HOBSON, John Atkinson
6th July 1858 to 1st April 1940
Hobson was a heterodox writer on economics, best known for his theory of underconsumption. He was also a staunch anti-Imperialist, whose work was cited with approval by V.I. Lenin.
Hobson was born in Derby on 6 July 1858, the son of a newspaper owner and editor. He was educated at Derby School and then Lincoln College, Oxford. At university he excelled at athletics, winning a place on the Oxford athletics team, but not at his studies, earning a third in literae humaniores. From 1880-2 he taught at Faversham School, and from 1882-7 was a master in classics at Exeter grammar school. At Exeter he met the poet and campaigner for women’s rights, Florence Edgar; they married in 1885. In 1887 Hobson moved to London where he taught university extension courses for Oxford and also the London Society for the Extension of University Teaching.
While at Exeter, Hobson met the celebrated mountaineer Albert Mummery, with whom he shared an interest in economics. The two men became close friends, and Hobson (1938) credited Mummery with inspiring much of his own later thought. The Physiology of Industry, written by Mummery and Hobson, was published in 1889. The book received a series of damning reviews, including personal attacks on the authors. Hobson was deeply embittered by this experience, and felt – perhaps with some justice – that the economics community had closed ranks against him and deliberately denied him any chance of receiving academic appointments or awards. He suffered a further loss when Mummery, who had been very much the lead writer on The Physiology of Industry, was killed while climbing on Nanga Parbat in the Himalayas in 1895.
This sense of exclusion from academic circles inspired Hobson to rebellion. His economics and politics both drifted sharply to the left. He attended one meeting of the Fabian Society but was unimpressed by what he saw and heard; he was similarly disappointed by his first reading of Das Kapital. Hobson decided to go his own way. He supported himself for the next forty years by teaching university extension and writing prolifically, often three or four books a year – the list of major works below is not exhaustive – as well as numerous articles (see Pheby 1994 for a full list of works). His articles were well-written and popular, and he became a regular writer for newspapers and periodicals including the Manchester Guardian and The Nation.
From 1899-1900 Hobson was in South Africa as war correspondent for the Manchester Guardian during the Boer War. That experience led Hobson to an examination of imperialism, and he became a convinced and passionate anti-imperialist. Imperialism (1902) was perhaps his best-known work at the time and was highly influential; Lenin quoted from it frequently in his own work Imperialism: The Highest Stage of Capitalism, in 1916. Hobson’s profile in radical circles was increasing, and he became prominent in a number of new movements and organisations. He was a founder member of the Sociological Society, and served as its chairman from 1913-22 and then vice-president from 1922-32.
Hobson was opposed to the First World War, and in 1914 joined the Union of Democratic Control, an anti-war group that opposed conscription and censorship; members included the former Liberal cabinet minister Charles Trevelyan, several prominent Labour Party members including Ramsay MacDonald and Philip Snowden, and the Liberal MP Arnold Rowntree, a director of the Rowntree company and cousin of Benjamin Seebohm Rowntree (and later a Rowntree conference speaker). Hobson was a leading member of the UDC, and served as its chairman from the 1920s until his death. His involvement with the UDC did not however preclude his doing work for the government. From 1917-18 he served on the Whitley Committee and advised on the creation of Joint Industrial Councils (Whitley Councils) and from 1918-19 worked with the Ministry of Reconstruction. He was a witness at the Sankey commission of inquiry into the coal industry in 1919.
The war also led Hobson to sever his ties with the Liberal Party. In the 1918 general election, he stood as an independent candidate for the combined universities seat, but was narrowly defeated. By now Hobson was a respected public figure, his once heterodox economic views now widely accepted; John Maynard Keynes even praised The Physiology of Industry in his own General Theory. Hobson was consulted by Ramsay MacDonald before the establishment of the Economic Advisory Council, but in the end was not appointed to the council itself. His relations with MacDonald, and the Labour Party, worsened in the late 1920s as he disagreed fundamentally with many of Labour’s economic policies. In 1931 he was offered a peerage by MacDonald, but refused it as an act of protest. Throughout the remainder of the 1930s Hobson remained a kind of respected elder statesman of the left, though he held no official posts. Hobson died at his home in Hampstead on 1 April 1940.
There is not sufficient space here to go into detail on all of Hobson’s ideas. In The Physiology of Industry, Mummery and Hobson developed on Mummery’s original idea of over-saving and created a theory of underconsumption. As Keynes would later do, they argued that a lack of demand was key factor in dampening down economic growth, but unlike Keynes, who stressed capital investment, Mummery and Hobson argued that lack of spending by consumers was the most important issue restricting growth. Their conclusion was that putting more money into the hands of the poor would enable them to become more active spenders, and this in turn would push growth. Later, searching for causes of poverty, Hobson’s The Economics of Distribution argued that the market economy itself is to blame as it leads to an unfair distribution of income; going further, he effectively accused the neoclassical economics establishment of being complicit in inequality through its defence of free market economics.
On the other hand, Hobson maintained a healthy scepticism about socialism, and argued against Marxism. Through the 1920s and 1930s especially, he sought in his writings for a middle way, an economic system that would encourage free trade – which Hobson thought was essential for world peace as well as prosperity – and at the same time promote fairness and equality and end poverty. His biographies of eminent radical and liberal figures such as Richard Cobden and John Ruskin show the direction in which he was travelling. He advocated a role for both private enterprise and state-owned businesses, and was a strong advocate of closer relationships between employers and workers; as evidenced by his work with the Whitley Committee.
This last is the primary theme of Hobson’s lecture at the Rowntree conference of April 1922, though there are echoes of other themes in his work present as well. Hobson begins by taking to task those who look back on the days before the First World War as a golden age, and wish to return the country to its pre-war state. He reminds his audience that the period from 1911-14 was riven with increasingly bitter strikes and industrial disputes, and only the outbreak of war prevented situation from growing more serious still.
The causes of this unrest, Hobson says, can be found in the worsening economic situation of the workers. Unlike the economist Lawrence Hammond, who believed the Industrial Revolution saw a general worsening of the welfare of the working classes, Hobson argues that the lot of the working man and woman improved through much of the nineteenth century. But from the 1880s onwards, he says, wages failed to keep pace with rising prices. Workers had less money to spend, and this in turn – harking back to his theory of underconsumption – led to economic instability more generally.
The war, however, had changed the nature of the economic game. In particular, it had led to immense strides forward in the concentration of both capital and labour. Both were now much more organised and structured than before, and it is simply not possible to roll back those changes and go back to earlier times, even if it were desirable. Hobson goes on to identify two further important changes: new ideas about who should control businesses, and the role to played by the state.
The 1920s saw the beginning of a debate on the nature of ownership and control, not just in Britain but also in Germany, France and the USA. Hobson argues that control should be in the hands of all those who have an interest in the business, whose lives are affected by it. This means, in effect, worker representation and participation in decision-making. The owners of the capital of the business should not, Hobson says, be entitled to call it ‘their’ business. The business belongs to all those who take part in it.
As for the state, says Hobson, a well-regulated state has five key functions. The first four are the maintenance of public order; ensuring that the people are healthy, educated and have a livelihood; protection of the rights of the consumer; and the promotion of trade and commerce. All four of these are essential to the functioning of a well-regulated economy, and for this reason it is foolish to argue that the state has no business to interfere in markets; to promote these four goals, the state can and must intervene. That leads us to the state’s fifth function, the collection of taxes, which Hobson describes as a ‘reward’ for achieving the first four. There is a bargain between the state and the business community; the state provides a stable platform from which business can operate, and in turn it receives revenue in the form of taxation.
Hobson’s summary is also a reasonable summing up of his economic and political views in general:
All this means that we must enter upon a new era of organisation and concentration of industry, and that cannot be reached by competition between capital and labour, between trade and trade, or even between country and country. It can only be attained when people meet together on a reasonable common basis, and try to build up a just agreement in their mutual dealings with one another, and to get the sense of fair play into industry, on the one hand, and into the apportionment of wealth upon the other.
(with A.F. Mummery) The Physiology of Industry: Being an Exposure of Certain Fallacies in Existing Theories of Economics,1889.
Problems of Poverty,1891.
The Evolution of Modern Capitalism: A Study of Machine Production,1894.
John Ruskin: Social Reformer,1898.
The Economics of Distribution,1900.
The War in South Africa: Its Causes and Effects,1900.
The Social Problem: Life and Work,1900.
The Psychology of Jingoism,1901.
Imperialism: A Study,1902.
The Crisis of Liberalism,1909.
Gold, Prices and Wages,1913.
Work and Wealth: A Human Valuation,1914.
Labour and the Costs of the War,1916.
Richard Cobden: The International Man,1918.
Incentives in the New Industrial Order,1922.
The Economics of Unemployment,1922.
Free-thought in the Social Sciences,1926.
Confessions of an Economic Heretic,1938.
Allet, J., New Liberalism: The Political Economy of J. A. Hobson ,Toronto: University of Toronto Press, 1981.
Freeden, M. (ed.), Reappraising J.A. Hobson: Humanism and Welfare, London: Routledge, 1990.
Freeden, M., ‘Hobson, John Atkinson’, in Oxford Dictionary of National Biography, Oxford: Oxford University Press, 2004.
Maclachlan, F., ‘Hobson, John Atkinson’, in D. Rutherford (ed.) Biographical Dictionary of British Economists, Bristol: Thoemmes Press, 2004.
Pheby, J. (ed.), J.A. Hobson After Fifty Years : Freethinker of the Social Sciences, New York: Macmillan, 1994.
Schneider, M., J. A. Hobson, Basingstoke: Palgrave Macmillan, 1996.
Townshend, J., J. A. Hobson, Manchester: Manchester University Press, 1990.
Witzel, M., ‘Mummery, Albert Frederick’, in D. Rutherford (ed.) Biographical Dictionary of British Economists, Bristol: Thoemmes Press, 2004.
‘Why a return to pre-war industry is impossible’, 23 April 1922, Balliol College