What is the difference between Capitalism and Oligarchy?Some people say the USA has a Capitalist political-economic system and others say it is an Oligarchy political-economic system, which one is...

What is the difference between Capitalism and Oligarchy?

Some people say the USA has a Capitalist political-economic system and others say it is an Oligarchy political-economic system, which one is it? is it both?

Expert Answers
enotechris eNotes educator| Certified Educator

By strict definition, the United States is not a Capitalist-Democracy as some have stated; we are instead (or we were founded as) a Capitalist-Constitutional Republic. These go hand-in-hand -- you cannot have economic freedom without political freedom, and vice-versa.  Democracy, or majority rule, is antithetical to the exercise of individual Rights. To say that the US functions democratically in the sense that it is a "people's government" is correct. Unlike a democracy, a Constitutional Republic, on the other hand, insists upon the safeguarding of individual Rights.

Capitalism (and not what the media and the bulk of the world seem to think) requires a true level playing field so that competition can occur, where no one and nothing is favored, or the playing field "tilted" by any government or elite; if General Motors fails in the market, they go under, period. Products and services survive because they have withstood the test of a level Free Market. People have purchased or invested in those goods or services, they have in effect, shown their approval by spending their money, or "voting with dollars." People get rich under a capitalist system because they have created wealth by bringing these goods and services to the market, not because they have stolen these things from someone else (in which case they would have violated someone else's Rights to property, and should be justly prosecuted, if the Rule of Law is still intact.)

Oligarchy, or rule by the elite, may be what the US government has devolved into, but that is more a reflection of the failure of our Legislative and Executive Branches of Government than to the economic system of Capitalism. By the government itself continuing to upset the balance of power and destroy representative government, our economic and political freedoms continue to diminish, and those in government grow tyrannous. It's not Occupy Wall Street; it's Occupy Washington.

stolperia eNotes educator| Certified Educator

Wikipedia defines "oligarchy" as a "form of power structure in which power effectively rests with an elite class distinguished by royalty, wealth, family ties, commercial, and/or military legitimacy." As the previous post rightly states, determining whether or not the power of the United States government is concentrated in an "elite class" is a matter of opinion and definition. Certainly, we don't have an elite based directly on any of the distinguishing marks cited. The key lies in remembering that an oligarchy is a power structure - a type of governing body.

Wikipedia says there is no completely accepted definition of "capitalism" but adds that "elements of capitalism include private ownership of the means of production, creation of goods or services for profit or incomecompetitive marketsvoluntary exchange, and wage labor." Capitalism is a label for a type of economic structure. I would argue that capitalism is not concerned with the politics of a system and that the United States should be described as a capitalist democracy if you're addressing both the political and economic systems.

brettd eNotes educator| Certified Educator

I agree that the definition of oligarchy is going to vary from person to person, but it seems to me that we have a capitalist economic system by design, and an oligarchy for a political system.  We are a nation of more than 308 million people, yet are governed by a national Congress of only 535 members.  Representative and participatory as it may be, that is still government by a few.  Many of those same Congresspeople are millionaires, tied in one way or another to the financial elite.

By another measure, in 222 years of the republic's existence, we have elected exactly zero female Presidents.  It took until 2008 to elect the first African-American.  Latinos, Natives and Asians are very under-represented in Congress.  We have a long tradition, dating back to colonial times, of being governed by a handful of white males.  I could make a convincing argument, I think, that this makes us a political oligarchy. 

Economically, though, the economy is just too large (25% of the business of Earth, think about that) to be dominated by a few people.  And the handful of very wealthy people are absolutely dependent on the work and spending of the mass of Americans to maintain their wealth.

pohnpei397 eNotes educator| Certified Educator

Oligarchy is in the eye of the beholder.  Anyone can claim that a country is ruled by "the few" because there is no way to objectively quantify whether this is true.

I would argue that the US really is capitalistic and democratic.  I do not think that power is so concentrated in the hands of the few that we should call it an oligarchy.  However, that is clearly what people like the Occupy Wall St movement would say is going on.

I could point to the fact that Barack Obama was elected president in 2008 as proof of this, but it is too easy to dismiss any such argument if you believe the US is an oligarchy.  All you have to say is "it doesn't matter who gets elected -- the people with the real power control things from behind the scenes."

kapokkid eNotes educator| Certified Educator

There is some great stuff above, but I have to echo both that the distinction is in the eye of the beholder and it also depends on how willing one is to accept that the power lies in the hands of the people it appears to.

Those wealthy few, in Congress or at the top of the economic heap, derive their power from the consent of those who support their industries, vote for them, buy their products, are willing to accept social norms and laws to not just take what they want.  So while they may appear to be in control, there is a very clear consent from those who are not in Congress and those who do not control the reins of financial empires.

But that also does not make it any less of an oligarchy if someone would like to see it that way.

vangoghfan eNotes educator| Certified Educator

It is possible to argue that to the extent that power becomes vested in the government, the danger of oligarchy becomes greater. It is also, of course, possible to argue that democratic government is a means of resisting the rise of oligarchy. Capitalism in the ideal sense -- which involves real, free, out-and-out competition -- can also be seen as a way of preventing the rise of oligarchy. Whether capitalism is this sense exists in the U. S. today is a matter of debate.

megan-bright eNotes educator| Certified Educator

Post number 4 was such an excellent response.

I would say that the United States has a capitalist economic system. The United States can somewhat be viewed as oligarchic in the sense that the wealthy and those in political power are most often white or white males. Granted it is not the same small group of people, but it is usually people of a certain race or gender that have held the power and wealth.

litteacher8 eNotes educator| Certified Educator
Capitalism is not a system of government, it is an economic structure. An oligarchy consists of a small group of powerful rulers. In an economic sense, oligarchy refers to a small number of companies selling similar products, and a free market means that there is free competition.