Oligarchy in America and Russia – Explaining History
In the early 1990s, a comfortable delusion settled over the Western world. With the Berlin Wall reduced to souvenir rubble and the Soviet Union dissolving, the political scientist Francis Fukuyama famously declared “The End of History.” The thesis was seductive: liberal democracy and free-market capitalism had won the ideological battle, and the future would be a steady, boring march toward global freedom
Thirty-five years later, that optimism looks not just naive, but tragically misguided. As we approach the close of 2025, it is becoming increasingly clear that democracy did not triumph. Instead, unfettered capitalism triumphed over democracy, birthing a new global political system: Oligarchy.
In this week’s podcast, I explored the anatomy of this transformation. Drawing on the insights of economic journalists and historians, we must ask: What is an oligarch? Why do we now use a term once reserved for Russian kleptocrats to describe American tech billionaires? And how did the economic decisions of the 1990s lead us to a world where political power is essentially up for sale?
Defining the Oligarch
The term derives from the Greek oligos (few) and arkhein (to rule). An oligarch is not simply a billionaire. There are plenty of wealthy individuals who buy superyachts and islands but have no interest in the mechanisms of the state. An oligarch, by contrast, is defined by the exercise of political power. They do not just inhabit the economy; they shape the rules that govern it.
We see this most clearly in figures like Eric Schmidt or Elon Musk. Their wealth is not passive; it is an active instrument used to reshape the world in their own image—often bypassing democratic consent entirely. As we have seen in the recent political maneuvering of late 2024 and 2025, when an individual possesses wealth that exceeds the GDP of small nations, they do not need to overthrow a government to rule; they simply need to render the government obsolete or capture its regulatory bodies.
The Russian Blueprint: Shock and Humiliation
To understand the rise of the American oligarch, we must first look at the Russian archetype. The Russian oligarchy was not an accident; it was a product of design, specifically the “Shock Doctrine” economics critiqued by Naomi Klein.
Following the collapse of the USSR, Western advisors and the IMF pushed for immediate, radical privatizationPrivatization Full Description:The transfer of ownership, property, or business from the government to the private sector. It involves selling off public assets—such as water, rail, energy, and housing—turning shared public goods into commodities for profit. Privatization is based on the neoliberal assumption that the private sector is inherently more efficient than the public sector. Governments sell off state-owned enterprises to private investors, often at discounted rates, arguing that the profit motive will drive better service and lower costs.
Critical Perspective:Critics view privatization as the “enclosure of the commons.” It frequently leads to higher prices for essential services, as private companies prioritize shareholder returns over public access. It also hollows out the state, stripping it of its capacity to act and leaving citizens at the mercy of private monopolies for their basic needs (like water or electricity).
Read more. The theory was that a sharp shock would transition Russia to a market economy. The reality was the fire-sale of state assets to insiders and the criminal underworld.
But the creation of the Russian oligarch wasn’t just economic; it was psychological. Svetlana Alexievich, in her masterpiece of oral history Secondhand Time, documents the profound sense of humiliation that accompanied this transition. For the average Russian, the 1990s were not a time of liberation but of abject poverty and the loss of national dignity. When professionals are forced to hawk cheap toys on the street to survive, the social contract breaks.
This humiliation bred a deep cynicism toward the state and the very concept of democracy. It reinforced the Soviet-era reliance on blat—the system of connections and favors described by historian Sheila Fitzpatrick in Everyday Stalinism. In a world of scarcity and corruption, “who you know” matters more than the rule of law. This cynicism created the vacuum that allowed the oligarchs to seize the state.
The American Parallel: The Rise of “Scam Culture”
While Russia was undergoing its shock therapy, America was incubating its own pathology. We often assume corruption is a foreign problem, but the post-Cold War era in the US has been defined by the normalization of the grift.
From the deregulationDeregulation Full Description:The systematic removal or simplification of government rules and regulations that constrain business activity. Framed as “cutting red tape” to unleash innovation, it involves stripping away protections for workers, consumers, and the environment. Deregulation is a primary tool of neoliberal policy. It targets everything from financial oversight (allowing banks to take bigger risks) to safety standards and environmental laws. The argument is that regulations increase costs and stifle competition.
Critical Perspective:History has shown that deregulation often leads to corporate excess, monopoly power, and systemic instability. The removal of financial guardrails directly contributed to major economic collapses. Furthermore, it represents a transfer of power from the democratic state (which creates regulations) to private corporations (who are freed from accountability).
Read more of Wall Street that led to the 2008 financial crisis to the rise of figures like Donald Trump, American culture has increasingly elevated the “scam artist” to a position of civic virtue. We see this in the decay of academic integrity—students using AI to cheat without shame—and in a corporate culture that views regulation not as a safeguard, but as an inefficiency to be disrupted.
This paved the way for Rentier Capitalism. As the geographer and economist Brett Christophers argues in his book Rentier Capitalism, the modern economy is less about production and innovation, and more about controlling scarce assets and charging for access.
We see this in the UK’s water industry—a privatized disaster of high fees and sewage dumping—and we see it in the American tech sector. Real capitalism involves risk. However, as economist Mariana Mazzucato points out in The Entrepreneurial State, much of the “risk” in modern capitalism is shouldered by the state (through research subsidies and infrastructure), while the rewards are privatized by billionaires.
The Oligarch’s Endgame
Why does the billionaire seek to become an oligarch? Because eventually, you run out of things to buy, but you never run out of threats to your wealth. Political power is the ultimate insurance policy. By capturing the state, you ensure low taxes, weak regulation, and the preservation of your empire.
We are currently witnessing the “Department of Government Efficiency” (DOGE) and other oligarch-led initiatives in the US, which serve as mechanisms to dismantle the welfare state under the guise of efficiency. This is the ultimate victory of the rentier: stripping the state of its ability to serve the public, leaving only a framework that serves private capital.
However, the loyalty of the oligarch is fickle. As we saw recently with Elon Musk’s friction with the Trump administration and subsequent courting by Democrats, these figures are not ideologically bound to parties. They are bound to power. To an oligarch, political parties are merely different service providers.
The China Exception?
Interestingly, the only major power that has managed to avoid this specific form of oligarchic capture is China. This is not to praise the authoritarianism of the CCP, which is built on a mountain of repression. However, purely from an economic history perspective, China focused on manufacturing and infrastructure rather than financialization and rentierism. Crucially, when their billionaires attempted to turn their wealth into political power (the oligarchic transition), the state brought them to heel.
Conclusion
The 21st century is shaping up to be a battle not between democracy and communism, but between the public good and private capture. The economic shocks of the 1990s did not lead to a free world; they led to a world for sale. To resist this, we must first understand that the “Oligarch” is not just a Russian phenomenon—it is the logical endpoint of a capitalism that has slipped its democratic leash.
Further Reading:
- Secondhand Time by Svetlana Alexievich
- The Shock Doctrine by Naomi Klein
- Rentier Capitalism by Brett Christophers
- The Entrepreneurial State by Mariana Mazzucato
- Everyday Stalinism by Sheila Fitzpatrick
- The Road to Unfreedom by Timothy Snyder
Part 2: Transcript
Nick: Welcome again to the Explaining History podcast.
A bit of a heads-up for tomorrow: we have another one of our “double interview Wednesdays.” I don’t like to pre-announce them too much because I want it to be a bit of a mystery for you, but we are looking at Chilean folk music, and we are also examining the exciting world of murder mysteries in the Edwardian era. So, tune in for that tomorrow.
We are doing so well at the moment with interviews; there are lots of fascinating book proposals and ideas coming out that we will be talking more about. I’m really glad we can bring those to you.
Today, I want to discuss something I’ve been reading about recently regarding economic history. There are some key texts coming out that help us make sense of the moment we are in. It is a pivotal, and in many ways dangerous, moment where the nature of 21st-century capitalism is being formed, along with the resistance to it.
I’ve been following a great political and economic journalist on Twitter, William Ho. If you get a chance, look him up. He has some fascinating takes on “end-state neoliberalismSupply Side Economics Full Description:Supply-Side Economics posits that production (supply) is the key to economic prosperity. Proponents argue that by reducing the “burden” of taxes on the wealthy and removing regulatory barriers for corporations, investment will increase, creating jobs and expanding the economy. Key Policies: Tax Cuts: Specifically for high-income earners and corporations, under the premise that this releases capital for investment. Deregulation: Removing environmental, labor, and safety protections to lower the cost of doing business. Critical Perspective:Historical analysis suggests that supply-side policies rarely lead to the promised broad-based prosperity. Instead, they often result in massive budget deficits (starving the state of revenue) and a dramatic concentration of wealth at the top. Critics argue the “trickle-down” effect is a myth used to justify the upward redistribution of wealth.,” the dynamic between America and China, and much more. One thing he was talking about today was the difference between billionaires in America and oligarchs.
He had an interesting definition. There are lots of billionaires who are very wealthy, but they don’t get a look-in at the “top table.” Oligarchs, in addition to being very rich, get to shape the system of wealth and power. In America, they get to write the economic rules. He referred particularly to the former Google executive Eric Schmidt, who is very vocal at the moment about the future of Artificial General Intelligence (AGI). I would take what he has to say with a pinch of salt, but I don’t think he’s entirely wrong about the influence involved.
It got me thinking about oligarchy and why we are considering this term in the 21st century. What is an oligarch, and how do we define it?
My opening thesis is this: we once talked about Russian oligarchs, and now we talk about American ones, because since the end of the Cold War, the economic and ideological conditions required to make oligarchs have prevailed in both countries. It was considered at the end of the Cold War, in that era of triumphalism, that democracy had triumphed over tyranny. But what really happened is that unfettered capitalism triumphed over liberal democracy.
In Russia, what remained of a state-led, undemocratic command economyCommand Economy Full Description:An economic system in which production, investment, prices, and incomes are determined centrally by the government rather than by market forces. It represents the antithesis of free-market capitalism. In a Command Economy, the “invisible hand” of the market is replaced by the “visible hand” of the state planning committee (Gosplan). The state dictates what is produced, how much is produced, and who receives it. There is no competition, and prices are set by decree to serve political goals rather than reflecting scarcity or demand.
Critical Perspective:While theoretically designed to ensure equality and prevent the boom-bust cycles of capitalism, in practice, it created a rigid, inefficient bureaucracy. Without price signals to indicate what people actually needed, the economy suffered from chronic shortages of essential goods and massive surpluses of unwanted items. It concentrated economic power in the hands of a small elite, who enjoyed special privileges while the masses endured stagnation and hardship.
Read more—which notionally called itself socialism but was anything but—was replaced. In the West, liberal democracy eroded. These systems were replaced by a form that has emerged in the 21st century as almost a neo-feudalism. This is not the “End of History” as was predicted in 1989.
Oligarchy is defined by the exercise of political power. The Greek origin is oligos (few) and arkhein (to rule). It is rule by the few. It describes the circumstances by which a small number of exceedingly wealthy, powerful people understand how to concentrate power and maintain that concentration.
They often don’t need to overthrow democracy; they simply render it obsolete. They short-circuit it. This is done through the funding of political parties and donations. Elon Musk, in the most overt way, decided he wanted Trump to win the 2024 presidential election. I think Musk can easily be described as an oligarchic figure—one that has perhaps fallen out of favor rather quickly, which was easily predicted.
The question of how these billionaires accumulated that wealth in the first place is pertinent. Once an individual can afford virtually anything—possessing an income that small countries would envy—they almost always purchase political power. Why? Because it eliminates vulnerability to your wealth. You ensure the people you hire or fund won’t tax you.
Furthermore, when you have more money than you can spend in a lifetime, the urge often comes to reshape the world to suit your own particular interests and obsessions. These almost never coincide with the common good. Your wealth exists not just in spite of the common good, but at the expense of it, as hoarding wealth always does. Therefore, oligarchy is always a conspiracy against the demos—the public.
In Russia, this was made possible by the “Shock Doctrine” imposed by the West through the IMF, ensuring state industries were sold for a song. There was a theory that this economic shock would be painful for a while, but then a new, prosperous society would magically emerge. This was fantasy thinking, dreamt up in university economics departments like Chicago, yet it was lapped up by political think tanks.
On the ground, however, as Svetlana Alexievich documents in her book Secondhand Time, the experience for ordinary Russians was one of impoverishment and humiliation. You don’t undo those psychical scars easily.
This transition created a crisis of narrative, and this has happened in America too. There was a photo recently of a student graduating, waving his laptop with ChatGPT on the screen, grinning because he had essentially cheated. In many cultures, that shame would be unbearable. But in America, a culture has emerged that appreciates the “scam.” There is a sense that everything is a scam, and the only way to function is to be the scammer, not the victim. The idea of the “grifter” has been elevated to a civic virtue.
The fallout from the 2008 financial crisis showed that the entire system was based on a pack of lies. You have a fraudster for a President—someone who has ripped people off via universities, vodka, steaks, and real estate. This is abundantly clear; people know this. Yet, democratic norms involving the rule of law, fair play, and decency have been swept away by the hegemonic force of free-market values where “anything goes.”
In the Soviet Union, there was always a widespread cynicism toward the state. People knew scarce resources had to be acquired through blat—connections. As Sheila Fitzpatrick discusses in Everyday Stalinism, corruption exists when there isn’t enough stuff.
After the Cold War, most Russians weren’t convinced that liberalization would bring milk and honey. They wanted democracy largely for transparency and less corruption. But what they got was an acceleration straight into oligarchic capture.
America has descended into this too, specifically via Rentier Capitalism. All capitalism is, to a degree, rentierism—capturing resources, ring-fencing them, and charging for access. You only need to look at the state of British water, which is the most privatized system in the world, full of sewage, and has some of the highest rates. We allowed private capital to capture a basic necessity.
Rentier capitalism is different from the creation of new technologies. We like to think capitalism is about engineering and biomedicine. Those things do get created, but usually with large state subsidies. Private capital doesn’t like taking risks; it requires the state to shoulder the risk while it takes the shareholder return.
Once oligarchs have decision-making power—as we see in America now with the Department of Government Efficiency (DOGE)—they divert resources into pet projects or axe welfare programs because the state has been captured. The media system is captured, too. Oligarchs can cut social safety nets without fearing a revolution, because revolutions usually require state collapse, and the American security state is not collapsing.
An oligarch can be confident they can do what they like. If the midterms go against Trump, they can dump him. When Musk appeared to break with Trump recently, the first people to start courting him were the Democrats.
China is the exception here. You don’t get as much rentier-based capitalism there. China focuses on manufacturing, engineering, and infrastructure. Interestingly, China brought its oligarchs to heel. The oligarchic coups that happened in the USA and Russia never managed to take root in China. That is not to suggest the Chinese regime is benign—it is built on repression—but it seems to have insulated itself from the specific malaise that saps both Russia and America.
Anyway, we have some cracking interviews tomorrow. Stay tuned, thanks so much for listening, and I’ll catch you next time.
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