In this explanation of history, oligarchic society is the transition period between aristocrat peasant society and democratic market society. There were earlier oligarchic states in the Ancient Mediterranean world and Southern Asia that are not included in this discussion.
Modern oligarchic society began in 17th century Europe and evolved out of aristocratic society. The oligarchic class gradually formed from a combination of aristocrats, lawyers, and wealthy merchants. After World War II about a hundred former colonies became independent nations. These countries formed a new group of oligarchic states. In this case the oligarchs evolved from a number of different sources. Some were the leaders of the anti-colonialist resistance movements. Some came from the relatively small group of native people who had gotten a modern education during the colonial period. Others were talented and energetic people who rose to the top after independence was achieved. Both kinds of oligarchic societies function in a remarkably similar way.
In modern society, the market economy takes over the food distribution function that used to be part of the aristocrat peasant relationship. After the market becomes dominant, it is clear that the monarch and aristocrats can not continue to rule by themselves. They have very little experience with business and markets. In aristocrat peasant society wealth is achieved through the control of land and peasants. In a market economy nation-state wealth is achieved through capitalism.
As the markets increase in size and strength, successful merchants, capitalists, and lawyers become wealthy. In a nation-state, wealth is power. At first this new group of wealthy commoners begins to challenge the aristocrats for political power. It is very typical, however, that soon they start to intermarry with the nobility. In a few generations these two groups merge to form a new oligarchic ruling class.
The development of this new ruling class is not an evil conspiracy perpetrated by the rich and powerful. It is a natural evolutionary process. Aristocrats were specifically defined as a ruling class. Early oligarchs retain that tradition. In the beginning, a person’s status in the oligarchic ruling class is almost as hereditary as in the aristocratic class. The same wealthy families often dominate the government and the economy generation after generation.
It is easy to get the impression that oligarchs are the bad guys, but it is actually much more complicated than that. Oligarchs are normal people who were born into rich and powerful families. They use their political power to try to protect and increase their wealth. This is normal behavior. The general idea is to pass on the same degree of power and wealth to their children as they inherited from their parents. The problem is that this behavior tends to stifle economic and political opportunity for the rest of the population.
In the 16th, 17th, and 18th centuries the first few countries to make the change from aristocratic to oligarchic rule usually had a difficult time. Religious cleansing, anarchy, rebellion, civil war, and revolution were common. For countries that started the process in the second half of the 19th century or later, aristocratic resistance tailed off, and the nobility and wealthy capitalists merged more easily. In most of these countries, the hard part is the change from an oligarchic ruling class to democratic government.
As the oligarchic class is forming and ruling there are a thousand and one other things to do. Borders must be established. Who is, and who is not, a citizen must be decided. It is very common to have border wars, civil wars, ethnic cleansing, religious cleansing, anarchy, factional infighting, and general confusion. There are often cycles where waves of violence are followed by periods of relative calm. Strong authoritarian dictators are sometimes required to reestablish order so that the economy can function.
In the middle of all this mayhem, the economy must continue to grow and develop. Transportation and communications infrastructure must be built. Wholesale markets and stock exchanges must be developed. Laws, rules, and regulations that are designed to keep order and protect the markets must be adopted and enforced. All of this is called nation building. It is always a difficult process, but in some countries it is more difficult than in others.
Next comes the hard part, the change from oligarchic to democratic market society.
A few countries, including the United States, had a relatively benign period of oligarchic development. This can sometimes happen if the emerging market economy develops with a tradition of free enterprise and open economic opportunity. Markets tend to reward hard work and good ideas. Oligarchs do not have a monopoly on these. In an open economy, ordinary people who are clever, lucky, and hard workers will become successful. They join the growing middle class. Each year a few of them join the ranks of the wealthy capitalists.
As wealth spreads through the population so does political influence. Electoral politics begins to develop into a meaningful mechanism for sharing power. At some point the politicians realize that they must represent everyone, rich and poor alike. When this happens, the country is ready to change from oligarchic to democratic market society.
Unfortunately, few countries make the transition through oligarchic society that easily. More often there is a problem. In many countries, the oligarchic ruling class retains its monopoly on wealth and power. With the government in control of the economy, and the oligarchs in control of both, it is natural for them to entrench their position, protect their wealth, and limit competition from the rest of the population. In this kind of society the oligarchs are wealthy and powerful. The vast majority of the population becomes the working class, which is impoverished and often powerless. In between there is a small middle class of skilled workers and small business owners.
Oligarchic societies often have a hard time deciding how to choose government leaders. Oligarchic families have the same kinds of rivalries, jealousies, and factional disputes that divided aristocrats. One solution to the problem of who should lead the government is to have an election. These elections are not for the purpose of sharing power with the people, and they are not for the purpose of deciding government policies. Their primary purpose is to decide which oligarchic faction should rule for the next few years. In Asia and Africa the top oligarchs sometimes run for political office themselves. In Europe and Latin America this job is usually left to politicians who are dependent on some oligarchic faction for money and influence.
Electoral politics requires a lot of money. The oligarchs control most of the money and most of the elections. When unwanted popular challengers appear, they can be starved of funding. They can be prevented from running by legal maneuvering, or they can be stopped by electoral fraud. If all of this fails, and a popular leader wins election, he can be co-opted into the oligarchic class. The majority of elections in oligarchic societies are not a sign of democracy. They are a mechanism for monopolizing power within the oligarchic ruling class.
Some oligarchic countries have relatively free and open elections. Over time the politicians have learned the rules of the game. They can campaign as they choose so long as they do not become a threat to the wealthy ruling class. The oligarchs feel secure in their overall political and economic dominance. They are willing to tolerate a certain amount of populist rhetoric. If the situation begins to get out of hand they can always take steps to deal with the troublemaker when the need arises.
An entrenched oligarchic society is an unhappy society. The working class is impoverished and exploited. Wages are kept low. Justice is for the wealthy. Free enterprise is discouraged. The only solace for the ordinary people comes from their friends and their families, which tend to be large. The people know that they are being exploited, and they know that it is not right, but they do not know what to do about it. The problem is often blamed on capitalism. Various other ideologies have sprung up to try to find a solution. These include socialism, communism, fascism, and Islamic fundamentalism. So far, none of them have been very successful.
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