The political scientist Jeffrey Winters has a new book titled The Blind Spot: How Oligarchs Dominate Our Democracy that is well worth reading. Winters published an excellent scholarly analysis of oligarchy in various countries in 2011, simply titled Oligarchy. In The Blind Spot he builds on a career studying how oligarchs operate to make his case that oligarchy is the greatest problem facing American democracy today.
What is oligarchy? And who are these oligarchs? Political theorists familiar with government typologies going back to Ancient Greece will know that oligarchy means rule by the wealthy few. Plato suggests that the extreme concentration of wealth in an oligarchy eventually produces a democratic backlash in which power is taken over by the people and the poor majority rules instead. Perhaps much of the populist backlash of the past 10-15 years can be understood in these terms, as ordinary citizens on the left and the right seek to reclaim popular power from ultra-wealthy elites.
Oligarchs, then, are the extremely wealthy individuals who use their wealth to exercise political power. In a representative democracy, oligarchs use the system to defend their wealth. As he says, “oligarchy is not a type of government. It is the politics of wealth defense itself.” It can happen under any system, or at the very least is a constant threat.
This is because oligarchs “are laser-focused on this political project both as individuals and as a group, and they win political battles over threats to their wealth far more often than they lose them.” (4). So, oligarchy occurs when a system is dominated by the wealthy few. And those wealthy few, rather than focus on controlling all political issues, flex their political muscle primarily when their wealth is threatened.
As Winters characterizes it, there are two issue dimensions. The vertical, oligarchic realm, and the horizontal, democratic realm. “In this first oligarchic realm, where wealth is at stake, democracy serves the few—which is to say it is broken. But in the second realm it works.” (5).
In other words, when issues concern wealth defense, we are an oligarchy in the United States. The wealthy effectively prevent any and all efforts to tax or otherwise constrain their absurd wealth. When politics concerns social issues like religion, abortion, or guns, for example, we are more democratic and what the people want tends to win out. “Because democracy works for all these horizontal issues among the non-rich, we mistakenly assume it will also work for vertical issues like greater economic equality…Whether we elect liberals or conservatives it keeps getting worse.” This is “our collective blind spot—our belief that democracy, as it currently stands, will give us the change we need.” (5). Hence the title of the book.
So, are we an oligarchy in the manner that Bernie Sanders claims? Yes, and undeniably so. (Read Sanders’ brief book Fight Oligarchy). At the same time, we also have elements of representative democracy in which ordinary activism, voting, and citizen power matter. In Winters’ words, “we live in a peculiar system that combines democracy with oligarchy: we have equal political power as voters, but our votes must contend with the unequal wealth power of oligarchs that is also built into the system.“ (5-6). This combination of representative democracy and oligarchy is “domination through democracy. It is by far the most elegant mode of exclusion ever created.” (11).
Winters calls this “participatory inequality—a combination of maximum popular voice with very limited impact, so that political freedom can coexist with gross economic injustice.” (13). There is much truth to this, though I wouldn’t characterize representative democracy as “maximum popular voice.” Only something like Athenian direct democracy creates maximum popular voice. Still, he is fundamentally correct that the American system, and other contemporary representative democracies (what political theorists would tend to characterize as republican systems of government) combine elements of free speech, popular power, and oligarchy. It is a strange combination, as Winters frequently stresses.
How does this strange combination operate? How could it be stable? After all, Plato speculated that oligarchy and direct democracy are opposites and that a political system is in danger of lurching from one to the other. However, that doesn’t seem to be the case in the USA. Instead, the two have combined into this unique mix. “More democratic equality has not produced more economic equality. Why not?” (16). This basic question is the blind spot for Winters. The gradual struggles to expand the suffrage and other modern democratic rights over the past few centuries led to a situation in which “democracy did not replace oligarchy but was instead integrated with it.” (22).
As Winters rightly observes, democracy is something you struggle towards. You are always getting more or less of it; democracy is never finally and fully realized. As he says, “the central question of democracy is to the degree to which power in all its forms is shared equally among members of a political community.” (24). And as plenty of political theorists have argued (Hélène Landemore, John McCormick, Alan Ryan, among others) our oligarch-dominated form of representative democracy is really a kind of oligarchic republican government. It is not nearly democratic enough.
The Wealth Defense Industry
“Pretending that private wealth is somehow not raw political power is the grand lie that sustains domination through democracy.” (26). It should therefore come as no surprise that oligarchs are preoccupied with preserving and expanding their wealth. As Winters demonstrates, oligarchs are willing to skirt or even break the law to avoid paying taxes on their enormous fortunes.
Winters uses the term Wealth Defense Industry to discuss the array of accountants, lawyers, and consultants that help oligarchs stash their wealth overseas and avoid paying taxes. In their book The Triumph of Injustice, Emmanuel Saez and Gabriel Zuckman demonstrate in detail how the rich pay similar or lower effective tax rates than ordinary Americans. (See also Jeffrey Winters’ Oligarchy and Chuck Collins’ The Wealth Hoarders). This is because, as Winters reminds us, ordinary Americans have their taxes automatically withdrawn from their paychecks. In other words, there is little room for tax evasion.
The ultra-rich oligarchs, however, don’t make their money primarily through wages or conventional salaries. This gives them ample room to park assets overseas and generally avoid efforts to accurately assess and tax their wealth. Winters shows in considerable detail how in the late 1970s the Wealth Defense Industry really ramped up and the power of the IRS to go after tax-evading oligarchs was hollowed out. As he says, “this is what it looks like when oligarchy triumphs over democracy.” (119). It makes for invigorating reading. We might ask why are the ideas of Bernie Sanders more popular now? Because, at least in part, they better describe reality in the 21st century than reality in postwar America.
Summarizing the Wealth Defense Industry and the behavior of oligarchs, Winters says that “once Congress sets the tax brackets as law, the paramount objective of oligarchs is to never pay the published tax brackets. This isn’t an option for the vast majority of citizens.” (123). In other words, oligarchs use their influence to set up a tax structure advantageous to them. They then do their best to evade even this light tax load.
“It is this capacity to come back and fight a second round outside and against the boundaries of democratic politics that separates the very rich from everyone else. Oligarchs win in framing the tax structure, and then win again in evading it.” (124). This in turn makes me think of Robert Reich’s Saving Capitalism, which describes how, in practice, laws and regulations tend to be enforced in ways that benefit the rich. The laws on the books themselves don’t really tell you how things operate.
Winters spends much of the book looking at the American founding and how the battle between democracy and oligarchy can be seen in stark relief at the constitutional convention. These sections are insightful but I won’t dwell on them here. But I do want to stress that the whole book is worth reading.
Throughout The Blind Spot Winters says that we usually think of oligarchy and democracy as opposite, zero-sum things. We thus have trouble understanding how they can overlap and coexist in the same system. Yet this paradoxical combination can be very durable. Nevertheless, “the arrangement breaks down when it becomes obvious that the wealthy are distorting and impairing democracy for their own narrow benefit. Domination through democracy is sustained by the plausible illusion that the oligarchs are not, in fact, running the show.” (190). Indeed, the American system of government is durable. Thinkers from Aristotle to Machiavelli to Montesquieu saw the power of mixed republican forms of government, as did the founders. An oligarchic republican government (aka modern representative democracy) can exist and endure for centuries as a sort of halfway compromise between pure oligarchy and pure democracy.
The balance becomes less stable when these systems start to veer toward pure oligarchy, as the USA has done in the neoliberal era (the past half century). As Winters says, Americans don’t necessarily mind wealth inequality on its own. He mentions the common saying that we’re all temporarily embarrassed millionaires. But when oligarchs use that wealth to exert unequal political power and blatantly corrupt democracy, ordinary citizens become outraged. In his words, “collectively our confidence in our democracies is sinking because their failures have grown unusually visible and painful.” (27). There is a reason the Bernie Sanders “fight oligarchy” tour resonates more in the 2020s than it would have in the 1960s.
Winters offers a concluding reminder of the history of the term oligarchy: “oligarchy has always been about the political use of wealth for wealth defense.” (194). On wealth defense and tax evasion, Winters cites a former IRS Commissioner who estimates that there are roughly $1 trillion in unpaid taxes every year, primarily from the ultra-wealthy.
He unsurprisingly argues that “stronger tax agencies” would help to weaken oligarchy. “Larger budgets, more auditors, and more technology will only hurt oligarchs. They are the group tax agencies struggle to see and collect from. It cannot be said enough—debilitated tax agencies fatten oligarchs.” (301).
To conclude we might ask, is there any hope? In part, the answer feels like no. Winters convincingly demonstrates how durable and effective the combination of oligarchy and popular participation through representative democracy remains. But there are also critical periods where the power of oligarchy is challenged, such as during and after the Great Depression and World War Two. We may be in a similar position now, with the ravages of half a century of neoliberalism combining with the aftermath of the Great Recession to shatter the legitimacy of oligarchic representative democracy. Therein lies the hope: things are so bad that mass movements are starting to call for an end to oligarchy. As I keep stressing, there’s a reason so many are now drawn to Bernie’s critique of oligarchy.