e article tracks the current crises of development theory in the understanding of the differences in political economy of developed capitalism (rising mass incomes) and underdeveloped economies (labor surplus and rent). e challenge of rents consists in spontaneous tendencies of its wasteful use for blocking development, which do, however, not exclude its possible use for the elimination of marginality. A convoy model of globalization with world wide full employment and an underconsumptionist model are distinguished. In the convoy model, an underdeveloped economy reaches full employment on the basis of devaluation. In the underconsumptionist model, devaluation-driven export-oriented industrialization does because of its too small impact not lead to the scarcity of average skilled labor. Leading industrialized countries react to the new competitiveness of catching-up economies through the implementation of wage restraint and industrial policies. Rent bounces back. Establishing a convoy model requires development policies characterized by an intelligent mix of rising mass incomes, reduced rents and devaluation-driven industrialization together with state support for investment.

In opposition to the now generalised critique of rent-seeking the following contribution establishes the inevitable character of the emergence of a rent problem in nearly any transition to capitalism from pre-capitalist relations of production. The only possibility of avoiding this possibility would be a rapid demographic decline or an equally rapid increase in availability of productive land. This rent problem in underdeveloped countries is aggravated by the existence of technically more advanced economies. Integration into the world economy can contribute to the management of this rent problem, but does not abolish it. The topic of development economics is, therefore, the combination of market regulation with non-market regulation in order to move the respective underdeveloped economy to a state where.rent can be abolished by the extension of the market mechanism. In contrast to the recommendations of the Bretton Woods Institution, the mere reinforcement of market regulation and the withdrawal of the state from economic regulation cannot be considered as sufficient for moving underdeveloped economies to self-sustained growth which allows market regulation.

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