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Trade Wars Are Strategic Sector Wars

Trade Wars Are Class Wars: How Rising Inequality
Distorts the Global Economy and Threatens International Peace
by Matthew C. Klein and Michael Pettis
Yale University Press, 2020, 269 pages

Are globalization, rising inequality, and populist backlashes against trade linked? According to the dominant narrative in trans­atlantic media and academic circles, the transfer of manufacturing and some services from First World countries to developing nations like China benefits all of humanity in the long run. In the short run, how­ever, the winners include everyone in developing countries together with those in secure “knowledge economy” jobs in the First World. Unfortunately, there are also a few losers, the “left behind” in former First World manufacturing regions like the U.S. Midwest and similar rust belts in Europe. To prevent them from wrecking the global econ­omy by supporting populism and protectionism, the losers of global­ization must be retrained for well-paying postindustrial jobs (“learn to code”). If that is not possible, their pain should be anesthetized by more redistributive welfare spending.

In Trade Wars Are Class Wars, Matthew C. Klein—an economics commentator at Barron’s—and Michael Pettis—a senior fellow at the Carnegie Endowment for International Peace, a professor of finance at Peking University, and one of the world’s most respected experts on the Chinese economy—persuasively dismantle this conventional wisdom about globalization. Klein and Pettis focus on trade imbalances—in particular, the interaction of the chronic trade surpluses of China and Germany with the chronic trade deficits of the United States:

This has been the defining problem of the past few decades: people in certain countries [like China and Germany] are spending too little and saving too much. This is not because their households are especially thrifty or because their governments are unusually prudent. It is not even because their busi­nesses are rationally responding to the dearth of attractive opportunities. Rather, it is because of choices made by elites within those countries that transfer wealth and income away from people who would spend more on goods and services, such as workers and pensioners, to those, such as the rich, who would instead use extra income to accumulate additional finan­cial assets. This imposes an untenable choice on the rest of the world: absorb the glut through additional spending (saving less) or endure a slump caused by insufficient global demand.

Winners and Losers of Globalization

Since the beginning of the Industrial Revolution in eighteenth-century Britain, successful countries have transitioned from agrarian to industrial economies by means of state-sponsored economic strate­gies. The most common has been import substitution industrialization, the use of tariffs or other barriers to imports to force national consumers to buy the products of favored domestic manufacturers rather than those made abroad. This protectionist strategy is how Britain before the 1840s, the United States and Germany in the late nineteenth and early twentieth centuries, and many Latin Ameri­can countries after World War II initially built up their manufacturing bases. Other countries, like Japan, South Korea, Taiwan, China, and contemporary Germany to a degree, have combined formal or in­formal protection of their home markets with aggressive export promotion strategies.

In addition, Klein and Pettis argue that industrializing nations have had a choice between high-wage and high-savings approaches to development. The northern states in the industrializing United States exemplified the high-wage model. American wage earners and family farmers in the Northeast and Midwest had high incomes, by global standards. They, along with much poorer white and black southerners, provided the home market for U.S. infant industries which were protected from foreign competition by a wall of tariffs until after World War II.

More common has been the high-savings model, in which the incomes of workers and farmers are deliberately suppressed by the modernizing state in order to free resources for state-sponsored industrial and infrastructure development. The most brutal versions of this strategy were the crash programs of collectivization and indus­trialization undertaken by the Soviet Union, which succeeded in building up manufacturing at the price of horrifying repression and the starvation of millions.

“Japan developed a more humane variant of the high-savings mod­el after World War II,” Klein and Pettis write. The Little Tigers (South Korea, Taiwan, and Singapore) and post-Maoist China have adopted variants of the same modernization strategy, biased toward investment in manufacturing or infrastructure rather than higher consumption for the wage-earning majority of the kind that would be made possible by higher wages or more spending on public goods like social insurance. With the Hartz IV reforms that moderated benefits and unemployment insurance in 2003, Germany, a developed coun­try, has followed a similar strategy of suppressing worker incomes and consumption to maintain the competitiveness of its industries.

As in Goethe’s poem “The Sorcerer’s Apprentice,” an initially successful process can get out of control. Long after the strategy has succeeded and the country has caught up with other industrialized nations, the favored industries may have the political clout to keep the system going, cranking out gluts of manufactured goods while other social needs go unmet. If a country tries to export more than it imports, the result will inevitably be a painful adjustment of excess supply to insufficient demand.

This outcome can be postponed, however, as long as some trading partners of the export-promoting states are content to absorb their exports, at the expense of running chronic trade deficits and losing much of their own industry to import competition. Klein and Pettis document in detail how the United States in particular, since the late twentieth century, has been an enabler of surplus countries like China and Germany.

In essence, the surplus countries have engaged in a form of vendor finance by taking advantage of the status of the dollar as the world’s reserve currency. Rather than lend money directly to American con­sumers to buy imports, the exporters—China, in particular—recycled their surplus profits by investing in dollar-denominated assets like Treasury bonds and Wall Street financial products. This enabled low­er U.S. interest rates, which in turn enabled American consumers to borrow more money from the U.S. financial sector to supplement their stagnant incomes and purchase imports or, in some cases, houses they could not otherwise afford. At the same time, the growing indebtedness of American consumers to American lenders ballooned the income and political power of the U.S. financial industry, while the import-battered American manufacturing industry dwindled in economic and political importance.

This explains the “class war” in the book’s title, Trade Wars Are Class Wars. Contrary to the neoliberal conventional wisdom, the win­ners of globalization are not Chinese manufacturing workers and American knowledge workers. Rather, the winners are elites—the managers and capitalists of hyper-industrial China, and the rentiers of the swollen U.S. financial sector. The losers are the underpaid factory workers of China, Germany, and other countries with chronic trade surpluses, along with former American industrial workers forced out of well-paid, unionized manufacturing jobs into low-wage service jobs or permanent unemployment.

Trade, Imperialism, and Conflict:
Assessing the Hobson Thesis in the Twenty-First Century

As an account of the toxic interaction of unbalanced national devel­opment strategies with the dollar-based financial system in today’s global economy, Trade Wars Are Class Wars is brilliant and convincing. But the broader historical analysis in the book is flawed.

Klein and Pettis devote a number of pages to arguing that there is a parallel between the economic strategies of twenty-first century Chi­na and Germany and the imperialism of the major Western countries, including the United States, in the era of the Scramble for Africa and the Spanish-American War more than a century ago:

According to the British economist and social critic John A. Hobson, the need to find outlets for “surplus capital which cannot find sound investments within the country” was the central explanation for American and European imperialism. . . . Income concentration gave the rich “an excess of consuming power which they cannot use” at the expense of everyone else. . . . Rich savers therefore had to search abroad to find “new areas for profitable investment and speculation.” Eventually, this search encouraged powerful domestic interests 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.1

A maverick polemicist on the liberal left of British politics in the 1900s, Hobson expressed some striking insights in Imperialism: A Study (1902). For example, he envisioned the possibility of the mass offshoring of industry from the West to China that took place in recent decades and the concomitant rise of a postindustrial rentier class in the West.2 Nevertheless, Hobson likely would be forgotten today if Vladimir Lenin had not relied on his arguments and data as the basis for his own tract Imperialism, the Highest Stage of Capitalism (1917). Going well beyond Hobson, Lenin asserted that monopoly capitalism inevitably led to competition among the capitalist pow­ers for colonies and wars like the First World War. What has been known for a century as “the Hobson-Lenin thesis” is more Lenin than Hobson.

In Imperialism, Hobson summarized his thesis about inequality and underconsumption as the indirect cause of imperialism and colonialism and concluded that “there is no necessity to open up new foreign markets” because “whatever is produced in England is con­sumed in England.” But only nine years after he published Imperialism, in his book Economic Interpretation of Investment (1911), Hobson completely abandoned his earlier argument that domestic underconsumption drives imperialism and declared that the investment of foreign capital in a developing country “is always beneficial to the country itself, to the industrial world at large (by increasing world trade), and the investing country in particular.”3 Daniel H. Kruger summarizes Hobson’s argument in Economic Interpretation of Investment: “Though other non-economic motives might eventually bring about an organized endeavor to expel Western political and financial control from the backward areas, a prolonged utilization of Western capital would afford the strongest assurance of pacific development in which all the creditor nations would take their share of profitable exploitation. . . . [T]he capitalist countries investing capi­tal in the backward areas would make for peace and good government in proportion as finance grew more distinctively international.” Com­pleting the startling reversal of his earlier argument in Imperialism, Hobson in 1911 praised foreign investment for allowing home industries to produce goods for both domestic and foreign markets.4

While he was extremely inconsistent in his economic views, Hob­son was consistent in his anti-Semitism. Unfortunately, this is not easily dismissed as an idiosyncratic prejudice that can be separated from the views of capitalism and imperialism for which he is known today. In The War in South Africa: Its Causes and Effects (1900), Hobson attributed the Boer War explicitly to the machinations of Jewish investors and media tycoons: “[T]he wider and ever-growing Jewish control of other organs of the press warrants a suspicion that the direct economic nexus between the English press and Rand fi­nance is far stronger than is actually known.”5

Two years later, in Imperialism, Hobson repeated the same theme in language reminiscent of The Protocols of the Elders of Zion, assert­ing that the international financial system was “controlled, so far as Europe is concerned, by men of a single and peculiar race, who have behind them many centuries of financial experience, [who] are in a unique position to control the policy of nations.” Not only did Jews “control the policy of nations,” but also, “There is not a war, a revo­lution, an anarchist assassination, or any other public shock, which is not gainful to these men; they are harpies who suck their gains from every new forced expenditure and every sudden disturbance of public credit.” Hobson asked: “Does anyone seriously suppose that a great war could be undertaken by any European state, or a great state loan subscribed, if the house of Rothschild and its connections set their face against it?”6 In his 1918 satire 1920: Dips into the Near Future, writing under the pseudonym Lucian, Hobson mocked Zionism as “the ceremonial return of the Chosen People to the City of Their Choice” and imagined a pilgrimage of South African Jews bearing “share certificates” to “the New Jerusalem.”7 Hobson’s attitude to­ward Jews became a subject of controversy in British politics in 2018, when Jeremy Corbyn, then the leader of the Labour Party, published a preface to a new edition of Imperialism.

Whatever Hobson himself believed, the Hobson Thesis has been understood for most of the past century, by advocates and critics alike, as a theory about the dynamics of capitalism, regardless of the ethnicity of the capitalists. Lenin’s version of it became orthodoxy for many Marxist-Leninists around the world. Other variants of Hob­sonism have been embraced by liberals, populists, and noncommunist socialists because it confirms their views that one set of things they dislike, wars and empires, must be caused by other things they dislike, business and banking. The alleged link between underconsumption and imperialism inspired the progressive isolationist historian Charles Beard to promote “the Open Door at Home” as an alternative to foreign trade and military intervention in the 1930s, as did the social­ist historian William Appleman Williams in the next generation.8

Scholarly historians of imperialism, investment, and trade have found the underconsumption theory of imperialism less persuasive. In “The Imperialism of Free Trade,” published in the Economic History Review in 1953, John Gallagher and Ronald Robinson argued that neither the Scramble for Africa (Hobson’s immediate subject) nor British territorial annexations in general could be explained by Hob­son’s theory that the British government had been captured by a cabal of investors exporting capital to undeveloped regions like Africa.9 British investment and emigration went overwhelmingly to the Unit­ed States and the “white dominions”—Canada, Australia, and New Zealand.

Between the 1840s, when it abandoned protectionism and mer­cantilism, and World War I, the British Empire typically promoted free trade and equal investment rights for investors of all countries, not just its own, in the regions that it informally dominated and policed. What became the “Monroe Doctrine” for Latin America dur­ing the Monroe administration and the “Open Door” doctrine of the McKinley administration (regarding China) both originated with suggestions by British officials to American policymakers that the United States cooperate with Britain in preventing the economic clo­sure of the western hemisphere and China by continental European powers.

By 1914, British African possessions provided only 8 percent of British imports and received only 5.26 percent of British exports.10 The extension of British power inland from coastal enclaves between the 1880s and 1900s can be explained chiefly in terms of preemptive annexation triggered by fears of German and French expansion in the African continent, a strategic policy enabled by new technologies like quinine for malaria, steamships, railroads, and Gatling guns, rather than by the political machinations of capitalists and press lords, Jew­ish or otherwise.

In the case of India, British capital exports and British colonialism were indeed linked, but in a way quite different from the method that Hobson thought that he had identified. India was important to Brit­ain as an exporter in its own right, as Utsa Patnaik has explained:

Britain shored up demand in the world outside its colonies, by continuously running current account deficits with the Euro­pean Continent and the USA, and later with the other regions of European settlement—Argentina, Australia and Canada. It would have been impossible for Britain, at the same time, to have exported capital to these regions, as it did, thereby devel­oping them rapidly, and thereby also incurring even larger and rising balance of payments deficits with them, without access to the enormous exchange earnings of colonised lands which were transferred to Britain to offset deficits and substantially finance its capital exports.11

To further this complex, finance-driven triangular trade, Britain ar­ranged for India to export opium to China and later cotton to industrializing Japan, while siphoning off India’s foreign exchange earnings for British benefit. By 1914, British India had the second largest export earnings in the world after the United States.12

The Hobson Thesis does not explain the Spanish-American War any more than it explains the Scramble for Africa. German-American naval rivalry over strategic ports in the Pacific and Caribbean explains the timing of the U.S. annexations of Hawaii and Samoa and the seizure of strategic ports in Cuba, Puerto Rico, and the Philippines better than the alleged desire of U.S. corporations for foreign markets for their surplus goods in . . . Puerto Rico?

Klein and Pettis are not the only contemporary thinkers to try to revive the Hobson thesis as a sweeping explanation of historical events, however. They cite a 2017 paper by the economists Branko Milanović, Thomas Hauner, and Suresh Naidu, who write:

Using recent data, we show 1) inequality was at historical highs in all the advanced belligerent countries at the turn of the century, 2) rich wealth holders invested more of their assets abroad, 3) risk-adjusted foreign returns were higher than risk adjusted domestic returns, 4) establishing direct political con­trol decreased the riskiness of foreign assets, 5) increased ine­quality was associated with higher share of foreign assets in GDP, and 6) increased share of foreign assets was correlated with higher levels of military mobilization. Together, these facts suggest that the classic theory of imperialism may have some empirical support.13

But correlation is not causation. It is hardly surprising that the in­dustrialized great powers of Europe simultaneously had more for­eign investment, greater inequality, and could afford bigger mili­taries than poorer, less industrialized countries before 1914. This does not confirm the Hobson thesis that capitalists seeking protection for their foreign investments were the main drivers of imperialism, much less Lenin’s theory that monopoly capitalism caused the First World War.

Lenin to the contrary, World War I was not simply the result of colonial rivalries, all of which, from the Balkans to the Pacific and Africa, had been settled peacefully before 1914 by negotiations in­volving various European powers and sometimes the United States. As German thinkers of the World War I era like Otto von Hintze and Friedrich Naumann, along with later historians including Fritz Fisch­er, John Rohl, and Ludwig Dehio, have explained, the leaders of Imperial Germany wanted their country to become a “world power” like the British Empire, the Russian Empire, and the United States. Because it was too small to be more than a medium-sized power in the future, Germany could become a global superpower only by smashing Russia and France and consolidating Europe into a Ger­man‑led bloc. The crisis of relations between Germany’s client state Austria-Hungary and Russia that followed the assassination of Arch­duke Ferdinand in 1914 was just an excuse for a German policy of European conquest which the kaiser and his government for years had considered launching on one pretext or another.14

Let us give Hobson himself the last word. In his autobiography, Confessions of an Economic Heretic (1938), published at the age of eighty, he admitted that “by enlisting my combative instincts in defence of my heretical views of capitalism as a source of unjust dis­tribution, oversaving, and an economic impulsion to adventurous imperialism, it led me for a time to an excessive and too simple advocacy of the economic determination of history.”15

The Contest for Strategic Industries

Trade Wars Are Class Wars is a good book that would have been better if Klein and Pettis had not sought to build the dubious Hobson Thesis into a general theory of modern global economic and geopolitical history. The sections attributing nineteenth-century imperialism to capital exports made possible by underconsumption could be excised from the text without harm to the essential argument that national industrial development policies carried out by particular countries can have horrendous side effects for the global economy, exacerbated by the use of the dollar as a reserve currency. This is a valid and important thesis, but it owes far more to John Maynard Keynes, whom they also cite, than to John A. Hobson.

“Absorbing the rest of the world’s excess output and savings—at the cost of deindustrialization and financial crises—has been America’s exorbitant burden,” they write. “When the system was first con­structed, the U.S. economy was about equal in size to the entire rest of the world. Today, however, the United States makes up less than a quarter of global output.”

The present system of global trade and finance is unsustainable and must either be reformed or abandoned. Klein and Pettis hope that it can be reformed—mainly by the evolution of major surplus countries like China and Germany away from export- and infrastructure-led growth toward more domestic demand-driven growth. Given the resistance of vested interests to change, Klein and Pettis suggest that China and Germany may need to be pressured into raising the in­comes of workers and consumers: “The deficit countries must find a way to force the elites in the surplus countries to internalize the costs of their behavior, and they must do so in the face of substantial opposition from their own elites.”

One form of external pressure on the surplus countries could be the adoption of capital controls by nations with chronic trade deficits. Klein and Pettis note that governments in New Zealand, Canada, and Australia have imposed limits on foreign purchases of housing assets. They also draw attention to support among some Democrats and Republicans for a “market access charge” that would lower the U.S. trade deficit indirectly by reducing foreign investment in U.S. assets.

Klein and Pettis are right to argue that all sides can win if current account imbalances are reduced by a redistribution of income down­ward to working class majorities in all countries that results in an expansion of global consumer demand. But the reduction of global current account imbalances, either by the downward redistribution of income within China and Germany or unilateral retaliation by the United States and other deficit countries, would eliminate only one source of trade disputes. Another, ultimately more fundamental source of international economic conflict would remain—the compe­tition among nations and blocs for global market shares of strategic indus­tries.

The contest among nations and blocs for shares of specific indus­tries is by nature a zero-sum game. A bigger relative share of the global drone market for China means a smaller one for the United States. To the extent that drone manufacturing is essential for defense, the competition for relative productive capacity acquires military as well as commercial significance. In the case of rivalries over strategic industries and supply chains, there can be negotiated truces among military and commercial rivals, but there is no harmonious win-win situation.

Trade wars over strategic industries are sector wars, not class wars. Sectoral trade wars do not pit the rich against the poor. They pit everyone in one productive sector in a country against everyone in another—for example, American farmers (investors, managers, and employees) against American manufacturers (investors, managers, and employees). And they create transnational alliances among complementary national industries. China’s government has learned from Japanese trade negotiators to try to head off U.S. industrial protectionism by promising to import more U.S. farm products.

The damage done by the macroeconomic imbalances that Klein and Pettis describe should not be minimized; after all, these imbalances contributed to the asset bubbles that brought down the world economy when they popped in 2008. Even so, the composition of exports and imports is ultimately of greater importance to the national security and prosperity of a country than balanced overall trade. U.S. trade with China could be perfectly balanced, but most Americans other than libertarians would consider it a disaster if a deindustrialized U.S. imported all of its manufactured goods from China and other countries while exporting commodities and natural resources like soybeans, corn, oil, and gas, plus tourism (which is counted as an export by the U.S. government). The elimination of bilateral and global trade deficits by itself is not enough to prevent the U.S. from degenerating into a postindustrial resource colony and tourist trap for industrial Asia and industrial Europe.

Klein and Pettis favorably cite John Maynard Keynes’s failed plan for the post–World War II global financial system, which would have automatically taxed countries running persistent trade surpluses via an international clearing house using a new global reserve currency, the bancor. They neglect to note, however, that from the 1920s onward Keynes was skeptical about free trade.

Keynes recognized the distinction between the two issues of unbalanced trade and strategic trade. For both problems, he favored unilateral national protectionism in some circumstances as a legitimate cure. In the case of unbalanced trade, Keynes believed that tariffs imposed by deficit countries could be justified, but only as short-term measures, and they might be unnecessary if the same result could be achieved by currency devaluation.

In addition, Keynes favored the use of targeted, sector-specific tariffs to promote or preserve important national industries as part of strategic national industrial policies. In the 1930s, Keynes argued for a British economic plan that would include protection of strategic industries including automobiles, iron, steel, and agriculture.16 In his 1933 essay “National Self-Sufficiency,” Keynes rejected the nineteenth-century ideology of free trade in favor of economic nationalism:

A considerable degree of international specialization is neces­sary in a rational world in all cases where it is dictated by wide differences of climate, natural resources, native aptitudes, level of culture and density of population. But over an increasingly wide range of industrial products, and perhaps of agricultural products also, I have become doubtful whether the economic cost of national self-sufficiency is great enough to outweigh the other advantages of gradually bringing the product and the con­sumer within the ambit of the same national, economic, and financial organization.

He concluded: “I sympathize, therefore, with those who would minimize, rather than with those who would maximize, economic entanglement among nations. Ideas, knowledge, science, hospitality, travel—these are the things which should of their nature be international. But let goods be homespun whenever it is reasonably and conveniently possible, and, above all, let finance be primarily national.”17

It is often assumed that Keynes was more committed in later life to maintaining an integrated global economy. But his prediction of the “euthanasia of the rentier” and his career-long support of corporatist structures and national planning implied a greater permanent degree of state-managed trade and investment in the future. During British-American discussions in 1941, according to Stephen C. Neff, “The Americans were particularly dismayed to find that John Maynard Keynes was thinking, in terms somewhat akin to those of Friedrich Naumann earlier in the century, of a postwar system of regional or imperial economic blocs which might be relatively liberal internally, but largely autarkic vis-à-vis one another.”18

In the absence of anything like his proposed international system to penalize mercantilist countries with permanent trade surpluses, it is reasonable to assume that Keynes would have favored unilateral measures of national economic self-defense as a second-best option in some cases. Testifying before the House of Lords in support of the Bretton Woods system in 1945, Keynes acknowledged: “Separate eco­nomic blocs and all the friction and loss of friendship they bring with them are expedients to which one may be driven in a hostile world, where trade has ceased over wide areas to be co-operative and peace­ful and where are forgotten the healthy rules of mutual advantage and equal treatment.”19 This is arguably the situation in the world econ­omy today, given China’s combination of industrial mercantilism and state capitalism with its aggressive attempts to use military power to intimidate the United States and its Asian neighbors.

Klein and Pettis’s thesis—which, they write, “is ultimately an opti­mistic argument: we do not believe that the world is destined to endure a zero-sum conflict between nations or economic blocs”—therefore seems out of date, given the Sino-American conflict at the heart of today’s deepening Cold War II.

Trade Wars Are Class Wars is an excellent guide to one kind of trade war, the competition for limited global consumer demand, a trade war which is indeed a class war within nations. About the other kind of trade war, the competition among nations for strategic indus­tries, the book has nothing to say. Those seeking guidance on this issue must look elsewhere. To paraphrase Carlyle on Byron and Goethe: “Close thy Hobson; open thy Keynes.”

This article originally appeared in American Affairs Volume IV, Number 4 (Winter 2020): 77–91.

1 Matthew C. Klein and Michael Pettis, Trade Wars Are Class Wars: How Rising Inequality Distorts the Global Economy and Threatens International Peace (New Haven: Yale University Press, 2020), 6.

2 John A. Hobson, Imperialism: A Study (New York: Pott, 1902).

3 John A. Hobson, An Economic Interpretation of Investment (London: n.p., 1911).

4 Daniel H. Kruger, “Hobson, Lenin, and Schumpeter on Imperialism,” Journal of the History of Ideas 16, no. 2 (April 1955): 254–55. See also P. J. Cain, “J. A. Hobson, Cobdenism, and the Radical Theory of Economic Imperialism, 1898–1914,” Economic History Review, n.s., 31, no. 4 (November 1978): 565–84; P. J. Cain, “Hobson’s Developing Theory of Imperialism,” Economic History Review, n.s., 34, no. 2 (May 1981): 313–16.

5 J. A. Hobson, The War in South Africa: Its Causes and Effects (London: Nisbet, 1900), 197.

6 Hobson, War, 197.

7 J. A. Hobson (“Lucian”), 1920: Dips into the Near Future (London: n.p., 1918).

8 Charles A. Beard, with the collaboration of G. H. E. Smith, The Open Door at Home: A Trial Philosophy of National Interest (New York: Macmillan, 1934); William Appleman Williams, The Tragedy of American Diplomacy (New York: Marzani and Munsell, 1959).

9 John Gallagher and Ronald Robinson, “The Imperialism of Free Trade,” Economic History Review, n.s., 6, no. 1 (August 1953): 1–15. See also D. K. Fieldhouse, The Theory of Capitalist Imperialism (London: Longmans, 1967); John Pheby, ed., J. A. Hobson after Fifty Years: Freethinker of the Social Sciences (New York: St. Martin’s, 1994).

10 Peter Duignan and L. H. Gann, eds., “Introduction,” in The Economics of Colonialism, vol. 4 of Colonialism in Africa, 1860–1970 (London: Cambridge University Press, 1975).

11 Utsa Patnaik, “India in the World Economy 1900 to 1935: The Inter-War Depression and Britain’s Demise as World Capitalist Leader,” Social Scientist 42, no. 1/2 (January/February 2014): 23.

12 Patnaik.

13 Thomas Hauner, Branko Milanović, and Suresh Naidu, “Inequality, Foreign Investment, and Imperialism” (working paper, Stone Center for Socio-Economic Inequality, CUNY Graduate Center, 2017).

14 Fritz Fischer, Griff nach der Weltmacht: Die Kriegszielpolitik des kaiserlichen Deutschland, 1914–18 (Düsseldorf: Droste, 1961); published in English as Germany’s Aims in the First World War, trans. Hajo Holborn and James Joll (New York: Norton, 1968). See also John C. G. Rohl, The Kaiser and His Court: Wilhelm II and the Government of Germany (Cambridge: Cambridge University Press, 1996); Felix Gilbert, ed., The Historical Essays of Otto Hintze (Oxford: Oxford University Press, 1975); Ludwig Dehio, Gleichgewicht oder Hegemonie: Betrachtungen über ein Grundproblem der neueren Staatengeschichte (Krefeld: Scherpe, 1948); Charles Fullman, trans., The Precarious Balance: The Politics of Power in Europe, 1494–1945 (London: Chatto and Windus, 1963); Friedrich Naumann, Mitteleuropa (Berlin: Reimer, 1915), published in English as Central Europe, trans. Christabel Meredith (New York: Knopf, 1917).

15 J. A. Hobson, Confessions of an Economic Heretic (New York: Macmillan, 1938).

16 Barry Eichengreen, “Keynes and Protection,” Journal of Economic History 44, no. 2 (June 1984): 363–73.

17 John Maynard Keynes, “National Self-Sufficiency,” Studies: An Irish Quarterly Review 22, no. 86 (June 1933): 177–93.

18 The Financial Adviser to the British Government (Keynes) to the Assistant Secretary of State (Acheson), Washington, June 4, 1941, in Foreign Relations of the United States: Diplomatic Papers, 1941, vol. 3, The British Commonwealth, the Near East and Africa (Washington: United States Government Printing Office, 1959), 95–96.

19 John Maynard Keynes, “Anglo-American Financial Arrangements,” House of Lords, December 18, 1945, in British Speeches of the Day 3, no. 13 (January 1946): 799.

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