Understanding Oligarchy: The Dangers of Oligarchy, Cronyism, and Big Government Run By Wealth
- Oligarchy is a classical form of government ruled “by the few.” Generally, the term implies that monied interests rule (dictate the laws) rather than the people or their representatives. With that said, one could argue that oligarchy is a form of government defined only by the fact that “the few” rule (regardless of if it is by wealth or another source of power).
- Cronyism is when traditional government and oligarchical special interests rule together, generally creating state-run monopolies like the VOC.
- Plutocracy is a name for oligarchy in a tyrannical form (where the laws benefit the oligarchs, not the people). With that said, one could argue that when we speak of monied interests ruling, and especially when they rule in their own self interest, the proper term is “plutocracy” (not just “oligarchy”).
- Corporatocracy is an type of oligarchy where corporations rule instead of individual “barons” and their families. Contrary to popular belief, corporatocracy can be a rather democratic form of government in theory. When many public shareholders benefit from a company doing well, and when boards and shareholder votes rule, it creates a sort of democratic form of shareholder capitalism. This is, in these terms, different from a plutocracy controlled by the few. With that said, lines can blur as fewer-and-fewer shareholder control the corporations, or when government cronies favor corporations over people.
OLIGARCHY – PLATO VS. ARISTOTLE: Plato treats oligarchy as implying rule by wealth in his Republic, Aristotle treats oligarchy more literally as implying rule by the few in his Politics. Plato treats oligarchy as being a legitimate system in his forms of government (lesser than aristocracy, but legitimate), Aristotle treats oligarchy as being a corrupt aristocracy where the few rule by their own interests. To the extent that these definitions conflict, is to the extent that a perfect definition of oligarchy that works in any context is elusive.
NOTE: As you can see there isn’t one simple definition for Oligarchy (in part due to the way important philosophers like Plato and Aristotle have used the term, in part due to their usage since). However, if we think of a lawful system ruled by a few monied interests as oligarchy, and we think of a corrupt version of this as plutocracy, then we have a way to distinguish between a lawful and deviant form of the same system. If one considers a mixed capitalist republican government ruled by representatives, then we can see how mixing in lawful oligarchy (with other forms) can be a workable thing, while ensuring the laws prevent plutocracy would be a necessity. This would be the same way we want to distinguish between a benevolent monarch and a despotic tyrant (both are rule by “the one,” but we use semantics to differentiate between the lawful and deviant forms). See the forms of government compared to the forms of tyranny.
NOTE: If the source of power is a monarch (or the people indirectly), then rule by the few can be called aristocracy. If the source of power is military, then the proper name for rule by the few is timocracy. This is one reason why the term oligarchy often gets equated with the idea of “rule by wealth” (it helps distinguish it from other systems where the few rule).
TIP: According to the CIA World Fact Book. Oligarchy is a government in which control is exercised by a small group of individuals whose authority generally is based on wealth or power. So, just like Plato says, just like we say, is just like the CIA says here in modern times. Thus, oligarchy describes both a philosophical and real form of government (like the other classical types).
What creates an oligarchy? An oligarchy is created by wealth (or power from another source) consolidating into the hands of fewer-and-fewer people, generally creating a wealth gap (and thus power gap), paired with an ability for that wealth to influence government (or create government-like policies). This problem compounds over time, as return on capital compounds over time. To the extent that money is power is to the extent that the law of cumulative returns creates a power gap alongside a wealth gap.
TIP: An oligarchy generally forms as a result of monied interests corrupting government, but technically an anarchistic state with no rules could see an oligarchy arise. Oligarchy is a form of government, so it doesn’t specifically require another form to co-exist with. This point seems to be lost on anarcho-capitalists as sure as the idea that big government is the best solution to big government is sometimes lost on progressives.
“The history of the progressive tax over the course of the twentieth century [which is becoming flatter] suggests that the risk of a drift toward oligarchy is real and gives little reason for optimism about where the United States is headed.” – Capital in the Twenty-First Century By Thomas Piketty
Oligarchy in Classical Terms and The Vices and Virtues of Oligarchy
As noted above, one could say oligarchy simply means rule by the few. However, that isn’t the definition we will be considering below.
Generally, and in terms of Plato’s forms of government (so in somewhat philosophical terms), aristocracy means rule by the “wise” few, timocracy means rule by a military state (headed by the “strong” few), and oligarchy denotes rule by the “wealth” of the few.
Thus, since there are three classical forms ruled by “the few,” it makes sense to use the term oligarchy to denote “rule by the wealthy few.”
Rule by the wealthy few generally creates a form of government where the top of pyramid consists of the wealthy and those at the bottom are the poor (a nation in which power is based on wealth alone).
This is different than the merit and rank based systems of aristocracy and timocracy, and this is different than the more egalitarian system of democracy or the top down system of monarchy.
Oligarchy and the Capitalist State
One could say that in a mixed government oligarchy simply denotes the capitalist aspects of government, and in this respect oligarchy isn’t inherently corrupt (if oligarchy is tempered by other systems, that restraint can ensure a healthy economy and prevent extreme power gaps due to wealth).
In fact, as noted above, Plato doesn’t paint pure oligarchy as a fully corrupt system in his Republic. Instead he paints it as a system bound for tyranny (as making wealth the highest virtue of a state is a thing that naturally corrupts the system; just as focusing on wealth only would corrupt a person, so it is for the state; other checks and balances are needed!).
The Problem With “the Few” Ruling a State
With the above in mind, oligarchy in any form has the same general effect, that effect is that special interests (generally monied interests) rule to some degree.
If monied interest rule rather than true representatives of the people, then the government is not a legitimate government (at least in the classical terms of Rousseau and Locke).
Only a government that strives to rule in the general interest of the people is fully legitimate.
That doesn’t mean that any corruption spoils the whole system, it means that when that corruption can’t be addressed in some democratic form via the ballot box, then the people have a right to remedy (in all its non-violent forms; again, according to Locke and the social contract philosophers).
In America, our remedy is found in the Constitution and Bill of Rights, in our legal rights, freedoms, and right to elect a representative government (and in our right to own property and amass capital ourselves). Thus, any revolution to ensure against oligarchy and safeguard the union should be a democratic one that works in the bounds of our political system.
The problem here of course is that Oligarchical interests, like Citizens United, can corrupt the spirit of democracy and lead to a diminishing of the people’s voice and vote. Thus, oligarchy presents a few ongoing problems for a mixed-Republic with a capitalist economic system.
What is an Oligarchy? | Sincere Ignorance.
TIP: The image below shows a loose example of the modern class system (in a mixed-Republic with a capitalist system like the United States). In an oligarchy wealth alone rules, so the aristocrats and timocracy become cronies and a military industrial complex who serve monied interests (rather than benevolent and wise aristocrats and honorable timocrats who represent the general will of the people).
The Folly of the Libertarian and Small Government Conservative
Proponents of “Small Government” frequently ignore the dangers of Oligarchy. They see clearly the dangers of aristocracy, clearly the dangers of democracy, clearly the dangers of any big government, yet they almost uniformly ignore the dangers of oligarchy.
Simply put, this group ignores the idea that monied interests can act as government and instead zero in on the idea that only social justice programs can create a “big government.”
Thus, you can make your way through most of Mises, Hayek, or Rothbard (how he creates A New History of Leviathan without realizing this I can’t even understand?…), etc, etc, and you can listen to the speeches of every Republican senator, and you’ll essentially never be warned of oligarchy.
Sure, having government cronies in bed with monied interests presents a set of real dangers, but the idea that oligarchs need government to make this happen is a myth. With government out of the way, nothing is stopping the oligarch from acting as their own government (an unelected one mind you).
Mises’s otherwise genius work Human Action goes on for something like a thousand pages, only mentioning the word oligarchy once.
Rothbard thought that he could team up with social conservatives because they had a fear of big government like the libertarians, but the truth is social conservatives tend to want a sort of timocracy (a military state with a social hierarchy)… which is also big government (just not in terms of social programs for all). That means, if this conservative coalition actually got their way, they would have paved the road for pure oligarchy in a military state (which isn’t probably what Rothbard was thinking of in his countless essays).
We don’t mix the government types because we love or hate government, we do it to ensure democracy and its virtues of liberty and equality (TIP: Democracy is just as chaotic itself in a pure state, yet another fact often lost on lovers of liberty and equality).
The free market is democratic, but only when it is free.
If the oligarch creates a government, we can be assured they will seek capital over “freedom for all.” This is self-interested human nature. The invisible hand demands it as sure as it demands the distribution of resources in a well functioning free market!
I could go on, but the folly is clear, they put all their hope in the market and seem to, in their optimism that they are so quick to tease others about (like Mill for example by Mises), completely ignore Plato’s warnings of oligarchy and democracy!
This is their folly.
When a democracy which is thirsting for freedom has evil cupbearers presiding over the feast, and has drunk too deeply of the strong wine of freedom, then, unless her rulers are very amenable and give a plentiful draught, she calls them to account and punishes them, and says that they are cursed oligarchs.
– Plato’s Socrates on how oligarchy and democracy have the same results. What else can pure liberty and equality accomplish but ensuring that pure wealth seeking is not kept in check?
TIP: Even if the libertarians were right, 1. we have big militaries in the west, 2. we have a legacy system. You can’t get rid of those, and thus a move toward total liberty (which is unstable) won’t actually work. It will just create an oligarchy or timocracy, and likely a tyrannical one. The libertarian state is just as mythical as the utopian Communist or Fascist timocracy. All these roads lead to serfdom (think about it logically; the anarcho-capitalist state is pure idealism!). Plato ensures us total liberty and equality don’t work, so no to the liberty minded anarcho-capitalism and no to the equality minded Communism.
NOTE: If you consider some on the right right wing which mix up a desire for a strong military with a desire for deregulation, you get an odd mix of oligarchy and timocracy (not much better than those who want deregulation only, and potentially even more troublesome as it is a system that both requires and eschews big government). Like with a purely free-market system, this sort of system has its own imbalances, and those imbalances erode a system over time. Plato’s argument is for a balanced system where elements of aristocracy and democracy, paired with just and fair laws, ensure a balance between the different forms. For Plato, an unbalanced system like an unbalanced soul is bound for tyranny.
The Folly of the Democrat, Liberal, and Big Government Progressive
The liberal and progressive aren’t innocent in this story either.
Their push for big government may be virtuous (at least as virtuous as the libertarian’s ideology, but from a different perspective), but the result is the same.
Government spending and big government results in protections for businesses which results in oligarchy.
The liberal tries for universal healthcare, but by the time it is done getting edited by Congress and K-Street they tend to get a half-baked system and a tax hike. The result is a benefit for monied interests. In words, they more toward cronyism as a side effect of big actions.
Luckily this point is simple to make, as where the libertarians can’t see their own folly, they see the folly of the left clearly and talk about it constantly. Here is Rothbard explaining aspects of this.
TIP: You may have good intentions, but if your buddy has a Cloward-Piven Strategy… your good intentions are going to get diminished around the edges. Then if things don’t work, you’ll get the blame. Think about how Marx gets the blame today! Liberty and equality are excellent virtues, just like wealth, but all require moderation!
Murray Rothbard – Origins Of Progressive Regulation.
TIP: A problem the left-wing has is with the right-wing and business interests. In short, well intentioned lefties don’t have enough control to ensure their policies work. They also tend to go for too much too quick, or they have good intentions that won’t work with the current environment and legacy system. There is lots that can go wrong here, but our concern here is just about left-wing policies leading to oligarchy. See the FDR video below to learn about how the right tries to dismantle aspects of progressive policies.
FDR “Let Me Warn You” (1936).m4v.
FACT: One of the first constitutions we have on record, The Athenian Constitution, starts with the story about a poet-politician-liberator named Solon in about 600 BC. Athens had been enslaved by an oligarchical class. Solon liberated Athens by relieving all debts and credits, and he was remembered fondly by the later Greeks like Aristotle in 350 BC.
Famous Greeks Series Solon. Do we look to Sparta or Athens? Either way, not standing up for your nation isn’t on the table.
After this event there was contention for a long time between the upper classes and the populace. Not only was the constitution at this time oligarchical in every respect, but the poorer classes, men, women, and children, were the serfs of the rich. They were known as Pelatae and also as Hectemori, because they cultivated the lands of the rich at the rent thus indicated. The whole country was in the hands of a few persons, and if the tenants failed to pay their rent they were liable to be haled into slavery, and their children with them. All loans secured upon the debtor’s person, a custom which prevailed until the time of Solon, who was the first to appear as the champion of the people. But the hardest and bitterest part of the constitution in the eyes of the masses was their state of serfdom. Not but what they were also discontented with every other feature of their lot; for, to speak generally, they had no part nor share in anything. – The Athenian Constitution By Aristotle Written 350 B.C.E
The Folly Of Those Who Know Exactly What They Are Doing
So far I’ve described well-intentioned innocents, those who think they are fighting for progress or small government, but are really setting the stage for oligarchy (generally as a side effect of their action).
However, we have to also consider those who want oligarchy (some cronies, neocons, neoliberals, big businesses, military industrial complex, etc).
- Some of these want to usher in a new era, thinking maybe debt will lead the way.
- Some of these want to conserve back to a past era, thinking maybe debt will lead the way.
- Some of these just want to enrich themselves now.
- Some of these want to build up wealth before the party is over.
- Some are literally just narrowly focused on their own self interest and ignoring the side-effects.
Good or bad intentions, short sight or long visions, it doesn’t matter.
The lawful mixed-republic where in which the forms balance and check each other is essentially the only viable solution.
Funneling money into the hands of monied interests by corrupting the democracy, by perversion or intent, is an insult of the highest order. This message has not changed since the time of Plato in 300’s BC. It did not magically change since 1776.
One should fear pure democracy, pure oligarchy, and pure timocracy (a military state) as much as they fear the absolute rule of the one. That fear is healthy. As in all cases it is the consequence, tyranny, that is at the root of the fear. It is healthy to fear despotism.
So then, the question becomes: Is the America of today an oligarchy? The short answer is, no. The long answer is, yeah, a bit. Check out the link to learn more.
Corruption is Legal in America Here is a video that explains why trading a Federal Republic for a corporatocracy is a slippery slope.