Understanding marginality as a consequence of mass labour surplus, the solution therefore lies in creating the conditions where labour is in high demand. With labour scarcity, the masses are able to have negotiating power against the capitalists, linking wages to productivity increases. The reverse situation exists in the developing world today, one of labour surplus and weak demand. Elsenhans paths development through mass consumption markets, as without them there is no interest in developing new technologies. Overcoming underdevelopment requires a developmental state that first fosters domestic markets with policies of import substitution, and then a dual strategy of industrialisation coupled with exchange rate devaluation at the point of export potential. Alongside this industrialisation, measures should be taken to increase mass incomes as this causes an increase in mass demand which, in turn, creates incentives for investment and begins the accumulation process.
KeywordsComparative Advantage Moral Hazard Technical Progress Export Market Investment Good
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