According to Hobson's theory, imperialism arises from the generation of under-consumption and over-saving in the capitalistic economy of the home country. Powerful financiers seek investment opportunities with a high rate of return for their excess savings, driving them to invest in the "uncivilized" lands of Africa. These investors, looking to minimize risks on their investments while maintaining their high rate of return, use their influence to force their government to provide military protection and eventually to annex outright the areas in which they have invested. Thus, imperialism exists to further the interests of the investor class at the expense of the rest of the nation. Hunt (2002; 351) Hobson saw imperialism as a social parasite by which moneyed interest when the states uprising the reins of government ,makes imperial expansion in order to foster economic suckers into foreign bodies so as to drain them of their wealth in order to support domestic luxury. These investors, looking to minimize risks on their investments while maintaining their high rate of return, use their influence to force their government to provide military protection and eventually to annex outright the areas in which they have invested. Thus, imperialism exists to further the interests of the investor class at the expense of the rest of the nation.
Hunt (2002:351) elaborates that imperialism was the outcome of many separate social forces such as nationalism, patriotism, religious fervor and militarism as well as capitalist ceaseless quest for more profit. The major powers advanced there rule to weaker nations in the proposition to increase their capital accumulations and investment to more profits. Imperialism generally described as the benevolent quest to civilize and bring Christianity to the low races was according to Hobson was a propagandist way lie a fraudent conceit behind the real motives of imperialism. Hunt (2002;353) propounds that the rapid accelerating concentration of the of industrial power and wealth which occurred in the last third of the 19th century the income colossal wealth holdings was so large that even the most extravagant and luxurious of consumption expenditure would leave them with enormous amounts of income. This led to foreign investment being the only answer but such investment was only possible only if the non capitalist countries could be “civilized”, Christianized and uplift thus if the traditional institutions could be forcefully destroyed and people coercively be brought under the domain of the “visible hand “of capitalism so imperialism was the only answer to the capitalist ambitions of capital expansion. Hobson therefore concludes that although these non-economic forces are not the real justifications for imperialism, they are powerful and necessary tools for the investors.
Hobson examining the empirical data showing the profits derived from ordinary export and import trade concluded that the income derived as interest upon foreign investment enormously exceeded that derived as profits from the ordinary trade. Hobson showed why imperialism was required for capitalist to make profits why could not make their profits by investing at home or with capitalist countries. Why was it necessary to subjugate an non capitalist culture to destroy the its traditional institutions and make it economically dependent of the market and politically dependent on imperialist conqueror Hunt (2002:354). The primary force promoting and directing imperialism in Hobson view was the ceaseless drive to accumulate capital and invest the profits derived from the capital into new other and equally profitable capital. Imperialism is the is very useful in understanding the expansion of capitalism as its efficacy led to the most dominate countries globally in investing in foreign land in the proposition of increasing their capital accumulation prospects.
The foreign government of the great powers involvement often begins as military intervention to protect industrial sites in Africa or Asia. But eventually investors realized that the only true way to protect their investments from the native inhabitants and from other capitalist nations were to get rid of all difficulties. The result of this is imperialism, caused by the economic forces of over-production and under-consumption at home. Hunt (2002: 351) gives America example when President McKinney described the brutal, blood, military crushing of the Filipino independence movement by American troops as a benevolent attempt to educate the Filipinos and uplift and Christianize them of which this was just a propagandist way to shelve away the capitalist motives they had in the Filipinas.
In conclusion Hobson argues that imperialism is a product of capitalism. Capitalism and its profit motive generate over-production, which leads to concentration in industries. These new wealthy interests, though, cannot possibly spend enough to make up for the general under-consumption of the market and excess savings result. Unwilling to let these savings fail to realize maximum profit, investors place their money into risky, yet lucrative assets in the "uncivilized" lands of Africa and Asia. Then the investors, wishing to minimize their risks, induce their governments into giving their investments military protection and eventually to annex those areas in which they are invested.
Hunt E. K. (2002) History of economic thought: a critical perspective M. E Sharpe Inc USA