14.10.2008 | Mykola Kozyrev

New Ruling Class


The following is a summary of the results of a field study carried out by the Civic Committee for the Protection of Constitutional Rights and Civil Liberties (Luhansk) as part of a project entitled “The New ruling class in the agrarian sector: non-law based practice as a means of accumulating capital, using the Novorozsosh District of the Luhansk region as example”. The study was carried out from 15 September 2007 to 15 May 2008 with the support of the International Renaissance Foundation.

The monitoring group investigated how the “new Nomenklatura”  - the dominant group of owners making up the new ruling class in the agrarian sector – is formed.

The information below is a selection of typical data from the monitoring. It was received through talking to residents of villages and settlements in the district, with officials from bodies of self-government, public meetings, participation in law suits and information requests to the local authorities.  The monitoring covered people living under the jurisdiction of 17 village and settlement councils. The identity of persons breaking the law is not giving to avoid difficulties for the editor.

The village of Novorozsosh

1960 inhabitants; 1286 hectares of agricultural land; 397.5 hectares – reserve and 439 hectares of reserve fund

The leaser of land plots is Joint Limited Liability Company [JLLC] “Promin”, which rents 700 land shares, as well as property shares. The size of the land plot according to the certificates is 8.08 cadastre hectares, a State act has been issued for 64,365 hectares and the enterprise uses it only for ploughed land and hay. Rent for the use of land is not paid to the co-owners. The grazing land is also at their disposal with documents having been drawn up. In conversations with the villagers it transpired that there is nowhere to take cattle from their own yards and poultry.  Everything is being used by Promin. According to two milkmaids, one with more than 40 years experience, they are frightened to even ask the leaseholders why they can’t let their own cattle graze on the land plots where a heard of Promin cows graze.

The typical situation with the property plots is that the certifications are issued, however the actual property in the general complex is used by Promin without any agreements for lease or sale and purchase. The issue is not even discussed. The property works for the founders of Promin which has effectively seized all the land which is used for the personal needs of private individuals.

The technology is valued without the knowledge or consent of the villager-co-owners. Those working there are frightened to put forward any proposals or conditions of rent for land or property plots since dismissals immediately follow. There have been a fair number of dismissals: V. Narozhny, H Chapa, V. Kolesnik. They have their own view as to the grounds for their “resignations”. Kolesnik even had to change his place of residence. According to pensioners (five are named) it is better to be silent than to make enemies of the founders, since they’re the bosses in the village and they dictate their terms.

It is typical for rural people these days to silently conform to any kind of arbitrary behaviour, even to oppression. Villager-letters are totally dependent on lessees who have changed from former communist heads of the kolkhoz to business people. Such “businesspeople” at the initial stage appropriated the villagers’ property thus depriving them of the possibility of independently working their land or creating a service-providing cooperative.

The problem of problems Is to get work, even more so a position. Things work on blood relations or close contacts. The bodies of local self-government, the village council are inevitably made up to meet the demands of the lessee boss. For example, the Head of the Novorozsosh Village Council is the wife of the founder of Promin, the secretary of the council is the daughter-in-law of the head of the district treasury, and her son works as a medical officer in the police, her sister is the deputy head of the Pension Fund, her brother works in the district department for agriculture. The village council land surveyor is the wife of the manager of the JLLC “Agroprodservis” which manages things over the territory of the council, while her daughter is the chief expert on reform of management of agriculture and food production. Even the district police officer for the council area has to be a relative or someone close to the bosses, and this is indeed the case with Officer C. being the son-in-law of Land Surveyor P.

In the Pension Fund, the prosecutor’s office, the tax office you’ll find only relatives with family ties to the founders of the LLC, using other people’s property, land almost free of charge and cheap labour. And nobody says anything.

Therefore the court rulings on the demands for their property shares by A. Kovalyova, Kh. Andrushchenko, Y. Shcherbak and S. Sarafan have not been enforced and cannot be with such an approach to appointing civil servants – the new Nomenklatura look after their own at the district level.


1237 inhabitants, of whom 550 are pensioners with 498 people working on a seasonal basis. The economic structure on the area of the village council is the Engels JLLC. As a result of the reform of the Engels Kolkhoz No. 648, its members received the right to land and property shares. The land was formerly divided into shares however certificates were not issued personally to each owner. The size of the share in conventional cadastre units was 10.89 hectares. To this day 644 people have not received their certificates of land shares, and cannot get a State act affirming their ownership rights to the land plot.  Some of them – Y. Khavarchuk, L. Dontsova, Y. Veremeyenko, I. Slatimova, A. Slatimov, H. Klimova, and A. Pabych have approached the law enforcement agencies and prosecutor’s office to defend their rights to a certificate of ownership of the land share and allocation of property.  The prosecutor’s office of the district, region and the Prosecutor General’s Office have since 2004 been engaged in correspondence with the applicants (35 people), yet have not taken any decision. The District Prosecutor “does not see any criminal elements” in the actions of the Engels JLLC who registered a State act on the land share ownership of 646 people in the name of the legal entity of the  Engels JLLC, i.e. himself. In registering this agreement, the village council presented in the name of the owners of 646 certificates statements addressed to the head of the Novorozsosh District Administration S. Chernyavsky and authority to the Engels JLLC. The shareholders only learned of this when Y. Khavarchuk approached the village council asking for documents confirming that she and her husband owned land and property shares. Y. Khavarchuk (Klimenko),  L. Dontsova, Y. Veremeyenko, I. Slatimova, A. Slatimov, H. Klimova, A.H. and A.I. Babich, H. Klimova, H. Nekruty, I. and S. Zykranev are still asserting their property rights in the Novorozsosh District Court.  The court uses any pretext to drag out the hearings into the law suits. Applications to the Prosecutor General (collective and individual) were sent to the Novorozsosh District Prosecutor’s Office which in some cases has not even reacted with a formal fob-off.  The property shares of 646 citizens have been supposedly bought off the joint owners on condition that their value is repaid over 33 years!

The boss in the village is Z, the head of the Engels JLLC. The villagers are his subordinates. He and his relatives deal with people without any labour legislation at their own discretion. Z. has several shops in Kamyanka, the drinking water in the village is run by his business, the pond also is Z’s, nobody knows on what conditions, and even children aren’t allowed to swim in it.  The village school is Z’s property, and the director is his mother-in-law, does not obey or answer to anybody and does her own thing. Children are divided up into “their own” and simply poor children. The specially equipped class and playroom are for her grandson Ivan. Other children are forbidden to go there. Poor children don’t even have the opportunity to receive food since there parents don’t work at the Engels JLLC. Z. tries to employ people from other villages so that his own people agreed to any conditions. This creates the illusion of competition for jobs. Those who come from other villages don’t stick it for long, but his own people become more submissive.  This means that bond slavery has been brought in.

If one images the life of village residents from the point of view of social organization, then villagers are completely redundant with the exception of the 13 founders of the Engels JLLC. Everything in the village belongs to Z: the shops, the school, the kindergarten, the sauna, the clinic with treatment and diagnosis offices where villagers are only given assistance with Z’s knowledge. Z. pays the doctors. The main source of Z’s power is land which the villages effectively do not even have a legal relation to. Z supposedly settles with the villagers for the rent of the land, however this is a fiction. The villagers for Z. are an article for expenditure and therefore their rights can be taken into account only in order to reduce this expenditure.

If one of the villages tries to mention his or her rights, punishment is instantaneous. Z. issues an order to sell nothing to this creature in the shop, to refuse medical treatment, and he won’t even let them use the machine to clear out the toilet pit. Thus all civic relations in the village are based on personal dependence on Z, like in Pushkin’s Troyekurov.

The facts cited here, and these are just a part of the information we received during the monitoring, record the first, initial stage of the formation of a new ruling class in the agrarian sector of the economy. However there are important factors here such as the presence of legal regulation of land and social relations in the process of transformation of a historic scale where the very foundations of the country were changing.

As it transpired the law here was indeed an orphan.

The Presidential Decree from 3 December 1999 “On urgent measures to accelerate the reform of the agrarian sector of the economy led to a qualitative “breakthrough” in the carrying out of land reform in our country.

However straight after the passing of this Decree, it turned out that there were considerable legal obstacles to its implementation. The point was that the issue of land lease was regulated by the Law “On land lease” passed on 6 October 1998.  According to Article 3 of the Law the objects subject to lease are land plots which are owned by individuals or legal entities of Ukraine, territorial communities, villages, settlements, cities and the State. A land share is not a land plot as it transpired and cannot be leased out according to the rules set down in the law on land lease, for example, adhering to the requirements of Article 14 of the Law.

Yet the vast majority of new agricultural enterprises created as a result of the reorganization of kolkhozes concluded lease agreements specifically for land shares with the former kolkhoz members. Unfortunately the lease agreements for the land shares did not fix the condition and quality of the land or the duty of the lessee to use it properly, preserve it, and to return it when the lease expires. This is impossible in principle given such lease relations. After all the owner of the land share doesn’t and cannot know which particularly piece of land s/he is letting to the lessee and what condition it is in. accordingly the lessee does not take on any commitment to preserve the rented piece of land and return it when the lease ends. Therefore individuals letting land shares cannot defend their rights and legitimate interests which have been violated by the lessee businesses in court.

So what is the problem in the present day? It lies in the fact that although most villagers have received State acts and are the legal owners of land plots, the lessee farmer or agricultural firm just as before uses the land as an aggregate of the unallocated land plots. Therefore the legal owners of these plots effectively don’t even know where their land plots are in the field and have no possibility of exerting control over their use. This means that the right to dispose of his or her owned land has effectively been taken away from the legal owner, and there is a non-law-based form of lease which blocks the right to enjoy the land (the right to sell, give it, leave it as inheritance, mortgage it, let it, etc).

And the main thing is that the citizen owning a land plot is effectively unable to freely found and independently carry out farming or any other private business, create a cooperate or let the land to another person. There was theoretically such a possibility. However when the lessees rented not only the land shares (later the plots of land), but also the property of the former kolkhoz, they automatically became monopolists and used this opportunity to become de facto the full owner of the land and property. Thus, for example, the property they needed, they immediately simply appropriated or bought out (as a rule for a song), while the other property they sold without the consent of the villagers, ignoring their property rights. The property was thus effectively seized illegally and taken over by the lessee. Examples are provided above.

Therefore the owners of land plots found themselves in a position where they could not take back their plot of land, terminating the lease agreement, and couldn’t for example, organize a service-providing cooperative with other partners; without technology (a tractor, etc) it wasn’t needed. And the lessee used this as a weapon for extra-economic compulsion. As monopolists they can dictate their conditions of work, rent, the form of the agreement and so forth. And to those who don’t agree with the conditions, they say: “If you don’t agree take your land back”.

Thus at the present time in the villages a rather paradoxical situation has arisen where nobody properly owns the land.

After kolkhozes were reorganized into legal entities of a market type which were the successors to the kolkhozes, the latter ceased to function as legal entities and were subject to exclusion from the State register of subjects of business activities. This in turn means that the State act to the right of collective ownership of land issued to such a kolkhoz lost its legal force. The business – the successor to the kolkhoz took all the assets of the kolkhoz barring land.  This was linked with the fact that the legal entities created as a result of the reorganization of the kolkhoz (private enterprises, farms, limited liability companies) are not and cannot be, in accordance with current legislation participants in the right of collective ownership of land.  And if we recall, the reform of the kolkhozes was initiated in order to transfer agricultural goods land use from a legal regime of collective ownership into a legal regime of private ownership of land.

Yet then when villagers received State acts confirming ownership rights to land plots  the lessee’s fields did not have these plots marked out, the land today has merely a formal owner since the villagers own it but don’t use it and effectively lack the possibility of disposing of their land, while the lessees use and dispose of only the fruits of the land, but do not de jure own the land itself, although de facto this is the case.

All of this has led to degradation of production, to social disintegration and regression to more primitive social, economic and political forms and procedures for the life of the country.  We noticed, for example, such primitive (non-legal) forms as seizure of unlawfully appropriated property and land, as well as extra-economic exploitation typical of a pre-capitalist feudal form of production.

For example, everywhere in the district we see the law in effect of accumulated wealth of lessees via undercutting rent, remuneration for labour and at the same time inflating the cost of services (one occasion was recorded in the village of Zakotne where a villager receives 75 UAH for a month’s work on forest felling, while on the same wood cutter for chopping six logs which he brought with his own vehicle, over 3 hours working alone, the boss calculated the cost of this service at 360 UAH!)

The villagers give a negative assessment of the results of the agrarian reform since their standard of living has worsened considerably.

However the mass consciousness does not comprehend the hidden historical element of this process – the fact that the feudalization of socio-economic relations is “cancelling out” the law as such with the “rule of force”, habit and privileges taking its place.

Thus the process of buying up property shares took place with widespread infringements of the property rights of those holding property certificates – the right to a part of collective property:

а) in many cases the villager who are owners of property which in joint general ownership have not received an allocated plot, and their land’s transfer to the management of the new boss was formalized improperly or was not formalized at all at first);

b) owners did not as a rule receive rental payments for the exploitation of their property;

c) unwarranted (aimed at buying it up) multiple revaluing (discounting) property was carried out;

d) liquid property (cattle, cars) were sold without the owners’ consent;

e) real estate in a number of cases was not kept under responsible care or faced degradation or being stolen, or the management deliberately destroyed it. For example, a new cement factory in the village of Zakotne in the Novorozsosh district with 40 jobs was literally destroyed and cut up for metal;

е) redemption of property is, as a rule, carried out according to depreciated cost, so, for example, in the village of Makartetino in the Novorozsosh district the size of a property share was only 618 UAH.(!). this is not in adherence with the rules of procedure for redemption set down in the President’s Decree;

–  the sale of property on competitive terms is not ensured with this countering the unwarranted undercut of the value of the property;

– conditions have not been created to ensure the right to receive shares in kind, and in the free creation of property complexes for the formation of service-providing cooperatives in a competitive environment.

All of this is non-law-based forms of extra-economic coercion, over exploitation of labour and villagers’ property. However it should be noted that such an important condition – a legal vacuum in land relations places the lessee in the position of predator who is also not concerned about the fertility of the soil but simply squeezes the last ounce of benefit from it. In the pursuit of profit each year whole areas are sown with sunflowers without any consideration for agrotechnology.

In summing up, one can say that the violations of property rights are an extremely painful blow to people, depriving them of prospects in life and irreversibly affecting their social behaviour. The scale of the violations of property rights of a large social group of villagers over the last decade will possibly have results which cannot at present be predicted leading to social tension.


Description of the status group which exerts dominant economic and political influence in the district

For the dominant group problem No. 1 at present is to achieve full legitimization of their power and wealth. For this, two tasks need to be resolved, one being political – legal, the other – economic – legal.  The first is how, with the help of “elections” according to party lists to extend for as long as possible these new “Middle Ages”. The second is how in a system of production and appropriation of wealth to overcome the contradictions between de jure and de facto as quickly as possible. The problem lies in the following.

The dominant group does not yet formally have the right to full property rights on the land which it is presently working: it only uses the land plots rented from the villagers. Other powers to dispose of it and own it supposedly remain with the villager owners. For the moment and supposedly!  Therefore the economic and political power of this group in the district is formally restricted, however not in actual fact. In fact all power is ensured through a fait accompli. It is precisely in the gap between de jure and de factor that the “line of exclusion” exists in which non-law-based practice with regard to gaining power and income is cultivated.  This basically means that economic relations are to a large extent of a criminal nature, and therefore all efforts by the dominant group are aimed at monopolizing their influence, in the first instance, in the sphere of power – property relations. The fusing of power and property arises precisely from this source. And it is these “Siamese twins” which are the main brakes on the road to democratic order in the country.

 Seizure of land and property: “Stationery bandits”

There are around ten biggest lessees in the district. In order to understand the mechanism for creating capital used by these “new Ukrainians” in the rural backwaters, the monitoring group studied the lease relations in all villages of the district. Some typical examples are given above of how property is obtained and used – the source of income. It is interesting to draw a parallel between the formation of princes’ property and power during the time of classic feudalism and the formation of property and power of contemporary “princes”.

In the far off days of Kyivan Rus the first stage in the formation of princes’ power, beginning with the Ruriks, was seizure of land and property. Then this was done with the help of a militarized force which received from the prince first “payment”, and later their own part of the captured land – on condition of unfailing service. No service – no land. The highest owner of all the seized land remained the prince who (in the term used in modern sociology – M. Olson) was a stationery bandit. After forcible seizure of land, he aspired to a settled long-term regulating of economic life.

The actual boss of the Novorozsosh district is according to the rule of force fully entitled to aspire to the role of district “prince” (stationery bandit), the First Person. He effectively has absolute power in the district.  In Kuchma’s day he enjoyed the protection of high-ranking officials. This “protection” was a form of administrative rent, deriving from the land rent.  The economic power of the First Person was based on the fact that as well as informal possession of land, he effectively controls all of the district’s resources, including credit and financial resources, influencing their distribution and use. He also controls the key positions of the district (both State and economic), including those of the enforcement bodies. He enables those who serve him unfailingly (like the military force) and gives short shrift to those who try to act independently.

Criminal mechanisms for ensuring economic power in the district

Businessman M. Lyapyukhin recounts how he was crushed by the First Person. He rents over 2,000 hectares of land and refused to pay a tithe to the First Person. The reprisals were swift. The First Person sent a bandit to him who forced him, on threat of violence against his family, into signing over, with forged documents a mill to his person. A quote from the recording:

“They squeezed me, there was simply nowhere for me to turn. I was least of all afraid for myself. I warned them that I’d take at least one of them with me. But well, when they started on my daughter, saying don’t forget that you have a daughter, one and the other, I had no way out. I was scared for them. I have two, and I was simply worried about my children. I consciously took on that fraud, there was no other option. One daughter goes to school, with three kilometres to the centre. Any car can stop, and what does it take to thrust a child into the car. They throw an adult in”.

To seize Lyapyukhin’s property the police were also used. Here is a telling example:

“They got my tractor K-701 off me. At Trembachevo.  I had taken land there. 1,800  hectares, I began farming it. And that day I had just filled up the tractor so as to begin ploughing in Dontsivka the next day. In the evening, the district police office S. came and said that he had let down the front tyre on my tractor that day. I asked why? He said so that I couldn’t go anywhere. I said that I’m going to plough tomorrow, and he – just wait, you have to live to see tomorrow, and went off. Well fine, I thought, what will you do to me, I’ll pump up the tyre.  In the morning I arrive and when I’d got ready for work, some guys from Trembachevo come up and say: Petrovych, your tractor’s gone. They say that the cops came and took my tractor away. I run over there and see that the tractor’s not there. Turn back and write a statement to the Prosecutor Savchenko against those police officers.

I arrive at the prosecutor’s office and give the statement to the secretary. She waves both hands, no, go to the prosecutor. So the prosecutor comes in, I go up to him. “What’s your problem?”. I say that the police took my tractor. He says: I know nothing, go to the head of administration. I say: take my statement, he says not and goes into his office. I go after him and pull at the door handle. There’s even a small fight, and I want to get into the office. But he still didn’t let me in, he locked the door from inside and didn’t let me in. And he didn’t take the statement. I stood there, what could I do? Later I came to the prosecutor again, asked him to take the statement. He again fobbed me off. And another time. Three times and he never did take it.”

Political mechanism for ensuring power in the district

The mechanism is simply and unfailing. Two settlement and fifteen village councils are totally under the control of the First Person and dependent on him. The dependence, like in the times of the feudal princes has the nature of personal dependence of the head of the council on the First Person since the “elections” for the heads of councils were merely carrying out the choice of this person. If this mechanism of “elections” fails (and it does happen), the head elected by the community doesn’t stay in his post for long.

However it is specifically this personal dependence which constitutes the system of hierarchical relations between the ruling class and its subordinates which in its turn is determined by a system of rent relations in releasing income from the exploitation of land property and employment.

The hierarchical system on the scale of the district exists in the form of a spread out “Nomenklatura tree” on the branches of which are “their own people” placed in key posts and ranging according to their level of access to the trough. The trough is the property of the top owner. In the Novorozsosh district, these people are placed in the police force, the prosecutor’s office, the administrative apparatus, in banks, the treasury and village councils.

It is through the councils that the land fund is used, with the main interest at present being with “extra” land registered as “grazing land”, “reserve land”, unclaimed shares which have fallen to the councils’ jurisdiction and others. Or these are lands not accounted for at all. It is these lands which are handed out by the “leadership” to their vassals – “for their services”.

Rent in overt and covert form. The law enforcement bodies in the service of the new class

As we know from history textbooks, feudal rent existed in the form of labour worked (corvee) or tithes (in money or produce). The advantage of this or that form depended on the development of goods and money market relations.

In our times feudal rent are retained with the prefix “quasi”. A case was recorded, for example, of quasi-corvee when there was a relative of the First Person in the farm. During the peak time of sowing and gathering the harvest, at the instructions of the First Person brigades of workers from other farms who are in vassal-like dependence on him are sent to the relative in this farm.  However there are also other cases, in various farms hundreds of hectares of land are cultivated for “important people” – workers of the district and regional administrations, the deputies of councils, various heads from the police, prosecutor’s office, court and the new Nomenklatura which exchanges the land rent for “loyal” service to the new class of owners.  These lands are worked by “new bond slaves” from different farms. The managers of these farms exchange such corvee for the privilege of engaging in business and receiving their part of the rent in the form of farm profit, while the “bond slaves” in their turn exchange the privilege of work into their part of the rent in the form of wages.

If we look more closely at how food and money tithes are extracted in the Novorozsosh district, it corresponds more to the contemporary level of market relations.

The food product quasi-tithe everywhere in the farms of the district has the form of products (grain) appropriated and in kind which are arbitrarily extracted from the rent which the lesser pays in kind to the villagers – the quasi-landowner. When, for example, in the village of Tanusivka villagers for the rent of 10 hectares of their land receive from the lessee 150 kilograms of maize and 3 litres of oil for the year, then in this case one can assume that the products in kind calculated from the rent in favour of the lessee has a considerable size of concealed food quasi-tithe.

The monitoring group found that over recent years there is an ever growing tendency to move towards monetary forms of rent. Here the covert money tithe is expressed in the appropriation of a part of the rent through an unwarranted over-valuing of the price, for example, the grain from the new harvest (in the case of accounts settled with the villagers) in comparison with the market value of grain. Thus, for example, this year in the villages of Trembachevo, Novobila, Pavlenkovo, Mozhnyakivka villagers accounts were settled with villages for forage wheat at 1 UAH for a kilogram whereas the present market price for quality wheat is 0.7 to 0.8 UAH.

Quasi-tithe in monetary form can also be a “princes’” taxations of businesses in the form of dues, a certain amount brought “to the office”.

Concealed, masked tithes exist today also in the form of appropriation via artificially reduced value of the actual land or an undervaluing of the percentage of the rent of the value of the land plot. This is how the property which is “redeemed” from the villagers (property shares) is made several times smaller.

The monitoring group detected a money quasi-tithe in masked form in the village of Zakotne – via “intercepting” subsidies which should have been paid to those providing milk from farms with this falling into the hands of “boyar” P.  Another way was through underestimating the price of the milk when receiving it from villagers, concealing this via over-simplified calculations for milk with using any special calculating books. No written agreements were drawn up from the outset with the villagers for providing milk with the conditions for calculation set down, and the settling de facto for the milk provided was not registered properly. Agreements were only established in 2006 when some of the villagers began demanding this.

Such is the appalling social reality of today’s villages in the Novorozsosh district. This reality is not unfortunately taken into account in the provisions of the Government’s Programme for the Development of the Villages. There is nothing there about the lack of law and adherence to law, about rule on the basis of rent relations of a feudal nature, about the vassal-like dependence of the courts, prosecutor’s office, police and SBU [Security Service] on the new class of owners, or about the slave-like dependence of villagers on this  class. It would seem that those in power in Kyiv know nothing about this, and do not want to know.

Nor has consideration been taken of the reverse side of the process of creating a new class of agrarian owners, of its methods for becoming rich – the impoverishing and social passivity of the villagers whose right to their land plots is purely nominal. The pauperization and social degradation of the villages is the most noticeable result of the decade-long “reform” of the agrarian sector of the country.  The village household, this thousand-year-old oasis of national life is presently dying. It is dying in a zone of exclusion from the law and State. It is dying quietly, like one’s own animal, suffocating in a social wasteland of lawlessness, unemployment and total drunkenness.

The most terrible thing is the rapid expansion of drunkenness among women who are keeping up with men. This was not seen just ten years ago.

The loss of productive force in the Ukrainian village means the destruction of the foundation of national life and the undermining of the basis of the State structure. This is because the age-old social genetic code of village is irrevocably changing and being destroyed.  The committed and mass-scale work of the peasants always ensured that the overall income of the village outweighed its expenses and outgoings. At present it is expenses and outgoings which are dominant, with these unfortunately not taken into consideration by official statistics which only record bourgeois well-being of the new ruling class.

* * *


 Karl Marx at one stage wrote that in the age of feudalism land rent is the single dominating and conditional form of additional value or additional production. Furthermore the direct producer provides land rent to the owner of this condition of work which in this stage encompasses everything, that is the landowner. This happens because it is the land which counters it as what is held in others; hands, the condition of work which is separate from it and represented by the landowner.

Thus the most developed stage of feudal relations becomes reality only when from a social point of view the land on which the producer is directly working is in his consciousness separated from him. Furthermore this separation is represented by the landowner. In other words, in the eyes of the direct producer the land is already identified with the feudal owner, i.e. has become a condition of work which is separated with regard to himself.

Here, drawing a historical parallel it is worth noting that in the Novorozsosh district the rent relations have been turned around: it is not the landowner who symbolizes the separation of the land from the worker as condition of his work, but the lessee who has concentrated in his hands the land plots of many villager-owners de facto usurping the rights of the landowners. The actual owner – the lessee – counters the legal owner – the villager with his land plot as his exploiter extracting land rent through appropriating a considerable part of it.

This system for extracting rent (income for the landowner) in the system of classical feudalism can be set out in the following formula:

R = P – e, where:

R is the rent extracted from the total surplus production for the feudal landowner;

P is the total surplus production received from the land;

E  is the part of the rent which the lessee receives in the form of expenditure on simple reproduction of the invested capital and labour.

In our times of collapse of the kolkhoz system, with the formation of a “new ruling class” the land rent in the modern Ukrainian village follows a new formula for distribution:

R = P – c + Rc, where

R is the rent which the villager owner of a land plot has at his disposal under a rent agreement;

P is the total surplus production received from the land;

– c + Rc are the parts of the rent which the lessee receives in ownership in which c is the part of the lessee’s rent paid in compensation for invested capital and labour

And Rc is the pure rent income of the lessee.

Thus, whereas the classic feudal landowner received rent income which amounted to the total income from the land with the exception (if he so decided) of a part of the lessee which covered only the pure reproduction of expended capital, our quasi-feudal, being the formal lessee of the land plots has effectively usurped the right of ownership to the land plots and has personally taken all the income to be at his disposal.  It is already not the legal owner (the villager), but he himself (the actual owner) who decides which part of the rent to pay to the villager – owner. It is natural that his decision in this case is dictated by the desire to maximize his pure rent income as his own wealth. The size of the rent is here the indicator of the level of exploitation of the villager – owner by the lessee.  It is a paradox that the Rurik princes never dreamed of!  The monopolist maximizing of this amount which of course the lessee seeks inevitably transforms the exploitation of the villagers, workers and the land into over exploitation. We spoke of the forms of such exploitation above.

This turnaround in rent relations, as a result of which the modern lessee effectively becomes a quasi-feudal landowner, has become possible due to the lack of clear division of land plots held by the villager – owners, with the separation (effective removal) of these land plots for the benefit of the lessee. The villagers in this case have basically lost control over their land and have become quasi- or pretend owners who are dependent on the will of the lessee.

This paradoxical situation dictates the agenda for the new working class in turning modern rent into ownership by buying up land plots. In the absence of firm State policy in the sphere of agrarian reform and an effective legal system such transformation is already taking place through covert seizures of land and property, covert accumulating together of land by means, and this is most shocking, of forced impoverishment and pauperization of the main mass of villagers in the system of quasi-feudal rent relations. And all this is logical since they will be able to buy up land plots for a song from poor villagers.

There is a strategically important question of whether the size of pure profit from rent coming in the form of what the lessee has accumulated will become part of an extension of the reproduction of his capital in the absence of a free land market. Otherwise is it possible today without a free land market to move from feudal rent to capitalist, with all the results of a civilization nation following therewith, for the entire country?

It should be noted in this respect that at one stage a large group of leading American economists (including 4 Nobel laureates) turned to Soviet President Mikhail Gorbachev. They strongly urged that in reforming the planned economy and moving towards the market as foundation for private property to avoid the fatal mistakes made by western countries, urging that the State kept natural rent in its possession.

It didn’t work for Gorbachev and Yeltsin didn’t have such a problem. The Ukrainian experience in this sense has merely repeated Russia’s. Just as our billionaires repeat the experience of the storybook fortunes amassed by Russian billionaires, the same experience is with natural rent. It is the experience of making a shadow economy, the impoverishment and dying out of a large mass of the population.

Thus, the project found a reality which as far as we know has not been represented either in scholarly studies or in the public awareness. This reality can be described as follows:

1. In the Novorozsosh district  the dominant form of surplus production is land rent of a quasi-feudal nature;

2.  The cases of rent relations studied make it possible to identify variations of appropriation of land rent, seizure of property, quasi-corvee, production and money rent (quasi-tithe).

3. These rent relations do not exist in pure form as in classic feudalism, but are twisted both by the objective structure of land property relations at the modern phase of development of the agrarian sector, and by subjective factors (nobody these days will present themselves as a feudal lord, and still less will they estimate the source of their income in terms of “corvee” and “tithes”. We can therefore speak of quasi-feudal relations as a means of accumulating capital.

4. The new ruling class is formed under conditions of non-law-based practice of appropriation of land rent and impoverishment of the villagers.

Can one extrapolate these sociological facts to a much wider framework of the agrarian sector of the country? It would seem that the answer is yes.

The participants in the Project have four suggestions for the authorities of Ukraine:

1.  It is vital for the State, independently of the local authorities, to urgently carry out a check and full inventory of the land fund of the district, region and country in order to stop the parasitical use of land and violation of villagers’ property rights.

2. A review is needed of the ideology for reform of the agrarian sector, and it is necessary to find forms of the modern cooperative movement in the villages to involve villages on a large scale, involving those who have not lost their ability to think clearly through alcohol in motivated and productive work.

3.  The strategy for development of the country, especially the agrarian sector, will not be implemented until a legal system is established in which the fundamental postulates of freedom, formal equality and justice are universal principles.

4. In drawing up a strategy for development of the country it would be worth thinking about whether we may not be making a “fatal mistake” by directing natural (land) rent not into the State or local budgets, but into the pockets of the new rich.  Historical evidence shows that almost nobody has succeeded in rectifying fatal mistakes.

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