The privatization of state assets from formerly communist countries is often riddled with corruption and leads to a small ruling cadre with extensive influence (see the example of Russian oligarchs).

My question is: What political factors are shared by countries that let oligarchs emerge during the transition from a communist country to a capitalist country?

  • The Wikipedia page you cite seems to explain it quite well in Russia, e.g. the voucher-privatization program and specific examples of corruption. What else are you looking for?
    – Stuart F
    Commented Nov 29, 2018 at 11:47
  • 1
    I don't want factors for just Russia. If possible there might be other examples (like Mongolia) of communist countries that made the transition. What I'm trying to look for is if there are factors that are common between countries that have undergone privatization and have had oligarchs emerge.
    – anon
    Commented Nov 29, 2018 at 11:49

2 Answers 2


Your question is sort of like asking what big, strong people all have in common that makes them good at weight lifting.

What do the formerly communist nations have in common that causes oligarchs to arise when they transition to a mixed economy? The simple fact that they are communist nations making this transition is enough to explain it.

Although under communism everything is ostensibly owned by everybody, the day-to-day management is in the hands of managers and bureaucrats who form a small minority of the overall population. Unless they are removed during the transition from communism to a mixed economy, they are still in place during that transition.

Such people will often have insider information about how, when, and where people need to go to obtain ownership of the state-owned assets, and will often be directly involved in setting up this transition. They can easily rig the system or game the system for their own benefit.

The specifics of how things are rigged can vary but are not difficult to implement. A failing state-owned industry can be restructured into several smaller ones, one with with all of the assets and the rest with only liabilities. Naturally, the people involved know which stock to buy and which stock to avoid, whereas a regular citizen may not. Or, a bureaucrat can be instructed to prioritize the stock purchases of some people before than others, so that regular citizens get shut out of the process.

And of course if someone starts asking too many embarrassing questions about this, the apparatus for silencing him is still there, just as it was under communism.

TL;DR: The oligarchs don't 'arise' from the transition; the transition begins with the oligarchs already in place.


Answer is very simple.

Who are oligarchs?

They are, as we know, big capitalists - small group of men, controlling big amounts manufacturing, and money.

Why do they appear on communist country fall?

Because they ARE a part of capitalists, free-market world.

Why do they appear bringing corruption and bribes?

Because they appears on a country dramatic and sometimes bloody changes - and they are doing money on a country, or even empire, fall. And those dark times always brings corruption and criminal uprising.

What is their differnce from bureaucrats?

Imagine situation: oligarch owns a factory in such dark times for country. He has two ways: upgrade factory, pay salaries, and so on, OR sell factory to the scrap, have some money from it and leave the country. Do you think, where people should work, if there is no more factory, and this is a mono-city - city around big factory which is now closed? Yes. Nowhere. Bureacrat, instead of it, cannot close factory, because he DO NOT owns it. He even cannot (or it is hard to) leave the country, especially with money. He is just manager. That brings difficulties in changing - because it is always more simple to leave things going, but also bring some protection from closing factory and leaving people unlaboured.

Soviet union falls into it, changed and transformed into modern Russia, which controls oligarchs in some way. China had left in a step behind, and change communism system in a some way - they have oligarchs, but they didn't have 'wild capitalism' period.

  • Downvoters, please, leave your comments. Interesting to know you motivation.) Commented Dec 19, 2018 at 6:08

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