Hobson, John (1858–1940)

JOHN ATKINSON HOBSON was born in Derby, England. He went on to study at Lincoln College, Oxford, before becoming a teacher of classics and English literature at schools in Exeter and Faversham. In 1887, on the invitation of the journalist William Clarke, Hobson joined the Fabian Society. A group of nonrevolutionary liberal socialists who drew heavily from London's arts communities, the Fabians counted among their members George Bernard Shaw and Beatrice Webb.

At the end of the 19th century, Hobson wrote a series of influential works dealing with issues of economics, social development, and social reform. Among these are Problems of Poverty (1891) and Problem of the Unemployed (1896), both written as publications of the Fabian Society, and Evolution of Modern Capitalism (1894) and John Ruskin: Social Reformer (1898). His most acclaimed and influential work, Imperialism: A Study (1902), would later impact the writings of Bolshevik leaders Vladimir Lenin and Nicolai Bukharin. Hobson also wrote for socialist journals, including the New Leader, the Socialist Review, and the New Statesman. His approach to socialism always stressed the moderation of capitalism through reforms rather than a revolutionary transformation of capitalist social relations.

Hobson's humanist approach to economic theory made an important contribution to the development of welfare policy and influenced later welfare state economics. Notably Hobson's theory of underconsumption and trade cycles prefigures the later work of John Maynard Keynes. This theory, presented initially in The Physiology of Industry (1889, with A.F. Mummery) and developed more fully in The Industrial System (1909), suggests that the unequal distribution of income leads, especially through underconsumption and tendencies of the rich to save their wealth, to growing unemployment.

Specifically, unequal income distribution places vast quantities of wealth in the hands of the rich, who tend to save large proportions of their income. In addition, competition among capitalists for further wealth leads to growing industrial concentration as less successful capitalists are absorbed by their stronger competitors, who come to monopolize markets and develop the economic strength to influences state policies in their own interest. Monopoly power leads to even greater profits and savings, which lead to further decreased consumption and an extension of unemployment and poverty.

The solution for Hobson, anticipating Keynes, was to redistribute income through taxation and the nationalization of monopoly industries as means to disperse the social surplus. Increased demand would provide adequate markets for increases of investment and production. Even more, Hobson develops his analysis, in Imperialism: A Study, into a theory of global competition and imperialism. For Hobson, imperialism is based in the failure of consumption to keep up with production for the reasons outlined above. This led capitalists to seek foreign markets for the sale of goods that were otherwise left unsold and for new investment opportunities. Imperialism was marked, however, by the same problems of unequal income distribution, underconsumption, competition, and monopoly.

[Page 495]Despite his advocacy of government-sponsored social reform programs, Hobson opposed statist socialist visions of a planned economy directed through the state and advocated instead a mixed economy allowing both individual private property and public property. At the same time he opposed classical liberalism in arguing for an expanded role of the state in managing the economy.

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