So, here we are. We have arrived at a point where prominent politicians from BOTH the democratic and republican party feel like the U.S. has become an Oligarchy. But, is that true?

Are U.S. billionaires like Michael Bloomberg, Mark Zuckerberg, Jeff Bezos, Elon Musk, and, perhaps even Donald Trump himself, actually Oligarchs? Or are they just rich? Did the U.S. really turn into an oligarchy like Russia, or is this all just overblown partisan nonsense?

To answer these questions, I’ve turned to the work of professor Jeffrey Winters, who has studied Oligarchs all over the world for decades, and summarized his vast body of research into key insights about exactly: (1) what separates a mere billionaire from an oligarch; (2) whether the U.S. is turning into an oligarchy, and what that means for its democracy, and finally, (3) how to potentially tame the power of the so-called oligarchs.

And, I’m happy to report that, in this research, I found some really surprising insights about how democracies can be oligarchies at the same time, about how there are different types of Oligarchies, about how Oligarchs can be defeated, and finally what this means for the future of the U.S. as a democracy.

But, to understand all of that, we first need to lay the groundwork by determining exactly:

1 What separates a mere billionaire from an oligarch

because there seems to quite a lot of confusion about it. For example, when Steve Bannon called Michael Bloomberg an Oligarch in a 2020 interview with PBS, the interviewer challenged him by saying

Michael Bloomberg is a capitalist that has made his money not because the united states of America or any leader of a government has decided that he deserves to have billions of Dollars. He earned himself is it fair to call him an oligarch?>

To which Bannon replies that

Yes, because he’s buying the democratic party

Of course then the interviewer asks the logical question:

is Trump an Oligarch?

which Bannon believes is not the case because:

he’s a wealthy guy. He’s worth 7 or 8 billion dollars. He’s not an Oligarch

Now, I selected these clips because I think it really gets to the heart of the confusion surrounding the term Oligarch. Is the interviewer right that an oligarch a person that got very rich through corruption? Or is Bannon right that an oligarch is a person that is so rich, that he or she can buy political influence?

and….

… mr. Bannon is right.

Look, I suspect that the interviewer bases her view on too specifically on Russia’s oligarchs, who infamously got their wealth right after the Soviet Union fell. During this period, they used their political connections to buy previously state run companies for next to nothing, thereby becoming rich over night, through corruption rather than by actually starting a company. This is a key difference between Russian oligarchs and people like Bloomberg, Bezos, and Musk.

However, the concept of oligarchs, and oligarchy, is actually much older than modern Russia. The original definition actually comes from the famous Greek philosopher Aristotle, who wrote that

“Wherever men rule by reason of their wealth, whether they be few or many, that is an oligarchy.”

So, an oligarch is someone who rules, or has become powerful, through their wealth. It does not matter HOW they became rich and powerful. They just need to be rich AND this wealth should make them politically powerful enough to classify as an oligarch.

This definition also shows us how Oligarchs are different from elites, who are politically powerful. But, not necessarily because they are rich. So, for example, the Dutch prime minister Dick Schoof is clearly part of the Dutch elite because of his powerful position. However, that power comes exclusively from his ranking as a top bureaucrat. He is therefore an elite. But, not an Oligarch.

We can use this framework to understand why Bannon believes that Bloomberg is an oligarch, while Trump is not. Bannon says Bloomberg is so rich, that it gives him political power. Therefore, he is an oligarch.

On the other hand, according to Bannon, Trump’s meager 7bn wealth does not make him more politically powerful than the rest of us. Of course, as you may be furiously writing in the comments… Bannon, who is a key Trump ally, may not be the best source to determine whether or not Trump is an Oligarch.

Instead, I chose to use the work of professor Winters, who, after acknowledging that the exact number will always be a bit arbitrary, states that the top 1/10th richest people of America have a high enough income to buy serious political influence.

So, using this metric, who are America’s Oligarchs? In 2007, when Winters did his research, there were roughly 150k ultra wealthy individuals that qualified as Oligarchs. The average income of the poorest oligarchs was 4 million US Dollars per year. Is Trump one of them?

Yes, absolutely, given that according to his tax returns, his 2005 income was roughly $150 million Dollars.

His immense wealth meant that he could spend 66 million in 2016 to kickstart his own campaign, bypassing the need to win the approval of the Oligarchs that were at the time mostly funding his rival Jeb Bush. So, yes, clearly Trump’s money already gave him significantly more political power than an ordinary citizens in 2016. And, now, with Trump operating his own social media platform, that is reportedly worth even more than Musk’s X these days, I think it is crystal clear that Trump is one of the Oligarchs, putting him in the company of Silicon Valley Billionaires like Bezos, Zuckerberg, and Elon Musk.

However, next, I’m going to make the case that the fact that there are Oligarchs in the U.S. does NOT mean that the U.S. itself is an oligarchy. After all, the fact that there are elections in Russia, does not make Russia a democracy.

Therefore, to answer whether or not the U.S. is turning into an Oligarchy, we now need to determine

2 What makes a country an Oligarchy?

To do so, let’s first go back to Aristotle’s definition:

“Wherever men RULE by reason of their wealth, whether they be few or many, that is an oligarchy.”

RULE RULE. What does it mean to rule. You could say that Trump will rule the U.S…. He is an oligarch. So, the U.S. is becoming an Oligarchy. But, there are still a lot of checks in balances that means he will be far less powerful than Putin.

You could also argue that the U.S. was already an oligarchy long before Trump. But, unlike Russian oligarchs, the U.S. oligarchs RULED indirectly, by funding only candidates in both parties that did NOT threaten their wealth. This could explain why, despite being very different on issues that Oligarchs do NOT care about, like which gender goes to which bathroom, candidates in both parties were only ever successful if they did NOT threaten the WEALTH of the Oligarchs.

Professor Winters though, goes EVEN FURTHER by stating that ANY COUNTRY that has oligarchs, who exercise power through money, is an oligarchy. In his theory, Russia in an oligarchy. The US is an oligarchy. Heck, he even classifies democratic role models like Sweden and Norway as oligarchies. The only countries which are not oligarchies, are communist countries, which have outlawed private wealth. These countries are ruled by powerful elites. But, not oligarchs.

So, according to Winters, if someone like Bernie Sanders says:

“my friends what we are looking at here has nothing to do with democracy, what we are looking at here is oligarchy”

he is wrong. The U.S. was an oligarchy long before Trump. Oligarchy is a separate concept from democracy. Oligarchy is about how much power the ultra-wealthy have to defend their wealth, while democracy is about rule by the people. We can visualize both of them as a scale. Each year The Economist ranks countries using their democracy index. This is essentially a scale, where, because almost all countries have elements of democracy, they use a complex methodology, taking into account stuff like how free and fair elections are, how diversified the media is and so on, where nations lie between the extremes of autocracy and democracy. Using such a methodology, Putin’s Russia, or Stalin’s Russia would both be very authoritarian. Turkey is a hybrid system. The U.S. is a flawed democracy due to the influence of money in politics, and Sweden is a full democracy.

Now, as you may have picked up on, there is a relationship between democracy and oligarchy. But, it is not perfect. Yes. Less democratic nations, like Russia, Turkey, and China are typically more oligarchic. But, communist nations like the Soviet Union were very authoritarian, ruled by an elite, and yet not oligarchic.

So, okay, Oligarchy and democracy are related. But, not the same. And every country except for communist countries are potentially an oligarchy, at least according to Winters.

But, actually, I disagree with him there. I think that just as with the democracy scale, we should recognize that countries like the U.S. and Sweden are hybrid systems. They are not full-blown oligarchies. But, they do have Oligarchs, that are more powerful than ordinary citizens.

So, are the people who are talking about the U.S. becoming an oligarchy wrong then? Not quite. But, to understand why they fear the U.S. may turn into an oligarchy, we need to talk about

3 The different types of oligarchies

When it comes to rule by a collective of oligarchs, Winters argues that there are currently 3 common oligarchic system. The U.S. and Sweden are civil oligarchies. Ancient Rome & modern China are a ruling oligarchy, and Russia is a Sultanistic oligarchy.

The definition of what an oligarch is, remains the same in each system. Their main goals —to defend or expand their wealth— also remains the same in each system.

However, where these systems differ is how Oligarchs can best defend their wealth.

In a ruling Oligarchy the Oligarchs RULE the country DIRECTLY, as a collective. For example, in the Roman republic, they did so through the institution of the Roman senate, which was not really democratic. In China, the Oligarchs rule together through the Chinese Communist Party, which is no longer really communist because it has allowed its top members to become filthy rich.

In ruling oligarchies like Rome and China, the main threat comes from an ambitious Oligarch that aims to use the resources of the state to dominate the other Oligarchs. Think Julius Ceasar, who tried to become Rome’s first dictator, after which he got killed by the other oligarchs. Or think Xi-Jinping, who increasingly dominates the CCP, making rivalling oligarchs simply ‘disappear’.

If such an ambitious oligarch succeeds, he becomes the sultan. Russia is such a Sultanistic oligarchy, where Putin dominates all other Oligarchs through his wealth and control of the Russian state. In such as system, the main threat comes from the Sultan oligarch. Indeed, any Russian Oligarch who crossed Putin quickly found their assets confiscated, and themselves, exiled, poisoned or even killed. So, in a Sultanistic oligarchy, Oligarchs are primarily focused on defending their wealth against the Sultan. This is why so many Russian oligarchs, and increasingly Chinese oligarchs are trying to get as much of their fortune to the civil Oligarchies in the West.

After all, in the civil oligarchies of the West you can be obscenely rich, just like in Russia. But, there is no unpredictable mortal threat from other Oligarchs, or the state. After all, in a civil oligarchy, the law applies equally to people and Oligarchs. And yet, civil oligarchies, the Oligarchs have often gotten richer than ever.

How is that possible?

Well, Winters argues that most civil oligarchies have formed as a consequence of a deal between the people and the Oligarchs. The Oligarchs gave up some of their political power. But, in exchange they got the state to defend their property rights, which was enshrined in the law or constitution.

However, in civil oligarchies the oligarchs do face a different threat to their wealth: TAXATION. That is, in any democracy the people can vote to increases taxes on the ultra wealthy. Faced with this threat Western oligarchs spend considerable resources to convince governments to keep their tax rates lower than what the middle class and regular rich folks pay.

So, despite disagreeing with winters in labelling the U.S. today an Oligarchy, I did think his framework was supremely insightful because it can help us explain why, despite all countries being oligarchic, the Oligarchs in each country acts very differently. Oligarchs in civil oligarchies can operate from the shadows, focusing on lobbying for tax reductions. Meanwhile, Oligarchs in a Sultanistic system have to be much more involved in ruling directly, while protecting themselves from the most powerful oligarch of them all, the Sultan, to maximize their wealth.

This knowledge is crucial if we want to understand what is going on in this cartoon, and why it is so worrying.

Recently, the Washington Post, which is owned by Jeff Bezos, refused to publish this cartoon, prompting its cartoonist to resign.

Believe it or not, but, I believe that, with our knowledge of professor Winter’s Oligarchy types, this cartoon can finally help us answer the question:

Is the U.S. turning into an oligarchy

Here we see, amongst others, Jeff Bezos, and Disney bending the knee to Trump, argueably America’s most powerful Oligarch.

In a civil oligarchy, this behavior was not needed. After all, thanks to the rule of law, the Oligarchs that supported a different party could not be touched by the president. But, in a Sultanistic oligarchy like Russia, this behavior is very normal. To protect their wealth, all Oligarchs need to pay tribute to the most powerful Oligarch, or risk losing their fortune or worse.

This shows us that the U.S. may be on the cusp of turning from a civil oligarchy, into a Sultanistic oligarchy. I think that a sultanistic oligarchy classifies as a full oligarchy. Even more worryingly, Sultanistic oligarchies are not compatible with democracy and the rule of law.

If this is true, then yes, Bernie Sanders is right to say that the U.S. is turning into an Oligarchy.

However, that process is not unstoppable. Luckily, I did find

(3) Reasons to hope the U.S. will not turn into an oligarchy

In particular, Winters has found that, historically, Oligarchs are vulnerable in times of crisis. For example, the U.S. was arguably very close to becoming a ruling Oligarchy during America’s gilded age, when politics was dominated by powerful Oligarchs like Rockefeller, Carnegie and Vanderbilt. However, after the great depression, and second world war the U.S. introduced very high income and inheritance taxes for the ultra-wealthy. According to famous French economist Thomas Piketty, this caused their share of total income to collapse, ending their oligarchic dominance of society. .

However, as professor Winters notes, today is a different world. In today’s globalized world even if there are very high taxes, there is a massive global industry that has specialized in helping Oligarchs move their wealth abroad to avoid actually paying these taxes.

Therefore, I think that along with higher tax rates for the ultra-wealthy, taxes can only prevent direct rule by the Oligarchs, if it is combined with actually cracking down own global tax evasion.

But, with the world potentially deglobalizing, and other global crises looming large, the Oligarchs are looking vulnerable. The U.S. may be at a tipping point, either go full-blown oligarchy or face a crackdown by a public that is more and more fed-up by eye-watering levels of inequality.

Don’t take it all from me though. As always, I recommend checking out multiple analysis, from credible sources, other than me. The best place to start, is of course, the sponsor of this video, The Economist.

Where, I highly recommend you check out this explainer about the democracy index, and where democracy is most at risk. Then, I suggest you follow up with this article about Zuckerberg’s U-turn on fact-checking in response to Trump’s rise, and then this article about whether or not Musk will dominate Trump’s economic policy.

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