This chapter elaborates on the key notion of “dualism” starting from the seminal contribution of Sir Arthur Lewis (The Manchester School of Economic and Social Studies, 22, 139–191, 1954). This is the most important notion in the understanding of what “development” and “underdevelopment” are. A “dual” economy is one where two different logics—or even two ‘modes of production’ (in the sense of Marx)—simultaneously operate and interact with each other. A fully capitalistic sector coexists and interacts with a pre-capitalistic sector, the latter being populated by petty commodity producers employing pre-modern production techniques and adopting a distributive rule based on the average rather than the marginal product of labor. ‘Development’ coincides with the progressive absorption of the pre-capitalistic sector, whose role is to supply cheap wage goods and labor to the capitalistic sector. In this framework, an economy may be said to be developed or ‘mature’ when it ceases to be dual and becomes homogenously capitalistic. During the development process, people move away from the pre-capitalistic sector (often located in the countryside, but not necessarily so); independent, petty commodity producers become workers in the capitalistic sector; pre-modern production techniques are progressively abandoned and, finally, functional income distribution worsens because capital accumulation in the modern sector proceeds at an unchanged real wage as long as an ‘unlimited’ supply of labor is available. This pattern of development—for example China in the thirty years approximately going from 1980 to 2010—shares many similarities with the Marxian view according to which the destiny of petty commodity production was to be progressively and fully replaced by capitalistic production during the development process, and Lewis’s unlimited supply of labor is just another name for the Marxian reserve army. This is certainly a powerful description of the development process. The historical process, however, is always less linear than expected and in some cases the dual character of the social fabric (especially of those economies belonging to the ‘periphery’ of the world capitalistic system), far from being a transitory feature, is a permanent and structural characteristic of the economy. Petty commodity production (sometimes referred to as ‘informality’) coexists with capitalistic production on a permanent basis and in this respect the Marxian (and Lewisian) view is a bit too mechanical.