Wednesday, January 03, 2007

Economic feudalism

An interesting article was posted in the economics section of 'Ukrainska Pravda' recently, entitled 'Ukraine needs a war between millionaires and billionaires', about how the former are systematically being subjected to 'hostile raids' by the latter.

Some quotes:
"Billionaires, ie the oligarchs, which were formed in the days of Kuchma's presidency, are actively conducting a war against millionaires, i.e. middle-ranking businesses, by means of raiding. Top management of the most influential Financial Industrial Groups stand behind dozens of raiding attacks involving almost-daily resonant business scandals.

Any Ukrainian corporation whose value may be measured in billions of dollars, forms such a large portion of the national economy, that in existing conditions, it cannot but have a major influence on politicians and the state apparatus.

Until now, it has been considered in business circles that the distancing of a business group from the levers of power would nearly always mean that it would be destroyed by business rivals.

Participation of FIGs in 'shadow politics', gives them powerful instruments of business influence on the economy and on their rivals, in the form of corrupt state officials, judges and politicians.

In such a situation it is irrational not to employ hostile raiding as a technique when there is a possibility of obtaining an attractive enterprise or property for a small portion of its true value. The expansion of any business empire, in turn, increases the political clout of the FIG - thus closing the circle. In the post-soviet era, this oligarchic system resembles 'economic feudalism'.

Just as in the past, feudal armies and not the law or justicial system ensured a medieval baron could maintain his possessions and accumulate new ones, so now, for Ukrainian oligarchs, the guarantors of success are their clan colleagues i.e. politicians, judges, and government officials.

The oligarchic elite is not interested in the strengthening of the law, transparency, or protection of the institution of private ownership, because these deprive them of their corrupt competitive advantages. As a result, the nation's efforts are wasted on endless dividing up of assets, and not on improvements in productive technology.

Particularly dangerous is the pseudo-liberal policy of expecting the 'unseen hand of the market' to transform the Ukrainian oligarchic system and lead it toward a civilized relationship between business and politics."

The author suggests "the authorities should take away from 'feudal businessmen' their raiding weapons, while simultaneously opening up national finance and technology markets".

The oligarchic clans' political representatives are well described in an article in 'Der Speigel'

"The parliamentary groups.. even those of Tymoshenko and Yushchenko, have been taken over by a caste of politicians who came of age as "bazaar dealers" in the 1990s, without even the slightest understanding of the needs of the state and of society as a whole. They have spent their entire lives thinking only of themselves."

In the March 2006 VR and local elections, this caste of politicians embedded itself and its young adult offsping more deeply into the VR and city councils, where they can be seen preening their expensive clothes and gelled hair, flaunting recently-acquired expensive baubles. [Yuk! enough]


Anonymous said...

Didn't you post prior about the divisions in the PoR bet. the billionaire and the millionare, and that those two groups have tension bet. them? Did world press catch on to something you already had the tail end of?

Anonymous said...

An economic system to increase a nation's wealth is called mercantilism. Fuedalism occured before that