This unaltered story [1] was originally published on OpenDemocracy.org. License [2]: Creative Commons 4.0 - Attributions/No Derivities/Int'l. ------------------------ Rentier capitalism and class warfare in Kazakhstan By: [] Date: 2022-01 The recent protests in oil-rich Kazakhstan have highlighted the devastating effects of rent extraction. The country’s largest sellers of liquefied petroleum gas (LPG), including KazMunaiGas, Kazgermunai, CNPC-AktobeMunaiGas and Kazakhoil, have been accused by the government of increasing fuel prices by abusing their oligopoly power. When the state lifted its price cap on LPG at the start of 2022, the market price doubled within a couple of days. The impact was immediately felt by poor and vulnerable sections of Kazakhstani society, which relied on the commodity for heating and vehicles. Ultimately, the price hike was a violent attempt by powerful oil corporations to extract rent – they knew that most of the population had no alternative but to pay up or go without. Akin to social historian EP Thompson’s moral economy of the 18th-century English crowd that rioted against soaring food prices, Kazakhstan’s working class revolted against the market price and the injustice of the ‘free’ market. ‘Free’ market Kazakhstan’s government justified the removal of the price cap by saying that it was complying with market principles. It wanted to liberalise the market by ending the price subsidy on LPG, and allowing the ‘free’ market to dictate the price. This policy is based on mainstream economic thinking that a commodity’s price and value should be determined by demand and supply to reflect its scarcity and costs. Moreover, the government argued that the price subsidy had created a domestic shortage of LPG. Illegal traders were said to have exported LPG to neighbouring countries, where prices were significantly higher than in Kazakhstan. The market reform would incentivise oil corporations to reduce their exports overseas, and sell domestically at a better price. Get our free Daily Email Get one whole story, direct to your inbox every weekday. Sign up now But such justifications and faith in market forces proved to be seriously flawed and fatal. Whereas the price cap had previously limited the powers of natural monopolies, the government was now proposing that large oil corporations dominate the market and dictate and raise prices to what the market could bear. The price jump from 60 tenge ($0.14) to 120 tenge ($0.28) per litre was a sheer exercise in economic power and rent extraction, which was initially defended as an outcome of impersonal electronic market trading. The price rise came as a shock to most working-class people, who had already seen higher inflation and interest rates increasing their living costs over the past year. For the working class, LPG, dubbed “road fuels for the poor”, was cheaper than alternative fuels, such as diesel and gasoline, which can cost 180–240 tenge ($0.40–0.55) per litre. In the south-western region of Mangystau, and many other parts of the country, it is estimated that 70–90% of vehicles use LPG. Facing abject poverty, immense inequality and blatant value-grabbing, a large section of the working class, in many districts, revolted against the introduction of a market reform that clearly favoured the rich and powerful propertied class, including oil and gas executives and shareholders. In cities across the country, violent clashes between protesters and security forces left many people injured or killed, and numerous buildings and cars set alight and destroyed. Almaty, the commercial capital, looked like something from an apocalyptic film. [END] [1] Url: https://www.opendemocracy.net/en/odr/rentier-capitalism-and-class-warfare-in-kazakhstan/ [2] url: https://creativecommons.org/licenses/by-nd/4.0/ OpenDemocracy via Magical.Fish Gopher News Feeds: gopher://magical.fish/1/feeds/news/opendemocracy/