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The study focuses on the analysis of social political and economical transformations in connection with the decolonization of the former Territory of Papua and New Guinea. The study core includes an analysis of colonial arrangements and its influence on the transformation of society at the time before the independence and after the formation of the independent state of PapuaNew Guinea. Special attention is paid to the analysis of the formation of elites and working classes within the former equalitarian communities, the blending of original, i.e. Big-Man systems with politics, and the influence of monetary economics on the former systems of socio-political ceremonial exchanges. The author documents how the colonial arrangement influenced the segmented ethnic identity of the inhabitants in the state of Papua-New Guinea, which the author understands as a vertical scale of ethnic consciousness. In the case of Papua- New Guinea the author shows that ethnic identity is divided into four levels: the country, the provincial, the territorial and the national one. Simultaneously, the author documents that in addition to the vertical division, also the horizontal division developed in the new state, which is result of the commencement of monetary economics.
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