Hobson's Theory of Empire

Question 1

How did “under-consumption” relate to Hobson’s theory of empire?

Answer 1

Hobson argued that under-consumption in the domestic market led to a surplus of goods and capital. In order to make this profitable, the capital was invested abroad to expand the market. This was then followed by formal empire as that was the “safest means of securing and developing such [new] markets”.

Question 2

What was driving the “under-consumption”?

Answer 2

• Industrial competition with other countries made it more difficult to dispose of the manufacturing and capital surplus. Stopped British monopoloy
• Inequality within the country was provoking under-consumption amongst the masses

Question 3

According to Hobson, who did the empire benefit?

Answer 3

Financiers - they were investing the capital abroad and getting returns from it since the government was shoring up the investment through empire

Question 4

According to Hobson, who did the empire not benefit?

Answer 4

The general population: the expansion comes at the expense of neglected agricultural and educational development as well as increasing urban density.

Question 5

How do financiers get politicians to pursue imperial policy according to Hobson?

Answer 5

They influence and manipulate them as well as public opinion. This forces them to be Jingoistic and imperalist. They have an economic influence over government.

Question 6

What are the two fundamental flaws with Hobson’s theory of empire?

Answer 6

• Empire, like anything, was never purely driven by economic reasons as Hobson suggests
• Hobson’s theory does not explain the relaxation of some parts of the empire in the mid-19th century

Question 7

Which investor and his company were crucial in extending British control in Western Africa?

Answer 7

George Goldie and the Royal Niger Company

Question 8

Which investor and his company were crucial in establishing a British presence in East Africa? What other investors backed him and pressured the government?

Answer 8

William Mackinnon - the Imperial East Africa Company

Backed by James Hutton, Henry Younger and George Mackenzie

Question 9

Which man and his company shaped British imperial policy in South Africa?

Answer 9

Cecil Rhodes and the British South Africa Company

Question 10

How much did foreign and colonial investments grow by between 1862 and 1893?

Answer 10

1862 - 144bn

1893 - 1.6tn

Question 11

After 1890, what kept Britain achieving a positive balance of payments?

Answer 11

Income from overseas investments

Question 12

How could the taking of Egypt in 1882 potentially support Hobson’s theory?

Answer 12

When Egypt faced bankruptcy in the 1870s, British capitalists wanted to shore up Egypt’s assets. Even William Gladstone (PM during the invasion) had a signficant investment portfolio in Suez canal shares.

Question 13

Where did Britain have a positive balance of trade with visible goods in the world?

Answer 13

Just Africa

Question 14

From whom did Disraeli get the money to purchase shares in the Suez canal in 1875? What proportion of shares did he buy for the government?

Answer 14

Rotschilds (large banking family with whom he had a personal connection)
44% of the shares in the Suez canal

Question 15

Between 1889 and 1903, what proportion of London’s population did Charles Booth find living in extreme poverty?

Answer 15

30%

Question 16

How many people did Rowntree find living under the poverty line in York in 1901?

Answer 16

20,000

Question 17

How was the empire a fiscal burden on the general population?

Answer 17

They faced higher taxes as the empire required subsidies for defence

Question 18

How could the case of Egypt be used to refute Hobson’s theory?

Answer 18

Intervention there came as a response to a nationalist uprising, not just from investor manipulation.
Likewise, the Suez Canal protected British strategic interests in India not just investment in the Canal.
Britain europeanised aspects of Egypt e.g. laws. Shows a cultural element to imperialism.
I.e. more than just economic reasons for imperial growth

Question 19

What was a non-economic driving factor for empire in Africa?

Answer 19

International rivalry and domestic politics

Question 20

Which investment returns were higher? Domestic or foreign?

Answer 20

Domestic

Question 21

Between 1856-99, what happened to British exports and imports with colonies?

Answer 21

They consistently declined

Question 22

What was General Gordon’s claim as to why he was intervening in Sudan for Britain?

Answer 22

He wanted to suppress the slave trade not defend investors.

Question 23

How is the invasion of Afghanistan in 1879 evidence against Hobson’s theory?

Answer 23

Afghanistan was invaded in order to protect British interests in India and to counteract Russian influence (not to defend investment there)

Question 24

What was Karl Marx’s theory of empire?

Answer 24

He saw empire as a progression of capitalist competition: firms have to accumulate more and more capital to fund investment to stay competitive. One way to remain competitive is to expand into other parts of the world where there are raw materials and cheaper sources of land and labour

Question 25

What was Luxemburg’s theory of imperalism?

Answer 25

She saw imperalism as a way to prolong capitalism. In capitalist societies, there was a problem of suppressed economic demand (under-consumption) which led these societies to seek new markets abroad in undeveloped nations. Conquest was necessary to force these nations to be turned into export markets from the previously agrarian non-capitalist ones.

Question 26

What was Lenin’s theory of imperialism?

Answer 26

Lenin placed the root of imperalism with monopoly capitalists. These form from the merging of bank capital with industrial captial. They then export capital abroad and empire is a way to protect this capital and ensure that these capitalists maintain a monopoly. The politicians are manipulated by this form of capitalist to expand the empire for them. Imperialsm “subordinates.. the small and medium”.