Frontier Capitalism’s Latest Frontier
Speaking of frontier capitalism, or “extreme capitalism” if you prefer, I recently discovered that one of the most isolated and interesting places on earth is now booming, economically-speaking. I am referring to of all places, Mongolia.
If you are a history buff like myself you no doubt have a fascination with Genghis Khan and the Mongol Hordes who swept across Asia and Europe roughly 800 years ago. If there’s a documentary on Mongolia and its people, you can bet your money I have seen it. The Mongols were perhaps history’s most intimidating warriors. Try to imagine a Mongol horde of 300,000 horsemen thundering across the Russian steppes towards your city.
Frontier capitalism: Economics in transition from state ownership and control of resources to a private ownership system in which the price system is used for resource allocation.
While you have no doubt heard of extreme sports by now, my hunch is that many of you have never heard of “frontier capitalism,” which is the “extreme” version of capitalism.” Personally, I don’t think the frontier capitalism label actually goes far enough in capturing the essence of this high stakes game played in some of the most dangerous regions around the globe. Therefore, I prefer “extreme capitalism.”
To get a better handle on what it is it helps to understand what happened in Russia right after the collapse of the USSR in 1991. In a nutshell, the economy collapsed to Third World levels. Average life expectancies for Russians plummeted by 15 to 20 years. People were literally starving and dying in the streets because the old command economy was no longer there to feed them and nothing else had filled the void. As a result it wasn’t too long before the old Communist Party started telling Russians, “See, we told you capitalism and free markets wouldn’t work. Now you need to re-elect and put us back into power.” During the 1990s Boris Yeltsin was the president of the newly formed Russian Federation. While he was committed to reforms that would bring about a western-style economy, he also had to deal with the catastrophic consequences of the overnight transition.