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Emerging Subjects’ Second Advisory Board Meeting: Features of Mongolian Capitalism

By Rebecca Empson, on 28 November 2016

On the 15th November, 2016, we held our Second Advisory Board Meeting at the Club Coworking space, in the ICC Tower, Ulaanbaatar, Mongolia.

This time our Advisory Board was tasked with presenting three features that they think defines capitalism in Mongolia today. Each person was asked to speak for 20 mins or so on their themes, followed by heated questions and intense discussion. The day was divided by lunch at Maggiano, and lasted from 10am until 5pm.

The topic of discussion was a fitting prelude to our conference on Mongolian-made Capitalism, which took place the following day at the Mongolian-Japan Centre (which we will post about shortly). The gathering was also a chance to ask our Advisory Board about current economic and political changes in Mongolia and raise questions that have arisen since our fieldwork, which started a year and a half ago.

 

Once again, we felt incredibly lucky to be able to hear such varied opinion and expert insight from such a diverse group of people, representing so many different sectors of society.

There is a real sense that our research is guided by their advice as much as providing food for thought for further elaboration. Many of the Advisory Board also attended the conference the next day and participated in it.

In order to honour our commitment that everything spoken about in the meeting remains anonymous we have decided to list the features that were discussed below, but not identify them with any individual. We hope that this will provide some food for thought, and also perhaps, in the future, a historical record of how people at this moment perceive the political and economic climate in Mongolia.

 

Three Features of Mongolian Capitalism – November 2016

  1.  The power of networks dominates everything
  2. Capitalism in Mongolia defies market principles – especially property regimes
  3. Wealth above all else is valued

  1. The extractive industry is a dependent economy
  2. Oligarchical governance
  3. Neocolonialism, or the country is a neo-colony to multinational companies and economic powers such as USA, China, Canada, Netherlands and Australia.

  1. Lack of information, knowledge and education of the rural population
  2. Violence toward rural women
  3. Influence of election in the rural regions

  1. Relationship between Mongolia, China and Russia (transport corridor etc.)
  2. Mongolia’s third neighbours
  3. Symbolic representation of Mongolia, China and Russia as Mazalai, Panda and Bear.

  1. Two parties play with the nation’s resource wealth
  2. The political parties and the rich have become the heads of the state
  3. Rulers and ruling institutions are buying the state and state assets through the management of parties

  1. The state is captured by non-transparent business (Erdenbilegism: a new phenomenon in Mongolia’s democracy)
  2. Semi-capitalist society (Marching back to socialism)
  3. Too large government (Fakestan)

  1. Law implementation: common problem that occurs frequently is we have many world-standard legal frameworks, but lack implementation. Here, people who are supposed to enforce the law could be well-informed or ill-suited, or some legal aspects are just not compatible with our level of development (i.e. anti-smoking law).
  1. Organizational check-and-balance: frequently, the balance between key organizations in the public sector is biased or leaned toward one side, so that, at the end of day, human factors define performance results. Thus, at some point, one organization becomes very active or powerful, it may seem our policy is focused on that part. Then, sometimes within the organization, an individual ‘s decision could be implemented unchecked.
  1. The extent of public sector involvement in the market: we’ve seen some back-and-forth thinking in terms of where the line should be drawn for the government to be involved in the markets. In the 90s popular thinking was laissez-faire economy, which is now transformed into more public involvement to regulate parts of the economy. It’s always in flux, a fight about where the balance should be (think of banking sector, which was freely regulated, but now might become our Achilles hill).

 

 

Photos © Rebecca Empson.

 

5 Responses to “Emerging Subjects’ Second Advisory Board Meeting: Features of Mongolian Capitalism”

  • 1
    Tuvshin wrote on 28 November 2016:

    Could someone please show me an example of how Mongolia being the neo-colony of the U.S.?

  • 2
    Has Mongolia fallen under neo-colonialism? wrote on 5 December 2016:

    We may naively believe colonialism is the thing in the past, but it’s by no means entirely abolished, still lingers on in different hidden, invisible forms. Many former colonies such as Zambia, Zimbabwe, Madagagscar etc. Africa may believe that they no longer are colonies, but their independence is nominal. It’s like nominal GDP that’s the number not adjusted to the inflation, so it doesn’t really tell much about the economy or realities. It’s like nominally you are in the rule, but don’t have real power and authority. You can’t, you are not allowed to make decisions protecting the national interest. You are obliged, at the expense of people and nation state, to protect the interests of those who trained you.

    Neo-colonialism is exercised invisibly through the control of economic or monetary means.

    Generally, it’s a country that produce nothing, its economy completely dependent on exporting raw materials, and importing finished products. Nominal independence in both, politics and economics.

    While the status of a country under neo-colony can be likened to that of Mankurt-bool, slave, in popular folk story of Central Asia, owner or neo-colonists no longer are just superpower countries as traditionally understood, but they can now be multiple countries, transnational companies, or even may be groups of powerful individuals.

    When your industrialized country where 25% of GDP comprised of manufacturing products destroyed and its fairly dynamic economics turned into a beggar economy that is absolutely dependent on so many external forces/factors such as so called foreign investors, raw products of mine and its importing country, China, that’s when you know you are under neo-colony.

    When you produce nothing but only consume, for example when you import 70% of consumer goods, that’s when you know you are under neo-colony.

    When your diverse exports where mining comprised only about 22%, destroyed and mining accounts for 90% of the exports, you know you are under neo-colony.

    When China closes the border for holidays your economy gets on the brink of collapse, that’s when you know you are under neo-colony.

    When you have national debt equaling over 300% of GDP and much of it you owe to so called investors, “feeders” of your economy, you know you are under neo-colonialism.

    When you realize that you have to spend 150% of the budget on debt, that’s over 70% foreign currency denominated debt, you know you are under neo-colonialism.

    When your country is under oversized external debt and beg everyone for more money and get noting and gets ready to sell anything you possess, you know you are under neo-colony.

  • 3
    Marissa J. Smith wrote on 28 November 2016:

    I just reread Katherine Verdery’s essay “A Transition from Socialism to Feudalism?: Thoughts on the Postsocialist State” in the collection “Socialism, What Was it, and What Comes Next?” Very resonant with Mongolia’s situation today, and in many of the ways brought up in your points here.

    I would also like an elaboration on the colony/neo-colony point! A comparison of Mongolia and the Zambian copper-belt would be very interesting, I don’t know that one exists (other than a very cursory one in the literature review of my dissertation!). Also (particularly since the mining projects are dormant and look like they will continue to be for some time) the Steppe Road/Silk Road/One Road, which is being treated as a way out of the crisis, would be good to look at with a “colonialism” lens.

  • 4
    Lauren Bonilla wrote on 29 November 2016:

    Tuvshin, Marissa: If I remember correctly, the person who brought up the point about neo-colonialism pointed to the asymmetries in political, legal, and economic power between Mongolia and the countries given as examples, including business interests located in those countries, not just governments. I don’t recall the specific example from the US, though there was discussion about how debt has put Mongolia in a vulnerable relationship with creditors (many of whom are based in the United States/US markets). IMF was also discussed.

    Perhaps if the person who contributed this idea reads this discussion, they will provide further elaboration on their point.

    Marissa, thanks for bringing up the relevance of these features of capitalism to Katherine Verdery’s essay. It will be good to take another look at that. There is certainly fertile ground to explore a comparison between Mongolia and Zambia! China’s One Belt/One Road initiative was brought up by one participant as something that will have great influence on Mongolia and how the economy will take shape in the future.

    From my research, it seems that while some aspects of the mining industry are dormant (like exploration or large-scale greenfield investments) a number of projects are active and in some cases even expanding despite the economic situation. However, the form, content, and scale of mining is changing because of new pressures (lack of liquidity, debt distress, no new investments in infrastructure development, etc.), and this is likely to impact relations of dependency with foreign governmental, corporate, and financial actors.

  • 5
    Marissa J. Smith wrote on 1 December 2016:

    Thanks Lauren!

    That extra context is really helpful, though I also hope that the person who brought up colonialism at the meeting can jump in.

    Looking forward to hearing about your observations on some expansions in the mining sector. As far as One Belt/One Road, I am extremely skeptical about much materializing — and thanks for mentioning it as I need the extra impetus to expand a talk I gave last year and publish on it!

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