John A Hobson
From Hobson's Choice
This article is under construction
Hobson made two extremely important contributions to the understanding of his world: he outlined persuasively the destructive impulses that contributed to imperialism, and he also produced the most thorough and compelling argument for underconsumptionist theory. The latter was latter to be used as the foundation for Keynesianism.
CareerHobson was born in Derby, England in 1858 to an affluent, somewhat austere Anglican family. He attended Lincoln College (Oxford University). At that time, parliamentary politics did not address most social issues, although the 19th century had seen a long series of severe depressions.
Politics in this placid epoch had little social or economic significance. Factory legislation and other interference with competitive capitalism did not figure with any prominence, and, although there was a good deal of loose philanthropic talk about "the amelioration of the condition of the working classes," there was no sincere attempt at amelioration by governmental action. The dominant classes in Derby were pretty equally divided between Conservatism and Liberalism, the latter generally carrying the elections by their larger hold upon the working-class electors. When I first began to take notice of such matters as elections, Gladstone and Disraeli were the great protagonists, while conflicts where the extension of the franchise, popular education, Irish land tenure, non-conformist rating, with something called the Eastern question, were the main staple of party politics... At that time the two-party system was engaged half-consciously in keeping out of politics all deep and drastic issues of the condition of the people.Hobson was initially a schoolteacher who taught the classics and economics. In 1887 he married a Usonian, Florence Edgar, and settled in London. There he became involved in a group of Fabian Radicals and began work on his critique of political economy.
Confessions of an Economic Heretic George Allen & Unwin (1938), p.17-18
Hobson is credited by John M. Keynes for his contributions to the idea of underconsumption Orthodox economic theory, then and now, has tended to insist that there has never been, and cannot ever be, any such thing as underconsumption. Underconsumptionist theories of the economy dated back at least to Thomas Robert Malthus, but were thought to have been "defeated" by Ricardo and Jean-Baptiste Say. Hobson had befriended Albert F. Mummery, the famous economist and mountain climber, and in 1889 they wrote [The Physiology of Industry]. Hobson and Mummery differed from prior writers in the field by focusing on the empirical evidence, such as surveys of industry.
The essence of Hobson's and Mummery's critique was as follows: the gains to economic expansions are captured chiefly by capitalists, who also account for a disproportionately large volume of saving. The saving is then channeled into investments, the output of which cannot be absorbed by the markets. It is interesting to note that criticisms of this theory (couched in respectful, but patronizing language by Hutchison and Schumpeter) were published in the 1950's, when the concept of technical limits to economic expansion were absolutely heretical.
- ↑ T. W. Hutchison, A Review of Economic Doctrines: 1870-1930, Oxford University Press (1953), p.119. Hobson's own intellectual autobiography skips over his private life entirely.
- ↑ Miles Taylor, "Biography of Hobson", Liberal Democrat Study Group
- ↑ John M Keynes, General Theory of Employment, Interest, and Money, "Chapter 23" (1936)
- ↑ Jacob Viner notes that a Lord Lauderdale had criticized the monetary policies of the Bank of England on the grounds that they would lead to underconsumption (1798). See Viner, Studies in the Theory of International Trade, (Harper and Brothers Publishers, 1937), note 56. Keynes, as everyone knows, credited Bernard Mandeville's 1705 "Fable of the Bees" (Keynes, General Theory, (1936), §23). But the debate was made famous by Malthus and Ricardo, in 1820.
Also At This Site
- Complete text of Imperialism , Library of Economics and Liberty
- Project Gutenberg, Works by J.A. Hobson
- John A. Hobson, Confessions of an Economic Heretic George Allen & Unwin (1938)
- T. W. Hutchison, A Review of Economic Doctrines: 1870-1930, Oxford University Press (1953)
- Miles Taylor, Biography of Hobson, Liberal Democrat Study Group
- John Mackinnon Robertson, The Fallacy of Saving: A Study in Economics (complete text online), Scribner's (1892)
- Joseph A. Schumpeter, History of Economic Analysis, Oxford University Press (1954)
- CEPA New School, "Underconsumption Theories";