Brief History of Oligarchy – Part 3

Written by Rosa Tressell and Dr. Leon Tressell exclusively for SouthFront; 

This is the third part of a series prepared on the topic. The first part can be found here. The second part can be found here. The series includes four parts.

Robert Michels, a German sociologist and pro-anarchist, wrote what he called the Iron Law of Oligarchy. In Political Parties he argued that organised bureaucracy always resulted in Oligarchy. He used for his study the socialist parties of Europe, arguing that the Oligarchical structures he found proved that it is an organic tendency which every organisation experiences. The more complex the more likely the tendency to Oligarchy. However, his theory that the socialist parties should be Oligarch free could be a faulty assumption. Democratic Centralism, as it is called, gives the appearance of democracy whilst in actuality a small elite group make the decisions. Is this the true nature of the complex society we live in today?

It is a stark reality today that we are living in a period of massive wealth disparity. This has only accelerated since the 2008 financial crisis. The richest 1% have seen their wealth increase on average by 6% a year, whilst the rest have averaged 3%.  This increase is due to the money printing or QE that has been propping our economies up for the last decade.  It has sent bond and stock markets soaring, as well as the continuation of inflated housing bubbles. Those who are asset rich have done disproportionately well. Meanwhile due to high inflation, even those lucky enough to see a 3% increase will in real terms have been losing money. This point is even further underlined by the fact that most of that 3% gain is from the rising price of the family home. If this trend continues then the top 1% will hold 64% of the world’s wealth by 2030. Given that much wealth in our society is hidden, it will probably be much higher than that.

This concentration of income and wealth make democracy a ‘demockery’. We are witnessing an upward redistribution of money from the bottom 80% to the upper 1%, if not to the 0.1% the real elite in our society. A trend Karl Marx noted and said would only get worse over 150 years ago. This 0.1% are America’s corporate leaders. Many have described the US as a Corptocracy meaning total control by corporate interests. They control politicians and the media to ensure political decisions are made that promote corporate interests; fracking, tax cuts, deregulations, etc. Are these corporate leaders the new Oligarchs of our time?

In a paper from Princeton University in 2014 the authors argued that the US political system is geared towards serving the interests of special interest groups. They concluded that US government policies rarely align with preferences of the majority. The French economist Thomas Picketty, who has written extensively about Oligarchy in Russia, has pointed the finger at the US and has charted the rise of inequality in his book Capital in the Twenty First Century and its impact on democracy. Of course his conclusions that a more progressive tax system is needed is met with horror. There are also those who have made livings out of claiming that wealth inequality is not a bad thing, or that further, it is a good thing.

It is in the nature of Oligarchs to believe they are specially imbued with the qualities to govern. Their wealth, for example, may have given them a superior education and experience in the world fitting them to hold political office. There are now more than 2,000 billionaires in the world that we know of. Many families fortunes are deliberately diffuse and obscure so we can not be certain. It has been estimated in Treasure Islands, by Nicholas Shaxson, that at least $20 trillion could be hidden off-shore. Inequality tends to convince elites that they have unequal abilities in other areas. Oligarchs are fearful of the masses, and take steps to ensure that their wealth and privilege are protected first and foremost. It for this reason that they stack the judicial system, seek to control freedom of speech, movement and association, feather their own nests and engage in criminal behaviour including murder.

Oligarchy has its base in the US, this can be seen in the types of wealthy inhabiting the novels of Henry James. The Bostonian families of Forbes, Lowells, Perkins, Cabots etc. The financiers from the City of London, the Peabodys and the Morgans, were also Oligarchs. They formed the so-called Eastern Establishment. They made up Forbes original 400 rich families list, the amount that could fit into a doyenne’s ballroom. Then there were the Robber Barons of the nineteenth century known for their monopolisation of huge industries and ruthless/murderous accumulation of massive wealth. Key players included Carnegie, Vanderbilt, Rockefeller, Gould and Astor.

Oligarchy can be seen clearly in the US South amongst the large slave-holding plantation owners. They formed an elite class who created their own ideas of gentility, honour, and the Southern way of life. The attitude towards those at the bottom was expressed in racial terms, but displays the same superiority we find in Oligarchs through history;

“[I]t is clear the Athenian democracy would not suit a negro nation, nor will the government of mere law suffice for the individual negro. He is but a grown up child and must be governed as a child . . . The master occupies towards him the place of parent or guardian.” George Fitzhugh

We also see overtime a familiar situation in which the wealthy got wealthier. By 1860 0.1% owned the vast majority of the slaves. For example, Nathaniel Heyward owned more than eighteen hundred slaves. Even after the abolition of slavery certain intermarried families became dominant in cities, tending to hold numerous posts such as Governor, the mayor, newspaper editor, the bank president and the local businessman.  Even today many parts of the US South still consist of regions where feudal relations, especially in relation to the black population, is a better descriptor than democracy.

Oligarchies are concerned with maintaining the status quo, and they do this by an emphasis on conformity and consensus. Spartan virtues were harmony, simplicity and strength. The Roman Republic virtues were known as the ‘Via Romana’ and were seen as the reason for the moral fortitude to conquer the known world. They included dignity, fortitude, dutifulness, and respectability. In Venice they cultivated compromise, self-effacement and conformity, all virtues that perpetuated the Venetian model. In Britain the virtues of the Oligarchs came to be associated with the Victorian era. Virtues such as fairness, diligence, conformity and enterprise were seen as the gift that Britain brought to the world through her “civilizing” Empire.

The country run by the few is one based on conformity and acceptance. Abidance to the national qualities or virtues that are held to make the country “great” is a must. Anything that seeks to challenge this mainstream is seen as threatening. It is why Julius Caesar was brutally murdered in the Senate. Caesar, although from an old aristocratic family, was regarded by the Oligarchic families who dominated the Senate as a mortal threat as he sought to carry out progressive reforms and leant on the plebeian masses for support. He did not conform with Oligarch values of acceptance of the status quo and disdain for the plebs.

It has been noted by many observers that the response to the 2008 crash is very different to the comparable 1929 crash. In 2008 Congress took the step to bail out the banks. This was largely accepted by the majority because they have synonymised banking interests with that of the mass of people. They were labeled as “too big to fail”. In 1929 however the US President Franklin D Roosevelt (FDR) enacted a series of legislative measures throughout the 1930s aimed at assisting the mass of people and restricting the banks. The question in a crisis is always who pays. The answer for the Oligarchs is always not us.

FDR refused to be that doddering Venetian Doge. Despite coming, naturally, from a very wealthy family himself, he saw that America was best served by a pro-active labour oriented solution. FDR saw that reform from above was needed to prevent revolution from below. His hand was immeasurably strengthened by the coalition of the trade union movement and the various political parties representing workers, such as the Communist Party which exerted enormous pressure for reform upon the ruling elite. His coalition also extended to black voters, the middle class, farmers, intellectuals and the army. The wealthy Oligarchs hated him and mobilised the Supreme Court to try and block his New Deal measures such as the Alphabet agencies. Indeed there is still much hatred shown towards these two New Deals, as they were called, and expressed as “entitlements” and the bain of the virtues of entrepreneurship and self-reliance. FDR’s policies appealed directly to the man at the bottom of the pyramid, and resulted in an unprecedented four terms. Indeed it was this success that resulted in the 22^nd Amendment to the Constitution in 1947 limiting the term to twice.

The US had another anti-Oligarchical president in John F Kennedy (JFK). Again, coming from a very wealthy family, he went against the established norms. This was very much part of the times with a general increase in political participation amongst wider sections of the US population. As president JFK attempted to break up the Federal reserve, bring an end to the Cold War, get out of Vietnam, and compelled steel executives to roll back price increases. Basically Kennedy refused to listen to the Harvard elite foreign policy advisers after the Cuban missile crisis brought the world to the brink of World War Three. After the Cuban Missile Crisis in October 1962 in particular he displayed an autonomy that was unsettling to the elite that surrounded him. He was assassinated in November 1963, undoubtedly at the behest of the Oligarchy, and whitewashed by the Warren Commission. It has though, with other prominent political assassinations of the 1960s – Martin Luther King and Malcolm X – created a permanent scepticism within large sections of the American public towards official narratives.

Subsequently the grooming and selection of US presidents has since been concentrated into channels that the Oligarchy believe they can exert control over. However, each president presents their own challenge. Nixon, for example, (not from a wealthy background) was seen as Kissinger’s man. Kissinger, himself a talented protege of Nelson Rockefeller, was a key player. However, they did not like Nixon’s authoritarian tendencies nor his Quakerism. Impeachment proceedings began in February 1974 and he resigned in August. Gerald Ford was seen in inner circles as dumb. Jimmy Carter, rumoured to have been selected as a candidate at the Trilateral Commission (Rockefeller’s private discussion club for the Oligarchy) in 1974, was content to put his administration under the control of the Federal Reserve and Paul Volcker. Ronald Reagan couldn’t resemble a doddering old Doge more if he acted the role. In the background Vice President George Bush Senior ran the show.

Bill Clinton, on the other hand was not the Oligarch’s first choice. It shows that the wealthy elite are adept at making compromises and through conformity seek to keep power. Clinton’s advisers drew attention back to the ideas of economic populism rather than social issues. “It’s the economy, stupid!”. Lee Atwater, Republican strategist, suggested that US politics was divided into populist and elitist issues. Clinton reluctantly took the populist path promising to restore the hopes of the middle classes. Reluctantly, because he was also Harvard educated, Yale law graduate, craving approval from the liberal intelligentsia. The old labour leaders of FDR’s New Deal coalition had been eviscerated and totally compromised. Praised for its diversity in sexuality and ethnicity nonetheless Clinton’s cabinet resembled those of a British Conservative government – full of millionaires. For example, Robert Rubin, Andrew Cuomo and Madeline Albright. He ended his presidency facing sexual scandals and impeachment charges.

Despite the appearance of the most important job in the land the US presidency has been largely stripped of its economic and financial power which now lies with the Federal Reserve. Itself being a private organisation to serve the bank interests, originating in secret at a meeting on Jeckyll Island in 1910. Further the Department of Justice and the FBI, not to mention the CIA and the Department of Defense, all operate as if they were separate fiefdoms. The media is owned by and on behalf of large conglomerates, key players are Murdoch, Disney, and General Electric. Gore Vidal, America’s greatest writer and an astute insider who was best friends with the Kennedy’s, wrote extensively about the “Washington Establishment” and how it was in effect an “invisible” Oligarchy. His insights are illuminating;

“You know, I’ve been around the ruling class all my life, and I’ve been quite aware of their total contempt for the people of the country.”

As the number of obscenely wealthy people has grown, so we have entered according to some a golden age of philanthropy. The wealthy are then praised for giving back to society through charitable foundations. However, they are classic vehicles, not only for tax avoidance, but to shape culture and politics. Hidden behind educational foundations is often a complete disdain for what Reagan famously referred to as black “welfare queens”. The problem with Americans is that they are simply not educated! Let us benevolently help you. A popular ideology today is social Darwinism. Survival of the fittest. It implies that the winners, those who top the public rich lists, constitute a meritocracy. This ignores though the important class divisions that operate in the US, but are vehemently denied. This is expressed politically as tax cuts for the rich and welfare cuts for the poor. This policy track has only accelerated since 2008 as the Oligarchy seeks to put the burden of the financial crisis on the poor.