Relative merits of oligarchy and democracy

Relative merits of oligarchy and democracy

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It's being presumed in a few Q&A and discussions here that democracy is the most optimal political system. I'd like to see whether this assertion can be substantiated or refuted here.

Are their historical trends in the circumstances that would favour one system over another for economic performance?

For example, it has been argued that Soviets defeated Germany in the fields of WWII, something that French or British couldn't do until 1944, because Stalin's violent dictatorship led to single-minded mobilization of all resources. On the other hand, in the times of plenty the opportunities for diverse free enterprise implied by democracy would lead to better economic performance in a democratic society.

I'm looking for trends such as above: historically, under what circumstances would a tight oligarchy tend to outperform, and under what circumstances a democracy would?

Notice that I'm not asking for opinions such as "which system is better". I'm looking for measurable performance - such as the health of economy in the times of piece or prevailing in the times of war.

The real dichotomy is the balance between Democracy and Meritocracy. Sometimes an oligarchy is more meritocratic in a given context than a democracy, sometimes it isn't.

So to answer your question (Under what circumstances would a tight oligarchy tend to outperform, and under what circumstances would a democracy?):


  • When entry into the oligarchy or role distribution therein is assigned on merit. Military oligarchies for example.
  • When communication of a problem or solution is complex, an oligarchy has lower overheads (O(1) instead of O(N)) to distribute and review potential solutions. A war cabinet would be an example, as strictly speaking inclusion of members disproportionate to underlying democratic mandate makes it more a meritocracy than a democracy.
  • When a solution must applied within a limited time-frame. For example, the Manhattan Project wasn't voted on, nor the Cuban missile crisis. The executive (assumed to be filled on some basis of merit and demos) acted directly.


  • When solutions are intended to be stable and long-term, democratic consent makes the people more likely to comply and apply the solution. Any major law or law reform would be an example of this.
  • When the problem is too complex for the size of the oligarchy regardless of merit.
  • When the criteria "outperform" means for everyone, not just a minority.


Oligarchy occupies a curious place in the political vocabulary. While oligarchies are largely predominant economic, social, and political life, few ruling groups would publicly use this word to describe themselves. Furthermore, unlike the word "democratic," few ruling groups would claim to be oligarchical as a way of justifying their rule as proper and legitimate. Conversely, if a political party, a political interest group, or a political regime is described as oligarchical, one invariably wants to refer to the fact that a small class or group is in charge and the vast majority of the party, group, or regime has been excluded from decision making.

The concept of oligarchy has its roots in Greek political vocabulary and literally means rule or political power of the few. The few, as the term was originally used, could be the wealthy, the powerful, or the nobility. In The Politics, Aristotle (384–322 b.c.e.) described oligarchy as one of those forms of political rule that does not aim to achieve justice or the public good as compared to monarchy, aristocracy, or a mixed republic, but in fact involves a small, cohesive political class ruling in its own interest. In contemporary society, oligarchy refers to any small, cohesive class or group that is in a position to make decisions or command others in either political or nonpolitical contexts. However, it also has a specifically political meaning, namely as a kind of constitutional arrangement or political regime in which political power is in the hands of a few individuals or a small class of rulers. Oligarchy also can be combined with other constitutional forms, such as democracy, monarchy, or aristocracy, in that all of these constitutions might contain an oligarchical element. Whatever the political arrangement, oligarchy always designates some cohesive group that rules a political community in its own interest, over and against democracy, the rule of the many or the common people.

Although oligarchies have existed in all civilizations, it was among the ancient Greeks that the term was first used explicitly to distinguish different kinds of political communities. From the eighth century b.c.e. on, most Greek city-states were oligarchies—ruled by well-connected, mostly aristocratic groups. The typical forms of political rule in ancient Greek city-states in were either oligarchies or democracies. For Aristotle oligarchies were notoriously unstable, tending to produce injustice and eventually revolutions of the lower classes that often led to tyranny. His proposed solution was a mixed constitution (a republic) that combined oligarchy with democracy. The great advantage of this solution was that each form of rule might balance the dangerous effects of the other.

During the later medieval period and through the renaissance (1400s–1500s), there was an ongoing debate among the Italian civic humanists over Aristotle's republican solution to the problem of oligarchy. Some sided with the model of the Venetian republic that was highly stable and ruled by an oligarchy based on birth. Others sided with the republic of Florence, which was far less stable, but incorporated the lower classes of craftspeople into the rule of the city. In 1513 Niccolò Machiavelli (1469–1527) attacked the model of a republic based on oligarchy as its ruling principle. Oligarchical republics are static and cannot defend themselves from enemies because they cannot rely on the common people. His solution was to construct a republic that encourages a constant but controlled conflict between the ordinary people and the few who desired to rule. By having the common people actively resisting the tendency toward oligarchy through protests and indictments of power-hungry political leaders, laws leading to republican self-government would be introduced and the people could be mobilized to fight on behalf of the republic. Machiavelli was one of the first political thinkers to recognize that even though there was an inherent tendency in all republics for an oligarchical political class to arise, a constant tension between the many and the few would result in political freedom as popular self-government.

Relative merits of oligarchy and democracy - History

Democratic institutions aren't sufficient in themselves to keep the wealthy few from concentrating political power.

I t is a confounding moment in American political history. On the one hand, evidence of democratic possibilities is undeniable. In 2008, millions of Americans helped catapult a man of half-African descent into the White House long before observers thought the nation was “ready.” Democratic movements have won major victories in recent decades, spreading civil rights, improving the status of women and ending unpopular wars. This is the continuation of a trend with deep roots in American history, reaching back at least to the Jacksonian era, of extending the equality principle into American culture at large.

On the other hand, democracy appears chronically dysfunctional when it comes to policies that impinge on the rich. Despite polls consistently showing that large majorities favor increasing taxes on the wealthiest Americans, policy has been moving for decades in the opposite direction. Reduced taxes on the ultra-rich and the corporations and banks they dominate have shifted fiscal burdens downward even as they have strained the government’s capacity to maintain infrastructure, provide relief to children and the poor, and assist the elderly.

Everyone is by now aware of the staggering shift in fortunes upward favoring the wealthy. Less well understood is that this rising inequality is not the result of something economically rational, such as a surge in productivity or value-added contributions from financiers and hedge-fund CEOs, but is rather a direct reflection of redistributive policies that have helped the richest get richer.

Such outcomes are inexplicable on standard, commonly understood democratic grounds. The tiny proportion of wealthy actors among eligible voters cannot account for the immense political firepower needed to keep winning these policy victories. While motivated and mobilized minorities—those organized over issues like gay marriage, for example—can sometimes win legislative victories despite broad opposition from the electorate, America’s ultra-rich all together could barely fill a large sports stadium. They never assemble for rallies or marches, sign petitions, or mount Facebook or Twitter campaigns. So how do they so consistently get their way?

One increasingly popular answer is that America is an oligarchy rather than a democracy. 1 The complex truth, however, is that the American political economy is both an oligarchy and a democracy the challenge is to understand how these two political forms can coexist in a single system. Sorting out this duality begins with a recognition of the different kinds of power involved in each realm. Oligarchy rests on the concentration of material power, democracy on the dispersion of non-material power. The American system, like many others, pits a few with money power against the many with participation power. The chronic problem is not just that electoral democracy provides few constraints on the power of oligarchs in general, but that American democracy is by design particularly responsive to the power of money (a point Adam Garfinkle makes clear in his introduction to The American Interest’s January/February 2011 issue on Plutocracy and Democracy). 2

Oligarchy within Democracy

hen democracy combines with oligarchy, the result is a distinctive fusion of equality and inequality. This is what sets the current debate about oligarchs and the power of the rich apart from the debate that erupted in the 1950s over “power elites.” The claim then was that the United States was dominated by a tiny segment of the population that commanded major institutions across society and shared privileges of status, education, access and comfortable living standards. Elite theorists like C. Wright Mills devoted great energy to mapping how the power elite were densely networked, and thus politically suspect.

Pluralists led by Robert Dahl at Yale responded by granting that American democracy had plenty of inequality built into it. Some actors and institutions were unusually powerful, but always in ways that were competitive and crosscutting. Pluralists argued that the linkages mapped by elite theorists did not amount to cohesion. Although various strands of elites constituted influential minorities, no pernicious or consensual political thread could be shown to run through them. There were powerful Republicans with the expected laissez faire proclivities, but there were also influential Democrats who paid homage to or were even evangelizers for the latter-day social gospel agenda. The conclusion was that American democracy had elites, but no coherent elite agenda.

The current focus on oligarchs is different. Unlike elites, who are empowered in diverse ways and are oriented toward diverse ends, oligarchs are defined more uniformly by the power of money. Concentrated wealth serves as both the source of oligarchic power and the motivation to exercise it. Unlike any other power resource, wealth unites oligarchs politically around a core set of shared interests because, throughout human civilization, great riches have always attracted threats. Whatever their political disagreements, oligarchs in America, as elsewhere, are motivated and connected by the desire to deflect threats to their fortunes. Being networked certainly augments the influence of oligarchs, but coordination is not the primary source of their political power.

ligarchy should be understood as the politics of wealth defense, which has evolved in important ways throughout human civilization. For most of history, this has meant oligarchs were focused on defending their claims to property. They did so by arming themselves or by ruling directly and jointly over armed forces they assembled and funded. Every great increase in wealth required oligarchs to spend additional resources on armaments, castles, militias and other means of defense. The greatest transformation in the politics of wealth defense and thus of oligarchy came with the rise of the modern state. Through its impersonal system of laws, the armed modern state converted individual oligarchic property claims into secure societal property rights. In exchange, oligarchs disarmed and submitted to the same protective legal infrastructure that applied to all citizens (in theory if not always in practice). Property rights offered reliable safeguards not only against potential antagonists without property, but also, no less important, against other oligarchs and the armed state itself that administered the entire arrangement.

This new formula for political economy had several major consequences. One was that it created the mistaken impression that there were no longer any oligarchs, only wealthy people with no shared political motivation yet this illusion is proved false every time states in the modern era fail to protect property and wealthy people re-arm or hire private militias once again to do the oligarchic job themselves. Another consequence is that the transformation shifted rather than fully solved the broader problem of wealth defense for contemporary oligarchs. The legal state made property inviolable, but in many cases it also aggressively targeted income and, occasionally, wealth via taxation. This was “taking” of a different kind.

Indeed, progressive taxation is the unique challenge to oligarchs in democratic states. Heavier tax burdens on those most able to pay can theoretically retard the pace at which the rich enlarge their estates, and in extreme cases could even redistribute wealth downward. The story of oligarchy in America has unfolded as a titanic battle over wealth defense as oligarchs have sought to deflect tax burdens onto others in society. With tens of billions of dollars at stake annually, the struggle is politically charged for a small number of ultra-wealthy Americans. While its intensity has ebbed and flowed throughout American history, it is a battle oligarchs have been winning handily for the past several decades. Again, the question is why.

here tends to be considerable ideological tension in the United States when the discussion turns to money and power. The “class anonymous” packaging of liberal democracy has been so prevalent that many Americans balk at the mention of oligarchy and the anti-democratic power wielded exclusively by the ultra-rich. 3 The regrettable detour into power-elite theory only muddled the debate further. Yet the basic understanding that concentrated wealth confers concentrated power, whether in dictatorships or democracies, has a pedigree stretching back at least to ancient Greece. James Harrington observed in the 1650s that “where there is inequality of estates, there must be inequality of power.” Much influenced by Harrington, John Adams wrote in 1776 that “the balance of power in a society, accompanies the balance of property in land.”

Riches have always been a source of power, and nothing about modern societies or institutions fundamentally changes that reality. Neither the shift in wealth away from landed estates nor the achievement of universal suffrage has disrupted the fundamental nexus between money and power. The essence of oligarchy within democracy rests on the near-veto power oligarchs retain on threats to concentrated wealth. On all other issues, oligarchs’ views and positions are as disunited and democratically contested as those held by everyone else across the society. Thus, there is no oligarchic stance on abortion, immigration or the rights of women.

A full appreciation of oligarchy in America must begin with an estimate of how much material power is concentrated in the hands of a tiny minority. I call this a Material Power Index (MPI), which can be approximated using both income and wealth data. The MPI assigns a base value of one to the average material power position of Americans across the bottom 90 percent of the population. The MPI of the richest strata in society are a multiple of this base value. The accompanying tables provide a snapshot of MPIs for the United States based on recent income and wealth data.

Measured by income, oligarchs at the very top of American society have an MPI just over 10,000, which happens to approximate the MPI of Roman senators relative to their society of slaves and farmers. When measured by wealth, the MPI for the richest Americans is 30,000 (it jumps to 50,000 if home equity is excluded). The weakest American oligarchs have between 125 and 200 times the material power of an average citizen.

Beyond a certain level, the political meaning of these concentrations of material power becomes too enormous to fathom, for there is no precise algorithm for translating financial power into political power. An oligarch with $1 million to deploy politically for wealth and income defense is dramatically more powerful than someone who has only $100. But an oligarch with a spare $1 billion to deploy may not be a thousand times more powerful than one with $1 million. He may be more or less powerful depending on a host of other contextual factors. It is clear, however, that oligarchs in America, who constitute only a fraction of 1 percent of the population, have at their disposal material “voting” power that is hundreds, and in some cases tens of thousands, of times that of the average citizen. Such inequalities of power do not comport with garden-variety notions of pluralism and democratic representation.

One might counter that despite these yawning asymmetries at the individual level, average citizens with a modest MPI of one can still muster the overwhelming power of their numbers in a democracy if they band together and pool their material resources, say, to vote for candidates favoring large social welfare programs. But poverty by itself neither motivates nor provides a core set of common interests for the poor the way wealth does for the rich. The presence of wealth focuses the political attention of the rich on wealth defense its absence has no parallel effect on the poor or those of middling or lower than middling income. Wealth is inherently empowering and motivating poverty is neither.

Thus, for the many to exercise their collective material power in a manner oligarchs can while operating solo, they must first be actively networked and coordinated and then remain in this state of mobilization over extended periods. This inverts the common argument that oligarchs are only potent politically if they form associations or conspire. In fact, the reverse is true. The vast majority of citizens exert very little concerted material power in politics. But a small number of individuals each have at their disposal the resources it would take tens of thousands of their fellow Americans acting in sustained coordination to match.

A final and daunting aspect of wealth’s power is that it buys armies of skilled professionals, not least lawyers and accountants, to pursue the core political and social interests of the rich. These intermediaries render the political engagement of oligarchs more indirect, obscure their power from view, and shield them from scrutiny and accountability. In democracies no less than in dictatorships, oligarchs experience virtually no disruption of their daily lives as they employ and deploy the best wealth defense money can buy. The duration and intensity of this oligarchic power is limited mainly by the scale of resources the richest Americans have at their disposal.

The Great American Inversion

ow has this power been expressed in the United States over the past century? The best window on oligarchy in America is the battle over taxes, which for oligarchs means the politics of income defense. Not surprisingly, this battle has also affected American income inequality writ large.

Over the course of the 20 th century, two wrenching things happened within American democracy and oligarchy that together constitute the Great American Inversion. First, early in the century, steep new income taxes were imposed exclusively on the rich. By the end of the century, these same tax burdens had been shifted from the richest Americans to the various strata below them.

Second and related, there was a sharp reversal of economic momentum for average Americans and the rich. The average income of working-class Americans around 1920 doubled in real terms by 1955 and tripled by 1970. A growing American middle class was taking an ever-larger share of an expanding economic pie. Although the chasm separating the rich from the rest remained huge, ordinary citizens were closing the gap at a remarkable pace. But then this process stopped. In the four decades since 1970, there has been almost no improvement on average for the lower 90 percent of American households. Although the U.S. economy continued to grow, income stopped growing for average citizens. Adjusted for inflation, average household incomes in 2010 were almost exactly what they had been forty years earlier. They peaked and stopped in 1970 at “triple 1920.” Growth America became stagnation America.

The story was much different for America’s oligarchs. At first their wealth shot up significantly during the 1920s. They were also busy in that decade trying to roll back or deflect the new taxes aimed at them. But then the Crash of 1929 hit them in the solar plexus. It is not that oligarchs went to the poorhouse like almost everyone else. The rich still enjoyed very luxurious lives, but their real gains across the next several decades were very modest. One instructive thing about this period of history is that oligarchic influence was weaker during deep political-economic crises and wars than it was during the “politics of the ordinary” between crises. It took decades after 1945 to reverse the relative leveling effects of the Crash, the New Deal and the embryonic welfare state of the Great Society.

During the long arc from 1920 to 1970, the top 1 percent of American families moved up at barely half the pace of the average household. The very richest families (the top 0.1 percent and 0.01 percent) were having a hard time grabbing a larger share of the growing income pie for themselves. By 1955, the real incomes of these two top strata were actually 20 percent lower than their 1915-–20 level. It was not until 1970 that the ultra-rich were earning roughly the same real incomes they had enjoyed half a century earlier.

And then, as suddenly as the improvements had come for mainstream society, the new bonanza for the ultra-rich commenced. The decade from 1970–80 was the turning point in the Great American Inversion. This is when the boom for the average household turned to bust and the rich soared after decades of treading water. It is as if a big pause button had been hit in 1970 for the bottom 90 percent at the same moment the fast-forward button clicked on for oligarchs. The cumulative effect was breathtaking. By 1990, real incomes for the top 1 percent exceeded the 1920 level threefold and continued to rise thereafter, while those of the majority did not budge. Reversing the pattern of previous decades, the richer you were, the faster gains accrued. It did not matter if Democrats or Republicans were in charge of the White House or Congress. By 2007, the top 1 percent of households had almost five times the real income they had in 1920 the top 0.1 percent had around six times, and the top 0.01 percent were awash in nearly ten times the real income they had enjoyed nine decades earlier. The tables had turned.

Many analysts have pointed out the role of globalization, higher international capital mobility and the related decline of unions in causing this reversal of fortunes. What has gone largely unnoticed is the compounding effect on these trends due to the increasingly aggressive strategies of wealth defense on the part of oligarchs. As the United States was becoming a tiger economy exclusively for the rich, tax burdens on American oligarchs grew lighter by the decade. Meanwhile, tax burdens on the strata below grew more regressive as average Americans went from seeing rapid gains to being mired in economic molasses and rising debt.

t is impossible to make sense of these transformations without understanding how oligarchic power operates within American democracy. A crucial part of the inversion story starts at the end of the 19 th century. In an unprecedented blow to an emerging stratum of American industrial oligarchs, Congress passed a new Federal income tax law in 1894 aimed narrowly at the richest fraction of taxpayers. All but 0.1 percent of citizens earning below a threshold of $100,000 in today’s dollars were exempt. Alarmed oligarchs quickly hired teams of lawyers, who took the law to the Supreme Court, which struck it down in a 5-4 decision that referred to the tax as a “communistic threat.” Although oligarchs won this round, the law confirmed their fears about extending democratic voting rights to those too far down the national wealth pyramid.

The high court protected oligarchs for the next 18 years until the Sixteenth Amendment was passed in 1913, after which a Federal income tax was again imposed exclusively on the top 1 percent of earners. Oligarchs immediately began to explore new modes of income defense, particularly after World War I, which caused the highest rate to leap from 7 percent in 1915 to 77 percent in 1918 (the number of brackets went from seven to 56 over the same period). They fought on two fronts.

First, oligarchs pressured legislators to meet the Federal government’s demand for revenue by reducing the number of brackets, lowering the rate of the highest bracket and shifting the entire structure downward to capture more revenue from the merely well-off and less from the ultra-rich. Although the “mass affluent” had much larger numbers (which ought to count for something in a democracy), individually they lacked the financial firepower oligarchs possessed to influence policy outcomes. Unable to band together, the mass affluent saw their tax burdens rise in tandem with tax relief for the very richest Americans.

The second front was a bold tax strike on the part of oligarchs through tax avoidance and outright evasion. Although there were not that many oligarchs for tax collectors to pursue, they each had formidable resources to hire lawyers and other professionals to mount a vigorous defense. If the government wanted their money, they were going to make it costly and politically risky to get it. Between 1916 and 1925, tax filings by the rich dropped by an average of 50 percent. In the worst year, 1921, tax filings plunged to an average of 19 percent of their 1916 level. The richer the oligarch, the lower the compliance rate. Americans making more than $1 million per year in 1921 filed at just 10 percent of the rate they did in 1916. This resistance by the ultra-rich was so pervasive that it prompted Congressman Ogden Mills (R-NY) to complain, “We collected as much at [a tax rate on the rich of] 10 percent in 1916 as we did at 65 percent in 1921.” By contrast, taxpayers in the “mass affluent” category lacked the resources and nerve to defy the Federal government. Cowed into paying, their filing rate actually increased by 32 percent between 1916 and 1925.

The government faced a difficult choice. Basically, it could either beef up law enforcement against oligarchs and design better systems to track and tax their incomes to force them into compliance, or abandon the effort and instead squeeze the same resources from citizens with far less material clout to fight back. Despite the daunting complexities of taxing wider swaths of the population (and the risks of doing so at election time), the government capitulated to the wealthy few. Beginning with deep tax cuts on oligarchs enacted in 1921, 1924 and 1926, the single most progressive economic policy ever enacted in U.S. history—an income tax exclusively on the rich—was slowly inverted into a mass tax that burdens oligarchs at the same effective rate as their office staff and landscapers.

Pleased with how well their exercise of power had worked, oligarchs rewarded the Federal government for the tax cuts by once again agreeing to file tax returns. One analysis of the period notes that the effect of lower taxes on the willingness of the rich to file returns was “more dramatic the higher the net-income tax class.” 4

It is noteworthy that from 1913 until 1939 the battle over this new income tax unfolded exclusively among the different components of the rich. It was a narrowly oligarchic tax only during the first four years. On average, across these decades the tax fell on just 10 percent of income earners. In no year before 1940 did it ever involve more than 17.3 percent.

This point matters in debates about who gets what in democracy, and whether there are significant forms of power affecting outcomes that have little to do with democratic equality, representation and voting. One key argument about why the bottom strata of American society, despite their large numbers, fare so badly in economic policy struggles is that the poor lack resources, education and political skills. This reasoning, however, collapses when applied to the pitched battle over who would shoulder the Federal income tax burdens between the two world wars. A tiny number of powerful oligarchs succeeded in convincing legislators to shift tax burdens to the affluent strata immediately below them, a group a hundred times as numerous and hardly lacking in education and political skills. Democratic participation theory cannot explain oligarchic success in this case.

A far better explanation lies in the realm of material power. It is the difference in their MPIs that allows a small number of oligarchs to defeat a much larger number of citizens below them. As we’ve seen, Americans just above the 90 th income percentile have MPIs ranging from four to seven. Oligarchs in the top 0.1 percent have MPIs starting at 125 and going as high as 10,300. The intensity of this material power amplified oligarchs’ complaints, made them more intimidating politically, and enabled their tax defiance in 1921. Oligarchs succeeded in getting their taxes reduced from the 70 percent range to just 25 percent. The top bracket held at this level until 1931, when a series of crises weakened oligarchs and increased the government’s need for resources. The 1929 Crash, the Great Depression and World War II combined to increase the top bracket to 63 percent in 1932, 81 percent in 1941 and a peak of 94 percent in 1944. Income taxes on the richest Americans remained above 90 percent until 1964—and that includes the two terms of the Republican Eisenhower Administration—and above 70 percent thereafter until 1981.

Although the Depression (thanks to the advent of Social Security and the new infrastructure for collecting payroll taxes) and especially World War II caused Federal income taxes to be imposed at the mass level for the first time, the rising tax rates on oligarchs and the strength of unions combined to help double and then triple average real incomes for the bottom 90 percent of the population, while the richest saw no gains at all. High taxes on what today are often self-interestedly called the “job creators” did not prevent jobs from being created. But they did retard the rate at which the richest could get even richer.

The Income Defense Industry

his account of the first half of the 20 th century prompts an important question: If oligarchic power works especially well behind the scenes during the “politics of the ordinary”, while crises like war and financial collapses tend to undercut this power, why have oligarchs been able to maintain the Bush tax cuts (which reduced the top rate to 35 percent) and win other battles despite the devastating economic crisis of recent years?

The answer lies in a major innovation in how oligarchs flexed their wealth muscle starting in the 1960s and 1970s. This was when the income defense industry arose in America to fight against taxes and other policies that restrained the ability of oligarchs to increase their share of national income and wealth. This industry is similar to the legal apparatus oligarchs deployed in 1895 to reverse the income tax, and the tax evasion methods employed to get the 1920s tax cuts, but it is now greatly amplified.

The income defense industry is comprised of lawyers, accountants, wealth management consultants, revolving-door lobbyists, think-tank debate framers and even key segments of the insurance industry whose sole purpose is income defense for America’s oligarchs. The industry is wholly funded by oligarchs, and it would simply not exist if oligarchs did not have massive fortunes to defend. There is no parallel (much less countervailing) industry serving the material interests of the mass affluent, the middle class or the poor. The activities of the income defense industry extend far beyond mere “interest group” lobbying over policies. Its salaried specialists assist oligarchs in exerting a form of power that is unique to the ultra-rich: the defensive redeployment of their money and income across a global geography of jurisdictions, banks and offshore havens through the use of tailor-made tax instruments, evasive trusts and shell corporations.

The industry operates almost exclusively by referral and serves only high net-worth individuals who have at least $2 million in investable financial assets, and especially ultra high net-worth individuals with holdings of $30 million or more. The industry is global in its spread and integration. Top-tier players like Whithers, Clifford Chance, Linklaters, White & Case, Milbank Tweed Hadley and McCloy, Weil Gotshal and Manges, and Freeman Freeman and Smiley are known in the trade as “magic circle” firms. They help coordinate relationships with accounting firms and other weapons in the wealth defense arsenal.

The most strategic theater is taxes, with combat conducted on two fronts. The first is the effort to lower the published top tax rate as much as possible and also to set the income threshold for the top bracket low enough that large numbers of relatively modest income earners feel the oligarchs’ pain. The second front is making the spread between the published tax rate and actual (or “effective”) taxes paid as wide as possible. This is one of the most important and costly fights the income defense industry wages on behalf of its oligarchic patrons. In the 1970s, oligarchs paid an average effective tax rate of about 55 percent, which was almost 80 percent of the top published rate. By 2007, the top 400 income earners in America paid an effective tax rate of 16.5 percent, which was barely 50 percent of the top published rate. Thus, the industry delivered lower tax rates on which oligarchs paid a lower proportion. The richer the client, the wider the income defense spread achieved. 5

The income defense industry’s capacities improved throughout the 1970s and 1980s. As it grew stronger, the results the industry achieved for the ultra-rich were spectacular. Navigating through the almost 72,000 incomprehensible pages of tax code they had helped draft, industry specialists today structure complex partnerships and tax shelters that few IRS auditors can disentangle, or in some cases even fully understand. The richest Americans pay fees ranging from $300,000 to $3 million for lawyers to sort through the tax code and produce “tax opinion” letters (an instrument only those who can afford to buy them have ever heard of). Their purpose is to justify enormous non-payments of taxes that straddle the murky (and therefore costly to enforce) line between tax avoidance and tax evasion. These letters are among the most important weapons for pushing down the effective tax rate and increasing the income defense spread.

The U.S. Senate estimates that the income defense industry helps America’s oligarchs avoid paying about $70 billion in taxes a year through what the IRS calls “abusive offshore tax avoidance schemes” alone. 6 This is a sum equal to the boon the Bush tax cuts give to the entire top 2 percent of income earners (a group twenty times as numerous as America’s oligarchs), and it does not include losses from similar schemes employed by corporations.

The income defense industry, attached symbiotically to the nation’s richest citizens, has fortified the material power and influence of oligarchs. It has enabled them to fight much more tenaciously even in the face of deep crises that, in earlier decades, delivered serious setbacks to their broader wealth defense agenda. Although oligarchs still operate mostly atomistically, their common deployment of a highly networked and organized industry lends their actions an unprecedented degree of unity. Combined with weakened unions and considerably less political unity among average citizens, America’s oligarchs are arguably more powerful today than during the robber baron era at the turn of the 19 th century.

merica does not have oligarchs, it has rich people”, declared one of my seminar students at Northwestern University. This could only be true if wealth were somehow stripped of its inherent political potency. Whatever else American democracy has achieved, it has not managed this. Rather, oligarchy and democracy operate within a single system, and American politics is a daily display of their interplay. Indeed, it is a misreading of oligarchic theory dating back to Aristotle to view oligarchy and democracy as mutually exclusive, or to suggest that democracy is a sham if oligarchs exist and exercise their power routinely and effectively. Aristotle called for an ideal political system, the polity, that combines oligarchy and democracy so deftly that “there should appear to be both elements and yet neither.”

Universal suffrage and liberal freedoms empower all citizens in a radically equal manner. But the one-person/one-vote principle does little to prevent oligarchs from exercising the power of money in a manner that is profoundly unequal. Formal juridical equality is essential to human freedom. But full political equality, even in the most liberal democracy, is impossible as long as concentrated wealth places grossly unequal political influence in the hands of a few citizens. Democracy fused with oligarchy is certainly better than no democracy at all. But there should be no illusions that it is anything other than a partial step toward full political equality and representation.

1 Simon Johnson, former chief economist of the International Monetary Fund, wrote of the &ldquothe reemergence of an American financial oligarchy&rdquo in &ldquoThe Quiet Coup&rdquo, The Atlantic (May 2009) Columbia University historian Simon Schama, in Scribble, Scribble, Scribble: Writing on Politics, Ice Cream, Churchill, and My Mother (Ecco, 2011), suggests that &ldquothe United States Inc. is currently being run by an oligarchy, conducting its affairs with a plutocratic effrontery which in comparison makes the age of the robber barons . . . seem a model of capitalist rectitude.&rdquo

2 In the same issue, Francis Fukuyama suggests that the pathology of a democracy can be measured by elites&rsquo success in using their power to shift the burdens of public expenditure onto the rest of society.

3 This term is from John P. McCormick&rsquos book Machiavellian Democracy (Cambridge University Press, 2011). &ldquoClass anonymous&rdquo democracy ignores the highly distorting power of the ultra-wealthy. He argues that electoral democracy alone cannot safeguard the economic interests of the many against America&rsquos oligarchs. In reaching this conclusion he echoes, of all people, William Graham Sumner (on this see Garfinkle&rsquos discussion in The American Interest, January/February 2011).

4 Gene Smiley and Richard H. Keehn, &ldquoFederal Personal Income Tax Policy in the 1920s&rdquo, Journal of Economic History (June 1995).

14 thoughts on &ldquoDemocracy and Oligarchy&rdquo

In the article “How the Oligarchy Wins,” the author focuses on an important question: how do we prevent democracy from subtly regressing into oligarchy through the interwoven influence of economic and political power? However, equally important may be a counterpart of this question: how do we ensure that democracy, a system with power installed on the masses, can remain so without the people willingly giving power to the elites and/or charismatic strong figures? Throughout ancient Greek literature, it has been demonstrated of just how receptive the people are of strong rule by men deemed as of high virtue and ability.
In one excerpt of Solon’s poems, the lawgiver describes the people’s outrage at him when he refused to claim power as a tyrant. According to Solon, he was criticized to be of “shallow intellect,” “no good sense,” and lacking “courage and sanity.” One detail is especially intriguing: the people described Solon’s resistance against power as renouncing “the bounty offered by the gods” (Plutarch, 58). In other words, the Athenians associated Solon’s intelligence, leadership, and charisma with divine approval, and deemed it just for him to claim supreme power. Eventually, even Solon’s prescient resistance had not been able to stop the Athenians from destroying their democracy: against Solon’s harsh admonition, the people fell prey to Peisistratos’ lie and strengthened the latter’s military power, paving the way for generations of brutal dictatorship.
Moreover, this susceptibility of the masses to charismatic leadership is not limited to the earlier time of Solon, but still visible from the abundant account of great men’s lives by later historians such as Aristotle and Plutarch. Such literature has paid tremendous emphasis on individual virtues and morality, and in turn the charisma derived from personal virtue. This is also evident from their tendency to attribute all substantial reforms to a few prominent figures. This brings to any democracy the inherent danger that the people may willingly and unknowingly submit their rights to a charismatic leader.
Therefore, going back to the article, what it fails to note is that, besides the institutional designs, such as campaign finance and lobbying system, there exists another less conspicuous channel that allows the elites to translate their economic power into disproportionate political strength: that is, they often enjoy greater access to education, information, and employment, which foster their political savvy and enhance their advantage in fierce political competition.

I think you highlight a really important point in your post! The tendency of people to rally behind a charismatic political figure is something that we have seen, not only in Ancient Greek society but throughout history. It is such a potent force in a democracy and we’ve seen the masses willing to give up their own political power to a political elite because of this. Max Weber described this political phenomenon as “charismatic legitimacy,” which is essentially the legitimacy of a leader based entirely off their charisma. Often, we see these leaders’ values and policies institutionalized and continued even after they have left the political stage. For example, Lycurgus established the Gerousia in Sparta, which was seen as a great feature of his government. This was institutionalized in the Spartan political system and outlasted Lycurgus’ reign. It is certainly problematic that we have a natural tendency as humans to get swept up in the charisma of leaders at the expense of our democratic freedoms.

I think your point on the charismatic the leadership is absolutely correct. And especially in these days, the effect is being magnified by the exposure through social media. It might be a good thing for the people to follow someone who looks more like a leader, but meanwhile the perception could be misleading. There has been a lot of discussions about personalities of the leadership in this country, so I’m thinking if it could be more efficient in terms of governing and policy making, if politics could involve less about individuals.
I also agree on the campaign financing and the lobbying system you mentioned. Election campaigns in the U.S. are generally privately financed and require a tremendous amount of money. In this case, without considering other factors, the wealthier candidates apparently tend to have more privileges. Although the U.S. might be more democratic compared to the rest of the world, we cannot say that every aspect within the society is rightfully established based on what the people want.

I do not think democracies and monarchies are forms of oligarchies. Sure, they’re all forms of government, but that’s where the similarities end. Perhaps monarchies and oligarchies are closer in nature because they have a small number of people (whether that be one king or ten top ministers) holding all the power in the state. Democracies spread the power across many people, making them less susceptible to tyranny. Of course some people in democracies have more power than others, because it is incredibly difficult to distribute power equally among the people, but overall it is far more equal than a monarchy or oligarchy. The whole purpose of a monarchy or oligarchy is to have some people at the top of the power pyramid and everyone else in the state is beneath them and therefore subject to them. This is not the case with democracies, because its purpose is the liberty and freedom of the people.

I agree with you in theory, but in practice democracy often becomes a more palatable-seeming form of oligarchical control, particularly in the ancient world. A large percent of this comes down to what “the people” means as a practical term. If there is mass enfranchisement or universal suffrage, or even something more closely resembling it, then your point certainly stands, shown by systems of democracy in the modern world. In antiquity though, I would argue that more often than not, the right of citizenship is restricted to such a small number of individuals that one can hardly say voting record reflect the majority will of the population at any given time. While I definitely agree with your point about the differences between democracy and monarchy, I would be hesitant to argue that democracy is substantially less immune to corruption and elite control than any other form of government (i.e. Demetrius of Phaleron in the 320’s, the Oligarchic coup in Athens at the end of the Peloponnesian war, etc).

On the question: “in practice aren’t monarchies and democracies merely different sorts of oligarchy? The king or queen has his/her courtiers and some sort of council that can function to limit his/her power and even in our own beloved democracy some people are still more ‘equal’ than others, and there is much talk of various ‘oligarchic’ forces pulling the strings.” I would like to bring up a reading that I think addressed this very well while also connecting it to a modern day scenario – Kim Jong Un. The short article I mention is “Even Dictators Like Kim Jong Un Need to Keep Some People Really Happy” and is by Andrea Jones-Rooy and Ilene Prusher. Ignoring the international relations part of this article – like how it is an institutionalist argument and the implications this has on the Nuclear weapons program that is being pursued by North Korea – I will delve into the parts that actually connect it to this class.

I bring it up with the question that blurs the line between monarchy and oligarchy because this article does the same, by taking a government that we have labeled as a dictatorship, and pointing out how as “dictator”, Kim Jong Un has people he needs to answer to and that support him and his rule. For one, there is the selectorate theory, which is a group of people that has the say on who is in power and who gets to sustain said power. This is Kim Jong Un’s support group – and a group/division of government that is seen in democracies around the world today. Within the Selectorate, there is the Winning Coalition. This group of people are the key ones who keep Kim Jong Un in power, but only if he keeps them happy – which he most likely does through payoffs or some other private good (in democracies as we see them today, it is the general public, and they are kept happy through public goods).

So maybe we need to think as these ancient democracies (like the governmental structure of power in Athens/Attika that we went over in class today) as not so ancient, and maybe we need to take a second look at the labels that we have given/been told to put on governments/leaders, for maybe there is more (or even less – as even looking at the government of the US, the power of the president has increased exponentially after and during WWII and has only been increasing since then) going on behind the scenes than we are aware of.

Although we have no officially sanctioned economic barriers to political power, it is not hard to make the case that political offices are restricted to those with the economic means to attain them. Moreover, when considering the compounded wealth, influence, and connections of political dynasties and major parties, a clear picture of concentrated power begins to emerge. Whether this counts as oligarchy (civil or otherwise) is a matter for debate, but assuming it is true, the question then becomes whether we are experiencing an “oligarchic breakdown”.

For the last hundred or so years, we have enjoyed relative political stability. Despite the various periods of social upheaval, two aligning issues in politics have remained constant, as have the two political parties that have alternated holding power: economic policy and personal liberty. Those have driven most of the debate, and while stances on them have since morphed into complete identities with their own plethora of accompanying positions, until very recently these “package” identities have remained dominant. On the left, the social democrats, favoring more economic regulation and greater social liberty and on the right, the free-market conservatives, favoring less economic regulation and more restrictions on social liberty. Because these groups have dominated the political landscape, anyone caught between the positions was forced to choose between ideologies. It leaves little room for smaller parties outside of the big two, and has had the result of allowing the two main parties to only worry about each other. Consequently, the relatively few have shared control of virtually every political arena.

For the Greeks, tyrants served to disrupt such political orders. And while we are unlikely to end up with a tyrant in the tradition of the Greeks, we have already had a sort of political coup, in the form of Trump. Trump seized upon the growing discontent with the current political order and the disparity it had with the new alignment, and in doing so successfully split one of the dominant parties. Trump, like the Greek tyrants, may not last, but the damage he has done to the old political order is likely irreparable.

Now we are in the midst of a great political realignment. The new aligning issue is identity, and this made itself clear in the 2016 presidential election. The poles have shifted to national collectivism and cosmopolitan liberalism. The national collectivists, represented by Trump, favor economic nationalism, and tend to be more authoritarian and traditionalist. The cosmopolitan liberals favor economic globalism, and tend to be more socially permissive. This shift has already fragmented the big political parties, and disrupted much of the current power structure. The current parties do not fit the new aligning issues, and until new parties emerge or old ones transform, we will be in a state of constant flux. The question that remains to be seen is whether a new oligarchic order will replace the previous one, or whether, as in the case of the Greeks, a somewhat different order will emerge.
I have drawn these conclusions in part from a wonderful lecture by Stephen Davies of the IEA, entitled “The Great Realignment”. I believe this theory explains many of the more puzzling political phenomena we have witnessed in recent years. You can find a version of the lecture here:

I think institutional political scholars, and the Guardian article, would counter your argument by suggesting that though the landscape of the American political climate may have changed on its surface, the way political systems are set up inherently favor a concentration of political power with economic elites. @zfu02 gave the great example of campaign finance laws, which some would argue are “officially sanctioned barriers to political power.”

In Athens these institutions are more clearly defined. Setting aside the clear inequalities in granting of citizenship to all people, timocracy is, by its definition, a political system based on landownership and (in Solon’s version) overall wealth. This rigid institution prevented members of lower classes from holding high political office. While Solon’s reforms allowed for some social mobility, as inheritance laws broke up family wealth and “new money” merchants were granted equal political status to “old money” landowners, the sticky institution of timocracy perpetuates concentration of political power in wealthy classes.

American politics are also set up on a foundation of timocracy. The phrase “white, land-owning men” comes up in description of citizenship and power in colonial and revolutionary times ad nauseam. Thus, many of our institutions have their roots in efforts to keep power from the masses. The electoral college, for example, was established based on the founding father’s fear of the will of the masses [In the (translated) words of Mexabyos, “nothing is stupider or more arrogant than a useless mob” (EGPT 84)]. As much as you can argue the collectivist identity has political power today, what kind of individual is Trump, a New York billionare, to represent that identity? I think in order to examine this issue we have to look at the evidence: To be a politician in the United States, certainty at the state and federal levels, you must come from a certain amount of wealth. To say that political parties are in flux is to ignore the immense power they have and because of a relatively small number of economic and political elites. The political system in the US is set up to favor concentration of power in our two parties, which can be noted in nearly all electoral outcomes. I think no matter who is elected to represent the American people, Congressional voting patterns demonstrate that representatives are beholden to the bodies that helped get them elected (political parties) and the interests of the donors that fund them (economic elites).

Is giving the poor “more of a justified voice for their relative class in society” by redistributing some amount of capital a form of democracy? No, it is a weakening of the wealthy and the desire to limit the disparity of excess. Society does not reform its want of power and money. An oligarchy remains because property laws demand that there is private ownership. Democracy in its most essential form will naturally tick off the individuals who believed that they beat the system and contributed more to society. Now, I do believe the Athenian democracy is powerful in that all people have the ability to participate in civic government yet, capital and land requirements along with what family lineage one came from does matter.

Now Solon does institute a positive form of sumptuary laws that did limit the ostentatious displays of wealth. The amount or display of clothing and gold is limited because the material wealth and moral decay of society is Solon’s priority. Yet, this does not mean the ruling aristocracy will pursue the maximum amount of capital and societal wealth.

The issue at hand with all three of these ideologies is that those with wealth will always have influence in politics. The idealism inherent in Democracy may be more appealing than the other two forms of government but the reality of Democracy often falls short of said ideals. The two-party system present in the United States is an excellent example of this as power circulates between one of two groups which have a stark dichotomy between each other yet are still tied together by way of being ruling elites. This stark dichotomy between the parties creates a division between the American people through identity politics, in which the party one personally aligns them self with becomes integral to how they see them self as a person. That division amongst the people serves as a distraction used by those in power to remain in power.

Monarchy, oligarchy, and democracy all rely on a single group wielding power, but this is where the similarities end. Monarchies and oligarchies rely on tyranny of one or a minority, while democracies inherently rule by majority. This majority can be dominated by a popular/charismatic ruler, but the difference is that leader is removed from power after a set term limit and his family is not guaranteed power (although political “dynasties” can form as seen in modern day America with the Bush, Kennedy, and Clinton families due to name recognition). This limit is important, as a democratic ruler is forced to appeal to at least a majority of his citizens, or else he faces loss of power. In an oligarchy, the rulers may continue with tyrannical powers until they lose the monopoly on force (i.e. the military). This key difference leads to many dictators strongly supporting military and repression tactics, while democratic leaders support their citizens first and the military second.

While you have certainly delineated the differences between democracy, oligarchy, and monarchy, it is worth noting that these differences do not make a political climate immune from converting from one of the above systems to another. Observe all the governmental changes in Greece in the 500s, when it seemed that there was a cycle of democracy and oligarchy every few years in Athens, with a tyrant thrown in every now and again to spice things up. This fluidity in the power structure mainly relies upon the expressed similarity in a group wielding power allowing themselves to be represented by a single figurehead leader depending on the leader, the system may go in any which direction. As seen in the recent case of Xi Jinping abolishing his term limit in China, once the leader has enough power and popular support-either genuine, like a ‘cult of personality’, or forced due to repressive conditions-they can do whatever they want, until the current populous has had enough of it or external forces intervene.

I agree with Jeffrey Winters’ view that economic factors relate and contribute to the type of a regime, but I do not think that oligarchy surpasses democracy in terms of equal allocation of economic resources. In the articles, the author states that according to Winters, democrats tend to overlook economic equality while the oligarchs are skillful at actively concentrating wealth for political purposes. However, the notion of having distinctly separated classes will eventually lead to the incompatibility between the “have” and “have nots,” since the society is established based on the injustice that a certain group of people are legitimate to take advantages of the masses. Although rule of law might exist within oligarchy, it cannot prevent the “oligarchic breakdown,” since people have no say in the law and corruption is thus inevitable. One example would be the era of the Thirty Tyrants in Athens after the Peloponnesian War, which was a disastrous regime compared to the democratic era.
Democracy suggests more of an egalitarian society where economic discrepancy could be eased by “isonomia,” or the equality in law preferred by Otanes during the debate among the Persian aristocrats (EGPT, 83). A democratic government grants citizens civil liberty under the law, which entails equal political power, rights, and opportunities. Economic inequality will rise given the natural differences between people, but it’s much more unlikely to factionalize the society, or to dismantle trust between the government and the governed.
Although features of some democratic societies, the U.S. in particular, tend to suggest an oligarchic style of ruling, I would still say that they are distinctly different forms of government, considering the democratic nature of protecting civil liberty. But the representative democracy in the U.S. these days might look more like an evolved timocracy of Solon, in which social status and economic conditions play significant roles in terms of how much power one can get. The key feature that differentiates American democracy from an ancient Greek oligarchy might be the well-established and well-protected rule of law.

There is some truth to the notion that bot monarchy and democratic institutions tend to centralize power in a relatively small group of people. In the case of monarchy, particularly when influenced by aristocracy is constantly balancing appeasement of these hereditary families, who have significant local influence that the king does not possess. For example, Louis XIV moved his aristocrats from their familial estates in the country to his palace at Versailles, so as not to let their power overtake his own. Similarly, with the institution of democracy, where suffrage has almost never been universal. In the United States, men without property, African Americans and Women did not have the right to vote until years of protest, some getting the right quicker than others. But still today, the American electorate is confined by the electoral college, a mechanism put in place by wealthy men who felt the majority shouldn’t be in power. The electoral college could override popular vote, defeating the concept of democratic suffrage. I believe that we may not have all the information to answer if monarchies and democracies always fall into oligarchy, but I believe there is a strong case, both in antiquity and the present, that oligarchy is a tendency governments fall into frequently. As explained in Ober’s “Demos and Tribes as Social Networks,” citizens of Athens had universal suffrage, but citizenship was not automatically granted. Men of the council of 500 consolidated most of decision-making, with only their fellow land-owning men electing them into the council. Effectively, not being a government of the demos, as most Athenians were still unincorporated to this process.

162 – Where did democracy emerge?

The conventional trope is that democracy emerged in Athens, 2� years ago. Never mind that it did not last long and enjoyed a thoroughly bad press after the political experiment failed (Plato for one hated it, and Aristophanes savaged it is his comedies). Or that those who argued in the agora were in a sense an oligarchy: about 5’000 men together as “equals under the law”, who ruled women and untold numbers of slaves toiling in silver mines so that the citizens could debate. Athens’ experiment with an egalitarian political model of self-government soon failed because the deliberation was all about “winning” an argument in the agora (with the help of the PR men of the day: the sophists) by silencing the opposition through aporia (irresolvable internal contradiction) – rather than achieving a constructive balance between the factions.

What political system to chose? The contemporary Herodotus[1] had three “wise men” argue over the relative merits of autocracy, aristocracy or oligarchy, and democracy. A circular argument develops. All three methods have merits, but they can be seen to degenerate rapidly – personalities overwhelm the structures. None can be shown as superior or sustainable. Aporia ensues.

What next? Rewind the historical tape and shift to Italy. Enter Romulus, the founder of Rome in (conventionally, but quite accurately) 753 BC. or thereabouts and well before Athens had emerged. Romulus arrived from outside and united politically a cluster of proto-urban settlements nestled at a bend in the Tiber where fording was possible and a salt road (via Salaria) was the main economic feature. Romulus achieved his political goal by creating a constitution as well as building public places where politics could be exercised.

Romulus was both king and diviner. As he could not overcome the Sabine peoples living close by, he eventually settled for joint kingship with Tito Tazio. Direct transmission of kingship to one’s child was forbidden, lest kingship become hereditary (the Tarquinii tried – and lost). Romulus relied on a priestly caste to sustain his rule. There was also an assembly of the leading patres familias meeting in what was later called curia. The people gathered in the comitia curiata. All deliberated and an agreement had to be reached. An army of 3’000 foot soldiers and 300 horsemen could be raised. Soldiers were not allowed to enter the city – political rule was strictly and firmly in civilian hands[2].

From the beginning the Roman constitution was conceived as balance between autarchy, oligarchy, and democracy (in Herodotus sense). This chart put a constructive – and sustainable – compromise between recognizable interests at its core. It could only be sustained by ongoing commitment by all factions to the whole – the res publica. It was grounded in an appreciation that one could disagree without becoming enemies, but also the insight that failure to do so would tear the city apart – as it did during the civil wars. This balance played itself out year after year in the public spaces of the forum, in the curia, and in the comitia. It was not easy, and on the way to learning the system most of the seven kings, including Romulus, got killed.

Romulus’ constitution proved on the whole successful. When the autocratic branch tried to overwhelm the system, the king was driven out of town and replaced by two consuls[3] renewed yearly in elections. After that the constitutional experiment became sustainable, though conquest and expansion probably sustained it to a large extent. The people got a good share of the booty and later on were awarded plots of land. The oligarchy grew wealthy on their newly acquired latifundia and the spoils from administering conquered countries.

This innovation is epochal, and one that has not been sufficiently acknowledged today, though its students at the time were fully aware of it and underlined the unique character of the experiment[4]. It took another thousand years before the concept of positive balance was taken up again. And indeed, if one takes the judiciary to be in some way an “aristocracy” that stands super partes in order to adjudicate, we may recognize modern political democracies with their “checks and balances” as distant descendants of the Roman concept of constructive “compromise” and “balance”.

This balance would not emerge or be sustained automatically – the Romans knew that. Cicero was adamant: it required education and study. Being a good citizen was, in a way, as much profession as declaration of belief in the system.

Aristotle, fine observer as he was, perceived[5] the phenomenon of “wisdom of the crowds”[6] – common deliberation can be an improvement over the opinions of individuals[7]. For a long time this view hovered somewhere between the simple “sum of the parts” and the novel “emergent” properties of a group. Adam SMITH’s “invisible hand” injected an element of automaticity into such phenomena, a view that has now subliminally pervaded our thinking – we live in an age of “economism”. No longer do we need to seek balance – balance would flow automatically form the contraposition of interests in debate and subsequent vote – winner take all. This belief that “democracy takes care of itself” through debate is closer to the Athenian than the Roman view.

When one notices the angriness of current partisan political discourse one wonders what is left of the Roman understanding that every participant in the deliberation in the end must bear responsibility for the whole, and thus for the outcome – workable compromise.

[1] HERODOTUS: Histories. III 80 -82

[2] I’m endebted for these details to Andrea CARANDINI (2007): Roma. Il primo giorno. Editori Laterza.

Financial oligarchy

Financial oligarchy is a term that is used within political economy and is used to give a name to the power and domination exercised by financial capital. When monopolies of the countries grow and the financial capital increases, it produces that the bank owners and the most important industries create a small group of individuals who own the economy and politics of a country.

It uses a participation system with which they are able to exercise control over shares, to control a company or a corporation causing that the greater the number of shares of other companies acquired, the more power over those shares is gained. It is common to observe the financial oligarchy within the political sphere.

Oligarchy in the U.S.A.

In 2005 , Citigroup offered its high net-worth clients in the United States a concise statement of the threats they and their money faced.

The report told them they were the leaders of a ​ “ plutonomy,” an economy driven by the spending of its ultra-rich citizens. ​ “ At the heart of plutonomy is income inequality,” which is made possible by ​ “ capitalist-friendly governments and tax regimes.”

The danger, according to Citigroup’s analysts, is that ​ “ personal taxation rates could rise – dividends, capital gains, and inheritance taxes would hurt the plutonomy.”

But the ultra-rich already knew that. In fact, even as America’s income distribution has skewed to favor the upper classes, the very richest have successfully managed to reduce their overall tax burden. Look no further than Republican presidential contender Mitt Romney, who in 2010 paid 13 . 9 percent of his $ 21 . 6 million income in taxes that year, the same tax rate as an individual who earned a mere $ 8 , 500 to $ 34 , 500 .

How is that possible? How can a country make so much progress toward equality on other fronts – race, gender, sexual orientation and disability – but run the opposite way in its policy on taxing the rich?

In 2004 , the American Political Science Association (APSA) tried to answer that very question. The explanation they came up with viewed the problem as a classic case of democratic participation: While the poor have overwhelming numbers, the wealthy have higher rates of political participation, more advanced skills and greater access to resources and information. In short, APSA said, the wealthy use their social capital to offset their minority status at the ballot box.

But this explanation has one major flaw. Regardless of the Occupy movement’s rhetoric, most of the growth in the wealth gap has actually gone to a tiny sliver of the 1 % – one-tenth of it, or even one-one-hundredth.

Even more shockingly, that 1 percent of the 1 % has shifted its tax burden not to the middle class or poor, but to rich households in the 85 th to 99 th percentile range. In 2007 , the effective income tax rate for the richest 400 Americans was below 17 percent, while the ​ “ mass affluent” 1 % paid nearly 24 percent. Disparities in Social Security taxes were even greater, with the merely rich paying 12 . 4 percent of their income, while the super-rich paid only one-one-thousandth of a percent.

It’s one thing for the poor to lose the democratic participation game, but APSA has no explanation for why the majority of the upper class – which has no shortage of government-influencing social capital – should fall so far behind the very top earners. (Of course, relative to middle- and lower-class earners, they’ve done just fine.)

For a better explanation, we need to look more closely at the relationship between wealth and political power. I propose an updated theory of ​ “ oligarchy,” the same lens developed by Plato and Aristotle when they studied the same problem in their own times.

First, let’s review what we think we know about power in America.

We begin with a theory of ​ “ democratic pluralism,” which posits that democracy is basically a tug-of-war with different interest groups trying to pull government policy toward an outcome. In this framework, the rich are just one group among many competing ​ “ special interests.”

Of course, it’s hard not to notice that some groups can tug better than others. So in the 1950 s, social scientists, like C. Wright Mills, author of The Power Elite, developed another theory of ​ “ elites” – those who wield more pull thanks to factors like education, social networks and ethnicity. In this view, wealth is just one of many factors that might help someone become the leader of a major business or gain a government position, thereby joining the elite.

But neither theory explains how the super-rich are turning public policy to their benefit even at the expense of the moderately rich. The mass affluent vastly outnumber the super-rich, and the super-rich aren’t necessarily better-educated, more skilled or more able to participate in politics nor do the super-rich dominate the top posts of American government – our representatives tend to be among the slightly lower rungs of the upper class who are losing the tax battle.

Also, neither theory takes into account the unique power that comes with enormous wealth – the kind found in that one-tenth of the 1 %. Whether or not the super-rich hold any official position in business or government, they remain powerful.

Only when we separate wealth from all other kinds of power can we begin to understand why our tax system looks the way it does – and, by extension, how the top one-tenth of 1 % of the income distribution has distorted American democracy.

Enormous wealth is the heart of oligarchy.

So what’s an oligarchy?

Across all political spectrums, oligarchs are people (never corporations or other organizations) who command massive concentrations of material resources (that is, wealth) that can be deployed to defend or enhance their own property and interests, even if they don’t own those resources personally. Without this massive concentration of wealth, there are no oligarchs.

In any society, of course, an extremely unequal wealth distribution provokes conflict. Oligarchy is the politics of the defense of this wealth, propagated by the richest members of society.

Wealth defense can take many forms. In ancient Greece and Rome, the wealthiest citizens cooperated to run institutionalized states that defended their property rights. In Suharto’s Indonesia, a single oligarch led a despotic régime that mostly used state power to support other oligarchs. In medieval Europe, the rich built castles and raised private armies to defend themselves against each other and deter peasants tempted by their masters’ vaults. In all of these cases oligarchs are directly engaged in rule. They literally embody the law and play an active role in coercion as part of their wealth defense strategy.

Contemporary America (along with other capitalist states) instead houses a kind of ​ “ civil oligarchy.” The big difference is that property rights are now guaranteed by the impersonal laws of an armed state. Even oligarchs, who can be disarmed for the first time in history and no longer need to rule directly, must submit to the rule of law for this modern ​ “ civil” arrangement to work. When oligarchs do enter government, it is more for vanity than to rule as or for oligarchs. Good examples are New York City Mayor Michael Bloomberg, former presidential candidate Ross Perot and former Massachusetts Governor Mitt Romney.

Another feature of American oligarchy is that it allows oligarchs to hire skilled professionals, middle- and upper-class worker bees, to labor year-round as salaried, full-time political advocates and defenders of the oligarchy. Unlike those backing ordinary politicians, the oligarchs’ professional forces require no ideological invigoration to keep going. In other words, they function as a very well-paid mercenary army.

Whatever views and interests may divide the very rich, they are united in being materially focused and materially empowered. The social and political tensions associated with extreme wealth bond oligarchs together even if they never meet, and sets in motion the complex dynamics of wealth defense. Oligarchs do overlap with each other in certain social circles that theorists of the elite worked hard to map. But such networks are not vital to their power and effectiveness. Oligarchic theory requires no conspiracies or backroom deals. It is the minions oligarchs hire who provide structure and continuity to America’s civil oligarchy.

The U.S. Wealth Defense Industry

The threats to wealth that oligarchs face, and want to overcome, create the enormous profit-making opportunities that motivate the wealth defense industry, or WDI. In American oligarchy, it consists of two components.

The first is the mercenary army of professionals – lawyers, accountants, wealth management agencies – who use highly specialized knowledge to navigate 72 , 000 pages of tax code and generate a range of tax ​ “ products” and advice, enabling oligarchs to collectively save scores of billions of dollars, every year, that would otherwise have to be surrendered to the state. While most of us are what I call ​ “ TurboTaxpayers,” buying cheap tax software to navigate our returns and make routine deductions, oligarchs purchase complex ​ “ tax opinion letters” from professional firms. These letters are drafted to justify enormous nonpayments of taxes if the IRS ever questions how certain transactions produce losses, or how other accounting gymnastics make it appear that no gains or compensation occurred. The letters can cost up to $ 3 million each, but can save an oligarch tens or hundreds of millions of dollars in a given year.

Written by some of the most high-powered attorneys and firms in the industry, tax letters serve to intimidate the legal department of the IRS even before a prosecution is contemplated.

The Senate is aware of these letters – noting in a 2003 report on the ​ “ tax shelter industry” that ​ “ respected professional firms are spending substantial resources … to design, market, and implement hundreds of complex tax shelters, some of which are illegal and improperly deny the U.S. Treasury of billions of dollars in tax revenues” – but getting specific information about them is extremely difficult, since the IRS rarely prosecutes oligarchs. When it does, most cases are sealed, and oligarchs who work with tax attorneys can invoke attorney-client privilege. But in 2003 , there was a breach of this fortress of secrecy when the Senate published detailed reports about illegal tax shelters created by the accounting firm KPMG.

According to the Senate, the KPMG tax shelters created ​ “ phony paper losses for taxpayers, using a series of complex, orchestrated transactions involving shell corporations, structured finance, purported multi-million dollar loans, and deliberately obscure investments” for 350 clients between 1997 and 2001 . The fake losses totaled about $ 8 . 4 billion, or $ 24 million per client applied against their incomes, these losses reduced the taxes of each oligarch by an average of $ 8 . 3 million, or $ 2 . 9 billion for the group.

One of the reasons this case was exposed is that it was all rather down-market, using cheap cookie-cutter tax opinion letters priced at a mere $ 350 , 000 each.

Not only did all the firms and banks conspiring on behalf of these 350 oligarchs – and the oligarchs themselves – know that the investments ​ “ had no reasonable potential for profit,” but KPMG calculated that even if it was fined for failing to disclose the shelters, it would still earn far more in fees than it would pay in fines. The firm was fined $ 456 million. Even more incredibly, more than a dozen KPMG clients sued the firm for the taxes and penalties incurred after being discovered – the suits claim that KPMG bungled its job of creating shelters for tax evasion with zero legal risks for oligarchs. It’s tantamount to suing your hit man for a sloppy murder.

The second component of the WDI is the nitty-gritty legwork that keeps the tax system sufficiently porous, complex and uncertain enough to be manipulated. Some oligarchs do this work themselves, speed dialing public officials to directly complain about laws and regulations, but most do not. Instead, WDI professionals, motivated to earn a share of annual oligarchic gains, constitute a highly coherent and aggressive network for political pressure. These lobbyists fight to insert favorable material into the tax code, cut sections that cause problems, and block threats on the horizon.

Apologists for havens

Discussions about money in politics often begin with campaign finance reform. Advocates argue that a small fraction of wealthy Americans constitute a powerful donor class that provides the vast majority of candidates’ funds. Long before ordinary citizens get to vote, they say, their choices are reduced to politicians deemed acceptable by the richest Americans via a ​ “ wealth primary,” in which candidates straying from a narrow economic agenda are shut out of campaign funding.

“ For all their influence at the polls, guys like Joe the Plumber aren’t typically campaign contributors,” explains Sheila Krumholz, executive director of the Center for Responsive Politics. ​ “ You’re more likely to see John the Bond Trader bankrolling these campaigns.” And she’s right: Of the roughly 1 . 4 million individual contributions of $ 200 or more during the 2008 elections, three-fourths of the money came from a mere one-fifth of the donors, who in turn comprised one-tenth of 1 percent of American adults.

But while this fraction does coincide with our approximation of the size of the American oligarchy, campaign donations are not oligarchs’ primary or even most effective strategy for political influence. Academics Michael Graetz and Ian Shapiro explain this in their 2005 book, Death by a Thousand Cuts: The Fight over Taxing Inherited Wealth.

“ Campaign contributions, soft money, spending limits for political candidates and the like have become controversial issues,” they admit, ​ “ but they mattered little in the estate tax fight.” The battle was between smaller oligarchs and the biggest players at the top. Believing it unlikely that the elimination of the estate tax could be extended indefinitely, a significant number of wealthy Americans with a net worth between $ 5 and $ 15 million wanted the threshold moved up to exempt their estate tax. In exchange, they supported a higher estate tax rate on everyone above the threshold. Big oligarchs took the opposite position. They wanted no estate tax at all. But if Congress was going to bring it back, the ultra-rich supported a lower exemption in exchange for a lower overall rate.

The big oligarchs won again – but not because of campaign finance. ​ “ Money mattered more fundamentally in shifting the tectonic plates underlying American tax debates,” Graetz and Shapiro suggest. And this is precisely where oligarchs deploy their resources in the WDI.

Oligarchs’ ​ “ three decades of investments in activist, conservative think tanks” has blazed an ideological path that drones in the WDI follow. Activists at institutions like the Heritage Foundation supply ​ “ ideological ammunition to the lobbyists and interest groups … who work relentlessly … to keep up the tax-cutting pressure on the Hill.”

This pressure was hard at work in President Obama’s feeble attempt to curtail offshore tax havens in 2009 . In the middle of massive public bailouts to the financial system and large bonuses on Wall Street, the president proposed stronger measures to fight against who he called ​ “ tax cheats,” the individuals using offshore tax havens to deny the government nearly $ 70 billion a year – a level equal to about seven cents on every dollar of taxes paid honestly.

But Obama’s proposals were less aggressive than his rhetoric. The president urged Congress to support efforts to sanction nations that maintained secrecy on bank accounts and corporate entities, and sought to hire 800 additional IRS agents ​ “ to detect and pursue American tax evaders abroad” these measures were projected to save a mere $ 8 . 7 billion over 10 years – about one percent of the losses from offshore accounts. Despite the timidity, the proposals received only a lukewarm response from Democrats and outright hostility from Republicans, who argued that they would cripple American corporations’ ability to compete globally.

Dan Mitchell, a senior fellow (i.e. mercenary) at the Cato Institute (a think tank financed by American oligarchs), defended tax havens as ​ “ outposts of freedom.” If Americans are concerned that ​ “ individuals are moving their money to countries with better tax law, that should be a lesson to us that we should fix our tax law.”

In other words: Let’s decrease taxes on the super-rich.

The WDI, arising naturally from the opportunities and risks created by enormous wealth, has spawned its own pile of these opinion-makers, free to spread their ideas through a compliant corporate media while oligarchs themselves are free to look on.

Oligarchy, or Democracy?

To argue that the United States is a thriving oligarchy does not imply that our democracy is a sham: There are many policies about which oligarchs have no shared interests. Their influence in these areas is either small or mutually canceling.

Though it may strike at the heart of elitism, greater democratic participation is not an antidote to oligarchic power. It is merely a potential threat. Only when participation challenges material inequality – when extreme wealth is redistributed – do oligarchy and democracy finally clash.

The answer to the question of inequality, then, is troubling. Wars and revolutions have destroyed oligarchies by forcibly dispersing their wealth, but a democracy never has.

Democracy and the rule of law can, however, tame oligarchs.

A campaign to tame oligarchs is a struggle unlikely to fire the spirits of those outraged by the profound injustices between rich and poor. However, to those enduring the economic and political burdens of living among wild oligarchs, it is an achievement that can improve the absolute welfare of average citizens, even if the relative gap between them and oligarchs widens rather than narrows.

A graduate student in one of my seminars – resisting my terminology – once declared that the ​ “ U.S. has rich people, not oligarchs.” More than anything else, that statement claims that somehow American democracy has managed to do something no other political system in history ever has: strip the holders of extreme wealth of their inherent power resources and the political interests linked to protecting those fortunes.

Of course, this hasn’t happened.

But it is endlessly fascinating that we’re now in a moment when Americans are once again asking fundamental questions about how the oligarchic power of wealth distorts and outflanks the democratic power of participation.

The Political Development of Athens

The Acropolis of Athens, seen from the Hill of the Muses / Photo by Carole Raddato, Wikimedia Commons

It was a traditional Greek practice to explain significant historical changes, such as the founding of communities or the codification of laws, as the work of an individual “inventor” from the distant past. Just like the Spartans, who remembered the legendary Lycurgus as the founder of their city-state, the Athenians also believed their polis owed its start to a single man. Athenian legends made Theseus responsible for founding the polis of Athens by the synoecism of villages in Attica, the name given to the peninsula at the southeastern corner of the mainland of Greece, which formed the territory of the Athenian polis. Since Attica had several good ports along its coast, the Athenians were much more oriented to seafaring and communication with other peoples than were the almost landlocked Spartans.

Myth described Theseus as a traveling adventurer, whose most spectacular feat was volunteering to sail as a hostage to the island of Crete so that he could defeat the Minotaur, a cannibalistic monster with the body of a man and the head of a bull, to whom young Athenian men and women were fed as expiation of the city-state’s killing of the son of King Minos. Like Theseus’s other legendary adventures, this exploit became a favorite subject matter for artists. Theseus’s “labors,” as they are called in imitation of the deeds performed by the most famous Greek hero, Heracles (Hercules to the Romans), were mainly successful fights against monsters and criminals threatening civilized life. They therefore elevated him to the status of a culture hero laboring to promote the social and moral institutions of the city-state. Heracles, by contrast, the hero of Dorian Greeks, was renowned for overcoming monsters and criminals as a demonstration of his supreme physical strength and ability. The legend of Theseus made him a particularly appropriate choice as the founder of a city like Athens that prided itself on its claim to have taught the most important aspects of civilized life, agriculture and the initiation ceremonies of Demeter, to the rest of the Greek world. The choice of Theseus as the legendary founder of the city-state thus expressed an Athenian feeling of superiority through its claim of having successfully conducted a “civilizing mission” for the early Greek world.

Unlike most other important sites inhabited in the Mycenaean period, Athens had apparently not suffered any catastrophic destruction at the end of the Bronze Age, although it seems unlikely that the settlement entirely escaped the violent disruptions so widespread at that time. In any case, the population of Attica shrank in the early Dark Age, just like the populations of the rest of Greece. By around 850 B.C., however, archaeological evidence, such as the model of grain storage containers from a woman’s burial mentioned in chapter 3, implies that the Athenian agricultural economy was reviving. When the population of Attica apparently expanded at a phenomenal rate during the century from about 800 to 700, the free peasants constituted the fastest-growing segment of the population as economic conditions improved in the early Archaic Age. These small agricultural producers apparently began to insist on having a say in making decisions in Athenian policies because they felt that justice demanded at least a limited form of political equality for themselves as citizens. Some of these modest landowners became wealthy enough to afford hoplite armor, and these men, like similarly prosperous men elsewhere, probably made strong demands on the elite, who had up to this time ruled Athens as what amounted to a relatively broad oligarchy. Rivalries among the oligarchs for status and material wealth prevented them from presenting a united front, and they had to respond to these pressures to insure the participation of the hoplites in the citizen militia, on which depended Athenian military strength. The poor were also enfranchised as citizens in early Athens, but we are in no better position in this case than in that of the rest of Greece to explain the precise mechanism powering this significant development. It seems very likely that poorer citizens earned their right to participate politically on the grounds of their service as light-armed troops in the city-state’s militia.

Was Athens already on the road toward democracy at this early stage in its political development as a city-state? Scholars disagree strongly on this question, but the evidence, admittedly scarce and obscure as it is, seems to me to indicate that by the late seventh century B.C., Athens’s male citizens—rich, hoplite level, and poor together—had established the first form of government in Greece (and therefore in the world) about which we have enough information rightly to call a democracy, or at least the first major step toward a democracy that admittedly reached its full form only after a long period of change and strife between richer and poorer citizens. It was also admittedly a limited and incomplete form of democratic government. Finally, it was not Greece’s only democracy other Greek city-states (about which we have much less information) also created democracies.

Theagenes fountain in Megara / Photo by O. Mustafin, Wikimedia Commons

Still, the city-state of Athens as it developed after the Dark Age broke new ground in the organization of politics and society. It remains a difficult problem to understand why, on this interpretation, Athenians moved toward democracy instead of, for example, toward a narrow oligarchy like that of Sparta. Two factors perhaps encouraging the emergence of the Athenian polis as an incipient democracy were rapid population growth and a rough sense of egalitarianism among male citizens surviving from the frontier-like conditions of the early Dark Age, when most people had shared the same meager existence. These same factors, however, do not necessarily differentiate Athens from other city-states that did not evolve into democracies, because the same conditions generally pertained across the Greek world in the late Dark Age and early Archaic Age. Perhaps population growth was so rapid among Athenian peasants that they had greater opportunity than at other places to demand a share in governing. Their power and political cohesion were evident, for example, in about 632 B.C., when they rallied “from the fields in a body” to foil the attempted coup of an Athenian nobleman named Cylon (Thucydides, The Peloponnesian War 1.126.7). A former champion in the Olympics and married to a daughter of Theagenes, tyrant of Megara, Cylon and some of his friends had planned to use force to install a tyranny.

The scanty evidence seems to indicate that by the seventh century B.C. all freeborn adult male citizens of Athens had the right to attend open meetings, in a body called the assembly (ecclesia, “a gathering of those who have been called out”), which elected nine magistrates called archons (“rulers”) each year. The archons headed the government and rendered verdicts in disputes and criminal accusations. As earlier, the social elite still dominated Athenian political life and exploited their status to secure election for themselves as archons, perhaps by organizing their bands of followers as voters and by making alliances with others of their socioeconomic level. The right of poorer men to serve as members of the assembly as yet had only limited significance because little business besides the election of archons was conducted in its gatherings, which in this period probably took place only rarely, when the current archons decided the time was right.

Political alliances among members of the elite often proved temporary, however, and rivalries among men jealous of each other’s status could become violent. In the aftermath of Cylon’s attempted tyranny, an Athenian named Draco was appointed in 621 B.C., perhaps after pressure by the hoplites, to establish a code of laws promoting stability and equity. He infamously made death the penalty for most crimes. The Athenians later remembered his laws as having been as harsh as the meaning of his name (drakōn, the Greek word for “dragon, snake”). Athenians, like other Greeks, maintained the death penalty for murder and other serious crimes such as treason, but, for reasons that we cannot recover, Draco’s reforms only increased the tension and instability of the political situation at Athens. Deterioration in the economic situation of Athens’s peasants, which had been slowly building for a long time, further undermined social peace hungry farmers were willing to do desperate things to try to feed their families. Later Athenians did not know what had caused this economic crisis that looked likely to flare up into a bloody rebellion, only that it had pitted the rich against the peasants and the poor.

One cause of the trouble may have been that the precariousness of agriculture in this period led to the gradual accumulation of the available farmland in the hands of fewer and fewer people. In subsistence agriculture, the level at which many Athenian farmers operated, a lean year could mean starvation. Moreover, farmers lacked any easy method to convert the surplus of a good year into imperishable capital, such as coined money, which then could be stored up to offset bad years in the future, because coinage was not yet in common use Athens had yet to mint any currency. Failed farmers had to borrow food and seed from the rich to survive. When they could borrow no more, they had to leave their land to find a job to support their families, most likely by laboring for successful farmers. Under these conditions, farmers who became more effective, or simply more fortunate, than others could acquire the use and even the ownership of the land of failed farmers. Whatever the reasons may have been, many poor Athenians had apparently lost control of their land to wealthier proprietors by around 600 B.C. The crisis became so desperate that impoverished peasants became slaves when they could not pay their debts economic failure had brought politics to the breaking point.

The Reforms of Solon

Bust of Solon from the National Museum, Naples / Wikimedia Commons

Within twenty-five years after Draco’s legislation, the conditions of life had become so awful for many poorer Athenians that a civil war threatened to break out. In desperation, the Athenians in 594 B.C. gave Solon special authority to revise the laws on his own to deal with the crisis. Putting this power in the hands of one man was an extraordinary decision for a city-state whose government was now based on the principle that policies and laws were to be determined by shared decisions made in the assembly. As Solon explains in his autobiographical poetry, he tried to steer a middle course between the demands of the rich to preserve their financial advantages, and the call of the poor for a redistribution of land to themselves from fields that would be seized from the holdings of the large landowners. His famous “shaking off of obligations,” as the Athenians called it, somehow (we do not know the details) freed those farms whose ownership had become formally encumbered by debt but did not, however, actually redistribute any land. Solon also prohibited the selling of Athenians into slavery for debt and secured the liberation of citizens who had become slaves in this way, commemorating his success in the verses he wrote about his reforms: “To Athens, their home established by the gods, I brought back many who had been sold into slavery, some justly, some not. . . .” (Fragment 36).

Attempting to balance political power between rich and poor, Solon also instituted a reform that ranked male citizens into four levels according to their income: “five-hundred-measure men” (pentakosiomedimnoi, those with an annual income equivalent to that much agricultural produce) “horsemen” (hippeis, income of three hundred measures), “yoked men” (zeugitai, two hundred measures) and “laborers” (thetes, less than two hundred measures). The higher a man’s income level, the higher the governmental office for which he was eligible, with thetesbarred from all posts. Solon did reaffirm the right of this large group of poor men to participate in the assembly, however. Crucially important was Solon’s creation of a council (boulē) of four hundred men to prepare an agenda for the discussions in the assembly (some scholars date this innovation after Solon’s time). Council members were chosen by lottery, probably only from the top three income levels. Still, this innovation mattered because it meant that the elite could not dominate the council’s deliberations by setting the agenda ahead of time in ways that privileged matters supporting their own interests to the detriment of the needs of poorer citizens. Solon also probably initiated a schedule of regular meetings for the assembly. All these reforms gave added impact to the assembly’s legislative role in the city-state and thus indirectly laid a foundation for the political influence that thethetes would gradually acquire at Athens over the next century and a half.

Despite the restriction on officeholding by the lowest income class that he imposed, Solon’s classification scheme supported further development of conditions leading to democracy because it allowed for upward social mobility, and the absence of direct taxes on income made it easier forentrepreneurial citizens to better their lot. If a man managed to increase his income, he could move up the scale of eligibility for office. One man who did so had an inscription erected in the center of Athens along with a statue of a horse to commemorate his elevation from the fourth to the second income level: “Anthemion son of Diphilus set up this dedication to the gods when he exchanged his ranking in the laborer class for one in the horsemen class” (Aristotle, Constitution of the Athenians 7). Solon’s reforms empowered Athenian male citizens to create, over time, a political and social system far more open to individual initiative and change than that of Sparta.

Equally important to restoring social stability and peace in a time of near–civil war were Solon’s judicial reforms. He instituted as a legal right that any male citizen could bring charges on a wide variety of offenses against wrongdoers on behalf of any victim of a crime. Perhaps most importantly, he specified a right of appeal to the assembly by persons who believed a magistrate had rendered unjust legal decisions or verdicts against them. With these two measures, Solon made the administration of justice the concern of all citizens, and not just of the upper-income-level men who filled the official positions of government. He balanced these judicial reforms that favored ordinary people, however, by also granting broader powers to the “Council which meets on the Hill of the god of war, Ares,” (Demosthenes Orations 20.157) this council is usually just called “The Areopagus” (“Ares’ hill”). Archons became members of the Areopagus after their year in office. This body of ex-archons could, if the members chose, exercise great power because at this period it judged the most serious judicial cases, in particular accusations against archons themselves. Solon probably also expected the Areopagus to use its power to protect his reforms.

For its place and time, Athens’s political system was remarkable, even at this early stage in its development toward greater democracy, because it granted all male citizens the possibility of participating meaningfully in the making of laws and the administration of justice. But not everyone found the system admirable. A visiting foreign king in the time of Solon reportedly remarked scornfully that he found Athenian democratic government ludicrous. Observing the procedure in the Athenian assembly, he expressed his amazement that leading politicians could only recommend policy in their speeches, while the male citizens as a whole voted on what to do: “I find it astonishing that here wise men speak on public affairs, while fools decide them” (Plutarch, Solon 5). Some Athenians who agreed with the king that the wealthy should count as wise and the poor as foolish continued to scheme to undermine Solon’s reforms, and such oligarchic sympathizers continued to challenge Athenian democracy at intervals throughout its history.

From Tyranny to Democratic Reorganization

An archaic silver obol of Athens of heraldic type from the time of Peisistratos, 545–525 BCE / Wikimedia Commons

Solon also made reforms that he hoped would improve economic life, such as prohibiting exports of agricultural products except for olive oil and requiring fathers to train their sons in ways to make a living. Despite his best efforts, however, fierce conflict flared up again at Athens following his reforms, lasting for decades into the mid-sixth century B.C. The conflict sprang from rivalries for office and status among the members of the elite and the continuing discontent of the poorest Athenians. The outcome of this protracted unrest was a tyranny, when a prominent Athenian named Pisistratus began a long and violent effort to make himself sole ruler with the help of wealthy friends and also the poor, whose interests he championed. On his third try in 546 B.C., he finally established himself as tyrant at Athens, protected by a bodyguard. Pisistratus courted poor supporters by providing funds to help peasants acquire needed farm equipment and by offering employment for poorer men on public-works projects, such as road improvements, a huge temple to Zeus, and fountains to increase the supply of drinking water in the city. The tax that he imposed on agricultural production, one of the rare instances of direct taxation in Athenian history, financed the loans to farmers and the construction projects. He also arranged for judicial officials to travel on circuits through the outlying villages of Attica to hear cases, thereby saving farmers the trouble of having to leave their fields to seek justice in the city courts. He left in place Solon’s laws and the by-now-traditional institutions of government. Like the earlier tyrants of Corinth, he promoted the economic, cultural, and architectural development of Athens. Athenian pottery, for example, now increasingly crowded out Corinthian wares in the international export trade.

Hippias, the eldest son of Pisistratus, inherited the position of tyrant of Athens after his father’s death in 527 B.C. He governed by making certain that his relatives and friends occupied magistracies, but for a time he also allowed rivals from the social elite to serve as archons, thereby defusing some of the tension created by their jealousy of his superior status. Eventually, however, the wealthy family of the Alcmaeonids arranged to have the Spartans send an army to expel Hippias. This startling decision reflected the Spartans’ view of themselves that, as Greece’s most powerful city-state, they had the duty of protecting the freedom of other Greeks (at least those who were not helots). In the ensuing vacuum of power, the leading Alcmaeonid, a man named Cleisthenes, sought support among the masses by promising dramatic democratic reforms when his bitterest rival, Isagoras, from another elite family, became archon in 508 B.C. Isagoras tried to block Cleisthenes’ reforms by calling on the Spartans to make another military intervention at Athens, this time as his supporters. They responded, evidently having decided that Isagoras was the man to ensure Athens’s freedom, given that they regarded democracy not as true liberty but rather as unbridled license propelled by the whim of the masses. In response to this second invasion, the majority of the Athenians united to force Isagoras and his foreign allies out. This remarkable demonstration of resistance by the bulk of the Athenian population put a quick end to the conflict between Athens and Sparta, but the repulse of the proud Spartans by, as they saw it, the Athenian rabble sowed seeds of mutual distrust between the two city-states, which would bear bitter fruit in the wars with one another that broke out two generations later in the mid-fifth century B.C.

The ordinary people’s willingness to put their bodies on the battle line to support Cleisthenes’ plans for Athenian government gave him the authority to begin to install the even more strongly democratic system for which Athens became famous. The enduring importance of his reforms led later Athenians to think of him as a principal founder of the democracy of the Classical Age. First, he made the preexisting villages of the countryside and the neighborhoods of the city of Athens (both called “demes,” dēmoi) the constituent units of Athenian political organization. Organized according to deme, male citizens participated directly in the running of their government. To begin with, they kept track in deme registers of which males were citizens and therefore eligible beginning at the age of eighteen to attend the assembly to vote on laws and public policies. Each deme was also assigned according to its location to one of thirty different intermediate groupings called “thirds” (trittyes), which were drawn up to represent three territorial areas of Attica (ten thirds each for coast, plain, and city, respectively). Finally, ten administrative divisions called “tribes” (phylai) were created by assigning one third from each of the three regional categories to each tribe these were not kinship groups, despite that implication of the term tribe.

This complex system of dividing up the voting population, which replaced an earlier division into four tribes, thus created ten groups whose members did not all necessarily live near one another. Cleisthenes’ rearrangement of the political map of Athenian government meant that local notables no longer could easily control election results just by exercising influence on the poorer people in their immediate area. This effect may have been especially directed at the political power of his oligarchic enemies. In any case, the system of ten tribes, each made up of demes from all over Attica, provided an administrative basis for spreading service in Athenian government widely throughout the male citizen body. Especially significant was his reform by which fifty representatives were chosen by lottery from each tribe to serve for one year on a new Council of Five Hundred (replacing Solon’s Council of Four Hundred). The number of representatives from each deme was proportional to its population. Most importantly, the ten men who served each year as “generals” (stratēgoi), the officials with the highest civil and military authority in the city-state, were elected one from each tribe. The citizen militia was also organized by tribes. Cleisthenes’ reorganization was administratively complicated, but its overall goal was to promote less conflict among citizens in the sharing of political power. His full motives for the changes are not easy to discern, but his undermining of existing political alliances among the elite had the undeniable effect of promoting the interests of greater democracy and political stability.

By about 500 B.C., then, Cleisthenes had succeeded in devising a system of government based on direct participation by as many adult male citizens as possible. That he could put such a system in place successfully in a time of turmoil and have it endure and over time become even more democratic, as it did, means that he must have been building on preexisting conditions favorable to direct rather than representative democracy. Certainly, as a member of the social elite looking for popular support, Cleisthenes had good reason to invent the kind of system he thought ordinary people wanted. That he based his system on the demes, the great majority of which were country villages, suggests that some conditions favoring democracy may have stemmed from the traditions of village life. Possibly, the concept of widespread participation in government gained support from the custom that village residents often have of dealing with each other on relatively egalitarian terms. Each man is entitled to his say in running local affairs and must persuade others of the wisdom of his recommendations rather than resorting to compulsion. In the daily affairs of life in a small community, especially the organization and accomplishment of religious festivals and sacrifices, villagers of all statuses, from the poorest peasant to the richest landowner, must for practical reasons deal with each other through negotiation and compromise more often than not, at least if they want to accomplish anything for the group.

Furthermore, since many wealthy Athenian landowners in this period increasingly seem to have preferred to reside primarily in the city (even if they maintained a house in the country as well), they could no longer dominate discussions and affairs in the rural demes as they had when they lived outside the urban center. In any case, the idea that persuasion, rather than force or status, should constitute the mechanism for political decision making in the emerging Athenian democracy fit well with the spirit of the intellectual changes that were taking place during the late Archaic Age. That is, the idea that people had to present plausible and persuasive reasons for their recommendations corresponded to one of the period’s new ways of thought. This development has proved to be one of the most influential legacies of Greek civilization.


Here are the countries that have the most evidence of being oligarchies, and why.


To be rich in Russia, you must have contacts within the government. If you don't maintain these contacts, you can lose your power and wealth. As a result, many Russian billionaires buy assets in other countries. There, the rule of law protects their property.

The close relationship between billionaires and the government works both ways. Oligarchs have a great deal of influence in Russia's politics.

Today's exclusive club includes Igor Sechin, the chief of Rosneft, the state oil company.   His main rival is Gennady Timchenko, the former head of the country's largest oil trading company.   A third is Roman Abramovich, the owner of the Chelsea Football Club and the Millhouse investment company.  

In 2018, the U.S. Treasury released a list of Russian oligarchs.   It included energy czars Vladimir Bogdanov and Oleg Deripaska. They each have an estimated net worth of $1 billion or more.     Treasury insists it isn't a sanctions list.

The Russian oligarchy hasn't changed much since the 1400s because it works. It operates regardless of whether communists or capitalists run the country.

Russia's oligarchy system extends back to the 10th century.   The medieval boyars were advisors to the prince. In the 13th and 14th centuries, they were rich landowners who counseled the princes. From the 15th to 17th centuries, the Muscovy boyars ruled the country with the czar. By the 18th century, Tsar Peter the Great abolished the title of boyar.

The oligarch system returned in the 1990s with the breakup of the Soviet Union.   They had become wealthy through their connections to the government. They benefited when the government privatized state-owned businesses. They also funded the first post-Soviet president, Boris Yeltsin.


An oligarchy took control of China after the death of Mao Tse-Tung. It is the 103 members of the families descended from the "Eight Immortals," according to research done by Bloomberg News.   They manage most of the state-owned corporations, collaborate on business deals, and even intermarry.

Saudi Arabia

The Royal Family is an oligarchy since it's not run by any one person. The reigning monarch must share his power with the descendants of the country's founder. That was King Abd al-Aziz al-Sa'ud, who left behind 44 sons, 17 wives, and an unknown number of daughters.   The current king, Salman bin Abdulaziz, appointed his son in key positions to consolidate power.   Prince Mohammed bin Salman (MBS) became defense minister at age 30 and was given oversight of the state oil monopoly, Saudi Aramco. In 2015, the two changed many long-standing policies.

  1. They engaged in a proxy war against Iran in Yemen. They hinted they might send forces into Syria to combat Russia's presence.
  2. They allowed oil prices to fall below the Organization of the Petroleum Exporting Countries' $70 floor. They wanted to put U.S. shale oil producers out of business. They also want to prevent arch-enemy Iran from profiting from the nuclear peace treaty.
  3. They cracked down on dissidents to prevent further ISIS terrorism.

This team upset the oligarchy. The successor to King Salman was Crown Prince Mohammed bin Nayef.   In 2017, the king replaced him with MBS as Crown Prince and successor to the throne.

An oligarchy of Islamic clerics, relatives, and business associates runs the country. They took power after the demise of Ayatollah Ruhollah Khomeini. He led the 1979 revolution that ousted Shah Pahlavi.  

Khomeini did not allow his family to rule, but his replacement did. Ayatollah Ali Khamenei put his friends and allies in government positions.   The elected president owes his position to these oligarchs. The five Larijani brothers are friends and relatives of Khamenei and his allies.   They have become heads of many critical government posts.

South Africa

South Africa was an oligarchy in the 20th century.   It was run by Caucasian descendants of Dutch settlers who made up 20% of the population. It ended with the election of Nelson Mandela as the first Black president in 1994.


The Koc family is a wealthy and powerful family in Turkey. Koc Holding owns businesses in oil refining, banking, car manufacturing, and electronics.   In 2005, it purchased the Tupras oil refining business from the government for $4 billion.   Tupras holds a dominant position in Europe's fuel market. The government allows Koc to set fuel prices as long as it supplies Turkey before other countries.

Due to their dominance in multiple industries, foreign investors and politics are more likely to work with the Koc family.

United States

A study by political scientists Martin Gilens of Princeton and Benjamin Page of Northwestern found that policies favored by the richest 10% of Americans passed more often than those of the poorest 50%.   If they oppose a policy, it is unlikely to pass. It doesn't matter how many middle-class Americans favor it.

Some say that an example of American oligarchs is the Koch brothers, which made their fortune in a variety of industries, including oil pipelines, cattle ranching, and trading oil derivatives.  

The Koch brothers influence elections by contributing to political causes and politicians. The overwhelming majority of those contributions benefit Republicans and Libertarians.  

In general, they support less government intervention, open borders, and free trade. Their views on Obamacare and other issues lands them on the same side of the ideological spectrum as the Tea Party and the GOP. While they didn't actively support Donald Trump's re-election campaign, they agreed with many of the Trump administration's policy stances and actively funded campaigns for prominent Trump allies like Rep. Devin Nunes.  

Aménagement du Territoire: Territorial Development

Italy: Equilibrium North–South

At a different scale, Italy had to face development disparities between the northern part, rich and industrialized, and the southern one (Mezzogiorno ), poor and essentially agricultural, due to geographical, historic, and social reasons (the south being dominated by an oligarchy of landowners and by a criminal organization). The gap, in terms of income, was from one to two. The result was an intense migration from south to north.

The Mussolini government had initiated a policy of financial subsidies to reduce this gap. But he did not try to transform the economical and social structures.

It was only during the 1950s that the Cassa per il Mezzogiorn was created to undertake a land reform, to create infrastructures, and to develop manufacturing activity. Despite the money engaged, an important gap is still remaining.

Watch the video: Θεσσαλονίκη ΔΕΘ - Ομιλία Θ. Τζήμερου και Φ. Κρανιδιώτη στην Νέα Ελβετία 1792021 - Μέρος 1ο (August 2022).