Privatization and the Rise of the Oligarchy

  • Shelly GottfriedEmail author


The following two chapters examine the main stages of the formation and evolution of oligarchy in most states in which oligarchy was an outcome of the transition from market coordinated economy to a so-called free-market mode; this chapter thus analyzes the way the oligarchy consolidated and commandeered the economy following the implementation of key reforms. The first stage is defined by privatization and the subsequent emergence of new business groups, and is the topic of this chapter. The second stage of the rise of the oligarchy, which traditionally took place in the early 2000s, evolved as a process of financialization and is the topic of the next chapter. This chapter describes the ensuing transition from the old business groups or corporations to pyramidal business groups, showing how this process resulted in a few individuals becoming extremely powerful and wealthy, by means of their control over the market. This was largely due to the way in which states conducted the privatization process, along with their retreat from an active role in the market and from solid and robust responses to economic changes, and not due to oligarchies’ competitive virtues. This development or mechanism of wealth accumulation was a political rather than purely economic process, with its beneficiaries tightly linked to the political circles. The assets of the states were privatized with the logic of transferring control to a stable pool of shareholders.


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Authors and Affiliations

  1. 1.City Political Economy Research Centre (CITYPERC)City, University of LondonLondonUK
  2. 2.Beit Berl CollegeBeit BerlIsrael

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