To make this more specific: Today’s Anglo-American world view rests on the shoulders of
three men. One is Isaac Newton, the father of modern science. One is Jean-Jacques Rousseau,
the father of liberal political theory. (If we want to keep this purely Anglo-American, John
Locke can serve in his place.) And one is Adam Smith, the father of laissez-faire economics.
From these founding titans come the principles by which advanced society, in the
Anglo-American view, is supposed to work. A society is supposed to understand the laws of
nature as Newton outlined them. It is supposed to recognize the paramount dignity of the
individual, thanks to Rousseau, Locke, and their followers. And it is supposed to recognize
that the most prosperous future for the greatest number of people comes from the free workings
of the market
In most of East Asia and continental Europe the study of economics is less theoretical than
in England and America (which is why English-speakers monopolize Nobel Prizes) and more geared
toward solving business problems.
In place of Rousseau and Locke the Germans offered Hegel. In place of Adam Smith they had
Friedrich List.
A note on this, I’ve been listening to the Revolutions podcast about Marx and him being
influenced by Hegel
Friedrich List and his best-known American counterpart, Alexander Hamilton, argued that
industrial development entailed a more sweeping sort of market failure. Societies did not
automatically move from farming to small crafts to major industries just because millions of
small merchants were making decisions for themselves. If every person put his money where the
return was greatest, the money might not automatically go where it would do the nation the
most good.
”. But the growth of industries is a process that may take hundreds of years to complete and
one should not ascribe to sheer chance what a nation has achieved through its laws and
institutions. In England Edward III created the manufacture of woolen cloth and Elizabeth
founded the mercantile marine and foreign trade. In France Colbert was responsible for all
that a great power needs to develop its economy. Following these examples every responsible
government should strive to remove those obstacles that hinder the progress of civilisation
and should stimulate the growth of those economic forces that a nation carries in its
bosom.”
Differences between anglo american economic thought and Frederick Lists’
Automatic growth vs deliberate development
Consumers vs producers
The Anglo-American approach assumes that the ultimate measure of a society is its
level of consumption.
That whats best for society is whats best for the consumer, no matter how this is
attained.
”That is, if you buy the ton of steel or cask of wine at bargain rates this year,
you are better off, as a consumer, right away. But over ten years, or fifty, you and
your children may be stronger as both consumers and producers if you learn how to make
the steel and wine yourself. If you can make steel rather than just being able to buy
it, you’ll be better able to make machine tools. If you’re able to make machine tools,
you’ll be better able to make engines, robots, airplanes"
"__The tree which bears the fruit is of greater value than the fruit itself… The
prosperity of a nation is not … greater in the proportion in which it has amassed
more wealth (ie, values of exchange), but in the proportion in which it has
more developed its powers of production.”
Process vs result : More pessimistic view that people will not automatically choose whats
best for society
Individuals vs the Nation
” The same spirit and logic run through List’s arguments. Trade is not just a game. Over the
long sweep of history some nations lose independence and control of their destiny if they fall
behind in trade. Therefore nations must think about it strategically, not just as a matter of
where they can buy the cheapest shirt this week. “
England Corn laws breaking the rules, building up manufacturing for the previous 150 years before
hand
” __ America’s economic history follows the same pattern. While American industry was
developing, the country had no time for laissez-faire. After it had grown strong, the United
States began preaching laissez-faire to the rest of the world—and began to kid itself about
its own history, believing its slogans about laissez-faire as the secret of its success.__ “
Military need driving industrial development
”__
Just before Thomas Jefferson took office as President, the U.S. government began an ambitious
project to pick winners. England surpassed America in virtually every category of
manufacturing, and so, to a lesser degree, did France. Wheels turned and gears spun throughout
Europe, but they barely did so in the new United States. In 1798 Congress authorized an
extraordinary purchase of muskets from the inventor Eli Whitney, who was at the time
struggling and in debt. Congress offered him an unprecedented contract to provide 10,000
muskets within twenty-eight months. This was at a time when the average production rate was
one musket per worker per week. Getting the muskets was only part of what Congress
accomplished: this was a way to induce, and to finance, a mass-production industry for the
United States. Whitney worked round the clock, developed America’s first mass-production
equipment, and put on a show for the congressmen. He brought a set of disassembled musket
locks to Washington and invited congressmen to fit the pieces together themselves—showing that
the age of standardized parts had arrived.__"
"The nascent American arms industry led where the rest of manufacturing followed,” Perret
concluded. “Far from being left behind by the Industrial Revolution the United States, in a
single decade and thanks largely to one man, had suddenly burst into the front rank.” America
took this step not by waiting for it to occur but by deliberately promoting the desired
result.
”What America actually did while industrializing is not what we tell ourselves about
industrialization today. Consumer welfare took second place; promoting production came first.
A preference for domestic industries did cost consumers money. A heavy tariff on imported
British rails made the expansion of the American railroads in the 1880s costlier than it would
otherwise have been. But this protectionist policy coincided with, and arguably contributed
to, the emergence of a productive, efficient American steel industry.”
More of a focus on Economic history could be interesting to check out.
How to poor countries get the capital how do they generate money. They need people to save so that
banks can loan more, but the also need low interest rates for businesses.