Eliminate the dictate of monopolies
Yerkir
July 22, 2005
By Mher Ohanian
We can state that the international experts, donors and financial
organizations as well as various officials assess Armenia’s experience
of transition to the market economy rather positively.
Armenia is listed among countries that have successfully implemented
economic reforms. Nevertheless, among negative consequences of such
reforms experts mention the tendency of convergence of power and
property ownership.
Looking back at the privatization process
At the outset of the economic and political reforms the problem of
delineation between political power and property ownership was
obvious. This situation is common for all societies undergoing
transition to free market economy. The privatization policies
implemented in Armenia partially solved this problem. However, the
Armenian-style privatization had certain negative consequences.
Many people will agree that the privatization processes in the
post-Soviet countries could well be called a `great criminal
revolution’. The case of Armenia fits this characterization. In
Armenia this revolution was made possible as a result of mutually
beneficial deals made between the ex-nomenklatura guys that appeared
on stage on the wave of the national movement.
So in the first years of independence the new nomenklatura that
pretended to be implementing liberal reforms started to expropriate
national property instead of creating a healthy functioning
competitive market. Many people call the decade of `reforms’ a period
of `initial accumulation of capital’.
The dictate of monopolies
As a result of the above mentioned developments, the private sector of
the economy was consolidated mainly through arbitrary processes that
very often derived from political considerations.
This is why we can say that today there are more obstacles on the way
of development of the private sector than there are favorable factors
contributing to its development. We still have a long way to go before
we will understand and apply the conventional norm of equality of all
before the law, a norm that has been practiced in the civilized world
for centuries. If we could adhere to that norm we wouldn’t have such
large scale corruption and shadow economy.
It turns out that the corrupt state apparatus so devotedly
implementing `reforms’ is itself the result of reforms and the main
obstacle to them. Corruption is both a general and specific problem on
the way of development of the private sector. Monopoly and unfair
competition are the other side of corruption.
Ever since Armenia became independent, monopolies have always been
derivatives from political power. Both the well established and the
newly emerged monopolies have been outside of the domain of taxation,
thus they were outside of the domain of fair economic competition.
All this distorts economic competition, alters efficient
redistribution of recourses in the economy and hinders introduction of
new progressive technologies. It is obvious that further convergence
of power and property ownership is unacceptable since it can deter
economic progress and limit the potential for economic growth.
The solution to this problem lies in the political-legal domain `
serious constitutional amendments are needed and laws regulating
property ownership relations and economic competition must be amended
to solve this problem.