From Rent-Seeking to Oligarchy to State Capture

All but a handful of the post-communist countries have experienced a substantial increase in the role of private-sector activity, which means a lot of new capitalists are now active in these economies, many with small enterprises, but a few owning and controlling vast amounts of industrial, financial and even agricultural assets. The term oligarch is now almost universally used to describe these few whose holdings are estimated to have values in the billions of dollars, and unsurprisingly they attract the greatest attention of popular and academic commentary. Popular interest in the notoriety surrounding oligarchs is not simply following the lives of ‘the rich and famous’. Taras in Sumy, Ukraine, reading complex accounts in Post-Postup of how 30-plus Rinat Akhmetov became a multi billionaire, is not to be equated with Arthur of Eau Claire, USA, absorbing all the juicy details in People magazine about Brad Pitt’s latest off-screen romance. Akhmetov’s past and future dealings doubtless have far greater impact on the well-being of Taras and his family than do Pitt’s twists and turns on Arthur’s life, and they both know this. Serious analysis of such oligarchs in the post-communist region has, in fact, great importance not only in understanding this episode in history, but also in countries where they have become politically powerful it is essential for a proper perspective into the future. The goal of this chapter is to elucidate the evolution of this new capitalist class, to understand what conditions during the transition nurtured the evolution of such great concentrations of ownership, to investigate who they are and who they were in the Soviet period, and finally to make clear why the term is more typically applied to countries in the CIS group and less so, if at all, in Central Europe.1