Individuals do not necessarily categorize themselves as oligarchs. Instead, the media and people from outside the oligarchy may label some businesspeople and other powerful members of society this. It is typically seen as a criticism of people who have a large influence on the government. When people reference oligarchs, they often are referring to Russians who have large influences over their national government. They play active roles in advising the Russian government and parliament on legislative changes. Some have even drafted legislation. An example of a Russian oligarch is Roman Abramovich. He is an advisor and friend to Russian President Vladmir Putin and made his money in oil. In 2022, the U.S. government and other nations around the world sanctioned oligarchs for their roles in helping Putin in his war against Ukraine. While Russia has a large quantity of oligarchs, there are other countries with businesspeople who can strongly influence their politicians and government. China has a concentration of individuals with business interests and wealth that have influence over the government. The Philippines also has often been cited as a country with a strong oligarchical class. Oligarchies have also existed throughout history in many nations, including Italy, Sweden, and Korea, as many families have owned large conglomerates and had influence on their political operations.
How Does One Become an Oligarch?
One can become an oligarch by controlling business interests, which give them economic influence in a nation. If a businessperson controls enough economic interests, government leaders are more apt to work with them to continue to grow the economy or get a share of the business profit. Oligarchs gain power and influence with support from the state or government in the forms of direct subsidies, tax breaks, land grants, and subsidized credit.
Are Oligarchs Economically Beneficial to a Nation?
Oligarchs could be beneficial to an economy because their companies are very large and vertically integrated. This can mitigate hold-ups in the supply chain and keep the economy running normally. However, there are also a number of ways an oligarch can hurt economic growth. First, oligarchs own large conglomerates that are concentrated in important industries such as media, energy, and commodities. Connections to state-affiliated banks and government funding may make it difficult for small firms to enter the market and compete, which can hurt small businesses and consumers. Second, oligarch-owned firms tend to be very large and may not operate efficiently. They keep their power through political favoritism and may not allocate capital and resources optimally in a way to maximize economic growth. Third, oligarchs can weaken an economy by stripping assets away from the government through private ownership and the takeover of resources. This can weaken democratic institutions and laws that help ensure competitive fairness. It can also create an economic environment that is less conducive to economic growth. Generally speaking, while oligarchs can increase wealth and assets for themselves and the oligarchy, this does not result in an equal amount of economic growth for all citizens of a nation. Moreover, because oligarchs control the news and other key industries, they have political influence on elections. Oligarchs will promote politicians that best serve them, rather than politicians that will best serve the economy as a whole. This can leave oligarchy economies vulnerable to crises. Want to read more content like this? Sign up for The Balance’s newsletter for daily insights, analysis, and financial tips, all delivered straight to your inbox every morning!
