notes, Xunzi also highlighted “the role of national power in realizing stateenrichment and people-enrichment” and recognized that wealth stemmed not just from agriculture but also from commerce and industry.22 These ideas from ancient China were well known to scholars in Tokugawa Japan because of the prestige of classical Chinese writings at the time. As early

18. Pines 2017, 124–26, 158, 163. 19. von Glahn 2016, 77; see also 120–21. 20. Ming 2012; Schwartz 1964, 12–13; von Glahn 2016, 124–27. 21. von Glahn 2016, 118. 22. Zhao 2014, 73. For the broader prevalence of a “people-oriented” discourse (including the idea that rulers had responsibility for the people’s livelihood) during the Warring States period, see Pines 2012, chaps. 8–9.



as the 1740s, the important kokueki thinker Dazai Shundai promoted the phrase “fukoku kyōhei” as an ideal goal of governance, directly invoking Shang (while criticizing him for not recognizing the importance of commerce) and Chinese Legalism. He also highlighted the parallels between the Warring States’ political context and the competition among the Japanese domains.23 Alongside the idea of kokueki, the phrase “fukoku kyōhei” became popular in Japan in subsequent decades.24 These Chinese influences highlight a theme to which we will return in the next two chapters: the importance of the regional intellectual context in which East Asian mercantilist and neomercantilist ideas emerged.25 The growth of kokueki thought also benefited from Tokugawa society’s high literacy rates, extensive schools, and widespread publishing activity. These con­ ditions encouraged the emergence of an active intellectual class that discussed many issues of public significance, including political economy, which began to emerge an independent sphere of intellectual activity under the name keizai—an abbreviation of the phrase keisei saimin noted above.26 Not all keizai thinkers were mercantilists; some were more interested in the virtues of self-regulating markets in ways that were closer to the ideas of emerging Western economic lib­ eralism at this time.27 But kokueki thought was the dominant strand among this new class of political economists that Mark Metzler describes as “an interacting, self-conscious group of institutionally embedded actors who concerned them­ selves with and engaged each other concerning economic policy.”28 Kokueki thinkers were primarily focused on policies and goals at the daimyō level, but some also became interested in the idea of promoting the wealth and power of all of Japan. Since the 1630s, Japanese authorities had limited trade with Western countries, restricting it to interactions with Dutch merchants under highly controlled conditions in Nagasaki. In the late eighteenth and early nine­ teenth centuries, the concept of kokueki began to be used by supporters of a more outward-oriented mercantilist strategy for Japan as a whole. As the power of Western states in the East Asian region grew, a number of Japanese think­ ers outlined plans for Japan to open economically to the West and pursue the

23. Gramlich-Oka 2010, 118; Sagers 2006, 24. 24. Toby 2001; Morris-Suzuki 1989, 41; Gramlich-Oka 2010, 118; Jansen 2000, 377; Sagers 2006, 24; Samuels 1994, 36. 25. Ronald Toby (2001) also traces the origins of the phrase kokueki back to the second and first century BCE Chinese thinker Sima Qian, who combined Confucianism with the goals of enriching the state and the people via the promotion of commerce, industry, and agriculture. Sima Qian was, however, more skeptical of state economic activism than were many Japanese kokueki thinkers (Zhao 2014, 77). 26. Najita 1972; Metzler and Smits 2010; Morris-Suzuki 1989; Gramlich-Oka 2006, 174. 27. See, for example, Metzler and Smits 2010; Najita 1987. 28. Metzler 2010, 241.



goal of fukoku kyōhei through policies such as state-controlled trade expansion, promotion of export-oriented local manufacturing, and acquisition of foreign colonies. Although they were not familiar with European mercantilist writings, these thinkers often invoked the mercantilist practices of Western powers, such as Britain, as models to be emulated. In outlining this kind of vision, thinkers in this time period such as Honda Toshiaki and Satō Nobuhiro also appealed to embryonic conceptions of Japanese nationalism.29 Satō’s ideas deserve special mention, as they are important for understanding early Meiji neomercantilism. In addition to outlining bold ideas about how Japan could become a world power, Satō promoted ambitious mercantilist ideas in 1830 at the domain level in Satsuma, where he was an adviser. At the time, Satsuma was a very poor domain that was plagued by trade deficits and a serious external debt crisis. Satō advised the local authorities to conduct a detailed study of the resources of their domain and then focus on ambitious goals of economic devel­ opment led by a centralized state.30 Soon after, he even outlined a utopian state in which the population would be divided into eight occupational groups, with each being supervised by a separate government ministry to provide “steadily increased benefits for the greater wealth and prosperity of the state.”31 In this vision, the government would control all domestic and external trade, provide education and social services, promote technological innovation, and open new lands for cultivation. Ryusaku Tsunoda, William Theodore de Bary, and Donald Keen note that Satō’s vision “seems frighteningly modern and yet owes much to Confucian social ideals and the already well-developed Chinese pattern of cen­ tralized government.”32 Reforms subsequently undertaken by Satsuma were, indeed, ambitious. State monopolies were created for the main agricultural crops and export production was improved and expanded, including via new plantations with tight labor con­ trol. The government also promoted industry by supplying capital, importing skilled workers and technology from elsewhere in Japan, and directing people into sectors with products that would sell well in wider Japanese markets. Trade beyond Japan with Asian merchants was also expanded via the Ryukyu Islands (a trade that the shogunate had long allowed) in ways that increasingly rivaled the foreign trade of Nagasaki. In these ways, Satsuma rapidly became “a central­

29. For example, Gramlich-Oka 2006, 2010; Hall 1955; Honda [1798] 1969; Sagers 2006, 28–29, 47, 60; Tsunoda, de Bary, and Keene 1958, 561–63, 575–78; Totman 1993, 454; Morris-Suzuki 1989, 37; Metzler 2010, 236, 240; Toby 2001; Metzler and Smits 2010, 5–6. 30. Morris-Suzuki 1989, 35; Sagers 2006, 49–51; Marcon 2014. 31. Quoted in Tsunoda, de Bary, and Keene 1958, 573. 32. Tsunoda, de Bary, and Keene 1958, 572.



izing mercantilist state,” in the words of Federico Marcon.33 Indeed, by the 1840s it had become one of the wealthiest domains and Satō’s advice was given some of the credit. When Shimazu Nariakira was daimyō of Satsuma in 1851–58, he intensified these efforts to strengthen Satsuma’s economy, including by import­ ing Western manufacturing techniques and building a factory complex that soon produced a wide range of manufactured goods, including even weapons and steamships.34 The political and economic context changed for Satsuma and other domains when the Japanese government signed treaties in 1858 that ushered in freer trade with Western powers. In this new context, a deep split emerged in Japan between advocates of economic opening (kaikoku) and those who sought to repel the foreigners (jōi).35 While this debate raged, many domains continued their mer­ cantilist policies, but with more focus on markets beyond Japan as well as on the importation of Western technology and advisers.36 The leading advocate of kaikoku—Yokoi Shōnan—endorsed these policies and suggested ways to improve them in his widely read 1860 publication Kokuze sanron (Three theses on state policy). Shōnan’s ideas also deserve to be described because of their significance to Meiji neomercantilist thought. Shōnan argued that economic opening would enable Japan to become wealthier by obtaining “the profits of trade” and learning from the West. In keeping with the tradition of kokueki mercantilism, Shōnan argued that rising wealth would assist Japanese rulers to meet their Confu­ cian duty of providing “a humane government” and moral teaching. He further popularized the slogan “fukoku kyōhei,” emphasizing that greater wealth would enhance Japan’s power.37 In order to ensure that the economic benefits of this new world of trade served the right ends, Shōnan argued, domain authorities needed to establish trading monopolies that avoided the exploitative practices of the past.38 Specifically, he proposed that authorities should offer “non-profit” loans to local producers to increase and improve their output, which would then be sold to the government for export abroad.39 In this way, he argued that both the people and the state would gain from the country’s new economic openness. Shōnan’s

33. Marcon 2014, 272. For the reforms, see also Sagers 2006, chap. 2. 34. Ravina 2017, 87; Sagers 2006, chap. 3. 35. See, for example, Blacker 1964, chap. 2. 36. Roberts 1998, 202–3; Smith 2012. 37. Shōnan quotes from de Bary, Gluck, and Tiedemann 2005, 641. See Sagers 2006, 77, for his role in popularizing the phrase. 38. Smith 2012, 72–73. 39. Shōnan quote from de Bary, Gluck, and Tiedemann 2005, 642.



advice encouraged the creation of many new trading monopolies—often called kokueki offices—at the domain level in the 1860s.40 Thus, by the time of the Meiji Restoration, Japanese thinkers were already drawing on rich intellectual traditions of local and Chinese mercantilism that were different from their European counterparts in both origins and content. These traditions provided a crucial foundation on which the Meiji leaders built. As Jan Sykora puts it, “The Meiji Restoration should be viewed as a culmination of broad intellectual discourse on political and economic issues rather than as the mere starting point of modernization.”41 Similarly, John Sagers notes that “Japan’s ability to adapt relatively quickly to the growing pressures of the international market was largely the product of the late Tokugawa period’s ideological legacy”42 I now turn to highlight how this legacy did more to influence the ideas of some key neomercantilists in early Meiji Japan than the imported thought of List and other Western neomercantilists.

The Neomercantilism of Ōkubo Ōkubo Toshimichi’s thought is particularly significant to the study of Japanese neomercantilism. Ōkubo was the most powerful figure in the Meiji government from 1873 to 1878 (when he was assassinated). In his role as minister of home affairs, he launched the government’s state-led industrialization drive with his 1874 Shokusan kōgyō ni kansuru kengisho (Memorandum on the promotion of production and encouragement of industry).43 He has earned descriptions such as “the Colbert of Japan” and “Japan’s mercantilist.”44 In the terminology employed in this book, he was one of Japan first “neomercantilists,” because his ideas were developed in a context in which Adam Smith’s ideas were becoming well known in Japan for the first time (as noted below). With Ōkubo’s advice, the Meiji government promoted industrialization by creating state-run firms that established modern industries with the help of foreign experts in sectors such as silk reeling, woolen production, and cotton spinning. These firms were meant to serve as model operations that private indi­ viduals were invited to learn from and emulate, after which they would be spun

40. 41. 42. 43. 44.

Roberts 1998; Smith 2012. Sykora 2010, 158. Sagers 2006, 135; see also Metzler 2006. I have used Sagers’s (2006, 105) translation of the title. Quotes from Brown 1962, 197; Lockwood 1954, 504.



off to the private sector. The government also promoted industry through loans and subsidies to private firms and initiatives to improve the quality of exports. Because of the trade treaties with Western powers, Ōkubo could not support industry with tariffs. But he made clear his desire to revise the treaties in early 1871 when he established the government committee to study the issue that was noted in chapter 6.45 In addition to promoting industrialization, Ōkubo supported the creation of a privately owned Japanese firm in the shipping sector through subsidies and the purchasing of modern ships. He also emphasized the need for the government to help bolster production and productivity in the agricultural sector through education, research, subsidies to encourage new equipment, and the importation of skills.46 As noted below, he also advanced some innovative ideas about the government’s role in improving how Japanese products were sold abroad. To what extent were Ōkubo’s initiatives influenced by the ideas of Western neomercantilist thinkers? Some scholars have pointed to the potential signifi­ cance of List’s thought. For example, John Sagers suggests that List’s views “were reflected in the writings of Ōkubo.”47 Referring to the Iwakura Embassy, in which Ōkubo participated, Richard Samuels also suggests that “Ōkubo was exposed to List’s neomercantilism during his visit to Germany in the early 1870s, and List’s ideas suffuse Ōkubo’s 1874 economic program.”48 In both cases, the evidence pre­ sented to defend these points is circumstantial. Sagers supports his argument by noting that “Ōkubo’s rhetorical style suggested that he was familiar with Friedrich List’s protectionist arguments.”49 To back up his case, Samuels references the work of Byron Marshall, who cautiously cites the following evidence in a footnote: “Ōkubo had just returned from a lengthy tour of Europe, including Germany, and the terms in which he couched his views suggest strongly that he had been exposed to the ideas of Friedrich List.”50 Let us examine the circumstantial evidence more closely. There is no question that Ōkubo’s interest in pursuing state-led industrialization was encouraged by his participation in the Iwakura Embassy during 1871–73. He returned from the mission deeply committed to the goal of closing the economic gap between Japan and the West. Some scholars have noted that Ōkubo was particularly impressed

45. Iwata 1964, 149–50; for his early advocacy of treaty revision, see Tsunoda, de Bary, and Keene 1958, 661. As noted in chapter 3, Japan would not recover full tariff autonomy until the very end of the Meiji period in 1911. 46. Iwata 1964, 239–41; Smith 2012, 114. 47. Sagers 2006, 99. 48. Samuels 1994, 56. For discussion of the Iwakura Embassy, see chapter 6. 49. Sagers 2006, 108. 50. Marshall 1967, 17n.



by a speech by Bismarck in which the German leader highlighted the importance of national power and warned Japan to be wary of European powers such as Britain and France.51 But it is important not to read too much into the influence of this speech on Ōkubo’s economic views. His biographer Masakazu Iwata notes that Ōkubo had already come to similar conclusions and that “their reiteration by the Ger­ man chancellor had merely vindicated his policy of fukoku kyōhei for Japan.”52 According to firsthand accounts of the speech, Bismarck did not offer any spe­ cific economic advice or mention List’s thought. Indeed, he did not even discuss economic issues beyond noting British and French exploitation of the resources of their colonies.53 It is also important to remember that Ōkubo met Bismarck at a time when Bismarck was still a supporter of free trade and other liberal eco­ nomic policies. Although Ōkubo may have encountered List’s ideas in some other context in Germany, List’s thought had fallen out of favor in German protection­ ist circles at the time (see previous chapter). List’s name is also never mentioned in the extremely detailed five-volume records of the Iwakura Embassy.54 More generally, it is also striking that Iwata’s detailed biography of Ōkubo contains no mention of List. Indeed, Iwata’s comment that Bismarck’s speech “merely vindicated” Ōkubo’s “policy of fukoku kyōhei for Japan” highlights how Ōkubo’s views were firmly rooted in the history of kokueki mercantilism and its use of Shang Yang’s ancient phrase.55 It is noteworthy that Ōkubo came from the Satsuma domain, which, as discussed above, had undertaken some of the most ambitious mercantilist initia­ tives in the pre-Meiji period. In his younger days, he even studied Satō’s writings. Ōkubo also worked for Nariakira in the 1850s and was influenced by his mercan­ tilist ideas. In the wake of the forced opening of Japan, Ōkubo had initially been in the jōi camp, but after a conflict between Satsuma and Britain, he embraced the kaikoku view that his domain should avoid further aggression toward the West while building up its wealth and military power. Even before the Meiji Restora­ tion, he had also increasingly focused on Japan’s interests as a whole, referring in an 1865 letter to the need to pursue the goal of fukoku kyōhei for the entire country to boost imperial prestige abroad.56

51. Sagers 2006, 96; Brown 1962, 189. 52. Iwata 1964, 159. 53. Kume 2002, 3:324; see also Kume 2009, 306–7; Kido 1985, 300. 54. Kume 2002. 55. Some of those who have suggested List’s influence have also noted the influence of the history of kokueki mercantilism (see, e.g., Samuels 2003, 79; Sagers 2006, 108). 56. Iwata 1964, 67, 86, 88.



As Sidney Brown puts it, Ōkubo’s Satsuma experience thus provided him with “some guidelines” for his later policies.57 Indeed, Ōkubo even invoked kokueki mercantilist thought explicitly as a model in the 1870s. After he became the min­ ister of home affairs, he arranged for one of Satō’s works—his 1827 Keizai yōroku (Essence of economics)—to be circulated among his employees for inspiration.58 In that work, Satō argued that “the ruler of the land must not fail to adopt meth­ ods for the achievement of national prosperity,” including efforts to improve the productivity of nature through careful scientific study and management.59 Ōkubo suggested in his 1874 memo that the government conduct a detailed survey of the resources of the country’s regions in order to develop a plan, as Satō had done in Satsuma,.60 As Tetsuo Najita notes, Satō’s ideas “exercised great influence on the practical leadership” of the early Meiji government.61 The case that Ōkubo’s ideas shared some similarities with those of List appears much less compelling when viewed in the context of his deep familiarity with, and support for, kokueki mercantilism. For example, when Ōkubo noted that “a country’s strength is dependent upon the prosperity of its people,” he was expressing a view at the core of kokueki thought.62 Many kokueki thinkers would also have agreed with his view that industrial promotion was the best route to “strengthen the foundations of national wealth and power.”63 The same goes for his argument that it was “the duty of state officials, wholeheartedly and skillfully

57. Brown 1962, 186; see also Iwata 1964, 259, 262. 58. Brown 1962, 187. I have used Brown’s translation of the title, but Satō’s use of the word keizai is translated as “political economy” by others (e.g., Marcon 2014, 270). Satō himself defined keizai as follows: “Keizai means managing the nation, developing its products, enriching the country and res­ cuing all its people from suffering. Thus the person who rules the country must be able to carry out his important task without relaxing his vigilance even for a single day. If this administration of keizai is neglected, the country will inevitably become weakened, and both rulers and people will lack the necessities of life” (quoted in Marcon 2014, 270). 59. Quoted in Tsunoda, de Bary, and Keene 1958, 571; see also Marcon 2014, 282; Sagers 2006, 47. 60. Iwata 1964, 238. 61. Najita 1972, 839; see also Marcon 2014, 266, 283. 62. Quoted in Iwata 1964, 236; see also Sagers 2006, 105, 220. See also the views of Kume (2002, 2:74) on the Iwakura Embassy in late 1872 before the meeting with Bismarck: “If a country is to exer­ cise its national rights fully and protect its interests, it is necessary that all the people, high and low, must give full priority to the creation of wealth in order to achieve economic prosperity and military strength.” 63. Quoted in Brown 1962, 194. Again, see also the views of Kume (2002, 2:272–73) in late 1872: “The peoples of the East and the South Seas have failed to devote their attention to manufacturing and so have simply relinquished all the profit to be derived from it to Europe. The peoples of Asia and the Pacific, that is to say, use the bounty of nature to pay for the manufacturing power of the West . . . it is by the cumulative effect of the work done with the use of machines that they have attained their present wealth and strength.”



on the basis of actual conditions, to encourage industry and increase production and thus secure the foundation of wealth and strength without delay.”64 Iwata speculates about whether Ōkubo also had in mind the history of Chinese Legal­ ism when calling for state action to promote economic strength.65 Similarly, when Ōkubo invoked English mercantilist policies as a precedent, he was also echoing kokueki thinkers.66 Even Ōkubo’s broader argument that economic theory needed be adjusted to Japan’s distinct circumstances did not necessarily come from List, given that it followed a long Japanese tradition of thought. In the Tokugawa period, Japanese thinkers often stressed the unique­ ness of their country when engaging with foreign ideas, a tendency that has been described as a kind of “cosmopolitan chauvinism” by Ravina.67 Sagers also notes that “Tokugawa era Ancient Learning had emphasized the point derived from the Chinese Legalist tradition that powerful states were the products of sage leader­ ship that established institutions appropriate for a country’s land and people.”68 This relativist conception of knowledge encouraged skepticism of the universal­ ist pretentions of some Western thought, including not just liberal trade theory but also—as in the case of Wakayama in the last chapter—Carey’s method. Ōkubo’s views also differed from List’s in some important and revealing ways. For example, when justifying the need for government economic leadership, he noted not just the country’s limited industrial experience and scarce capital but also “the weakness of spirit of the people.”69 As he put it, the amount of production generated by the Japanese people had “always depended on the strength of the guidance and encouragement provided by governments and administrators.”70 Sydney Crawcour cites this paternalistic passage as an example of how Japanese debates about political economy at this time were conducted “not in terms of classical or other Western economic principles but in the framework of Confu­ cian ideals of keizai.”71 These ideals also help to explain why Ōkubo placed a heavy emphasis on a policy that had no place List’s advice: the creation of model factories by the government. Ōkubo also advanced proposals for taking greater control of Japan’s exter­ nal trade via a state-owned firm that resembled kokueki practices much more

64. 65. 66. 67. 68. 69. 70. 71.

Quoted in Sagers 2006, 106. Iwata 1964, 236. For this invocation, see Sagers 2006, 107; Iwata 1964, 237–38; Lee 2008, 513–14. Ravina 2017, 10–12; see also Sagers 2001, 192. Sagers 2006, 96. Quoted in Marshall 1967, 16; this comment was made in a memo to Prince Sanjō in 1874. Quoted in Crawcour 1997, 73; see also Smith 2012, 138; Iwata 1964, 238. Crawcour 1997, 73.



closely than List’s advice. In 1874, to help pay off foreign loans assumed in 1870 and 1873, he recommended that the government take over the selling to foreign markets of some products made in its state-run enterprises. The proposal drew directly on Japan’s kokueki past. As Michael Smith puts it, “Ōkubo’s plan was little more than a proposal to create a slightly modified form of domain monopoly at the national level.”72 A small government operation of this kind was created that sold Japanese products in London. Soon after, Ōkubo proposed that the govern­ ment support the creation of Japanese trading companies to sell Japan’s prod­ ucts directly in foreign markets instead of relying on powerful foreign merchants who engaged in predatory practices vis-à-vis Japanese producers. Although this proposal for “direct trade” found less traction, it drew once again on pre-Meiji practices at the domain level of using state trading firms to repay “foreign” (i.e., outside the domain) debts as well as on the ideas of Shōnan and others who had recommended that domain authorities challenge merchant exploitation with this kind of institution.73 These pre-Meiji ideas also had a direct impact in encouraging Ōkubo and other top Meiji policymakers to press for a revision of trade treaties even before they met Bismarck on the Iwakura Embassy. Recall that Ōkubo had created a gov­ ernment committee to examine the issue in early 1871. The important official Itō Hirobumi also wrote a memo in February 1871 arguing that Japan should send officials to the United States and Europe to demand revisions to the treaties and for other purposes, a recommendation that helped generate the Iwakura Embassy later that same year, in which he participated.74 Marius Jansen highlights how Itō’s arguments for protective tariffs in a later memo to other members of the Iwakura Embassy used language that invoked earlier kokueki thought.75 Iwakura himself had also criticized the treaties in 1869, before the Iwakura Embassy.76 His frustrations with the treaties arose directly out of an effort to apply Yokoi Shōnan’s mercantilist ideas about monopoly trading systems at the national level in the first year of Meiji rule. Soon after the Meiji Restoration, Iwakura had asked Shōnan to advise the new government on the issue.77 One of Shōnan’s disciples, Yuri Kimimasa, was then empowered by the Meiji govern­ ment to create a trading system in the treaty ports similar to a successful one

72. Smith 2012, 86. Because this involved just the products of state-owned companies, Ōkubo avoided the treaty problem that Iwakura encountered with his promotion of a state trading company. 73. Smith 2012, 88–89, 116. 74. Takii 2014, 24. 75. Jansen 2000, 375. 76. Hiroshi 2006, 290. 77. Sagers 2006, 80.



implemented in the Fukui domain in the 1860s with Shōnan’s advice. As Smith puts it, this policy would have established “a virtual government monopoly on Japanese exports by securing exclusive sales rights on important exports from producers.”78 Not surprisingly, Western powers objected to the scheme, arguing that it would violate the trade treaties’ commitment to free commerce. These objections—as well as domestic opposition—helped to bring a quick end to the experiment in early 1869.79 But they also encouraged Iwakura and others in the government to press for treaty revision as soon as possible. One final comment needs to be made about the relationship between Ōkubo’s ideas and earlier Japanese mercantilism. Although Ōkubo drew directly on his Satsuma experience, Sagers makes the important observation that he “departed from earlier Satsuma practice in his acceptance of private enterprise as the engine of economic growth.” As he puts it, “Ōkubo believed that private enter­ prise should take over government projects as early as possible. The government would be the planner, facilitator and financier, but ultimately, Japanese corpo­ rations would have to do the work.” What explains this difference from earlier Satsuma practice? Sagers suggests that he may have simply “recognized that the government’s resources were too limited to developed Japanese industry on the old domain monopoly model.” But Sagers also speculates that “perhaps Ōkubo realized that private enterprise was a central feature of Western economic success and understood that the government’s limited resources would be most produc­ tive if combined with private efforts.”80 This latter was certainly a view that local supporters of economic liberalism were promoting in Japan at the time. Indeed, it is important to recognize that Ōkubo was working in an atmosphere in which Western liberal political economy had acquired considerable authority. In the first few years of the Meiji regime, most of the Western literature on political economy that was introduced to Japan had a lib­ eral economic perspective, and Japanese thinkers had become familiar with Adam Smith’s critique of mercantilism. For example, while on the Iwakura Embassy, Ōkubo’s colleague Kume Kunitake described as “immoral” laws inspired by “the mercantile system,” such as those that guaranteed preferential colonial trade and suppressed industry and commerce in colonies. He noted: “As public opinion has become more enlightened in recent years, such evil practices have been checked.”81 In this sense, Ōkubo faced a different political context than his Satsuma predeces­

78. 79. 80. 81.

Smith 2012, 79. Smith 2012, 80. Quotes from Sagers 2006, 105, 110. Kume 2002, 5:242.



sors, one in which he was forced to defend state economic activism in new ways. This defensive posture was apparent when he justified his promotion of industry with the argument that “these industries are absolutely necessary even though they go against the laws of political economy.”82 In defending his activist ideas in the context of new knowledge of Western economic liberalism, Ōkubo became one of Japan’s first neomercantilists. That context may also help to explain his willingness to endorse a larger role for the private sector than Satō and other Satsuma mercan­ tilists had backed earlier in the century. Before concluding this discussion of Ōkubo’s thought, it is important to con­ sider briefly whether he may have been influenced by the ideas of Carey instead of List. It is curious that this issue has received less attention in scholarly litera­ ture than the question of List’s potential influence. After all, as noted in chapter 6, Carey’s ideas were more prominent than List’s in early Meiji Japan and were certainly known in Japanese government circles as early as 1871 because of their promotion by Wakayama and E. P. Smith. I also suggest in the previous chapter that members of the Iwakura Embassy likely heard about Carey’s views, includ­ ing from Wakayama himself, who participated in the venture. For those scholars who want to make a case that Ōkubo’s neomercantilism had Western intellectual roots, Carey’s ideas would seem to be a better place to look than those of List. Once again, however, any such case would not explain the considerable dif­ ferences between Ōkubo’s ideas and those of Carey, including the former’s focus on initiatives such as government-run model factories and state-owned trading firms, as well as his skepticism toward economic theories that claimed universal relevance. It is also noteworthy that Carey does even make an appearance in the index of Iwata’s lengthy biography of Ōkubo.83 The most important weak­ ness in such a case, however, would simply be the strength of the evidence link­ ing Ōkubo’s neomercantilist thought to the tradition of kokueki mercantilism. If Carey’s ideas had an influence, they merely reinforced strong views that Ōkubo already held deriving from these local Japanese roots.

Fukuzawa’s Version of Neomercantilism Another prominent pioneer of Japanese neomercantilism was Fukuzawa Yukichi. Although without a role in government, Fukuzawa was Japan’s most famous intel­ lectual in the early Meiji years. He is best known for his extensive efforts to intro­

82. Quoted in Sagers 2006, 95. 83. E. P. Smith also does not appear in the index.



duce Western “civilization and enlightenment” to Japan in this period. Born into a relatively modest samurai family, Fukuzawa gained an education in the Chinese classics and Western medicine. He was then among the first Japanese intellectu­ als to travel extensively in the West after the country’s economic opening, visit­ ing the United States (1860, 1867) and Europe (1862) (as well as places such as Egypt, Russia, and Southeast Asia, as part of his 1862 trip).84 In his widely read three-volume work Seiyō Jijō (Conditions in the West), published in 1866–70, Fukuzawa described his experiences and introduced Japanese readers to Western ideas and society. He then emerged as one of the leading promoters of Western civilization in the early Meiji years. His well-known 1875 book Bummeiron no Gairyaku (An Outline of a Theory of Civilization) provided the most important intellectual justification for this promotion. Included among the Western ideas that Fukuzawa introduced to Japan was Western economic liberalism, which he first encountered in 1867 by reading a liberal textbook on political economy authored by the US writer Francis Wayland (Elements of Political Economy). Fukuzawa later reported his fascination with this work: “Every chapter, even every sentence in it was a revelation. . . . My heart and soul were so carried away that I forgot to eat.”85 The second volume of Seiyō Jijō, published in 1868, was primarily a translation of part of a textbook on liberal political economy by the British writer John Burton. It was this work that first made Adam Smith’s ideas well known in Japan. At this time, Fukuzawa also began teaching Japan’s first course on Western political economy, using Wayland’s work as a textbook. Indeed, Fukuzawa reported that he heard the fighting associated with the Meiji Restoration outside his classroom while he was teaching the sub­ ject in May 1868.86 Although Fukuzawa played a key role in introducing Adam Smith’s ideas to Japan, he was skeptical of the relevance to his own country of the Scottish thinker’s ideas about free trade. As Fukuzawa put it later, “We cannot but admire the beauty and consistency of Adam Smith’s free trade theory but when we ask whether it applies to the reality of Japan, we find it hard to answer.”87 Although strongly supporting economic opening, Fukuzawa favored strategic protectionist policies. Fukuzawa’s wariness of free trade was evident as far back as 1865 and he reiterated it subsequently, including in the mid-1870s when the costs and benefits of free trade became the subject of a major public debate in the context of Japan’s

84. 85. 86. 87.

Oxford 1973, 14–15. Quoted in Oxford 1973, 118. Fukuzawa 1948, 224. Quoted in Sugiyama, Omori, and Takemoto 1993, 296.



rising trade deficits.88 He also praised efforts to restore his country’s “autonomy over tariffs” in 1874, although he reluctantly acknowledged in 1878 that “because of the unequal treaties, there is no prospect yet of any restriction in trade being adopted.”89 Chūhei Sugiyama uses the phrase “mercantilist protectionism” to describe Fukuzawa’s ideology.90 In the terminology employed in this book, he is better described as a neomercantilist because his protectionism emerged in the context of engagement with Smith’s ideas. Was Fukuzawa’s neomercantilism influenced by List? Although Fukuzawa was interested in Western political economy, I have seen no evidence that he was familiar with List’s ideas. He popularized the ideas of Western economic liber­ als, but he made no effort to do the same with Western protectionist thinkers. For example, in one passage from 1876, he briefly mentioned the existence of a Western debate between free traders and protectionists, but did not describe the latter. Instead, he mentioned this debate merely as an example of how people in the West argued over issues instead of accepting intellectual tradition. Interest­ ingly, in this passage, he associated protectionism with “some American econo­ mists,” suggesting that he may have been familiar with Carey’s ideas.91 But he does not seem to have been very interested in the latter, either. When he mentioned Carey’s name in a later 1889 article, he questioned whether Carey’s ideas (as well as those of Adam Smith) applied to Japan’s reality, invoking a relativist conception of political economy in the same way that Ōkubo (and Wakayama) did: “This [his skepticism] comes from the fact that moral science cannot be pure and genuine, and that the advocate of any theory is under the influence of his time and place.”92 Like Ōkubo, however, Fukuzawa was certainly influenced by earlier East Asian mercantilist traditions. For example, he echoed some kokueki thinkers in arguing that “waging the war of trade” was a “public duty” of merchants. He also depicted this war as a “struggle over profits between different peoples” in a way that was similar to kokueki ideology.93 More generally, he followed kokueki thinkers in invoking Shang Yang’s call for a “rich state, strong army” as far back as 1862 and again in his 1875 book. He defended this prioritization of fukoku kyōhei by high­ lighting the conflictual nature of international relations in his era: “Power and wealth are essential in today’s world. The people of one nation, in their private

88. Sugiyama 1988; 1994, 53–59. This is the same debate in which Matsukata participated; see chapter 3. 89. Fukuzawa quotes from Oxford 1973, 200; Sugiyama 1994, 58. 90. Sugiyama 1988, 57. 91. Quoted in Sugiyama 1988, 43. 92. Quoted in Sugiyama, Omori, and Takemoto 1993, 296. 93. Quoted in Sugiyama 1994, 53; Smith 2012, 179.



relationships, may be able to befriend people of other countries far away and treat them as old friends, but when it comes to relations between one country and another only two things count: in times of peace, exchange goods and compete with one another for profit; in times of war, take up arms and kill each other. To put it another way, the present world is a world of commerce and warfare.”94 Although Fukuzawa’s goals shared similarities with those of Ōkubo, the two men’s ideas also differed in some ways that highlight the heterogeneity of early Japanese neomercantilist thought. For example, Fukuzawa’s ideas about an activ­ ist economic role for the state at the domestic level were less ambitious than those of Ōkubo. Inspired by his reading of Western economic liberalism, he urged the dismantling of feudal restrictions in Japan and the creation of a national market economy based on principles of free competition and private property. As he put it in 1880, he believed that the government’s role in the domestic economy should be limited to supporting activities “which [were] useful to the nation at large such as railways, telegraph, gas and water supplies.”95 Fukuzawa also developed a more detailed critique of free trade than Ōkubo who was more focused on his domestic policy initiatives. As early as 1865, Fuku­ zawa argued that Japan could not embrace free trade until it was in an economic position more equal to that of the West. He also lamented that foreigners were dominating Japan’s trade as well as profiting in Japan in ways that did not serve the country. In 1870 he noted: “There are many among the foreigners who want to enrich themselves by keeping us poor and ignorant.” More generally, he argued in 1875 that the Japanese had been losing relative to foreigners under the regime of free trade that had been imposed on the country: “When we look at how the trade has been conducted, we cannot fail to realize that we have always been on the losing side and they have been on the winning side.”96 Fukuzawa devoted particular attention to the fact that Japan largely exported resources to the West in exchange for manufactures under the existing trade regime. In his view, countries in this situation lost out because they were deprived of profit opportunities to be gained from manufacturing goods from resources (particularly when they imported manufactures processed from their own resources). They also risked losing, or failing to create, manufacturing skills that Fukuzawa believed were key for the accumulation of national wealth over time. As he put it, “The Western nations have grown rich through manufacture [as a result

94. Fukuzawa [1875] 2009, 234; see also p. 225, 254. For his call for fukoku kyōhei in 1862, see Tamaki 2001, 4, 54. 95. Quoted in Sugiyama 1994, 5. 96. Fukuzawa quotes from Sugiyama 1994, 53, 56; see also 57; 1988, 48.



of the fact that] manufacturing adds human skill to natural resources.”97 These arguments had a Carey-like tone, but they were also consistent with kokueki thought. Indeed, to bring these points home, Fukuzawa invoked Tokugawa his­ tory, comparing Japan’s position as a resource exporter to that of a samurai who regularly paid out rice for real goods and services in the Tokugawa era: “[Those payments] were equivalent to natural resources, as it were, yet because he used them year after year, he had no prospect of accumulating wealth. This is roughly what happens in our present state of trade with the West. We are clearly making a loss.”98 In critiquing free trade, Fukuzawa invoked not just Japan’s experience but also that of other countries, such as India and Turkey, that had been harmed by free trade. In the case of Turkey, he lamented its dependence on imported manu­ factured goods as well as the fact that Turkey’s trade had become controlled by foreigners in ways that eroded its sovereignty. As he put it, Turkey was “an independent country in name only whose trade is governed by the British and French.”99 In the Japanese context, Fukuzawa expressed similar concerns about the control of trade by foreigners. Those concerns encouraged him to support initiatives in 1880 for the kind of direct trade that Ōkubo had backed. He also worried about potential foreign domination of domestic trade, opposing propos­ als in the mid-1870s for foreigners to travel freely outside concessions in ways that might have enabled foreign merchants to control interior trade.100 Although Japan opened some ports to foreign residence and trade, its trade treaties with Western powers did not allow foreigners the right to travel and trade inland (in contrast to Chinese treaties after the Second Opium War).101 Fukuzawa also critiqued the trade treaties for undermining Japan’s sovereignty more generally, including with their extraterritorial provisions that exempted foreigners from Japanese courts in ways that encouraged them to “behave inso­ lently.” Citing the examples of India, Java, and other colonies, he alerted his read­ ers that the treaties could be the first step to Japan’s loss of independence: “Since we live under their [foreigners’] control and are subject to their restraints in so many ways, we Japanese are figuratively suffocating, as though the density of their abuses does not allow us a breath of air. When one imagines what might happen

97. Fukuzawa [1875] 2009, 237–38; see also Sugiyama 1988, 49–52; 1994, 58; Sagers 2006, 100. 98. Fukuzawa [1875 ]2009, 238. 99. Quoted in Sugiyama 1994, 46–47. Once again, it is possible that Fukuzawa took some of these points from Carey, who made similar arguments with these country examples. 100. Blacker 1964, 34; Oxford 1973, 202–3; Ōkubo 2014, 235–39. 101. Foreigners would not gain the right to live across the whole country until new treaties came into effect in 1899 and even then there was much opposition to the idea (Takii 2014, 89, 176).



in the future, one’s hair stands on end!” He also warned of how “the national pol­ ity of Southern China was taken over by the Manchus of North China,” and how “the American Indians were driven off their lands by the white settlers” in order to make the point that “the existence of a national polity depends on whether or not a given people retains or is deprived of its political sovereignty.”102 Fukuzawa also went beyond Ōkubo in the emphasis he placed on the idea that the pursuit of Japan’s wealth and power needed to address the issue of “the spirit of the people.” Ōkubo had also highlighted “the weakness of spirit of the people,” but he had invoked this idea only in the context of justifying the need for government economic leadership. By contrast, Fukuzawa set out to “reform men’s minds” as his most important priority. In addition to calling for a stron­ ger sense of “patriotism” (which meant “trying to benefit one’s country rather than oneself ”), Fukuzawa urged the Japanese people to embrace what he called “the spirit of civilization.” In his view, the latter was associated with the sense of individual independence, initiative, and responsibility that he saw in Western societies. This kind of spirit, he argued, was fostered by those societies’ empha­ sis on individual freedom and equal rights, and it formed a key foundation of their wealth and power. In Fukuzawa’s view, it was a spirit sorely lacking in Japan, where he thought servile obedience, meekness, anxiety, and irresponsibility were the norm. If Japan wanted to match the wealth and power of the West, he insisted, it needed to embrace this new mentality of the spirit of civilization that existed in Western countries. As he put it, “Our country’s independence is the goal, and our people’s civilization is the way to that goal.”103 Fukuzawa’s advice contrasted with other Japanese views that the country’s wealth and power were best cultivated through strengthening its traditional val­ ues and/or those of Confucian Chinese civilization. From Fukuzawa’s standpoint, those traditional views overlooked the fact that Western countries had advanced furthest toward “civilization,” whereas Asian countries were only “semi-civilized” (with Japan further advanced than China). Underlying this judgment was a lin­ ear theory of human progress in which societies passed through “stages” from a “primitive” state to a “semi-civilized” (or “semi-developed”) one and then to civilization.104 Fukuzawa borrowed this stage theory of human civilization from the ideas of the Scottish Enlightenment that he encountered in his reading of Western liberal political economy. His conception of the “spirit of civilization”

102. Quotes from Fukuzawa [1875] 2009, 241, 245, 31. 103. Quotes from Fukuzawa [1875] 2009, 22, 235, 22, 254 104. Quotes from Fukuzawa [1875] 2009, 59, 20.



that the Japanese people needed embrace also reflected the emphasis in Western political liberalism on individual rights, freedom, and initiative.105 When embracing Western linear theories of human progress, however, Fuku­ zawa insisted that civilization was a universal standard rather than one associ­ ated with the West. Indeed, he argued that people in the future would judge “the present condition of the nations of the West” to have been at “a pitifully primitive stage.” He defined civilizational progress as follows: “In its broad sense ‘civiliza­ tion’ means not only comfort in daily necessities but also the refining of knowl­ edge and the cultivation of virtue so as to elevate human life to a higher plane.” Drawing on this idea, he outlined a future cosmopolitan utopia in his 1875 book in which the pursuit of wealth and power would no longer be prioritized: Private virtue expands into public, and the extent of public knowledge and public virtue among the populace in general widens and eventu­ ally leads toward tranquility. As the art of attaining tranquility makes daily progress, wars begin to decline. In the end, a point will be reached where men do not fight for land and do not covet wealth. . . . People in the world will be surrounded by an atmosphere of courtesy and mutual deference; they will bathe, as it were, in a sea of morality. This is what I call the tranquility of civilization. I do not know how many thousands of years it will take us to reach such a state.106 Although Fukuzawa was known as a fierce critic of Confucianism, this future utopian vision would have been attractive to those who were supportive of Confucian values. Indeed, Takenori Inoki notes that Fukuzawa’s 1875 book was designed to appeal to Confucian scholars and to win their approval.107 Whereas Confucian thought had traditionally associated this kind of utopia with a golden past, Fukuzawa suggested that it would come in the future only after Japan first sought to catch up to the wealth and power of Western states.108 With this stage theory, Fukuzawa justified neomercantilist goals in a manner that rejected Con­ fucian values while simultaneously appealing to them implicitly as an end goal. As we shall see, Chinese neomercantilists developed a similar justification for their goals (but with a more explicit endorsement of Confucian ideals). List had

105. In the 1880s, some of Fukuzawa’s commitment to political liberalism diminished in the context of his intensified concerns about threats to Japanese sovereignty (Blacker 1964, 133–35). 106. Quotes from Fukuzawa [1875] 2009, 20, 45, 149–50. 107. Inoki 2009, xvi. The book also contained passages that were critical of Confucianism (e.g., Fukuzawa [1875] 2009, 51–53, 72, 199). 108. Fukuzawa [1875] 2009, 254–55; Blacker 1964, 61, 91.



also suggested a cosmopolitan long-term utopia to be realized after neomercan­ tilist goals and policies had created equality among nation-states, but his vision was informed by liberal cosmopolitan thought. Fukuzawa’s cosmopolitan future implicitly drew instead on the Confucian intellectual tradition in which he had originally been trained.

East Asian Mercantilist Legacies in Matsukata’s and Maeda’s Thought The legacy of earlier Japanese and Chinese mercantilism was evident in the ideas not just of Ōkubo and Fukuzawa in the 1870s but also of other subsequent prom­ inent advocates of state-led economic development, including one already dis­ cussed in chapter 3: Matsukata Masayoshi. Long before Matsukata encountered List’s ideas, his thinking about political economy had already been influenced by his experience with the domain mercantilism of the Tokugawa era. Like Ōkubo, Matsukata was from Satsuma and was deeply familiar with its mercantilist poli­ cies as a result of working for its government in his youth in the 1850s. Accord­ ing to Sagers, Matsukata embraced the mercantilist views of Nariakira, who was his patron at the time.109 Steven Ericson also highlights “his exposure to preMeiji mercantilism in his home domain of Satsuma” as an important influence.110 In addition, Ericson notes that Matsukata’s mindset was shaped in part by “his study of ancient Chinese Legalism”; indeed, one of his favorite books was Guanzi, which had served as an inspiration for Chinese Legalist thinkers who emphasized the need for states to cultivate wealth and power.111 Matsukata’s dramatic financial reforms of the early 1880s also drew strong inspiration from earlier Japanese financial reforms carried out by the Confucian scholar Arai Hakuseki in the early 1700s. Those reforms involved what Ericson calls “a program of retrenchment and deflation” to address domestic inflationary pressures.112 They were followed up with a tightening of Japan’s trade restric­ tions to protect the specie of the country as a whole. Arai Hakuseki shared some European mercantilists’ bullionist view that a loss of specie was a loss of the

109. Sagers 2006, 71. 110. Ericson 2019, 5. Ericson also describes Ōkubo as a kind of “mentor” for Matsukata in the early Meiji government (71). See also Sagers 2006, 101, 126. 111. Ericson 2019, 5; see also 29–30. 112. Ericson 2019, 30. Sagers (2006, 134) also notes the similarities between Matsukata’s goals and the financial stabilization in Satsuma in the early 1830s that helped to address the domain’s debt crisis at the time and foster its independence.



country’s wealth.113 Echoing European mercantilist goals, his reforms were part of his broader efforts to consolidate Japanese sovereignty and the shogunate’s power both within Japan and vis-à-vis foreigners.114 During the early Meiji years, Arai Hakuseki’s mercantilism inspired not just Matsukata but also other early advocates of protectionism, such as Sugi Kōji, who suggested in 1874 that the scholar’s advocacy of managed trade should have been used as a model for Japan after its economic opening.115 Another important Japanese neomercantilist influenced by earlier local mer­ cantilist thought was Matsukata’s colleague Maeda Masana. Meada wrote an important and detailed economic plan for the country in 1884 in his capacity as an employee of the Ministry of Agriculture and Commerce. Over 2,000 pages long, Kogyō iken (Opinions on promoting industry) was published in thirty vol­ umes after some editing that Matsukata demanded.116 Richard Smethurst consid­ ers Meada’s plan to be “one of the most important proposals of modern Japanese history.”117 Ichiro Inukai has pointed to its wider global significance, suggesting that “it might be considered the world’s first comprehensive economic develop­ ment plan.”118 Like other Japanese neomercantilists, Maeda lamented how Japan’s sov­ ereignty had been undermined by its trade treaties with Western powers and argued that cultivating “strong national economic power” was essential to deal with the country’s “extremely precarious situation” and the need “to rescue the people from impoverishment.” In Japan’s economic “battle” with other countries, he prioritized “industrial promotion” because it was key to military power and because “the value of goods is increased by processing.” He emphasized that “the government must not forget its role as the leader of the people” and highlighted the “vital importance” of ensuring that “all of the people can be imbued with a sense of purposefulness, energy, and industriousness, as well as feelings of patrio­ tism and social responsibility.”119

113. See, for example, Kazui and Videen 1982, 299–301. Arai Hakuseki’s mercantilism was asso­ ciated with constraining exports rather than expanding them because of the key role of metals in Japan’s exports. 114. Nakai 1988, 106–17; Hakuseki 1979, 179, 247; Toby 1984, 199–201. 115. Braisted 1976, 306. 116. I have followed Smethurst’s (2007, 79) translation of the Japanese title. The original interim report was explicitly critical of Matsukata. Even after his demanded changes had been made, Matsu­ kata refused to endorse the report. It was never published and became available only when research­ ers discovered it in 1969 (89–90). 117. Smethurst 2017, 277. 118. Inukai 2003, 4; see also 10; Metzler 2006, 101; Crawcour 1997. 119. Maeda quotes from Inukai 2003, 166, 284, 269, 282, 176, 283, 293; for Maeda’s concerns about the trade treaties, see 274, 277, 281.



Maeda called for the creation of a network of state-owned development banks that could provide capital for farmers and private firms, particularly small-scale, rural, traditional industries that made up the bulk of the country’s manufacturing at the time. Because Matsukata had his own ideas for a bank with different pri­ orities, he demanded that this proposal be removed from the final version of the report.120 Smethurst juxtaposes Maeda’s focus on “a grassroots, bottom-up indus­ trialization based on traditional industries” with Matsukata’s interest in cultivat­ ing large-scale modern manufacturing, particularly heavy and defense-oriented industry, via a centralized bank.121 Indeed, he argues that if Maeda’s plan “had been put into practice, prewar Japan might well have developed in a more demo­ cratic and less centralized and militaristic way.”122 Regarding militarism, Maeda did emphasize that his neomercantilist goals were merely defensive, contrasting them with what he saw abroad: “Our goals are far superior to those of countries which harm other people, invade their countries, or enslave their people for self­ ish reasons.”123 Maeda also urged the government to challenge the dominance of Japan’s trade by large foreign merchants who were “skillfully oppressing our people.” He sug­ gested that these merchants used their market power to “manipulate prices,” pur­ chasing Japanese products at overly low prices while selling imports at excessively high prices. The result was detrimental to Japanese producers but also to the nation’s trade balance as a whole. The ability of foreign merchants to dominate markets in this way, he argued, stemmed from their superior access to capital and knowledge of world markets as well as from their small numbers vis-à-vis the large number of disorganized Japanese producers. He compared Japan’s situation to that of colonies where “all of the profits gained by foreign trade are absorbed by the foreigners, who in effect ‘feed’ on these countries.”124 To counter the power of foreign merchants, Maeda supported the “direct trade” initiatives backed by Ōkubo and Fukuzawa, including the creation of Japanese trading houses and foreign consulates to improve Japanese information about foreign markets. He also supported the Yokohama Specie Bank’s role of lending to Japanese trading houses and domestic exporters as well as efforts to challenge

120. Crawcour 1997; Inukai 2003, 50–51; Smethurst 2007. 121. Quote from Smethurst 2007, 79; see also Metzler 2006, 113; Crawcourt 1997. This distinc­ tion should not be overstated, given that both Inukai (2003, 35) and Ericson (2019, 81–82) note that Matsukata was supportive of rural industry and agriculture. Indeed, Inukai argues that Maeda may have based his 1884 proposal on Matsukata’s earlier ideas on this topic. 122. Smethurst 2017, 277; see also Smethurst 2007, 79, 93, 302; Metzler 2006, 113; Crawcour 1997, 102. 123. Inukai 2003, 291. 124. Maeda quotes from Inukai 2003, 267, 108, 278; see also 68, 177, 258–60, 266–74.



foreign banks’ control of the foreign exchange market.125 Within Japan, Maeda also called for producer cooperatives and trade associations that could encour­ age cooperation among farmers, manufacturers, and merchants and boost their bargaining power vis-à-vis foreign merchants. After resigning from the govern­ ment in 1890, he devoted the rest of his life traveling the country to promote this kind of cooperation.126 When calling for state-led economic development, Maeda cited the economic activism of European states (as well as—like Ranade—the economic achievements of Java).127 He had become familiar with European ideas and practices during a long study period in France in 1869–77 and further travels to Europe in 1881–83.128 Some scholars suggest that Maeda may have been influenced by List’s ideas because of the content of his report.129 It is certainly possible that he was familiar with List’s work, but I have seen no proof of this and many of Maeda’s ideas diverged dramati­ cally from List’s, such as his focus on small-scale traditional industry and decentral­ ized development banking, as well as his strong critique of foreign merchants.130 Maeda also displayed a much stronger concern for domestic inequality and poverty than List did in his 1841 book. Indeed, the central economic target in Maeda’s 1884 plan reflected this concern; he set the goal of raising the lower class of his country up to the level of the current middle class within ten years.131 Some of Maeda’s ideas, in fact, seem closer to Carey’s thought than to that of List. I have not seen any scholarly literature drawing this link, but Maeda may have been familiar with Carey’s ideas, given that his 1884 report identifies the oppo­ nents of “English free trade” as those who backed “American protection.” Interest­ ingly, however, he did not endorse the latter, appealing instead—like Ōkubo and Fukuzawa—to a relativist conception of political economy (which Carey explic­ itly opposed): “Why should we adhere absolutely to theory? English free trade or American protection is neither good nor bad. It is nothing more than a policy to protect things appropriate to that country’s situation.”132 Carey’s Principles of

125. Inukai 2003, 112, 273, 298; Smethurst 2007; Ericson 2019; Metzler 2006. 126. Smith 2012, 191; Inukai 2003, 111–12; Sugihara 1988, 242; Crawcour 1997, 72. 127. Inukai 2003, 153, 157, 269; for his invocation of Java, see 178. 128. Before he left for France, Maeda had also shown an interest in Western knowledge, studying English in Nagasaki and even developing an English-Japanese dictionary that was widely used after its publication in 1869 (Sagers 2001, 174). 129. Crawcour 1997, 103–4, Sagers 2006, 129. 130. For the lack of proof of List’s influence, see Metzler 2006, 127n127. 131. Inukai 2003, 61; for Maeda’s social concerns, see also 143, 151, 154, 284. 132. Quoted in Sagers 2006, 133. Elsewhere, Maeda also made the following comment about the­ ories of economic development: “Theory does not cross national boundaries” (quoted in Smethurst 2007, 80).



Social Sciences also focused only on trade restrictions rather than the broader government economic activism that Maeda promoted. In addition, unlike Carey (and List), Maeda opposed the idea that skilled workers from abroad should be encouraged to come to Japan, arguing that Japan’s “own economic power is still too weak to allow us to employ foreign workers.”133 It is also possible that Maeda may have been influenced intellectually by the French economist Eugène Tisserand, with whom Maeda worked during his study in Paris. Like Maeda, Tisserand supported government intervention in markets, and he was particularly interested in the role of rural economies and small pro­ ducers in the early stages of industrialization.134 Crawcour notes, however, that Tisserand’s ideas “served to confirm rather than form his [Maeda’s] attitudes.”135 Sagers makes a similar point, arguing that Maeda’s core views on political econ­ omy had already been formed before he left for France and that thinkers such as Tisserand did not sway those views much.136 What, then, shaped Maeda’s neomercantilist thought? It is worth noting that Maeda was close to Ōkubo, who supported his career and encouraged him to study ways of stimulating manufacturing when they met in Paris in 1873.137 Like his mentor, Maeda was deeply influenced by his Satsuma background. Crawcour points to the particular significance of Satō’s ideas, arguing that Maeda’s work is best seen as following in the tradition of Satō rather than Western thought. Sag­ ers, too, highlights Satō’s influence, including the latter’s emphasis on detailed surveys of local resources.138 The legacy of kokueki mercantilism was also evident in Maeda’s emphasis on the Confucian duty of a ruler to increase production in ways that both improved the people’s “livelihood” and “increased tax revenues” for the state. Further, Maeda explicitly invoked Confucian ideas that associated the elimination of poverty with improvements in moral behavior, domestic social peace, and defense. The influence of Tokugawa mercantilist thought was also evident in Maeda’s description of the loss of specie from trade deficits as a loss of metals “inherited from our forefathers.”139 The wording invoked longstand­ ing Japanese concerns from the Tokugawa era dating back to Arai Hakuseki’s

133. Inukai 2003, 290. 134. Crawcour 1997; Inukai 2003; Smith 2012, 173; Smethurst 2007, 84; Sagers 2006, 129; Met­ zler 2006, 112. 135. Crawcour 1997, 75. 136. Sagers 2006, 130. 137. Inukai 2003, 36; Smethurst 2007, 83–84. 138. Crawcour 1997; Sagers 2006, 133. 139. Maeda quotes from Inukai 2003, 152–53, 258; see also 284 for invocation of Confucian ideas.



writings. In addition, like so many other Japanese thinkers, Maeda’s report invoked the goal of fukoku kyōhei that had been derived from Shang Yang’s ancient ideas by earlier Tokugawa-era mercantilists.140 Development banking—which interested both Maeda and Matsukata—also had strong roots in kokueki thought in the Tokugawa period. A prominent Japa­ nese thinker from the late eighteenth century, Nakai Chikuzan, urged the creation of semigovernmental, rural development banks (or Shasō) to lend interest-free or at low rates to local producers as a way to “strengthen” a domain.141 He high­ lighted how these banks could minimize the need for external borrowing (i.e., borrowing from outside the domain) in ways that reduced the amount of gold leaving the domain in the form of interest payments. He justified the proposal by invoking earlier Chinese Confucian ideas about using community granaries as lenders to address rural poverty.142 The final, and perhaps most important, piece of evidence of the local roots of Maeda’s neomercantilism comes from the references he made when justify­ ing government economic activism in his detailed 1884 economic plan. Maeda’s most common appeal was also not to foreign ideas or practices but rather to the mercantilist policies of various daimyō in the pre-Meiji period.143 He was criti­ cal of the Meiji government for not matching their performance: “Compared to the performance of the han administration in the feudal period, should we not be ashamed of what we have been doing?” As he put it, “It is a great pity that they [Meiji government leaders] did not adopt appropriate methods of control and protection drawing upon the practice of the former daimyō who aided artisans, indirectly promoted advances in technology, regulated commerce throughout their domains, and consolidated sales through a single agency.”144 He lamented how the greater individual freedom generated by the abolition of Tokugawa feudalism had undermined the ways in which domain governments had controlled their economies to support key industries, regulate the quantity and quality of specialized products sold to Japan-wide markets, and even pro­ tect valuable forests.145 When making a case for direct trade, Maeda also invoked the experience of earlier domains, which had become rich by researching the preferences of

140. Crawcour 1997, 69. 141. Quoted in Ravina 2010, 195. 142. Ravina 1999, 181; see also 2010, 189, 204. 143. See, for example, Inukai 2003, 139–42, 152–53, 245–46, 260, 266. 144. Maeda quotes from Inukai 2003, 152; Crawcour 1997, 75; see also Inukai 2003, 265. 145. Inukai 2003, 243–47. Radkau (2014, 21) notes that Japanese authorities had pursued system­ atic policies to protect forests as far back as the late seventeenth century.



consumers elsewhere in Japan and selling directly to them. He even praised the Japanese government’s control of foreign trade before the economic opening: “During the time of the Bakufu regime, the government monopolized the exports of our products. All of the commodities were collected at the Government Trad­ ing House in Nagasaki to be traded with foreign merchants. Therefore, one seller against many buyers was the structure of the market. . . . After the opening of the ports, the situation was reversed. A large number of sellers emerged and com­ peted for business with foreign merchants, which resulted in a quick fall in prices and the monopolizing of trade by foreigners.”146 Maeda’s ambitious plan was not implemented, but his ideas left a deep impres­ sion on many, including Takahashi Korekiyo, who became prime minister in the early 1920s and then, as finance minister in the early 1930s, helped pull Japan out of the Great Depression. As a young man, Takahashi had traveled to the United States (with Tomita Tetsunosuke) in 1867 and emerged critical of free trade in Japanese debates in the mid-1870s. He had met Maeda in 1883 and helped in the preparation of the latter’s 1884 report.147 Years later, in the mid-1920s, Takahashi also created and became the first head of the industrial promotion body, the Min­ istry of Commerce and Industry. Although Takahashi invoked List’s ideas at this time, he cited Maeda as the most powerful influence on his views about political economy.148 Takahashi’s new ministry would subsequently play a major role in the 1930s promoting Japan’s push into heavy industry and empire building (and would be reworked into the famous industry-promoting Ministry of Interna­ tional Trade and Industry after 1945).149 Even in the 1930s, the legacy of kokueki mercantilism endured as Satō’s work was resurrected by Japanese nationalists in support of goals quite different from those of Takahashi.150 In chapters 3 and 6, I highlighted some of the ways in which Japanese neomer­ cantilists imported and adapted Western neomercantilist thought. But diffusioncentered narratives of this kind tell only part of the story of the origins of

146. Inukai 2003, 260. Maeda also suggested that Japan’s lack of control of its trade in his era was the same as that of the Ryukyu Islands, which had suffered from the fact that their trade had been monopolized by Satsuma merchants: “This situation seems to mirror exactly our present foreign trade relations” (260–61). 147. Metzler 2006, 101, 110–11; Inukai 2003, 5–6; Smethurst 2007. Metzler (2006, 123n10) notes that Takahashi may have first encountered protectionist ideas through the work of Byles (discussed in chapter 5; its 1877 translation into Japanese is discussed in chapter 6). 148. Metzler 2006, 111. 149. Metzler 2006, 98; Johnson 1982, 93–94, chap. 4. 150. Morris-Suzuki 1989, 38.



Japanese neomercantilist ideology. Japan also produced important neomer­ cantilists, such as Ōkubo, Fukuzawa, and Maeda, whose ideas drew more from Japanese and Chinese mercantilist intellectual traditions than from Western neo­ mercantilist thought. Even prominent List-inspired thinkers, such as Matsukata, were heavily influenced by these traditions, which emerged independently of their Western intellectual counterparts. The influence of these traditions provides further evidence that diverse mer­ cantilist traditions around the world—rather than just the European ones cited by List—helped to inform the emergence of neomercantilist thought. In this case, some of these traditions dated as far back as the era of the Warring States in China. Like Indian neomercantilists who cited the Arthashastra, Japanese thinkers drew on mercantilist ideas that long predated European mercantilism. Whereas the Arthashastra was only rediscovered in the early twentieth century after Indian neomercantilism had already emerged, Japanese neomercantilism emerged in a context of ongoing and active engagement with these ancient ideas as well as with more recent kokueki thought that built on them. The ideas of Japanese thinkers such as Ōkubo, Fukuzawa, and Maeda also reinforce the need to recognize the diversity of the content of pre-1939 neomer­ cantilist thought. In part because of the different historical roots of their ideas, these Japanese thinkers developed versions of neomercantilism quite distinct from those examined in the book so far. For example, their neomercantilism drew on Confucian ideas in a number of ways, such as their justifications for government economic activism, their emphasis on controlling merchants, Mae­ da’s focus on the people’s livelihood, and Fukuzawa’s unique long-term vision. All of these thinkers (including Matsukata) also emphasized export promotion more strongly than List, Carey, and many other Western neomercantilists. This emphasis partly reflected the fact that import tariffs were constrained by Japan’s trade treaties, but it was also in keeping the highly outward-oriented (within Japan rather than the wider world) nature of the mercantilism of the Japanese domains. The legacy of kokueki mercantilism also could be seen in the focus of these thinkers on commercial forms of protectionism and the support for state trading companies. All of these thinkers also advanced relativist conceptions of political economy, building on the cosmopolitan chauvinism of Tokugawa Japan. Although these figures had some common aspects to their thought, they also disagreed with each other in various ways. In other words, there were many varieties of neomercantilist thought even within the context of Meiji Japan. For example, in addition to presenting a distinctive long-term vision, Fukuzawa was less supportive of domestic government economic activism and more commit­ ted to cultivating a liberal spirit of civilization than the others. Maeda’s version of neomercantilism put more emphasis on social content, defensive power goals,



development banking, support for small-scale producers, opposition to foreign experts, and challenging foreign bank control of foreign exchange markets. Ōkubo gave more attention than the others to the pedagogical role of model fac­ tories. The diversity of Japanese neomercantilism expands further if we include Matsukata’s distinctive version described in chapter 3 as well as those of the fol­ lowers of Carey analyzed in chapter 6. This diversity ensured that there was no single Japanese intellectual model for neomercantilists abroad to follow. As discussed in previous chapters, Japan’s post-1868 success in cultivating wealth and power inspired neomercantilists in places as diverse as India, Turkey, and Ethiopia. Subsequent chapters show how Japan was also a model for thinkers in Africa and the Pan-African movement. If neomercantilists outside Japan wanted to learn from the country’s neomer­ cantilist thinkers, they had a number of versions from which to choose. Interest­ ingly, however, these foreigners seemed more focused on Japan as a symbol of a non-Western state that had successfully cultivated wealth and power than in the specific ideas of any Japanese thinker. I have seen no case where the Japa­ nese thinkers discussed in this book were referenced in these other countries. In contrast to List and Carey, these Japanese thinkers remained relatively unknown in most parts of the world. One reason may have simply been language barri­ ers, but Japanese neomercantilists themselves also did not display much interest in cultivating an international audience. The one exception to these generalizations occurred in the East Asian region, where Japanese thinkers engaged in active dialogue with foreign neomercantil­ ists and the latter sought out the ideas of specific Japanese thinkers. I highlight this intraregional East Asian circulation of ideas in the next two chapters, includ­ ing the influence of Fukuzawa in Korean neomercantilist circles. I also call atten­ tion to a phenomenon that I have left undiscussed in this chapter: the diffusion of the ideas of some early Chinese neomercantilists to Japan in the late Tokugawa and early Meiji periods. As I note in the next chapter, the emergence of Japanese neomercantilist thought took place in a regional ideational context that included not just the deep Chinese mercantilist tradition discussed above but also nine­ teenth-century Chinese neomercantilist ideas that emerged before and alongside their Japanese counterparts.



China has received much less attention than Japan among scholars interested in pre-1939 neomercantilist thought. It is easy to guess why. Whereas Japan pur­ sued an ambitious state-led industrialization strategy after 1868 that boosted its wealth and power, China experienced growing economic problems, domestic conflict, and international weaknesses. Despite their country’s trajectory in that era—and indeed, partly because of it—some Chinese thinkers developed creative and important neomercantilist ideas. These pioneers of Chinese neomercantil­ ism deserve greater recognition for their contributions to the history of neomer­ cantilist thought. As I note in the concluding chapter of this book, their ideas also left legacies that need to be better understood as China emerges as an increas­ ingly powerful neomercantilist state in the early twenty-first century. The story of the emergence of Chinese neomercantilist thought begins with what I call the “protoneomercantilist” ideas of Wei Yuan after the First Opium War of 1839–42. More substantial versions of Chinese neomercantilism then appeared after the Second Opium War of 1856–60 among thinkers associated with the self-strengthening movement, of whom the most important was Zheng Guanying. His ideas then helped to inspire the most influential Chinese neomer­ cantilist in the early twentieth century, Sun Yat-sen. In analyzing these figures, I highlight the ways in which they each drew on older Chinese mercantilist tradi­ tions to develop distinctive versions of neomercantilism that also found a wider regional audience in Japan. I leave for the next chapter a discussion of one further Chinese thinker—Liang Qichao—who developed quite different neomercantilist 232



ideas in the early twentieth century while engaging much more extensively with foreign neomercantilist ideas than Wei, Zheng, and Sun did.

The Endogenous Origins of Nineteenth-Century Chinese Neomercantilism The intellectual foundations for Chinese neomercantilism were established in the wake of China’s military defeat in the First Opium War of 1839–42. In addi­ tion to demonstrating the West’s new military superiority, the war resulted in commercial treaties that undermined the tightly controlled manner by which Chinese authorities had tried to manage trade with Western merchants since they steered the latter in 1757 through the single port of Canton via designated Chinese merchants. Under the treaties signed with Western powers in the wake of the war, trade with the West was opened up at five treaty ports where for­ eigners enjoyed extraterritorial legal protection and could trade more freely with new, standardized tariffs fixed at low levels. The extraterritorial provisions were nonreciprocal, as were most-favored-nation clauses that were inserted into the new treaties.

Wei Yuan’s Tributary Protoneomercantilism One of the most innovative intellectual responses to the new external threat posed by the West came from Wei Yuan, a high-profile Confucian scholar. To understand the novelty of Wei’s ideas, it is important to recognize that the Qing dynasty in the 1840s was dominated by conservative thinkers who prioritized traditional Confucian values of frugality and moral virtue. These thinkers urged rulers to model these values and to focus on orthodox goals of balancing budgets and stabilizing the traditional agrarian economy rather than promoting com­ merce and industry. They saw trade privileges extended to foreigners primarily as a way of cultivating and maintaining good relations with tributary states in a context where China was perceived as the center of a universal moral order. Within this worldview, the Chinese emperor was the son of heaven and foreign­ ers were expected to show him respect by sending regular tribute.1

1. For classic works describing this worldview, see, for example, Wright 1957; Fairbank 1968; Cohen 1974; Schwartz 1964. For the tributary system, see also Kang 2010.



Wei challenged this conservative orthodoxy in two key works published in the immediate wake of the First Opium War: Shengwu ji (Military history of the Qing dynasty, 1842) and Haiguo tuzhi (Illustrated gazetteer on the maritime countries, 1843).2 The latter was particularly important and was updated with new mate­ rial in two further editions in 1849 and 1852. In these works, Wei urged Chinese leaders to respond to China’s “humiliation” in the Opium War by prioritizing a goal that was morally suspect from the standpoint of Chinese conservatives: the promotion of China’s fuqiang, or wealth and power. As Wei put it in his Shengwu ji, “When the state is rich and powerful, it will be effective. . . . What then is there to fear about barbarians anywhere—what is there to worry about as to defense against aggression?”3 The best way to cultivate fuqiang, he argued, was through policies encourag­ ing the growth of commerce and industry. In his Haiguo tuzhi, Wei was par­ ticularly supportive of the state’s promotion of foreign commerce, arguing that it would increase revenues and enable China to acquire foreign items it needed, including those that would help China strengthen its military power with West­ ern methods. In contrast to conservatives, Wei was eager to learn from the West, urging the creation of a Western-style arsenal and naval shipyard as well as a translation bureau to enhance awareness of Western knowledge and skills. He argued that public authorities had an important role to play in the realm of for­ eign commerce, including by supporting Chinese trade through naval power, encouraging the importation of desirable military-related items, and protecting the country against undesirable imports such as opium that drained China’s sil­ ver.4 I prefer to describe Wei’s views as a form of protoneomercantilism because he did not develop a detailed case for strategic trade protectionism. His criticism of the trade treaties with the British focused more on the size of the indemnity and the lack of a ban on opium sales than on the new broader low tariff regime.5 Although Wei’s advice challenged many conservative views, the emphasis he placed on fuqiang built directly on the same ancient Chinese mercantilist ideas that the Japanese kokueki thinkers drew on (as discussed in the last chapter). The term fuqiang was a shortened version of the phrase fuguo qiangbing (rich state, strong army) that Shang Yang had used in the era of the Warring States. Well before the First Opium War, Wei had been a prominent member of a reform­ ist Confucian statecraft school that had emerged in the 1820s and 1830s and

2. 3. 4. 5.

The title translations and dates of publication follow de Bary and Lufrano 2000, 206–12. Quotes in de Bary and Lufrano, 208. Mitchell 1972; Teng and Fairbank 1965, 34–35; Hu 1988, 517–24; Leonard 1984. Schell and Delury 2013, 30.



whose members included many who saw the promotion of wealth and power via commerce as legitimate goals. Responding to growing problems in the Chinese Empire, such as corruption, the breakdown of local order, and eroding control of the coast, thinkers in this school followed Confucian orthodoxy in calling for stronger moral leadership. But they also called for the practical examination of issues such as methods to improve government administration, military power, and economic welfare. Wei published an influential collection of statecraft writ­ ings in 1826 that included many procommerce pieces. Like many others in the statecraft school, Wei tied his interest in practical Confucian reform initiatives to the Legalist objective of cultivating wealth and power. As he put it, “There is no kingly way without wealth and power.”6 Although Wei’s ideas in the 1840s drew directly on his previous statecraft views, they also reflected his new interest in the West at this time. Wei’s Haiguo tuzhi, in fact, provided the first significant Chinese analysis of the West. In it, Wei argued that the West derived power from commerce and that its focus on commercial expansion and the pursuit of profit stemmed from the competitive nature of the European state system. He also noted that the commerce of Western states was backed by military power that conquered territory and created bases to support their merchants, monopolize trade, foster communication, and collect information. In his words, the British “promote trade by sending out soldiers. Soldiers and trade are mutually dependent.”7 Wei argued that this Western strat­ egy differed dramatically from the traditional governance of trade in maritime Asia, and he warned that Western influence was growing rapidly in countries in the region that traditionally had tributary relations vis-a-vis China. Because Wei had no firsthand experience in the West or knowledge of West­ ern languages to read Western texts, his observations about the Western behavior stemmed from other sources, such as earlier Chinese writings about the outside world, literature produced in Chinese by European missionaries, and his own observations and conversations with travelers and foreigners.8 Although Wei was interested in Western countries’ pursuit of wealth and power, I have seen no evi­ dence that he was familiar with the ideas of any Western mercantilist or neomer­ cantilist thinkers. Indeed, Chinese knowledge of Western literature of all kinds was extremely limited at this time. As Paul Cohen notes, China was “isolated by

6. Quoted in Chang 1971, 30; see also Schell and Delury 2013, 19–24; Rowe 2001, 139; 2009, 159–60. For discussions of the mix of Confucianism and Legalism, see Schwartz 1964, 17; Schell and Delury 2013, 36; Zhao 2015; Ming 2012. 7. Quoted in Leonard 1984, 164; see also 155–56; Fairbank [1953] 1964, 180–82. 8. Leonard 1984.



choice and totally self-absorbed.”9 Historians tie this self-absorption to the con­ servativism of the Confucian literati, who believed that China was the center of the world and had little to learn from others. Because of the expectations of the all-important Chinese examination system, Chinese officials and scholars also had little incentive to explore knowledge from outside of the subjects covered by the exams: the rich and deep traditions of Chinese intellectual history dating back to the ancient classics. Within those traditions, there were many analyses of political economy issues, but there was little engagement with scholarship on this topic from outside China. Wei himself, however, had been exposed to Western economic liberalism and its advocacy of free trade in a rudimentary way. At the same time that the British were using diplomatic and military pressure to open China in the 1830s, they launched what Songhcuan Chen calls an “information war” promoting West­ ern ideas among the Chinese masses.10 Included in this war were some Chineselanguage publications celebrating the benefits of free trade that were written by a German Protestant missionary named Karl Gützlaff. Gützlaff ’s argumentation was unsophisticated because his publications were aimed at a mass audience and because his political economy was self-taught. In a basic way, he argued that free trade would foster economic prosperity, encourage friendly international relations, expand knowledge, and promote civilization. Wei referenced Gützlaff ’s work and even included excerpts from it, but he did so in a selective way, omitting Gützlaff ’s normative message and simply reproducing key facts about Western history, naval power, and commercial strength and practices. The German writer had provided descriptions of European mercantilist practices in order to criticize them, but Wei found them useful for improving his understanding of the West.11 When calling for Chinese authorities to promote foreign commerce, Wei did not endorse all the practices of Western states. Indeed, he considered some immoral, such as their seizing territory and their use of coercion and monopolies in trade. Instead of entirely emulating the West, he called on Chinese authori­ ties to rebuild and strengthen traditional tributary relations with willing states through the promotion of commerce and diplomatic ties, under the protec­ tion of China’s strengthened naval power. He argued that the traditions of the Chinese-led tributary system offered a better framework for peaceful and

9. Cohen 1974, 5. 10. Chen 2012, 1735. 11. Casalin 2005; Lutz 2008, 69, 182–84, 191–92, 199–210, 213, 337–39.



prosperous regional trade than the more violent, unstable, and exploitative prac­ tices of Western powers.12 In this and other ways, Wei’s advice differed from that of List’s 1841 book pub­ lished around the same time as Wei’s work. As noted in chapter 2, List believed that the “regeneration” of China—like that of the rest of Asia—could only take place under European colonial rule.13 By contrast, Wei suggested that China could boost its wealth and power on its own through domestic reform and a state-managed expansion of trade that strengthened China’s traditional tributary relations. Wei was not the only Chinese thinker at this time calling for greater study of the West. Drawing on some of the same sources as Wei (including Gützlaff ’s work), another member of the statecraft school, Xu Jiyu, published an 1848 book about the West titled Yinghuan zhilue (A short account of the maritime circuit). This work echoed Wei’s argument about China’s waning influence in maritime Asia, but Xu rejected the tributary worldview, portraying China simply as one state among many that were competing for wealth and power in a new global context. That context, Xu argued, was, in fact, similar to that of the era of the Warring States, except that China as a whole now needed to compete in a global environment. Although Xu refrained from explicit recommendations, his praise of the West suggested that China needed to learn from Western practices that successfully cultivated wealth and power, such as supporting commerce, manu­ facturing, and new kinds of education, and even cultivating a stronger political link between rulers and the people. In his view, Western states had learned many of these practices from China in earlier times.14 The ideas of Wei and Xu did not find much support among conservative intel­ lectuals and officials in China in the 1840s and 1850s. Chinese policymakers accepted Western pressure for trade opening only reluctantly as a means of paci­ fying foreign demands and addressing one of many disputes facing the imperial court at the time.15 They also did not show much interest in learning more about the West. Indeed, when the Russian government provided hundreds of books as a gift to the court in 1845, one official warned that they “might be unethical, and harm our country.”16 Wei himself became frustrated by the limited interest

12. Leonard 1984, 153, 194, 204; Hu 1988, 524. 13. List [1841b] 1909, 336. 14. Drake 1975. 15. Lovell 2011, 11; Mao 2016, 94; Teng and Fairbank 1965, 25–26; Ch’en 1980, 8; Fairbank [1953] 1964, 33, 104–5. 16. A Chinese official quoted in Mao 2016, 512.



in reform, and joined a Buddhist monastic community in 1856, one year before he died.17 Xu soon lost a position he held because of conservative opposition to his views.18 The ideas of these two thinkers did, however, find an audience in Japan soon after their publication. The second edition of Wei’s Haiguo tuzhi found its way to Japan in the early 1850s. After initially being banned, the work gained national recognition after Japan was forcibly opened in 1853–54 and the shogunate pub­ lished part of its analysis.19 Jessie Lutz notes that Xu’s book also gained “consider­ able popularity in Japan during the 1850s,” and it was soon reprinted in Japanese editions.20 Wei’s work is credited with encouraging prominent Japanese think­ ers, including Yokoi Shōnan (discussed in chapter 7), to abandon their support for seclusion in the 1850s and to become supporters of more outward-oriented developmentalist policies.21 Indeed, Li Man argues that “it is no exaggeration to say that Wei Yuan’s works inspired the Japanese modernizers to end the ‘closed door’ policy and march towards ‘modernisation’, and in a way triggered the Meiji Restoration in Japan.”22 Given the strength of the local kokueki tradition, it is important not to over­ state the impact of Wei’s views. But his influence provides an early example of intraregional diffusion of East Asian neomercantilist thought and highlights how Japanese neomercantilism emerged within a wider regional intellectual context. As discussed in chapter 9, both Wei and Xu were also read by Koreans who pio­ neered neomercantilist ideas in their country around the time of their country’s economic opening in the 1870s.

Zheng Guanying and the Self-Strengthening Movement Although the ideas of Wei and Xu gained little traction in Chinese official circles in the 1840s and 1850s, the situation changed in the early 1860s because of the seriousness of the crises facing Qing China at the time. At home, the imperial court was challenged by the devastating Taiping Rebellion of 1851–64. In foreign

17. Schell and Delury 2013, 35. 18. Drake 1975. 19. Casalin 2005, 58n44; Jansen 1992, 74–75; 2000, 270–71; Hiroshi 2006, 58; Chen 2012, 1724; Mitchell 1972, 175. 20. Lutz 2008, 321; see also Chang 1950, 23; Drake 1975, 221n8. 21. de Bary, Gluck, and Tiedemann 2005, 638–39. See also the impact of Wei’s work on Sakuma Shōzan, who became well known for promoting the idea of “Eastern ethics, Western technical learn­ ing”: Li 2016, 262; de Bary, Gluck, and Tiedemann 2005, 632n15; Jansen 2000, 271. 22. Li 2016, 262; see also Leonard 1984; Mao 2016, 511.



relations, the Second Opium War of 1856–60 ended with a much more humiliat­ ing defeat for the empire than had the First Opium War, including the occupation of Beijing, the burning of the emperor’s summer palace, and the acceptance of treaties that went much further in undermining China’s sovereignty, including the establishment of new treaty ports.23 In this context, Chinese authorities began to support reforms that Wei had urged in the 1840s, such as the creation of a Western-style arsenal (1865) and naval shipyard (1866), as well as a new school in Beijing (1862) to train Chinese diplomats. By 1866, students in the latter were being assigned to read the 1848 book written by Xu, who soon became the director of the school.24 Wei’s Haiguo tuzhi also gained a new audience, and was reprinted many times up until the late nineteenth century. The official reforms of this time were associated with the idea of self-strengthening (ziqiang), a phrase from ancient Chinese scholarship that had been mentioned in both Wei’s and Xu’s work.25 The phrase was popularized in government circles in the early 1860s by Feng Guifen, who was influenced by the statecraft school with which Wei had been associated as well as by Xu’s work.26 In the 1870s and 1880s, the powerful official Li Hongzhang led more ambi­ tious self-strengthening economic reforms aimed at boosting China’s wealth and power. They included the creation of a number of state-supported firms to pro­ mote economic modernization in sectors such as shipping, mining, telegraphs and textile manufacturing. These government-controlled firms were run on the principle of “government-supervision and merchant-operation” (guandu shang­ ban), under which private merchants managed their day-to-day operations, but with government oversight and often with the support of government loans and privileges.27 Li Hongzhang drew inspiration from the Chinese statecraft and Legalist traditions.28 A number of scholars have also noted specific parallels between his state-sponsored firms and the history of the Chinese government’s salt monopoly as well as a zhaoshang tradition dating back to the Ming dynasty (1368–1644 CE) (in which public authorities invited private merchants to fund and manage projects that they identified as public priorities in sectors such as construction, hydrology, mining, and the tea trade). Zhaoshang was in fact the

23. 24. 25. Ching. 26. 27. 28.

Wang 2005, 18–19. Drake 1975, 186–87. Drake 1975, 90, 196; Schell and Delury 2013. The phrase comes from an ancient text, the I Chang 1971, 30; Mitchell 1972, 175. Quoted in Teng and Fairbank 1965, 110; see also Feuerwerker 1958, chaps. 1, 4, 5. See, for example, Pong 1985, 38–39; Liu 1994.



Chinese name given to Li’s first state-supervised firm, which was established in the shipping sector.29 Li Hongzhang was influenced not just by these Chinese historical traditions but also by a number of his Chinese contemporaries who advanced neomer­ cantilist ideas that built on Wei’s work. The most prominent of them was Zheng Guanying.30 The son of a school teacher, Zheng became a leading merchant in Shanghai. He supported Li’s reform initiatives and even worked briefly in Li’s state-supervised firms (as well as in Chinese diplomacy). From the early 1870s to the early 1890s, Zheng published a number of widely read works that addressed issues of political economy. The best known was Shengshi weiyan (Words of warning in a flourishing age), published in 1893 and subsequently reprinted more than twenty times. Indeed, Guo Wu argues that this work has the largest number of editions of any book in the history of Chinese publishing.31 Zheng’s ideas inspired many people in China, including Sun Yat-sen and even Mao Zedong in his youth.32 Following in the footsteps of Wei Yuan, Zheng’s neo­ mercantilist writings also found an audience beyond China’s borders in Meiji Japan and Korea.33 His experience was not unique in this respect. The neomer­ cantilist writings of one of Zheng’s most important intellectual allies in this period, Wang Tao, also circulated in Japan, with his books even appearing in Japanese editions in the 1870s and 1880s.34 The international diffusion of these two figures’ ideas provides another example of the way in which East Asian neo­ mercantilism emerged in a regional context in this period. Zheng was more knowledgeable about the West than most Chinese at the time because of his study at a British missionary school during 1865–68, his exten­ sive interactions with foreigners through his merchant activities (which included working for Western companies in China), and his reading of Chinese-language newspapers and translations of foreign works such as Henry Wheaton’s 1836 Ele­ ments of International Law (which was translated into Chinese in the 1860s).35 I have seen no evidence, however, that he was familiar with the ideas of List or any

29. Sun 1992, 18; for the parallels to the salt monopoly, see, for example, Teng and Fairbank 1965, 112; von Glahn 2016, 378. 30. Other important Chinese thinkers developing similar neomercantilist ideas in this period included Wang Tao, Shen Baozhen, Guo Songtao, Ma Jianzhong, Huang Zunxian, and Sheng Xuan­ huai (see, e.g., Cohen 1974; Kamachi 1981; Pong 1985, 1994; Bailey 1998). 31. Wu 2010, 143. 32. Wu 2010. 33. Hao 1969, 17. For Korea, see chapter 9. 34. Cohen 1974, 100; for the links between Wang Tao and Zheng, see Helleiner and Wang 2018. 35. Wu 2010. He never travelled to Europe or the United States.



other foreign neomercantilists. Indeed, knowledge of Western political economy was much more limited in China during this period than in Japan. Although the new school for diplomats in Beijing established a course on political economy in 1867 taught by a US missionary, students were introduced only to British liberal economic thought via Henry Fawcett’s 1863 A Manual of Political Economy, a book that also became one of the first Western works of political economy to be translated into Chinese in 1880. The small number of other Western works of political economy that were translated in the late 1870s and 1880s also had this liberal orientation.36 What about Japanese neomercantilist thought? Zheng was certainly fascinated by Japan’s economic success, praising how the country had “emulated Western manufacture and revitalized her commerce” and citing it as an example for Chi­ na.37 Feng Guifen and Li Hongzhang had also looked to Japan as a model as far back as the 1860s.38 But all these Chinese thinkers appeared much more inter­ ested in Japan’s policies and practices than the specific ideas of Japanese neomer­ cantilists. Indeed, within China, even knowledge of the details of the Japanese economic reform process remained quite superficial until China’s military defeat by Japan in 1895, after which many Chinese began to travel to Japan and the first significant Chinese analyses of Meiji Japan’s economic policies were published.39 Rather than drawing on foreign neomercantilist thought, Zheng’s neomer­ cantilism built on earlier Chinese thought as well as that of his contemporaries. Inspired by the ideas of Wei and Chinese statecraft thought, he emphasized that “strength can not be achieved without wealth, and wealth can not be secured without strength.”40 He also drew on Chinese sources for one of his most pop­ ular ideas: that China was caught up in a new kind of “commercial warfare” (shangzhan) in which states around the world fought not just for territory but also for profit. The phrase “commercial warfare” was borrowed by Zheng from Zeng Guofan, a prominent advocate of reform in official circles in the 1860s. Zeng Guofan himself had been inspired by Shang Yang’s idea of “agricultural warfare” from the time of the Warring States.41 Zeng Guofan used the phrase to highlight how a country’s wealth could be undermined by trade before it was invaded. Zheng Guanying developed the idea further, arguing—as Xu had—that

36. Janku 2014, 341n41; Trescott 2007, 23–25. 37. Quoted in Hao 1969, 20; see also Chong 1969, 262; Wu 2010, 47–48, 84–85. 38. Teng and Fairbank 1965, 54, 71, 109–10; Ch’en 1980, 79. 39. Kamachi 1981. In terms of Chinese analyses of Meiji Japan’s reform, particularly important was Huang Zunxian’s 1895 work noted in the next chapter. 40. Quoted in Wu 2010, 189; see also 28, 144. 41. For Zeng’s ideas, see Pong 1985; Teng and Fairbank 1965, 65.



the period of the Warring States was a precedent for the worldwide competitive interstate system in which China now found itself. In his view, China was losing badly in commercial warfare with the result that the country’s “right to profits” (liquan) was eroding and its wealth was “draining” away. He concurred with Zeng that the final outcome could be conquest: “Trade was the means used by the Brit­ ish to expand their territory. The occupation of America, India and Burma and intercourse with China were all accomplished by her merchants serving as the vanguard.”42 How should China respond to this new world? Whereas Wei Yuan had sought to resurrect trade via traditional tributary relations, Zheng emphasized the need for China to engage in commercial warfare—both at home and in international markets—in the way that Japan and Western countries were doing. China needed to focus on cultivating wealth, a goal that would generate not just revenue for the state and improvements in the “people’s livelihood,” but also power in the world. He also emphasized that the successful prosecution of commercial warfare would encourage foreigners to leave the country because they would lose interest in the Chinese market as Chinese firms increasingly outcompeted their foreign coun­ terparts. Because of China’s existing military weakness, he argued, “fighting with wealth rather than force” needed to be the priority.43 To fight commercial warfare successfully, Zheng outlined a much more ambitious reform program than that of earlier reformers such as Wei, includ­ ing modernizing agriculture, manufacturing, mining, and shipping; fostering domestic and international trade; improving merchants’ status; boosting China’s diplomatic activities; establishing new technical schools and chambers of com­ merce; strengthening infrastructure in new areas such as railways, telegraph, and roads; promoting Western-style banking and national currency consolidation; and abolishing taxes on internal commerce (particularly given that foreign goods had been exempt from them under an 1858 treaty). Like Xu Jiyu, Zheng argued that many of the Western practices that China needed to emulate had their roots in ideas acquired from ancient China.44 He also insisted that this economic

42. Quotes from Halsey 2015, 75; Gerth 2003, 60; Hu 1988, 539. See also Wu 2010, 82, 156–57. Zheng’s focus on China’s “right to profits,” its sovereignty, and the “drain” of its wealth were also prominent in Li Hongzhang’s defense of his state-sponsored firms (see, e.g., Halsey 2015, 192, 200; Ch’en 1980, 94). 43. Quotes from Wu 2010, 42, 190. The focus of Zheng and other Chinese neomercantilists on the “drain” of wealth was quite different from the Indian “drain” theory discussed in chapter 4. Whereas the former was focused on trade deficits, the latter was concerned with specific capital flows associated with colonial rule. 44. For the last point, see Chong 1969, 252. For his broader reform agenda, see Wu 2010.



transformation required state support, including through the state-sponsored firms that Li was establishing (although Zheng was critical of excessive state supervision of the latter). In addition, Zheng argued that the Chinese govern­ ment should support the economic interests of its merchants abroad with mili­ tary force if necessary.45 Zheng’s interests also included the significance of nationalism—which he saw in civic rather than ethnic terms—to the task of fighting commercial warfare successfully. As he noted in his 1893 book, “The reason why China is poor and weak whereas the West is rich and strong lies in their different social customs—the familism of China and the nationalism of the West.” Zheng’s inter­ est in promoting nationalist worldviews directly challenged Wei’s commitment to tributary norms that were based on the traditional conception of China at the center of a universal moral order.46 Zheng’s nationalism also was combined with a strong Confucian concern for the “people’s livelihood,” including domestic social injustice and poverty within China, and he was an early advocate for women’s rights and education.47 Zheng also argued that China’s treaties with Western powers needed to be reformed. In 1880, he suggested that taxes on internal commerce that had been established in the 1850s needed be replaced with a higher external tariff, a pro­ posal that called into question the constraints on Chinese tariff policy that had been imposed by Western powers. By the 1890s, Zheng was also explicitly cri­ tiquing the treaties for constraining China’s ability to follow the policies pursued by other countries of cultivating infant industries with tariffs. He also urged an end to the treaties’ extraterritoriality provisions, proposing instead in 1894 that foreigners could contribute to China’s economic modernization by living and investing in what he called “multinational public business zones” (wanguo gonggong shangchang) in border regions that were under Chinese jurisdiction.48 His criticisms helped to attract attention within China to the constraints imposed on its sovereignty by the treaties. These constraints would become a centrally important issue to the Chinese nationalist movement by the 1920s. Zheng and some other thinkers of his time played an important role in setting the stage for these later criticisms.49

45. Chong 1969, 260; Wu 2010, 36–54, 130–32. 46. Quote from Hao 1970, 205; see also 19, 202–4; Wu 2010, 7, 168, 187–93; Chong 1969, 247. Zheng did, however, invoke tributary norms in his diplomatic work in Siam in 1884 (Wu 2010, 59–61). 47. Zheng quoted in Wu 2010, 42. 48. Quoted in Wu 2010, 189; see also 153, 208; Halsey 2015, 75–76; Van de Ven 2014, 154–55. 49. For the 1920s, see Wang 2005. Zheng’s colleague Wang Tao also began to criticize the treaties in 1883 for constraining China’s ability to increase tariffs and for failing to force European powers to



It is striking, in fact, that the treaties’ trade and extraterritoriality provisions had not been subject to this kind of criticism at the time they were first put in place during the early 1840s. For example, Mao Haijian notes that Chinese negotiators gave up tariff autonomy at their own initiative and did not object to the low tariff levels included in the 1843 Treaty of the Bogue. In keeping with tributary notions of using trade privileges to serve foreign policy, they appeared to view these moves simply as a way of mollifying the bothersome demands of Westerners. The most-favored-nation clauses in the treaty were also accepted without complaint by Chinese authorities, who saw them as consistent with the Confucian tradition of treating “all [men from afar] without discrimination” and also as a way to play foreigners off against each other by extending benefits to all. Even the provisions for extraterritoriality were included in the 1843 treaty at the request of Chinese negotiators, who wanted the British to control growing disputes involving their merchants, as foreign merchant communities had often done in the past.50 In these ways, Chinese authorities in the early 1840s inter­ preted these new treaty provisions as representing continuity with past practices rather than any radical new arrangement.51 At this time, concerns about con­ straints on Chinese sovereignty also did not have the same political salience they would acquire later, because modern conceptions of Chinese nationalism had yet to gain influence in the country.52 After the implementation of the treaties, Chinese criticism of their trade provisions may also have been discouraged by the fact that British textile imports did not surge into China to the extent that they did in other regions of the world.53 One final dimension of Zheng’s thought deserves mention. In the 1870s and 1880s, he promoted a linear conception of history in which China had progressed from an ancient stage (lasting until 221 BCE) through a medieval one into a modern one that began with the incursion of the West. In Shengshi weiyan, he also predicted a further stage hundreds of years in the future when all countries

impose equally low tariffs on their imports from China (Cohen 1974, 203–6, 231). Other early critics included the Chinese diplomats Guo Songtao, Zeng Jize, and Huang Zunxian (Helleiner and Wang 2018, 474n122). Western thinkers such as Carey (1861, 23–24) had critiqued the unequal nature of China’s treaties earlier. 50. Quote from Mao 2016, 453; see also 449–51, 465; Lovell 2011, 11; Fairbank [1953] 1964, 104–5, 196–99; 1968, 260; Ch’en 1980, 8. Extraterritoriality had been part of Chinese legal orders before the nineteenth century (as it had been in those of the Ottoman Empire) (Lorca 2014, 96). 51. See also Fairbank 1968, 260–63; Motono 2000, 7. 52. Cohen 1974, 231. 53. Scholars attribute this outcome to conservative customer preferences in China, low Chinese purchasing power, and the strength of the local cotton industry (Fairbank [1953] 1964, 286–87, 299; Ch’en 1980, 32).



would be united with China and Confucianism would prevail worldwide. In out­ lining this vision of the future, Wu notes that Zheng never fully abandoned “the cultural universalism of the Confucian Way.”54 This idea of China’s progressing through historical stages was developed in greater depth and popularized in the 1890s by Kang Youwei, who began in the late 1880s to support neomercantilist goals of strengthening China’s wealth and power through industrialization, commerce, and other reforms. Kang advanced a more sophisticated stage theory of progress in which the world evolved from an Age of Disorder through an Age of Approaching Peace to an Age of Great Harmony (datong). The last stage was associated with world government and the Confucian ideal of a universal moral empire. Kang argued that China cur­ rently found itself in the second stage, in which the pursuit of state wealth and power had to be prioritized. Confucian thinkers traditionally had discussed the datong as an ancient golden age, but Kang depicted it instead as a future goal that China could reach after it successfully increased its wealth and power.55 With this stage theory, Kang offered a creative way to reconcile a neomercantilist political project with Confucian values. Zheng endorsed Kang’s vision in the late 1890s.56 Although Zheng’s ideas found an audience in Chinese reformist circles, they were less well received in much of broader Chinese officialdom at this time. Many Chinese policymakers were opposed to reform and to new ideas that might call into question conservative orthodoxy. Hao Chang notes that Zheng’s influence was also limited by the fact he “did not belong to the elite group of gentry-literati” and hence was “lacking in the traditional respectability in the Chinese intellectual world” of the time.57 Interestingly, the next key Chinese neomercantilist thinker— Sun Yat-sen—came from an even more marginal social background.

The Innovative Neomercantilism of Sun Yat-sen Sun is well known for his remarkable political career, rising from his family’s humble peasant background to become the first provisional president of the new

54. Wu 2010, 168; see also 144–45, 165, 234. 55. For Kang’s views, see Hsiao 1975. One of Wei Yuan’s teachers, Liu Fenglu, had also suggested that history progressed through stages that culminated in the datong (Elman 1990, chap. 7; Schell and Delury 2013, 18–19). Even earlier, Shang Yang had justified reform with the idea of linear time in which institutions needed to be adapted to specific stages of history. Despite his criticism of Con­ fucianism, Shang had also held out the ideal of a unified all-under-heaven world. See Pines 2012, 3; 2017, 97, 99. 56. Wu 2010, 147. 57. Chang 1971, 4–5.



Chinese republic in 1911. But his ideas on political economy are rarely discussed by IPE scholars or historians of economic thought.58 This neglect is unfortunate given the influence of Sun’s neomercantilism within China both during and after his lifetime. Sun’s ideas are also interesting because they built on and extended in innovative ways the endogenous Chinese neomercantilist tradition that had emerged in the nineteenth century. Sun’s first detailed writing on political economy came in a memo he sent as a young man in 1894 to Li Hongzhang. At the time, he had finished many years of education that began with the study of Chinese classics under his uncle’s tute­ lage in his birthplace near Canton, continued as a teenager in English-language schools in Hawaiʻi, and ended with medical training in Hong Kong from 1886 to 1892. During his medical schooling, Sun became increasingly concerned about the political and economic fate of his country in the face of Western power. His 1894 memo reflected this concern. The memo analyzed the sources of “the wealth and power of the European nations” and urged an emulation of many of their practices. Specifically, he called for educational reform, agricultural modernization, improvements to trans­ portation, the freeing up of internal commerce, and the application of modern machines to many sectors ranging from mining to cloth weaving. Citing Western practices, he also emphasized the need for state promotion and protection of external commerce: “In the West the interests of state and those of commerce flourish together; military expenditures and commercial wealth are interdepen­ dent.” Sun also lamented China’s losses in international trade: “Ever since China began trading with the West, all the privileges and profits of that trade have been seized by the West.” In addition, Sun applauded many of the reforms that Li had launched and argued that, if China could carry out further reforms “on a nation­ wide basis,” it “could match and surpass Europe within twenty years.” He pre­ sented Japan as a model of a country that had pursued this course. Like Wei Yuan before him, Sun argued that reforms to cultivate China’s wealth and power would help “to maintain our tributary states.”59 Many of the ideas in the memo resembled closely the writings of earlier Chi­ nese neomercantilists, especially those of Zheng Guanying.60 The parallels were not coincidental. Sun had formed a close relationship with Zheng in the late

58. For some exceptions, see Perälä 2009; Trescott 2007. 59. Quotes from Sun [1894] 1994, 4, 11, 13. 60. Schiffrin 1968, 28–29, 36; 1989, 16, 31–36; Cohen 1974, 3; Chang and Gordon 1991, 11–12; Chong 1969; Yü 1989, 89–90; Wu 2010; Hao 1969, 20n35.



1880s and may even have contributed to Zheng’s 1893 book.61 Sun visited Zheng in Shanghai on his way to deliver his 1894 memo to Li, an occasion when he also met Zheng’s colleague Wang Tao. Wang helped to edit Sun’s memo and provided him with an introduction to a member of Li’s secretariat.62 Sun’s first foray into political economy was thus shaped heavily by these earlier Chinese neomercan­ tilists. Sun was deeply disappointed when his memo was ignored by Li and he turned in 1895 from reform to revolution, following in the footsteps of the Taiping reb­ els who had inspired him in his youth.63 Because of his revolutionary politics, Sun was forced into exile that same year, after which he traveled extensively in Europe, North America, Southeast Asia, and Japan. During this time, he called for the overthrow of the imperial regime and became the best-known Chinese revolutionary abroad. When the regime fell in 1911, he returned to China and became the country’s first provisional president for forty-five days, after which he became director-general of railway development. After falling out with the new government, he fled into exile again in 1913. When he returned to China in 1917, Sun plunged back into politics for much of the time until his death in 1925, dedicating himself to the task of reunifying the country from his political base in the Canton area.

Sun’s Post-1918 Ideas After writing the 1894 memo, Sun advanced increasingly ambitious ideas about promoting China’s economic development, culminating in a number of publica­ tions written in both English and Chinese after World War I. The best known of these are his 1920 English-language book The International Development of China and a compilation of lectures he gave in China in 1924 titled The Three Principles of the People. Although Sun read foreign literature extensively and studied for­ eign economic practices, his ideas in these works continued to be shaped heavily by Chinese reformist thought and deeper Chinese intellectual traditions, includ­ ing Confucianism.64 Sun himself was eager to emphasize the Chinese roots of his ideas, expressing skepticism of those who applied foreign ideas about economics (and what he referred to as the “people’s livelihood”) uncritically to the Chinese context: “The different countries of the world, because of varying conditions and

61. 62. 63. 64.

Bergère 1994, 39; Schiffrin 1968, 28–29; 1980, 31. Cohen 1974, chap. 9; Schiffrin 1980, 33; Chong 1969, 248. Schiffrin 1980; Jansen 1967, 60. Gregor and Chang 1980; Yü 1989.



varying degrees of capitalistic development, must necessarily follow different methods in dealing with the livelihood problem.”65 Sun also called attention to the richness of economic thought in Chinese history and even challenged Eurocentric understandings of the origins of the subject: “Economics initially origi­ nated in China, Guanzi was an economist in ancient China.”66 In his writings after World War I, Sun continued to be deeply concerned about China’s weak power position in world politics. As he put it in The Three Prin­ ciples of the People: “We are the poorest and weakest state in the world, occupying the lowest position in international affairs; the rest of mankind is the carving knife and the serving dish, while we are the fish and meat. Our position now is extremely perilous.” In Sun’s view, China’s vulnerable position in world politics was strongly linked to its economic weakness. The latter left the country vul­ nerable to foreign “economic oppression,” which he deemed to be “more severe than imperialism or political  oppression.” Although the common people were “hardly conscious” of this oppression, he warned that the “economic domina­ tion” of China “will spell the loss of our country as well as the annihilation of our race.” Indeed, fascinated with Darwin’s ideas since his schooling in Hawaiʻi, Sun often depicted world politics as a bitter struggle for survival between countries and races.67 In discussing economic oppression, Sun drew on ideas that had emerged in the work of Zheng and other earlier Chinese neomercantilists about “commercial war,” “drain” of the country’s wealth, and recovering the “right” to profits. He excoriated China’s externally imposed low tariff regime for causing an “invasion” of foreign goods that was destroying local businesses and generating “tremen­ dous drain” on China’s resources arising from trade deficits. He lamented China’s “failure in the trade war” and highlighted the need to “recover our rights” in sec­ tors such as the woolen industry, where foreign goods had come to dominate the Chinese markets.68

65. Sun 1928, 409. 66. Quoted in Zhao 2014, 80. 67. Quotes from Sun 1928, 12, 37, 53. For his depiction of world politics as a bitter struggle for survival between races, see, for example, Sun 1928, 87. Sun’s ideas about “economic oppression” were downplayed in The International Development of China, presumably because this English-language book was written with a foreign audience in mind. For his early interest in Darwin, see Sun [1896] 1994, 21; Pusey 1983, 317. As noted below, Sun (1928, 20) also anticipated that future international conflicts and war would no longer be between races but rather between defenders of two distinct principles: “might and right.” 68. Quotes from Sun 1953a, 186; 1931, 47; 1928, 510.



Sun also pointed to some other forms of economic oppression. He argued that China was losing money from the fact that the foreign treaties enabled foreigners to earn money from tax revenue, land rent, and land sales in the treaty ports as well as more generally through the profits they earned by their other activities in the country. Sun also noted Chinese losses arising from the dominant position in China of foreign banks and shipping companies and from foreigners taking advantage of the Chinese people in “the speculation business and various other fleecing games” in the country. Sun described the economic losses arising from these various “stolen rights and privileges” as a “tribute” paid by China to foreign­ ers, with the result that “our society is not free to develop and the common people do not have the means of living.” He also called attention to how the political power of Europe and the United States reinforced their economic oppression of China: “If their economic arm is at times weak, they intervene with political force of navies and armies. The way their political power cooperates with their economic power is like the way in which the left arm helps the right arm.”69 If the Chinese authorities did more to promote rapid economic development, Sun argued, the country would gain power and be better able to throw off eco­ nomic oppression as well as recapture lost export markets in sectors such as tea and silk. As he had done in 1894, Sun held up Japan as a model, seeing its success in defeating Russia in 1905 and in throwing off its unequal treaties as an inspira­ tion to other Asian countries. In The Three Principles of the People, Sun argued that China would be able to acquire even more power than Japan if it followed the latter’s path: “Japan studied from the West for only a few decades and became one of the world’s great Powers. But China has ten times the population and thirty times the area of Japan, and her resources are much larger than Japan’s. If China reaches the standard of Japan, she will be equal to ten Great Powers.”70 When writing about foreign economic oppression after World War I, Sun was aware of Lenin’s theory of imperialism, not least because he turned to the USSR for assistance in 1922 and began working closely with Soviet advisers in late 1923. Criticisms of “imperialism” became more prominent in Sun’s writing and speeches at this time.71 But Sun did not explain imperialism with reference to the dynamics of capitalism and class struggle, but instead in terms of the rival­ ries and unequal power relations between countries and races. Indeed, as I note below, the core of Sun’s understanding of the roots of Western imperialism was a

69. Quotes from Sun 1928, 52–53, 87–88. 70. Sun 1928, 176. For Japan as an inspiration, see Sun 1953b, 164; 1970, 115. For benefits of economic development, see Sun [1912b] 1994, 109; [1920] 1922, 205–8; 1928, 42–52; 1942, 3–5. 71. See, for example, Bergère 1994, 290, 356, 361–63; Wilbur 1976, chaps. 5–6.



cultural one that located it in a Western civilizational tradition that he compared unfavorably to China’s.72 More generally, although Sun identified with the political left, he was critical of what he saw as the excessive materialism of Marxism. He also attacked Marx himself for focusing so heavily on class struggle without recognizing that social reform and progress often took place through the cooperation of classes within a nation. As he put it in The Three Principles of the People, “If most of the economic interests of society can be harmonized, the majority of people will benefit and society will progress.” He also insisted that the productive advances of society did not stem just from the labor of the working class but also from many others working together in the nation as whole.73 When urging Chinese authorities to promote economic development, Sun emphasized the need to improve not just China’s weak power position in the world but also the living standards of the Chinese people (as well as to create legal equality between men and women). Drawing on classical Chinese thought, he argued that the government had a responsibility to promote the “people’s livelihood” and to provide for what he called the “four great necessities of the people: food, clothing, housing, and means of travel.” Indeed, he declared the advancement of the people’s livelihood to be one of core three principles of his philosophy (alongside nationalism and democracy). Drawing on the European and US experience, he insisted that industrialization was required to raise living standards (as well as national power). He also suggested that “in international trade an industrial nation has an advantage over an agricultural nation,” although he provided no detail about why.74 When highlighting the importance of the people’s livelihood, Sun insisted that China needed to avoid mistakes made by the Western countries. He condemned how Western industrialization had generated rising inequality and social tensions between the rich and poor. He had seen these conditions in Europe firsthand in the late 1890s, later describing the impact of this experience: “For the first time I understood that though the European powers achieved national wealth and power, they were not able to give their peoples full happiness.”75 Although he argued that China did not yet suffer from class conflict, Sun emphasized that the government needed to preempt it. He advocated policies such as a land tax that

72. See also Gregor and Chang 1982; Gregor 1981; 2000, chap. 4; Bergère 1994, 364. 73. Quote from Sun 1928, 391; see also 382–85, 390–94. 74. Quotes from Sun 1953a, 9; 1928, 41. For the link between industry and power, see, for exam­ ple, Sun [1912a] 1994, 91. 75. Quoted in Schiffrin 1968, 136–37.



could promote “equalization of land ownership,” an idea he took from the Ameri­ can Henry George.76 Sun also called for the regulation of private capital and the creation of state-owned firms that could constrain the growth of powerful private capitalists and the profits of which could be used to support social spending that benefited the people. He praised Bismarck’s initiatives to create state welfare and state-owned firms, but also noted that his goals of sharing the country’s wealth were in keeping with “Confucius’ hope of a ‘great commonwealth.’”77 Sun was more critical, however, of the short-term usefulness of another legacy of Confucianism: its cosmopolitanism. Like Zheng, Sun believed that a strong “nationalist spirit” was needed instead to promote China’s economic develop­ ment and lamented its absence in China: “Because we have lost our national spirit, we have opened the gates for political and economic forces to break in, which never would have happened if we had preserved our nationalism.” Sun argued that nationalist ideas in China “were inherited from our remote forefa­ thers” but had been weakened by the cosmopolitanism of traditional Confucian thought as well as by the country’s long Manchu rule.78 He pointed once again to the need to learn from the Japanese experience if China wanted to cultivate wealth and power: “Because of their national spirit, which has called forth a fiery heroism, they have, in a period of less than fifty years, transformed Japan from a weak into a powerful state. If we want China to become strong, Japan is an excel­ lent model for us.”79 At the same time, however, Sun remained wedded to the tributary tradition. I have already noted how Sun’s 1894 memo argued that the promotion of China’s wealth and power would help to maintain its tributary states. In his later writings, this idea endured, but in a new and more ambitious form. As China’s wealth and power grew, Sun argued, it should draw on the traditional principle by which it had governed its smaller and weaker neighbors; that is, what he called the “rule of Right,” which respected their independence and governed by “respect, not fear” through setting a superior moral example to promote “benevolence, justice and morality.” He contrasted this with the approach of Europe and the United States, which were seeking to govern the world with what he called “the rule of Might,” involving the use of force and imperialism.80

76. 77. 78. 79. 80.

Sun 1928, 434; see also Trescott 1994; 2007, 46. Sun 1928, 444. Sun 1928, 72; 1953a, 77. Sun 1928, 14–15. Quotes from Sun 1953b, 168, 166; see also 1928, 20–21, 84, 90–91, 99, 131, 146–47.



Sun used this idea to advance a kind of neomercantilism in which China would project power externally as its power and wealth increased, but in a dis­ tinctive anti-imperialist way that was inspired by the tributary tradition. As he put it in The Three Principles of the People, “If we want China to rise to power, we must not only restore our national standing, but we must also assume a great responsibility towards the world.” That responsibility was to be informed by the ancient Chinese phrase “Rescue the weak, lift up the fallen,” which Sun suggested had guided China’s historical policy toward its nearby tributary states. In the future, its meaning would be the following: “Let us to-day, before China’s devel­ opment begins, pledge ourselves to lift up the fallen and to aid the weak; then when we become strong and look back upon our sufferings under the political and economic domination of the Powers and see weaker and smaller peoples undergoing similar treatment, we will rise and smite that imperialism. Then will we be truly ‘governing the state and pacifying the world.’”81 In helping “the weaker, smaller peoples to unite in a common struggle” against imperialist powers, China would be using “Right to fight Might,” Sun argued. Indeed, he predicted that future international conflicts and wars were likely to be fought not between races but between defenders of “might and right.” In a speech to a Japanese audience in late 1924, Sun even attributed this contrast to deep civilizational traditions, arguing that “Oriental civilization is the rule of Right; Occidental civilization is the rule of Might” and challenging Japan to uphold the “Oriental” tradition instead of embracing Western civilizational norms.82 Whereas List saw Western civilization as the standard for other regions, Sun was arguing that neomercantilists in East Asia needed to challenge it directly. Sun’s 1924 speech in Japan was later invoked in the late 1930s by Japanese officials promoting Pan-Asianism as part of their imperial expansion in East Asia.83 What then should happen after China defeated Western imperialism and the “rule of Might”? At that point, Sun argued, China could finally return to the cos­ mopolitan goals of traditional Confucian thought. As he put it, “When Might is overthrown and the selfishly ambitious have disappeared, then we may talk about cosmopolitanism.” The ultimate goal, he argued, was to “unify the world upon the foundation of our ancient morality and love of peace, and bring about a universal

81. Sun 1928, 147–48. 82. Quotes from Sun 1928, 76, 20; 1953b, 169. Sun participated in anti-imperialist movements beyond China, including a failed effort in 1899–1900 to assist the Filipino uprising against US occu­ pation (Jansen 1967, 68–74; Wilbur 1976, 17–18). He also supported the Vietnamese independence movement (Kindermann 1989). 83. Linebarger 1937, 198; Bergère 1994, 411.



rule of equality and fraternity. This is the great responsibility which devolves upon our four hundred millions [of Chinese people].” With this argument, Sun embraced a long-term Confucian cosmopolitan goal, just as did Zheng Guany­ ing and Kang Youwei (and Japan’s Fukuzawa Yukichi, as noted in the previous chapter). In one publication from 1923, Sun even associated this cosmopolitan future with a mixing of civilizational traditions, arguing that China should strive “to spread our indigenous civilization as well as to enrich it by absorbing what is best in world civilization, with the hope that we may forge ahead with other nations toward the goal of ideal brotherhood.”84 On the surface, Sun’s endorsement of both nationalism and cosmopolitanism was reminiscent of List’s arguments. But like Zheng and the other East Asian thinkers, Sun came to this position through an East Asian intellectual tradition. Indeed, Sun reminded his readers that the Chinese cosmopolitan tradition was much older than the European one that had only begun to gain serious political traction with the creation of the League of Nations: “Cosmopolitanism has just flowered out in Europe during this generation, but it was talked of two thousand years ago in China.”85

How to Promote Economic Development? In the immediate term, how did Sun propose that China develop economically? Sun outlined some extremely ambitious ideas on this topic, in keeping with what William Rowe calls his “flair for the dramatic.”86 He urged public authorities to support a massive industrialization drive as well as agricultural and irrigation improvement and development schemes in sectors such as forestry, mining, and energy (including the transportation of “ten millions of the people .  .  . to the Northwestern territory to develop its natural resources”). He also called for mas­ sive urban development and infrastructural projects, including the construction of “100,000 miles of Railways” and the development of three ports that would equal New York’s harbor in their future capacity. Describing his infrastruc­ tural plans as “the weapons for the promotion of industry,” he argued: “Unless we have facilities of communication, transport and storage, industry cannot be developed.”87

84. 85. 86. 87.

Quotes from Sun 1928, 76, 148; 1953a, 78. Sun 1928, 98–99. Rowe 2009, 270. Quotes from Sun [1920] 1922, 24, 6–7; 1953a, 190.



To meet these objectives as well as his domestic social goals, Sun assigned the Chinese state a major role. To begin with, he argued that the government needed to create state-owned firms in the industrial sector. In some places, Sun was cautious about the issue: “All matters that can be and are better carried out by private enterprise should be left to private hands which should be encouraged and fully protected by liberal laws.” But he clearly anticipated a significant role for state-owned firms in the Chinese economy. His justification was that Adam Smith’s advice no longer made sense in an age when the competitive “handicraft economy” had given way to one dominated by “labor-saving machines” owned by concentrated and powerful private interests. State-owned trusts would not just contain private power and allow profits to be shared by “the whole nation.” They would also promote efficiency in the same way that Western private trusts were able to produce goods cheaply “by eliminating waste and cutting down expenses.”88 Sun also prioritized trade protectionism in The Three Principles of the People to “meet foreign economic pressure and check the invasion of economic forces” from abroad. He argued: “Just as forts are built at the entrances of harbors for protection against foreign military invasion, so a tariff against foreign goods pro­ tects a nation’s revenue and gives native industries a chance to develop.”89 Some scholars have suggested that Sun’s protectionist views were directly inspired by List’s ideas.90 Sun may well have been aware of List’s writings, but I have seen no place where he cited them (or those of Carey) and none of his biographers even mention List’s name (or that of Carey). Given that Sun openly acknowledged his debt to other Western political economists such as Henry George, this absence is noteworthy.91 Sun did cite US and German protectionism as an example for China to follow, but the invocation of these two countries’ trade policies was common among neomercantilists around the world in the late nineteenth and early twentieth centuries, whether or not they followed List.92 As I have shown in chapter 6, List’s ideas were not even centrally important to the origin of US and German protectionism in the second half of the nineteenth century. It is also worth noting that Sun’s thought departed sharply from that of List in many areas: his social focus on the “people’s livelihood,” his anti-imperialism and

88. Quotes from Sun [1920] 1922, 11; 1931, 48–49; 1928, 443; [1920] 1922, 235. 89. Sun 1928, 41. His advocacy of protectionism does not appear in his 1920 book, presumably because he was appealing to foreign countries for assistance and highlighting how that assistance would enable China to develop in ways that bolstered their exports to China. 90. See, for example, Gregor and Chang 1979, 34; Boecking 2017, 66–67; Gerybadze 2019, 235. 91. Sun’s neomercantilist views did not come from George, who supported free trade. 92. For Sun’s citing of US and German protectionism, see Sun 1928, 508.



criticism of Western civilization, his promotion of tributary norms and Confu­ cian cosmopolitanism, his enthusiasm for state-owned companies, some of his specific concerns about foreign economic domination, his ideas about “rights” to profit, his emphasis on a struggle for survival between races, his left-wing politi­ cal orientation, his rejection of Eurocentrism, and his view of the prospects for Asia’s industrialization. I note some further differences below concerning the two thinkers’ views about managing foreign experts and investment. To what extent were Sun’s protectionist views influenced by Japanese think­ ers? The question is an important one because Sun praised Japan’s protectionist policies alongside German and US ones and he also lived in Japan for extended periods of time from 1897 to 1917, during which time he became familiar with many Japanese thinkers and policymakers.93 Interestingly, his closest Japanese contact was Inukai Tsuyoshi, whose interest in Carey’s thought was noted in the last chapter.94 This friendship may have reinforced Sun’s protectionist views, but any such influence was certainly not decisive, given that Sun’s core views had already been shaped by Chinese thinkers such as Zheng before he arrived in Japan. When advocating protectionism, Sun highlighted that China would first need to abolish the unequal trade treaties.95 In the meantime, Sun also noted the potential role of voluntary boycotts of foreign products that might parallel the Indian swadeshi movement. A “national products movement” of this kind had been growing in popularity in China since the early twentieth century. Its supporters linked the purchasing of Chinese-made products to the nationalist cause of fighting “commercial warfare,” “cleansing China’s national humiliations,” and preventing the “drainage of profits” from the country.96 The origins of the movement are usually located in a 1905 boycott of US goods, which protested that country’s discriminatory immigration policies and in which Zheng Guany­ ing took a leading role.97 During spikes of anti-imperialist sentiment in 1919 and 1925, the boycott movement extended to foreign banks98 Sun backed the national products movement in 1912 and abandoned the Western suit and tie he had adopted since leaving China in favor of his distinctive Sun Yat-sen suit, whose style was neither Western nor that of the Qing dynasty.99

93. 94. 95. 96. 97. 98. 99.

For Sun’s praise of Japanese protectionism, see Sun 1928, 506. For their relationship, see Jansen 1967. Sun 1928, 506–8. Quotes from Gerth 2003, 19, 103–4. Gerth 2003, 65. For Zheng’s role, see Hao 1969, 21. Horesh 2006, 110; 2013. Gerth 2003, 107. The style was subsequently adopted by Mao.



In The Three Principles of the People, he also noted the achievements of Gandhi’s broader “non-cooperation” policy in India and argued that the Chinese people could “refuse to work for foreigners, refuse to be foreign slaves or to use foreign goods manufactured abroad, push the use of native goods, decline to use foreign bank notes, use only Chinese government money, and sever economic relations with foreigners.” But Sun was also skeptical of how much China’s boycott move­ ment could achieve: “The nation has never acted in unison and the movement has been unsuccessful.” As he put it, “With foreign cloth cheaper than native cloth, as is the case at present, we cannot expect the people, however patriotic they may be, always to refuse foreign cloth in favor of native cloth.”100 For this reason, Sun prioritized the need for tariffs and he became a lead critic of the treaties with the West, urging Chinese attendees of the Paris Peace Conference to propose their abolition. Indeed, Dong Wang argues that Sun was the first to use the phrase “unequal treaties” in the Chinese context (in January 1924). The phrase quickly became popular in nationalist as well as communist circles.101 Sun assigned a high priority to attracting foreign capital and expertise to support his efforts to raise the standards of living of the Chinese people through industrial growth. As he put it in The International Development of China, “This miserable condition among the Chinese proletariat is due to the non-development of the country, the crude methods of production and the wastefulness of labor. The radical cure for all this is industrial development by foreign capital and experts for the benefit of the whole nation.” Despite his strong concerns about foreign economic oppression, Sun argued that China’s rapid industrialization and economic development required this kind of for­ eign assistance because of the country’s late start: “Europe and America are a hundred years ahead of us in industrial development; so in order to catch up in a very short time, we have to use their capital, mainly their machinery.”102 In contrast to List, however, Sun argued that foreign capital would serve Chinese interests only if it was subject to a degree of public management. In fact, Sun’s discussion of the management of foreign capital in his 1920 book included one of his most original contributions to neomercantilist thought. He proposed that the League of Nations create a multilateral institution that could support Chinese development aspirations by channeling foreign capital and

100. Quotes from Sun 1928, 120, 508, 509. 101. Wang 2005, 65–72. Sun’s strong attack on the treaties at this time no doubt partly reflected his frustration with Western reaction to his efforts in late 1923 to take greater control of customs revenue in his political base of Canton (Schiffrin 1980, chap. 7; Chang and Gordon 1991, 80–81. 102. Quotes from Sun [1920] 1922, 198.



expertise to the country through its auspices. In the late 1920s and early 1930s, thinkers such as Manoilescu and B. K. Sarkar also called on wealthy countries to export capital to poor countries to promote the latter’s industrialization. But Sun’s proposal came earlier and was more innovative in suggesting that these capital flows be managed via a multilateral institution. It also went well beyond Manoi­ lescu’s proposal for the League to support the neomercantilist goals of countries by recognizing their right to use protectionist policies. Almost a decade before Manoilescu’s 1929 book was published, Sun was proposing a much more activist economic role for the multilateral institution. Sun was provoked to develop this proposal by the international preparations for the 1919 Paris Peace Conference. As soon as World War I ended in November 1918, Sun began writing on the topic. Although he had no formal position in Chinese politics at the time, he circulated some initial ideas to foreign officials in early 1919 in the hopes of influencing the conference that had begun in January of that year. His detailed proposals were subsequently published in English in the Far Eastern Economic Review beginning in June 1919, as well as in his 1920 book.103 In his writings of this time, Sun proposed the creation of an “Interna­ tional Development Organization” (IDO) with the “various Governments of the Capital-supplying Powers” as members.104 Sun provided no details about how the IDO would be structured and managed, but he argued that its purpose would be to negotiate contracts with the Chinese government for the lending of money and expertise to support a wide range of Chinese development projects. Sun’s IDO proposal arose from his efforts to reconcile his concerns about China’s economic oppression by foreigners with the country’s need for foreign capital. Under his plan, foreign capital would be publicly managed on both the borrowing and lending side to serve Chinese interests. On the borrowing side, the Chinese state would be in charge of securing funds from abroad.105 As he put it in his 1920 book, his plan was to “make all the national industries of China into a

103. Schiffrin 1989, 37–38; Wilbur 1976, 322; Sun [1920] 1922, v, 251–59; 1970, 174–75. 104. Sun [1920] 1922, 9. 105. Sun’s idea of managing foreign capital in this way echoed the ideas of one of the earlier neomercantilists in Li Hongzhang’s circle, Ma Jianzhong, who had suggested in the late nineteenth century that the Chinese government borrow private foreign money in order to “kick-start” domestic economic initiatives by Chinese firms to build infrastructure and modernize production (Ma [1890] 1998b, 102–3). Ma proposed government borrowing of this kind as a better way to use foreign capital than foreign direct investment in Chinese firms, which he associated with the export of profits and the risk of triggering foreign intervention in the country. If China did not use foreign capital to assist its development, Ma argued, its slow economic progress would result in more military defeats (Ma [1879] 1998a, 71). In chapter 4, I also note how Ranade urged the Indian colonial government in the late nineteenth century to borrow abroad to help support local industrial firms in India.



Great Trust owned by the Chinese people, and financed with international capital for mutual benefit.” Sun argued that the projects that were financed with foreign capital would be “national undertakings” in which the property created would be “state owned” and “managed for the benefit of the whole nation.” To be sure, foreigners would be involved in managing and supervising development projects before foreign loans were paid off, but he insisted they would work “under Chi­ nese employment” and with the obligation “to undertake the training of Chinese assistants to take their places in the future.”106 Sun’s desire to carefully manage the role of foreign experts in supporting Chinese development contrasted with List’s more open-ended welcome of foreign skilled migrants. On the lending side, foreign capital would also be managed publicly because the Chinese government would borrow from an international public institution— Sun’s proposed IDO—rather than from private foreign financiers. Whereas the latter had “entirely disregarded the will of the Chinese people” in the past, Sun argued that the IDO would be required to secure “the confidence of the Chinese people” before any contract was signed between it and the Chinese government. As Sun emphasized, “In this International Project we must pay more attention to the people’s will than ever before.”107 Sun also argued that the IDO would bring an end to the damaging kinds of interimperialist commercial rivalries and spheres of influence that had been present in China before World War I: “Inter­ national cooperation of this kind cannot but help to strengthen the Brotherhood of Man.”108 Anticipating some of the arguments of Manoilescu in 1929 and of B. K. Sarkar in 1932, Sun also pointed to some concrete economic benefits that foreigners would derive from supporting his scheme. Not only would the eco­ nomic development of China “create an unlimited market for the whole world” but China was also “capable of absorbing all the surplus capital” in the postwar context.109 Sun’s advocacy for a public international financial institution to support China’s development was highly innovative. The only multilateral institutions that existed before the creation of the League of Nations were the limited public

106. Quotes from Sun [1920] 1922, 236, 11–12. 107. Quotes from Sun [1920] 1922, 9–10. Sun’s skepticism of foreign banks was also evident in The Three Principles of the People, where he described their activities as one of the kinds of “economic domination” experienced by the country (Sun 1928, 53). In 1914 writings, he also objected to their influence in Chinese politics: “Foreign bankers, such as the Hongkong-Shanghai Banking Corpora­ tion, really hold the balance of power in our internal struggle. If one cannot get rid of that money control one can never be independent” (Sun 1942, 304). 108. Sun [1920] 1922, 9. 109. Quotes from Sun [1920] 1922, 5, 8.



international unions, none of which had this kind of development-lending man­ date. In writing this proposal, Sun may have been influenced by US government efforts to create an international consortium of private bankers to lend to China (efforts to which he referred in his book).110 He was also clearly inspired by Kang Youwei’s anticipation of an Age of Great Harmony with a world government.111 In the 1922 edition of The International Development of China, Sun noted that after the end of World War I “the hope of the peace-loving nations in the world was raised so high that we Chinese thought that the ‘Tatung’ or the Great Harmony Age was at hand.”112 Chinese hopes were subsequently dashed by the results of the postwar settlement, but Sun’s IDO proposal was developed at the earlier, hopeful moment in the spirit of Kang’s predictions.113 The influence of Kang represented yet one more way in which Sun’s ideas were infused by Chinese thought and Confucian intellectual tradition. Like the expectations for an Age of Great Harmony, Sun’s efforts to influence the Paris Peace Conference went nowhere. The charter of the League of Nations included no commitment to the idea of multilateral development lending. As discussed in chapter 11, however, neomercantilists in Latin America also began during the 1930s to advance proposals for multilateral financial institutions that could provide support for state-led development goals. I note in the concluding chapter how both their ideas and those of Sun would help to inform the discus­ sions leading up to the 1944 Bretton Woods conference that created the Interna­ tional Bank for Reconstruction and Development (later the World Bank). This chapter’s analysis of Chinese neomercantilist thought reinforces all four core themes of the book. First, it provides further examples of thinkers beyond List who made important contributions to neomercantilist thought in the pre-1939 period. Wei Yuan, Zheng Guanying, and Sun Yat-sen all responded to their coun­ try’s growing geopolitical and economic vulnerabilities in this period with inno­ vative protoneomercantilist and neomercantilist ideas that were developed quite independently of engagement with List’s work. Indeed, Wei Yuan and Zheng Guanying were much more intellectually isolated from Western neomercantilist thought as a whole than any of the other figures I have discussed in the book so far, including the Japanese thinkers in the last chapter.

110. Wilbur 1976, 97; Sun [1920] 1922, 233–34. 111. For the interest of Sun and others in Kang’s ideas, see Gregor 1981, 9–10; Hsiao 1975; Pusey 1983; Bergère 1994, 392. 112. Sun [1920] 1922, 231. 113. Sun [1920] 1922, 231; Bergère 1994, 285.



Second, the study of Chinese neomercantilism presents more evidence of the diversity of the content of pre-1939 neomercantilist thought. The ideas of Sun Yat-sen, for example, contrasted with those of List in many ways that have been noted. There were also important differences among Chinese neomercan­ tilists. Sun’s version of neomercantilism differed from Zheng’s across a number of dimensions ranging from his more ambitious ideas about economic develop­ ment to his IDO proposal. As we will see in the next chapter, both of their ver­ sions also contrasted with that of another prominent Chinese neomercantilist in the early twentieth century: Liang Qichao. Third, this chapter provides more evidence of the complexity of the interna­ tional circulation of neomercantilist ideas in the pre-1939 period. In this case, the key flows were intraregional within East Asia. Although Japan is usually por­ trayed as the pioneer of neomercantilism in the nineteenth century, the Chinese ideas of Wei Yuan and Zheng Guanying helped to inspire Japanese reformers in that era in ways that are often overlooked. In Sun Yat-sen’s case, ideas moved in both directions; Sun engaged directly with Japanese neomercantilists such as Inukai, but his ideas were also invoked by later Japanese supporters of imperial expansion. Finally, this Chinese intellectual history highlights the importance of recog­ nizing the diverse mercantilist traditions that inspired neomercantilists around the world. Although Chinese thinkers were interested in the history of Euro­ pean mercantilist practices, the mercantilist ideas with which they engaged were Chinese in origin. Like Japanese neomercantilists, Wei, Zheng, and Sun drew heavily on the deep history of Chinese mercantilism dating all the way back to the era of the Warring States. Indeed, that era even provided thinkers such as Xu Jiyu and Zheng Guanying with a reference point through which to interpret the nineteenth-century world of competing states and China’s position in it.



In the previous two chapters, I have challenged the idea that neomercantilist ideology in Japan and China was largely imported from the West. I have shown that many influential neomercantilist ideas in these two countries emerged more endogenously, with their creators drawing more on East Asian mercantilist tradi­ tions than Western neomercantilist thought. The result was a number of varieties of neomercantilism whose content was often quite different from that of those in the West. I have also highlighted how the intraregional circulation of neomercan­ tilist ideas was an important part of the story of the emergence of this East Asian neomercantilist thought. In this chapter, I reinforce these messages in two ways. First, I analyze the ideas of one more Chinese neomercantilist, Liang Qichao, who advanced a ver­ sion of this ideology that contrasted in important ways with that of his political rival Sun Yat-sen in the early twentieth century. In developing his ideas, Liang engaged more extensively with Western neomercantilist thought than did Sun and the other Chinese thinkers discussed in the previous chapter. Even in this case, however, I show the limits of the impact of those Western ideas. Not only was Liang’s neomercantilism also shaped by East Asian mercantilist and neomer­ cantilist thinkers, but its influence was also less significant and enduring than Sun’s. In the second section of the chapter, I examine the emergence of neomer­ cantilist thought in Korea in the late nineteenth and early twentieth centuries. Korean neomercantilists in that era, like their Chinese counterparts, are rarely 261



mentioned in modern IPE scholarship. Even specialist literature on the origins of the Korean developmental state often does not discuss them. Work on the latter topic has effectively highlighted the legacies of Japanese colonial practices.1 But ideational origins of Korean developmentalism can also be found further back in the ideas of Korean neomercantilist thinkers from the precolonial period.2 Their ideas emerged in the context of Korea’s economic opening in the last quarter of the nineteenth century and without much engagement with Western neomercan­ tilist thought. Like key pioneering Japanese and Chinese neomercantilists, those in Korea built their ideas instead on local mercantilist tradition. They were also influenced—strongly, in this case—by the broader regional ideational context.

Liang Qichao’s Version of Neomercantilism In the wake of the China’s humiliating military defeat by Japan in 1895, most of its ruling elite finally accepted the need for political and economic reforms. In many ways, the defeat was more shocking to Chinese officials and intellectu­ als than those during the Opium Wars, and it undermined any remaining con­ servative notions that China was still the center of the world.3 In this context, some Chinese thinkers began to look more seriously at what they could learn from foreign thought about political economy. From 1898 to 1911, no fewer than fifteen histories of Western economic thought were published in Chinese, and a Chinese translation of Adam Smith’s The Wealth of Nations was finally published in 1902.4 Although some Chinese scholars embraced Western eco­ nomic liberalism, others showed more interest in foreign neomercantilist ideas. The most important of these figures was Liang Qichao, who has been described by Hao Chang as “China’s most popular writer of the first decade of the twen­ tieth century.”5

Engaging with Western Neomercantilist Thought Liang’s engagement with Western neomercantilist thought occurred while he was living in Japan, to which had he fled after his involvement in a failed reform

1. See, for example, Kohli 2004. 2. For a broader discussion of the importance of the precolonial roots of Korean developmentalism, see Hwang 2016, esp. 119, 132, 144. 3. See, for example, Rowe 2009, 230; Lovell 2011, 297; Schwartz 1964, 18. 4. Lin, Peach, and Fang 2014, 3. 5. Chang 1971, 142.



initiative in 1898. Before leaving China, Liang’s knowledge of Western political economy was limited to his reading of some of the Western liberal economic literature that had been translated in Chinese. After arriving in Japan, he sought to gain a more serious understanding of Western political economy because he saw it as a key foundation of the West’s wealth and power. He was particularly influenced by his reading of three Japanese-language histories of Western eco­ nomic thought, all of which analyzed the subject from a perspective sympathetic to the younger German historical school that had become influential in Japan at the time (see chapter 3).6 Echoing the texts he had read, Liang published a set of articles in 1902 that told the history of Western economic thought leading up to Adam Smith’s ideas in a manner that highlighted positive features of European mercantilism as well as its relevance to China.7 In subsequent work, Liang identified his views with the Western tradition of “national economics” and critiqued Smith for being “focused on the individual not on the nation.” As he put it, “The state is the most important human group. A good economist should consider all the people in the state and be concerned with their economic status. This is the advantage of national economics.” In keeping with this perspective, Liang argued—like Zheng and Sun—that the Chinese people needed to abandon their “village mentality” for a “national mentality.”8 Nationalism would encour­ age Chinese citizens both to resist foreign domination and to recognize the need to adapt their ways to help increase China’s wealth and power. In making these arguments, he invoked the European example: “Since the sixteenth cen­ tury, about four hundred years ago, the reason for European development and world progress has been the stimulation and growth of extensive nationalist feeling everywhere.”9 Although his emphasis on nationalism was similar to that of other Chi­ nese neomercantilists, Liang strongly rejected the idea promoted by thinkers such as Zheng, Kang, and Sun that nationalism was merely a stepping stone en route to a more cosmopolitan future. For Liang, the defense of nationalism

6. Trescott and Wang 1994; Mori 2009. The works included Japanese translations of books by John Ingram (from Ireland) and Luigi Cossa (from Italy), as well as a work by the Japanese scholar Inoue Tatsukuro that combined insights from these two books. In subsequent work, Liang also cited Schmoller (Mori 2009; Trescott and Wang 1994). Liang was able to read Japanese but never mastered a Western language (Lai and Trescott 2005). 7. Mori 2009, 17; Trescott 2007, 40. 8. Liang quotes from Mori 2009, 19, 30, 19; Liang [1903] 1989, 92; see also Pusey 1983, 312; Levenson 1953, 113–14; Zarrow 2012, 106. 9. Quoted in Teng and Fairbank 1965, 221.



and the nation-state was the end goal. As he put it, “Nationalism is the bright­ est, greatest, and most just ‘ism’ in the world.”10 Embracing social Darwinist logic, Liang depicted countries and races as being involved in a never-ending struggle for survival. China’s vulnerability in this situation, he argued, was like that of other weak non-Western countries, such as Egypt, the Philippines, and Poland. In this context, Liang was critical of the Confucian ideal of a universal moral empire, arguing that it undermined efforts to cultivate a sense of Chinese nationalism that was needed for the competitive struggle.11 Liang’s rejection of cosmopolitan goals was a radical step in the context of Chinese intellectual history. Even during the era of the Warring States, most Chinese scholars— including Legalists such as Shang Yang—had held on to the ideal of a universal community.12 In policy terms, Liang followed other Chinese neomercantilists in urging trade protectionism on the grounds that “no private business firms in China can be strong enough to survive the competition with their western counterparts backed by their governments.” In his view, China’s survival was heavily depen­ dent on its ability to succeed in a “trade war” of worldwide dimensions. As part of his opposition to free trade, he also critiqued the treaty ports imposed by the Western treaties: “Are not Shanghai, Hankou, and other [treaty ports] called concessions? What are concessions but colonies? If the whole country becomes a free-trade zone, then is that not equivalent to making the whole country a colony?” At the same time as he advocated for protection against imports, Liang echoed other East Asian neomercantilists in calling for export promotion. China needed to embrace this aspect of European mercantilist policy, he argued, because the country was “able to produce low-cost commodities” with its cheap labor force, abundant supply of raw materials, and “talented and enterprising” businessmen.13 Liang also called for the creation of large Chinese companies under gov­ ernment supervision that could take on foreign counterparts: “We need big capitalists to keep out the foreigners.  .  .  . My economic policy would make the encouragement and protection of capitalists, as a united force against the foreigners, primary and everything else secondary.”14 When Liang noted that

10. Quoted in Zarrow 2012, 108. 11. For Liang’s views, see Chang 1971, 157–60; Zarrow 2012, 111; Levenson 1953, 95, 115–16; Pusey 1983, 117–18; Karl 2002. 12. Pines 2012, 3; 2017, 97, 99. 13. Liang quotes from Trescott and Wang 1994, 135; Tang 1996, 167; Karl 2002, 73; Trescott 2007, 38. 14. Quoted in Pusey 1983, 362; see also Lai and Trescott 2005, 1054; Chang 1971, 269–71.



“everything else” should be “secondary” to the goal of cultivating strong cap­ italists, he had in mind the domestic social goals of some Chinese reform­ ers, especially Sun Yat-sen. Liang first met Sun in Japan in 1899 and initially appeared willing to work with him. After 1903, however, Liang made clear his preference for reform over revolution and the two men became political rivals. In a series of polemical exchanges with Sun and his supporters from 1905 to 1907, Liang criticized them for “advocating revolutionary socialism” and for making “oppressing capitalists” a primary goal. He argued: “If the people follow their advice and encourage laborers to demand shorter working hours as well as higher wages, and threaten with syndicalist strikes, then [Chinese] capital­ ists will be weakened internationally, . . . and foreign capital will flood in and control the whole Chinese market. . . . People of the whole nation will be under foreign whips to earn their poor living.”15 When Liang called for the creation of large Chinese companies to fend off foreign competition, he was particularly concerned about the growing power and international influence of US trusts that he witnessed during a trip to the United States in 1903. As he put it, “This monster [the trust] was born in New York, but its power had spread to all of the United States and is speeding over the whole world. In essence, this monster, whose power far exceeds that of Alexander the Great or Napoleon, is the one and only sovereign of the twentieth-century world.” As domestic trusts grew into international ones, he argued, “the nation that will be most severely victimized will surely be China.”16 Indeed, he was much more wary than Sun of foreign capital in general, arguing that it risked benefiting only the investor and creating an opening for later annexation.17 Liang also warned that the industrial powers were ushering in a new phase of world history characterized by “national-imperialism,” in which they sought outlets for their surplus production through expansion, with China increasingly becoming a target.18 In Liang’s view, this new kind of imperialism was no lon­ ger driven just by the ambitions of a ruler but also had wider popular support

15. Liang quotes from Lai and Trescott 2005, 1054. For the relationship between Sun and Liang, see, for example, Jansen 1967, 119–20; Trescott 2007; Bergère 1994, 78–79; Chang 1971, 142; Schif­ frin 1968. 16. Quotes from Liang [1903] 1989, 88–89; see also Chang 1971, 244; Levenson 1953, 73–76. 17. Pusey 1983, 361; Trescott 2007, 39; Lee 1977, 69. 18. Teng and Fairbank 1965, 221; See also Liang [1903] 1989, 89; Chang 1971, 240–43; Huang 1972, 57–58. Liang borrowed the phrase “national-imperialism” from a book published by a US scholar, Paul Reinsch (1900), which had been immediately translated into Japanese and attracted considerable interest in Japan (Mori 2009). In contrast to Liang, however, Reinsch was critical of ter­ ritorial expansion, both that of his own country and of others, and he did not see imperialism emerg­ ing from a Darwinist struggle for survival. Liang’s interest in “imperialism” was also likely piqued by



because it was tied to the economic interests of the citizenry. In sharp contrast to Sun’s critique of the West’s “rule of Might,” however, Liang’s social Darwinist outlook left him nonjudgmental about the behavior of the imperialist powers: “If a country can strengthen itself and make itself one of the fittest, then, even if it annihilates the unfit and the weak, it can still not be said to be immoral. Why? Because it is a law of evolution. Even if we do not extinguish a country that is weak and unfit, it will be unable to survive in the end anyway.”19 Looking to the future, Liang also departed dramatically from Sun in express­ ing his hope that China would be able to become an imperialist power: “If as the largest race on this planet we are able to build a country fit for evolution, then who will be able to usurp from us the title of the Number One Imperialist Nation on Earth?” He criticized past Chinese leaders for failing to support Western-style imperialism: “Ruling the territory of barbarian countries is an evolutionary right that civilized nations ought to enjoy; and enlightening the people of barbarian countries is an ethical responsibility that civilized countries ought to perform. China, though famed throughout the world as the first ancestor of civilization, has in several thousand years had only one or two men who have embraced this idea. That is China’s shame.”20

The Limits of Western Neomercantilist Influence Liang’s version of neomercantilism was, thus, very different than Sun’s. These differences emerged partly from his engagement with Western neomercantilist ideas as well as social Darwinism. Liang’s thought also reflected the influence of Japanese neomercantilist ideas, including the Japanese-language histories of Western economic thought informed by the German historical school that he had read. On his first boat trip to Japan, Liang had also read Shiba Shirō’s famous novel that channeled Carey’s anti-imperialist and protectionist views. Liang was so moved by the novel that he arranged to have it translated and serialized in a Chinese-language magazine he founded in Japan. The translation went on to become a bestseller in China.21 In addition to being influenced by these foreign ideas, however, Liang’s neo­ mercantilism was also heavily shaped by Chinese intellectual tradition. Even

discussions on the subject that broke out among Japanese intellectuals from 1898 to 1901, just at the time of his first years living in Japan (for those discussions, see Tierney 2015). 19. Quoted in Pusey 1983, 311; see also 361; Zarrow 2012, 108. 20. Quoted in Pusey 1983, 312. 21. Sakaki 2000.



before traveling to Japan, Liang was deeply immersed in Chinese neomercantil­ ist intellectual circles. He studied intensively with Kang Youwei during 1891–94 and joined him after 1895 as a leading advocate of reforms to support selfstrengthening goals.22 In that latter role, Liang struck up friendships with other important Chinese neomercantilists.23 Liang saw also himself as carrying on the statecraft tradition, even sponsoring an updated 1897 edition of Wei Yuan’s widely read 1826 collection of essays.24 During the 1898 reforms, in which Liang had an important role, the work of Feng Guifen and Zheng Guanying was also widely invoked, with the former even being published by the emperor and cir­ culated to government offices.25 Before encountering Western and Japanese neomercantilist work in Japan, Liang was thus already very familiar with Chinese mercantilist and neomercan­ tilist thought. Although his ideas evolved in new directions (including criticism of Kang) after he fled into exile, his broad commitment to promoting China’s wealth and power was consistent. Even when he was in Japan, Liang made a point of locating his neomercantilist ideas in the context of China’s mercantilist intel­ lectual history. In 1903, he published the first half of a biography of Guanzi (the rest was published in 1910) in which he praised this ancient Chinese philosopher as one of China’s greatest statesmen and argued that Guanzi had developed an early version of nationalist economics.26 Liang also identified his own ideas with those of Shang Yang. As he put it in 1903, “I pray only that our country can have a Guanzi, a Shang Yang, a Lycurgus, a Cromwell alive today to carry out harsh rule, and with iron and fire to forge and temper our countrymen for twenty, thirty, even fifty years.”27 The influence of Western neomercantilist thought on Liang’s thought should not be overstated for one more reason; he dramatically rejected his embrace of it after World War I. Like Sun, Liang returned to China after the 1911 revolu­ tion and quickly became deeply involved in Chinese politics, assuming promi­ nent government positions. He even attended the 1919 Paris Peace conference

22. Limin 2012, 106; Karl 2002, 12. He had also initially become interested in the West by reading Xu Jiyu’s 1848 book (Limin 2012, 105; Schell and Delury 2013, 94). 23. Particularly important was his connection to Ma Jianzhong (see note in previous chapter) who took on the role of his teacher after they became neighbors in Shanghai in 1896. For Liang’s relationships with the neomercantilists Huang Zunxian and Sheng Xuanhuai at this time, see Bailey 1998, 27; Limin 2012, 106. 24. Chang 1971, 62. 25. Hao 1969; Teng and Fairbank 1965, 50. 26. Li 1977, li–lii; Mori 2009, 23. Even before arriving in Japan, Liang had noted in 1897 that Western economics had historical parallels in the ideas of Guanzi (Ye 2014, 173). 27. Liang [1903] 1989, 93.



as an advisor to the official delegates, calling for the restoration of China’s tariff autonomy and an end to the treaties with foreign powers.28 After these and other Chinese demands were rejected at the conference, however, Liang underwent an intellectual transformation that led him to turn his back on neomercantilism altogether. After the Paris conference ended, he traveled in Europe for a year, witnessing the devastation and social problems of European societies in the postwar context as well as the pessimism of European intellectuals. These experiences led him to question his previous ideas, including social Darwinism, which he argued was one of the causes of the world war that “nearly wiped out human civilization.” He now insisted that “China should not copy Europe,” criticizing the latter’s mate­ rialism and arguing that the progress of the West “during the last three hundred years has only led to selfishness, slaughter, corruption, and shamelessness.” He also began to describe nationalism as a “sickness” rather than something to be embraced. At the same time, he praised traditional Chinese thought for having a morality that “aims at all the people in the world” and for recognizing that “the state is just one stage in the development from single families to the whole world.”29 Although Liang turned his back on Western neomercantilist ideas after World War I, others remained interested. For example, a Chinese translation of List’s work was finally published in 1927 by Wang Kaihau, who had completed a PhD the previous year in Germany. The translated work opened with a preface from the Chinese minister at the German Legation, Wei Chenzu, who argued that it was “highly proper that List’s theory should be adopted in China” and linked List’s work to the cause of Chinese tariff autonomy.30 Chinese officials were working hard at this time to restore that autonomy, efforts that finally suc­ ceeded in the late 1920s and that were followed by the introduction of much higher tariffs. On the surface, Wei’s comment might suggest that List’s ideas were becoming influential in Chinese policymaking circles at the time. But it was Sun’s thought— not List’s—that served as the core inspiration for economic policymaking in the Kuomintang nationalist government, which consolidated its rule over China by

28. Levenson 1953, 189; Mishra 2012, 187. 29. Liang quotes from Levenson 1953, 203; Mori 2009, 21; Schell and Delury 2013, 112; Mori 2009, 24, 22. 30. Quoted in Mei 2019, 215. Mei discusses other examples of Chinese interest in List in the early twentieth century. The work of List and Carey was also described in a chapter on political economy in a 1901 book on Western thought published in Shanghai that was written by a Japanese scholar but aimed at a wide Chinese audience (Janku 2014, 357–58).



1928. As C. Martin Wilbur puts it, Sun’s The Three Principles of the People “became virtually a Kuomintang bible” that was invoked continuously by Chinese policy­ makers in their pursuit of state-led economic development and industrialization throughout the 1930s.31 Inspired by Sun’s ideas about international development, they also accepted development assistance from the League of Nations as well as from countries like Germany.32 As discussed in the concluding chapter, they even invoked Sun’s IDO proposal in the early 1940s during the Bretton Woods negotiations in support of the creation of the International Bank for Reconstruc­ tion and Development.33 It is important, therefore, not to overstate the influence of Western neomer­ cantilist thought on Chinese neomercantilism in the early twentieth century. Its chief promoter before World War I, Liang Qichao, was also inspired by Chinese mercantilist and neomercantilist ideas as well as by Japanese neomercantilist thought. Moreover, he turned his back on neomercantilism after the war. During the same period, Sun put forward the most ambitious version of his neomercan­ tilist ideas, which then became increasingly influential in China during the interwar years. Indeed, it is worth noting that even Mao and the Chinese Communist Party declared their support for Sun’s ideas in this period.34

Korea’s Gaehwa Group Before concluding these chapters on the rise of East Asian neomercantilist thought, it is important to discuss a strand that emerged in Korea in the con­ text of debates about the country’s dramatic economic opening that began in the 1870s. Before this time, the country followed a policy of what Key-Hiuk Kim calls “militant exclusionism,” successfully resisting Western pressure for opening since the 1830s, while engaging in some limited trade with Japan and China under highly controlled conditions.35 This tightly regulated trade regime was defended by a particularly conservative version of neo-Confucianism that distrusted commerce, merchants, and Western influence, and that upheld the Confucian

31. Wilbur 1976, 198; see also Trescott 2007, 55; Kirby 2000; Boecking 2017, 41; Zanasi 2006. 32. Kirby 1984, 32, 254–56; 2000, 147–48; Zanasi 2007; Fertik 2018. 33. Chinese officials also lobbied Germany in mid-1940 to include Sun’s ideas about interna­ tional development assistance for China in German plans for a new international economic order at the time (Kirby 1984, 250). 34. Gregor 2000, 75; Gregor and Chang 1989, 119. It is also noteworthy that Mao was interested in Liang’s work as a teenager (Huang 1972, 7). 35. Kim 1980, 31.



four-class social system as well as Korea’s position as a vassal state within China’s tributary system. The trade regime first began to unravel in 1876 when Japan pressed for the creation of three Korean treaty ports where trade could take place more freely. In the early 1880s, the economy was opened more extensively when new trade treaties were signed with China and Western countries. The country’s dramatic trade liberalization was then accompanied by a new openness to for­ eign investment with many concessions granted to foreign investors (particularly from Japan) in sectors ranging from resources to railways.36

Support for Economic Opening Although Korea’s economic opening was shaped heavily by external pressure, it also found strong support within Korea among a group of Gaehwa (enlight­ enment) thinkers who promoted neomercantilist views.37 The most prominent intellectual figure in the group was Yu Kil-chun, who became the first Korean to study in both Japan (1881–83) and the United States (1883–85). He then found himself under house arrest in 1885–92 because of his links to people who had unsuccessfully attempted a coup in 1884 (that was suppressed with the help of Chinese intervention). In 1889, he completed a book titled Seoyugyeonmon (Observations on travels in the West), which was published in 1895. After partic­ ipating in a reform-minded government in 1894–95, he fled into exile once more, living in Japan from 1896 to 1907, when he returned to Korea and remained active until his death in 1914.38 Other prominent members of the Gaehwa group included the leader of the 1884 coup attempt, Kim Ok-gyun, as well as Eo Yun-jung and Bak Yeong-hyo.39 Also important was Soh Jaipil, who—along with Yu, Eo, and Bak—was involved in the 1894–95 reform government. He then promoted Gaehwa thought through a newspaper he founded, Dokrib-Shinmoon (The independent). Soh’s student Rhee Syngman became well known for his book Dongnip Jeongsin (The spirit of independence), which was completed in 1904 and then published in Los Angeles (in Korean) in 1910. Lew Young Ick describes it as “the best” of the Gaehwa work in this period and notes that it became “a bible for Koreans fighting for national

36. Chandra (1988, 143) notes twenty-three major concessions granted by the Korean govern­ ment to foreigners during 1883–98. 37. Some supporters of economic opening were more moderate reformers who favored import­ ing Western technology while maintaining Korea’s traditional culture and social order (see, e.g., Chung 1995, 216–21; Huh 2005, 42–43). 38. For Yu’s life, see Choi 2014. For his book, see Yu [1895] 2004. 39. Hwang 1978, 81–82; Lew 1977; Huh 2005, 35–38; Cook 1972, 29–31.



restoration and independence” after Japanese colonial rule formally began in 1910.40 Rhee subsequently earned a PhD in political science from Princeton Uni­ versity and later became South Korea’s first president in 1948. Although there were some disagreements among these and other Gaehwa thinkers, they agreed on the priority of cultivating Korea’s wealth and power and on the desirability of economic opening. They linked economic open­ ing to the goal of ending Korea’s tributary status and introducing domestic reforms aimed at bringing Korea up to the standards of Western “civilisation and enlightenment.” Underlying this goal was a concern for the threats to Korea’s sovereignty in the new global context in which all states were engaged in intense competition for survival. As Rhee put it in his 1910 book, the avoid­ ance of economic opening “would only lead to permanent extinction of the nation and eventual annihilation of the race. Everyone should realize it is inevitable in today’s world that [we] must be open to foreign countries.”41 Like Japanese and Chinese neomercantilists, Gaehwa thinkers also emphasized the need for a strong sense of national collective purpose. As Soh Jaipil put it in 1896, “What makes Korea so weak as a nation is that the people are not united in their sentiments . . . they do not appreciate the common fate in which they are bound together.”42 Gaehwa thinkers argued that economic opening would augment Korea’s wealth and power by creating new opportunities to export Korean products and to import foreign knowledge, technology, and industrial goods.43 In 1883, Yu Kil­ chun also praised how this policy would cultivate a necessary “aggressive spirit of competition.” As he put it, “Look at European countries and America. Haven’t they thrived with greater wealth and power because they have expanded traffic and interaction with even far-off countries, in addition to having closely asso­ ciated among themselves for hundreds of years?”44 In a more pragmatic sense, Rhee also reminded his readers that Korean sovereignty would likely continue to be challenged if the country refused to open up its economy. At the same time, he called attention to how commerce—domestic and international—encouraged a beneficial division of labor: “We must realise that trade is mutually beneficial. A man can survive only when there are neighbors. . . . The broader the range of

40. 41. 42. 43. 44.

Lew 2001, xii. Rhee [1910] 2001, 254. Quoted in McNamara 1996, 80; see also Kim 1978; Schmid 2002; Chandra 1988, chap. 6. McNamara 1996, 51, 83; Rhee [1910] 2001, 64–66, 253–55. Yu quotes from Lee 2000, 52.



my neighborhood, the more refined and plentiful are the goods available for my use, while my own products will be more appreciated and more widely utilised.”45 In addition to their arguments about Korean wealth and power, some Gae­ hwa thinkers invoked more cosmopolitan reasons for opening the economy that responded to conservative Confucians who questioned the morality of their goals. For example, Yu Kil-chun argued that trade would boost international goodwill and create the “great Way” among nations. Rhee also argued that Korea’s “unused” resources needed to be made available to suffering people in foreign countries: “God’s intent in creating the myriad things in the universe was to let none of them go to waste but be useful to all mankind. . . . How can we be so selfish as to ignore the suffering of others and refuse contacts with the rest of the world?”46 Some of the arguments in favor of economic opening echoed ideas in West­ ern economic liberalism with which Gaehwa thinkers had become familiar from their studies abroad and/or from Western Protestant missionaries who promoted these ideas in Korea after the opening of the country. Indeed, beginning in the early 1880s, articles began to appear in Korean newspapers discussing the ideas of leading Western economic liberals, and figures such as Yu and Soh made efforts to explain liberal economic ideas to the broader Korean public.47 But most Gaehwa thinkers themselves were neomercantilists who favored strategic protec­ tionism and other kinds of government economic activism to promote the wealth and power of Korea in the context of its economic opening. For example, Hyoung-kyu Chey notes that the Gaehwa group’s advocacy of trade did not extend to “support of fully-blown free trade.”48 Instead, they backed selective protectionist measures for various reasons, including supporting infant industries.49 Like Japanese and Chinese neomercantilists, Yu depicted commerce as a war-like activity. He argued that Korean firms needed government sup­ port in sectors such as commerce and manufacturing because they “could not compete at first.” Kim Ok-gyun also noted that Koreans needed to recognize how foreign countries supported their commerce with military power: “Trade is done with all countries under the shield of military force. Backed up by military force, they intimidate and force neighboring countries to open ports.”50 He also

45. 46. 47. 48. 49. 50.

Rhee [1910] 2001, 254; see also 63, 66. Quotes from McNamara 1996, 82; Rhee [1910] 2001, 63, 65. Gold 2014, 15; Chey 2019, 21. Chey 2019, 19. Chey 2019, 19–20; McNamara 1996, 51; Huh 2005. Quoted in Lee 2000, 59; see also Rhee [1910] 2001, 255.



highlighted the example of Meiji Japan in making the case for state economic activism: “There are two strategies that develop a nation: one is to gradually develop it in a long run, as has the West done; the other is to achieve it in a short run by using the power of the state, as Japan has done. We have to choose the Japanese way in order to preserve our sovereignty.”51 In addition to backing strategic protectionism, some Gaehwa thinkers argued that the Korean government could play an important role in actively managing other aspects of the country’s foreign economic relations. In the early 1880s, Eo Yun-jung proposed that foreign borrowing be centralized through the govern­ ment, which could then take the lead in developing a plan for Korea’s economic development.52 As Michael Robinson notes, others wanted more regulation of foreign investment in the country’s resource sector on the grounds that “Koreans, not foreigners, should exploit Korea’s own resources for the future benefit of the nation.”53 Gaehwa thinkers also warned of the growing role of foreign (especially Japanese) bankers and merchants in the country. In his 1910 book, for example, Rhee defended a ban on foreigners trading on Korea’s coast with the following warning: “Once foreigners have grabbed all commercial rights, it would not be easy for us to recover them.” He also opposed proposals to establish Japanese bank branches across the country on the following grounds: “It is tantamount to proposing to seize the arteries of the entire country. A nation’s finances are like a body’s blood vessels. Setting up banks in the cities and villages throughout the country will connect every locality, as a vascular system does in a body, so that the energy for action can be generated.” Switching the analogy, he continued: “To set up Japanese bank branches instead [of our own] . . . would be like my leaving the control of the windpipe in my body in the hands of someone else; how could I still be considered a living person?”54 Gaehwa thinkers further insisted that Korean authorities could play a num­ ber of active roles domestically in assisting the development of the national economy and the “fight for commercial rights” vis-à-vis other countries.55 Like neomercantilists elsewhere, they prioritized the promotion of manufacturing, arguing that it was key for generating Korean wealth and power. To cultivate its growth, they supported not just strategic protectionism but also subsidies, the

51. Quoted in Chey 2019, 20; see also Chandra 1988, 40. 52. Huh 2005, 41. 53. Robinson 1986, 40; see also Rhee [1910] 2001, 242–43; Chandra 1988, 141–45; Kim 1978, 32; Lew 2001, 41. 54. Quotes from Rhee [1910] 2001, 246–47; see also Chandra 1988, 141–42; Kim 1978; Tikhonov 2010, 73–77. 55. Quote from Rhee [1910] 2001, 256.



acquisition of expertise and technology from abroad, the building of infrastruc­ ture, and/or the creation of research institutions, modern schools, and bank­ ing.  To increase exports and provide inputs for industry, they also urged the government to support the development of agriculture, fisheries, and mining. In addition, they called on the state to support Korean firms involved in foreign commerce by providing them with information about their trading partners abroad.56

East Asian Influences What intellectual influences helped to shape this Korean strand of neomer­ cantilism? Although Gaehwa thinkers invoked the neomercantilist practices of Western states, the ideas of leading Western neomercantilists such as List and Carey appear to have had little impact. Korean historians note that List’s thought was not introduced to the country until after 1900, and I have seen no references to discussions of Carey’s work.57 Given that many Gaehwa think­ ers traveled and studied abroad in Japan and the West before this time, it is certainly possible that they became familiar with Western neomercantilist thought, but the more important intellectual influences came from within the East Asian region. As in Japan and China, neomercantilist ideology in Korea had some impor­ tant roots in a local mercantilist tradition. Gaehwa thinkers drew on Silhak (practical learning) reformist thought that had become quite influential during the second half of the eighteenth century in the context of the country’s growing economic difficulties and awareness of China’s relative commercial and agricul­ tural progress at the time. Within Silhak thought, the Bukhak—or “learning the North (China)”—school became particularly interested at this time in pursuing “economic enrichment” through the promotion of commerce and industry.58 The most interesting Bukhak thinker was Bak Je-ga, who put special emphasis on the need for international trade in a 1778 book, Bukagui (Learning the north). In his view, foreign commerce was more useful than domestic commerce for boosting Korea’s wealth and power because it would increase the supply of goods in the country, encourage consumption, and enable the importation of foreign

56. Chey 2019; Huh 2005, 41; Kim 1978; Rhee [1910] 2001, 246, 255–56, 261; Tikhonov 2010, 67–71, 145. 57. For List’s introduction, see references in Chey and Helleiner 2017, 207n2. 58. Quotes from Chey 2019, 25n5; Lee 1984, 235.



technology and knowledge. Syngboc Chon argues that his views are best described as a form of “mercantilism.”59 This Korean intellectual history had a direct impact on the later Gaehwa think­ ers. As Ki-baik Lee puts it, Gaehwa thought “was a continuation of the traditions of the school of Northern Learning within the Silhak movement . . . it had the same aim of achieving national prosperity and military strength through intro­ ducing new technology and developing commerce and industry.”60 Yu Kil-chun, Kim Ok-gyun, and Bak Yeong-hyo were all inspired by the older Silhak tradition.61 Many of them were also interested in the ideas of Bak Gyu-su, whose grandfather was a leader of the Bukhak school and who was educated by a prominent Silhak thinker. As a government official, Bak controversially called in 1874 for “opening the country voluntarily” as part of a wider policy of self-strengthening.62 Bak was subsequently forced to resign his official position, but he continued to promote his views from outside the government. Indeed, Yu Kil-chun first became interested in the West through his discussions with Bak after the latter had left office.63 Bak Gyu-su also directly influenced other prominent members of the Gaehwa group, such as Kim Ok-gyun, Eo Yun-jung, and Bak Yeong-hyo.64 In addition to building on this local intellectual tradition, Korean neomer­ cantilists drew on ancient Chinese mercantilist ideas. Like their Chinese coun­ terparts, they cited Chinese Legalist thought and the precedent of the period of Warring States in their early efforts to understand the new threatening interna­ tional environment their country faced. At the time, this history served as a key reference for Korean scholars, who were familiar with classical Chinese thought. For example, in seeking to interpret the new global context in which Korea now found itself, the Korean monarch asked the following of his officials in 1881: “Is it the same as in the Warring States period in ancient China, when only enrichment and strengthening were sought after?” Here was Eo Yun-jung’s answer: “That is really the case. Compared with today’s greater Warring States period, in ancient Chinese history that was just a lesser Warring States period. . . . In this situation, only enrichment and strengthening will keep the country safe, and the rulers

59. Chon 1984, 130–38. Chey (2019) argues that Bak’s arguments were somewhere between mer­ cantilism and economic liberalism because he did not propose trade protectionism. 60. Lee 1984, 297. 61. Hwang 1978, 81; Lew 2001, 43; Tikhonov 2010, 24; Cook 1972, 222; Choi 2014; Chey 2019, 21. 62. Quoted in Hwang 1978, 81. 63. Choi 2014, 105; Tikhonov 2010, 24. 64. Hwang 1978, 81–82; Lew 1977; Huh 2005, 35–38; Cook 1972, 29–31.



should unite with the ruled in the self-strengthening efforts.”65 In an important memorial to the monarch in 1888 that stressed the need for “enlightenment,” Bak Yeong-hyo also emphasized this point: “The world today resembles the Warring States Period of China.”66 As Eo’s invocation of the Chinese concept of “self-strengthening” high­ lights, Gaehwa thinkers were also interested in the ideas of Chinese neomer­ cantilist thinkers of their age. Many Koreans’ initial knowledge about the West was strongly shaped by Wei Yuan’s 1843 book, which began to circulate among Korean elites within a year of its publication. In addition, Xu’s 1848 book was read in Korea from the 1850s onward.67 Bak Gyu-su read both and even recom­ mended the former in the early 1870s to other officials and scholars, including Yu, whose first ideas about the West were shaped strongly by the text.68 Yu was also probably familiar with Xu’s work as well as with Zheng Guanying’s first book, published in 1873, which was introduced to Korea in 1880 from Japan.69 By the early 1880s, Gaehwa publications were also republishing Chinese neomercantil­ ist writing that stressed the need to promote national wealth and power.70 Another Chinese neomercantilist who had direct influence on Korean gov­ ernment policy in this period was Huang Zunxian, a Chinese diplomat posted in Tokyo from 1877 to 1882. During his time in Japan, he became interested in the country’s economic development and the need for China to reform along simi­ lar lines (although he was also critical of some aspects of Japan’s development). His views became similar to those of Zheng Guanying, whose work he admired. Indeed, it was Huang who had introduced Zheng’s 1873 book to Korea in 1880 by giving it to Korean officials visiting Japan.71 In 1895, Huang became particularly well known in China for publishing the first detailed Chinese analysis of the Meiji experience, a work that had an impact on China’s 1898 reform movement. At that time, he also emerged as a key mentor to Liang Qichao.72 Huang’s connection to Korean neomercantilism stemmed from a detailed memo he wrote in 1880 for the Korean mission in Japan. At the time, he and other Chinese officials were becoming concerned about the growing power of both Japan and Russia in the region. To address this situation, Huang’s memo

65. 66. 67. 68. 69. 70. 71. 72.

Quoted on Huh 2005, 38. Quoted in Lee 2000, 42–43 Kim 2014; Lee 1984, 256, 267. Choi 2014, 105; Hwang 1978, 81; Tikhonov 2010, 24; Lee 2000, 36n1; Kim 2014, 31. Lee 1984, 270; Finch 2002, 20; Choi 2014. Chey 2019, 19. Kamachi 1981; Wu 2010, 78; Lee 1973; Lee 1984, 270. Lee 1975, 17, 23; Kamachi 1981, chap. 8.



advised China’s traditional ally to open itself economically to Western powers as a way of cultivating wealth and power as well as avoiding being forced to open through force. Huang did not have any great sympathy for Korea; he had initially suggested to Chinese authorities that they annex Korea. Only after that sugges­ tion was rejected did he recommend neomercantilist reforms in the Chinese tributary state. Huang’s memo circulated widely in official and scholarly circles, and it encouraged the government to embrace this policy (while also provoking huge opposition from those against economic opening).73 The way that this Chi­ nese neomercantilist, who was inspired by Japanese policy, influenced Korean thought provides a particularly striking example of the regional context in which neomercantilist ideas emerged in East Asia in this period. Chinese intellectual influence on the Gaehwa movement could also been seen in the early twentieth century, when Liang Qichao’s work was translated into Korean and attracted much attention. Although Yu had embraced social Darwin­ ism in the early 1880s, Liang’s ideas on the topic were more important in popular­ izing this ideology in Korea in the early 1900s.74 At that time, Koreans became increasingly interested in countries such as Egypt, Vietnam, Poland, India, and the Philippines, which had been colonized, a fate that many Koreans blamed on their failure to reform sufficiently.75 Gaehwa thinkers invoked their experience to highlight the need for Korean reforms to avoid a similar fate. In addition to drawing on Chinese mercantilist thought, Korean neomercan­ tilists were influenced by their Japanese counterparts. I have already noted how the example of Meiji Japan served as an important inspiration for Korean Gae­ hwa reformers.76 In contrast to neomercantilists in most other parts of the world, Korean neomercantilists were familiar with the specific ideas of Japanese neo­ mercantilists. Particularly influential were the ideas of Fukuzawa Yukichi, who developed a close relationship with Yu Kil-chun, Kim Ok-gyun, and Bak Yeong­ hyo in the early 1880s when they each visited Japan.77 At this time, Fukuzawa became briefly interested in the idea of Pan-Asian cooperation to resist Western power.78 As part of this commitment, Fukuzawa guided Yu’s education from May 1881 to December 1882, when the latter became the first foreign student to enroll

73. Kamachi 1981, 111–16; Hwang 1978, 70–75. 74. Tikhonov 2010, 19, 83–91; Hashimoto 2014, chap. 2. For Yu’s earlier ideas, see Tikhonov 2010, 21–25, chap. 2; Choi 2014, 109. 75. Tikhonov 2010, 204; 2016, 322; Rhee [1910] 2001, 57, chap. 22. 76. See also Lew 2001; Tikhonov 2010, 66; Rhee [1910] 2001, 148; Hwang 1978. 77. Hwang 1978; Huh 2005; Choi 2014; Lew 1977, 43; Cook 1972, 63, 125, 223. 78. Blacker 1964, 131, 136. Fukuzawa’s interest ended with the failed 1884 coup effort (which he perceived as a Japanese defeat). His change at this time was symbolized by his 1885 editorial “Leave



at Keio University (which Fukuzawa had established). Fukuzawa later subsidized the publication of Yu’s book, which was produced on his printing press in Japan.79 Fukuzawa also served as a mentor for Bak and worked closely with Kim, who also published in a newspaper run by the Japanese scholar.80 Many Gaehwa ideas drew directly on Fukuzawa’s, including the overall focus on cultivating wealth and power by embracing the “civilization and enlighten­ ment” of Western countries. Some content and even vocabulary in Yu’s 1895 book emulated Fukuzawa’s Seiyō Jijō.81 Gaehwa thinkers followed Fukuzawa in rejecting the idea that Western civilization was permanently superior. In their view, societies outside the West had made important contributions to the global advancement of civilization in the past, and they could again in the future.82 Fukuzawa’s influence was also evident in the emphasis that Gaehwa thinkers placed on strengthening the country’s wealth by increasing the individual politi­ cal and economic freedoms of Koreans. Although they backed an activist state to promote wealth and power, these thinkers followed Fukuzawa in emphasizing the importance of private property, entrepreneurship, and competition.83 Japanese thought, thus, helped to encourage Korean neomercantilist ideas even before Korea came under Japanese colonial rule. It is also important to rec­ ognize that the ideas associated with Gaehwa thought endured in the colonial era within Korean nationalist circles. Although scholars have noted the devel­ opmental orientation of Japanese colonial rule, Korean nationalists emphasized that it was transforming the Korean economy to serve only Japanese interests. As Hyoung-kyu Chey puts it, they argued that “the Koreans’ economy was in fact devastated, with Korean capital and rural economies facing crises.” In this context, they continued to aspire to what Chey calls “the building of a modern capitalist industrialized economy, similar to that visualized in Gaehwa thought.”84 Like the members of the swadeshi movement in India, Korean nationalists turned to informal nonstate mechanisms, creating in 1923 the Association for Promotion of Korean Products, which sought to support Korean-owned busi­ nesses in manufacturing and other sectors by fostering cooperation among them

Asia,” which noted: “We cannot treat China and Korea specially as our neighbours any more. We must confront them in the way in which westerners do” (quoted in Tamaki 2001, 60; see also 105–6, 160). 79. Schmid 2002, 111. 80. Choi 2014; Hwang 1978; Cook 1972, 238–44. 81. Choi 2014; Huh 2005; Lew 2001, 43; Schmid 2002, 110–11. 82. Kim 2012; Schmid 2002. 83. Lew 2001, 38–40; Tikhonov 2010, 28. 84. Chey 2019, 22.



and encouraging Koreans to consume their products.85 Not surprisingly, Japa­ nese colonial authorities did not look kindly on the association, and it was closed down by 1937. Although Japanese colonial rule may have laid some foundations for the post-1945 Korean developmental state, it also undermined these antico­ lonial Korean developmentalist initiatives as well as goals of precolonial Gaehwa thinkers that served as their predecessors. This chapter concludes my discussion of the endogenous roots of neomercantil­ ist thought in the East Asian region. Western neomercantilist ideas clearly had some influence in East Asia in the pre-1939 period. But a history of the origins of East Asian neomercantilist ideas must focus on many more figures than just those who imported and adapted Western neomercantilist thought. It also needs to include influential thinkers in Japan, China, and Korea who pioneered neo­ mercantilism by drawing inspiration more from mercantilist traditions within the region than from the ideas of List, Carey, or other Western neomercantilists. These East Asian influences were even important in helping to shape the ideas of prominent figures who did draw more extensively on Western neomercantilist thought, such as Matsukata Masayoshi and Liang Qichao. What were these endogenous roots of East Asian neomercantilist thought? In all three countries, neomercantilists drew heavily on local mercantilist tradi­ tions from the recent past: Japan’s kokueki thought, Korea’s Bukhak tradition, and the Chinese statecraft school. They also cited as an inspiration much older Chi­ nese mercantilist ideas from the period of Warring States that formed a common intellectual foundation for scholars across the region. In addition, intraregional circulation of neomercantilist ideas among these countries took place indepen­ dently of Western neomercantilist thought. For example, well before the Meiji Restoration, Korean and Japanese thinkers learned about the protoneomercantilist ideas of Wei Yuan, who developed his ideas without any knowledge of Western neomercantilist thought. Subsequent Chinese and Japan neomercantilist ideas developed with little influence from Western neomercantilist thought also circu­ lated to other countries in the region. These endogenous intellectual origins of East Asian neomercantilism helped to give it different content than the thought of List and other Western neomer­ cantilists. Of course, there were many varieties of neomercantilism within the East Asian region as well as within specific country contexts. But some dis­ tinctive features were common across many neomercantilists. For example,

85. Chey 2019; Lee 1984, 360; Tikhonov 2016, 323–24.



reflecting the intellectual histories of their countries, neomercantilists in Japan, China, and Korea all engaged actively with Confucian thought. They also often placed a heavy emphasis on export-led growth, partly because their countries were constrained in their ability to raise import tariffs and partly because endog­ enous mercantilist traditions in each country had been strongly export-focused. Those traditions also encouraged many East Asian neomercantilists to embrace more ambitious kinds of government economic activism than List did. Many of these distinctive features of East Asian neomercantilism have endured to the twenty-first century.



The previous two sections of this book have attempted to widen the history of pre-1939 neomercantilist thought beyond a List-centric story by highlighting the importance of Carey and his supporters as well as of the endogenous roots of East Asian neomercantilism. In this fourth and final section of the book, I broaden the story further to explore some other contexts in which important neomercantilist ideas emerged quite independently from those of List. These strands of neomer­ cantilism are also interesting because many were distinct in content from that of List and some circulated internationally. In this chapter, I focus on two thinkers who developed important neomercan­ tilist ideas in the early nineteenth century: Nikolai Semenovich Mordvinov in Russia and John Rae in Canada. There is no question that Mordvinov’s ideas were developed without the influence of List. They were published in 1815, before the German thinker had even begun writing about political economy. Rae’s relation­ ship to List’s work is less clear. Although his key book was published in 1834, several years before List’s 1841 book, it is possible that Rae was aware of List’s earlier 1827 letters. I show, however, that his main source of inspiration came from his Canadian context.

Mordvinov as Russia’s List? Russia is often overlooked as a place that generated pioneering neomercantil­ ist ideas in the nineteenth century. For example, Liah Greenfeld suggests that 283



the Russian intelligentsia “never spawned an equivalent of Friedrich List” in the country.1 But it is important to recognize the innovative neomercantilist ideas of Mordvinov in the early nineteenth century. Indeed, some of those who have studied his work even describe Mordvinov as the “Russian List.”2 Mordvinov was from an aristocratic family and was inspired by what Susan McCaffray calls a “devout patriotism.”3 After being educated in Catherine the Great’s palace, Mordvinov began his career in the navy and then became an increasingly prominent public official. In the context of his government work, he wrote extensively about a range of issues relating to economic policy. His best known neomercantilist work was an eighty-eight-page publication critiqu­ ing free trade that appeared in 1815 under the title Nekotoryya soobrazheniya po predmetu manufaktur v Rossii i o tarife (Some considerations on the issue of manufactures in Russia and on the tariff). At a broad level, McCaffray describes how Mordvinov’s views were shaped by the “late mercantilism” of Catherine the Great’s court (a tradition that List briefly referred to in his 1841 book).4 In the terminology used in this book, Mordvinov himself, however, is better described as a neomercantilist because his critique of free trade emerged in response to the ideas of one of the most prominent Russian promoters of Adam Smith during his time: Heinrich von Storch. To understand Mordvinov’s views, it is necessary to recognize the distinctive nature of Storch’s engagement with Smith’s work. A professor of fine arts in St. Petersburg, Storch became interested in Smith’s views when he was appointed in 1799 to teach political economy to two Grand Dukes in the imperial family.5 In 1815, he published a book titled Cours d’Économie Politique ou Exposition des Principes qui Déterminent la Prospérité des Nations (Course in political economy or an exposition of the principles that determine the prosperity of nations) that played a significant role in popular­ izing Smith’s ideas not just in Russia but also elsewhere in Europe. Although Storch embraced free trade and a limited state role in the domestic economy, he criticized Smith for having a narrow materialist focus only on tangible goods that could be exchanged for money. Storch argued that this focus on what he called “external goods” overlooked the importance of “internal goods” that could not be

1. Greenfeld 2003, 476. Greenfeld acknowledges Witte but comments that he was “a man of foreign ancestry and name.” 2. Avtonomov and Burina 2019, 200; see also Sheptun 2005, 350; Zweynert 2004, 539. 3. McCaffray 2000, 582. 4. McCaffray 2000, 577. For List’s reference, see List [1841b] 1909, 73. 5. For the Russian elite’s early and keen interest in Smith’s The Wealth of Nations in the late eigh­ teenth and early nineteenth centuries, see Kingston-Mann 1999, 65; Zweynert 2004; Sheptun 2005.



bought and sold, but that were humans’ “moral property” and “part of our being.” Although internal goods had no price, Storch argued, they had important “value” because external goods could not exist without them, and vice versa. Indeed, Storch argued that internal goods were key to the development of “national civi­ lization.” He pointed to “health, skill, knowledge, aesthetics, morals, [and] reli­ gion” as examples.6 Ezequiel Adamovsky notes that Storch’s focus on internal goods emerged from the context of broader Russian debates about the need to cultivate “civilization” in the context of the country’s perceived economic and cultural backwardness vis-à-vis western Europe.7 A number of scholars have noted how Storch’s theory of internal goods antic­ ipated, and likely helped to inform, List’s later ideas about “productive powers.”8 List was certainly familiar with Storch’s work, citing it in his own writing. But Storch offered policy advice that starkly contrasted with that of List. In addition to opposing trade restrictions, Storch was skeptical of the benefits of emulating Britain’s advance from an agricultural economy to one centered on manufactur­ ing and commerce. Whereas Britain’s elite were benefiting from its economic transformation, Storch argued, the majority of the population was worse off, with workers falling “into apathy and stupor” because of the growing division of labor and use of machinery.9 Having seen the urban poor of Germany and France, he believed that rural life generated healthier and better citizens. He preferred to see Russia retain a strong agricultural economy, exporting farm produce to the leading industrial powers while importing manufactures under a regime of free trade.10 This last part of Storch’s argument provoked Mordvinov’s opposition. Although unnamed in the text, Storch—and his advocacy of Russia’s role as a grain exporter in a system of free trade—was the target of Mordvinov’s 1815 pub­ lication. From Mordvinov’s perspective, the industrialization of Russia needed to be prioritized in order to boost the country’s power and wealth. Mordvinov advanced a defensive style of neomercantilism, arguing that the development of domestic manufacturing was key for the protection of Russia’s sovereignty. When a country was dependent on foreigners for basic needs such as clothing, he argued, it “does not enjoy the political freedom needed by all people who wish to

6. 7. 8. 9. 10.

Quotes from Adamovsky 2010, 363; Sheptun 2005, 351; Zweynert 2004, 531. Adamovsky 2010. Zweynert 2004; Adamovsky 2010, 368; Avtonomov and Burina 2019. Quoted in Zweynert 2004, 533. Zweynert 2004, 533; McGrew 1976.



be sovereign and independent on their own land.”11 Drawing on his experience of managing Russian currency problems a few years earlier, Mordvinov also argued that the growth of industry could strengthen Russia’s sovereignty by improving the country’s payments position in ways that stabilized its currency. Mordvinov argued that industrialization would benefit Russian agriculture by creating a larger domestic market for farm produce and by increasing agricul­ tural productivity with new tools. It would also foster a more diverse economy in which the talents of the population would be more fully used, idleness would be reduced (including among farmers in the winter), and parts of country unsuited for agriculture would become more productive.12 More generally, Mordvinov suggested that industrialization would boost Russia’s wealth by stimulating learning and broader civilization. If the division of labor created by free trade left some countries focused on agriculture, he asked, would not such a division “reduce the countries to an uncivilized condition which deprived them of all possibilities to achieve future success in enlightenment and education?” Build­ ing directly on Storch’s theory of internal goods, he argued that “enlightenment” was “the foundation of the wealth of nations.”13 Like List, he also associated civi­ lization and enlightenment with the expansion of individual freedom and politi­ cal liberties. Mordvinov argued that protectionism was necessary if Russia wanted to industrialize. In using Storch’s theory of internal goods to promote a trade pol­ icy that Storch rejected, Mordvinov undertook an intellectual maneuver that anticipated what List did a quarter of century later in his 1841 book. Mordvinov highlighted that Britain had built up its manufacturing sector through protec­ tionist policies and that British firms now had enormous competitive advantages because of government subsidies and their access to an abundance of domestic capital. After Russia had broken the continental blockade of trade with Britain in 1810 (imposed after its defeat by France three years earlier), the British competi­ tive threat had been evident and Mordvinov had pressed successfully for a ban on imported textiles and a high tariff on luxury imports. When the Napoleonic Wars ended, he wrote his 1815 text to challenge those—such as Storch—who were pressing for trade liberalization.14 His work, thus, emerged from the inter­ national economic context that gave rise to neomercantilist ideas in many parts of the world at this time (including List’s initial ideas); that is, one in which many

11. 12. 13. 14.

Quoted in McCaffray 2000, 593. McCaffray 2000, 592–93; Dmytryshyn 1971. Mordvinov quotes from Zweynert 2004, 539. Zweynert 2004; McCaffray 2000; Blackwell 1968, 132–38.



countries were experiencing new competitive challenges posed by British manu­ factures after the Napoleonic Wars. In some ways, Mordvinov was an unlikely critic of British theories of free trade. As McCaffray notes, he was “an unabashed anglophile” who “had thor­ oughly imbibed the liberal spirit and worldview” emerging in his age.15 He even imported British gravel for the roads of his estates.16 Mordvinov also cited Adam Smith as one of the greatest geniuses of all time alongside other British liber­ als, such as Jeremy Bentham, whom he befriended in the 1780s.17 Mordvinov departed from Smith in his views of free trade, however, as well as in some other areas. For example, he supported a more activist domestic economic role for the state, arguing in the early 1800s for the creation of a state bank that could encour­ age industry by offering loans and technical advice to entrepreneurs to address the shortage of capital in the country.18 Similarly, whereas Smith argued that free labor was more profitable than serfdom, Mordvinov believed that greater control of the lives of serfs—of whom he owned thousands—was the way to boost pro­ ductivity (although he argued that serfdom would and should disappear eventu­ ally as part of the growth of Russia’s economy).19 These two contrasts with Smith’s thought also highlight ways in which Mord­ vinov’s ideas differed from those of List. Mordvinov’s endorsement of a state industrial bank went further than List would go in his 1841 book when discuss­ ing government economic activism at the domestic level. List’s commitment to political liberalism was also stronger than that of Mordvinov. In his 1841 book, List argued forcefully that Russia’s “industrial and commercial progress” would be hindered without the “gradual limitation and final abolition of serfdom” in the country.20 Mordvinov did not disagree, but the strength of his political liberal commitment was called into question by his own labor practices. Indeed, Esther Kingston-Mann reports that “when Alexander I visited Mordvinov’s estates in 1809, two thousand peasants lined the roads to complain of their master’s intru­ siveness and cruelty and to beg for mercy and relief.”21 Rather than listening to Mordvinov’s advocacy of protectionism, the Russian government chose to embrace freer trade in 1819. When that policy generated widespread opposition from manufacturers, however, the government decided

15. 16. 17. 18. 19. 20. 21.

Quotes from McCaffray 2000, 75n14, 581. Kingston-Mann 1999, 66. McCaffray 2000, 575n14, 576n15; Stanziani 2008. Sheptun 2008, 46–47. Stanziani 2008, 47; Kingston-Mann 1999, 66–67. List [1841b] 1909, 75. Kingston-Mann 1999, 67.



in 1821 to return to a more protectionist regime that remained until the late 1850s. During much of this period, Russian protectionism was heavily shaped by the distinctive views of Yegor Cancrin, the country’s finance minister from 1823 to 1844. According to Vladimir Avtonomov and Elizaveta Burina, Cancrin was an opponent of industrialization who favored protectionism for a quite different reason than Mordvinov: to isolate Russian from what he perceived as Europe’s growing economic and social crises arising from the latter’s industrial growth. Interestingly, however, after the publication of List’s 1841 book, Cancrin sud­ denly became a fan of List, even offering him a job in the Russian government after they met in Munich in 1843.22 Before concluding this brief discussion of Mordvinov, it is worth addressing whether Mordvinov’s ideas influenced List. Despite some similarities between their views, List did not cite the Russian thinker. Avtonomov and Burina argue that it seems that “highly improbable” that List was aware of Mordvinov’s 1815 work.23 A connection cannot be entirely ruled out because, as I note in the introductory chapter, List emphasized that he had read “a hundred-fold more writings” than those from which he quoted.24 List also displayed some inter­ est in Russian developments, devoting a chapter to Russia’s history in his 1841 book. In that chapter, List praised the effects of Russia’s protectionist turn in the early 1820s, noting that it helped local industry and attracted “foreign capi­ tal, talent, and labor” to the country, with the result that Russia was “increas­ ing her national wealth and power by enormous strides.” If List was aware of Mordvinov’s views, however, one might have expected him to cite them in this passage. Instead, he cited the defense of the new policy from an 1821 official circular written by “the most enlightened and discerning statesman of Russia, Count Nesselrode.”25 Although it seems unlikely that Mordvinov’s ideas influenced List, they did attract some attention outside Russia. For example, they were cited by Henry Carey in Principles of Social Science. In that book, Carey—like List—devoted a chapter to Russia’s economic history in which he also praised the effects of Rus­ sian protectionist policies introduced in the early 1820s. Unlike List, he invoked Mordvinov’s 1815 work explicitly in this analysis and even included an extended

22. Avtonomov and Burina 2019, 199–200; Blackwell 1968, 140–42; Szporluk 1988, 114. 23. Avtonomov and Burina 2019, 200. 24. List [1841b] 1909, xliii. 25. Quotes from List [1841b] 1909, 74–75. His reference to Nesselrode may have been influ­ enced by Mathew Carey, who referenced Nesselrode in the early 1820s, as noted in Clay [1824] 1963, 716–17.



extract from it about the benefits of manufacturing and commerce for the devel­ opment of civilization.26 Although List may not have had access to Mordvinov’s work, Carey had wider resources at his disposal in the shape of the enormous library of political economy literature that his friend Stephen Colwell had assem­ bled. It is possible that Mordvinov’s work was in that collection.27 Mordvinov’s ideas were also cited in the late nineteenth century in his home­ land in the context of tariff debates at the time. Russian interest in his thought had been revived by a biography published in 1878 and his grandson’s produc­ tion of a thirteen-volume collection of his writings in the 1860s and 1870s.28 The invocation of Mordvinov’s ideas at this moment highlighted how the intellectual inspiration for late nineteenth-century Russian neomercantilism did not stem entirely from Witte’s imported Listian ideas. For some Russians, it had roots in the intellectual history of their own country.29

Rae’s Theorizing in the Canadian Backwoods Writing in the colony of Upper Canada, John Rae advanced a more elaborate defense of protectionist policies than Mordvinov’s in a 1834 book that was over four hundred pages in length. Its title was also lengthy: Statement of Some New Principles on the Subject of Political Economy: Exposing the Fallacies of the System of Free Trade and of Some Other Doctrines Maintained in the “Wealth of Nations”. Because of the sophisticated content of this book, the historian of economic thought Joseph Spengler has described Rae as “possibly as brilliant an econo­ mist as nineteenth century North America was to produce.”30 Like Mordvinov’s ideas, however, Rae’s are much less well known those of List. Indeed, even among the scholars who mention him, there is confusion about his identity, with some locating him “in Scotland,” others referring to him as a “US economist,” and still others identifying him as a “Canadian-American” thinker.31

26. Carey 1858b, 148–49. 27. Colwell’s notes to the 1856 translation of List also praised the protectionist policies of Russia since the early 1820s (Colwell in List [1841c] 1856, 414n; Colwell 1856, lxvii. 28. McCaffray 2000, 574n8–9. 29. I note in chapter 3 how some Russian neomercantilists at this time were also interested in Schmoller’s ideas. 30. Spengler 1959, 393. 31. Quotes from Goswami 2004, 218; Reinert and Daastøl 2004, 22; Hudson 2010, 1. For impor­ tant analyses of Rae’s work, see James 1965; Neill 199l, chap. 4; Hamouda, Lee, and Mair 1998.



The confusion arises because Rae was born in Scotland, then lived in Canada from 1822 to 1848, after which he spent a few years in California, twenty more in Hawaiʻi, and then moved at the very end of his life to New York. Because his published work in political economy was all written in Canada and was inspired heavily by his Canadian context, it seems most appropriate to describe him as a Canadian thinker. Rae’s formal employment for most of his time in Upper Can­ ada was as a schoolteacher, first in the small town of Williamstown until 1831 and then in Hamilton from 1834 until 1848. His published work in political economy began in 1825 with an article in a Canadian journal and culminated with his 1834 book.

Rae’s Neomercantilism As is evident from the subtitle of his book, Rae was critical of Smith’s endorse­ ment of free trade. One of his arguments was that Smith had failed to recog­ nize the case for restricting imports of luxury goods, given that they encouraged wasteful consumption and diverted resources from more productive wealthgenerating activities. But Rae’s more significant criticism of free trade was linked to his support for the cultivation of local manufacturing. Like Hamilton (whose work he cited), Rae noted the significance of local industry for national indepen­ dence and security. He also echoed Hamilton in arguing that local manufacturing would generate economic benefits such as lower transportation costs, new local markets for farmers, new employment (including for women and children), and reduced dependence on foreign goods whose supply could be “suddenly inter­ rupted by war and other causes” in ways that caused “great waste of the resources of the community”32 Rae’s greatest interest in manufacturing, however, lay in its connection to the “power of invention,” which he argued was a “necessary element in the production of the wealth of nations.” Much more than Smith, Rae emphasized the economic significance of invention and technological change for eco­ nomic growth. He was interested in how new local manufacturing operations boosted productivity, including in the agricultural sector, by the inventions they embodied and generated. Rae also pointed to indirect benefits arising from their capacity to improve existing, interconnected industries and to act within society as “a powerful stimulus to the ingenuity of its members.” On the latter point, he quoted Hamilton’s argument that “the spirit of enterprise” was

32. Rae [1834] 1964, 366; see also vii, 364–67; Rae [1825] 1965, 195, 197.



bolstered in a more diverse economy.33 When discussing these benefits arising from the promotion of industry, Rae noted that his analysis assumed “that the remuneration awarded the laborer is, in the same society, always a fixed quan­ tity.” Although he thus neglected domestic distributional issues, he added the following comment: “In a society making a steady and healthy progress, they [the wages of labor] should rather be continually increasing, the laborer as well as the capitalist, gaining something by the improvements which the progress of invention produces.”34 Why were tariffs needed to cultivate local manufacturing? Like List, Rae insisted that tariffs be introduced only in specific circumstances that met his goals. He also noted the benefits of free trade where national competitive advan­ tages were based on natural endowments. But he was eager to highlight the dif­ ference between “natural” and “acquired” advantages. Although Smith had also identified this difference, Rae criticized him for downplaying its significance. In Rae’s view, this distinction was “of the greatest consequence” because “acquired advantages” could be cultivated through deliberate action, particularly in the manufacturing sector: “One country can often with ease, and at a trifling expense, acquire the practical skill and the knowledge of particular arts and manufactur­ ers which another possesses, and by doing so, gain the advantage of procuring for itself the products of this skill and knowledge at home, instead of having to go abroad for them.” For this reason, he was strongly critical of those advocates of free trade who overstated the natural basis of the international division of labor: “Because one country alone now produces particular commodities, we are by no means warranted to conclude that nature intended they should be produced only there. . . . Who can positively say what fifty years hence will be the productions of any country?”35 Like List, Rae saw tariff protection as an important means not just to support local manufacturing firms but also to encourage the “transfer” of industries from abroad. Indeed, his writing suggests that he was more interested in the latter than the former. He saw the transfer of industries from abroad as involving the movement of capital and machines, as well as of people who brought expertise, knowledge, and “inventive faculty.” Indeed, immigrants were valued more gen­ erally by Rae in an economic sense for the diversity they brought to a society: “Countries where various different races, or nations, have mingled together, are

33. Quotes from Rae [1834] 1964, 15, 365, 366; for his views on agricultural productivity, see, for example, 19–20, 255. 34. Rae [1834] 1964, 97, 327. 35. Rae [1834] 1964, 71–72, 258.



to be noted, as coming eminently forward in the career of industry. Great Brit­ ain is a remarkable instance of this; so are the United States of America. When individuals meet from different countries, they reciprocally communicate and receive the arts of each, adopt such as are suited to their new circumstances, and probably improve several. Servile imitation can there have no place, for there is no common standard to imitate.”36 Like other critics of free trade, Rae highlighted England’s history of borrow­ ing technology from abroad and cultivating industries with various mercantil­ ist policies. Although England no longer needed these protections, he argued, other countries needed to learn from its past experience. To make this point, he invoked an analogy in 1825 that bore some similarity to List’s later 1841 descrip­ tion of England’s mercantilist policies as a “ladder” that English policymakers had later kicked away: “While England was gradually raising up that astonishing fabric of manufactures which now exists, various expedients of a temporary and subsidiary nature were adopted, serving the purpose of ladders, frames and scaf­ folding, which she can now with safety and advantage throw down and forget. But the memory of such regulations remains for the instruction of other nations in the commencement of their manufacturing career.”37 Rae also justified the need for infant-industry protection with a theoretical point that Daniel Raymond had noted in 1820 and that List had repeated as early as 1827: “Individual and National Interests are not Identical.” Rae highlighted how individuals were discouraged from establishing new manufacturing opera­ tions because of “the difficulties attending new undertakings, the want of skilled labor, and a sufficiently accurate knowledge of the properties of the materials to be employed in the formation of the new instruments.” He added that, in the case of transferring “a manufacture from one country to another,” this had to “always be a very tedious and expensive operation, for any individual to perform.” Rae noted that individuals might sometimes proceed in the face of these difficulties for “the love of country or fame, or the desire to gratify personal vanity.” But public intervention in the form of tariffs was a much more reliable and effective tool to bring individual interests in line with those of the nation.38 For Rae, the need for public action was only reinforced by a temporal factor. Even if tariffs might generate short-term national economic costs, a country’s wealth would be advanced over the longer term as it acquired “the capability of producing the same quantity of an article with less expense.” This “increase of

36. Quotes from Rae [1834] 1964, 258, 109, 238. 37. Quote from Rae [1825] 1965, 202. 38. Quotes from Rae [1834] 1964, xv, 368, 51, 54.



the productive powers of the community” would increase wealth both directly and “indirectly, through the stimulus given to the accumulative principle.” Rae emphasized that improvements made to “the skill, dexterity, and judgment, with which its [the country’s] members exercise any branch of industry” were not of “a fleeting nature.” The benefits from them lasted much longer than one individual’s life. They were “continuous with the national existence.”39 To realize these long-term benefits, members of a society needed to be willing “to sacrifice a certain amount of present good, to obtain another greater amount of good, at some future period.” Whether they were willing to make that sacrifice was what Rae called “the effective desire of accumulation.” According to Rae, the latter varied across individuals and societies according to the strength of their “intellectual powers,” their “social and benevolent affections,” “the stability of the condition of the affairs of the society,” and “the reign of law and order throughout it.” He also mentioned the significance of a “healthy climate” and “safe occupa­ tions,” which increased “the probability of life” for people.40 To illustrate his point, Rae compared different societies, arguing that the “strength of the effective desire of accumulation” was greater among modern Europeans than among “Asiatics, or Africans” (although he argued that China’s was “greater than that of other Asiatics”). He also deemed the “American Indian” to have a low effective desire for accumulation partly because of the instability of life as a “hunter” but also because of the negative impact of European settle­ ment. Concerning the latter, he criticized the fact that “the white man robs their woods and waters of the stores with which nature had replenished them” and that European settlers had “gradually diminished, or entirely destroyed, the politi­ cal importance of their tribes, and consequently, the ties binding together the members of each of these communities, and leading them to feel, and to act, in common.”41 Rae, thus, insisted that every society had “a distinctive character of its own” and that these characters mattered because “man hardly exists but in the social state.” Although these differences among societies were obviously difficult to alter quickly, public authorities had a role to play in raising their country’s effec­ tive desire of accumulation through the provision of stable government, good

39. Quotes from Rae [1834] 1964, 70, 382, 62. 40. Quotes from Rae [1834] 1964, 119, 123–24. 41. Quoted in Rae [1834] 1964, 151, 131, 138, 135. James (1965, 117) notes that during Rae’s later life, in Hawaiʻi, he was also “greatly concerned by the plight of the natives and the damage which was being done to the native culture and moral standards by the impact of Western laws, customs and religion.”



laws, security, property rights, and initiatives to raise the “general intelligence and morality of the society” through education. Whereas tariffs were a direct means of fostering the productive powers of a community, these actions repre­ sented more indirect mechanisms of achieving this end via their role in varying “the relations between the present and the future” among people and thus “the strength of the accumulative principle” of the society.42 In endorsing tariffs to cultivate local industry, Rae insisted that policymak­ ers needed to act “cautiously.” Action was justified only if the creation of locally based industries would “ultimately lessen the costs of the commodities they produce” or if the expense involved in cultivating local production of goods was justified by “the risk of waste to the stock of the community, from a sudden interruption to their importation from abroad.” Rae noted that local industries could also be cultivated by subsidies but—unlike Hamilton—he did not put forward any rationale for why one might be preferred over the others. In his initial 1825 article, Rae also noted some other ways of fostering local manu­ facturing, such as public procurement policies, patent protection, and even the actions of “higher classes” in setting an “example” by purchasing domestic manufactured goods. In that article, Rae also suggested that governments could help foster foreign markets for national manufacturers through trade treaties, sending agents abroad to protect and advise their merchants, establishing colo­ nies, and creating privileged joint-stock companies along the model of the East India Company.43 One last argument of Rae’s deserves attention. Unlike many other neomercan­ tilists, Rae directly confronted a potential political objection to his policy advice. He acknowledged that some might question whether policymakers could be trusted “to act for the good of the society.” He acknowledged that policymakers did not always work for the common interest in many policy areas, but argued that it was in their interest to do vis-à-vis policies concerning “the wealth of the community” as a whole. He explained: “In despotic governments this is the case, because there the legislator looks on the wealth of the people as his own; in free governments because in them his interests are identified with theirs.”44 Rae’s endorsement of despotic governments’ capacity to pursue neomercan­ tilist policies differed from List’s insistence that these policies should not be pursued by countries that had not reached a high degree of “political develop­ ment” (according to List’s political liberal values). In Rae’s view, even if despotic

42. Quotes from Rae [1834] 1964, 95, 362, 162. 43. Quotes from Rae [1834] 1964, 37; Rae [1825] 1965, 205. 44. Quotes from Rae [1834] 1964, 377.



governments had a higher likelihood of making policy mistakes, this risk was offset by the larger potential gains they could realize. Despotic governments, he suggested, ruled countries that had less “inventive power,” less “advance in science and arts,” and greater “addiction to luxury.” For these reasons, he argued, they had greater opportunity “to increase the wealth of the community.” As he put it, “Speaking generally, if legislators in despotic governments, were other circumstances equal, would be more prone to go wrong; they have there so great facility in action, that they have greater chance to go right.”45 This line of argument led Rae to support neomercantilist initiatives in a wider range of contexts than List did, as discussed in the next chapter in the case of Egypt. This support also reflected the fact that Rae did not embrace the kind of climatic theory that List endorsed. To be sure, Rae noted that a “healthy climate” would influence a society’s “effective desire of accumulation.” But nowhere in Rae’s work is there any equivalent to List’s idea that certain parts of the world should never try to industrialize with neomercantilist policies because of their “tropical” climate.

Sources of Rae’s Ideas What were the sources of Rae’s sophisticated critique of Adam Smith? Because Rae’s work was published before List’s 1841 work, the latter was clearly not an influence. It is possible that Rae may have come across List’s 1827 letters, but Rae’s 1834 book presents a distinct and much more detailed and sophisticated critique of free trade than was contained in those letters. Moreover, Rae had already out­ lined his neomercantilist views in his 1825 article, two years before List’s letters were published. For these reasons, even if Rae was aware of these early writings of List, it would be difficult to credit them with having a major influence on his thought.46 Like both Mordvinov and List, Rae was clearly interested in Storch’s work, citing it in a number of places in his 1834 book. Indeed, there were interesting

45. Quotes from Rae [1834] 1964, 378. 46. One possible indication that Rae might have read List’s 1827 letters was that he included an analogy in his 1834 book that bore a strong resemblance to one used by List in 1827. In defending protectionism, List (1827, 22) discussed how a farmer who wanted to create a new mill would gain “productive power” in the long term from sending “his son or another of his family to the city to acquire the necessary skills,” despite the short term cost involved. Rae ([1834] 1964, 59) made the same point by invoking the example of two Canadian farmers who sent some of their children away to learn leather trades that could then be employed on their remote farms to produce items for them­ selves. List repeated this analogy in List [1841b] 1909, 118.



similarities between Storch’s theory of internal goods and Rae’s sociological approach to economic growth. Like Mordvinov and List, however, he adapted Storch’s ideas into a critique of free trade. In addition to not citing List’s work, Rae made no mention of Mordvinov’s 1815 work. Even if he had read it, it is worth noting once again that Rae’s critique of free trade went well beyond the Russian’s. From the references in his book, it is also clear that Rae was familiar with some earlier European mercantilists, such as Colbert, Thomas Munn, Antonio Serra, and Antonio Genovesi.47 I have already noted that Rae referred to Hamilton’s 1791 report (although he did so only once in the long book). He may also have been inspired by other early US neomercantilists; he noted at the start of his book that US protectionism was “the best practical illustration hitherto existing of the correctness of some of the principles I maintain.”48 At the same time, this state­ ment may simply have been included for the strategic reason that his book was published in Boston through the sponsorship of US protectionists.49 He did not cite the work of other US thinkers. Rae may also have been influenced by some French neomercantilist thought. His interest in the study of political economy seems to have emerged sometime between when he earned a medical degree in Edinburgh in 1817 and when he emigrated to Canada in 1822. During that period, he spent some time in Paris, where he likely first encountered Storch’s 1815 work (which had originally been published in French).50 Although almost nothing is known of his activities in the French capital, Rae may have come across Chaptal’s 1819 book there. Rae did not cite the work, but his discussion of the significance of the “inventive faculty” is similar to Chaptal’s focus on the “creative faculty” as a driver of eco­ nomic growth.51 In two brief places in his book, Rae did cite the French writer Charles Ganilh’s 1809 Des Systèmes d’Économie Politique (The systems of political economy), which provided one of the first overviews for a popular audience of various schools of political economy, dating back to the mercantilists. Although sympathetic to many aspects of economic liberalism, Ganilh argued that coun­ tries with industry were more prosperous than agricultural countries and that

47. Rae [1834] 1964, 389–91. 48. Rae [1834] 1964, xiii. 49. James 1965, 141, 165. 50. James 1965, 8–9, 13. 51. Another early neomercantilist, Portugal’s Francisco Solano Conståncio, also spent time in Paris in this period (during 1818–22 in his case) where he engaged with Chaptal’s work. He then went to the United States during 1822–26 where he became interested in Hamilton’s and Mathew Carey’s work. For more on his work, see Cardoso 2019.



trade restrictions were needed to support new industries. But neither of Rae’s references to Ganilh related to these points.52 Although Rae was aware of some foreign neomercantilist work, the latter was not a decisive influence on his thought. Instead, scholars who have carefully stud­ ied Rae’s life and work emphasize that the most important source of his ideas about political economy came from his practical experience of living in what he called the “Canadian backwoods.”53 This dominant influence of the Canadian context on his thought reflected his methodological orientation. In addition to criticizing Smith’s advocacy of free trade, Rae argued that Smith relied too heavily on deductive argumentation. Drawing on Francis Bacon’s ideas, Rae argued that this methodology was unscientific and inferior to a more inductive empirical and historical approach. In keeping with this orientation, Rae displayed a deep interest in the Canadian colonial economy and its development, a topic that was also of central concern to business figures who were in his social circle during his first nine years in the country.54 Although aimed at a wider international audience, his 1834 book included many Canadian examples. Rae had, in fact, seen his book as contribut­ ing to a larger volume to be titled Outlines of the Natural History and Statistics of Canada that he never ended up publishing.55 More generally, Omar Ham­ ouda, Clive Lee, and Douglas Mair argue that Rae’s interest in the significance of innovation for economic growth was encouraged by the dramatic contrast between Britain’s economic progress and that of colonial Canada.56 Robin Neill also suggests that the nature of the Upper Canadian economy at this time helped to inspire Rae’s ideas about the possibility for technologically driven growth that could be self-sustaining. As he puts it, Rae’s theory “corresponded to the econ­ omy in which it was expounded.”57 Although the Canadian context was a major source of inspiration for his ideas, Rae’s book included no specific call for a protectionist policy in Canada or even a call for Canadian colonies to gain the right to regulate their own tariffs (a right

52. Rae [1834] 1964, 183; Ganilh [1809] 1821, 285–89. For Ganilh’s work, see also Henderson 2008; Todd 2015, 30–31. Ganilh’s work is not discussed in chapter 1 because List did not cite it. 53. Rae [1834] 1964, viii. 54. James 1965, 136. 55. James 1965, 69–72, 139–40; 1998, 28. Although several Canadian newspapers announced in 1840 the pending publication of this book in England, James (1972) notes, “The manuscript was evidently rejected and later submitted for publication in New York where it was lost.” See also Mixter 1905, xxx–xxxi. 56. Hamouda, Lee, and Mair 1998, 4. 57. Neill 1991, 65; see also 58.



that was not granted until after the arrival of responsible government in 1841). Instead, Rae’s neomercantilist advice in the book was of a more generic kind, pitched at an international rather than Canadian audience. Indeed, Rae’s views about the relevance of his neomercantilist advice to colo­ nial Canada were quite unclear. A strong defender of Canada’s political ties to the British Empire and Crown, Rae noted in the preface to his book that he was initially driven to criticize liberal ideas of free trade because they were being used in Britain to justify the abandonment of British colonies.58 Rae argued that Britain’s economic relationship with its Canadian colonies was mutually ben­ eficial, with the latter receiving cheap industrial imports and a market for their resources while the former obtained resources and a place to export its manu­ factures and surplus population.59 These arguments suggested that Rae did not want the Canadian colonies to promote the development of local industry via protectionist policies in their economic relations with Britain. But it is also inter­ esting to note that his 1825 article promised a future proposal for “establishing some new branches of industry in the Canadas.” Unfortunately, his ideas on that topic remain unknown because this proposal never materialized.60 Much later in his life, Rae noted in a letter that his unpublished broader book on Canada had contained ideas that would have brought a “period of prosperity” to Can­ ada much earlier than one had in fact occurred.61 But the contents of that book remain a mystery.

Rae’s Influence via an Unusual Channel What influence did Rae’s ideas have? Initially, his 1834 book received little atten­ tion beyond a few lukewarm reviews. Even the Boston protectionists who had sponsored its publication were disappointed with its content, finding Rae’s theory “peculiar” and straying too far from the key issue of protectionism in its broader discussion of “the influence of social and political conditions of communities on their wealth.”62 Joseph Dorfman notes that the timing of the book’s publication in the United States was also unfortunate: “By the time the book appeared the compromise [US] tariff of 1833 had been passed and the tariff was a dead issue.”63

58. 59. 60. 61. 62. 63.

Rae [1834] 1964, ix–x; see also James 1965, 189. Rae [1825] 1965, 199; Rae [1834] 1964, ix; James 1965, 26. Quote from James 1965, 195; see also 19. Quoted in Mixter 1905, xxx. Quoted in James 1965, 164–65. Dorfman 1946, 788.



In addition, the book’s impact was reduced by a small print run, Rae’s lack of proximity to centers of power, and the fact that Rae did little to promote it. Regarding the latter, Rae appears to have been so discouraged by the book’s reception that he withdrew from public engagement in discussions of political economy for the rest of his life. Indeed, his biographer notes that “in later years, he did not even own a copy of his New Principles.”64 As in the case of Mordvinov, it is unclear whether List was familiar with Rae’s arguments. Although List did not cite Rae’s book, the Boston protectionists who sponsored its publication were known to him. But the book was published after List had returned to Europe and, because of their disappointment with the work, List’s US friends may not have recommended it to him. I have noted some inter­ esting parallels between Rae’s work and List’s, such as the use of the ladder anal­ ogy to describe England’s mercantilist policies. Rather than appearing in Rae’s 1834 book, however, this analogy appeared in his 1825 article, which was pub­ lished in a Canadian literary journal. Whether List came across that journal dur­ ing his time in the United States remains unknown. Despite the initial weak reception of Rae’s book, it soon gained more atten­ tion because of a high-profile endorsement from an unusual source: the famous economic liberal John Stuart Mill. Mill received a copy of Rae’s work in 1847 from the British political economist Nassau Senior, who had recognized its scholarly merits. Mill then applauded Rae’s ideas in the first 1848 edition of his widely read Principles of Political Economy: “In no other book known to me is so much light thrown, both from principle and history, on the causes which determine the accumulation of capital.”65 Mill even acknowledged the logic of part of Rae’s economic case for protectionism as an exception to Mill’s own general support for free trade: “The only case in which, on mere principles of political economy, protecting duties can be defensible, is when they are imposed temporarily (espe­ cially in a young and rising nation) in hopes of naturalizing a foreign industry, in itself perfectly suitable to the circumstances of the country. The superiority of one country over another in a branch of production, often arises only from hav­ ing begun it sooner.”66 Because of the high profile of Mill’s work, his endorsement of Rae’s ideas generated new attention for the Canadian thinker’s 1834 book. The latter was

64. James 1965, 175. 65. Mill 1848, 1:199. 66. Mill 1848, 2:495. When outlining this exception to his free-trade views, Mill did not men­ tion Rae’s name until the fifth, 1862 edition of his book (Dimand 1998, 181). See also Neill 1991, 57; James 1965, 167–69.



translated into Italian in the 1850s and later reissued in an abridged English language version in 1905 that was widely reviewed in scholarly journals.67 In his preface to the 1856 English translation of List’s work, Stephen Colwell also featured Rae as one of the prominent “American Political Economists who have left the beaten path” alongside Henry Carey, Daniel Raymond, Calvin Colton, and E. P. Smith.68 In the place where Rae’s ideas had initially been developed, Canadian supporters of the introduction of higher tariffs in 1879 (described in chapter 6) also invoked his critique of free trade.69 Much later, in 1923, the Turkish neomercantilist Ziya Gökalp (discussed in chapter 3) also praised Rae alongside List for discovering the “truth” that economic liberalism was “nothing but the national economics of England.” After describing Rae as an “American economist,” Gökalp applauded how both List and Rae had “put forward systems for their own countries which ensured their industrialization so that today the United States and Germany have reached a stage in which both can boast of being equal to Great Britain.”70 Rae would no doubt have been surprised to find himself credited with helping to shape the industrialization of the United States. Although Rae’s ideas were sometimes mentioned directly in these ways, their much greater influence on policy discussions came through the indirect route of Mill’s limited and cautious endorsement of Rae’s case for infant-industry protection. That endorsement appeared on just one page in Mill’s two-volume work that stretched well over a thousand pages, but it quickly attracted a great deal of attention in neomercantilist circles. As I noted in chapter 6, both John A. Macdonald in Canada and David Syme in Australia invoked the passage in the 1870s when advocating for higher tariffs. Carey also praised Mill’s passage in his 1858–59 book, as did his German follower Wilhelm von Kardorff.71 Others who did the same included Japanese supporters of protectionism in a high-profile trade-policy debate in 1880 as well as Mahadev Govind Ranade in his prominent 1892 lecture on Indian political economy.72 Free traders became increasingly frustrated by how Mill’s passage was being used politically to justify protectionist policies. Richard Cobden is even reported

67. Mixter 1905; James 1965, 169, 184. 68. Colwell 1856, lxv. 69. Neill 1991, 58; Heaman 2014, 214; 2017, 139; Goodwin 1961, 52. 70. Gökalp 1959, 307, 313. Given that Gökalp’s entry to political economy came via sociology (which he formally taught), he may have come across Rae’s work through its 1905 abridgement, which had been published under the title The Sociological Theory of Capital. 71. Carey 1859, 428; Kardorff 1875, 46. 72. Sugiyama 1994, 93; Ranade 1906, 27. Naoroji (1887, 104, 217) also cited Mill’s endorsement of infant-industry protection and even his use of Rae’s notion of the “effective desire of accumulation.”



to have declared on his deathbed in 1865 that Mill had “done more harm by his sentence about the fostering of infant industries, than he had done good by the whole of the rest of his writings.”73 Mill himself also became increasingly annoyed by the way his comments were being used by supporters of trade protection­ ism. He even wrote letters to people in various countries explicitly criticizing this practice. In one 1866 letter to an American, Mill lamented how his pas­ sage had been used “erroneously” in Australia to criticize free trade and even more so in the United States, where protectionist policies were defending wellestablished industries.74 In the 1865 edition of his book, Mill added to his brief comments on the issue that protection needed to be “strictly limited in point of time, and provision be made that during the latter part of its existence it be on a gradually decreasing scale.” Later in his career, he concluded—as Hamilton had—that subsidies would be preferable to protectionist measures because they were “not nearly so likely to be continued indefinitely.” But this conclusion was never included in his famous book.75 The ideas of Mordvinov and Rae provide further examples of the diverse ori­ gins of neomercantilist thought in the nineteenth century beyond List. Mord­ vinov clearly developed his ideas quite independently of List (although he was responding to a similar international economic context after the Napoleonic Wars that encouraged List’s initial skepticism of free trade). It is theoretically possible that Rae was familiar with List’s 1827 letters, but there is no clear evidence of this. Even if he was, it is unlikely that the letters had a significant influence on his thought. Instead, his ideas were shaped primarily by his local Canadian experience. This examination of Mordvinov’s and Rae’s neomercantilism also reinforces two other themes of this book. The first concerns the varied content of neo­ mercantilist ideology. The ideas of Mordvinov and Rae overlapped with those of List in important ways, particularly in their focus on the relationship between industrial protectionism and the growth of what both List and Rae called the broad “productive powers” of a country. At the same time, the two men differed from List in areas such as Mordvinov’s proposal for state industrial bank and his weaker commitment to political liberalism as well as Rae’s views about which countries could successfully pursue neomercantilist policies.

73. Quoted in Palen 2016, 54. 74. Quote from Mill 1884, 614; see also Chomley 1904, 81–82; Irwin 1996, 129–30. 75. Quotes from Irwin 1996, 130, 129.



This chapter also speaks to the complexity of the international circulation of neomercantilist thought in the pre-1939 period. Of course, neither of these think­ ers had anything like the kind of international influence of List or Carey. Indeed, Mordvinov’s ideas found an audience mainly within his own country, although Carey did cite his work. Rae’s ideas achieved a wider international reach, but they did so through a channel quite different from those discussed elsewhere in this book: their endorsement by a prominent economic liberal. Even in Canada itself, Rae’s ideas only gained attention after they were promoted by Mill. This strange round-tripping of Rae’s ideas from Canada to Mill’s Britain back to Canada high­ lights once again how the international flows of neomercantilist thought involved much more complicated dynamics than a simple one-way diffusion of Listian ideas around the world.



This chapter shows how neomercantilist thought emerged without any clear influence from List’s ideas (or from those of other thinkers examined in the book) in three other parts of the world in the pre-1939 era: Egypt, Poland, and Latin America. In Egypt’s case, the key innovator was Muhammad Ali, who ruled Ottoman Egypt from 1805 to 1848 and introduced the most ambitious neomercan­ tilist policies anywhere in the world during that time. In Poland, Xawery DruckiLubecki pursued bold neomercantilist policies when he was finance minister of that country in the 1820s. In Latin America, a number of policymakers who backed neomercantilist policies deserve mention, including one in the early postin­ dependence period (Mexico’s Lucas Alamán), another in the mid-nineteenth cen­ tury (Bolivia’s Manuel Isidoro Belzu), and two more in the early twentieth century (Uruguay’s José Batlle y Ordóñez and Mexico’s José Manuel Puig Casauranc). All of these figures were practitioners engaged in promoting and/or imple­ menting neomercantilist policies. Thus, their ideas were not always expressed in the same ways that the ideas of many others examined in this book were put for­ ward. I have included them in the analysis, however, because they each embraced neomercantilist ideologies that were politically consequential. In identifying the content of their ideology, I have relied on a number of different kinds of sources. Despite some limitations of evidence, these cases reinforce several themes of this volume: the diverse origins of neomercantilist ideology beyond the Listian intel­ lectual world, the many mercantilist traditions on which neomercantilism was built, and the varied content of pre-1939 neomercantilist thought. 303



Muhammad Ali’s Subimperial Neomercantilism The most ambitious of the neomercantilist ideas discussed in this chapter were associated with Muhammad Ali, who led Egypt from 1805 until just before his death in 1849. Born in Ottoman Albania, Ali first came to Egypt as a mercenary with the Anglo-Ottoman force that reoccupied the territory after Napoleon’s invasion of 1798. In the political upheavals that followed, he seized power in 1805 and then consolidated it in 1811 by massacring the mamluks who had previously ruled Egypt with considerable autonomy from the Ottoman sultan. Although Ali remained formally a vassal of the Ottomans, he sought to strengthen his regime’s power vis-à-vis the Ottoman sultanate and even declared his goal of indepen­ dence in 1838. As an admirer of Napoleon, Ali had ambitions of becoming a fifth great power alongside Britain, France, Russia, and Austria.1 Because he was formally a vassal of the Ottoman sultan for most of his rule, I describe his version of neomercantilism as “subimperial.”2 It is also worth high­ lighting that Ali’s neomercantilism was not linked to a nationalist worldview. Instead of identifying as an Egyptian, Ali considered himself an Ottoman, even if he was critical of how the empire was being run and eventually sought Egyp­ tian independence. According to Afaf Lutfi Al-Sayyid Marsot, Ali “despised the Egyptians” and viewed the country as “a piece of property he had acquired by guile and ability.”3 During the first three decades of his regime, Ali transformed Egypt into a major economic and military power in its region through a series of ambitious reforms. In addition to creating a centralized bureaucracy and conscription army, Ali introduced neomercantilist economic policies that went far beyond those endorsed by List or any other state of his time. In the agricultural sector, his government turned Egypt into a major cotton exporter by seizing control of all land, setting itself up as the monopoly buyer of produce at fixed prices, and con­ trolling peasant planting activity. By the 1830s, this tight system of social control extended to include restrictions on peasants traveling beyond their villages, leav­ ing them, in the words of Timothy Mitchell, as “inmates of their villages” with

1. For Ali’s admiration of Napoleon and ambitions to become a fifth great power, see Hourani 1983; Ufford 2007, 16; Marsot 1984, 214. For his declaration of independence, see Ufford 2007, 235. 2. I have borrowed the subimperial label from Schayegh (2018, 63) who discuses “subimperial developmentalism” in the Ottoman Empire in a later period. 3. Quotes from Marsot 1984, 97, 131; see also 9, 32–33, 109, 177, 193, 263; Fahmy 1997, chap. 6, 282–83; Ufford 2007.



“surveillance of guards night and day, and under the supervision of inspectors as they cultivated the land.”4 Through high taxes and low purchase prices, Ali also extracted large sur­ pluses from the agricultural sector to finance ambitious infrastructure and industrial initiatives. Supported by forced labor, his infrastructure projects included the building of canals, roads, and irrigation schemes. In the industrial sector, Ali set up many government-owned manufacturing workshops. Initially, he focused on producing manufactured goods related to military needs, such as ships, arms, gun powder, and bullets. When cheap textiles sold by British traders began to undermine traditional local producers after 1811, Ali established tex­ tile factories, some of which had as many as five hundred workers each. Other industries were also subsequently promoted to produce goods such as glass, leather, paper, carpets, sugar, and indigo. By the 1830s, Egypt had become one of the key industrializing regions in the world, with one author estimating its manufacturing capacity in mechanical cotton spinning as ninth globally, ahead of all other non-European countries.5 Ali combined this ambitious domestic economic activism with extensive con­ trols on cross-border economic activity. At the time, the Ottoman Empire had rules in place—the capitulations—that prevented tariffs from being raised. To protect his textile factories from British competition, Ali evaded these rules by simply placing an embargo on British textile imports (allowing only imports of luxury cottons and silks, along with high-grade woolens). Ali also controlled other imports and exports through the creation of state monopolies covering the country’s internal and external trade. These policies enabled Egyptian cotton textile producers to dominate local markets and even begin to export.6 Ali’s monopolies also served as a form of commercial protectionism, preventing for­ eign merchants from participating in domestic trade or dealing with Egyptian peasants directly. Indeed, the government effectively became the sole merchant in Egypt by 1816, purchasing and selling all marketable commodities at fixed prices. In addition, Ali prohibited foreign investment and rejected loan offers from foreign banking houses, preferring to finance his ambitious development program internally.7 Several other policies of Ali also deserve mention. One was his heavy reli­ ance on European technology and experts to establish Egypt’s industries as well

4. 5. 6. 7.

Mitchell 1988, 34. Batou 1990, 101–2, 122; see also Fahmy 1997; Marsot 1984. Marsot 1984. For the capitulations, see, for example, Lorca 2014, chap. 3. Davis 1983, 21; Marsot 1984, 146, 185.



as to support some of his ambitious infrastructure projects. Anticipating Sun Yat-sen’s later recommendations, he managed foreign experts carefully, insisting that they could stay only until they had taught locals the necessary skills. Ali also sent Egyptians to study in Europe and established new technical schools at home focusing on subjects such as mineralogy, engineering, applied chemistry, and irrigation. Finally, Ali turned to imperial expansion in the 1830s, with military expeditions to Sudan, Syria, and western Arabia to secure resources, trade routes, and markets that would support Egypt’s economic growth.8 What ideology drove Ali’s dramatic reforms? Ali left no treatises for schol­ ars to examine. Indeed, he did not even learn to read and write until he was forty-seven years old and had already been in power for ten years.9 As Marsot notes, however, he was intellectually curious and developed a strong politi­ cal and economic “vision” for his country that was outlined clearly in various accounts of his speeches, conversations, and letters. Marsot describes this vision as a “mercantilist” one that prioritized boosting Egypt’s wealth and power via the policies noted above.10 Using the terminology of this book, Ali’s ideology can be described as “neomercantilist” because of his engagement with liberal economic thought. Ali met and talked extensively with many European liberals who visited Egypt and often criticized his economic policies, including his pro­ motion of industrialization, which they saw as irrational in the context of Egypt’s comparative advantage in agriculture.11 Ali rejected their views forcefully with a number of arguments. To begin with, Ali argued that the cultivation of manufacturing was necessary to increase Egypt’s independence as well as to reduce manufacturing imports in ways that improved the country’s external payments position. As he put it in 1837, one of his goals in building factories was to place his country “in a condi­ tion to rely at least for a time, on its own resources, independent of other coun­ tries and their products.” Similarly, he told one French visitor in 1833, “[Egypt’s new factories] liberate me today from the tribute which European industry used to levy on Egypt, and the sums with which I paid for your cloth and silks now remain in the country.”12

8. Marsot 1984, 75, 168, 194–97; Hourani 1983, 53; Pilbeam 2014, 107; Fahmy 1997, 49–51; Ufford 2007, 19. 9. Tagher 1950, 19, 21. 10. Quotes from Marsot 1984, 23, 97; see also 34, 57. For his intellectual curiosity, see also Hourani 1983, 71; Tagher 1950, 20. 11. These visitors included famous liberals such as Richard Cobden and John Bowring (Morley 1906, 67; Todd 2008, 393). 12. Ali quotes from Tagher 1950, 23; Marsot 1984, 178; see also 98, 177; Tagher 1950, 28.



Ali also criticized the idea that some countries were destined by nature to be agricultural. In his view, all agricultural countries could become commercial and industrial nations through state activism, even if short-term economic costs were involved. For example, Ali noted that his factories were designed “to accustom the people to manufacture” rather than to realize immediate monetary gains. More generally, he highlighted his goal of raising the long-term productivity of Egypt: “I have seized everything, but it was in order to render all productive; it was a question of production, and who could do it other than me? Who would have made the necessary advances? Who would have shown the methods to be adopted, the new cultures to introduce?”13 When defending his policies, Ali advanced some other interesting argu­ ments. For example, he questioned the relevance of European economic lib­ eralism to Egypt’s circumstances: “We cannot apply the same rules to Egypt as to England: centuries have been required to bring you to your present state; I have only had a few years.”14 He also invoked Europe’s past mercantilist poli­ cies, telling European visitors that he was simply doing what both France and England had earlier done when nurturing their industrial sectors behind trade barriers.15 In addition, Ali occasionally justified his policies with reference to the well-being of the Egyptian people. In one such instance, he defended his com­ mercial monopolies on the grounds that the government was a better buyer than foreign merchants for Egyptian producers, sometimes even paying the latter a higher price than it sold the goods for.16 In a letter to one of his officials in 1842, Ali even emphasized that the wealth and power of a country could be advanced only by enhancing the wealth of its people.17 But his interest in the people’s well-being appeared to be largely an instrumental one linked to his desire to minimize uprisings that challenged his control and to maximize the power and wealth of his state.18 I have seen no evidence that Ali was influenced by the ideas of any foreign neomercantilist theorists.19 Marsot’s detailed analysis gives the impression that

13. Ali quotes from Marsot 1984, 174, 189; see also Tagher 1950, 28–29. 14. Quoted in Tagher 1950, 21. 15. Marsot 1984, 172, 174, 175. 16. Tagher 1950, 29. 17. Bey 1949–50. 18. Marsot 1984, 193–94. 19. Hourani (1983) and Waterbury (1999, 328) point to the broader foreign influence of French Saint Simonians (who stressed the benefits of industrial progress, technology, and economic plan­ ning). But the Saint Simonians did not arrive in Egypt until 1833 and Ali was apparently not much interested in their ideas (Pilbeam 2014, 114–15, 124).



Ali’s overall worldview instead was shaped heavily by his own pragmatic experi­ ences as a merchant and soldier and by his drive to accumulate power for the state he had conquered.20 Ali’s initial industrial initiatives also responded to a structural pressure similar to that found in other cases in this book: growing competition from British firms in the early nineteenth century. Like early East Asian neomercantilists, Ali was also a keen observer of the practices of dominant European states whose wealth and power he sought to match. In addition to not­ ing their past mercantilist practices, Ali commented on European practices of his day, such as the support provided to national shipping and exports as well as tariffs designed to promote local industry.21 When looking to European mercantilist practices as a model, Ali followed in the footsteps of earlier Ottoman reformers. Beginning in the late eighteenth century, prominent Ottoman officials praised European mercantilist policies as models for the empire to follow to reverse its growing economic and military weaknesses.22 Ali’s industrialization drive also followed the precedent of initia­ tives undertaken by Sultan Selim III from the early 1790s until his downfall in 1807 to strengthen the empire’s power by establishing modern European indus­ trial techniques to produce military equipment and uniforms.23 In these ways, Ali was building on local Ottoman mercantilist ideology. When justifying his interest in learning from European practices, Ali employed a discourse of civilizational advancement that placed Europe ahead of the society he governed. As an outsider to Egyptian society, he had no qualms about criti­ cizing it. As he told a British visitor, “I came to Egypt, and I found the country inhabited by barbarians. . . . I have done what I can to civilize the country.”24 He echoed these views in letters to his own officials in which he praised the practices of “civilized” countries in Europe as examples to be emulated. He also empha­ sized that he saw industrialization as a means to civilization, arguing that he had built factories because they were “in more than one respect, one of the most powerful means of civilizing a people.”25 His conception of civilizational advancement was also evident in his pro­ motion of the most famous scholarly work by an Egyptian of his time: Rifa’a al-Tahtawi’s 1834 Takhlis al-Ibriz fi Talkhis Bariz (The extraction of gold from

20. 21. 22. 23. 24. 25.

Marsot 1984. Bey 1949–50, 20–21. Ermiş 2014, 23–24, 121, 128–29,143–47. Clark 1974, 65–66; Waterbury 1999, 325. Quoted in Tagher 1950, 24; see also Fahmy 1997, 282, 303. Quotes from Bey 1949–50, 20 (my translation); Tagher 1950, 23.



a distillation of Paris). Al-Tahtawi wrote the book after being sent in 1826 as a religious adviser to a mission of Egyptian students in Paris (where he stayed until 1831). Ali liked the book so much that he distributed it to government officials, students, and even the sultan.26 Reflecting al-Tahtawi’s exposure to Enlighten­ ment thought in Paris, the book outlined a stage theory of the progress of civili­ zation and located Egypt at the same level as places such as Persia, Syria, Yemen, the Magreb, Germany, and the United States.27 Although his work said very little about political economy issues, al-Tahtawi argued that Egyptians had much to learn from Europe in the same way that Europeans had earlier learned from the Islamic world. The appeal that al-Tahtawi made to the Islamic world’s impres­ sive past anticipated later Chinese arguments that would highlight the earlier achievements of their civilization vis-à-vis the West. What became of Ali’s striking neomercantilist experiment? It was under­ mined by an alliance of the Ottoman sultan and the British government, both of whom were threatened by Ali’s growing power. In 1838, they signed a trade treaty that lowered Ottoman tariffs and abolished monopolies in the empire. Recogniz­ ing that these changes were designed to constrain his sources of revenue and industries, Ali refused initially to abide by the treaty until an Anglo-Ottoman invasion forced him to back down in 1840, when he also accepted restrictions on the size of his army and his territory. In the new context that resulted, Egypt’s economy increasingly focused on agricultural exporting as its fledging industries were soon undermined by foreign competition, the loss of colonial markets, and reduced purchasing from the smaller army.28 At the very moment that Ali’s neomercantilist policies were unraveling, List was completing his 1841 book. Despite the high-profile nature of Ali’s neomer­ cantilist policies at the time, they earned not a single mention in List’s volume. The silence did not reflect a lack of interest on List’s part in Ali’s country, given that List had written an entry on Egypt for a German encyclopedia in the 1830s.29 Instead, it likely stemmed from his opposition to what Ali had attempted to do. After all, List explicitly included Egypt in the list of countries that he argued would be “foolish” to try to build up manufacturing with protectionist policies.30 Other features of Ali’s distinctive style of neomercantilism also, no doubt, met

26. 27. 28. 29. 30.

Euben 2006, 99–100. al-Tahtawi [1834] 2004, 102–5. Marsot 1984, 175–78, 213, 237–50; Fahmy 1997, 13, 294–97, 302; Clark 1974. Wendler 2015, 137. List [1841b] 1909, 152. See chapter 2.



with List’s disapproval, such as his extensive government economic activism (both within the country and at the border) as well as his nonliberal politics. Other Europeans, however, were more impressed by Ali’s achievements before his downfall.31 Even in the British cabinet debate of 1840, opponents of military action against Ali, such as Lord Clarendon, praised his economic accom­ plishments as evidence of “the progress of civilization” and argued that “the productive powers of the country have been stimulated in a manner unknown in modern times.”32 Writing in the backwoods of Canada in the early 1830s, John Rae was also more sympathetic to Ali’s initiatives, reflecting his divergence from List on the question of which countries should pursue neomercantilist policies. Rae acknowledged that “unmitigated slavery and despotism” prevailed in Egypt, but he argued: “Errors, no doubt, may have been, and may be committed, but the good assuredly overbalances the evil.”33 In cases such as Ali’s Egypt (and, earlier, Peter the Great’s Russia), Rae argued that “the power of the legislator to effect beneficial change is so great, that even his most blundering efforts are seldom altogether successless. A fruitful soil yields large returns, even to a very unskillful husbandman.” In the wake of the dismantling of Ali’s neomercantilist policies, Western economic liberalism became the dominant economic ideology in Ottoman elite circles. His policies were, however, occasionally cited by later Ottoman neomer­ cantilists. For example, in the late nineteenth century, Ahmed Midhat Efendi (noted in chapter 3) cited the success of Ali’s protectionist policies and tight con­ trol of foreigners within the domestic economy when calling for neomercantilist policies in the Ottoman Empire.34 Ali’s experience was also invoked sympatheti­ cally by later neomercantilists in East Asia. After traveling to Egypt on an offi­ cial mission in the late 1880s, the prominent Japanese supporter of Carey, Shiba Shirō, published a short history of Egypt in 1890 that criticized British imperial­ ism in the country and praised Ali as a failed hero who had attempted to reverse Egypt’s civilizational decline.35 At the turn of the century, Liang Qichao published a Chinese translation of Shiba’s history that generated enormous interest in Ali’s experience in early twentieth-century Chinese intellectual circles. For Liang and

31. Batou 1990, 84; Marsot 1984, 243–44. 32. Quoted in Ufford 2007, 198. 33. Rae [1834] 1964, 379. 34. Geyikdaği 2008, 548; Kilinçoğlu 2015, 142. 35. Karl 2002; Bradshaw and Ndzesop 2009, 152. Another history of Egypt published in Japan in 1896, however, drew a different lesson from Ali’s experience. Its author, Kitamura Saburo, argued that Ali’s downfall could be blamed on his failure to gain enough popular support for his reforms (Karl 2002, 179).



other Chinese thinkers, the key lesson was the role of European power in stop­ ping Ali’s efforts.36 Similar attention to Ali’s initiatives emerged in Korea a few years later after Shiba’s work was translated into Korean in 1905.37 None of these thinkers could cite specific texts written by Ali, but they drew inspiration and lessons from his initiatives for their own neomercantilist goals.

Drucki-Lubecki’s Brief Neomercantilist Experiment Poland’s finance minister from 1821 to 1830, Xawery Drucki-Lubecki, also advanced some important neomercantilist ideas in the course of implement­ ing bold economic reforms within his country. At the time, Poland had an agriculturally focused economy that served as a major grain exporter to west­ ern Europe. After first stabilizing the government’s budget, Drucki-Lubecki launched a drive to transform Poland into a modern industrial economy. He encouraged the creation of new industrial operations in sectors such as textiles, food processing, and metallurgy via tariff protection, the importation of foreign skilled labor, and government subsidies for private manufacturing firms. He also created government-run mining and metallurgy operations that became the largest producers in these sectors within the country as well as a state-owned bank (the Bank of Poland) in 1828 that lent money to, and invested in, a wide range of projects.38 Although focused on industrial promotion, Drucki-Lubecki also assigned the government an active role in improving the country’s infrastructure through activities such as the building of roads and waterways. In addition, he created a state-supported mortgage association—the Land Credit Society—that was designed to assist indebted landowners and encourage agricultural improvement (although without challenging the feudal property relations in the agricultural sector, where the vast bulk of the population was employed).39 Drucki-Lubecki was more willing than Ali to use foreign capital to support his goals, but he did so in a controlled manner. In 1829, he borrowed from Prussian and Dutch banks and earmarked the funds to support his ambitious economic goals, especially state-owned firms. He argued that foreign borrowing by the state in this way

36. Karl 2002, 177–81. 37. Tikhonov 2010, 223–24; 2016, 322–23. 38. For overviews of his reforms, see David 2009, chap. 4; Jedlicki 1968, 1999, 2006; Szlajfer 2012, chap. 6. 39. David and Spilman 2006, 102.



was preferable to allowing foreign direct investment in the domestic economy, particularly in important sectors such as mining and metallurgy.40 Underlying these economic policies was Drucki-Lubecki’s core goal of increas­ ing Poland’s independence. As he put it, “Political independence must be comple­ mented with economic independence.”41 This issue had been politically salient in Poland since the country had lost its sovereignty altogether in 1795 in the face of pressure from Russia, Prussia, and Austria. The Congress of Vienna had then restored a Kingdom of Poland in 1815 with its own constitution, currency, and army, but under the formal rule of the Russian emperor. Although DruckiLubecki expressed his loyalty to the Russian emperor, he saw industrialization as a way to enhance Poland’s power and autonomy in this constrained political situation. It is no coincidence that his industrialization goals prioritized arms factories, and that the country’s new textile and metallurgical industries pro­ vided critical local sources of supply for the country’s expanding army. Indeed, as Thomas David and Elisabeth Spilman put it, “It was this demand [of the military] that was at the centre of the state’s industrial policies.”42 Drucki-Lubecki also highlighted how industrialization would reduce the country’s economic dependence on grain exports to unreliable western Euro­ pean markets. When Drucki-Lubecki came into office, the Polish economy had been battered by a dramatic fall in grain prices from 1817 to 1822 as well as by external barriers to its grain exports in the form of new British corn laws and Prussian tariffs.43 In this context, Drucki-Lubecki argued that industrialization would foster a more steady and lucrative domestic market for the Polish agricul­ tural sector over time. As he put it, industrial development was “the only lever for raising the withering agriculture.” More generally, Drucki-Lubecki argued that industrialization provided the best prospects for creating a healthy economy for the country: “With the help of industry it [Poland] will attain an independent and durable prosperity which nothing will wreck.”44 Drucki-Lubecki’s ambitious state-led industrialization generated much domestic criticism. Some was directed against the heavy taxation he imposed to help fund large state spending. But in intellectual circles, opposition also stemmed from supporters of the ideas of Adam Smith, who had become increas­ ingly prominent in the country since the end of the Napoleonic Wars. Prominent

40. 41. 42. 43. 44.

Jedlicki 1968, 226. Quoted in Szlajfer 2012, 199. David and Spilman 2006, 102; see also Szlajfer 2012, 200; Jedlicki 1999, 2006. Bujarski 1972, 28; David and Spilman 2006, 101–2; Jedlicki 1999, 82. Drucki-Lubecki quotes from Jedlicki 1968, 225; 1999, 83–84.



economic liberals, such as Fryderyk Skarbek, supported industrialization, but felt it would be better fostered gradually by free trade and market forces rather than in the rushed, state-led manner that Drucki-Lubecki was pursuing. Economic liberals were particularly critical of Drucki-Lubecki’s state-run firms, includ­ ing the government’s mining operations that were described by one critic as a “millions-consuming mining fantasmagory.”45 In response to opposition from economic liberals, Drucki-Lubecki defended the idea that the government needed to assume such an active role in pro­ moting industry and economic development. One of his rationales was that “foreign countries’ industry abuses its advantage and keeps [Polish industry] underdeveloped and subordinated.”46 The inability of Polish manufacturers to compete with their foreign counterparts had been evident when foreign manu­ factured goods had flooded into the country after the end of the Napoleonic Wars. In addition to retaliating against a Prussian tariff on Polish grain exports, Drucki-Lubecki’s high tariff on industrial imports of 1823 was designed—like similar protectionist initiatives elsewhere in the world after the Napoleonic Wars—to protect and cultivate local industry by insulating it from these exter­ nal pressures.47 Using language somewhat similar to Ali’s, Drucki-Lubecki also argued in 1824 that state leadership was needed because of the poverty and conservatism of the country: The position, alas, of the government in an underdeveloped country like ours is such that it has to take the initiative in everything and on every field, because the level of education, distrust and deeply ingrained habits discourage the citizens from embracing all innovations, which elsewhere can be left to the endeavors of private persons acting in their own interests. . . . Our government is the commander-in-chief of inex­ perienced legions which have still to learn strict discipline, and must lead them onwards, instilling in them a sense of power and an awareness of the means at their disposal.48 At the same time, Drucki-Lubecki emphasized that the government’s lead role in the economy should only be temporary: “With God’s help, the government will be able to relinquish this role as soon as possible, and its powers of impulse,

45. 46. 47. 48.

Quoted in Jedlicki 2006, 366; see also 364; 1999, 65–67, 78–79. Quoted in Szlajfer 2012, 199. Lis and Pyć 2012, 103; Szlajfer 2012. Quoted in Jedlicki 1999, 82.



having put everything in motion, will commit themselves once more to the bounds of prudent rest.” Like neomercantilists elsewhere, he emphasized that the country’s leadership needed to impose short-term sacrifices on the popula­ tion to reap long-term economic gains: “Like a surgeon who must be oblivious to his patient’s moanings in order not to endanger his life by his own excessive sentimentality, so must I too proceed unwaveringly on the road mapped out for me by duty.”49 Where did Drucki-Lubecki’s neomercantilist ideas come from? I have seen no evidence that Drucki-Lubecki was influenced by the ideas of foreign neo­ mercantilists at the time. Instead, he was responding to specific Polish cir­ cumstances such as its geostrategic weakness, its export difficulties, and the vulnerability of local manufactures to new foreign competition in the post– Napoleonic Wars context. Drucki-Lubecki’s interest in industrialization also reflected his fascination with the industrial progress he saw abroad in Prussia and especially Britain.50 In addition, he built directly on a mercantilist intellectual tradition in his country that emerged in the late eighteenth century in response to the growing political and economic challenges facing Poland at that time. In contrast to many other European countries, Poland had no previous history of mercantilist policies and only a weak tradition of mercantilist thought before the 1780s. Beginning in that decade, however, Polish intellectuals began to call for public authorities to promote industrialization through policies of the kind that Drucki-Lubecki later pursued, including the creation of a national bank. Inspired by Enlightenment ideas of progress, they came to see their own country as backward, with a stag­ nant agricultural economy that left the country too dependent on foreigners. Like Drucki-Lubecki, they also argued that a more industrial economy would provide a more stable domestic market for the country’s grain than would foreign markets.51 Drucki-Lubecki’s efforts to promote Poland industrialization achieved considerable initial success. Supported by the immigration of Prussian weav­ ers, the country’s textile sector grew particularly rapidly, displacing foreign imports and even beginning to export to places such as Russia and China.52 But Drucki-Lubecki’s role as finance minister came to an end during the political upheavals of 1830–31, when a Polish uprising against Russian rule resulted in

49. Drucki-Lubecki quotes from Jedlicki 1999, 82, 84–85. 50. Szlajfer 2012, 204. 51. Jedlicki 1999, 51–55, 82; 2006, 359. See also the ideas of Wawrzyniec Surowiecki from 1810 (Jedlicki 1999, 57–63; 2006, 360–61). 52. Jedlicki 1999, 83; 2006; Szlajfer 2012, 202, 210.



a war in which Poland was defeated. Russia followed up its victory with repres­ sion and a curtailment of the country’s autonomy. Although the Bank of Poland continued to promote industry up until the early 1840s, many industrial firms experienced serious difficulties arising from factors such as weak management, corruption, insufficient skilled labor, expensive and poor-quality production, overinvestment in metallurgy, and the country’s broader post-1830 economic stagnation. The tariff regime imposed in 1823 was also dismantled at the end of the 1840s and many of the country’s state-owned firms went bankrupt or were privatized by the 1860s. As the legacies of Drucki-Lubecki’s initiatives encountered growing difficulties, his neomercantilist vision increasingly lost domestic support.53 The rise and fall of Poland’s early neomercantilist experiment appears to have attracted little attention from neomercantilists outside of Poland. As I note in chapter 9, Poland was sometimes cited by East Asian neomercantilists in the late nineteenth and early twentieth centuries, but usually just as an example of a country whose independence had been undermined by its failure to pursue wealth and power through neomercantilist economic reforms. List discussed Poland in his 1841 book, but also only in this same way. Instead of holding up Drucki-Lubecki’s initiatives as an example, List focused on Poland’s long his­ tory as a free-trading agricultural exporter, arguing that this had left Poland less wealthy, civilized, and powerful than it would otherwise have been. Indeed, in one passage, List even speculated about how wealthy and powerful Poland could have become earlier in its history if it had implemented the protectionist policies that England embraced in its mercantilist past.54 Why did List not discuss Drucki-Lubecki’s policies that were designed exactly with this same goal in mind and that were undertaken in the very era when he began writing political economy? Perhaps he disapproved of the fact that DruckiLubecki went beyond his advice in creating state-owned firms and resisting for­ eign investment. The ambitious nature of Drucki-Lubecki’s industrialization goals may also have frustrated List. Just before his death, List told some of his followers in nearby Hungary that it was still premature for them to promote large modern factories in their country and that they should be more supportive of free trade initially because of Hungary’s backward agrarian nature.55 If a similar view of Poland was the source of List’s reticence to endorse Drucki-Lubecki’s

53. Jedlicki 1968, 228; 1999; 2006, 366; Szlajfer 2012, 217, 222. 54. List [1841b] 1909, 9, 115, 150, 177, 190–92, 210. 55. Henderson 1983b, 109–10, 115. These followers had produced the first translation of List’s work into a foreign language in 1843 and they included the prominent nationalist Lajos Kossuth (David and Spilman 2006, 107; Szlajfer 2012, 56n6; Wendler 2015, 217).



neomercantilist policies in the 1820s, it was a perspective that Drucki-Lubecki himself—like Ali—clearly rejected. Although Drucki-Lubecki attracted less attention than Ali from neomercan­ tilists abroad, his initiatives left a more lasting impact within his country. The manufacturing base they established laid the foundations for a more market-led industrialization process in Poland in the last third of the nineteenth century, supported by new protectionist measures introduced in 1877. Drucki-Lubecki’s skepticism of foreign investment was not maintained in that later era, however. As Jedlicki notes, “The admission of foreign capital subordinated to Western con­ trol gave a semi-colonial character to the process of industrialization” in Poland and elsewhere in eastern Europe.56

Varieties of Latin American Neomercantilism Some interesting versions of neomercantilist ideology also emerged in Latin America during the pre-1939 era. In previous chapters, I have noted how the ideas of List, Carey, and Manoilescu were embraced in some parts of this region. But the ideas of some Latin America neomercantilists had different sources and content.57

Alamán’s Mexican Initiatives One such neomercantilist was Lucas Alamán, a prominent conservative Mexi­ can politician after his country became independent in 1821. Throughout the 1820s, Mexican politics was deeply divided on the question of free trade. At the time, the country housed a large textile sector located largely in Puebla, which had emerged as a major manufacturing center in the colonial period. Indeed, Guy Thomson notes that Puebla was “one of the most industrialized parts of America at the beginning of the nineteenth century, comparable to

56. Jedlicki 1968, 237. 57. This analysis is not meant to be comprehensive. For other Latin American neomercantil­ ists, see, for example, Gootenberg 1989, 1993; Helleiner and Rosales 2017. Carlos Antonio López’s neomercantilist policies in Paraguay from 1841 to 1862 were particularly ambitious, and were driven by stronger military-strategic goals than most others in Latin America at this time. I have not ana­ lyzed the case, however, because I have been unable to find a clear set of neomercantilist justifica­ tions expressed explicitly by López (or his Paraguayan advisers). For analyses of this episode, see, for example, Batou 1990; Williams 1979; Whigham 1991; Pastore 1994.



eastern Pennsylvania and parts of New England.”58 When the Mexican govern­ ment embraced freer trade at independence, many Mexican textile producers suddenly faced stiff competition from low-cost British manufactured goods and demanded a ban on textile imports. Economic liberals opposed them with the argument that the country should specialize in its natural strengths in agricul­ ture and mining and accept that “we Mexicans are not nor can we be for a long time manufacturers.”59 In the early 1830s, Alamán carved out a distinctive position in this debate. He endorsed targeted protectionist policies, but not for the purpose of defending traditional producers. Instead, he argued that Mexico needed to promote new, modern textile factories that could compete more effectively with their foreign counterparts and help to build a more productive and balanced national econ­ omy. Alamán also argued that modern manufacturing was needed to preserve the country’s newly won independence: “A people should try not to depend on others for those things indispensable to its subsistence.”60 When he became a government minister in 1830, Alamán combined his support for strategic pro­ tectionism with the creation of a new public bank—the Banco de Avío—that could supply capital to modern industrial enterprises and help to import foreign machinery and technicians. Although Alamán left his ministerial position in 1832, the Banco de Avío continued its lending, and Mexican protectionism endured. Indeed, the latter was even strengthened when the government introduced a complete ban on the import of cotton cloth during 1838–54. The ban was the longest in Latin America in this period and had what Thomson calls a clear “developmentalist” purpose.61 Throughout this period, Alamán remained an influential voice in Mexican poli­ tics, promoting his conservative neomercantilist vision. What was the source of Alamán’s neomercantilist ideas? It is possible that he was influenced by the early French or German neomercantilists described in chapter 1, because he studied in France and Germany during travels in Europe from 1814 to 1820. But this seems unlikely because his studies were focused on mineralogy and sciences and his views were economically liberal in the 1820s (he was also not an advocate of manufacturing in that decade).62 I have also seen no indication that he read List’s 1827 letters or other early US neomercantilist

58. 59. 60. 61. 62.

Thomson 1989, 33–34. Mexican journal (1830), quoted in Hale 1968, 260. Quoted in Potash 1983, 42; see also Hale 1968, 280. Thomson 1989, 218. Potash 1983; Hale 1968, 288, 304.



thought. Even if he had been familiar with List’s work, Alamán would not have found any proposals for a public bank in it. He would also have been turned off by List’s political liberalism as well as by List’s 1827 statement that the embrace of industrial protectionism by Mexico (or any South American country) would be an act of “folly” because its people were “yet uninstructed, indolent, and not accustomed to many enjoyments.”63 Alamán’s subsequent initiatives did not change List’s view on this issue. Just as he ignored the policies of Ali and DruckiLubecki, List made no mention of Alamán’s innovative neomercantilist policies in his 1841 book.64 The much clearer foreign source of inspiration for Alamán’s neomercantilist initiatives in the early 1830s was another strand of European thought, asso­ ciated with reforms undertaken by the Bourbon monarchy in Spain and its empire during the second half of the eighteenth century. These reforms had sought to reverse Spain’s declining economic and political power by combin­ ing trade liberalization within the empire with efforts to improve production, transportation, and technology, as well as encourage export-oriented agricul­ ture. Although backing more liberal trade within the empire, prominent Span­ ish thinkers urged Spanish authorities to impose trade restrictions against other countries as a means of promoting domestic manufacturing. The most important of these thinkers was Pedro Rodríguez de Campomanes, whose key work concerning the promotion of industry—Discurso sobre el Fomento de la Industria Popular (Discourse on the development of popular industry)—was published in 1774.65 In his 1841 book, List did not mention Campomanes’s work. Although he did cite some earlier Spanish mercantilists from the first half of the eighteenth century, List appears to have been skeptical that Spain—which he described as a “despot- and priest-ridden” country—offered many lessons for others.66 For

63. List 1827, 11, 25. 64. Indeed, he argued that Mexico would soon be taken over by Texas, which would “make out of that fertile country a territory such as the South States of the North American Union” (List [1841b] 1909, 155). 65. See, for example, Brading 1991; Hale 1968, 251–52; Shafer 1958, 48–49. Because Campo­ manes’s key work was published just before Smith’s The Wealth of Nations, I have classified him as a “mercantilist” thinker, but a case could be made to describe him as a “neomercantilist,” because he combined mercantilist commitments with emerging liberal economic ideas (see, e.g., Schumpeter 1954, 173; Hale 1968, 252). Campomanes received a translation of one part of The Wealth of Nations that discussed English poor laws in 1777 and then a copy of the full book from Smith himself in 1785 (Schwartz 2000, 119–21). 66. Quote from List [1841b] 1909, 108; the earlier Spanish mercantilists he cited were Jerónimo de Uztáriz and Bernardo de Ulloa (54).



many Latin American thinkers in the early nineteenth century, however, politi­ cal economy literature from late eighteenth-century Spain had a much higher intellectual profile because of their linguistic and other ties to Spain as well as the fact that their region had experienced the Bourbon reforms directly. Cam­ pomanes’s work, in particular, was read and cited widely in the region by those advocating protectionism and activist government efforts to promote economic development.67 Alamán was one of those Latin Americans who was heavily influenced by this strand of Spanish mercantilism. Charles Hale notes how a “Bourbon­ inspired conception of development” drove his thinking.68 Guy Thomson also describes Alamán’s initiatives as a “revival of a mercantilism with its roots in eighteenth-century Bourbon ‘foment.’”69 Indeed, Alamán’s Banco de Avío drew directly on the precedent of public banks established by Bourbon reformers in the 1770s to fund mining projects.70 Alamán refashioned this Spanish mercan­ tilist initiative to promote Mexican industrialization in the service of Mexican nationalist goals. Alamán’s views also had strong local origins. As noted already, they emerged in the context of local debates about new competitive pressures from British manu­ facturers as well as the strategic vulnerabilities of the newly independent coun­ try. Alamán’s neomercantilism was reinforced in the 1830s and 1840s by similar views expressed by Estéban de Antuñano, a prominent Puebla-based entrepre­ neur who supported Alamán’s initiatives and created Mexico’s first water-driven textile factory with the Banco de Avío’s support in the 1830s. In addition to being inspired by late Bourbon mercantilism, Antuñano was one of a group of Pueblan business leaders who began to mobilize in the late 1820s and early 1830s around the idea of industrial modernization supported by strategic protectionism as the solution to their city’s economic woes. Antuñano projected this Pueblan view into a national neomercantilist vision that included calls for trade protectionism, publicly supported industrial promotion, and even a ban on foreign factories. He argued that modern Mexican-owned textile manufacturing could serve as a catalyst for the growth of agriculture and of other industries in a dynamic process that generated wealth and power for the country as a whole.71

67. See, for example, Smith 1957; Jacobsen 2005, 118; Hale 1968, 64–67, 251–52; Prado Robles 2005; Shafer 1958, 133–34; Will 1964. 68. Hale 1968, 280; see also 281n81, 288; Thomson 1989. 69. Thomson 1989, 234. 70. Hale 1968, 270–1. 71. Thomson 1989, 209, 223–24, 250–58, 340; Hale 1968, 271–81, 288.



Although Mexico became the most industrialized country in Latin America in the 1830s and 1840s, it became clear by the mid-1840s that the initiatives to promote modern Mexican manufacturing had been much less successful than Alamán had hoped. Despite the ban on cotton imports, the modern textile sector remained quite small. From its early days, the Banco de Avío was also plagued by political interference and poor lending decisions. In 1842, the insti­ tution was formally dissolved. When liberal opponents of Mexico’s neomer­ cantilist policies gained ground politically after 1846, they undertook further reforms to dilute the government’s involvement in the promotion of manufac­ turing and eventually ended the country’s trade ban in the 1850s (although tariff rates remained high).72

Belzu’s Bolivian Neomercantilism Around the time that neomercantilist policies were losing support in Mexico, they found new champions in Bolivia during the rule of Manuel Isidoro Belzu from 1848 to 1855. Belzu’s politics were very different from those of Alamán. As Heather Thiessen-Reilly notes, he “promoted the concept of popular sover­ eignty to provide marginalised Bolivians the opportunity to raise their voices, make demands and participate as citizens of the nation.”73 Coming from a modest background himself, Belzu launched wide-ranging reforms that abolished slav­ ery, widened the suffrage, promoted literacy and women’s education, strength­ ened political liberties, and encouraged the country’s first unions. He told his supporters that “[an] insensible mob of aristocrats has become the arbiter of your riches and your destines; they exploit you ceaselessly.”74 Not surprisingly, his rhetoric and policies angered local mining, commercial, and landed elites, but Thiessen-Reilly notes that they were “wildly popular with the urban working class and artisan populations.”75 As part of strengthening the country’s sovereignty and raising living standards, Belzu promoted Bolivia’s economic and industrial development through strategic protectionism and other forms of government economic activism, including the creation of new mineral purchasing banks, state monopolies for products such as cascarilla bark, and restrictions on foreign participation in domestic commerce. In keeping with his populist orientation, Belzu’s neomercantilism prioritized the

72. 73. 74. 75.

Aubrey 1949, 171; Hale 1968, 271, 279, 284; Thomson 1989, 261–62, 277. Thiessen-Reilly 2002, 367. Belzu [1849] 2018, 220. Thiessen-Reilly 2002, 224.



promotion of small-scale artisan manufacturing by implementing a ban on cheap textile imports and introducing initiatives to improve their competitiveness, such as technical education, support for their guilds, and tax incentives that encour­ aged national products.76 Belzu left no detailed text of political economy to justify his strand of neo­ mercantilism. But artisan newspapers at the time, created with Belzu’s support, defended his policies with vigorous critiques of free trade that combined strong patriotic language with anti-elite sentiments. Thiessen-Reilly describes how one such paper that “became a mouthpiece for Belzu and other protection­ ists” depicted “free trade as nothing more than a means to make foreigners and importers rich off the backs of the working class.” She quotes the paper advocating “‘protectionism’ as a means to promote local industry and thereby benefit the working class.” She also highlights how it “poked fun at the freetraders who looked to Europe for not only economic policy but standards of dress and behavior.”77 The paper also mocked them for equating free trade with civilization, when the policy appeared instead to generate such poverty in the country. As one masthead in the paper put it, “We must become civilized . . . and starve.”78 Belzu’s policies may have been encouraged by criticism of free trade that had been advanced by Bolivian scholars in advance of his rule. In 1845, just before Belzu came into power, Julián Prudencio published one of the first formal Bolivian texts on political economy, which urged support for artisan produc­ tion through trade protectionism, technical education, and the importation of European machines and skilled labor.79 Earlier, in 1830, an anonymous Bolivian had also offered a detailed scholarly analysis over a hundred pages long arguing that free trade was generating poverty by undermining artisans as well as by hurting farmers whose products were longer bought by artisans. Gustavo Prado Robles notes a particular affinity between the ideas of early Bolivian protectionist writers after independence and Spanish mercantilist thought of the late colonial period, such as that of Campomanes.80 That affinity was also evident in Belzu’s initiatives, which closely resembled some of Campomanes’s ideas about revital­ izing the wealth and power of Spain. In addition to his 1774 book on “popular

76. Thiessen-Reilly 2002; Ortíz Mesa 1995. 77. Thiessen-Reilly 2002, 230–31; see also 241–42; Burns 1980, 107. 78. Newspaper quoted in Thiessen-Reilly 2002, 231. 79. Ortíz Mesa 1995, 81–82; Popescu 1997, 251, 291n3. 80. Prado Robles 2005. Prado Robles also noted that Prudencio was influenced by Charles Ganilh’s writings (noted in the previous chapter). A work of Ganilh’s published in 1826 was translated into Spanish in 1827 (Henderson 2008, 511n2).



industry,” Campomanes had published another in 1775 that outlined a detailed rationale for the promotion of “popular education” for artisans.81 Belzu’s left-wing populist strand of neomercantilism had only brief influ­ ence in Bolivia, but similar ideas could be found at this time in artisan circles in nearby countries, such as Peru and Colombia. As their countries liberalized trade in the mid-nineteenth century, artisans advanced important critiques of free trade that also highlighted domestic distributional issues. For example, they argued that free trade benefited only a small number of consumers of foreign products, whereas its costs were borne by many producers who lost their jobs or experienced lower wages. For this reason, they described free trade as “crude and open war against workers of the country” while criticizing elites for their “predilection for foreign products and the hatred of national products.” They also criticized liberals for suggesting that artisan labor could easily be reallocated to commodity-exporting sectors. More generally, artisans attacked free-trading elites for worshiping foreign thinking, and linked protectionism to ideas of popu­ lar sovereignty and republican values.82

Batllismo in Uruguay Another distinctive version of neomercantilism was promoted in Uruguay dur­ ing the early twentieth century by José Batlle y Ordóñez, who governed the coun­ try during 1903–07 and 1911–15. Batlle is well known for introducing some of Latin America’s most innovative social reforms at the time, relating to issues such as education, labor standards, unemployment benefits, and the rights of women. Although born into an elite family, Batlle became involved in politics because of what he called “the indignation” he “felt over the maltreatment and crimes which victimized the disinherited classes” of his country. At the same time, he rejected Marxist ideas of class struggle: “I do not believe that the interests of workers and capital are antagonistic.” He believed instead in “a superior social harmony,” preferring to see society as “a great family,” and he described Uruguay as a “social democracy” under his leadership.83 Batlle combined his domestic social reforms with a strong commitment to neomercantilist policies and goals. I have seen no evidence that Batlle’s views

81. Shafer 1958, 11; see also 48–50, 79–81, 85; Brading 1991, 505–7. 82. Quotes from José Leocadio Camacho in Sowell 1992, 96–97; Rojas 2002, 110. See also Goo­ tenberg 1993, 33–44, 146–47; Sowell 1987, 620; 1992, 61; Salvatore 1993, 498–99. 83. Batlle quotes from Vanger 2010, 31, 241, 242, 113; López-Alves 2002, 96–97; see also Szlajfer 2012, 267; Finch 1981.



in this area were influenced by foreign neomercantilist thought (or by the late Bourbon mercantilist tradition).84 Instead, he seems to have developed his neo­ mercantilist ideas independently in response to his country’s circumstances. Uruguay had already introduced a high tariff policy in the late 1880s, a policy that Battle backed when he came into office. But he infused this policy with a stronger developmentalist rationale, arguing that protectionism was needed to foster local industry, jobs, and economic diversification away from Uruguay’s heavy reliance upon export-oriented ranching. He contended that industrializa­ tion would bring both higher standards of living and greater “economic selfsufficiency for the country.”85 Batlle also promoted the country’s economic development through other kinds of state economic activism. For example, he expanded the lending of a state bank that had been created in 1896 to help industry. He also established economic development institutes to boost long-term productivity in various sectors. Particularly important was his creation of new state-owned enterprises in sectors such as railways, electric power, and insurance that had been domi­ nated by foreign—particularly British—investment. Batlle’s use of state-owned firms to challenge foreign capital was highly innovative in Latin America at the time and it reflected his strong concerns about the high degree of foreign control of the Uruguayan economy, concerns he had expressed as early as 1890. Batlle argued that the new firms would boost Uruguay’s economic independence and reduce the drain of profits from the country that he associated with foreign investment.86 Batlle insisted that he was not opposed to all foreign capital. As he put it in 1906, he “embraced with open arms” the kind of foreign capital “which comes to our country with its owner, establishes itself in the country, leaves its profits here, and identifies itself and mixes in with local capital, forming an integral part of the national wealth.” But he was opposed to foreign investment that “comes to the country alone, and, leaving its owner abroad, sends its profits far away, and at the end when it feels like it leaves our country.” He was also critical of how

84. The key foreign influence on his overall philosophy appears to have been the German thinker Heinrich Ahrens, whose critique of individualism helped to foster Batlle’s skepticism of liberal eco­ nomics (Vanger 1980, 286). But the Ahrens did not share Batlle’s egalitarianism and did not provide guidance for the neomercantilist policies of Batlle. 85. Quote from Batlle’s party’s platform in 1905 in Vanger 1963, 214; see also 86; Vanger 1980, 155–57. 86. Vanger 1963, 197, 206, 245–46; 1980, 38–39, 141–42; 2010, 180, 251; Hanson 1938, 23–24. For the developmental orientation of key economic advisers of Batlle, such as Eduardo Acevedo and José Serrato, see Vanger 1963, 243, 273; 1980, 140.



some foreign firms exploited Uruguayan workers in ways that exacerbated this export of capital. He expressed this concern when supporting striking workers at a foreign-owned streetcar company who demanded higher wages: “Without that strike the wage surplus would emigrate to London and Berlin along with a major part of the immense profits. . . . Now it will stay here, distributed among our people.”87

Puig’s Push for International Financial Reform One final Latin American figure to mention is Mexico’s José Manuel Puig Casa­ uranc. In contrast to all the other policymakers mentioned in this chapter, Puig did not implement a new neomercantilist program. His significance to this book lies instead in some innovative proposals he advanced as Mexico’s foreign minister in 1933 about international financial reform to support neomercantil­ ist policies. At the time Puig outlined these proposals, Latin American countries were experiencing a severe economic crisis and many governments in the region were in default on their external debts. The Great Depression had caused a collapse of their export markets, the prices of their commodity exports, and inflows of foreign capital to the region. At an important 1933 inter-American conference in Montevideo, the US secretary of state, Cordell Hull, proposed freer trade among the countries of the Americas as the best way to promote “peace, progress and prosperity” in the context of the crisis.88 Thornton notes that “Puig led the criti­ cism of the Hull proposal.”89 Puig agreed that a revival of trade was desirable, but he argued that “eco­ nomic recovery, both national and international, demands a revision of tenets and systems.” Specifically, he insisted on the need to recognize the costs of Latin America’s “colonial type” economies that simply exported commodities and imported manufacturers.90 These costs included balance of payments problems that weakened national currencies and encouraged the accumulation of foreign debt. Given these costs, he argued that the use of trade restrictions by Latin American government was entirely understandable. As Christy Thornton puts it, “In this criticism, Puig signaled toward the import substitution industrialization

87. 88. 89. 90.

Batlle quotes from Vanger 1963, 246; Szlajfer 2012, 266. Hull 1935, 27. Thornton 2018b, 270. Puig quotes from Thornton 2018b, 270–71.



that was to define the Mexican economy in the postwar years.”91 I have seen no evidence that Puig’s views on trade policy stemmed from an interest in List’s thought. Instead, they appeared to respond more directly to the economic crisis facing his country and the wider Latin American region. More innovative than Puig’s defense of trade restrictions were his ideas about international financial reform. He called for “a new legal and philosophic conception of credit” that would recognize the social relationship between those on both sides of a loan.92 As Thornton describes it, he emphasized that “just as borrowers needed capital for their industrialization and development efforts  .  .  .  lenders needed to make productive use of their surplus capital.”93 In this context, Puig insisted that international credit needed to be seen as serving “a ‘social function’ the same as property.”94 Thornton explains the link between this notion and the ideals of Mexico’s revolution of 1911–17: “Much as Mexico’s revolutionary constitution of 1917 redefined property rights as vested not in the individual, but in the nation, Puig’s proposal sought to reveal the social character of international finance, and to create institutions that would serve its social function.”95 To realize this new conception of international finance, Puig suggested that multilateral institutions had a role to play. His proposal built on some think­ ing that had first developed within the Mexican government two years earlier among some experts who had studied the 1930 Young Plan for addressing Ger­ man reparations. These officials were inspired by the Young Plan’s creation of the Bank for International Settlements (BIS) and what they called its “principle that, before accepting that a people should restrict consumption to pay a debt, the base should be the development of production.”96 Building on this model, they began to discuss the creation of an inter-American bank that could restructure Latin America’s external debts without sacrificing Latin American development goals and could also extend loans for currency stabilization, as the BIS did. In addition, the officials hoped that this bank could take on a role that the BIS did not perform: lending to promote economic development more directly in their region.97 This role was similar to the one that Sun suggested in 1920 for

91. Thornton 2018b, 271. 92. Quoted in Thornton 2018b, 269. 93. Thornton 2018b, 269. 94. Quoted in Thornton 2018b, 269 95. Thornton 2018b, 269. 96. Quoted in Thornton 2018b, 266–67. 97. As part of the discussions leading to the creation of the BIS, the German central bank presi­ dent, Hjalmar Schacht, proposed in 1929 an international bank that could lend to poorer countries



his proposed International Development Organization, but I have seen no evi­ dence that the Mexicans drew on Sun’s ideas. Indeed, with its additional tasks of restructuring debts and lending for currency stabilization, their proposed mul­ tilateral institution would do much more than Sun’s, which was designed simply to mobilize long-term development finance. The Mexicans’ conception of mul­ tilateralism was also wider than Sun’s because their proposed institution would serve more than one country and its membership would include not just lending countries (as in Sun’s proposal) but also borrowing countries. At Montevideo, Puig called not just for the creation of a multilateral bank but also for a six to ten year moratorium on all foreign debt payments and the incorporation into a formal treaty of the Drago Doctrine, which prohibited the use of force to collect debt repayment by American states. Although Puig’s ideas had an inter-American focus, he noted his long-term ambition that they might “perhaps come to have some effect of a universal order.”98 Puig’s proposals relat­ ing to a debt moratorium and the Drago Doctrine failed to gain adequate support at the conference. But other Latin American governments were interested in the idea of creating a new multilateral financial institution and some—such as Peru and Uruguay—even advanced their own specific proposals about how such an institution might be organized. After considering these various proposals, two conference subcommittees recommended the creation of an inter-American bank that would be empowered to grant credit facilities, “mobilize” capital, and “improve the onerous conditions in which many of the Latin American countries negotiate[d] their foreign loans.”99 The final conference then passed a resolution recommending that the next Pan-American Financial Conference consider the creation of a new inter-American bank. When the proposed Pan-American Financial Conference was subsequently delayed, Mexico and other Latin American governments continued to press for the creation of such a bank during the rest of the decade in other interAmerican fora. In the fall of 1939, US officials finally agreed to support nego­ tiations to create such an institution and negotiations produced a detailed blueprint for it by 1940. Although the plan was supported by the Franklin D. Roosevelt administration in the United States, it never secured the approval of the US Congress. I note in the concluding chapter to this volume, however,

to help them to “make full use of their raw materials and gradually to become industrialised” (quoted in Kregel 2018, 68). The proposal, which was designed to generate markets for German exports and raw materials from its former colonies, was not included in the final BIS design. 98. Quoted in Thornton 2018a, 397. 99. Quoted in Helleiner 2014, 54.



that this blueprint provided an important foundation for the US plans for the Bretton Woods conference of 1944.100 This chapter has focused on the neomercantilist ideas of practitioners rather than theorists. Although the ideas of these figures were expressed in a less systemic manner, they provide further evidence for the argument that neomercantilist ideology often emerged in a decentralized manner in the nineteenth and early twentieth centuries. None of these figures appear to have been influenced by the ideas of List or of other neomercantilist theorists described earlier in this book. In addition, many of them also built on mercantilist ideas that were more diverse than those that inspired List, including versions from the late eighteenth-century Ottoman Empire (in Ali’s case), Poland (in Drucki-Lubecki’s case), and Bourbon Spain (in the cases of Alamán and Belzu). These cases also provide further examples of how the content of neomercan­ tilist thought in the pre-1939 period was often quite different from List’s version. Some of the figures discussed in this chapter (Batlle and Belzu) placed a greater focus on social goals than did List. Some also associated neomercantilism with more conservative (Alamán), authoritarian (Ali), or left-wing (Belzu, Batlle, and Puig) politics than List did. All of these thinkers rejected List’s restrictive ideas about the types of countries that should pursue neomercantilist policies. Ali also promoted the wealth and power of a subimperial state rather than of a nationstate. Finally, to meet their neomercantilist goals, all these thinkers embraced more extensive kinds of government economic activism than List did, including state-owned firms (Batlle and Drucki-Lubecki), state banks (Alamán, DruckiLubecki, and Batlle), controls on skilled migrants (Ali), more extensive trade and commercial protectionism (Ali and Belzu), and roles for a multilateral financial institution (Puig).

100. Helleiner 2014.



The final neomercantilist ideas examined in this book emerged from late nineteenth-century West Africa as well as from the early twentieth-century PanAfrican movement.1 The West African case involved the ideas of some leaders of the Asante Empire whose ambitious neomercantilist goals were developed with­ out any clear influence from List’s work. Their neomercantilist initiatives were subsequently stymied by British colonial conquest near the end of the nineteenth century. The key figure associated with the Pan-African case was the Jamaican political activist Marcus Garvey, who gained a wide international following in the interwar years. Whereas Asante leaders sought to bolster the wealth and power of their empire, Garvey developed a distinctive neomercantilism linked to a political entity—the Universal Negro Improvement Association (UNIA)—that he conceptualized as an embryo for a future independent African state. Through this embryonic state, he sought to bolster the collective wealth and power of Africans and the African diaspora by fostering UNIA-supported industrial and commercial firms. Some might question whether the definition of “neomercantilism” can be stretched to include Garvey’s ideology. But Garvey developed what can be called a creative “diasporic neomercantilism” that prioritized swadeshi-style economic

1. For this movement, see, for example, Esedebe 1994. 328



activism to maximize the wealth and power of an African state-in-formation. Indeed, Garvey saw his goals as similar in a general sense to those of Bismarck and the Japanese leaders, who had cultivated the wealth and power of their states through activist economic policies. Aside from his general references to Bis­ marck, however, Garvey did not engage with specific ideas of German or Japa­ nese neomercantilist thinkers, preferring instead to gain intellectual inspiration from others from Africa and the African diaspora.

Asante Neomercantilism in West Africa The neomercantilist ideas of Muhammad Ali examined in the previous chapter were the most ambitious ones to emerge from the African continent during the nineteenth century. But another important example of African neomercan­ tilist thought appeared in the powerful Asante Empire in West Africa in the late nineteenth century. The case is a difficult one to analyze because of the absence of written records from the empire. As Ivor Wilks notes, “Through­ out the nineteenth century Asante remained an essentially preliterate society, memorializing its past in the spoken rather than the written word.”2 Despite this limitation, historians have been able to piece together important aspects of the Asante Empire’s political economy in this period as well as of the perspectives of its leadership. The Asante Empire emerged as a powerful state in the West African interior in the eighteenth century. Within the empire, the accumulation of wealth gained enormous esteem, generating common expressions such as “money is king” and “nothing is as important as money.”3 At the empire-wide level, the Asante rulers initially focused on the conquest of territory and tribute as the means of accumu­ lating wealth. But a military defeat by British-led forces in 1826 undermined this perspective. Under the reign of Kwaku Dua I from 1834 to 1867, Wilks notes, “an ideology of mercantilism” became dominant that focused instead on the accu­ mulation of wealth via trade.4 One of the most powerful agencies in the govern­ ment became a state-owned trading company that was granted special privileges and came to control much of the import-export business as well as some of the production of marketable goods. Private merchants were allowed to trade, but

2. Wilks 1993, 331. 3. Quoted in Wilks 1993, 127; see also Yarak 1990, 9. 4. Wilks 1993, 169; see also 189.



key private markets were restricted to the outer reaches of the empire and mer­ chants’ wealth was constrained with taxes and fines.5 When Kofi Kakari came to power in 1867, he returned briefly to military expansionism, but that policy was further discredited when Britain defeated the empire again in 1874 and Kakari’s rule ended. At this moment, some local mer­ chants called for the introduction of more laissez-faire policies, reflecting their growing frustrations with the restrictions imposed by the state on their activities under the mercantilist model. But the new leader, Mensa Bonsu, committed to what Wilks calls “neo-mercantilist” policies involving an intensification of past mercantilist practices, the introduction of a more professional civil service, and new partnerships with European firms to develop local resources and infrastruc­ ture with the assistance of foreign capital and skills.6 In the context of the terminology used in this book, Wilks’s label of “neo­ mercantilist” is very apt because Asante policies were implemented in the context of opposition from merchants whose calls for freer markets were informed by a growing knowledge of British economic liberalism. As Wilks puts it, private entrepreneurs expressed their discontent in ideological terms arising from “their subscription to the principle of laissez faire: an idea that had presumably spread into Asante from the Gold Coast Colony and which was ultimately derived from the works of British classical economists.” Indeed, Wilks argues that the conflict within Asante society in the last quarter of the nineteenth century cannot be understood without reference to the ideological dispute between supporters of neomercantilism and those backing economic liberalism.7 I have seen no evidence that Mensa Bonsu or his advisers had direct knowl­ edge of any mercantilist or neomercantilist thought from abroad. Instead, their ideology appears to provide yet another example of a strand of neomercantilism that emerged endogenously from a local context. These figures built directly on the earlier Asante mercantilist tradition to deal with the growing vulnerability of the empire in the face of British and wider European power in the region. As Wilks puts it, “The new administration had to take into account the lesson learned from the confrontation with the British in 1873–1874, that the Asante economy was grossly underdeveloped vis-a-vis that of its opponents (in a way that it had not been a century earlier) and that an extraordinary change in the

5. Austin 1996; Wilks 1975; 684–85, 691; 1993, 169. 6. Quote from Wilks 1975, 720; see also Wilks 1993. 7. Quote from Wilks 1993, 173; see also 169, 185.



balance of power had resulted from the failure of Asante to participate in the technological revolution that had so transformed western European society.”8 The endogenous roots of Mensa Bonsu’s neomercantilism gave it distinctive content. Of all the styles of neomercantilism examined in this book, it was the least focused on the cultivation of industry. Like early Asante mercantilism, the protectionism of the regime was heavily commercially focused, designed to max­ imize the Asante Empire’s control of merchant profits. Its productive orientation was also centered more on the development of agriculture and resource extrac­ tion than on industry. Mensa Bonsu’s policies and his autocratic ways were brought to an end by an 1883 coup that occurred in the wake of growing domestic opposition to his high taxes, constraints in markets, and policies of military conscription.9 The coup was then followed by a period of political instability until a new govern­ ment emerged in 1888 under the leadership of Agyeman Prempeh. This govern­ ment finally acquired support across the territory by 1894, after which Prempeh recommitted to neomercantilist policies, including partnerships with European firms to develop infrastructure, resources, and now even industry. As Wilks puts it, the view had emerged in official circles that “the only way to retain the political independence of Asante was to push through a program of rapid modernization involving the development of the nation’s resources with the utilization of Euro­ pean capital and skills.”10 The most important of these partnerships was signed in 1895 with the British businessman George Reckless. Under the agreement, his company was granted a concession to pursue initiatives from which the state would share in the prof­ its. The initiatives were ambitious, relating not just to mining and plantations but also to railways, banking, education, and factories. But the initiative was opposed by the British government, which then annexed the Asante territory in 1896, sending Prempeh into exile and bringing an end to the Asante Empire and its neomercantilist experiments. As Wilks puts it, “The military occupation of Asante in 1896, and the destruction of its institutions of central government, ensured that henceforth the paramount interest in the development of its rich resources would be that of London and not Kumase.”11

8. 9. 10. 11.

Wilks 1993, 171. Austin 1996; Davidson 1992, 68–69; Wilks 1975, 705. Wilks 1975, 665; see also 1993, 178. Wilks 1975, 665; see also 654–55; 1993, 183.



Garvey’s Diasporic Neomercantilism Not long after the collapse of the Asante Empire, a quite different version of neomercantilism found support in West Africa, promoted by Marcus Garvey. Born in Jamaica in 1887 to a family of modest means, Garvey left school at age fourteen to work as a printer and then became involved in trade-union activities and broader political activism in the country. After traveling during 1910–14 in central America and Europe, he and Amy Ashwood (with whom Garvey later had a short-lived marriage) created the UNIA, with its first branch in Jamaica in 1914 and a second in 1916 in New York, where Garvey relocated.12 More UNIA branches were soon created around the world, including in West Africa. At the height of its influence the UNIA claimed six million members across Europe, Africa, the Americas, and even Australasia.13 Garvey’s vision for the UNIA was linked his Pan-African ideology. As Robbie Shilliam puts it, he saw it as “an extra-territorial Pan-African sovereign authority” that would serve the Pan-Africanist cause.14 Erik McDuffie similarly describes how the UNIA “understood itself as a provisional government-in-exile commit­ ted to building self-reliant black institutions, an independent Africa, and a global black empire capable of protecting the rights and dignity of African-descended people everywhere.”15 Here is how Garvey himself explained the UNIA’s purpose in 1920: “We are endeavoring to unite Negros everywhere, and for what? For the purpose of building up a powerful nation on the continent of Africa, a nation in the near future boasting as a first-rate power . . . We are endeavoring to perform the function of government for our race.”16 Indeed, the UNIA developed some of the attributes of a sovereign state, such as a flag and an anthem (“Ethiopia, Thou Land of Our Fathers”).17 At its first international convention in 1920, the UNIA also outlined a “Declaration of the Rights of the Negro Peoples of the World” that was endorsed by delegates who were described in the document as “the duly elected representatives of the Negro peoples of the world.” Among other provisions, the declaration included a commitment to “the freedom of Africa for the Negro people of the world” and demanded “Africa for the Africans at home and abroad.” It strongly condemned

12. For Amy Ashwood’s role in the early years of the UNIA, see Sherwood 2003. 13. McDuffie 2016. For the influence of Garvey as far away as New Zealand, see Shilliam 2015, 152–54. 14. Shilliam 2006, 380. 15. McDuffie 2016, 147; see also Ewing 2014. 16. Garvey in Hill 1984, 23–24. 17. Shilliam 2006.



the “cupidity of those nations of the world who, by open aggression or secret schemes, have seized the territories and inexhaustible natural wealth of Africa” and it outlined “our most solemn determination to reclaim the treasures and pos­ session of the vast continent of our forefathers.”18

Cultivating Wealth and Power via the UNIA From Garvey’s standpoint, a core task for the UNIA was to cultivate commer­ cial and industrial power for Africans and the African diaspora. Garvey noted in 1919 that after World War I, countries everywhere were turning to prepare for “industrial and commercial expansion and conquest.” Using social Darwin­ ist language, he argued: “The next twenty-five year[s] will be a period of keen competition among people. It will be an age of survival of the fittest.” If others were preparing for this “commercial rivalry,” he argued “so must the Negro be prepared to play.”19 In his view, the UNIA needed to follow the example of Bismarck, who lifted up Germany from its former poor, weak state through fostering commerce and industry. As he put it, “Commerce and industry were the forces that pushed the great German Empire to the front. .  .  . Develop yourselves into a commercial and industrial people, and you will have laid the foundation for racial greatness.” Garvey also dreamt of creating what he called “a great African Empire,” drawing parallels between Bismarck and himself in this respect, too: “I am satisfied to be a dreamer as Bismarck was over the vision of a vast German Empire.”20 Garvey also cited Japan’s successful cultivation of industrial and commer­ cial power as a model for the UNIA. He noted that Japan had gained respect in the world through its military defeat of Russia in 1905. As he told an audi­ ence in 1920, “Not until the Negroes of the world on the battle plains of Africa teach some nation as the Japanese taught the Russians will they stop burning and lynching you in all parts of the world.”21 Ramla Bandele notes that “Garvey often alluded to a possible alliance with Japan, wherein Japan would provide military support and other resources to the UNIA, including equitable agreements for the

18. UNIA 1920. 19. Garvey quotes from in Hill 1983a, 351–52. 20. Garvey quotes from in Hill 1983a, 352–53; 1984, 298, 26. For some other examples of his praise for Bismarck, see Hill 1983b, 257; 1985, 826; 1990, 213–14. 21. Garvey in Hill 1984, 24.



purchase of ships.” Garvey believed, too, that Japanese imperialism would play an important role in helping to undermine Western imperialism.22 Without control of a state, however, Garvey could not cultivate industrial and commercial power in the ways that Bismarck and Japanese policymakers had done. Instead, he saw the UNIA as a body that would need to take on this role. Garvey’s most high-profile economic initiative was the establishment of a UNIA shipping company from 1919 to 1922 called the Black Star Line (in contrast to the prominent British-owned White Star Line of the time). In Garvey’s vision, the company would provide Africans and the African diaspora with their own ship­ ping services, eliminating their need to rely on established shipping lines oper­ ating between the United States, the Caribbean, and Africa (and offering better services, routes, and prices).23 More generally, his goal was to foster economic link­ ages between the African diaspora and Africa in ways that boosted their common identity, economic self-reliance, and power to work toward the goal of creating an independent African state that was wealthy and powerful. As Shilliam puts it, “It was through the UNIA’s shipping company—the Black Star Line—that Garvey sought to concretely establish commercial and industrial links between the Black Diaspora and the African continent that would build the ‘sinews of power’ even in the absence of sovereign territory.”24 Garvey himself expressed the rationale for the shipping line as follows in 1919: “To become a great national force, we must start business enterprises of our own; we must build ships and start trading with ourselves between America, West Indies and Africa.”25 Garvey’s goals for the Black Star Line bore some resemblance to those of the initial swadeshi movement in India, which employed nonstate economic initia­ tives to pursue neomercantilist goals for a community that did not yet control its own state. Indeed, some of Garvey’s colleagues were interested in the swadeshi movement, including Hubert Harrison, whose ideas had influenced Garvey when he first arrived in the United States and who subsequently became the edi­ tor of Garvey’s leading publication, Negro World. In that publication, Harrison applauded in 1919 how the swadeshi movement was “drawing Indians together in the work of self-generation.” Harrison also praised Sun Yat-sen, as did other Garvey supporters (some of whom even forged links with representatives of Sun’s political party in the late 1920s). The praise of Sun, however, appeared to be

22. 23. 24. 25.

Quote from Bandele 2008, 97; see also 90; Ewing 2014, 133–34. Bandele 2008, 37, 101. Shilliam 2006, 397. Garvey in Hill 1983a, 352.



focused more on his nationalist rejection of “white lords of misrule” than on his specific neomercantilist ideas on political economy.26 Garvey depicted the Black Star Line not as a private company but as “the property of the Negro race” and he invited Africans and the African diaspora to purchase shares in it. The response to Garvey’s appeal was enthusiastic, with $750,000 raised in small donations from 1919 to 1921.27 As Adam Ewing notes, “By purchasing shares at $5 apiece, black men and women in Africa and the Americas were buying ownership in a collective project that would ultimately comprise a fleet of black-owned ships, carrying raw materials and goods manu­ factured in black-owned factories, sold in black-owned stores, underwritten by black-owned banks. The idea of the Black Star Line, a shining symbol of emerg­ ing New Negro industrial potential, captured the imagination of peoples of African descent like few projects before or since. By 1920, seemingly ‘unlimited amount[s] of money’ arrived daily at Liberty Hall.”28 In addition to promoting the Black Star Line, Garvey established the Negro Factories Corporation to cultivate manufacturing operations. This initiative was also designed to cultivate not just greater economic self-reliance but also power in the world economy as a whole. As he put it in 1919: In these factories we must manufacture boats, clothing, and all the nec­ essaries of life, those things that the people need, not only our people in America, the West Indies and Africa, but the people of China, of India, of South and Central America, and even the white man. He has for hundreds of years made a market for his goods among Negroes and alien races; therefore, Negroes have the same right to make a market among white people. . . . When we can as a race settle down to business with honesty of purpose, we will be on the way to the founding of a per­ manent and strong position among the nations and races of the world.29 Part of Garvey’s vision for economic cooperation included efforts to promote the industrial, commercial, and agricultural development of the African conti­ nent with the help of the African diaspora. In keeping with this vision, the UNIA even asked the League of Nations in 1922 if it could be allowed to govern Ger­ many’s ex-colonies in Africa as mandates, arguing that it would be able to raise

26. 27. 28. 29.

Harrison quotes from Harrison 2001, 514, 217; see also Ewing 2014, 130. Garvey quote from Ewing 2014, 82; see also 108. Ewing 2014, 82. Quoted on Bandele 2008, 94; see also Hill 1983a, 352.



their level of economic development.30 In general, however, Garvey was skeptical of the League. In 1919, Garvey had argued that the League’s decision to assign the mandates to European governments was evidence of “the intention of the Euro­ pean powers to shackle the millions of black people on the continent of Africa and to further exploit them for the development of their respective nations.”31 The 1920 UNIA declaration also denounced the League: “We as a race of people declare the League of Nations null and void as far as the Negro is concerned, in that it seeks to deprive Negroes of their liberty.”32 The UNIA ideas about assisting Africa were often infused with what Shilliam calls a “Black colonial discourse.”33 Indeed, the UNIA constitution outlined its goal “to assist in civilizing the backward tribes of Africa.”34 Some of Garvey’s col­ leagues held different views; Harrison suggested that African Americans needed to learn from Africans rather than the other way around.35 Some in Africa were also critical of Garvey’s initiatives for this reason as well as because they preferred to see a Pan-African movement led from the continent itself. Some African crit­ ics of colonial rule at the time were also more focused on reforming colonial poli­ cies than on calling for the immediate creation of independent African states.36 But even many of these reformists found the UNIA’s strategy of using eco­ nomic initiatives to challenge European economic power in Africa appealing. An important example was the National Congress of British West Africa, which emerged as the leading forum for reformist opposition to British colonial author­ ities in its region during the 1920s. Although many supporters of the congress criticized the UNIA’s political goals, the organization chose at its first meeting in Accra in 1920 to welcome the UNIA’s creation of the Black Star Line. It also called for cooperation among West Africans to promote their region’s “economi­ cal development” by creating new banks, shipping facilities, cooperative stores, and “buying centres” that helped local farmers and challenged dominant Brit­ ish firms. Some African firms of this kind were subsequently created under plans developed by a businessman, Winifred Tete-Ansa, whose thought was

30. Esedebe 1994, 62; see also 56–57; Ewing 2014, 83–84. See also the requests made by a UNIA representative to the Paris Peace Conference (Lorca 2014, 228, 243–44). 31. Garvey in Hill 1983a, 368. 32. UNIA 1920. 33. Shilliam 2006, 397. 34. Quoted in Bandele 2008, 95. 35. Harrison 2001, 210–12. 36. See, for example, Gershoni 2001; Langley 1973, 99; Shilliam 2006.



also informed by Garvey’s ideas.37 Like the activities of Korean neomercantilists under Japanese colonial rule, these initiatives of the congress represented another example of swadeshi-style goals in a colonial context. Garvey’s ideas gained many other supporters in Africa after World War I. In Jonathan Derrick’s words, Garvey soon “became a legend” there, with UNIA branches being established across the continent, particularly in West and South Africa.38 P. Olisanwuche Esedebe notes: “It was he more than any other person who introduced the ideas of an African nationality and the African personality, hitherto restricted to a handful of intellectuals, to the uninformed masses in vil­ lages and streets of the African world.”39 But Garvey’s creative economic initiatives did not generate the results he had hoped for. Particularly disappointing to him was the fate of his Black Star Line.40 When the first ship of the line toured the Caribbean in 1919, it attracted large crowds in the places where it landed in Cuba, Panama, and Jamaica.41 In the same year, an agent for the corporation was also appointed in Lagos, Nigeria.42 By 1922, however, the Black Star Line was bankrupt. Its collapse was triggered by a number of factors, including internal management problems and opposition from US authorities. As part of the latter, Garvey was convicted in 1923 of fraud on the basis of what Ewing calls “tenuous evidence.”43 Jailed until 1927, he was then deported to Jamaica. Although Garvey’s movement endured, its popularity never regained the heights it had achieved in the 1919–24 period. Garvey himself moved to London in 1935 and died there in relative obscurity five years later. Some of the waning support for Garvey’s vision in intellectual circles can be attributed to the growing appeal of more class-based analyses among some Africans and members of the African diaspora in this period. In the United States, for example, African Ameri­ can thinkers such as Ralph Bunche criticized earlier Pan-Africans for being too concerned with race instead of class struggle.44 Within Africa, many thinkers also became more focused on national anticolonial movements that could build

37. Congress quotes from Hopkins 1966, 135; see also 140; Langley 1973, 129, 220; Gershoni 2001, 175. 38. Derrick 2008, 88; see also 86; Okonkwo 1980; Gerhart 1978; Langley 1973, 91, 223; Gershoni 2001. 39. Esedebe 1994, 55. 40. His Negro Factories Corporations also did not meet with much success (Derrick 2008, 84). 41. Bandele 2008, 111; Ewing 2014, 88. 42. Okonkwo 1980, 110. 43. Ewing 2014, 1. 44. Bunche 1936, 95–96; Vitalis 2015, 99, 101, 175.



new nation-states on the continent. Interestingly, however, even leading fig­ ures within that camp were interested in Garvey’s ideas. For instance, Nigeria’s Nnambi Azikiwe, who became the country’s first president in 1963 after its inde­ pendence, cited Marcus Garvey as one of his early intellectual heroes.45 Among the early leaders of Africa’s new nation-states after World War II, the most promi­ nent advocate of national neomercantilist policies, Kwame Nkrumah, was also inspired by Garvey, as I note in this book’s conclusion.

What Intellectual Influences? What were the intellectual influences behind Garvey’s distinctive diasporic neo­ mercantilism? Although Garvey invoked Bismarck in a general way and drew inspiration from the experiences of Germany and Japan, I have seen no refer­ ences in his writings and speeches to any other specific neomercantilist thinkers from those countries or to others examined in this book. Within the broader Pan-African movement, there were people with deeper knowledge of some of these thinkers, notably the African American intellectual W. E. B. Du Bois, whose graduate training in political economy even included study with Gustav Schmoller in the early 1890s at the University of Berlin. But far from being a close confidant of Garvey, Du Bois became a prominent critic of him and his manage­ ment of the Black Star Line.46 Garvey was much more interested in invoking the ideas of some thinkers from Africa and the African diaspora. One was the African American political leader Booker T. Washington, who in 1895 famously argued, “No race that has anything to contribute to the markets of the world is long in any degree ostracized.”47 Like Garvey, Washington was also interested in how African Americans could help support economic development in Africa. For example, at a prominent 1912 conference he hosted in Tuskegee, Alabama, proposals were discussed for Afri­ can Americans to extend technical and educational assistance to Africans and to expand their trade with Africa.48

45. Derrick 2008, 86; Jones-Quartey 1965; Okonkwo 1980, 116. 46. For Du Bois’s training, see Prasch 2008; Barkin 2000. After his study in Germany, Du Bois returned to the United States and completed a PhD in history in 1896 at Harvard University on the subject of the political economy of the slave trade. For his criticism of Garvey, see, for example, Contee 1970, 221–23; Bandele 2008, 98. 47. Quoted in Prasch 2008, 320. For Washington’s influence on Garvey, see Derrick 2008, 84; Ewing 2014, 42. One of the first ships of the Black Star Line was initially going to be named after him (Hill 2011, 442). 48. Langley 1973, 33.



Garvey was also inspired by the ideas of Edward Blyden, whose 1887 book, Christianity, Islam and the Negro Race, he read shortly before creating the UNIA.49 Originally from the Caribbean like Garvey, Blyden moved to Liberia in 1850 (after a very short time in the United States) where he became a major political and intellectual figure whose work was read not just in Africa but also across Europe and the United States. Often seen as one of the founders of PanAfricanism, Blyden in this work and others highlighted the accomplishments of Africans and the African diaspora. He also emphasized the unique culture of Africans, a view that led him in 1908 to emphasize the need for a distinctive approach to political economy to fit the African context: “The political economy of the white man is not our political economy.”50 In his economic analyses, Blyden also highlighted that Africa’s economic development had been undermined by the slave trade and that Africans had played a crucial role in the economic development of Britain and the United States. As he put it in his 1887 book, “The rapid growth and unparalleled pros­ perity of Lancashire are, in part, owing to the cotton supply of the Southern States, which could not have risen to such importance without the labour of the African.”51 Garvey made a similar argument to a London audience in 1928: “The cotton mills of Lancashire, the great shipping port of Liverpool, tell the tale of what we have done as black men for the British Empire. The cotton that you consume and use in keeping your mills going has for centuries come from the Southern States of United States; it is the product of Negro labour. Upon that cot­ ton your industry has prospered and you have been able to build the great British Empire of to-day.”52 Like Garvey, Blyden had a developmentalist orientation, emphasizing in 1857 the need to cultivate the “productive powers” of Liberia. In a subsequent appeal to “the descendants of Africa in America” in 1862, Blyden also anticipated Gar­ vey by suggesting to the African diaspora that “we must build up negro states” and that “we must build ships and navigate them.” In Blyden’s 1887 book, he also argued that “civilized and Christian Negros, drawn from the Western hemi­ sphere” had an important role in promoting Africa’s economic development.53 In addition, Blyden became interested in Booker T. Washington’s economic ideas,

49. Blyden [1887] 1888. For Garvey’s interest in his work, see, for example, Ewing 2014, 42–43. 50. Quote from Lynch 1971, 122. For analyses of Blyden’s views, see, for example, Mudimbe 1988, chap. 4; Lynch 1967. 51. Blyden [1887] 1888, 137; see also 224, 309; Lynch 1971, 141–42. 52. Garvey in Hill 1990, 198. 53. Quotes from Blyden [1857] 1969, 82; 1862, 75–76; [1887] 1888, ix–x.



writing to him in 1894 to express support for them.54 At the same time, some of Blyden’s ideas were different from Garvey’s, such as his belief that Africa should remain “largely” agricultural and in a role of exporting “raw materials” to the “Northern races” while importing manufactured goods from them. In his 1887 book, he even justified his belief in this international division of labor with ref­ erence to the impact of climatic factors on political economy, just as List had in 1841.55 Garvey was also influenced by the ideas of J. E. Casely Hayford, a prominent British-educated disciple of Blyden from the British West African colony of the Gold Coast who was author of the 1911 book Ethiopia Unbound: Studies in Race Emancipation.56 After the publication of this work, Casely Hayford went on to help found the National Congress of British West Africa, which backed nonstate initiatives to promote economic development and challenge British economic power in his region. Indeed, Casely Hayford was vice president of the congress in 1920 when it endorsed Garvey’s Black Star Line. Two years later, Garvey hon­ ored Casely Hayford publicly at the UNIA’s third international convention held in Harlem.57 In addition to praising Blyden, Casely Hayford’s 1911 book called for Africans and the African diaspora worldwide to recognize their common “nationality” as well as the fact that they were threatened by economic exploitation. As he put it, “[The African] is reminded at every turn that he is only intended to be a hewer of wood and a drawer of water.” He also called for Africans to follow Japan’s example of learning from the West while maintaining a distinct culture. Indeed, he even noted parallels between the timing of the Meiji Restoration and the “political awakening of the Gold Coast,” a reference to the creation and brief existence of the Fanti Confederation in West Africa from 1868 to 1873. He lamented Britain’s undermining of this entity in the early 1870s: “Had the fates been propitious, the development of the latter [the Gold Coast] might have been equally remarkable [as Japan’s development] in its way.”58

54. Lynch 1971, 205 55. Quotes from Blyden [1887] 1888, 126. 56. Casely Hayford 1911. For influence on Garvey, see, for example, Okonkwo 1980, 105. 57. Gershoni 2001, 184n58. 58. Quotes from Casely Hayford 1911, 167–69, 211; see also 170–73. For a comparison of the Gold Coast and Meiji Japan, see Davidson 1992, 68–69. The interest of Africans in Japan also existed beyond West Africa at this time. In addition to the case of Ethiopia noted in chapter 6, critics of French colonial rule in Madagascar were inspired by Japan’s 1905 military victory over Russia and began to see Japan as a model for economic modernization (Naoko 1998, 44–45; Zewde 2002, 4).



Casely Hayford was not the only Gold Coast thinker of his time to make this comparison. A few years earlier, in 1906, another critic of British colonial prac­ tices, John Mensah Sarbah, noted similarities between Meiji Japan’s developmen­ tal goals and the short-lived Fanti Confederation. The constitution of the latter had included a commitment to promoting “agricultural and industrial pursuits,” education, and “the working of the mineral and other resources of the country.”59 Sarbah concluded: “Fanti patriots, and the Japanese emperor with his statesmen, were both striving to raise up their respective countries by the proper education and efficient training of their people. The same laudable object was before them both. The African’s attempt was ruthlessly crushed and his plans frustrated.”60 Sarbah’s work was also known in Garveyite circles, receiving high praise from Harrison.61 In addition to these references to the stillborn Fanti Confederation, Casely Hayford invoked the Asante Empire. For Casely Hayford, its accomplishments were a key source of inspiration for the future of the Gold Coast. As he put it in his 1911 book, “The Gold Coast people were contemporaries and brethren in institutions, language, customs, and practices, in the far interior, of the Ashantis whose polity, prowess and moral backbone have aroused the admiration of the world.” He continued: “For quite a century they were a martial power to reckon with, though without arms of precision; and when measures of repression have been removed, it is quite conceivable that their inherent virility will be turned into healthy channels of statecraft and race development.”62 Garvey was also interested in the Asante experience. He often lamented how the British had relied on colonial subjects of African descent from the West Indies to fight against the Asante in the late nineteenth-century wars.63 He sug­ gested in 1921 that it would never had been possible if the UNIA had been in existence at that earlier time: “The British got away with it . . . because the UNIA was not here . . . our doctrine has been, from the adoption of the Declaration of Rights, that no Negro, no man of Negro blood, is supposed to fight [for] an alien race against his own.”64

59. Quotes from constitution in Boahen 1987, 11; see also Sarbah [1906] 1968, 253–54. 60. Quoted in Davidson 1992, 40; see also Sarbah [1906] 1968, xviii, 254. Sarbah also compared the failure of the British to promote development in their colony with the Japanese experience in Taiwan (239–42). 61. Harrison 2001, 325. 62. Casely Hayford 1911, 211–12 63. See, for example, Hill 1983b, 417; 1985, 53; 1986, 588; Martin 1976, 41. 64. Garvey in Hill 1985, 53.



Noticeably absent from the African intellectual influences on the Garveyites were Ethiopian neomercantilist thinkers such as Gabrahiwot Baykadagn (dis­ cussed in chapter 6).65 The lack of engagement with Gabrahiwot’s ideas was understandable, given that the latter’s important work was not published until 1924 and then only in Amharic. But the limited links to Ethiopian intellectual currents were still striking given the symbolic importance of Ethiopia to many in the UNIA and the broader Pan-African movement. Some early Pan-Africanists, such as the Haitian activist Benito Sylvain, had attempted to build ties between the Ethiopian emperor, Menelik, and the broader Pan-African movement in the late 1890s and early 1900s. But Raymond Jonas notes that Menelik was “a reluctant Messiah,” preferring to focus on domestic issues rather than global campaigns.66 Ethiopians were also not very involved in the Pan-African move­ ments of the 1920s, although Selassie and other Ethiopians did appeal to African Americans to assist their country’s development. The UNIA made note of these requests, but did not seem to show much interest in Ethiopian neomercantilist thought at the time.67 It is fitting that this last chapter analyzing the pre-1939 history of neomercan­ tilist thought reinforces all four themes of this book. To begin with, the neo­ mercantilism of the Asante leadership and of Garvey provides further examples of how this ideology emerged in many places without direct engagement with the ideas of List. In the case of the Asante Empire, its leaders’ version of neomercantilism was also informed by yet another distinctive mercantil­ ist intellectual tradition—that which had emerged earlier in the nineteenth century in the same empire. Garvey’s experience also shows once again that Listian thought was not the only version of neomercantilist ideology to circu­ late internationally. Indeed, the international diffusion of Garvey’s ideology— which followed a very different geographical pattern from that of List—was crucial to his goals. Finally, this chapter provides more evidence of the diversity of neomer­ cantilist thought in the pre-1939 period. The neomercantilism of the Asante

65. Other African thinkers whose ideas interested Garvey included the London-based Egyptian critic of British imperialism Dusé Mohamed Ali (Plummer 2015, 70). Before creating his Black Star Line, Garvey was also aware of an initiative a few years earlier by a Gold Coast businessman, Alfred Sam, to create the new Ethiopian Steamship Line as part of what Sam called an “African Movement” to bolster Africa’s “economic independence” with African American support (quoted in Langley 1973, 43; see also 41–58). Sam’s initiative floundered by 1915. 66. Jonas 2011, 282; see also 283; Harris 1994. 67. Harris 1994, 4, 6, 19.



leadership differed from List’s thought in many ways, including its heavy focus on commercial protectionism, the nature of its engagement with foreign invest­ ment, and the fact that it was associated with an empire rather than a nationstate. Garvey’s neomercantilism was even more distinctive with its appeal to a diasporic political community via the UNIA as well as its reliance on nonstate initiatives.



In this book, I have attempted to widen scholarly understandings of the intel­ lectual origins of neomercantilist ideology in the pre-1939 period. I hope readers have been convinced that many more thinkers than Friedrich List deserve atten­ tion for their contributions to the emergence of this ideology before World War II. I also hope they have been persuaded that neomercantilist ideas in that era came in many more varieties than just the well-known Listian one. In addition, I have highlighted how neomercantilist thought emerged in the context of a com­ plex, multidirectional international circulation of ideas that included much more than just List’s thought. My final goal has been to show readers that neomercan­ tilist thinkers drew on a more diverse set of mercantilist intellectual traditions than the ones that List cited, including some from outside Europe that deserve more attention in IPE literature. These arguments are relevant to more than just those who might be interested in the history of neomercantilist ideology. As I note in the introductory chapter, they also aim to contribute to scholarly literatures that are building more global approaches to the study of IPE and of intellectual history as well as those analyz­ ing the international circulation of economic ideas. In this concluding chapter, I explore briefly how the arguments of this book can also provide insights for those interested in the politics of the world economy since World War II. Specifi­ cally, I show how the history examined in this book left intellectual legacies that helped to shape the construction of the post-1945 international economic order




as well as the content of neomercantilist ideas that subsequently became politi­ cally prominent within that order.

Neomercantilism in the Design of the Bretton Woods Order These legacies were first evident during the wartime Bretton Woods negotiations that helped to construct the post-1945 international economic order. Forty-four governments participated in these negotiations that generated the Articles of Agreement of the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD, later the World Bank). Following the important analysis of John Ruggie, scholars often describe these negotiations as being informed by an ideology of “embedded liberalism,” the supporters of which sought to build a new form of institutionalized liberal multilateralism that was compatible with various kinds of active public management of the economy. Ruggie himself focuses on how governments across the industrial world sought to reconcile liberal multilateralism with their desire to assume “much more direct responsibility for domestic social security and economic stability” through the construction of welfare states and Keynesian-style macroeconomic manage­ ment.1 But the architects of the postwar international economic order were also interested in constructing a liberal multilateral order that could better accom­ modate neomercantilist ideas that had become prominent in less industrialized parts of the world. In previous work, I have shown how many of the officials who participated in the Bretton Woods negotiations came from these less industrialized parts of the world and were often deeply committed to pursuing neomercantilist indus­ trialization strategies after the war to boost the wealth and power of their states.2 These commitments stemmed from some of the ideas described in this book that had emerged in the pre-1939 period. Take, for example, the case of Chinese offi­ cials who had a prominent role in the Bretton Woods negotiations because their country was considered by US policymakers to be one of the four great powers among the wartime Allies (alongside the Soviet Union, Britain, and the United States). During the negotiations, Chinese officials made clear their commitment

1. Ruggie 1982, 388. For some of the debates surrounding the history of embedded liberalism, see Helleiner 2019c. 2. Helleiner 2014.



to Sun Yat-sen’s neomercantilist goals for their country and their desire to see an international economic order that was compatible with these goals. Indeed, in his opening statement to the conference, the head of the Chinese delegation even reminded the delegates of Sun’s 1920 book that proposed a multilateral financial institution to serve this purpose and noted that “Dr. Sun’s teachings constitute the basis of China’s national policy.”3 Many Latin American officials were also interested in pursuing neomercan­ tilist policies to promote economic development and industrialization after the war. Because they represented nineteen of the forty-four governments partici­ pating in the negotiations, their views had to be taken seriously. Building on the proposals advanced by Puig and other Latin Americans during the 1930s, they echoed the Chinese in signaling their strong support for the creation of multi­ lateral financial institutions that would support their development aspirations. Although the Bretton Woods negotiations were not focused on trade rules, some Latin American delegates also highlighted their desire to see postwar interna­ tional economic institutions support their use of protectionist policies to foster local industry.4 This idea echoed the proposal advanced in 1929 by Manoilescu, whose work had become popular in parts of Latin America during the 1930s. Other Bretton Woods delegations from less industrialized regions signaled their support for neomercantilist ideas that had emerged from their specific parts of the world. For example, although India was still under British rule at the time, its delegation included Indian nationalists who were committed to a stateled industrialization strategy for India in keeping with Indian neomercantilist thought dating back to Ranade. Like B. K. Sarkar in the early 1930s, they urged that multilateral institutions devote much more attention to the ways in which international cooperation could support the industrialization and economic development goals of poorer countries. Policymakers in Ethiopia, who also par­ ticipated in the Bretton Woods negotiations, had similar goals that echoed the ideas that Gabrahiwot had popularized in that country’s intellectual circles.5 These various views were accommodated in some ways by the US officials who hosted and led the Bretton Woods negotiations. The IBRD was assigned a role of mobilizing lending to governments in less industrialized countries, thereby bringing to fruition the proposals for multilateral development finance advanced by Sun, Puig, and others in the interwar years. The IMF’s charter also included provisions that could be used to support state-led development

3. Quoted in Helleiner 2014, 192. 4. Helleiner 2014, chap. 6. 5. For India, see Helleiner 2014, 245–56; for Ethiopia, see 227–33.



strategies, such as its endorsement of the use of capital controls and exchange rate adjustments as well as its provision of short-term loans for balance of payment support. Indeed, the US government even sent financial advisory missions to a number of less industrialized countries around the time of the Bretton Woods conference to assist those countries in strengthening their domestic capacity to pursue such strategies. Because the Bretton Woods conference concentrated on monetary and financial issues, it did not endorse the right of less industrialized countries to use protectionist trade policies. But the lead US negotiator, Harry Dexter White, signaled his strong support for infant-industry protectionism at the time, as did other top US officials. White had, in fact, been a strong supporter of state-led industrialization strategies in Latin America since the late 1930s (and had played a lead role drafting the stillborn inter-American bank proposal of 1939–40, described in chapter 11).6 The Bretton Woods conference, thus, endorsed a new kind of liberal multilat­ eralism that accommodated neomercantilist policies in less industrialized coun­ tries to some extent. In one sense, the goals of some of the thinkers discussed in this book were realized by the creation of multilateral institutions that could pro­ vide some support for the neomercantilist policies of those countries. At the same time, however, countries that became members of the new Bretton Woods system would find their policies constrained by its new legally binding multilateral rules. The explicit purpose of these rules, in turn, was to serve broader liberal goals of promoting global prosperity and peace rather than the narrower neomercantilist objectives of maximining state wealth and power. In these ways, neomercantilist ideology was both accommodated and tamed in the process of being embedded in broader postwar liberal international economic order.

Some Legacies after World War II As I have noted elsewhere, US priorities changed dramatically after the war in ways that made its policymakers much less sympathetic to the neomercantilist policies of less industrialized countries. Under US pressure, the IBRD and IMF became more conservative institutions with scaled-back roles. In 1948, the US Congress also refused to endorse the proposed International Trade Organization, which would have recognized the right of less industrialized countries to protect

6. For this history in this paragraph, see Helleiner 2014. In addition to his familiarity with Latin American neomercantilist views, White had read Manoilescu’s 1929 book, although he was appar­ ently critical of it (Rees 1973, 39).



infant industries. In its place was left the much weaker 1947 General Agreement on Tariffs and Trade that included relatively little content of interest to supporters of neomercantilist policies in less industrialized countries.7 It is not surprising, then, that neomercantilists in these countries became much more skeptical by the late 1940s of the postwar US-led multilateral eco­ nomic order. In this context, a new generation of thinkers from less industrial­ ized regions of the world emerged to demand international economic reforms to better support their neomercantilist goals. US policymakers caught up in the binary ideological struggle of the Cold War often viewed these calls for reform as subversively leaning in the direction of the statist economic policies of their Soviet adversary. But these calls often simply represented efforts to uphold and build on prewar neomercantilism that had carved out a distinctive third ideologi­ cal position between economic liberalism and Marxism. The most prominent thinker calling for these kinds of international economic reform was the Argentinian economist Raúl Prebisch, who became the first head of the Economic Commission of Latin America from 1950 to 1963 and then head of the United Nations Commission on Trade and Development from 1964 to 1969. In these roles, Prebisch promoted what came to be called a “structuralist” case for national governments to pursue strategic protectionism aimed at promot­ ing industrialization in lower-income countries. To support this national policy, Prebisch pressed for multilateral reforms, such as improved financial and techni­ cal assistance as well as preferential market access for the exports of less industrial­ ized countries on a nonreciprocal basis that allowed them to retain their tariffs.8 Like many of those who participated in the earlier Bretton Woods negotia­ tions, Prebisch was well aware of some of the intellectual history described in this book. In the early 1920s, he had studied and worked with Alejandro Bunge, who was then the leading advocate of neomercantilist ideas in Argentina. Although Prebisch supported free trade at that time, the case he developed for strategic pro­ tectionism in the 1940s arose from a concern Bunge shared about the poor terms of trade facing commodity-exporting countries. Prebisch developed Bunge’s analysis further, arguing that these countries faced a long-term secular decline in their terms of trade because of factors such as their more competitive labor markets and the greater income inelasticity of demand for agricultural products. If these countries remained focused on commodity exporting, Prebisch argued, they would be unable to escape their marginalized position in the periphery of

7. Helleiner 2014, conclusion. 8. Dosman 2008.



the global political economy vis-à-vis industrial countries in its core. His distinc­ tion between core and periphery countries was reminiscent of Bunge’s reference to a world divided between “star” and “satellite” countries.9 The intellectual legacies of the history told in this book were also evident in the ideas of neomercantilists from other regions of the world after World War II. After India became independent in 1947, its government embraced neomercan­ tilist policies under the leadership of Jawaharlal Nehru, who was influenced by the tradition of Indian neomercantilism that Ranade and others had pioneered in the late nineteenth and early twentieth centuries.10 In Africa, the most promi­ nent early postindependence leader who endorsed neomercantilist goals and policies—Ghana’s Kwame Nkrumah—drew inspiration from the ideas of Mar­ cus Garvey and the Pan-African movement. Indeed, Ghana’s new flag included a black star in its middle that was inspired by the flag of Garvey’s Black Star Line.11 In Romania, Manoilescu’s work was used to justify the post-1965 efforts of Nico­ lae Ceauşescu’s regime to promote rapid industrialization as part of carving out independence from the Soviet Union.12 In the East Asian region, where neomercantilist ideas found particularly strong support in the postwar years, the legacy of pre-1939 neomercantilist thought was also significant. For example, Chalmers Johnson’s seminal work on the postwar Japanese “developmental state” notes its roots in ideas and practices of the earlier Meiji era.13 Taiwan’s leader, Chiang Kai-shek, invoked the economic ideas of Sun Yat-sen to justify the neomercantilist policies he pursued during his rule from 1950 to 1975. Indeed, Taiwan’s constitution even declared, “National economy shall be based on [Sun’s] Principle of People’s Livelihood.”14 In South Korea, the country’s first postwar president, Rhee Syngman (in power from 1948 to 1960), had been a prominent neomercantilist thinker in the precolonial Gaehwa

9. Bunge quotes from Solberg 1979, 30 (see chapter 3). For his work with Bunge, see Dosman 2008, 30–32. Prebisch was also familiar with Manoilescu’s ideas, but denied that the Romanian thinker influenced his work (Helleiner 2014, 235). Indeed, Manoilescu’s views were very different from Prebisch’s. For example, he argued that the terms of trade of commodity exporting countries would improve over time rather than deteriorate. 10. For example, when critiquing British rule in India, Nehru invoked Ranade’s concept of “rural­ ization.” He also cited Dutt’s work as well as Naoroji’s drain theory (Nehru (1934–35] 2003, 417–20, 429–32, 439–40; [1936] 1941, 270). 11. For Nkrumah drawing on Garvey, see, for example, Gregor 2006, 135; Okonkwo 1980, 116. The historian Ivor Wilks (1993, 185) also suggests that Nkrumah’s strategic use of partnerships with foreign capital revived the policies of Mensa Bonsu and Agyeman Prempeh. As noted in chapter 12, Nigeria’s first president, Nnamdi Azikiwe, also stated that Garvey had been one of his early heroes. 12. Love 2006, 79–80. 13. Johnson 1982, chaps. 1–4. 14. Quoted in Gregor 1981, 2; see also Chiang [1947] 2013.



movement (as noted in chapter 9). After Rhee’s pursuit of import-substitution industrialization, a more significant and ambitious neomercantilist strategy was launched in the 1960s and 1970s by Park Chung Hee, who admired the ideas of Fukuzawa and Meiji Japan’s state-led industrialization strategy.15 These various examples highlight the importance of moving beyond Listcentric understandings of the history of pre-1939 neomercantilist thought. To be sure, List’s ideas had some influence in postwar neomercantilist thought.16 But the ideas of other pre-1939 neomercantilists often left more important legacies in the postwar years. It is particularly noteworthy that the direct influence of List’s thought was limited in some of the postwar East Asian cases noted above. In South Korea, for example, Hoon Hong reports that there was little interest among local economists during the country’s high-growth period in List’s ideas or the German historical school.17 In Taiwan’s case, Chiang Kai-shek did refer to List briefly in a book he published in the early 1940s that outlined his economic philosophy, but only in the context of a short survey of Western economic theory, which he deemed inferior to “Chinese economic theory.”18 The core message of his book was the importance of following Chinese—not Western—economic ideas, notably those rooted in the ancient classics and especially those of Sun Yat­ sen. Johnson’s book briefly notes the influence of the German historical school on Japan’s political economy, but List does not make an appearance in the index.19 List’s thought is also not cited as an influence in Japan in Mark Metzler’s recent detailed study of the ideas underlying its state-led development in the country’s high-growth period of the 1950s and 1960s.20

Post-1978 Chinese Neomercantilism What about China’s post-1978 outward-oriented, state-led development strat­ egy? Because of its significance, this case deserves a slightly more detailed

15. Kwon 2009; Thurbon 2016, 176n47. 16. For example, although Prebisch did not refer to List in any publications, he told Dudley Seers privately that he was influenced by List (Boianovsky 2013, 675). It is important to recall, however, that List did not discuss the terms-of-trade issue that was centrally important for Prebisch. 17. Hong 2017, 119. 18. Chiang [1947] 2013, 249–52. 19. For the reference to the German historical school, see Johnson 1982, 17. 20. List’s name makes only one appearance in Metzler’s (2013, 245n12) book, and it is simply in a footnote that highlights how List’s ideas emerged in a deflationary context. For Metzler, the key Western intellectual influence on Japan in this period was Joseph Schumpeter.



discussion than those mentioned above. This strategy is sometimes described as a “Listian” one.21 In a general descriptive sense, it is certainly true that China’s leaders have shared with List the view that state-led industrialization is key for their country to catch up to the wealth and power of leading economic powers. But in a causal sense, I have not seen evidence to show that List’s ideas have been a strong inspiration for this strategy.22 Even at a descriptive level, China’s post­ 1978 developmentalism departs from List’s ideas in important ways, such as its illiberal political orientation, its rhetorical commitment to domestic social issues, the scale of its government economic activism (in both domestic and foreign eco­ nomic policy), and, of course, in its rejection of List’s ideas about Asia’s capacity to industrialize. If a comparison is to be made to pre-1939 neomercantilists, there is a much closer correspondence with the ideas of Sun Yat-sen. The parallels to Sun’s thought are not perfect; for example, he insisted on the importance of democ­ racy as one of his three core “principles of the people” (alongside nationalism and the people’s livelihood). But in the economic realm, there are many resemblances between China’s post-1978 development strategy and Sun’s ambitious plans of the early 1920s to boost China’s wealth and power via state-led industrialization supported by state-owned enterprises, massive infrastructural investments, and the use of carefully managed foreign capital. Indeed, it is noteworthy that Sun’s ideas received new attention from Chinese officials after 1978 in their efforts to justify the new economic policy direction.23 Marie-Claire Bergère notes how even specific initiatives, such as the new port and financial district in Pudong in

21. See, for example, Hu 2015. 22. This is not to deny that there has been some growing interest among Chinese scholars in List’s ideas (e.g., Wendler 2015, 212–13; Mei 2019). Although Hu (2015, 213) argues that “the source of Chinese policy can be traced back to the ideas of Friedrich List,” he does not attempt to prove the point (but does highlight the significance of the nineteenth-century self-strengthening movement as an ideational source). In an indirect sense, Michael Pettis (2013, 30) has drawn a link to List by argu­ ing that China’s development model is “mostly a souped-up version of the Asian development model” that was pioneered by Japan, and that the latter’s development model was itself a “variation” on the early nineteenth-century American System that List “formalized” in his 1841 book. It is certainly true that the architect of China’s new strategy, Deng Xiaoping, was interested in the development models of other East Asian countries. But as I have shown, it is important not to overstate the significance of List’s ideas to the origins of neomercantilist development thinking in Japan or other East Asian coun­ tries. Pettis also points to the role of E. P. Smith in bringing the American System to Japan, arguing that Smith “helped set out the basic framework that became known as the Japanese or the East Asian development model” (31). For reasons noted in chapter 7 of this book, this line of argument risks overstating Smith’s significance to the neomercantilist ideas and policy of early Meiji Japan. I note in chapter 6 that E. P. Smith’s version of neomercantilism was also quite different from that of List. 23. Bergère 1994, 1, 414–15; Chang and Gordon 1991, 158–59; Godley 1987, 111, 113, 119; Wong 2013, 12.



Shanghai, were “regularly presented as the realization of a plan described by Sun Yat-sen in The International Development of China.”24 Like others who had been active in Chinese Communist Party (CCP) before the 1949 revolution, the architect of China’s policy turn in 1978, Deng Xiaoping, was familiar with Sun’s ideas (and even attended Sun Yat-sen University in Mos­ cow in the 1920s). Indeed, Sun’s doctrines had been endorsed by the CCP before the 1949 revolution, even though Mao then embraced a more Soviet model of development after coming to power.25 Deng was among those in the CCP who had supported Sun’s doctrine before 1949, and a number of scholars have linked his post-1978 economic reforms to Sun’s thought.26 Interestingly, earlier Chinese neomercantilists associated with the self-strengthening movement, such as Li Hongzhang, Zeng Guofan, and Zheng Guanying, were also increasingly depicted in more positive ways in Chinese official and intellectual circles after 1978.27 Xi Jinping, who became China’s president in 2013, also praised Sun’s ideas. For example, at a 2016 celebration of the 150th anniversary of Sun’s birth. Xi empha­ sized the need “to carry on the pursuit for a rejuvenated China that he [Sun] had dreamed of ” and argued that the CCP had been a faithful upholder of his vision. Referring to Sun’s The International Development of China, Xi argued that, under communist rule, China had met and exceeded Sun’s ambitious economic goals for the country outlined in that 1920 book. He even quoted directly from a pas­ sage in The Three Principles of the People about the need for China to assume responsibilities for the world as it emerged as a major world economic power: “If China prospers, we need to not only restore the status of our nation, but also shoulder great responsibilities for the world.”28 Xi spoke of China’s responsibili­ ties in terms of issues such as its willingness to contribute to global development, international peace, and the maintenance of international order.29

24. Bergère 1994, 415. 25. For the prerevolutionary endorsement of Sun’s ideas, see, for example, Gregor 2000, 75; Gregor and Chang 1989, 119. 26. See, for example, Gregor 2000, 133–37, 154; Bergère 1994,1, 414–15; Wong 2013, 12–14; Pantsov 2015, 113. 27. Chu 1994, 266, 276; Wu 2010, 3; Bailey 1998, 31n34; Liu 2020, 166. 28. Quotes from Xinhua 2016. The last passage comes from Sun 1928, 147 (although Frank Price’s translation has slightly different wording, as noted in chapter 8: “If we want China to rise to power, we must not only restore our national standing, but we must also assume a great responsibility towards the world”). For Xi’s full speech, see “Commemorating Dr. Sun Yat-sen, November 11, 2016,” CCTV News,, accessed April 28, 2020. 29. Xinhua 2016. As noted in chapter 8, Sun himself saw China’s future responsibilities in ways that invoked the country’s past tributary relations as well as the idea that China should help “the weaker and smaller peoples” to challenge established great powers’ imperialist policies.



Given how Sun’s ideas have been invoked, post-1978 Chinese neomercantil­ ism might better be described as “Sunian” than “Listian.” The label would also encourage analysts to recognize the distinctiveness of Chinese neomercantil­ ism. In addition, it might prompt IPE scholars to devote more attention to Sun’s thought and the deeper Chinese intellectual traditions on which he drew.

Trumpian Neomercantilism in the US What about neomercantilism in the other major power in the world economy of the early twenty-first century, the United States? In the same year that Xi praised Sun’s ideas, the US presidential election brought to power a US admin­ istration that was more openly neomercantilist in its ideological orientation than any previous one in the post-1945 years. Donald Trump’s administration pursued strategic protectionist policies unilaterally and aggressively, arguing that these policies were needed to restore US wealth and power. Trump him­ self expressed frustration with the entire multilateral liberal trading order that the United States had helped to construct after World War II. As the influential Financial Times columnist Martin Wolf put it in early 2020, “With his mer­ cantilism and bilateralism, Mr Trump has aimed an intellectual and moral missile at the global trading system.”30 Whereas China was described by the prominent economist Dani Rodrik as “the leading bearer of the mercantilist torch” before Trump’s election, the United States vied for this title with Trump in office.31 In defending his views, Trump also made some appeals to pre-1939 neomer­ cantilist thought. Rather than invoking List, however, he cited the protectionist ideas of George Washington, Alexander Hamilton, and Abraham Lincoln in an important economic speech that justified his neomercantilist views during the 2016 election campaign.32 Once in office, Trump reiterated the theme that his ideas were in keeping with older US thought, arguing that the United States was “built on tariffs” and “used to be a nation of tariffs.”33 Trump’s references to ear­ lier US neomercantilists were echoed by his supporters. For example, in advance of his 2016 economic speech, the Trump-supporting Breitbart News Network

30. 31. 32. 33.

Wolf 2020. Quote from Rodrik 2013. Trump 2016. Quoted in Helleiner 2019b, 11.



published a detailed article by Julia Hahn arguing that “American presidents from Washington to Lincoln agree with Trump on trade.”34 When invoking this history, Trump and his supporters were, in fact, citing two different strands of pre-1939 US neomercantilist thought: the Hamilton-inspired ideas of Washington’s era and the Careyite-inspired protectionism of the Lincoln administration.35 The latter was much closer in content to the Trumpian ver­ sion of neomercantilism than the former. As we have seen, Hamilton endorsed protectionist measures only in a cautious and tentative way, whereas Carey’s sup­ port was much more fulsome and ambitious (and extended to include an interest in the use of exchange rate policy to boost competitiveness). Hamilton also did not share Carey’s and Trump’s populist focus on the domestic distributional and social costs of free trade for disadvantaged groups. Further Hamilton’s neomer­ cantilism was designed for a country trying to challenge a dominant powerful state, whereas Carey believed that his ideas were also relevant to the latter. Breitbart’s Hahn seemed to concur that Careyite neomercantilism was the more important inspiration for Trump’s movement. When reminding readers of the United States’ “forgotten history” of protectionism, she argued that “its great­ est defenders would become Abraham Lincoln’s Republican Party.” Although she—like Trump—did not mention Carey by name, Hahn emphasized the important legacy of the Republican Party’s Carey-inspired commitment to high tariffs from its birth in the 1850s until the early twentieth century. She also tied Trump personally to this history by noting the protectionist views of the Careysupporting Joseph Wharton, who had founded “Trump’s alma mater,” the Univer­ sity of Pennsylvania’s Wharton School of Business. In addition, Hahn highlighted the parallels between this earlier Republican protectionism and Trump’s populist priorities, noting that “defending the American worker through trade protection­ ism was a priority of the original Republican Party.”36 Indeed, Carey’s bleak descriptions of the social costs of free trade for US work­ ers (and for those in the then-dominant power, Britain) bore a strong resem­ blance to Trump’s rhetorical focus on how globalization had left “millions of our [US] workers with nothing but poverty and heartache” while benefiting only a “financial elite.”37 Like Carey, Trump drew this rhetoric from a conservative politics

34. Hahn 2016. 35. I have not seen any case where Trump cited Carey directly, but the Republican politician whose economic ideas anticipated Trump’s—Pat Buchanan—did so (1998, 164, 169, 170, 193, 208). Buchanan himself saw Trump’s election as a vindication of his thought (Alberta 2017). 36. Hahn 2016. 37. Trump 2016, 2.



that addressed workers’ anxieties in a time of economic upheaval through protec­ tionism at the border. The rebirth of this conservative style of Republican social neomercantilism should not be entirely surprising. Historian James Huston notes that US trade policy did not begin to liberalize dramatically until after Franklin Roosevelt’s New Deal began to protect labor in an alternative way by strengthen­ ing domestic labor laws. As Huston puts it, “Unions finally replaced tariffs as the means of insuring the worker a decent standard of living.”38 The weakening of the legacies of Roosevelt’s New Deal reforms and of the power of US unions since the 1980s provided a political opening for the link between trade protectionism and labor to re-emerge, particularly in an era of growing job insecurity caused by growing foreign competition and rapid technological change. The emergence of US neomercantilism in the context of intensifying foreign competitive challenges was also reminiscent of the rise of the British tariff reform movement in the late nineteenth and early twentieth centuries, although the former movement was more politically successful than the latter was. Although Trump and his supporters invoked the history of Republican pro­ tectionism, the parallels between their views and Careyite ideology should not be overstated. Carey was much more welcoming of immigration and foreign investment, and his interest in the links between protectionism and the causes of greater gender equality and environmental sustainability found less resonance in the priorities of the Trump administration. Carey would also likely have been uncomfortable with the Trump administration’s more offensive style of neomer­ cantilism that used US power aggressively to open foreign markets to US exports and firms. In addition, Carey showed little interest in the kind of activist domestic “industrial policy in support of national security efforts” that the Trump admin­ istration endorsed.39 The latter was closer to Hamilton’s views; indeed, when advocating for this policy, Trump’s Department of Defense prominently quoted from Hamilton’s 1791 report.40

Preparing for Another Neomercantilist Moment? The neomercantilist ideas of the pre-1939 era have, thus, left many legacies, some of which have endured into the early twenty-first century. To understand these leg­ acies fully, however, it is necessary to move beyond List-centered understandings

38. Huston 1983, 56–57. 39. Quote from United States Department of Defense 2018, 5. 40. United States Department of Defense 2018, 7.



of the history of neomercantilist thought that are prominent in scholarly circles. The limitations of those understandings were particularly striking in 2016, when the leaders of the two dominant powers of the world economy, Xi in China and Trump in the United States, each invoked ideas associated with neomercantilist thinkers other than List from the pre-1939 era. The ideas of other such thinkers were also cited elsewhere in the early twenty-first century. For example, Witte’s work was republished in 2005 by Russian advocates of strategic industrial pro­ tectionism.41 In 2017, Manoilescu was applauded for pioneering the idea of the “developmental state” by Luiz Carlos Bresser-Pereira, one of the most prominent advocates for renewed state-led “developmental capitalism” in Latin America.42 In the same year, Belzu’s defense of national industry in nineteenth-century Bolivia was praised by Evo Morales Ayma, who pursued a left-wing version of neomercantilism when he was president of that country from 2006 to 2019.43 In India, supporters of Narendra Modi, who became the country’s prime minis­ ter in 2014, also called for a revival of the idea of swadeshi economics that was popular in Indian neomercantilist circles a century earlier.44 The case for recognizing the diverse intellectual origins of neomercantilist ideology in the pre-1939 era, thus, goes beyond the scholarly contributions noted in the introductory chapter of this book. It speaks directly to the ability of IPE scholars to interpret the growing prominence of neomercantilist ideas across many parts of the world in the early twenty-first century. Among the many signs of this growing prominence is the fact that even the IMF published a staff work­ ing paper in 2019 endorsing the use of industrial policy with the cheeky title “The Return of the Policy That Shall Not Be Named.”45 Some thinkers—including the authors of the IMF working paper—see their ideas as having a link to the writings of List.46 But others have built on different intellectual traditions from the pre­ 1939 period. I hope this book helps scholars to understand these wider historical sources of neomercantilist thought in the early twenty-first century. The history examined in this book may also be useful in shedding some light on one final question: Why has neomercantilist ideology gained influence in this era? It should be clear from this book’s analysis that neomercantilist ideol­ ogy emerged for many different reasons in the pre-1939 period. As I note in the

41. 42. 43. 44. 45. 46.

Avtonomov and Burina 2019, 210. Bresser-Pereira 2017, 691. Morales Ayma 2017. Anand 2020. Cherif and Hasanov 2019. For the IMF staff ’s invocation of List, see Cherif and Hasanov 2019, 5.



introductory chapter, however, a frequent cause was the fact that states were experiencing heightened economic and geostrategic vulnerabilities in the con­ text of developments such as the uneven progress of industrialization across the world, intensifying international economic integration and economic disloca­ tion, and/or growing geopolitical uncertainty. All of these circumstances have been present in the early twenty-first century. Compounding the sense of vul­ nerability for many states has been the broader erosion of the post-1945 global political and economic order, including the liberal multilateral economic frame­ work of Bretton Woods that was designed to tame neomercantilist ideology. As the guardrails of that framework are undermined, neomercantilism has gained new followers, particularly in response to more aggressive use of trade policy by powerful states. For example, policymakers in the European Union (EU) were prompted by Trump’s trade policy to begin to try to strengthen the EU’s collec­ tive ability to use strategic protectionist measures. As one unnamed European diplomat put it in late 2019, “We are seeing that the world is becoming more and more protectionist, and we must be prepared.”47 These various trends may be leading the world into a new international neo­ mercantilist moment that parallels some of those discussed in this book, such as the period following the Napoleonic Wars, the late nineteenth century, and the interwar years. If policymakers are getting politically prepared for this possible world, IPE scholars must also be ready intellectually. The study of the intellectual history of the emergence of neomercantilist ideology in the pre-1939 period was relatively neglected in the post-1945 years for the reasons noted in the introduc­ tion. This book begins to correct that neglect. For its readers, I hope this volume has provided some insights that help in this intellectual preparation.

47. Unnamed official quoted in Hanke 2019.


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