Elite Theory And The Theory of Democracy

Austrian Political Economy

Austrian Political Economy

I write about economics and political philosophy.

I-   T H E   R U L I N G   C L A S S

The citizenry of every political society can be divided into two classes: the rulers and the ruled. Moreover, the ruling class is always a numerical minority as compared to the ruled class. This is not merely an empirical regularity, it is inherent in the very concept of a political society; it is an immutable and universal law that holds true for all times and places. This law of human civilization, the law of elites, constitutes the central tenet of Italian school elitism. The law of elites was first elaborated by the eminent political theorist Gaetano Mosca in the 1870s while he was a student under Angelo Messesdagila at the University of Palermo. It was during this time that Mosca stumbled upon a profound insight. Mosca realised that the basic idea underlying the analytical categorisation that Hipppolyte Taine had applied to the Ancien Regime could be generalised and applied to any conceivable political society. Mosca posited that if one studies any polity, be it a monarchy, a republic, a dictatorship, or any political arrangement whatsoever, one inevitably discovers that real power is never held by one person, the king or dictator, nor by the whole populace. Rather, actual power is always wielded by a particular class of people, which is always a small minority as compared with the whole population. 

Thus, every society consists of two distinct classes; Mosca termed these classes the “political class” and the “non-political class” respectively. The political class constitutes an organised minority and the non-political class constitutes an unorganised majority. For Mosca, the ruling elites possess certain capacities and traits that predispose them to political rule. In particular, Mosca stresses the organisational ability of eliteselites are able to rule by virtue of their being an organised minority. It bears repeating: the rule of elites is a fundamental, immutable, and universal law of politics; it cannot be obviated or repealed. Robert Michels, another important Italian elite theorist who, alongside Mosca and Pareto, is credited with founding the Italian school of elitism, posited that the emergence of the ruling class–in his terminology, the dominant classis a necessary phenomenon, an iron law, that pervades every form of political society. No organisation, no matter how democratic its intentions, can constitute a true democracy. Even institutions that operate on the basis of direct democracy are oligarchal institutions. Within every organisation, there is necessarily always a leadership class that holds the most actual power. 

It would be folly to understate the significance of Mosca’s finding. Since the age of Aristotle, attempts have been made to discover the laws that govern the social realm; the science devoted to that purpose was called “political science.” In Mosca’s view, he had discovered an important and inexorable law of political science. Indeed, he had discovered the most fundamental political law — he had discovered the answer to the ontological problem of power. 

II-   C I R C U L A T I O N   A N D   T H E   P O L I T I C AL   F O R M U L A 

An important aspect of elite theory is the concept of the circulation of elites. In brief, the circulation of elite is the theory of regime change; it is the theory of how one group of elites comes to usurp another group of elites. The circulation of elites theory emanates principally from the works of Pareto but is foreshadowed by Mosca’s treatment of the process of recruitment into the ruling class. In the first place, Mosca claims that being born into the ruling class is the easiest and most assured way to become an elite. That is, for Mosca, certain social bonds, in addition to talent and organisation, can facilitate entry into the ruling class. 

Mosca uses the terms “aristocratic” and “democratic” to describe the potential sources from which new members of the elite are drawn. The democratic tendency exists when there is free entry into the elite–that is, where anyone, in principle, can become an elite–and the aristocratic tendency exists when entry into the ranks of the ruling class is limited to the descendants of the incumbent elites. Where the democratic tendency prevails, the ruling class may become heterogeneous, but, as Mosca stresses, it remains inherently oligarchal. The iron law of oligarchy cannot be circumvented or abolished. Thus, Mosca adhered dialectical theory of elite circulation, whereby the process of replenishment represents continuous and extended competition between sub-groups of elites within the ruling class, the outcome of which is certain elite groups usurping one another over time. 

As far as Pareto’s theory of elite circulation is concerned, he explained that there are ultimately only two ways in which elite circulation can take place: gradually through steady recruitment and integration or suddenly through revolution. The most obvious way in which circulation of the first type occurs is through the death of old elites; this process of replenishment results in the piecemeal replacement of older elites by a younger generation of elites. As Mosca explained, the new elites can reflect either an aristocratic or democratic tendency depending on the source from which they are recruited. This form of circulation does not pose any danger to the ruling class considered as a historical type; it only involves the replacement of certain individuals. Revolution, conversely, does damage a ruling elite as a historical group. Revolution signals the acquisition of power by a new set of elites, reflecting new ideologies and doctrines of social or economic affairs. 

The ruling class, according to Mosca, does not merely hold power, it is always engaged in the attempt to legitimise its position of power and dominance through the propagation of what he called a “political formula.” The political formula refers to those abstract principles and doctrines through which the ruling elite justifies its own power. The notion of the divine right of Kings, for example, was essential to the consolidation of power by the political class that existed under the European monarchies. The concept of the political formula is evident in the revisionist history of the preeminent philosopher-economist Murray Rothbard where he argues that the statist ruling class must engage a group of “court intellectuals” whose task it is to “bamboozle the public into accepting and celebrating the rule of its particular State.” The similarity between Rothbard’s conception of the function of court intellectuals and Mosca’s political formula is very clear, though Rothbard does not indicate whether he gained this insight from Mosca.

III-   T H E   M I R A G E   O F   D E M O C R A C Y

The indefeasible law of the inevitability of political rule by a minority elite has profound implications for the theory of democracy. Contrary to the theory of majority rule, societies are always ruled by minorities, that is, by oligarchies. Thus, elite theory renders the underlying logic of democracy nothing more than a sham. For if power is necessarily always vested in the minority ruling elite, it cannot reside in the people. Power cannot be exercised by the people directly or indirectly by their chosen representatives; it can only be exercised by the ruling elite. In short, all political societies, including those styling themselves as democracies, are fundamentally oligarchal.  Democracy, therefore, amounts to little more than a utopian folly. The theory of democracy is simply a particular political formula, a myth, employed to legitimise a particular form of government, viz. the democratic state. It does not correspond to any actual or realisable social reality. 

It is true that representative democracy does not technically purport to involve the exercise of actual power by the people themselves, but popular sovereignty and majority rule remain the underlying principle and, as we have seen, this is nothing more than a myth that throws a veil of confusion over the nature of power and the impossibility of democracy. That said, representative democracy, while oligarchical like any other mode of government, does constitute a unique system whereby the fact of universal suffrage systematically modifies the incentive structure of governance and thereby fundamentally alters the political and economic nature of the state as well as the conduct of its ruling class. Hans Hermann-Hoppe, the great libertarian theorist and Austrian school economist, has poignantly articulated the perverse incentives the ruling class faces under the democratic system:

Under democracy, the incentive structure is systematically changed. Egalitarian sentiments and envy are given free reign. Everyone, not just the king, is now allowed to participate in the exploitation—via legislation or taxation–of everyone else. Everyone is free to express any confiscatory demands whatsoever. Nothing, no demand, is off limits. In Bastiat’s words, under democracy the State becomes the great fiction by which everyone seeks to live at the expense of everyone else. Every person and his personal property come within reach of and are up for grabs by everyone else.”

Under the democratic system, the egalitarian principle of universal suffrage, combined with free entry into government, implies that every person’s property can be legitimately expropriated by the instruments of legislation and taxation. Expropriation and depredation is not only the logical implication of the democratic system but is heavily encouraged by it, as that is the nature of the democratic incentive structures. Under democracy, the political class does not “own” the country, unlike a traditional king, but only has current use of it; they are merely temporary caretakers. Assuming no more than self-interest on the part of the political class (maximising money and power), democratic rulers tend to engage in large-scale expropriation of private property (taxation) to increase their current income and to permit them to dispense the loot among various special interest groups for whom they must provide benefits in exchange for electoral support. The systematic incentives of the democratic state explain why democracy has engendered the greatest degree of taxation and why it led to the creation of the welfare state– the robbery of the productive members of society for the benefit of the unproductive. 

Despite, the profound scale of the expropriation and plunder under democracy, popular resistance against it is minimal. The reason for this perverse lack of opposition is that the political formula employed under democracy has succeeded in blurring the distinction between the rulers and the ruled. The effect is that public resistance against state power and state encroachments is systematically hampered. As Hoppe notes, “while exploitation and expropriation before might have appeared plainly oppressive and evil to the public, they seem so much less so, mankind being what it is, once anyone may freely enter the ranks [of the ruling class]. Consequently, exploitation will increase whether openly in the form of higher taxes or discreetly as increased governmental money “creation” (inflation) or legislative regulation.”

The salient question is not whether we ought to organise society on the basis of oligarchy; the power structures of every society will necessarily be dominated by an oligarchy of elites. Rather, the salient question is what socio-political system will tend to produce the highest quality of elites. It has been shown that democracy tends toward expropriation and exploitation by elites (the same, incidentally, is true of socialism). We can therefore dismiss democracy, and a fortiori socialism, as the system supplying the answer to our question. Monarchy (privately owned government) while also tending toward exploitation and expropriation–this is the natural tendency of all states—will, for reasons alluded to above, tend to better protect private property and thus tend to be considerably less exploitative than democracy. The reason for these different tendencies lies in the discrepancies between the incentive structures that exist under democracy and monarchy respectively. It is in the interest of the democratic ruler to rob the taxpayers in order to fund special interests, whereas it is in the interest of the monarch to ensure that the capital value of his kingdom increases over time so that he can one day make a valuable bequest to his heir. 

Monarchy, while preferable to democracy, is an inferior system to what Hoppe has called the “private law society.” There is no space here to elaborate on the theory of the private law society. Suffice it to say that the basic idea of a private law society is that there is no institution possessing monopoly privilege to invade property rights (i.e., there is no state). This is a system of pure private property in which privately competing courts and police undertake the role of law enforcement and protection of private property. Further, it is the only morally defensible legal system because it is the only one that is compatible with natural law and natural justice. 

IV-   C O N C L U S I O N

According to the elite theorists, in every political society power is concentrated in the hands of a numerical minority, the ruling elite. For Mosca and Pareto, the organisational ability of the elite, as well as certain traits and capabilities, is key to their rule. The ruling elite holds the most power by virtue of the fact that it is an organised minority. Moreover, rule by an elite constitutes an inexorable and universal law of politics. 

The process by which the ruling elite is replenished or replaced is called the circulation of elites. Mosca stresses that this process can be either democratic (free entry into the elite) or aristocratic (entry into the elite is limited to descendants of incumbent elites). Furthermore, there is persistent competition between elites, resulting in the replacement by one elite group of another over time. 

The ruling class will invariably propagate certain doctrines and ideas in order to legitimise their rule; Mosca called these ideas political formulae. The acquisition of power is one aspect of politics, the maintenance of power is another, and fruitful maintenance depends on the acceptance by the people of justificatory myths and doctrines. The propagation of a political formula is, therefore, necessary for the consolidation of political rule.

The implication of the law of oligarchy is that democracy can be nothing more than a sham. Since power is always held by a minority, the concept of majority rule is necessarily a utopian myth. Liberal democracies did not succeed in abolishing oligarchy. On the contrary, they are examples of oligarchy. 

Under democracy, mass exploitation and expropriation are incentivised, but the democratic formula, the illusion of majority rule, disguises the distinction between rulers and ruled and thereby reduces popular opposition to state oppression. Democracy, then, is not only a great fiction but civilisational self-harm. 

Monarchy is preferable to democracy because it tends to better protect private property and therefore tends to result in less exploitation and expropriation. However, monarchy is a morally and economically inferior system compared to a private law society. 

Anyone who wishes to understand the nature of power and politics must study the elite theory of the Italian school. It is imperative that the political theorist understands that the operation of the iron law of oligarchy means that every political society, irrespective of its political designation, be it democracy, monarchy, dictatorship, communist, or whatever, will inevitably be composed of a ruling class and a ruled class, whereby the ruled class constitutes an unorganised and largely powerless majority and the ruled class constitutes an organised minority which, by virtue of its organisational superiority and various other capabilities, will hold virtually all the power. And he must further understand that democracy or majority rule is strictly impossible as a consequence of the fact that political rule will always be the province of a minority of the total population, viz. the ruling elite.