ABSTRACT
Hobson made some very important contributions to what we now term macroeconomics, the subject that deals with the economy as a whole, including issues such as the determination of the price level (and hence inflation), aggregate output and employment. We start with his theory of money, to which most commentators have paid scant attention,1 after which we turn to his much better-known theory of underconsumption.2 Hobson was, of course, concerned with many aspects of economics and his contributions to many of these formed part of a coherent system of thought. His theory of underconsumption, for example, was linked to his theory of distribution and it formed the basis for his views on imperialism and international trade. For reasons of space, however, and in order to focus attention on Hobson’s distinctive contributions to macroeconomics, these wider issues are neglected here. In addition, the focus here is on Hobson’s contribution to macroeconomic theory, leaving aside his contributions to debates on macroeconomic policy.
