Overcoming Rent by Using Rent: The Challenge of Development

Abstract

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.

Open Production: Chances for Social Sustainability in Manufacturing

“…The game theory proved that win-win-situations on the basis of collaboration (even of competitors) are possible with the help of co-opetition, a value creation strategy between competition and cooperation [13,34]. As a result, a capitalistic-oriented market order can evolve and replace the current rent economy that many experts criticize [35]. The problem of recipient countries is that they remain in dependency, even if companies settle in their country, because the population does neither participate in the value creation process as an equal partner nor does it necessarily participate in the distribution of earnings [36].…”

“…The problem of recipient countries is that they remain in dependency, even if companies settle in their country, because the population does neither participate in the value creation process as an equal partner nor does it necessarily participate in the distribution of earnings [36]. Collaboration-oriented industrialization supports the evolving bottom-up-economics and is therefore a chance for developing countries to escape the marginality trap [35].…”

Bottom-up Economics. Foundations of a Theory of Distributed and Open Value Creation

“…Moreover, the concept of artificial construction of needs and the associated increase of societal level of sufficiency are renounced in favor of the satisfaction of needs. More participation in processes of value creation leads to social convergence instead of social inequality and may reduce the gap between industrial and emerging countries as well as inequalities within the respective countries or even facilitate cooperation at eye level (Elsenhans 2004). The terms "industrialisation" and "production" have to be rethought and their premises questioned as those new phenomena are not sufficiently explained by conventional patterns of thought.…”

Assembling biological economies: Region‐shaping initiatives in making and retaining value

“…His argument pivots on the idea that seeking rent, rent‐raiding and protecting rent are necessary behaviours in a capitalist economy, while creating and preserving rent that is always potentially available to others is a deep‐seated contradiction. He contends moreover that ‘rent is inevitable, the ways of dealing with it varied’ (Elsenhans , p. 103). He regards much political activity as ‘a struggle for relative shares in the access to rent‐generating [political] assets’ (Elsenhans , p. 94), channeled because of the inevitable emergence of rent‐hungry elites who are wedded to appropriating value and not the prospect of its creation.…”

“…He contends moreover that ‘rent is inevitable, the ways of dealing with it varied’ (Elsenhans , p. 103). He regards much political activity as ‘a struggle for relative shares in the access to rent‐generating [political] assets’ (Elsenhans , p. 94), channeled because of the inevitable emergence of rent‐hungry elites who are wedded to appropriating value and not the prospect of its creation. He argues that ‘ any [emphasis added] development policy, is confronted with the challenge of dealing with rent’ (Elsenhans , p. 103).…”