The other road to serfdom: The rise of the rentier class in post-Soviet economies

Abstract

This article offers a moral economic critique of the transition to a market economy in the post-Soviet space. In a reversal of the classical ideal of a ‘free market’ (a market free from land rent, monopoly rent and interest), neoliberalism celebrates and promotes rent extraction, sometimes over wealth creation (Hudson, 2017). In freeing markets from government regulation, neoliberalism enables powerful economic actors to extract income by mere virtue of property rights that entitle them to a stream of income from their ownership and control of scarce assets (Sayer, 2015). Neoliberalism has created and expanded the role of rent and unearned income in post-Soviet economies (Mihalyi & Szelenyi, 2017). This article will show the diversity and significance of rent in Kazakhstan and Kyrgyzstan that go beyond natural resources and illicit public and private rent-seeking. Using three case studies on finance, real estate and the judiciary in Kazakhstan and Kyrgyzstan, this article will examine how property relations, rentier activities and unearned income have been morally justified and normalized. Despite its moral legitimation, rentiership has been harmful and damaging. It has produced social inequalities and suffering, and has resulted in plutocracy and corruption.

Bad debt: The women’s mobilization against the financial industry in Kyrgyzstan

“…MFIs could have been established with only 2,175 USD in capital, and could have charged interest rates as high as 180% (Sabi, 2015). As a result, Kyrgyzstan had one of the highest real interest rates in the world (Sanghera & Satybaldieva, 2020a).…”

“…Sanghera (2020) argues that the judiciary in post-Soviet countries protected property owners' rights to own, speculate and dispose assets at a profit over poor groups' basic human needs. In Central Asia, the courts defended lenders in cases of default on the basis of the rule of law and the sanctity of the contract (see also Sanghera & Satybaldieva, 2020a). The judicial system and the central bank sanction reckless lending, expanding the "colonizing structures" of debt that facilitate and normalize secondary forms of exploitation by guaranteeing appropriate laws and governance (Soederberg, 2012).…”

“…Elites tend to exploit social grievances and movements for their own agenda. The anti-debt movement was an unpopular cause, partly because some politicians had vested interests in financial institutions, and several senior politicians had partial ownerships in banks and MFIs (see Sanghera & Satybaldieva, 2020a).…”

The neo-liberal conception of empowerment and its limits: micro-credit experiences of self-employed women in the bazaars of Bishkek

“…When looked at the factors behind these very high interest rates, one can identify 'lack of competition and inefficiency in the banking system, as well as high credit risk and funding costs' (Teodoru and Toktonalieva 2020, 6). These factors are all symptoms of the plutocratic/oligarchic nature of Kyrgyz neo-liberalism (Sanghera and Satybaldieva 2020b). Three largest banks control 66.5% of the banking system, against which individual loanees do not have any real bargaining power.…”

The 2020 Violent Change in Government in Kyrgyzstan Amid the Covid-19 Pandemic: Three Distinct Stories in One

“…It seems worth expanding on the ways the co-existence of a pluralistic system with an oligarchy can shift the balance towards the latter's bigger influence. 25 Oligarchization of Kyrgyz politics began in the 1990s and was part of the statebuilding processes (Radnitz 2010) leading further to the rise of a rentier class (Sanghera and Satybaldieva 2020). Previous research indicates how family kleptocracies and their cronies tapped into the state resources to enrich themselves (Cooley and Heathershaw 2017;Nakaya 2009;Doolotkeldieva and Heathershaw 2015), and how the state served as an "investment market" to generate direct rents (Engvall 2016).…”