3 - Co-operation, the surplus and the theory of underconsumption

Summary

While welfare needs were satisfied through the production of value in work, this might only have resulted in a social system in stasis were it not for the possibility of producing surplus value beyond immediate needs or efforts. Hobson believed that human welfare was enhanced through co-operation and, especially, co-operative labour. This chapter considers Hobson's two theories of surplus value and his theory of underconsumption. It begins with a consideration of Hobson's theory of co-operative surplus. He stated boldly that ‘[o]rganized co-operation is a productive power’. The possibility of surplus value propelled Hobson's evolutionary view of human society and his theory of the co-operative surplus gave dynamism to his arguments for increasing social organisation.

Hobson used the term ‘surplus’ more often to mean unproductive surplus, a product of an inequitable system of income distribution. Analysis of the unproductive surplus underlies much of his critical commentary of the contemporary arrangement of international relations as well as one aspect of his theory of underconsumption. The theory of underconsumption has for some time been considered Hobson's major contribution to heterodox political economy. In the context of his ideas on surplus value, underconsumption appears as an economic manifestation of a social and ethical malady. Furthermore, there are three distinct aspects, almost three different theories, of underconsumption that need to be considered.