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In reviewing the processes of normal development during which cathexes of self and object with libidinous, aggressive, and neutralized energy are established in the course of structural differentiation, the author proposes to dispense with the concepts of primary narcissism and masochism in favour of new psycho-economical concepts which she summarizes as follows: 'We would visualize an initial psycho-economical state characterized by a low level of tension and by a general diffuse dispersion of as yet undifferentiated physiological energy, within the structurally also undifferentiated self. After birth part of the energy would be vested as a basic energetic stock in the nuclei of the future autonomous ego. Under the influence of external stimuli, the undifferentiated forces would then begin to develop into the libidinous and aggressive drives with which the id is endowed. During the embryonic and still predominantly during the earliest infantile stage most of this undifferentiated energy of the self is diffusely discharged in small amounts on the inside through merely physiological centripetal channels. But after birth the pregenital zones and in an increasing degree the whole sensory and motor system become periodically hypercathected and processes of drive discharge towards the outside begin to develop, which become observable as pregenital sexual activity, and in biologically pre-patterned, primitive affectomotor and instinctive reflex reactions, easily recognizable as the forerunners of feeling, thinking and functional motor responses. In the course of structural differentiation, the libidinous and aggressive drives would