The proponents of this theory such as John Hobson and Vladimir Lenin believed that the primary intention of imperialism “was the search for investment opportunities.” They said that “super-profits” were present in less developed states due to the abundance of resources, cheap labor and scarce capital. Because of this, investors found it as attractive or even more attractive to invest in the periphery than to invest domestically.
Even though profits flowed into the powerful state, investors typically didn’t account for the “availability of skilled workers, inadequate infrastructure and political instability” of the less developed regions they were investing in. So even though Lenin claimed that super profits existed in the periphery, “the actual experience of his investors [did] not support his view.” The socialist theory of capitalism clearly fails to account for certain variables. It is a sharp contrast to the realist theory because realists dismiss economic factors and socialists “underestimate the importance of power …show more content…
In the early 20th century, as technology progressed there was a shift from the steam engine to the internal combustion engine. The growth of this new technology required a steady supply of oil. Britain, one of the greatest world powers at the time, did not have domestic oil reserves and would be unable to participate in this emerging technology unless it secured a supply of oil. Britain was not impaled by its lack of domestic reserves because it manipulated its lateral pressure to colonize oil-rich regions including Iran and Iraq. Just like the theory suggests, improved technology increased domestic growth beyond domestic capacity and thus lead to an increase in demand for foreign