Hobson, John A.
Hobson, John A.
John Atkinson Hobson (1858–1940) was a British economist. In his appealing autobiography, Confessions of an Economic Heretic (1938, p. 15), he described himself as “born and bred in the middle stratum of the middle class of a middlesized industrial town of the Midlands.” The town in question was Derby, and the family derived its income from the Derbyshire Advertiser, a Liberal newspaper. The family’s resources sufficed to assure Hobson an adequate private income all his life and the chance to pursue a heterodox career free of financial strain. At Oxford he specialized in classics. He also made a close study of Marx, but Capital repelled him and he dismissed the dialectical method as frivolous. As a child he broke with formal religion because it failed “to satisfy my elementary sense of reason and of justice in the doctrines of the atonement and of everlasting punishment for unrepentant sinners” (1938, p. 20).
The intellectual influences that impinged on Hobson included Mill’s On Liberty and Utilitarianism and Herbert Spencer’s Study of Sociology. John Ruskin’s message impressed him while he was teaching classics in two successive public schools. Even though Hobson recognized the speculative cast of much of Ruskin’s thought, he was attracted by Ruskin’s criticism of the conventional economists’ tendency to identify economic value with the monetary costs of producing marketable commodities. Ruskin’s slogan “there is no wealth but life” animated all of Hobson’s writings, especially the two volumes that best express his humanistic conception of economics, The Industrial System (1909) and Work and Wealth (1914). Thorstein Veblen’s criticisms of capitalist waste and capitalist standards of consumption also attracted Hobson. With American institutional economists of the period he shared a basic distrust of marginal economics and a disposition to interpret all aspects of economic activity within the broader framework of ethics and sociology.
Hobson’s two enduring contributions to economic thought are connected with the doctrine of oversaving and the theory of imperialism. The possibility, even the probability, of oversaving is the central lesson of his first book, The Physiology of Industry (Mummery & Hobson 1889), which he wrote in collaboration with the businessman and mountain climber A. F. Mummery. Hobson directed this first attack at a central proposition of conventional economics—that a society can never save too large a proportion of its income— asserting that excess saving brings about the construction of unneeded capital equipment whose products lack consumer markets. In later works Hobson strengthened his argument with explicit emphasis upon the maldistribution of income, which causes the wealthy to save too large a share of their income and thus generates unemployment and economic depression. Hobson’s conception of oversaving differs from contemporary theories in its assumption that saving is actually and necessarily converted into fixed investment. The Keynes-ian version maintains that an effort to save too much diminishes total spending rather than fixing itself in surplus machines.
Hobson’s second major contribution is contained in Imperialism (1902). This was an extension of his oversaving theory, but its impetus and a great deal of its historical detail derived from Hobson’s experience in South Africa as a correspondent of the Manchester Guardian just prior to the Boer War. He explained the revived drive for empire as the result of a search by English capitalists for savings outlets. Lenin borrowed freely of Hobson’s doctrine.
Although trenchant as a critic, Hobson was less successful as an inventor of concepts and programs. He never put into acceptable theoretical style his human conception of value or his perception that the money costs of production inade quately measure the human pains of economic output. Nor did he find a completely satisfactory political vehicle for his ideas. He began as a Liberal and then became a somewhat reluctant member of the Labour party. Never accepting class war as the proper route to a better society, always seeking to enlist portions of the middle class under his banner, Hobson was also skeptical of nationalization as the single remedy for a defective society. Although he was perfectly willing to nationalize industries which suffered from monopoly, inefficiency, or excessive routinization of their operations, he attached at least equal importance to less concentration within private industry, progressive taxation of income and wealth, and the social policies now embodied in the welfare state. Like R. H. Tawney and G. D. H. Cole, he emphasized the quality of consumption and the satisfactions of the worker as elements of a humane society. He took pride in what he called “’the jumble’ of politics, ethics, art, religion, which constitutes the setting of my thought” (1938, p. 164).
Orthodox economists admired Hobson little more than he admired them. F. Y. Edgeworth, in an influential review of The Physiology of Industry, denied Hobson and Mummery the “undoubted spec ulative genius” or the “extraordinarily wide learning” that alone might justify such paradoxical conclusions. As a direct consequence of the book, Hobson lost two extension lectureships and won a reputation for heresy that placed him on the fringes of the academic world for the rest of his career. As late as 1954, Schumpeter summed him up in this way: “In economics he was self-taught in a wilful way that made him both able to see aspects that trained economists refused to see and unable to see others that trained economists took for granted” (1954, p. 832, footnote).
Hobson felt himself vindicated, however, when Keynes in The General Theory of Employment, Interest and Money (1936) termed the publication of The Physiology of Industry “an epoch in economic thought” and credited Hobson with antici pating a good half of Keynes’s own theory of underemployment equilibrium. As an anticipator of both Lenin and Keynes, Hobson seems to have a secure place in the history of economic doctrine.
Robert Lekachman
[For the historical context of Hobson’s work, see the biographies ofMill; Spencer; Veblen; for discussion of the subsequent development of Hobson’s ideas, seeConsumption function; Imperialism; and the biographies ofKeynes, John maynard; Lenin.]
WORKS BY HOBSON
(1889) 1956 Mummery, Albert F.; and Hobson, John A. The Physiology of Industry: Being an Exposureof Certain Fallacies in Existing Theories ofEconomics. New York: Kelley.
(1894) 1949 The Evolution of Modern Capitalism: A Study of Machine Production. Rev. ed. New York: Macmillan.
(1902) 1948 Imperialism: A Study. 3d ed. London: Allen& Unwin.
(1909) 1910 The Industrial System: An Inquiry Into Earned and Unearned Income. New ed., rev. London and New York: Longmans.
(1914) 1933 Work and Wealth: A Human Valuation. Rev. ed. London: Allen & Unwin.
1938 Confessions of an Economic Heretic. New York: Macmillan.
SUPPLEMENTARY BIBLIOGRAPHY
Brailsford, Henry N. 1948 The Life-work of J. A. Hobson. London: Oxford Univ. Press.
Homan, Pault. 1928 Contemporary Economic Thought. New York: Harper. → See especially pages 281-374 on “John A. Hobson.”
Hutchison, Terence W. (1953) 1962 A Review of Economic Doctrines: 1870–1929. 2d ed. Oxford: Clarendon. → See especially pages 118-129 on “J. A. Hobson.”
Keynes, John Maynard 1936 The General Theory of Employment, Interest and Money. London: Macmillan. → A paperback edition was published in 1965 by Harcourt.
Schumpeter, Joseph A. (1954) 1960 History of Economic Analysis. Edited by E. B. Schumpeter. New York: Oxford Univ. Press.