HIST363: Global Perspectives on Industrialization

List considered that the prosperity of a nation depended not upon the wealth that it had amassed but upon its ability to develop "productive forces" which would create wealth in the future. These forces included scientific discoveries, advances in technology, improvements in transportation, the provision of educational facilities, the maintenance of law and order, an efficient public administration, and the introduction of a measure of self-government.

List drew a distinction between the theory of exchange value and the theory of powers of prediction. He argued that Adam Smith and his followers had laid too much emphasis upon material wealth, which had an exchange value, and had not adequately appreciated the significance of the productive powers that create wealth. He praised Adam Smith for breaking new ground with his theory of the division of labor, but criticized him for omitting to explain fully the role in the economy of the "productive powers of labor," which he had mentioned in the introduction to The Wealth of Nations.

List also noted that Adam Smith had failed to "assign a productive character to the mental labor of those who maintain law and order and cultivate and promote instruction, religion, science, and art". He thought it ridiculous that a pig breeder or a maker of bagpipes should be regarded as a productive member of society, while a professor or a composer should not.

On the issue of law, List wrote that "while J. B. Say was right when he asserted that 'laws cannot create wealth,' it was just as right to argue that laws could 'create productive power,' which is more important than riches, i.e. than the possession of values of exchange". Finally and foremost, List maintained that