The Role of Rents in the Transition from Socialist Redistributive Economies to Market Capitalism

in Comparative Sociology
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In this paper the authors make a critical distinction between inequalities arising from profits and wages and inequalities arising from rents, following Sorensen and 19th century economist Ricardo. Their new contribution is to articulate how rents are especially important in post-communist capitalist transition. Without the concept of rents, the mechanisms of corruption cannot be understood. The authors identify three types of rent-seeking behavior, which can be observed in any capitalist country, that play a particularly important role in post-communist transition: (i) market capture by political elites; (ii) state capture by oligarchs; (iii) capture of oligarchs by autocratic rulers through selective criminalization and the redistribution of their wealth to loyal new rich.

The Role of Rents in the Transition from Socialist Redistributive Economies to Market Capitalism

in Comparative Sociology

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References

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4

See Weber (1978) pp. 43-44. Clearly all this is very close to the concept of Acemoglu and Robinson (2012).

5

Solow (2014) calls this rent of super managers a “sort of adjunct to capital”.

7

See Oliver (1995) and Conley (1999) demonstrating that the major difference between whites and blacks is not in earned income but inherited wealth.

16

Until 1995Hungary pursued privatization through open tenders and ipos in which foreign investors competed with each other. See Eyal Szelényi and Townsley (1998) Mihalyi (2001) King and Szelényi (2005).

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In 2012the combined revenue from all kind of property and (net) wealth as a percentage of gdp was in the range of 0.3% (Estonia Mexico) and 3.9% (uk). https://stats.oecd.org/Index.aspx?DataSetCode=REV accessed 9 July 2015.

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