What Is an Oligarchy? Definition and Examples

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Indigenous women pass by a demonstration in front of the Government palace in Guatemala City. The banner reads "No to militarism and oligarchy".

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An oligarchy is a power structure made up of a few elite individuals, families, or corporations that are allowed to control a country or organization. This article examines the characteristics of oligarchies, their evolution, and how common they are today. 

Key Takeaways: What Is an Oligarchy?

  • An oligarchy is a power structure under which a small group of elite individuals, families, or corporations control a country.
  • The people who hold the power in an oligarchy are called “oligarchs” and are related by characteristics such as wealth, family, nobility, corporate interests, religion, politics, or military power.
  • Oligarchies can control all forms of government, including constitutional democracies.
  • The theoretical “iron law of oligarchy” holds that all political systems eventually evolve into oligarchies. 

Oligarchy Definition 

Coming from the Greek word oligarkhes, meaning “few governing,” an oligarchy is any power structure controlled by a small number of people called oligarchs. Oligarchs may be distinguished and related by their wealth, family ties, nobility, corporate interests, religion, politics, or military power. 

All forms of government, including democracies, theocracies, and monarchies can be controlled by an oligarchy. The presence of a constitution or similar formative charter does not preclude the possibility of an oligarchy holding actual control. Under the theoretical “iron law of oligarchy,” all political systems eventually evolve into oligarchies. In democracies, oligarchs use their wealth to influence elected officials. In monarchies, oligarchs use their military power or wealth to influence the king or queen. In general, leaders of oligarchies work to build their own power with little or no regard for the needs of society.

The terms oligarchy and plutocracy are often confused. The leaders of a plutocracy are always wealthy, while the leaders of an oligarchy need not be rich to command control. Thus, plutocracies are always oligarchies, but oligarchies are not always plutocracies.

Oligarchies date back the 600s BCE when the Greek city-states of Sparta and Athens were ruled by an elite group of educated aristocrats. During the 14th century, the city-state of Venice was controlled by rich nobles called “patricians.” More recently, South Africa while under white apartheid rule until 1994, was a classic example of a country ruled by a racially-based oligarchy. 

Modern Oligarchy Examples

A few examples of modern oligarchies are Russia, China, Iran, and perhaps the United States. 

Russia

Though Russian President Vladimir Putin denies it, he functions as part of a wealth-based ruling oligarchy that had its beginnings in the 1400s. In Russia, as in many essentially anti-capitalist countries, accumulating personal wealth requires contacts inside the government. As a result, the Russian government tacitly allows the billionaire oligarchs to invest in democratic countries where the rule of law protects their property.  

In January 2018, the U.S. Treasury Department released a list of some 200 Russian oligarchs, companies, and senior Russian government officials including Prime Minister Dimitry Medvedev. “The Russian government operates for the disproportionate benefit of oligarchs and government elites,” said Treasury Secretary Steven T. Mnuchin. 

China 

The religion-based Chinese oligarchy regained control after the death of Mao Tse-Tung in 1976. Claiming to be descendants of Taoism’s “Eight Immortals,” members of the so-called “Shanghai gang” oligarchs control most state-owned corporations, consult on and profit from business deals, and intermarry in order to maintain their relationship to the Immortals.

Saudi Arabia

The reigning monarch of Saudi Arabia is required to share his power with the descendants of the 44 sons and 17 wives of the country’s founder and first monarch, King Abd al-Aziz al-Sa'ud (1853-1953). The current king, Salman bin Abdulaziz has appointed his son, Prince Mohammed bin Salman as defense minister and overseer of Saudi Aramco, the powerful state-owned oil monopoly. 

Iran

Despite having a popularly elected president, Iran is controlled by a religion-based oligarchy of Islamic clerics and their relatives and friends. The Iranian constitution states that “the One God (Allah)” holds “exclusive sovereignty” over the country. The Islamic oligarchs took power after the death of Ayatollah Ruhollah Khomeini in 1989. His replacement, Ayatollah Ali Khamenei, has placed his family and allies into high government posts and controls the elected president.

The United States

Many economists contend that the United States is now or is becoming an oligarchy. In saying this, they point to the country’s worsening income inequality and social stratification, two of the main characteristics of a wealth-based oligarchy. Between 1979 and 2005, the incomes of the top 1% of U.S. workers rose by 400%. According to a 2104 study by political scientists Martin Gilens and Benjamin Page, the U.S. Congress passes legislation benefiting the wealthiest 10% of Americans more often than measures benefiting the poorest 50%. 

Pros and Cons of Oligarchies

While oligarchies are often criticized, they do have some positive aspects. 

Pros of Oligarchies

Oligarchies usually work efficiently. Power is placed in the hands of a few people whose expertise enables them to quickly make and apply decisions. In this way, oligarchies are more efficient than ruling systems in which many people must make all decisions in all cases.

As an outgrowth of efficiency, oligarchies allow most of the people to disregard issues that concern society and spend more time on their day-to-day lives. By trusting the wisdom of ruling oligarchs, the people are free to focus on their careers, families, and pastimes. In this manner, oligarchies can also allow more time for technological innovation.

Since one of the main objectives of an oligarchy is social stability—preserving the status quo—the oligarchs’ decisions tend to be conservative in nature. As a result, people are less likely to be harmed by extreme and potentially dangerous changes in policy.  

Cons of an Oligarchy

Oligarchies typically increase income inequality. Having grown used to their lavish, privileged lifestyles, the oligarchs and their close associates often pocket a disproportionately large share of the country’s wealth. 

Oligarchies can become stagnant. Oligarchs tend to be clannish, associating only with people who share their values. While this may provide stability, it also prevents people with new ideas and perspectives from entering the ruling class. 

Oligarchies that gain too much power can harm the people by restricting the free market. With unlimited power, the oligarchs can agree among themselves to fix prices, deny certain benefits to lower classes or limit the quantities of goods available to the general population. These violations of the laws of supply and demand can have a devastating effect on society. 

Oligarchies can cause social upheaval. When people realize they have no hope of ever joining the ruling class, they may feel frustrated and even resort to violence. Attempts to overthrow the oligarchy disrupt the economy, harming everyone in the society.

Sources and Further Reference