READING
Imperialism:
A Study (1902)
J. A. Hobson
Chapter VI: The Economic Taproot of Imperialism
No mere array of facts and figures adduced to illustrate
the economic nature of the new Imperialism will suffice to dispel the popular
delusion that the use of national force to secure new markets by annexing fresh
tracts of territory is a sound and a necessary policy for an advanced
industrial country like Great Britain. [1] It has indeed been proved that
recent annexations of tropical countries, procured at great expense, have
furnished poor and precarious markets, that our aggregate trade with our
colonial possessions is virtually stationary, and that our most profitable and
progressive trade is with rival industrial nations, whose territories we have no
desire to annex, whose markets we cannot force, and whose active antagonism we
are provoking by our expansive policy.
But these arguments are not
conclusive. It is open to Imperialists to argue thus: “We must have markets for
our growing manufactures, we must have new outlets for the investment of our
surplus capital and for the energies of the adventurous surplus of our
population: such expansion is a necessity of life to a nation with our great
and growing powers of production. An ever larger share of our population is
devoted to the manufactures and commerce of towns, and is thus dependent for
life and work upon food and raw materials from foreign lands. In order to buy
and pay for these things we must sell our goods abroad. During the first
three-quarters of the nineteenth century we could do so without difficulty by a
natural expansion of commerce with continental nations and our colonies, all of
which were far behind us in the main arts of manufacture and the carrying
trades. So long as England held a virtual monopoly of the world markets for
certain important classes of manufactured goods, Imperialism was unnecessary.
After 1870 this manufacturing and trading supremacy was greatly impaired: other
nations, especially Germany, the United States, and Belgium, advanced with
great rapidity, and while they have not crushed or even stayed the increase of
our external trade, their competition made it more and more difficult to
dispose of the full surplus of our manufactures at a profit. The encroachments
made by these nations upon our old markets, even in our own possessions, made
it most urgent that we should take energetic means to secure new markets. These
new markets had to lie in hitherto undeveloped countries, chiefly in the
tropics, where vast populations lived capable of growing economic needs which
our manufacturers and merchants could supply. Our rivals were seizing and
annexing territories for similar purposes, and when they had annexed them
closed them to our trade. The diplomacy and the arms of Great Britain had to be
used in order to compel the owners of the new markets to deal with us: and
experience showed that the safest means of securing and developing such markets
is by establishing 'protectorates' or by annexation. The value in 1905 of these
markets must not be taken as a final test of the economy of such a policy; the
process of educating civilized needs which we can supply is of necessity a
gradual one, and the cost of such can supply is of necessity a gradual one, and
the cost of such Imperialism must be regarded as a capital outlay, the fruits
of which posterity would reap. The new markets might not be large, but they
formed serviceable outlets for the overflow of our great textile and metal
industries, and, when the vast Asiatic and African populations of the interior
were reached, a rapid expansion of trade was expected to result.
“Far larger and more important
is the pressure of capital for external fields of investment. Moreover, while
the manufacturer and trader are well content to trade with foreign nations, the
tendency for investors to work towards the political annexation of countries
which contain their more speculative investments is very powerful. Of the fact
of this pressure of capital there can be no question. Large savings are made
which cannot find any profitable investment in this country; they must find
employment elsewhere, and it is to the advantage of the nation that they should
be employed as largely as possible in lands where they can be utilized in
opening up markets for British trade and employment for British enterprise.
“However costly, however
perilous, this process of imperial expansion may be, it is necessary to the
continued existence and progress of our nation; [2] if we abandoned it we must
be content to leave the development of the world to other nations, who will
everywhere cut into our trade, and even impair our means of securing the food
and raw materials we require to support our population. Imperialism is thus
seen to be, not a choice, but a necessity.”
The practical force of this
economic argument in politics is strikingly illustrated by the later history of
the United States. Here is a country which suddenly broke through a
conservative policy, strongly held by both political parties, bound up with every
popular instinct and tradition, and flung itself into a rapid imperial career
for which it possessed neither the material nor the moral equipment, risking
the principles and practices of liberty and equality by the establishment of
militarism and the forcible subjugation of peoples which it could not safely
admit to the condition of American citizenship.
Was this a mere wild freak of
spread-eaglism, a burst of political ambition on the part of a nation coming to
a sudden realization of its destiny? Not at all. The spirit of adventure, the
American “mission of civilization,” were as forces [sic] making for
Imperialism, clearly subordinate to the driving force of the economic factor.
The dramatic character of the change is due to the unprecedented rapidity of
the industrial revolution in the United States from the eighties onwards.
During that period the United States, with her unrivalled natural resources,
her immense resources of skilled and unskilled labour, and her genius for
invention and organization, developed the best equipped and most productive
manufacturing economy the world has yet seen. Fostered by rigid protective
tariffs, her metal, textile, tool, clothing, furniture, and other manufactures
shot up in a single generation from infancy to full maturity, and, having
passed through a period of intense competition, attained, under the able
control of great trust-makers, a power of production greater than has been
attained in the most advanced industrial countries of Europe.
An era of cut-throat competition,
followed by a rapid process of amalgamation, threw an enormous quantity of
wealth into the hands of a small number of captains of industry. No luxury of
living to which this class could attain kept pace with its rise of income, and
a process of automatic saving set in upon an unprecedented scale. The
investment of these savings in other industries helped to bring these under the
same concentrative forces. Thus a great increase of savings seeking profitable
investment is synchronous with a stricter economy of the use of existing
capital. No doubt the rapid growth of a population, accustomed to a high and an
always ascending standard of comfort, absorbs in the satisfaction of its wants
a large quantity of new capital. But the actual rate of saving, conjoined with
a more economical application of forms of existing capital, exceeded
considerably the rise of the national consumption of manufactures. The power of
production far outstripped the actual rate of consumption, and, contrary to the
older economic theory, was unable to force a corresponding increase of
consumption by lowering prices.
This is no mere theory. The
history of any of the numerous trusts or combinations in the United States sets
out the facts with complete distinctness. In the free competition of
manufactures preceding combination the chronic condition is one of
“over-production,” in the sense that all the mills or factories can only be
kept at work by cutting prices down towards a point where the weaker
competitors are forced to close down, because they cannot sell their goods at a
price which covers the true cost of production. The first result of the
successful formation of a trust or combine is to close down the worse equipped
or worse placed mills, and supply the entire market from the better equipped
and better placed ones. This course may or may not be attended by a rise of
price and some restriction of consumption: in some cases trusts take most of
their profits by raising prices, in other cases by reducing the costs of
production through employing only the best mills and stopping the waste of
competition.
For the present argument it
matters not which course is taken; the point is that this concentration of
industry in “trusts,” “combines,” etc., at once limits the quantity of capital
which can be effectively employed and increases the share of profits out of
which fresh savings and fresh capital will spring. It is quite evident that a
trust which is motived by cut-throat competition, due to an excess of capital,
cannot normally find inside the “trusted” industry employment for that portion
of the profits which the trust-makers desire to save and to invest. New
inventions and other economies of production or distribution within the trade
may absorb some of the new capital, but there are rigid limits to this
absorption. The trust-maker in oil or sugar must find other investments for his
savings: if he is early in the application of the combination principles to his
trade, he will naturally apply his surplus capital to establish similar
combinations in other industries, economising capital still further, and
rendering it ever harder for ordinary saving men to find investments for their
savings.
Indeed, the conditions alike of
cut-throat competition and of combination attest the congestion of capital in
the manufacturing industries which have entered the machine economy. We are not
here concerned with any theoretic question as to the possibility of producing
by modern machine methods more goods than can find a market. It is sufficient to
point out that the manufacturing power of a country like the United States
would grow so fast as to exceed the demands of the home market. No one
acquainted with trade will deny a fact which all American economists assert,
that this is the condition which the United States reached at the end of the
century, so far, as the more developed industries are concerned. Her
manufactures were saturated with capital and could absorb no more. One after
another they sought refuge from the waste of competition in “combines” which
secure a measure of profitable peace by restricting the quantity of operative
capital. Industrial and financial princes in oil, steel, sugar, railroads,
banking, etc., were faced with the dilemma of either spending more than they
knew how to spend, or forcing markets outside the home area. Two economic
courses were open to them, both leading towards an abandonment of the political
isolation of the past and the adoption of imperialist methods in the future.
Instead of shutting down inferior mills and rigidly restricting output to
correspond with profitable sales in the home markets, they might employ their
full productive power, applying their savings to increase their business
capital, and, while still regulating output and prices for the home market, may
“hustle” for foreign markets, dumping down their surplus goods at prices which
would not be possible save for the profitable nature of their home market. So
likewise they might employ their savings in seeking investments outside their
country, first repaying the capital borrowed from Great Britain and other
countries for the early development of their railroads, mines and manufactures,
and afterwards becoming themselves a creditor class to foreign countries.
It was this sudden demand for
foreign markets for manufactures and for investments which was avowedly
responsible for the adoption of Imperialism as a political policy and practice
by the Republican party to which the great industrial and financial chiefs
belonged, and which belonged to them. The adventurous enthusiasm of President
Theodore Roosevelt and his “manifest destiny” and “mission of civilization”
party must not deceive us. It was Messrs. Rockefeller, Pierpont Morgan, and
their associates who needed Imperialism and who fastened it upon the shoulders
of the great Republic of the West. They needed Imperialism because they desired
to use the public resources of their country to find profitable employment for
their capital which otherwise would be superfluous.
It is not indeed necessary to
own a country in order to do trade with it or to invest capital in it, and
doubtless the United States could find some vent for their surplus goods, and
capital in European countries. But these countries were for the most part able
to make provision for themselves: most of them erected tariffs against
manufacturing imports, and even Great Britain was urged to defend herself by
reverting to Protection. The big American manufacturers and financiers were
compelled to look to China and the Pacific and to South America for their most
profitable chances; Protectionists by principle and practice, they would insist
upon getting as close a monopoly of these markets as they can secure, and the
competition of Germany, England, and other trading nations would drive them to
the establishment of special political relations with the markets they most
prize. Cuba, the Philippines, and Hawaii were but the hors d'œuvre to
whet an appetite for an ampler banquet. Moreover, the powerful hold upon
politics which these industrial and financial magnates possessed formed a
separate stimulus, which, as we have shown, was operative in Great Britain and
elsewhere; the public expenditure in pursuit of an imperial career would be a
separate immense source of profit to these men, as financiers negotiating
loans, shipbuilders and owners handling subsidies, contractors, and
manufacturers of armaments and other imperialist appliances.
The suddenness of this political
revolution is due to the rapid manifestation of the need. In the last years of
the nineteenth century the United States nearly trebled the value of its
manufacturing export trade, and it was to be expected that, if the rate of
progress of those years continued, within a decade it would overtake our more
slowly advancing export trade, and stand first in the list of manufacture
exporting nations. [3]
Year |
Agriculture |
Manufactures |
Miscellaneous |
|
£ |
£ |
£ |
1890 |
125,756,000 |
31,435,000 |
13,019,000 |
1891 |
146,617,000 |
33,720,000 |
11,731,000 |
1892 |
142,508,000 |
30,479,000 |
11,660,000 |
1893 |
123,810,000 |
35,484,000 |
11,653,000 |
1894 |
114,737,000 |
35,557,000 |
11,168,000 |
1895 |
104,143,000 |
40,230,000 |
12,174,000 |
1896 |
132,992,000 |
50,738,000 |
13,639,000 |
1897 |
146,059,000 |
55,923,000 |
13,984,000 |
1898 |
170,383,000 |
61,585,000 |
14,743,000 |
1899 |
156,427,000 |
76,157,000 |
18,002,000 |
1900 |
180,931,000 |
88,281,000 |
21,389,000 |
This was the avowed ambition, and
no idle one, of the keenest business men of America; and with the natural
resources, the labour and the administrative talents at their disposal, it was
quite likely they would achieve their object. [4] The stronger and more direct
control over politics exercised in America by business men enabled them to
drive more quickly and more straightly along the line of their economic
interests than in Great Britain. American Imperialism was the natural product
of the economic pressure of a sudden advance of capitalism which could not find
occupation at home and needed foreign markets for goods and for investments.
The same needs existed in
European countries, and, as is admitted, drove Governments along the same path.
Overproduction in the sense of an excessive manufacturing plant, and surplus
capital which could not find sound investments within the country, forced Great
Britain, Germany, Holland, France to place larger and larger portions of their
economic resources outside the area of their present political domain, and then
stimulate a policy of political expansion so as to take in the new areas. The
economic sources of this movement are laid bare by periodic trade-depressions
due to an inability of producers to find adequate and profitable markets for
what they can produce. The Majority Report of the Commission upon the
Depression of Trade in 1885 put the matter in a nutshell. “That, owing to the
nature of the times, the demand for our commodities does not increase at the
same rate as formerly; that our capacity for production is consequently in
excess of our requirements, and could be considerably increased at short
notice; that this is due partly to the competition of the capital which is
being steadily accumulated in the country.” The Minority Report straightly
imputed the condition of affairs to “over-production.” Germany was in the early
1900's suffering severely from what is called a glut of capital and of
manufacturing power: she had to have new markets; her Consuls all over the
world were “hustling” for trade; trading settlements were forced upon Asia
Minor; in East and West Africa, in China and elsewhere the German Empire was
impelled to a policy of colonization and protectorates as outlets for German
commercial energy.
Every improvement of methods of
production, every concentration of ownership and control, seems to accentuate
the tendency. As one nation after another enters the machine economy and adopts
advanced industrial methods, it becomes more difficult for its manufacturers,
merchants, and financiers to dispose profitably of their economic resources,
and they are tempted more and more to use their Governments in order to secure
for their particular use some distant undeveloped country by annexation and
protection.
The process, we may be told, is
inevitable, and so it seems upon a superficial inspection. Everywhere appear
excessive powers of production, excessive capital in search of investment. It
is admitted by all business men that the growth of the powers of production in
their country exceeds the growth in consumption, that more goods can be
produced than can be sold at a profit, and that more capital exists than can
find remunerative investment.
It is this economic condition of
affairs that forms the taproot of Imperialism. If the consuming public in this
country raised its standard of consumption to keep pace with every rise of
productive powers, there could be no excess of goods or capital clamorous to
use Imperialism in order to find markets: foreign trade would indeed exist, but
there would be no difficulty in exchanging a small surplus of our manufactures
for the food and raw material we annually absorbed, and all the savings that we
made could find employment, if we chose, in home industries.
There is nothing inherently
irrational in such a supposition. Whatever is, or can be, produced, can be
consumed, for a claim upon it, as rent, profit, or wages, forms part of the
real income of some member of the community, and he can consume it, or else
exchange it for some other consumable with some one else who will consume it.
With everything that is produced a consuming power is born. If then there are
goods which cannot get consumed, or which cannot even get produced because it
is evident they cannot get consumed, and if there is a quantity of capital and
labour which cannot get full employment because its products cannot get
consumed, the only possible explanation of this paradox is the refusal of
owners of consuming power to apply that power in effective demand for
commodities.
It is, of course, possible that
an excess of producing power might exist in particular industries by
misdirection, being engaged in certain manufactures, whereas it ought to have
been engaged in agriculture or some other use. But no one can seriously contend
that such misdirection explains the recurrent gluts and consequent depressions
of modern industry, or that, when over-production is manifest in the leading
manufactures, ample avenues are open for the surplus capital and labour in
other industries. The general character of the excess of producing power is
proved by the existence at such times of large bank stocks of idle money seeking
any sort of profitable investment and finding none.
The root questions underlying
the phenomena are clearly these: “Why is it that consumption fails to keep pace
automatically in a community with power of production?” “Why does
under-consumption or over-saving occur?” For it is evident that the consuming
power, which, if exercised, would keep tense the reins of production, is in
part withheld, or in other words is “saved” and stored up for investment. All
saving for investment does not imply slackness of production; quite the
contrary. Saving is economically justified, from the social standpoint, when
the capital in which it takes material shape finds full employment in helping
to produce commodities which, when produced, will be consumed. It is saving in excess
of this amount that causes mischief, taking shape in surplus capital which is
not needed to assist current consumption, and which either lies idle, or tries
to oust existing capital from its employment, or else seeks speculative use
abroad under the protection of the Government.
But it may be asked, “Why should
there be any tendency to over-saving? Why should the owners of consuming power
withhold a larger quantity for savings than can be serviceably employed?”
Another way of putting the same question is this, “Why should not the pressure
of present wants keep pace with every possibility of satisfying them?” The
answer to these pertinent questions carries us to the broadest issue of the
distribution of wealth. If a tendency to distribute income or consuming power
according to needs were operative, it is evident that consumption would rise
with every rise of producing power, for human needs are illimitable, and there
could be no excess of saving. But it is quite otherwise in a state of economic
society where distribution has no fixed relation to needs, but is determined by
other conditions which assign to some people a consuming power vastly in excess
of needs or possible uses, while others are destitute of consuming power enough
to satisfy even the full demands of physical efficiency. The following
illustration may serve to make the issue clear. “The volume of production has
been constantly rising owing to the development of modern machinery. There are
two main channels to carry off these products — one channel carrying off the
product destined to be consumed by the workers, and the other channel carrying
off the remainder to the rich. The workers' channel is in rock-bound banks that
cannot enlarge, owing to the competitive wage system preventing wages rising
pro rata with increased efficiency. Wages are based upon cost of living, and
not upon efficiency of labour. The miner in the poor mine gets the same wages
per day as the miner in the adjoining rich mine. The owner of the rich mine
gets the advantage — not his labourer. The channel which conveys the goods
destined to supply the rich is itself divided into two streams. One stream
carries off what the rich 'spend' on themselves for the necessities and
luxuries of life. The other is simply an 'overflow' stream carrying off their
'savings.' The channel for spending, i.e. the amount wasted by the rich in
luxuries, may broaden somewhat, but owing to the small number of those rich
enough to indulge in whims it can never be greatly enlarged, and at any rate it
bears such a small proportion to the other channel that in no event can much
hope of avoiding a flood of capital be hoped for from this division. The rich
will never be so ingenious as to spend enough to prevent over-production. The
great safety overflow channel which has been continuously more and more widened
and deepened to carry off the ever-increasing flood of new capital is that
division of the stream which carried the savings of the rich, and this is not
only suddenly found to be incapable of further enlargement, but actually seems
to be in the process of being dammed up.” [5]
Though this presentation
over-accentuates the cleavage between rich and poor and over-states the
weakness of the workers, it gives forcible and sound expression to a most important
and ill-recognised economic truth. The “overflow” stream of savings is of
course fed not exclusively from the surplus income of “the rich"; the
professional and industrial middle classes, and to some slight extent the
workers, contribute. But the “flooding” is distinctly due to the automatic
saving of the surplus income of rich men. This is of course particularly true
of America, where multi-millionaires rise quickly and find themselves in
possession of incomes far exceeding the demands of any craving that is known to
them. To make the metaphor complete, the overflow stream must be represented as
reentering the stream of production and seeking to empty there all the
“savings” that it carries. Where competition remains free, the result is a
chronic congestion of productive power and of production, forcing down home
prices, wasting large sums in advertising and in pushing for orders, and
periodically causing a crisis followed by a collapse, during which quantities
of capital and labour lie unemployed and unremunerated. The prime object of the
trust or other combine is to remedy this waste and loss by substituting
regulation of output for reckless over-production. In achieving this it
actually narrows or even dams up the old channels of investment, limiting the
overflow stream to the exact amount required to maintain the normal current of
output. But this rigid limitation of trade, though required for the separate
economy of each trust, does not suit the trust-maker, who is driven to
compensate for strictly regulated industry at home by cutting new foreign
channels as outlets for his productive power and his excessive savings. Thus we
reach the conclusion that Imperialism is the endeavour of the great controllers
of industry to broaden the channel for the flow of their surplus wealth by
seeing foreign markets and foreign investments to take off the goods and
capital they cannot sell or use at home.
The fallacy of the supposed
inevitability of imperial expansion as a necessary outlet for progressive
industry is now manifest. It is not industrial progress that demands the
opening up of new markets and areas of investment but mal-distribution of
consuming power which prevents the absorption of commodities and capital within
the country. The over-saving which is the economic root of Imperialism is found
by analysis to consist of rents, monopoly profits, and other unearned or
excessive elements of income, which, not being earned by labour of head or
hand, have no legitimate raison d'etre. Having no natural relation to
effort of production, they impel their recipients to no corresponding
satisfaction of consumption: they form a surplus wealth, which, having no
proper place in the normal economy of production and consumption, tends to
accumulate as excessive savings. Let any turn in the tide of politico-economic
forces divert from these owners their excess of income and make it flow, either
to the workers in higher wages, or to the community in taxes, so that it will
be spent instead of being saved, serving in either of these ways to swell the
tide of consumption — there will be no need to fight for foreign markets or
foreign areas of investment.
Many have carried their analysis
so far as to realise the absurdity of spending half our financial resources in
fighting to secure foreign markets at times when hungry mouths, ill-clad backs,
ill-furnished houses indicate countless unsatisfied material wants among our
own population. If we may take the careful statistics of Mr. Rowntree [6] for
our guide, we shall be aware that more than one-fourth of the population of our
towns is living at a standard which is below bare physical efficiency. If, by
some economic readjustment, the products which flow from the surplus saving of
the rich to swell the overflow streams could be diverted so as to raise the
incomes and the standard of consumption of this inefficient fourth, there would
be no need for pushful Imperialism, and the cause of social reform would have
won its greatest victory.
It is not inherent in the nature
of things that we should spend our natural resources on militarism, war, and
risky unscrupulous diplomacy, in order to find markets for our goods and
surplus capital. An intelligent progressive community, based upon substantial
equality of economic and educational opportunities, will raise its standard of
consumption to correspond with every increased power of production, and can
find full employment for an unlimited quantity of capital and labour within the
limits of the country which it occupies. Where the distribution of incomes is
such as to enable all classes of the nation to convert their felt wants into an
effective demand for commodities, there can be no over-production, no
under-employment of capital and labour, and no necessity to fight for foreign
markets.
The most convincing condemnation
of the current economy is conveyed in the difficulty which producers everywhere
experience in finding consumers for their products: a fact attested by the
prodigious growth of classes of agents and middlemen, the multiplication of
every sort of advertising, and the general increase of the distributive
classes. Under a sound economy the pressure would be reversed: the growing
wants of progressive societies would be a constant stimulus to the inventive
and operative energies of producers, and would form a constant strain upon the
powers of production. The simultaneous excess of all the factors of production,
attested by frequently recurring periods of trade depression, is a most
dramatic exhibition of the false economy of distribution. It does not imply a
mere miscalculation in the application of productive power, or a brief
temporary excess of that power; it manifests in an acute form an economic waste
which is chronic and general throughout the advanced industrial nations, a waste
contained in the divorcement of the desire to consume and the power to consume.
If the apportionment of income
were such as to evoke no excessive saving, full constant employment for capital
and labour would be furnished at home. This, of course, does not imply that
there would be no foreign trade. Goods that could not be produced at home, or
produced as well or as cheaply, would still be purchased by ordinary process of
international exchange, but here again the pressure would be the wholesome
pressure of the consumer anxious to buy abroad what he could not buy at home,
not the blind eagerness of the producer to use every force or trick of trade or
politics to find markets for his “surplus” goods.
The struggle for markets, the
greater eagerness of producers to sell than of consumers to buy, is the
crowning proof of a false economy of distribution. Imperialism is the fruit of
this false economy; “social reform” is its remedy. The primary purpose of
“social reform,” using the term in its economic signification, is to raise the
wholesome standard of private and public consumption for a nation, so as to
enable the nation to live up to its highest standard of production. Even those
social reformers who aim directly at abolishing or reducing some bad form consumption,
as in the Temperance movement, generally recognise the necessity of
substituting some better form of current consumption which is more educative
and stimulative of other tastes, and will assist to raise the general standard
of consumption.
There is no necessity to open up
new foreign markets; the home markets are capable of indefinite expansion.
Whatever is produced in England can be consumed in England, provided that the
“income” or power to demand commodities, is properly distributed. This only appears
untrue because of the unnatural and unwholesome specialisation to which this
country has been subjected, based upon a bad distribution of economic
resources, which has induced an overgrowth of certain manufacturing trades for
the express purpose of effecting foreign sales. If the industrial revolution
had taken place in an England founded upon equal access by all classes to land,
education and legislation, specialisation in manufactures would not have gone
so far (though more intelligent progress would have been made, by reason of a
widening of the area of selection of inventive and organising talents); foreign
trade would have been less important, though more steady; the standard of life
for all portions of the population would have been high, and the present rate
of national consumption would probably have given full, constant, remunerative
employment to a far larger quantity of private and public capital than is now
employed. [7] For the over-saving or wider consumption that is traced to
excessive incomes of the rich is a suicidal economy, even from the exclusive
standpoint of capital; for consumption alone vitalises capital and makes it
capable of yielding profits. An economy that assigns to the “possessing”
classes an excess of consuming power which they cannot use, and cannot convert
into really of serviceable capital, is a dog-in-the-manger policy. The social
reforms which deprive the possessing classes of their surplus will not,
therefore, inflict upon them the real injury they dread; they can only use this
surplus by forcing on their country a wrecking policy of Imperialism. The only
safety of nations lies in removing the unearned increments of income from the
possessing classes, and adding them to the wage-income of the working classes
or to the public income, in order that they may be spent in raising the
standard of consumption.
Social reform bifurcates,
according as reformers seek to achieve this end by raising wages or by
increasing public taxation and expenditure. These courses are not essentially
contradictory, but are rather complementary. Working-class movements aim,
either by private co-operation or by political pressure on legislative and
administrative government, at increasing the proportion of the national income
which accrues to labour in the form of wages, pensions, compensation for
injuries, etc. State Socialism aims at getting for the direct use of the whole
society an increased share of the “social values” which arise from the closely
and essentially co-operative work of an industrial society, taxing property and
incomes so as to draw into the public exchequer for public expenditure the
“unearned elements” of income, leaving to individual producers those incomes
which are necessary to induce them to apply in the best way their economic
energies, and to private enterprises those businesses which do not breed
monopoly, and which the public need not or cannot undertake. These are not,
indeed, the sole or perhaps the best avowed objects of social reform movements.
But for the purposes of this analysis they form the kernel.
Trade Unionism and Socialism are
thus the natural enemies of Imperialism, for they take away from the
“imperialist” classes the surplus incomes which form the economic stimulus of
Imperialism.
This does not pretend to be a
final statement of the full relations of these forces. When we come to
political analysis we shall perceive that the tendency of Imperialism is to
crush Trade Unionism and to “nibble” at or parasitically exploit State
Socialism. But, confining ourselves for the present to the narrowly economic
setting, Trade Unionism and State Socialism may be regarded as complementary
forces arrayed against Imperialism, in as far as, by diverting to working-class
or public expenditure elements of income which would otherwise be surplus
savings, they raise the general standard of home consumption and abate the
pressure for foreign markets. Of course, if the increase of working-class
income were wholly or chiefly “saved,” not spent, or if the taxation of
unearned incomes were utilised for the relief of other taxes borne by the
possessing classes, no such result as we have described would follow. There is,
however, no reason to anticipate this result from trade-union or socialistic
measures. Though no sufficient natural stimulus exists to force the well-to-do
classes to spend in further luxuries the surplus incomes which they save, every
working-class family is subject to powerful stimuli of economic needs, and a
reasonably governed State would regard as its prime duty the relief of the
present poverty of public life by new forms of socially useful expenditure.
But we are not here concerned
with what belongs to the practical issues of political and economic policy. It
is the economic theory for which we claim acceptance — a theory which, if
accurate, dispels the delusion that expansion of foreign trade, and therefore
of empire, is a necessity of national life.
Regarded from the standpoint of
economy of energy the same “choice of life” confronts the nation as the
individual. An individual may expend all his energy in acquiring external
possessions, adding field to field, barn to barn, factory to factory — may
“spread himself” over the widest area of property, amassing material wealth
which is in some sense “himself” as containing the impress of his power and
interest. He does this by specialising upon the lower acquisitive plane of
interest at the cost of neglecting the cultivation of the higher qualities and
interests of his nature. The antagonism is not indeed absolute. Aristotle has
said, “We must first secure a livelihood and then practise virtue.” Hence the
pursuit of material property as a reasonable basis of physical comfort would be
held true economy by the wisest men; but the absorption of time, energy, and
interest upon such quantitative expansion at the necessary cost of starving the
higher tastes and faculties is condemned as false economy. The same issue comes
up in the business life of the individual: it is the question of intensive
versus extensive cultivation. A rude or ignorant farmer, where land is
plentiful, is apt to spread his capital and labour over a large area, taking in
new tracts and cultivating them poorly. A skilled, scientific farmer will study
a smaller patch of land, cultivate it thoroughly, and utilise its diverse
properties, adapting it to the special needs of his most remunerative markets.
The same is true of other businesses; even where the economy of large-scale
production is greatest there exists some limit beyond which the wise business
man will not go, aware that in doing so he will risk by enfeebled management
what he seems to gain by mechanical economies of production and market.
Everywhere the issue of
quantitative versus qualitative growth comes up. This is the entire issue of
empire. A people limited in number and energy and in the land they occupy have
the choice of improving to the utmost the political and economic management of
their own land, confining themselves to such accessions of territory as are
justified by the most economical disposition of a growing population; or they
may proceed, like the slovenly farmer, to spread their power and energy over
the whole earth, tempted by the speculative value or the quick profits of some
new market, or else by mere greed of territorial acquisition, and ignoring the
political and economic wastes and risks involved by this imperial career. It
must be clearly understood that this is essentially a choice of alternatives; a
full simultaneous application of intensive and extensive cultivation is impossible.
A nation may either, following the example of Denmark or Switzerland, put
brains into agriculture, develop a finely varied system of public education,
general and technical, apply the ripest science to its special manufacturing
industries, and so support in progressive comfort and character a considerable
population upon a strictly limited area; or it may, like Great Britain, neglect
its agriculture, allowing its lands to go out of cultivation and its population
to grow up in towns, fall behind other nations in its methods of education and
in the capacity of adapting to its uses the latest scientific knowledge, in
order that it may squander its pecuniary and military resources in forcing bad
markets and finding speculative fields of investment in distant corners of the
earth, adding millions of square miles and of unassimilable population to the
area of the Empire.
The driving forces of class
interest which stimulate and support this false economy we have explained. No
remedy will serve which permits the future operation of these forces. It is
idle to attack Imperialism or Militarism as political expedients or policies
unless the axe is laid at the economic root of the tree, and the classes for
whose interest Imperialism works are shorn of the surplus revenues which seek
this outlet.
[1] Written in
1905.
[2] "And why,
indeed, are wars undertaken, if not to conquer colonies which permit the
employment of fresh capital, to acquire commercial monopolies, or to obtain the
exclusive use of certain highways of commerce?” (Loria, Economic Foundations
of Society, p. 267).
[3] Post-war
conditions, with the immense opportunities afforded for exports of American
goods and capital brought a pause and a temporary withdrawal from imperialist
policy.
[4] "We hold
now three of the winning cards in the game for commercial greatness, to
wit-iron, steel and coal. We have long been the granary of the world, we now
aspire to be its workshop, then we want to be its clearing-house.” (The
President of the American Bankers' Association at Denver, 1898.)
[5] The
Significance of the Trust, by H. G. Wilshire.
[6] Poverty:
A Study of Town Life.
[7] The classical
economist of England, forbidden by their theories of parsimony and of the
growth of capital to entertain the notion of an indefinite expansion of home
market by reason of a constantly rising standard of national comfort were,
early driven to countenance a doctrine of the necessity of finding external
markets for the investment of capital. So J. S. Mill: “The expansion of capital
would soon reach its ultimate boundary if the boundary itself did not
continually open and leave more space” (Political Economy). And before
him Ricardo (in letter to Malthus): “If with every accumulation of capital we
could take a piece of fresh fertile land to our island, profits would never
fall.”