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Economic Manipulation:
J.A. Hobson's Theory
on the Role of Economic and
Other Forces in Imperialism

by
Tom Goldstein

Beginning around 1870, the major European powers Great Britain, France, Germany, Portugal, Belgium, Italy, Russia, and the Netherlands began carving up those areas of the globe inhabited by what they saw as "uncivilized" peoples. Thus European imperialism extended its rule of considerable portions of Africa and Asia. By the dawn of the twentieth century, many theories arose as to the causes of this new wave of imperialism. John Atkinson Hobson, who lived through this era of high imperialism, presented in his 1902 work, Imperialism: A Study, his own theory as to why this phenomenon was occurring. The purpose of this paper is to explore his theory on imperialism, following his logic and explaining why he draws the conclusions he does. In Imperialism, Hobson observes that imperialism is inefficient for Britain; it yields no great return or economic benefit to most people living in the imperial power, and Hobson seeks to determine why such an unprofitable system exists. According to Hobson's theory, imperialism arises from the generation of under-consumption and over-saving in the capitalistic economy of the home country. Powerful financiers seek investment opportunities with a high rate of return for their excess savings, driving them to invest in the "uncivilized" lands of Africa and Asia. These investors, looking to minimize risks on their investments while maintaining their high rate of return, use their influence to force their government to provide military protection and eventually to annex outright the areas in which they have invested. Thus, imperialism exists to further the interests of the investor class at the expense of the rest of the nation.

Hobson argues that despite the fact that most people do not benefit from imperialism, the rest of the nation supports these pursuits because of other, non-economic forces such as a sense of moral duty, religion, nationalism, the primitive human need for


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