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The age of the market and the regime of debt: the role of credit in the transformation of pastoral Mongolia1

Since the decollectivisation of the rural economy in the 1990s, Mongolian pastoralists have become subject ). Formerly collective assets, such as to the new property regime of the age of the market (zah zeeliin uye livestock, machinery and buildings, have become private property and land is increasingly becoming a resource available for private ownership. International finance and development agencies have advocated credit schemes for pastoralists faced with uneven annual income and the servicing of debt has become a central burden for an increasing number of Mongolian households. In the neoliberal era, the pastoral sector has become highly vulnerable to climatic variation. The distribution of environmental risks alongside processes of collateralisation has expanded the sphere of monetised relations and made pastoralists dependent upon increasingly global markets for commodities and credit. This new regime of debt has interesting historical parallels with the Qing-era barter trade that impoverished pre-revolutionary Mongolia. Key words debt, Mongolia, neoliberalism, credit, finance, development, transaction, primitive globalization, political economy

Introduction
Since the 1990s Mongolians have seen the transactional, quantifying logic of the market expand to entangle an ever-greater set of social relations. In the new neo-liberal political economy, timely money became a scarce resource and essential requirement, one that could be made to command a premium price through high interest rates. Most households became subject to a regime of debt that linked their fortunes to the national and international financial markets. It might seem implausible to suggest that debt has only recently appeared in Mongolia. Surely people have always been enmeshed in the obligations created by systems of exchange? But this thinking reflects Graebers point that our common-sense assumptions . . . tend to reduce all human relations to exchange, as if our ties to society, even to the cosmos itself, can be imagined in the same terms as a business deal (Graeber 2011: 18). In this view some form of debt might appear to be a social inevitability, an enduring aspect of the human condition. Leach, for example, saw social relations themselves as forms of debt: persisting relationships only exist as feelings of indebtedness (Leach 1982: 154). But more recent anthropology has challenged the classical application of the notion of exchange that has, as Hunt (2002:

This paper draws upon material collected by the Oral History of Twentieth Century Mongolia project funded by an AHRC grant [AH/E002277/1].

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115) points out, tended to obscure alternative modes of allocation that he describes as transfers. On reflection then, debt is clearly produced by a particular set of institutional formations within a given political economy; it cannot be taken for the substance of human relations, not even those that produce transfers of material goods. This is because debt is made to appear by the transactional logic of the exchange idiom, which is only one of the possible schemas used for the distribution of what economists would term goods and services. In Mongolia objects and help may be subject to transactional logics, and these may be commercialised and commoditised and subject to the logics of monetary economy. But many things are provided for others using non-transactional logics; ones that do not produce debt as such at all. Very substantial material flows are generated by obligations owed to relatives, for example, such as providing idesh food supplies. Close relatives of herding households can expect meat in winter, and dairy products in summer, and this is often a significant proportion of a households total livestock product. 2 In the collective era, all sorts of goods and assistance were obtained from relatives and friends through what was termed tanil tal (networking, literally friend/acquaintance side). Although these practices have declined markedly since that time, they remain important. One might term such transfers an economy of favours, indigenous service economy (Gell 1992), exchange network or field of reciprocity, but they are not talked of as such, and the relationships are substantially distinct. These sorts of transmissions are so common and expected that they can be seen as materialisations of the social relations themselves, a result of expectations and obligations generated by kinship and friendship connections. As I have argued elsewhere (Sneath 2006), rather than transactions, we can see these as enactions of aspects of persons and roles for which the language of obligation and expectation is more appropriate than the idiom of exchange. Social relations with strangers may also be materialised in transfers. In everyday rural life, expectations of hospitality (zochlomtgoi zan) entail routine material transfers to others. Old friend or complete stranger, any visitor to a herding household may expect to receive tea, dried curds and other snacks, at the absolute minimum, and usually a meal and nights stay if needed. If consumables are visible, then a guest may help themselves, and the way to ask for something is simply to ask if there is any (bainuu?). Transfers of this sort can be very substantial, but they do not produce debt. We might apply the term to one of these relationships and ascribe a feeling of indebtedness to one or other (debt) could not be properly applied to this relationship. party, but in reality the term or ureg ) and favours (ach). 3 A quite different vocabulary is used for obligations (u

2 3

See Sneath (1993) for a more detailed account of rural networks in the late state socialist and early neoliberal period. Gift giving remains very common, for example, and does not answer to transactional logic. In most cases presents are seen as legitimate ways of showing gratitude or respect and are defined in appropriate terms e.g. beleg (gift), to honour the hand (gar tsailgah). A middle-aged man who was engaged in obtaining a university place for his son gave a substantial gift to an educational official, but, he explained, this was not a bribe, but he helped me in this matter so I honoured his hand (gar tsailgah), I wanted to express my gratitude. Literally . . . ene n heel hahuul bish harinminii on uchraas garyg n tsailgaj, o oriinh o bayarlasan setgeliin ilerhiilel bolgon ogs on gej ajilyg buteej ogc o yarj baisan yum (see Sneath 2006: 99). This is entirely different from the conceptual vocabulary of transaction; indeed if it was described in such terms it would be considered unambiguously corrupt.
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M o n g o l i a s a g e o f t h e m a r k e t
The neoliberal reforms of the early 1990s dismantled Mongolias state socialist economy and plunged the country into a deep economic crisis. The security of employment in state enterprises evaporated, poverty and unemployment soared. Families were forced to develop diverse coping strategies to make ends meet in the new climate. The ability of most people to help members of their networks declined. The cousin who used to be able to get leather from his work in the boot factory had lost his job; if his relatives needed some they would have to buy it. The truck driver who used to take his friends children to school had no fuel to make the trip, unless the family could find the cash for him to buy some. Relations of mutual help became entangled in monetised logics, and since many people now needed cash, the most common requests for help became appeals to borrow money. Almost everyone, then, became enmeshed in monetised webs of obligation now quantified in terms of cash. 4 The rapid growth of lombard pawnbroker shops in the 1990s reflected this new reality. 5 Pawning valuables became a common strategy for people thrust suddenly into the margins of poverty. The use of the lombard tended to become cyclical; people would surrender items as security for a loan, later when they found the money they would pay off the debt and interest and reclaim their property, only to find that they were forced to pawn valuables again when their money ran out (Hjer 2012). As they became more established, however, commercial banks began to offer personal loans, particularly for larger sums. This process of collateralisation is one way in which new assets, resources and values have been produced. All sorts of things became economic resources that had not been available to such a discourse in the past. Land, for example, became a real or potential economic resource since the advent of a programme of privatisation that began with urban land and is now interacting in complex ways with the rights to the still largely public pasture-land. All sorts of items moved into the commercial realm if they could be made collateral for loans: at first the apartments privatised in the 1990s, then plots of land as they became forms of property; even fashionable mobile phone numbers and desirable number plates have become valued so that they can be used as collateral. The contemporary regime of debt has emerged along with two sorts of insecurity. The first is the familiar uncertainties of market fluctuation. The changing prices of products that people rely upon for their livelihoods may present households with unexpected falls in income. In the global recession of 2008, for example, the prices of cashmere plummeted, causing a sharp reduction in rural incomes. Cashmere has become one of the few livestock products that is still exported in the neoliberal era and
4 These personalised debts between family and friends can also sever relationships. In 2010, for example, the man I shall call Dorj was the executive director of a company in Ulaanbaatar importing kitchen goods and had saved a considerable amount of capital. He decided to help six of his unemployed friends by buying each a taxi for around US$3,0004,000 (45 million MNT), each on the understanding they would repay this over a year or so by paying US$16 (20,000 MNT) each working day. Within a few months none of the six were able to keep up these payments, but since he understood they had genuine financial difficulties he was reluctant to press them to repay. His friends started avoiding him because of their embarrassment and the result was the loss of both his capital and these friendships. Lombard is the Russian name for pawn-shop, derived from the northern Italian region of Lombardy associated with this form of finance in the Middle Ages.
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commands good prices. Mongolian pastoralists have doubled the proportion of goats in their herds since the early 1990s, and most have become heavily reliant upon the income from cashmere sales. Since 1992 prices have boomed and bust three times, dropping from around US$100 a kilo in the peaks to about half this value in the troughs. The prices paid to pastoralists are much lower, of course, but follow the fluctuations, so the prices they could expect dropped from US$42 a kilo in 2007 to just US$12 a kilo in 2008 (Marin forthcoming: 13), and bounced back to around US$40 a kilo in 2010. Similar market fluctuations affect all businesses, of course, creating comparable if usually less dramatic fluctuating fortunes for urban households. The other sort of risk is environmental, and this is a particular problem for pastoralists. Harsh winters and summer droughts can lead to the loss of very large numbers of livestock. Many households have lost their entire herds as the result of extreme weather, and in such situations herders are often forced to take on debts. This problem, what Marin (forthcoming) calls double exposure to both market and environmental risks has helped fuel a new regime of debt in Mongolia.

The old regime of debt

In the 20th century, Mongolia experienced two transformations of social order: in the 1920s from aristocracy to Soviet-style state socialism, and in the 1990s from modernist socialism to neoliberal democracy. Each of these transformations introduced new state orthodoxies and associated political economies. Although in general the introduction of Soviet modernism was the most far-reaching transformation, when it came to the organisation of animal husbandry, upon which most rural inhabitants rely for their livelihoods, there were certain ways in which the neoliberal era represented a more radical break with the past. The new regime of property and citizenship that was introduced was one in which district authorities were no longer able to command labour to maintain local political economies (Sneath 2004). In other ways, however, Mongolias age of the market has produced features that resemble the pre-revolutionary political economy. One of these is the role of debt. In the 18th and 19th centuries, Mongolia became enormously indebted to Chinese firms, within the Qing empire. In the late 19th century, the increasingly impoverished population struggled to pay the interest owed on debts, which in some districts exceeded the total capital value of all the property in the unit (Bawden 1968: 203). Historians consider the burden of ever-accumulating interest a major cause of the social unrest that fuelled the struggle for independence and led to the foundation of the Mongolian state in 1911 (Bawden 1968; Sanjdorj 1980). In pre-revolutionary Mongolia, commoners, aristocrats and local government all borrowed heavily, at high rates of interest, from Chinese merchant firms who traded consumer goods for livestock products. These firms operated in each of the principalities (hoshuu) that made up the Mongol territories of the Qing and the later independent Bogd Khaan state. They had become closely intertwined with the aristocratic state, financing various occasional needs of princely administrations, and supplying all sorts of consumer goods to their subjects. These firms became, in effect, partners (albeit ultimately junior ones) in the administration of the aristocratic state. Indeed, hoshuus generally appointed one such merchant house to be its tunsh partner or
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associate to act as its principal banker and favoured commercial agent. The hoshuu as an administrative unit frequently serviced a debt with their tunsh , and nobles often took personal loans amounting to thousands of silver taels (ounces). However, they often managed to get some or all of this debt transferred to their subjects (Atwood 2004: 97, Bawden 1968: 100, 203; Sanjdorj 1980: 80). The crushing poverty and dismal living standards of the hopelessly indebted commoners of Mongolia struck 19th- and early 20th-century European travellers as extreme. This regime of debt left its mark: the ui bol bayan, ovching bol jargal to be without debt is to be rich; to saying goes org ui be without illness is to be fortunate. Much of the commoner debt was produced in particular ways. The dominant commercial transactional form at the time (one that emerged again in the 1990s) was barter-trade, in which merchants took useful goods out to pastoral encampments and traded them directly for livestock or livestock products. Silver and other forms of cash held limited appeal for people several days ride from any place where you can purchase goods, and mobile pastoralists have long tended to want to acquire the goods they need on the spot. However, these barter transactions were monetised in the sense that the values of the items traded were calculated in terms of money prices and translated on the spot into goods, so that the difference could be made up using one of the various currencies in circulation (the main ones being silver, tea and sheep). Frequently, however, pastoralists needed goods that they could not pay for, and ran up debts. Partly this reflected the pastoral cycle products such as wool and cashmere only appear in certain seasons and this might not coincide with needs. The merchant houses also specialised in loans of currency the main ones being silver and tea blocks that might be needed to pay tax liabilities. They would often leave the livestock traded in this way for the pastoral household to herd for them and under these arrangements, which reflected the established sureg tavih relations for leasing out herds, the offspring of their animals also became their property. If these livestock were lost as a result of bad weather or other causes, the household would be left with the debt, which would increase in line with the expected growth of the herd. The Mongolian language reflects the reproductive logic of these property relations. The term for the interest u , which means son, boy or child. Indeed the term for finance is generated by a loan is hu u composed of san (treasury/wealth) and hu u (son/interest), since it entailed sanhu managing the growth of wealth. By the 19th century, merchant houses owned huge numbers of livestock. 6 The debts mounted, and by the early 20th century had become so great as to defy any realistic prospect of repayment, despite enormous livestock exports (Onon and Pritchatt 1989: 4; Atwood 2004: 97). However, the debt itself was overtaken by political events. The Soviet-backed Mongolian Peoples Revolutionary Party gained power in the early 1920s, eliminating the aristocratic and monastic elite, and expelling Chinese merchant firms and their debts in 1928. At first the new state struggled to construct any sort of centrally-planned economy, but it made rapid progress after World War II when Soviet investment fuelled the growth of industry and urban centres. Pastoralists were, eventually, relatively successfully integrated into the new national economy through the introduction of large politico-economic territorial units the collectives (negdel) and state farms (sangiin aj ahui).
6 Sanjdorj (1980: 91), for example, notes that in the late 19th century Chinese traders were taking 25,000 horses, 10,000 cows and 250,000 sheep from the area of Ih Huree alone every year.
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Introduced largely in the 1950s, the collectives and state farms managed pastoralism (and some agriculture) in each local government district (sum). They typically included something in the order of 1,000 households, about half of whom were specialist mobile pastoralists living in encampments throughout the district, and the other half working in support and service jobs in a central settlement. Pastoral households were organised into small groups called bases (suur), and these were grouped into production brigades (brigad) and sections (heseg). Households were assigned livestock to herd, and received a regular income. The collectives owned the bulk of the livestock of the district but herding households were allowed a certain number of livestock (50, in the 1980s, or in some regions 75) of their own to supply domestic needs. Brigades and sections would move livestock to different allocated seasonal pastures, and when necessary collective managers would employ the pastoral technique of otor, by which livestock are repeatedly moved over distant and lesser-used pastures at times of fodder shortage, as a method of intensively feeding them (Humphrey and Sneath, 1999: 23364). Land was ultimately owned by the state, use was managed by the collective management and pastoral households generally had recognised areas of pasture within the areas allocated to their group. The collectives also maintained machinery for transportation and haycutting services. Pastoralists were moved on the longest legs of the annual migration by collective trucks, and hay was delivered to help feed livestock during the difficult months of winter and early spring. This coordination and support of pastoralism is generally viewed as a very positive aspect of the old system by herders, and has been sorely missed since the advent of the age of the market. The collectives used their own accounting systems. Salaries and bonuses earned by the negdel members were held as credit against which pastoralists could buy goods from the collectives mobile shops that toured the encampments by truck. If they needed o ready money), they would withdraw it money in paper currency (belen mong from the financial department of their collective or state farm. This was the collectives answer to the Chinese merchant houses barter-trade, and it was thought of as successful, since wages were relatively high and Mongolias integration into the COMECON trading block brought a selection of industrial products to the pastoralists door. These might have been considered unimpressive by Western European standards, but were nevertheless very welcome to rural Mongolians. Staples were rationed and subsidised, and since luxuries were generally in shorter supply than state salaries, personal debt did not present itself as a significant problem, and this left its mark in oral history narratives of the period. 7

Informants interviewed as part of the Oral History of Twentieth Century Mongolia project often described the collective era as one in which they did not have debts. A 43-year-old music teacher and former herder from Malai sum in Omn ogov, for example, noted that people didnt have debts, so at that time their salaries were all spent on their own living (costs) and their children or ingeed tuhain uyeinhee oriinh o amdrald ur hu uhd u uddee shirgui tsaling odoo o o buren zartsuulaad (interview 080823A). A 67-year-old retired herder from Altanbulag remarked we would buy clothes for our children and food and drink and next months salary meant we never had any debt. uhd u uddee o hool undyg n, daraagiin tsalin boltol yero os o o or tavihgui Hu huvtsasyg n avch ogn (interview 080502A). One informant (080810A) did describe the obligation to work for the collective ), but this was unusual. as a debt (or
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Dismantling state socialism

In the early 1990s, in the wake of the collapse of Soviet-backed state socialism, the Mongolian state undertook wholesale political and economic reform. A multi-party electoral system was introduced, and although the old communist ruling party (the Mongolian Peoples Revolutionary Party, MPRP) was confirmed in office, the state nevertheless embraced a broadly neoliberal agenda. The government embarked on a series of radical reforms designed to create a market economy. In common with other Soviet-block countries, the western economic advice given to Mongolia resembled the stabilisation and structural reform packages that the IMF and the World Bank recommended for poor countries in the 1970s and 1980s (Nolan 1995: 75). It included the privatisation of public assets, price liberalisation, cutting state subsidies and expenditure, currency convertibility and the rapid introduction of markets. The recommendations reflected a neoliberal discourse in which the economy should be emancipated from the political structure, permitted to assume its latent natural form, composed of private property and the market. As Ferguson notes (2009), the term neoliberalism has a range of different meanings, from a synonym for capitalism to certain modes for the creation of subjects. Here it can serve to describe the macroeconomic doctrine, described by Harvey as advocating the liberation of individual entrepreneurial freedoms and skills within an institutional framework characterised by strong private property rights, free markets, and free trade. The role of the state is to create and preserve an institutional framework appropriate to such practices . . . if markets do not exist (in areas such as land, water, education, health care, social security, or environmental pollution) then they must be created, by state action if necessary. But beyond these tasks the state should not venture. State interventions in markets (once created) must be kept to a bare minimum. (2005: 2) 8 The programme to privatise collective and state enterprises began in 1991. In rural districts the reforms included the dissolution of the pastoral collectives (negdel) and most of the state farms (sangiin aj ahui). The collective herds of sheep, goats, cattle, horses and in some regions camels were divided between the former members, as were the other collective assets, such as motor vehicles, machinery and equipment. The introduction of the new property regime had the effect of breaking up the concentrated herd ownership, the large-scale movement systems and specialist support operations the collectives had organised. Many of the workers in the rural settlements lost their jobs but gained some livestock instead. A quarter of a million former collective and state workers became directly dependent on small holdings of livestock. This trebled the number of workers directly reliant on pastoralism for their livelihood from less than 18% of the national workforce in 1989 to 50% of the working population in 1998. Livestock numbers began to rise. Pastoralists valued herd-wealth in its own right and now relied upon their domestic animals for subsistence, so increasing herd size became
8 As a political position this generally entails, as Ferguson puts it, a valorization of private enterprise and suspicion of the state, along with what is sometimes called free-market fetishism and the advocacy of tariff elimination, currency deregulation, and the deployment of enterprise models that would allow the state itself to be run like a business (2009: 170).
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a matter of food security. From 1990 to 1998 the national herd increased by over 20% to nearly 32 million head. However, the efficiency of pastoralism declined. 9 The exports of livestock and livestock products collapsed; incomes, public services and living standards declined dramatically (World Bank 1994: 19; Griffin 1995: viii). The number of people living below the poverty line increased from almost zero in 1989 to over 33% in 1998 (United Nations Systems in Mongolia 1999: 5). Pastoralism began to fail to provide basic food security for a growing number of households, and a steady flow of people moved into the semi- and informal economies of peri-urban peripheries, particularly the vast city of yurts and shacks around Ulaanbaatar, the geriin horoolol.

Distribution of liabilities
As Verdery argues (2004: 140), new proprietary regimes can be analysed in terms of the distribution of liabilities, rather than simply goods and assets. In this case the new property rights became stakes in wider systems that included objects, resources and the organisation of labour. This also brought a share in the risk that this network might collapse or operate unsuccessfully, and the new pastoral sector was extremely vulnerable to bad weather. This was made tragically clear in the winters of 1999 to 2001 when Mongolia lost some 6 million livestock, a fifth of the national total. These zuds (disasters caused by severe weather) were the result of an unusually dry summer followed by a savagely cold winter. Losses were concentrated in some regions one province, Dundgov, was particularly badly affected, losing more than a quarter of its livestock. Across the country some 2,000 households were left without any livestock at all after the first winter, and many more were left with unsustainably small herds. Since then major livestock loss from gan (drought) and zud has become an endemic feature of the pastoral sector. The zud of 2010 was one of the most severe, causing the loss of more than 8 million livestock (UNDP 2010: 1). Although zuds are the result of unexpectedly harsh conditions, these crises were entirely predictable. Severe weather of this sort occurs periodically in Mongolia, and a number of measures had been developed to mitigate its effects. Mobility was an important technique; herds were moved from the most badly affected localities to areas where conditions were better. This could be done rapidly in the collective era as managers could use teams of trucks and coordinate movements centrally. The collectives and state farms also stockpiled hay, which could be used to provide extra fodder for exhausted animals, and this also relied upon the motor pools for distribution to pastoral encampments. The livestock losses themselves are in fact less important than their differential effects on the livelihoods of pastoral households. Some herds were wiped out entirely, and the poorest households had so few livestock to begin with that they were vulnerable to any sort of loss. In the collective era even these dramatic levels of livestock loss, should they have somehow occurred, would not have threatened the basic food security of pastoralists; total livestock numbers always recovered and collectives were restocked from other districts. Risk, as well as property, had been centralised firstly by the

By 1998 survival rates of offspring had fallen by around 10%, and livestock totals were only able to rise because levels of marketing and consumption declined by about 20% (NSO 1999: 834).
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negdel and secondly by the state itself, which ultimately underwrote the collectives operation. But the tiny, independent pastoral producers that have been created by the privatisation of pastoralism now face destitution if their livestock die. Half the Mongolian population had become directly dependent on their own herds for subsistence in a massive distribution of risk. In retrospect we might say that the centralisation of the planned economy exposed pastoralists to another sort of risk the possibility that the system itself might collapse. But in the collective period this sort of systemic risk had been largely invisible. The experience for most pastoralists in the 1990s was one of a sudden and dramatic rise in insecurity. The Mongolian government, made acutely aware of this by recent events, has begun to develop systems for spreading risk that are compatible with the neoliberal economic reforms. In March 2001 the government began debating a new Livestock Insurance Law in the hope of reducing the risks to pastoral producers. However, the result was that the World Bank launched a livestock insurance programme with the aim of combining the insurance products of commercial companies with a government-financed safety net, and this has led to a pilot scheme that was begun in three provinces in 2006 (Mahul and Skees 2006). It remains to be seen if this will have a positive effect, but there is considerable public scepticism about its prospects. Along with the new political economy came a new citizenship regime in which the associated neoliberal arts of government are also in play. 10 The pastoralist has been pressed to become the responsibilised citizen that Ferguson describes, supposed to be operating as a miniature firm, responding to incentives, rationally assessing risks, and prudently choosing from among different courses of action (2009: 172). Much of this comes from the transnational politics of the World Bank and other development agencies whose offers of funding are generally irresistible to domestic Mongolian politicians, but whose formulation of the problem and proposed solutions reflect neoliberal doctrine. The overall result of macroeconomic reform has been the introduction of market mechanisms into new areas of social relations. In this case it has been extended to include access to another scarce resource timely money. 11

The new regime of debt

Debt has become such a very common condition in rural (and urban) Mongolia that to o o bosod org ui baihshig saihan be free of it is something of a dream. As the saying goes ogl ug ui nothing is so beautiful as waking up in the morning free of debt. Baatsagaan zuil
10 Fergusons analytical distinction between the ideological project of neoliberalism on the one hand and neoliberal arts of government on the other (2009: 166) is helpful in this case since Mongolian political culture is diverse and as a political doctrine neoliberalism still has to contend with elements of reformed socialism. However, when it comes to the mechanisms of the post-socialist political economy introduced since the 1990s, Mongolia can certainly be said to have entered an era of neoliberalism. The expansion of commercial credit could be seen as a mechanism of neoliberal rationalisation in that it represents an ostensibly transparent market for timely money, just as in his study of the industrial city of Belaya Kalitva, Collier describes state budgets as technological mechanisms through which neoliberalism seeks to rationalise and reengineer the institutions of Soviet social modernity (2005: 373).
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sum, for example, is a rural district in the province of Bayanhongor aimag, some 700 km southwest of the Mongolian capital Ulaanbaatar. In 1991, after the dissolution of the districts collective farm (negdel), 12 a short-lived marketing cooperative was founded named Tsagaan Eej. 13 Cooperatives of this type (horshoo) were established all over the country at this time in an attempt to bridge the gap between the new rural producers and the markets. These cooperatives typically took bank loans for start-up costs such as trucks to move the produce to market, and almost all went bankrupt in the mid1990s in the face of spiralling interest rates and rising prices for costs such as fuel. Since then pastoral households have engaged directly in the market as atomised individual producers. The most successful of these have over a thousand head of livestock, but there are only a handful of such wealthy households. Most middle-income households have a few hundred sheep and goats and smaller numbers of larger animals, typically between ten and thirty cattle and horses. Poor households have fewer livestock, often just a few dozen sheep and goats, and some work herding the animals of richer households. ) was rare in the collective period, but borrowing (zeel), however, Formal debt (or was very usual. People would routinely lend goods to family and friends within their networks. Forms of pooling goods and labour were also very common. Production brigades (brigad) frequently undertook jobs that one of the member households needed doing on a rotational basis, such as sawing logs or repairing enclosures. This might be done as often as once a week, with each household benefiting in turn. Brigades would also often find ways of making extra, informal, income, by using scrap materials to make fencing, for example, and selling it. This money was usually put into a joint fund (dundyn san), often in a bank account with the brigade head and accountant as signatories, and was spent from time to time for weddings, funerals and other expenses as agreed at brigade meetings. From being virtually unknown in the collective period, debt is now ubiquitous. In rural districts most shops sell goods to customers on informal credit, particularly if they know and trust them. With the local economy fuelled in this way by credit in various forms, creditworthiness becomes of critical importance for households. Trust is generally sufficient for the members of networks, including shopkeepers. However, banks have more formal methods of producing security, and the result is a process of collateralisation by which herders possessions become priced without ever being on the market. The values created in this way, however, are very low. In Baatsagaan in 2011 a sheep was typically valued at 15,000 MNT (US$12), and a cow at 75,000 MNT (US$60), around a third of the market price. 14 A large fully furnished yurt (ger) is valued at just US$240 (300,000 MNT), again a fraction of the usual cost. The banks will generally only make loans to pastoralists who can put up a certain number of livestock as security, typically 75 sheep and goats (bog mal small animals). With other collateral such as gers, winter shelters or vehicles, loans are generally given up to 60% of the value of the security. Since around 30% of pastoral households have fewer than 50 head of livestock, there are many rural people who, in theory, should
12 In the state socialist period all rural districts supported a collective (negdel) or state farm (sangiin aj ahui). The Baatsagaan collective was named Choibalsangiin Zam Choibalsans Way after the Mongolian Premier Khorloogiin Choibalsan, Prime Minister from 1939 until his death in 1952. on Tsagaan in the district. This means White Mother a reference to Lake Bo Marin (forthcoming: 11) found that valuations could be much lower than this. He reports extraordinarily low bank valuations from Dundgov in 2007 just 1,350 MNT for a sheep and 8,000 MNT for a cow (about US$1 and US$8 respectively a tiny fraction of the normal price).

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not be able to get credit. But since those with the greatest need for timely money often lack collateral, it is common for people to take out double loans (davhar zeel), that is bank loans in the names of others, usually close relatives, who have better securities. Since they often find it hard to secure loans, pastoralists pay higher premiums as a result. Interest rates of 2.8% a month were usual for loans to herders, representing an annual interest rate of around 34% a year. 15 Rates as low as 2.3% a month could be charged those with particularly good records of repayment and security, but this was relatively rare. Interestingly, these rates approach the 3% per month that was the usual rate of interest charged by the pre-revolutionary Chinese merchant houses, considered blatantly exploitative by historians (Bawden 1968: 98). All but the richest households in Baatsagaan have bank loans. Most take these out in late August and early September to pay for their childrens school fees, the costs of repairing wells and producing animal fodder for the winter. They aim to repay them in late April to June with the proceeds of cashmere and wool sales. The seasonal nature of market income, then, is one source of the need for loans. The other major reason, however, is the systemic risk posed by climatic variation. Zud struck the district in 2000, 2004 and 2010. In sub-district (bag) number one, for example, livestock numbers totalled 37,000 in 2003 and fell to just 8,000 after the 2004 zud. Over the following years the total rose to 25,000 but fell back to 12,000 in 2010. These huge losses pressed some families deeply into debt. Having lost all their livestock, one household, for example, received a loan to buy 30 sheep and goats from the World Bank restocking programme shortly before the 2010 zud. The head of the household had hoped to build a herd of a thousand or more. Despite his making every effort to look after his livestock, he lost every single animal. Without any other prospects he joined the thousands of Mongolians who go every year to try their luck and the gruelling and dangerous work of illegal ninja gold mining. 16 The combination of zud and bank loans led to two other households in the subdistrict having their collateralised herds seized and driven away. One household had several adult children and had taken out loans to fund their marriages using their parents herd as collateral. In the aftermath of the zud, the household head was unable to keep up with the repayments so that all their remaining livestock were seized by the bank. In the second case a well-respected herder in his sixties had several hundred livestock before the zud killed all but 60 of his sheep and goats. He had taken a bank loan the year before to cover medical costs as a result of a motorcycle accident. Unable to keep up with the repayments on his bank loan, his entire herd was seized. As Solongo, the sub-district governor put it, If you ask why herders borrow money, it is because of these many recurring zuds; when herders livelihoods fall they borrow money. Loans, then, reflect needs, not investment opportunities. This was echoed by
15 16 Inflation averaged 12% from 2007 to 2012. The term ninja became the standard name for these miners who hand-dig tunnels for soil that can be panned for gold without any formal mining licences. The term appears to have come from the resemblance between the green bowls they carried on their backs and the characters in the popular TV cartoon Teenage Mutant Ninja Turtles. Ninja mining has become an important source of supplementary income for people of the district, particularly for those desperate for cash. Groups of three or four friends, or sometimes relatives, travel to gold fields in Gov-Altai province some 250 km to the east. They usually buy essentials on credit from a shopkeeper who they know and end up in another cycle of debt and repayment as they come across small finds of gold from time to time.
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her friend Narantuya: Someone who has a thousand livestock does not take out loans. They are not like us who have only a few livestock and worry about our livelihoods . . . Obviously, if the livestock are really good people will not take out loans. 17 Herders also take loans to pay for vehicle hire so that they can move to fresh pastures either as part of expected seasonal movement, or to make the additional movements to fatten livestock when the usual pastures are insufficient (otor). The need for movement depends upon the weather. This is true throughout Mongolia, but is particularly the case in the more arid regions in and around the Gobi, where rainfall variation is at it highest. Marin (forthcoming: 10), for example, has shown that in Dundgov debts increase in harsh years and are closely linked to the need to undertake otor. 18

Neoliberalism and the promise of credit

In neoliberal theory used here in Harveys utopian sense credit should function to facilitate investment in agricultural production, just as it would in industry or commerce, allowing greater productivity and eventually enhanced living standards. The extension of agricultural credit is advocated by the World Bank and international development agencies as a technical requirement of rural development. Something that resembles the neoliberal promise is materialising for some wealthier people. New shops and businesses have sprung up in places near large existing or future markets, such as Khanbogd sum near the major new copper mine being constructed at Oyu Tolgoi. Loans have allowed local entrepreneurs to invest in stock and machinery in the approved way (Tsolmon 2010: 14). Although such enterprises fail all the time and bankruptcies remain common, the anticipated flow of new mining wealth promises many success stories. 19 A small group of wealthy pastoralists are also in a position to reap the benefits of investment by exploiting economies of scale and extensive systems of pastoral movement. The wealthiest few households in most districts have
17 Solongo: Yaagaad malchid zeel avdag geheer ene olon davtamjtai zud turhan bolood malchdyn zeel avahgui ee. amjirgaa dordohloor zeel abch baigaa yum. Narantuya: Myangat malchin hun oh on maltai amjirgaa yaanaa gej baigaa bish. . . Mal ih saihan baival Ted nar chin bid nar shig tso u us zeel avahgui sh dee. hum Debt levels seem to reflect this variability. Total outstanding debt to commercial banks in Dundgov, for example, was 11,963 million MNT in 2007 (NSO 2008: 165), which works out at just under 1 million MNT (US$750) per household. Some aid agencies also offer soft loans, and these may be gratefully accepted. Bold, for example, was a 78-year old former electrical engineer living in the northern province of Bulgan aimag. He had acquired 12 hectares of agricultural land but had been unable to raise the funds to buy equipment needed to farm it. Even the agricultural HAAN bank had dismissed his case on the grounds of low security. However, in 2007 Bold got a loan of US$1,700 (2,160,000 MNT) from the international evangelical development organisation World Vision who offered loans to the poor without collateral. He marketed three tons of potatoes as a result and was required to repay only US$1,000 (1,296,000 MNT). In 2011 he was given another loan in the form of a tractor and trailer worth about US$4,000 (5,200,000 MNT), again without collateral. However, although the trailer was functional the tractor needed repairs he could not afford and had been sitting unused for several months. Bold was unsure if he would repay the World Vision loan; indeed he thought he might not have to since there was no contract or collateral. But this was a very rare situation; most borrowers dream of finding a source of financial aid with such beneficial terms.

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over 1,000 livestock, and the wealthiest few in each province have over 2,000. 20 The wealthiest owners typically employ hired herders, parcelling out livestock to other pastoral households to herd for them. They frequently own and maintain motor vehicles, sometimes trucks, which can allow them to move further and more often to make use of distant pastures, and to bring in fodder when they need to. This signals the emergence of larger-scale private herding businesses, drawing on labour and capital to operate reasonably successfully in the terms of new economy (Sneath 2004). In some ways these larger operations resemble those of the pre-revolutionary period, in that rich herd-owners make use of both livestock and labour to produce surplus, but this process would have to go much further before we saw the enormous concentrations of herd wealth found in the aristocratic era, and it is unlikely that under present conditions these larger-scale operations will become big enough to include the bulk of pastoral households. As yet, such wealthy pastoralists represent a small minority in 2007 less than 2% of herding households owned more than 1,000 livestock. The bulk of the pastoral sector continues to be composed of households with small herds. Around two-thirds of livestock-owning households own fewer than 150 domestic animals the sort of herd-size needed to successfully make a sustainable livelihood in pastoralism. These poor pastoralists are generally the most vulnerable to shocks such as zud, and are therefore also the most likely to need credit in times of trouble. In what, following Collier (2005), we might call actually existing neoliberalism, most loans are used to pay for goods that are consumed (often necessities in times of hardship); they cannot increase productivity. Pastoral families typically take loans of og for a year (approximately US$400800). Interest between 500,000 and 1 million togr payments simply become an added drain on the households income. The virtuous cycle of loans allowing improved productivity and greater wealth is a minority scenario. The great majority face a vicious cycle of poverty leading to debt and further poverty. Despite positive GDP growth for over a decade, the percentage of the population estimated to live below the poverty line has increased from 33% in 1998 to over 39% in 2010 (CIA 2012). Another driver for personal debt has been the promise of future payments. Mongolias economic future has increasingly become associated with the mining sector that came to account for between a quarter and a third of GDP (NSO 2008: 137). Multinational mining corporations showed strong interest. Rio Tinto, for example, entered protracted negotiations with the Mongolian government for the rights to exploit an enormous copper deposit in Oyu Tolgoi. Widespread fears of exploitation and heated debate within parliament and the press slowed the process, but in 2010 Rio Tinto finally gained rights to begin mining in an agreement that allowed the Mongolian government to purchase up to 34% of the project. In its long campaign to win mining rights, Rio Tinto had predicted that the Oyu Tolgoi development would increase the GDP of Mongolia by a third, and in the 2009 election campaign both political parties began to offer voters a direct handout from the anticipated revenue. 21 As a result, since 2011 all citizens receive a monthly income from the government of 21,000 MNT (about US$17).
20 In 1998 there were reported to be 955 pastoral households with more than 1,000 head of livestock, of whom 33 had more than 2,000 animals. By 2007 this number had trebled to 3,181 and 170 respectively. In 2009 the ruling MAHN party offered every citizen a handout of 70,000 MNT (around US$60), but when the rival MAN party offered to distribute more, a bidding war drove the final promise up to 1.5 million MNT (around US$1,200).
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This has provided a lifeline for poor rural households since it can go a long way towards covering the cost of staple items such as flour. 22 Banks have been quick to seize the opportunity of offering loans on the grounds that households would be able to repay them from future government handouts, and banking credit has expanded.

Conclusion
William Sites (2000) coined the term primitive globalization by drawing upon Marxs (1990 [1867]) notion of primitive accumulation the historical process by which the state uses its power to separate producers from the land in the feudal and early modern period, as in the enclosure of common land in England. Sites argues that although 21st-century capitalism does not require further accumulation of capital in this way, for globalisation to proceed people need to be dis-embedded from conditions that would otherwise impede short-term economic activity and integrate them into global markets (2000: 121), and he draws our attention to the important role of the state in this process. In the neoliberal era of Mongolia, the state very rapidly accomplished primitive accumulation of capital through privatisation, judging, realistically enough perhaps, that it had little choice. 23 It has also gone a long way towards primitive globalisation by thrusting its citizens into global markets, both to sell what they produce and to buy what they need. These needs now include credit. To in-debt can be to dis-embed since it engages the borrower in a wider series of economic relations. With the expansion of credit, Mongolian pastoralists are now increasingly subject to national and international financial markets as well as the global markets for their commodities. 24 Whatever else they have done, the various risks and liabilities that have been privatised, along with livestock, are efficient at producing the need for credit. In 2010, for example, there was an outbreak of foot and mouth disease in the eastern provinces of Dornod and Sukhbaatar. Herd owners rushed to vaccinate their herds and most had to take out loans to do so. In Sukhbaatar aimag over 1,500 pastoral households took out loans from a single bank, representing 17% of all herding households in the province. These loans averaged more than 1.1 million MNT (approximately US$900) each (Batzayaa 2010). With typical annual interest rates as high as 34%, this is a considerable debt burden for most pastoral households. 25 The new regime of debt is by no means restricted to the rural economy; it is a general feature of the new Mongolia. The total level of outstanding loans owed commercial banks in Mongolia has risen steadily from just under 63 billion MNT in 1995, to 606 billion in 2005, and in 2007 stood at just over 2 trillion MNT (NSO 2002: 101, 2006: 134, 2008: 165), representing a
22 23 In 2011 a 50-kg sack of flour cost 38,000 MNT (about US$30), for example, which is about enough to feed a herding household for a month when supplemented by animal products. Mongolias economy had relied upon Soviet inputs that collapsed in the 1990s. Some estimate this amounted to as much as a third of GDP or more (e.g. United Nations Systems in Mongolia 1999: 6). Pastoralists have, of course, long been enmeshed in wider sets of relations; in the Soviet era as part of the national planned economy and COMECON trading bloc, and in the Qing period in the wider regime of debt and market created by Chinese trading firms. This is by no means unusual. Throughout Mongolia pastoral households owed some 57 billion MNT to commercial banks in 2010, which represents an average debt of around US$400 assuming 30% of pastoral households are too poor to be credit worthy.

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debt of over 3 million MNT ($US2,400) for every household, in the country where the average monthly wage is around US$170. Timely money is a scarce resource. But as Verdery notes, resources are always made scarce within a given system of values and power relations (2003: x). The extension of credit is generally presented as a way of helping pastoralists; the World Bank and other development agencies are keen to promote microcredit schemes as means of combating poverty within the discourse of neoliberalism. Whatever the efficacy of extending credit and microfinance as a long-term means of reducing poverty, one powerful side effect has been to expand the opportunities for capital, and to create income from liquid assets. Although advanced as a solution to the variability of income and associated risks, debt exposes households to new sorts of risks. The fluctuating fortunes of international financial markets can change the availability and interest rates on loans so as to threaten livelihoods just as a zud or falling cashmere prices can, as many found to their cost in the early 1990s when interest rates increased so quickly as to put many enterprises out of business. We can only hope that market failures will not coincide with environmental shocks, since if they did Mongolian pastoralists would be facing a perfect storm in their struggle to provide for their families. Mongolias historical experience of debt is as a hugely powerful mechanism for extracting wealth from a progressively impoverished population. The challenge will be to prevent history from repeating itself.

Acknowledgements
This paper would not have been possible without an AHRC grant to support the Oral History of Twentieth Century Mongolia project. The author would like to thank all those who provided help and information, particularly Munkh-Erdene, Solongo and Narantuya.
David Sneath Department of Archaeology and Anthropology Faculty of Human, Social and Political Science Free School Lane, Cambridge CB2 3RF United Kingdom ds114@cam.ac.uk

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