Questioning the Economics of Imperialism

J. A. HOBSON, Imperialism (1902)

Not all Europeans were imperialists, although anti-imperialists were typically in the minority. One of the underlying assumptions of empire was that colonies would trade exclusively with their mother countries, a theory at odds with Adam Smith’s eighteenth-century vision of free trade. In 1902, John Atkinson Hobson, an English economist, published a critique of the prevailing link between colonies, economies, and national security, questioning the benefits of imperialism for the colonizing countries. His work influenced the communist leader Lenin’s later critique of imperialism.

Although the new Imperialism has been bad business for the nation, it has been good business for certain classes and certain trades within the nation. The vast expenditure on armaments, the costly wars, the grave risks and embarrassments of foreign policy, the stoppage of political and social reforms within Great Britain, though fraught with great injury to the nation, have served well the present business interests of certain industries and professions.

It is idle to meddle with politics unless we clearly recognize this central fact and understand what these sectional interests are which are the enemies of national safety and the commonwealth. We must put aside the merely sentimental diagnosis which explains wars or other national blunders by outbursts of patriotic animosity or errors of statecraft. Doubtless at every outbreak of war not only the man in the street but the man at the helm is often duped by the cunning with which aggressive motives and greedy purposes dress themselves in defensive clothing. There is, it may be safely asserted, no war within memory, however nakedly aggressive it may seem to the dispassionate historian, which has not been presented to the people who were called upon to fight as a necessary defensive policy, in which the honor, perhaps the very existence, of the State was involved. . . .

What is the direct economic outcome of Imperialism? A great expenditure of public money upon ships, guns, military and naval equipment and stores, growing and productive of enormous profits when a war, or an alarm of war, occurs; new public loans and important fluctuations in the home and foreign Bourses [essentially a stock market]; more posts for soldiers and sailors and in the diplomatic and consular services; improvement of foreign investments by the substitution of the British flag for a foreign flag; acquisition of markets for certain classes of exports, and some protection and assistance for trades representing British houses in these manufactures; employment for engineers, missionaries, speculative miners, ranchers, and other emigrants.

Certain definite business and professional interests feeding upon imperialistic expenditure, or upon the results of that expenditure, are thus set up in opposition to the common good, and, instinctively feeling their way to one another, are found united in strong sympathy to support every new imperialist exploit. . . .

With them stand the great manufacturers for export trade, who gain a living by supplying the real or artificial wants of the new countries we annex or open up. . . . The proportion which such trade bears to the total industry of Great Britain is very small, but some of it is extremely influential and able to make a definite impression upon politics, through chambers of commerce, Parliamentary representatives, and semi-political, semi-commercial bodies like the Imperial South African Association or the China League.

The shipping trade has a very definite interest which makes for Imperialism. This is well illustrated by the policy of State subsidies now claimed by shipping firms as a retainer, and in order to encourage British shipping for purposes of imperial safety and defense.

The services are, of course, imperialist by conviction and by professional interest, and every increase of the army and navy enhances their numerical strength and the political power they exert. . . .

What is true of Great Britain is true likewise of France, Germany, the United States, and of all countries in which modern capitalism has placed large surplus savings in the hands of a plutocracy or of a thrifty middle class. A well-recognized distinction is drawn between creditor and debtor countries. Great Britain has been for some time by far the largest creditor country, and the policy by which the investing classes use the instrument of the State for private business purposes is most richly illustrated in the recent history of her wars and annexations.1 But France, Germany, and the United States are advancing fast along the same path. . . .

Investors who have put their money in foreign lands, upon terms which take full account of risks connected with the political conditions of the country, desire to use the resources of their Government to minimize these risks, and so to enhance the capital value and the interest of their private investments. The investing and speculative classes in general also desire that Great Britain should take other foreign areas under her flag in order to secure new areas for profitable investment and speculation.

From Louis L. Snyder, ed., The Imperialism Reader: Documents and Readings on Modern Expansionism (Princeton, N.J.: Van Nostrand, 1962), pp. 322-323.