What Is an Oligarchy and What Does It Mean in 2018?

When you hear the word "oligarchy," you very well may think of the age-old political system that has lorded over dozens of civilizations. But oligarchies aren't just found in Greece or Italy - oligarchies can even be found in the highest-grossing companies and corporations in the world.

Despite the fact that many of the key players on the world stage boast democratic or parliamentary governments, it is important to understand how different styles of government and management operate - and to be able to recognize them when they may not be obvious.

But while democracies or monarchies are among the most popular forms of government, oligarchies have had a fascinating historical and present-day run. But what is an oligarchy anyway? And how does it operate?

Oligarchy Definition

The word "oligarchy" comes from the Greek word "oligarkhes" - meaning "few to rule or command." According to the Merriam-Webster dictionary, an oligarchy is a "government by the few," being "a small group [that] exercises control especially for corrupt and selfish purposes."

Given the dictionary definition, the term seems to carry a negative connotation.

But how does this system work? 

Oligarchy Structure

As per its definition, an oligarchy is a system of government where the few - be it families, businesses, scholars, or individuals - rule.

However, in many cases, even governments that have democracies or monarchies actually have oligarchies controlling them. In this case, a government may be structured as having democratic or monarchical systems, but is actually influenced by rich, powerful, or persuasive people, families, or corporations that can levy a good amount of authority.

Along the same lines, oligarchies pose a threat to free market practices, as they can decide to change or fix trading and economic regulations to benefit themselves. Often, oligarchies can collude to fix prices or violate other healthy economic standards.

Business Oligarchy

To this degree, oligarchies can also rule over companies or other corporations - not just countries.

Practically, an oligarchy in a business or corporation could look like a CEO, CFO, or other executives keeping a small group of advisors or other high-ups around them that manipulate their power to potentially do things like deceive shareholders, influence and abuse workers, or muddle finances.

While oligarchies in business are still very common, oligarchical governments are perhaps the most easily recognizable.

Oligarchy vs. Plutocracy

While the members of an oligarchy could either be wealthy or not, a plutocracy is an oligarchy with rich members.

Many countries and business may be considered plutocracies for this reason, where the wealthy are ruling or heavily influencing policy and operations.

Oligarchy vs. Aristocracy

And while a plutocracy is rule by the wealthy, aristocracy is rule by the elite. Despite being its own system in and of itself, aristocracies can often accompany other systems like monarchies, where the socially elite are influencing a monarch.

Still, much like a plutocracy, an aristocracy is a type of oligarchy, and therefore both can be considered subsets.

Causes of Oligarchies

How are oligarchies formed, and why?

Historically, oligarchies have formed for many reasons, but mostly when an elite class (either those who are very skilled or informed in certain areas, very rich, or very powerful by other means) decide to take over control of a government or corporation.

In democracies, oligarchies can form when the general population would rather trust those who pose to be better equipped to lead than those in charge. Or, oligarchies could form in a democracy when the people aren't actively involved in government or are facing a crisis.

Still, more traditionally, oligarchies have formed and usurped power of ineffectual leaders, including kings and tyrants.

Pros and Cons of Oligarchies

But are oligarchies always bad?

While there certainly are many negative aspects of oligarchies, there are some positive ones, too.

One of the main pros of oligarchy is that it puts power in the hands of people who are often experts and can make informed decisions for the populous or company. It therefore is more efficient than every single person being able to make decisions, and can often free up people to focus on their own work or lives.

Still, there are plenty of downsides to an oligarchical government or management structure. While oligarchies may free up others to focus on their craft or daily lives, they can tend to skew decisions and policies to benefit themselves.

In that manner, oligarchies tend to increase income inequality, which helps the oligarchy grow in power and wealth. Along those lines, oligarchies can often manipulate the financial markets to their advantage, even if they are not natural or do not comply with the rules of supply and demand.

Additionally, oligarchies can perpetuate bad policies by keeping those who are similar to them in power, which can create an unhealthy corporate or government community.

Oligarchy in History

There have been countless oligarchies wielding their power over governments and corporations alike over the years.

As far back as the 600s BCE, Greek city-states sported aristocracies (which, as you remember, are oligarchies made up of the elite class) in Sparta and Athens. Moreover, another antiquated example is Venice during the 14th century, where rich nobles called "patricians" controlled all the financial and political affairs of the city-state. 

But Greece wasn't the only one - Russia has long been considered an oligarchy, up until 1991. But many argue it still is. 

In fact, all communist regimes could be considered oligarchies, where the few in power make executive decisions for the rest of the country or regime - often for their personal benefit or agenda. Throughout the Soviet Union, an oligarchy was in place to manage affairs often suited mostly for the most powerful and wealthy. And, as countless publications including The New York Times have claimed, the Russian oligarchy is alive and well. 

Oligarchies Today

Several modern-day governments are allegedly oligarchies. 

Pulitzer Prize-winning journalist Anne Applebaum even dared to call then-candidate President Trump an oligarch, writing in The Washington Post that "the real problem with Trump isn't that he is sympathetic to Russian oligarchs, it's that he is a Russian oligarch, albeit one who happens to be American."

Applebaum was critical of Trump firing his former campaign manager Paul Manafort when Manafort allegedly had financial connections to Russian oligarchs. In fact, the Pulitzer Prize-winner reasserted her accusation due to how she believed the president to be "a rich man who aspires to combine business with politics and has an entirely cynical and instrumental attitude toward both."

However, President Trump isn't the only one.

Russia has long been accused of being a mega oligarchy, with dozens of influential members seemingly molding the government to fit their interests. In fact, CNN recently published a "name and shame" list of all of the Russian oligarchs who rose to power and are supported by current Russian president Vladimir Putin. The list is quite extensive, and makes it seem as though the antiquated form of government is long from dead. The billionaires of Russia seem only able to gain and sustain their wealth by approving of and supporting the government. Some on the aforementioned list include Gennady Timchenko, head of Russia's biggest oil trading company, and Chelsea Football Club owner Roman Abramovich. 

Other notable oligarchies include post-Mao China, when an oligarchy assumed control of the country. And, Saudi Arabia seems to boast a similar government structure, with current king Salman bin Abdulaziz appointing two of his sons to high positions, controlling oil prices and other major policies. 

In business, perhaps one of the most recent examples of an oligarchy may be the corporate structure at Papa John's, as exposed in a 2018 Forbes article. The tight-knit community of top execs and the loyalty to their respective interests definitely smells of oligarchy - however mild. 

Is the United States an Oligarchy?

Some have argued that the United States is actually an oligarchy. And, according to a study published in 2014 by Princeton University Professor Martin Gilens and Northwestern University Professor Benjamin Page, some researchers believe so, too. 

The pair concluded that, "Americans do enjoy many features central to democratic governance, such as regular elections, freedom of speech and association, and a widespread (if still contested) franchise. But we believe that if policymaking is dominated by powerful business organisations and a small number of affluent Americans, then America's claims to being a democratic society are seriously threatened.

Still, Gilens insists that despite often sharing goals, one side seems to get the shorter end of the stick. 

"Affluent and ordinary citizens frequently want the same thing. But when they disagree - and they do disagree on many important matters - the affluent generally get their way," Gilens said in a press release. "If democracy means that all citizens should have a say in shaping government policy, our findings cast doubt upon just how democratic U.S. policy making actually is."

So, some researchers have concluded that despite the democratic processes put in place to ensure an even balance of power, it may be the wealthy and elite who are the movers and shakers in forming policy. And while this may not be conclusive evidence that America is actually an oligarchy, it is certainly worth further inspection - especially given the allegations over President Trump. 

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