Peter Cain, Sheffield Hallam University


The paper is mainly concerned with two inter-related aspects of Imperialism: A Study, the most famous book written by John Atkinson Hobson (1858-1940) and first published in 1902. Firstly, it will critically examine the arguments used by Hobson to justify his conclusion that foreign investment and the financiers who controlled it were the main driving force behind imperial expansion. Secondly, it will show how Hobson developed his thesis about financial imperialism to predict a global dystopia wherein imperialism would have a disastrous economic and political impact both on the non-European periphery and on the imperial powers themselves.   


To appreciate the arguments of Imperialism fully it is important to be aware that it is a document deliberately fashioned to bring up to date a long radical tradition of anti-imperial thought in Britain. To use Herbert Spencer’s terminology with which Hobson was very familiar, in radical thinking the main distinction was between the ‘industrial’ society of both capitalists and workers and the ‘militant’ one of the landed aristocracy and their supporters. The former was the cornerstone of liberty and progress; the latter, living on unearned income, was the home of despotism, war and imperialism. Many radicals from Paine through to Bright believed that, as the financier of aristocratic governments, the City of London was an adjunct of militarism. Given the rising importance of the City and of foreign investment in British economic life by 1900, finance acquired a leading place in radical demonology and that fact was now widely acknowledged by contrasting ‘industry’ with ‘parasitism’. In Hobson’s work from the turn of the century onwards, ‘parasitism’ was a key term. It expressed the idea of a combination of forces with City-led finance as the dominating element but with both the traditional forces of militancy and emerging ‘big business’ in supporting roles. In Hobsonian theory this parasitic complex lived on unearned income that resulted in oversaving. Oversaving found an outlet in foreign investment and the latter then became the causa causans of imperial expansion. The notion of parasitism, so central to Hobson’s thinking, had a profound influence on Lenin. The latter mixed this element of radical discourse with his own Marxist one in Imperialism, the Highest Stage of Capitalism in 1916 where they made very uneasy bedfellows, as Bill Warren pointed out. ighest HHHhhhh   



Hobson was keen to deny that the driving force behind imperial expansion was the need for new markets for industrial exports. He asserted instead that finance was 'the governor of the imperial engine'.[1] It was an assertion that rested on a number of arguments, none easy to defend. Hobson claimed: firstly, that the value of foreign trade to the nation was small and that it was unnecessary to the prosperity of advanced industrial countries; secondly, that the trade gained from imperial expansion in tropical and sub-tropical lands was not only very limited but that the benefits were much outweighed by the costs of their acquisition; thirdly, that the power of finance was indicated by the immensity of the returns on foreign investment compared with those on foreign trade. The first proposition, though coming from a respectable intellectual tradition, was extremely contentious and was heavily criticised. His second rested on trade statistics that to some extent undermined his own argument and upon the assumption that all increases in military spending over the previous twenty or thirty years were directly attributable to imperial expansion. The third was seriously flawed. His assertion that foreign investment was a much more lucrative business than foreign trade was based on faulty arithmetic that inflated the importance of the former and, by implication, that of the financiers who controlled it. Another weakness in Hobson’s analysis of the link between the expansion of the imperial frontier and foreign investment was that he did not discuss the distribution of the latter. His failure to do so made it difficult to distinguish between those areas where British capital investments loomed large in the process of expansion and those where they did not.


Hobson's fourth major contention was that the great international financiers had power over the politicians of the imperialist nations and were the true guides of their foreign policies. Fifthly, he claimed that they could manipulate public opinion in these nations through control of the press; and, finally, he clearly believed that financiers possessed a singleness of purpose and clarity of vision accorded to no other body of men involved in imperial endeavour. There was some truth in the fifth proposition, though the picture was more complex than Hobson painted it, but he supplied no direct evidence for either the fourth or the sixth other than certain inferences drawn from the relations between South African mining magnates and politicians. Moreover, both of these claims were nuanced, and to some extent subverted, as the argument proceeded. In Part I, the American evidence suggested a different kind of finance capitalism existed there, one where industry had equality with, if not priority over, finance. Then in Part II, Hobson sometimes developed the argument about the complicity of propertied interests as a whole in imperialism in a way which accorded finance no special place; and he went on to present a sketch of the ideological foundations of imperial endeavour which, whatever his original intentions, sometimes hinted that financiers were as likely to be as ideologically blinkered as the populace they were supposed to manipulate.




Imperialism, is, of course, one of the enduring intellectual residues of the South African War of 1899-1902 but Hobson was convinced that the crisis in South Africa was only an early stage in a process that could transform the whole world for the worse. In Part II of Imperialism Hobson was, amongst other things, concerned to show what would be the consequences for the international economy of the persistence over a long period of the kind of financial imperialism he had analysed in Part I. Indeed, Imperialism is, in many ways, a drama in which the forces of industry and parasitism, of good and evil, are locked in battle for control of the whole world – though the central arena in which the drama was to be acted out was not Africa or the Middle East or India but China. Hobson predicted that, if world development continued on the same lines as it had done in the immediate past, China would soon become the focus of a new phase of capitalist growth under the control of financial imperialism that would destroy industry - and all the liberal institutions that industry had supported - in Britain and other parts of Europe and make the latter’s economies parasitic upon growth in Africa and Asia. To prevent this awfUse of uninitialized value in concatenation (.) or string at E:\listplex\SYSTEM\SCRIPTS\filearea.cgi line 455, line 270. ul fate drastic economic surgery was required in industrial countries that would cut off the sources of oversaving and thus the foreign investment that fed imperial expansion. Once that was achieved, international economic flows would be much reduced and each area, advanced or otherwise, could then develop in ways more suited to its local genius. The latter part of the paper will be devoted to a more detailed discussion of Hobson’s predictions about the future of Western imperialism, and of his views on what we now routinely call globalisation, in the context of the vivid contemporary debates on these issues.  



[1] Imperialism: A Study (1988 ed.), p. 59.