Detachment of the elite ruling class from the interests of underling organization or society and the immanent tendency to pursue their own narrowly understood political and economic interests is the major source of instability in the society.
This is the case for the American Neoliberal elite, the core of which is the financial oligarchy built around the upward redistribution of profits (wealth) since 1980. British, Western European and to an extent Japanese neoliberals have mirrored the upward trajectory but less gung-ho, less comfortable with boom-bust cycles of wealth transfer i.e. boom makes everyone richer, especially the elites, bust makes almost everyone richer less quickly, but its the poor and much of the honest, hard-working middle class meeting the full force of the bust’s economic backlash.
No surprise that over the last 40-50 years, this dynamic has managed to substantially lower the standard of living for working class and lower middle class Americans (and many other nations) while unapologetically enriching the 1% and – exponentially more – the 1% of the 1%.
By way of two familiar examples: austerity is not an economic necessity but a political sugar’d pill, persuading the credulous lower classes their sacrifice is needed to “balance the books” of the national economic downtown. Nothing could be further from the truth. Austerity is simply a practised methodology whereby the losses and the risk of the financial elites are divided neatly: profits retained by the wealthy, losses charged to the general public.
The neoliberal cavaliers behind the 2007/2008 financial crisis were initially far more trepidatious about brazen imposition of austerity on a population already subjected to record bankruptcies, redundancies, home repossessions, negative equity, etc. The lack of push back stunned even the most cynical, risk-optimistic financier in Wall Street/DC and London. The money men wasted no time propagating austerity across the entire G20 economic policy.
It’s worth checking out a concise article about the 2007/2008 Financial Crisis. It’s easy to comprehend when it’s explained properly, without jargon or government flimflam. Check out XXXXXXXXXX by Flurble Wurble. It’s one of the best short pieces I’ve read.
Most of the developed national economies – especially the United States and the United Kingdom – have eliminated the majority of their well-paying jobs in the lower and middle demographics: from skilled industrial to entry-level new tech, new service economy positions. Outsourcing and offshoring is a corporate no-brainer in the free trade world.
FINANCIAL OLIGARCHY – DEREGULATED BANKS – MILITARY INDUSTRIAL TECHNOCRACY
The financial oligarchy has also decimated social security mechanisms introduced by the New Deal and converted a large part of work form to perma-temps. Banking deregulation became open class warfare with the repeal of Glass-Steagall and NAFTA in the Neoliberal 90s.
The Iron Law of Oligarchy, in a way, can be viewed as a “backdoor” way of introduction of the idea of class society in sociology postulating on a different basis than Marxism the idea that the upper class always suppress and exploit lower classes.
Prominent examples here are Bolsheviks, national socialists as well as neoliberal elite, especially neocons. The latter should be understood as lobbyists of the military industrial complex and the level of detachment of the USA foreign policy from the need of the USA lower 90% of population is staggering.
The waste of money on foreign military adventures beneficial for financial oligarchy and MIC is simply astronomical (Pentagon alone consumes over trillion dollars of taxpayer money). This is quite an achievement of neoliberalism because in the past such a huge and sustained level of military spending was possible to achieve only in some absolutist regimes like Nazi regime in Germany.
This gap between policies of the elite and desire of “masses” is not always negative. By definition, the elite can see farther down the road. But it frequently acts completely against the interests of “common people” like in case of, say, US neocons, who from the very beginning was an imperial, militaristic force in the US society, driving up the influence of military industrial complex and serving as MIC lobbyists par excellence. At the expense of lives (it’s the common people not the elite, who constitute the “cannon fodder” in the USA mercenary army) and the standard of living of common people.
Trump won election on the back of dropping standards of living among the common people of the Republic base. Being a billionaire he belongs by default to the ruling class but, as an outsider, a sociopathic narcissist and possibly an idiot-level IQ, he was never accepted by the Neoliberal oligarchy as a legitimate Obama successor. Trump had no respect (or understanding) of the core postulates of Neoliberalism (such a globalization, offshoring/outsourcing of manufacturing, inevitable reduction of the standard living of common Americans – some increased standard of living in countries like China and India – permanent war for expansion and maintaining global dollar economic empire led from Washington, etc.)
Indiscretion is a crime alongside treason for the “Deep State” and its enablers. Witness the starkly different treatment of Trump and Bush, Obama and Joe Biden, despite the substance of policy being indistinguishable across all four Presidents.
THE COMMON PEOPLE (SO-CALLED “MASSES”) SHOULD NOT BE IDEALIZED EITHER, WINSTON SMITH!
The dynamic of neoliberal ruling elite and disenfranchised national population is more complex than a simple one-way exploitation of ruler and vassal. Some social changes hatched by the elite can sometimes improve socioeconomic well-being of “masses”, and there are even occasions the “masses” initially oppose the very measures best designed to improve their lives.
Uncritical idealisation – such as the immanent worker-as-noble-ideal (i.e. the so-called “proletariat” class) in Marxism-Leninism is one of the doctrinal sureties makes the typical Marxist feel more like a religious zealot than a secular idealist.
In reality, common people, “masses” should not be idealized either.
There is the whole set of issues with mass psychology including but not limited to the issues related to Conformism, Groupthink and the psychology of crowds.
In a sense, deindividuation mass-to-mob dynamics are an inversion of the meritocracy-to-oligarchy process; but both trajectories end in a degraded “universal democracy” i.e. typically “rank and file” members of the organization display high-level “groupthink”, subsuming whatever individual autonomy the person might’ve had without the peer pressure into the mob-sure objectives of the group (and its ‘glorious’ leader).
(McCarthyism — a witchhunt unleashed by the elite, executed by the rank-and-file groupthink mob, knowingly weaponizing paranoia and prejudice to desire to increase the cohesion of the organization and eliminate any opposition.)
Universal suffrage, the once-vaunted panacea for all the ills of government (and lineages of accumulated power, wealth and privilege) has exposed the default level of thinking of “common people” nicely. The wily British political scientists of the 19th century understood the power of “government by inversion” as the solution to inevitable – and desirable (for stability) – universal suffrage of one adult, one vote.
It can easily brainwash the public into supporting candidates very harmful for their policies. Which actually happened with the election of Reagan and quiet coup d’état that established the rule of Neoliberalism in the USA and set in motion the open decimation of the FDR’s New Deal (brought into play in the 1930s. Partly in response to the dustbowl depression caused by unregulated Wall Street boom and bust). Clinton (D-AR), Bush Jr (R-TX) and Obama (D-IL) continued the public-private reformation of the American Deep State and the Neoliberal Oligarchy.
CULT OF PERSONALITY – REALITY SHOW VOTE HARVESTING
They tend to create the “cult of personality” within the particular organization. The key problem is that “common people” often do not understand and resent the ideas/policies of the leaders, rejecting those which, at the end, are the most beneficiary for them personally.
Instead, they adhere to supporting self-sabotaging policies based on some delusions of envy toward other social groups (this effect is called “What’s the matter with Kansas?” as it was described in the book with the same title).
“Most people are altogether devoid of understanding of the actions and reactions between that organism we call the state and their private interests, their prosperity, and their life. As de Tocqueville expresses it, they regard it as far more important to consider “s’il faut faire passer un chemin au bout de leur domaine” than to interest themselves in the general work of public administration. The majority is content, with Stirner, to call out to the state, “Get away from between me and the sun!”
Stirner makes fun of all those who, in accordance with the views of Kant, preach it to humanity as a ‘ sacred duty ‘ ‘ to take an interest in public affairs. ‘ ‘ Let those persons who have a personal interest in political changes concern themselves with these. Neither now nor at any future time will ‘sacred duty’ lead people to trouble themselves about them.”
20th CENTURY REVOLUTONS OF THE PROLETARIAT? THINK AGAIN, CHUMBAWUMBA.
From this point of view, the 20th century revolutions in Russia and China were not “workers and peasants” revolutions, as Marxists present; nor was the French Revolution of 1789 a “workers” uprising against the aristocratic order and King Louis XIV’s bourbon autocracy.
These violent overthrows of the ruling caste were coups d’état of a narrow circle of intellectuals representing interests of lower middle class and organized as a radical political party with the explicit goal to depose existing elite and became a new elite themselves:
In Coup d’État: A Practical Handbook the military historian Edward Luttwak states that: “[a] coup consists of the infiltration of a small, but critical, segment of the state apparatus which is then used to displace the government from its control of the remainder.”
Those revolutions gave the birth of the world’s first home sprung totalitarian regimes, which raised the level of detachment and hostility of the elite to the rank-and-file members of society to a new historical level (now dutifully reproduced by the US neoliberal elite).
On the national level, the term “Deep State” describes essentially the same phenomenon as entrenched corporate oligarchy. The “Deep State” simply expands the scope of the oligarchy to include the elite of the major intelligence services (CIA, MI5/MI6, NSA, GCHQ, FBI, Mossad (Israel), DGSE (France), FSB (Russia’s KGB successor, other Five Eyes services), integrated into the authoritarian stability mechanisms of power and wealth and Weltpolitik – ostensibly acting on behalf of their home country but typically engaging in transnational political expediency, free to act as semi-autonomous, non-public-facing political and business deck-stacking (insurance, reality-check, civilian outreach) forces.
NOMENKLATURA – DEMOCRACY NOTHING MORE THAN A UTOPIAN FANTASY
The Iron law of Oligarchy – as a social science theory – undermines a cornerstone of both liberal-democratic and Marxist theories — the viability of democracy as a direct rule of people.
The Iron Law of Oligarchy also suggests that competition for power in “Western democracies” is far from “perfect” and is limited to competition between various factions of the political and economic elite (approximately top 0.01% of the population).
Institutions which provide for minority rights, checks and balances are just sweet political coatings over bitter socio-economic pills.
They also serve as the pressure valves for channeling discontent into more palatable forms, but are little more than that. Looks like Marxists were right that without greater economic equality democracy is completely impossible (but economic equality is impossible in its own right, at least within the current civilizational framework). But, they were wrong that an economically egalitarian society is viable, as self-generation of elites in any society and elite grabbing the society resources can’t be stopped.
The history of the USSR is an interesting demonstration of a viability of the “Iron Law of Oligarchy” even in the context of a theocratic society.
In the Soviet Union, oligarchy (a.k.a. Nomenklatura) emerged in less than 10 years from the 1917 revolution. The politburo of CPSU became the gravitational centre of the post-revolution “Soviet” oligarchy, which like old aristocracy was hereditary. Ironically, its nepotism allowed Gorbachev, a lousy political demagogue, to reach autocratic power; to dismantle the entire communist system and liberate the vassal states of the Soviet empire in Eastern Europe, the Baltic and the Caucasus.
As Boris Yeltsin was elected, the Bolshevik lineage elite had deftly changed sides – paradoxically with KGB kingpins in the forefront of this betrayal of the revolutionary ideals. Neoliberalism was adopted overnight. It was wholly compatible with the totalitarian oligarchy of the communist inner party Oligarchy had been restored by Russia’s first “democratic” election by the time Putin seized the reins of power. Michael Voslensky describes the phenomenon in his book on Soviet history: Nomenklatura: The Soviet Ruling Class.
By comparison to the USSR with its rigid one-party system, the USA employs more sophisticated system of two-party rule, which actually proved to be less brutal, but, at the same time, more efficient in sustaining of the rule of oligarchy (disguised as a two-party system or polyarchy).
Recently this polyarchic system advanced “false flag candidates” (Obama, Trump) candidates specifically selected due to lack of their political experience and as such capable to promise “change we can believe in”, performing brutal “bait and switch” maneuver after the election.
Indirectly the “Iron Rule of Oligarchy” also badly reflects on the US foreign policy, making “promotion of democracy” to look like a smokescreen behind which naked economic and imperial interests hide.
For example, in 2014, the Democratic Party and Hillary Clinton stance on Libya and Syria looks like hypocritical nonsense that masks geopolitical and economic energy security considerations.
It is just a “regime change” in which a different, more friendly to American interests, part of the national oligarchy is artificially propped up to power on the “tips of bayonets”. Not that dissimilar with the Trotsky idea of “permanent revolution”
The “Iron Law of Oligarchy” also makes clear that the current ruling regime in the USA has very little to do with the democracy and a lot with the defence of the interests of top one percent (or more correctly 0.01%) of population.
Still, improvement in socio-economic welfare matters, as it does increase economic sovereignty of individuals and limit the number of degrees of freedom that oligarchy enjoys. The poorer (and less economically secure) are the people, the easier it manipulates them. So egalitarian ideal still has distinct democratic and general social value.
The official goal of democracy – eliminating elite rule is impossible – and indirect or representative “democracy” is always a façade, legitimizing the rule of a particular (entrenched, lineage) elite.
But the “degree of separation” and attachment of the elite to larger society goals can vary greatly. For example, during the period of existence of the USSR, the US elite was forced to hide their cannibalistic tendencies and produced the period in the US history that was truly “golden age” for the US middle class.
This period ended with the accent of neoliberalism in 1970th and culminated with the election of President Reagan, who started destroying the New Deal society. The job was finished by President Clinton.According to the “iron law,” democracy and large-scale organizations are incompatible. In this sense democracy is and always will be a utopian ideal.
During the period of existence of the USSR, the US elite was forced to hide their cannibalistic tendencies and produced the period in the US history that was truly “golden age” for the middle class.
STRATIFIED SOCIETY – ISN’T IT ALL JUST A QUESTION OF DEGREES OF SEPARATION?
The degree of inequality in a given asset (e.g., income) depends, of course, on its dispersion or concentration of wealth across the individuals in the population. Although many scholars seek to characterize the overall level of societal inequality with a single parameter, such attempts will obviously be compromised insofar as some types of assets are distributed more equally than others.
This complexity clearly arises in the case of modern stratification systems, for instance, the recent emergence of “social rights” suggests that civil goods are now more equally dispersed across all citizens, whereas economic and political goods continue to be disproportionately controlled by a relatively small elite — financial oligarchy. And under neoliberalism this level of concentration of ownership of economic assets and corresponding level of inequality gradually rises, putting the stability of the society at risk. From the point of view of iron law if oligarchy neoliberalism, much like Bolshevism in the past, is inherently unstable, doomed social system.
In nearly all models of advanced industrial society, education is the principal mechanism by which we sort individuals into such classes; in a way educational institutions serve to “license” human capital (if we use this neoliberal term) and convert it to “cultural currency.”
But in the current phase of neoliberalism – with its transnational dimension – this process is no longer a meritocracy (for the most part) and the 19th-century British democracy-inversion methodology has spread once again. Universities are becomingly mainly a tool for reproduction of existing neoliberal elite: most egregiously, mediocre children of the elite has disproportionally higher chances to get to the top educational institutions than gifted children of common people.
In this simple mismatch, whether you’re a supporter of oligarchy as a “natural competition of winners, ensuring the best run the world and the losers get out of their way” or neoliberalism as a “proven solution to keep the world at peace, productive, innovative and – despite all the injustice – relatively stable” the meritocracy of winners argument is uprooted. At best, one exceptional migrant into the elite can lock up an inordinate power in the hands of mediocire (or worse) progeny. This can’t be a recipe for successive generations of the most innovative, competitive, creative people most efficiently pushing the envelope (to everyone’s benefit). Quite the opposite.
Right wing or left wing, socialist or capitalist, technologist or libertarian, oligarch or plutocrat: nepotism beyond a very limited point is a slow suffocation of national vitality, neoliberalism’s universally acknowledge Achilles heel. China, India and Russia – in different ways – ringfence neoliberalism with ideological superstructures. As it happens, these are built with a special attention to armouring the heel. The “West”, like complacent Achilles, has enjoyed so many uninterrupted years fucking the rest of the world, it’s forgotten the prophecy of the hoary doomsayers of the 19th and 20th century economists (Keynes, von Mises, Michels, Russell, and a hundred more_