J. A. Hobson

gigatos | June 22, 2022

Post Views: 15

Summary

John Atkinson Hobson, known as J.A. Hobson, (6 July 1858 – 1 April 1940) was a British essayist and economist. He is particularly known for his critique of British imperialism in his book Imperialism. A Study (1902), a work that directly inspired Lenin to write, in the spring of 1916, his essay Imperialism, the Supreme Stage of Capitalism. Hobson also participated in the emergence of social liberalism and criticized, at the cost of his academic career, Say”s Law, a criticism later taken up by Keynes. From this failure arose a reflection on orthodoxy that was not limited to economics or religion but also to politics, and that referred to rationalism and free thought in a broad sense. His economic criticism also focused on the neoclassical theory of the remuneration of factors of production.

Early years

Born in Derby to a father who had been a Liberal mayor of the city, J. A. Hobson was classically educated at Lincoln College, Oxford. He taught at a public school before becoming a journalist and lecturer at the University Extension in London in 1887. His meeting with the mountaineer A.F. Mummery gave rise to a book, The Physiology of Industry, in which the two authors criticized Say”s Law. This led to Hobson being banned from teaching economics at university.

Also read, biographies – E. E. Cummings

The man of clubs

In 1893, he founded the Rainbow Circle, a circle named after the place where it first met: The Rainbow Tavern in Fleet Street. It was made up of liberals, socialists, Fabians, Marxists, as well as imperialists and anti-imperialists. Among its most assiduous members were such future leaders as Herbert Samuel, Ramsay MacDonald and Sydney Olivier. The Rainbow Circle was among the promoters of the social reforms of 1906-1914.

Moreover, Hobson was a member of the South Place ethical society, as was a friend of his, Graham Wallas, insofar as the “ethical movement is founded on the conviction that morality is independent of theology, that goodness has a human origin and appeal. He also spoke out against the tendency “to use ethics as a substitute for religion and not as a general guide to social and personal conduct.

Hobson and writing

From 1896 to 1898, he participated in the Progressive Review, whose secretary was Ramsay MacDonald. This review set itself the objective of promoting a renewed liberalism or New Liberalism, a notion that subsequently developed significantly in England. For Hobson, “this ”New” Liberalism differed from the old in that it more clearly envisaged the need for major economic reforms, with the aim of giving positive meaning to the ”equality” that figures in the democratic triad of ”liberty, equality and fraternity. “But although “citizens as a body” must use the state as the main political instrument for the promotion of the “social good”, the editorial line of the magazine was very sensitive to the dangers of a powerful state, taken as an instrument of absolute control and leading to the “reason of state” as a principle of politics above the laws. For the editors, the embodiment of this type of state was Bismarck”s Germany, which they saw as an embodiment of Machiavelli”s thought. Moreover, this journal was sensitive to the fact that progress was not only political-economic but also cultural. Nevertheless, the journal was not a great public success and its publication ceased rather quickly.

In 1899, Hobson was sent to South Africa by Leonard Trelawny Hobhouse to cover the Boer War for the Manchester Guardian. He came back very anti-imperialist, ready to write his most famous book Imperialism. A Study in 1902.

Again at the request of Leonard Trelawny Hobhouse, he became an editorial writer for the Tribune in 1905. However, the collaboration ceased quite quickly because the work of a journalist in a daily newspaper did not suit him. More fortunate was his participation in the weekly newspaper Nation, which published many of his articles from 1906 to 1920. According to him, the editors (H.W. Massigham, Richard Cross) of this magazine “gave our writings (his and those of L.T. Hobhouse, H.W. Nevinson, F.W. Hirst, C.F.G. Masterman, J.L. Hammond, the Rev. W.D. Morrison) a certain degree of consistency that made the Nation a real influence on the new trend of liberalism. In 1922, John Maynard Keynes subsequently bought the magazine and gave it a less Oxford and more Cambridge tone.

He was a member of the Bryce Group, which included Lowes Dickinson and his friends Graham Wallas and Leonard Hobhouse, who drew up the first draft of what would become the League of Nations. Very quickly, he felt that this project did not take sufficiently into account the economic inequalities of countries and the problem of access to raw materials. To better expose his views on the issue, he published Towards International Government in 1915. In his autobiography, he noted that “for us, such a path (that of the League of Nations) implied the existence of an international government involving the abandonment of important elements of sovereignty on the part of the States,” noting in passing that it took eighteen years of the League of Nations” existence for this necessity to be recognized

Last years

After the First World War, he sees that the economic and political landscape has been profoundly transformed. Governments felt compelled to intervene in the economy to protect producers and consumers from consequences for which they were not responsible. Politically, the Liberal Party, which during the Victorian period had been closest to both the capitalists and the most disadvantaged classes, was supplanted among the former by the Conservative Party and among the latter by the Labour Party, leaving the field open to class conflicts. He himself joined the Labour Party. However, in his book Confessions of an Economics Heretic, he wrote: “I have never felt quite at home in a party (body) governed by trade unions and their finance and intellectually led by full-flooded socialists”.

Insommunicado, suffering from neuralgia, he died in April 1940. During his lifetime, he had a definite influence not so much on the course of events as on the level of thought. He left a considerable body of work, of which Imperialism remains the best known.

In his autobiography Confessions of an Economic Heretic, he wishes to arouse distrust of rationalists and freethinkers. He also examines what is orthodoxy in economics.

Orthodoxy, he says, is the acceptance of authoritative theories and opinions. From a mental point of view, he considers that it is “an attitude of mental and social security, a disposition to swim with the current and to enjoy the benefits of respectability… But this leads to inertia, to a difficulty in questioning and criticizing, so that this peaceful tendency is an enemy of progress. For progress can only come from a break with an authority or a convention.

For Hobson, one of the main keys to the success of orthodoxy is that it is sustained by a mixture of emotion and magical beliefs. This mixture is not only found in religion but also in political and economic beliefs. For him, rationalism and free thought consist precisely in a distrust of this mixture of emotion and magical beliefs. Also, he thinks that the fact that rationalism and freethought have been so much annexed by the opponents of religion have weakened their scope by focusing too much on the religious field to the detriment of other fields such as politics or economics.

At the end of the 19th century, English liberalism was undergoing a double crisis: its doctrine was perceived by some as outdated, or at least as needing to be profoundly revised to adapt it to modern times; its political expression, the liberal party, which was then one of the two major English parties along with the Tories, was deeply divided, particularly on the issue of imperialism. This double crisis both stimulates and runs through Hobson”s work.

Also read, biographies – 3rd Dalai Lama

Challenge of laissez-faire and under-consumption

For Hobson, as for other progressive liberals, the laissez-faire of the mid-Victorian era had become a dogma that prevented liberals from responding to the growing demand for social reform. On the economic front, Hobson, who favoured reform, challenged Say”s law that supply creates its own demand, an idea that was the cornerstone of the self-regulating market thesis. John Maynard Keynes would later consider the book in which Hobson and A.F. Mummery defended this idea as opening a new era in economic thought.

This first book by Hobson also poses the thesis of underconsumption, an idea that on the one hand there is potential production and on the other hand there are people who cannot consume. In his critique, he was preceded by John Ruskin who wrote in Unto This Last “Economists pretend that there is nothing good in consumption in the absolute. This is quite false, for consumption is the end, the crowning and the perfection of production.

For Hobson, underconsumption was due to a poor distribution of income between capitalists who enjoyed surplus income, which led to an excess of savings or investment (he did not distinguish between the two, as John Maynard Keynes would reproach him). To remedy this state of affairs, he advocated, on the one hand, the introduction of an income tax and an increase in inheritance tax and, on the other, an increase in wages.

The book The Physiology of Industry led to his exclusion from the academic world (he was then a lecturer at London University Extension) following a negative opinion from Professor Foxwell. Later, this exclusion led him to write his autobiography Confessions of an Economic Heretic (1938). Beyond his own case, he saw at the end of the 19th century an opposition “between men of the field and what in England is called academia” on the thesis of underconsumption. If he suffered from this exclusion, if he was for some “the wolf in the sheepfold (Traitor within the gates)” according to the expression of G. D. H. Cole, on the other hand, this situation also contributed to his fame

Also read, civilizations – Malacca Sultanate

The crisis within the English Liberal Party

The English liberal party seemed to him to have reached the end of its cycle after 1895. It was doubly divided. On the one hand, it was divided between the imperialist liberals who followed Lord Rosebery and the anti-imperialist liberals who followed Gladstone, and on the other hand, and the dividing lines did not overlap, between supporters of laissez faire and supporters of social reforms. This opposition was further sharpened by the Boer War: the imperialists were clearly in favour of the conflict, while the others, notably David Lloyd George, were just as firmly opposed. Hobson resolutely sided with the latter and, inspired by the Boer War, wrote his most famous work Imperialism.

On the second divide, Hobson favors social reform. Through the Rainbow Circle, he tried to “revitalize the party by developing a coherent and radical program of social reform. If he did not succeed in saving the Liberal Party, at least he had some influence on the social reforms undertaken by the Liberals from 1906 to 1914 and contributed, with others, to begin to lay the foundations of New Liberalism or Social Liberalism, currents of ideas also strongly marked by his anti-imperialism.

A journalist of radical and then Labour sensibilities, John Hobson admired Richard Cobden”s (1804-1865) opposition to British imperialist doctrine. This liberal opposition to imperialism is at the heart of the book he published in 1902 (republished several times, notably in 1905 and 1938), Imperialism. A Study. This essay was among the most influential of the twentieth century: Lenin explicitly referred to it in his essay Imperialism, the Supreme Stage of Capitalism, published in 1917. Hobson distinguishes between colonialism (which for him, as for the Ancient Greeks, applies to territories populated by emigrants from the mother society, such as Australia, Canada and New Zealand), and imperialism, i.e., the “pure and simple annexation of territories without any will to integrate” as it was implemented at the end of the 19th century.

Also read, biographies – Astrakhan Khanate

The main themes of the book

Hobson makes the first real economic study of the imperialist phenomenon. He highlights its real motives, the financial interests and the search for profits at its origin. He thus argues against the government”s thesis that the Boer War can be explained by British financial interests and develops the thesis of surplus capital that seeks to invest abroad: the purchasing power of the British being too low, the industrialists of the United Kingdom must find new markets that are likely to absorb their surplus production. With the support of major British investors (especially from the south-east of the country) and City financiers, they obtained from the press and from an aristocracy that still largely dominated political power the imperial expansion policy that would ensure the necessary outlets. In addition, the great British fortunes, which had substantial capital at their disposal, had placed it in investment funds abroad: in order for the great British mining or railway companies to provide them with comfortable dividends, it was necessary to open up new territories for commercial conquest. According to Hobson, these circles also had the “imperialist” support of sections of the population particularly interested in such a policy, whether they were military or missionaries. Thus, Hobson develops the idea according to which the imperial policy developed by the United Kingdom throughout the nineteenth century and particularly since the 1870s, was explained by the desire of a small group of British investors and aristocrats to defend their own economic interests, without really taking into account those of the British nation. The economic situation of the metropolis was therefore at the origin of imperial expansion. Deploring this instrumentalization of imperial policy for the benefit of a minority, Hobson advocated the abandonment of overseas investments in order to “redirect them to the British masses, so as to resolve the crises of industrial overproduction through collective enrichment.

It occupies the whole second part of the book. The book was written at a time when the English Liberal Party was divided between imperialists, around Lord Roseberry, and anti-imperialists. While Hobson understood that conservatives such as Benjamin Disraeli and Lord Salisbury were in favour of imperialism, he believed that imperialism was fundamentally anti-liberal. Indeed, the conquered territories were administered in a centralized manner without taking into account the will of the people. It follows that, for him, it is a tyranny. But this tyranny exercised by English civil servants and military officers could contaminate the whole of British society and threaten democracy.

Hobson also denounced the phraseology used to popularize imperialism: “supreme power, effective autonomy, emissary of civilization, rectification of frontier, and a whole sliding scale of terms, from ”hinterland” to ”effective occupation” and ”annexation”, come spontaneously to mind to illustrate a phraseology invented to conceal the fact that we are encroaching on the property of others. For him, in fact, imperialism was not in the interest of all Englishmen, particularly because it was not compatible with the social reforms needed in England. He also feared, like George Bernard Shaw, that imperialism would lead to a dependence of the imperial nation (England) on the conquered countries. Finally, Hobson was opposed to imperialism because he believed that it went against cultural pluralism by destroying ancient civilizations. Nevertheless, two points should be emphasized: on the one hand, he did not consider all civilizations to be equal, and on the other hand, he had the idea of a “good imperialism”, which led him to propose that, in certain cases, “imperialist nations should behave as trustees under the aegis of an international organization that would represent civilized humanity”, an idea that would be taken up again after the war by the League of Nations with the international mandates.

Also read, biographies – Joseph I, Holy Roman Emperor

Receipt of the book

While Lenin was impressed by Hobson”s emphasis on the role of capital in imperialism and by Hobson”s view that imperialism leads to a “parasitism” of the imperial nation on others, he did not follow Hobson on the other major economic theme, the theory of underconsumption

Peter J. Cain and Anthony G. Hopkins, authors of a major work on imperial economics published in 2001 and inventors of the concept of gentlemanly capitalism, explicitly underline their filiation with Hobson.

Also read, biographies – Samuel Johnson

The criticisms addressed to Hobson

The academic community was much more critical than Lenin. For them, Hobson was not rigorous and failed to demonstrate the link between capital exports and annexation. For Bernard Porter, there is a tension between the two theses of the book: the theory of the conspiracy of financiers and the explanation by underconsumption. Moreover, according to this author, the thesis that finance is the major force of imperialism is not empirically demonstrated, but is deduced from the idea that since imperialism is not favourable to the whole nation, it must be favourable to someone. For Townshend, in fact, Porter”s criticism would fail to take into account Hobson”s political purpose, namely, his desire to alert “the British public that a new plutocratic phenomenon was hijacking British foreign policy”

Also read, biographies – Pieter Bruegel the Elder

How Hobson explains the distribution of national income

At a time when the neoclassical school was in full swing, Hobson”s book “The Industrial System” (1909) made him one of the leading heterodox economists of the time. The main theme of the book was the division of national income between the four groups of factors of production, which, according to him, were labor, capital, land and enterprise, which he called “ability.

Hobson divides aggregate income into three funds based on the role each plays in motivating production agents:

Although in different proportions, we find these funds in the different types of remuneration: wages, interest, profit, rent. This means that Hobson, unlike the Marxists, considers interest to be a necessary stimulus: the savings of wealthy individuals, which are almost automatic, are not enough; the rest of the population must therefore be encouraged to save. According to Hobson, the problem of social justice “does not depend on the fairness or necessity of paying interest on savings, but on the process by which the accumulation of the largest share of savings is achieved.

The mode of distribution of the surplus (funds 2 and 3) is based mainly on the balance of power. The essential asset of a factor is its scarcity, natural or artificial. In this game, the winner is usually the enterprise factor. It is in a strong bargaining position with the other factors; moreover, entrepreneurs frequently restrict competition among themselves so that the selling price of their product incorporates unearned profit. According to Hobson, it is obvious that the real profit of individual firms is not correlated with the level that would be necessary to motivate their entrepreneur. On the other hand, labor suffers from its abundance. Consequently, the working class needs trade unionism to transfer to wages a part of the unearned income from property. Another way to reduce unearned income is to divert some of it to the financing of services of general interest through taxation.

Also read, important-events – Irish Famine (1740–1741)

Hobson versus marginal productivity theory

No other cause plays a role in distribution comparable to that of power relations and relative scarcity, which belies theories of distribution such as that which derives remuneration from the marginal productivity of the factor considered. Hobson was an outspoken opponent of this theory, which he criticized at length, and this set him against Marshall and his followers, with whom the debate was sometimes fierce.

Arguing against marginal productivity, Hobson writes: “The interdependence between the factors of production and between the various subgroups of each factor with each other and with the subgroups of the other factors is so intimate that no productivity of its own can be legitimately attributed to any one factor, much less to a subgroup of a factor. He also questions the possibility of varying the quantity of one factor while leaving the others constant. Hobson”s influence should not be underestimated. Why did Alfred Marshall put forward the concept of net marginal product, when other economists stuck to the simple marginal product? An astute commentator like Mark Blaug does not rule out that his concern was to guard against Hobson”s criticism.

Also read, biographies – Leonardo da Vinci

External links

Sources