Born in Chatham, Kent to a father who worked in the Chatham Naval Dockyard, Hodgskin joined the navy at the age of 12. He rose rapidly in the years of naval struggle with the French to the rank of first lieutenant. Following the naval defeat of the French in the Battle of Trafalgar, the opportunities for advancement closed and Hodgskin increasingly ran into disciplinary trouble with his superiors, eventually leading to his court martial and dismissal in 1812. This prompted his first book, , a scathing critique of the brutal authoritarian regime then current in the navy. Entering the University of Edinburgh for study, he later came to London in 1815 and entered the utilitarian circle around Francis Place, Jeremy Bentham and James Mill. With their support, he spent the next five years in a programme of travel and study around Europe which resulted inter alia in a second book, Travels in North Germany. After three years in Edinburgh, Hodgskin returned to London in 1823 as a journalist. Influenced by Jean-Baptiste Say amongst others, his views on political economy had diverged from the utilitarian orthodoxy of David Ricardo and Mill. During the controversy around the parliamentary acts to first legalise and then ban worker's combinations, Mill and Ricardo had been in favour of the ban whereas Hodgskin supported the right to organise. He used Ricardo's labour theory of value to denounce the appropriation of the most part of value produced by the labour of industrial workers as illegitimate. He propounded these views in a series of lectures at the London Mechanics Institute where he debated with William Thompson, with whom he shared the critique of capitalist expropriation, but not the proposed remedy. The results of these lectures and debates he published as "Labour Defended against the Claims of Capital", "Popular Political Economy" and "Natural and Artificial Right of Property Contrasted". The title of "Labour Defended" was a jibe at Mill's earlier "Commerce Defended" and signalled his opposition to the latter taking sides with the capitalists against their employees. Although his criticism of employers appropriation of the lion's share of the value produced by their employees went on to influence subsequent generations of socialists, including Karl Marx, Hodgskin's fundamental deist beliefs identified production and exchange based on the labour theory of value as part of natural right, the divinely ordained proper relations of society, contrasted with artificial contrivances—the source of disharmonies and conflicts. He rejected the proto-communism of William Thompson and Robert Owen by the same appeal to natural right. In 1823, Hodgskin joined forces with Joseph Clinton Robertson in founding the Mechanics Magazine. In the October 1823 edition of the Mechanics Magazine, Hodgskin and Francis Place wrote a manifesto for a Mechanics Institute. This would be more than a technical school, but a place where practical studies could be combined with practical reflection about the condition of society. The inaugural meeting to found the Mechanics Institute took place in 1823, but the idea was taken over by people of less radical views concerned about Hodgskin's unorthodox economic views, including George Birkbeck, a well-known educator from Glasgow. Despite his high profile in the agitated revolutionary times of the 1820s, he retreated into the realm of Whig journalism after the Reform Act 1832. He became an advocate of free trade and spent fifteen years writing for The Economist. He worked on the paper with its founder James Wilson and with the young Herbert Spencer. Hodgskin viewed the demise of the Corn Laws as the first step to the downfall of government and his free-market anarchism was regarded as too radical by many of the liberals of the Anti-Corn Law League. Hodgskin left The Economist in 1857, but he continued working as a journalist for the rest of his life until his death in 1869. Hodgskin was a pioneer of anti-capitalism, individualist anarchism and libertarian socialism.
