Friedrich List and the Historical School in German Economics from 1871 to 1914

Abstract

Following the collapse of the Holy Roman Empire in 1806, more than thirty independent states were formed in Germany, each with its own customs system. Following this event, the German economy stagnated and there were sharp differences among its states over the leadership of Germany. During this period, a prominent thinker named Friedrich List appeared in Germany. By forming a historical school in economics, he wanted to unify the states of this country through the formation of a customs union. This union was finally established by List's many efforts in 1834. The list later described the stages of economic growth and development in his historical school and explained the factors that caused the economic development of Germany in his book. Finally, Germany was able to unite in1870 under the leadership of Prussia and through Bismarck and inspired by the ideas of the historical school. After the unification of this country, Bismarck, through the ideas of List and the historical school, made several reforms, including pension and health insurance premiums, along with the strengthening and expansion of industry and trade; the result of which was the increasing economic development of this country. After taking power, Wilhelm II wanted to promote Germany as a great economic and military power in the world. Therefore, according to List's theories, he started to strengthen the military and especially the naval power of Germany so that he could own several colonies on the other side of the seas and by means of new markets that were created from these colonies, it increased its economic power and competed with Britain and America. In this way, according to the recommendations of the List, the German rulers tried to develop the economy and industry of Germany. As a result of their efforts, German industries were able to take second place after the United States in terms of the economy by 1914, behind Britain.