The Oligarchs’ Grip: Fusing Wealth and Power 9783111028255, 9783111027760

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David Lingelbach and Valentina Rodríguez Guerra The Oligarchs’ Grip

David Lingelbach and Valentina Rodríguez Guerra

The Oligarchs’ Grip

Fusing Wealth and Power

ISBN 978-3-11-102776-0 e-ISBN (PDF) 978-3-11-102825-5 e-ISBN (EPUB) 978-3-11-102932-0 Library of Congress Control Number: 2023941673 Bibliographic information published by the Deutsche Nationalbibliothek The Deutsche Nationalbibliothek lists this publication in the Deutsche Nationalbibliografie; detailed bibliographic data are available on the internet at http://dnb.dnb.de. © 2023 Walter de Gruyter GmbH, Berlin/Boston Cover image: Hybert Design Typesetting: Integra Software Services Pvt. Ltd. Printing and binding: CPI books GmbH, Leck www.degruyter.com

There is no peace and no rest in the development of material interests. They have their law, and their justice. But it is founded on expediency, and is inhuman; it is without rectitude, without the continuity and the force that can be found only in a moral principle. Joseph Conrad, Nostromo

Acknowledgments For both of us, this book has been a transformative, improbable, and utterly extraordinary labor of love. David began studying oligarchs, first out of necessity, but then, more and more, from horrified fascination and sneaking admiration. His journey has been a long and largely lonely one. “Oligarch studies” remains a nascent field at best, so there are few scholarly colleagues (yet) to whom one can turn. Indeed, business schools and academic journals seem to be hostile or, at best, indifferent, to the idea that oligarchs might matter. So, David has been swimming upstream with the ideas in this book for a very long time. Then we met in Bogotá in 2021, during the height of the COVID-19 pandemic and in the midst of Colombia’s most recent paro nacional. For David, Valentina (Vale) has been his intellectual soulmate. Younger, smarter, and Latina, Vale brought the perspective of an early career researcher and someone who will inherit whatever world oligarchs seem intent on building for the rest of us. She inspired him and also asked the hard and necessary questions. We are both so grateful to the Fulbright Program, which brought us together, and to our colleagues and friends at Universidad Nacional de Colombia, especially Professor Luis Alejandro Rodríguez Ramírez, head of the university’s entrepreneurship unit. And we greatly appreciate Stefan Giesen, Lucy Jarman, Mark Petrie, Anne Rudolph, and the rest of the team at De Gruyter for their confidence in this project, and their help in bringing it to the public. We want to thank the hundreds of informants who, over the past 28 years, have helped us to make better sense of oligarchs. They range from fellow academics, to businesspeople, political figures, friends, family . . . even a few oligarchs. Some discussions were formal ones – interviews, paper presentations, and responses to reviewer comments. Others were more informal – a casual comment over coffee or a brief text message that opened up new horizons for us. Except as otherwise noted, we have chosen to keep all of our conversations confidential. But these informants are the real academy in which this book’s ideas were formed. We really appreciate the helpful comments to improve the book that came from our circle of friendly reviewers: Roberto Cavazos (University of North Texas), Ellen Goldstein (international development consultant), Jim Sottile (Light & Wonder, Inc.), Ben Stupples (Bloomberg News), and David Wood (journalist and author). Others reviewed our manuscript, but wish to remain anonymous. Before coming together, each of us has incurred debts to those on whose shoulders we stand. David remembers Lincoln Bloomfield at MIT and Philip Windsor at LSE, who offered models of engaged scholarship and rigorous, big-picture thinking. They were the kinds of scholars that David always wanted to be. Academic colleagues – Ven Sriram, Murray Dalziel, Kurt Schmoke, Gordon Murray, Roger Leeds, and Celso Brunetti, to name just a few – have provided intellectual, emotional, and financial guidance and support along the way. His family members – Mom, Jane, Jenny, Catie, https://doi.org/10.1515/9783111028255-202

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Acknowledgments

and now Jacob – have been a source of love, comfort, and support over many years. David Wood and Kim Wehle (The University of Baltimore) have been very generous in helping David to develop earlier versions of this work. Valentina thanks her sister for always being there for her, her friends for helping her, and David for trusting her enough to share his life’s work.

Contents Acknowledgments

VII

Part I: Types Chapter 1 Introduction 5 The Oligarchs we will Study 9 Why are Oligarchs Important? 16 Oligarchs Increasingly Dominate Economic and Political Systems Oligarchs Cut Across the Political and Economic Spectrums 18 Oligarchs Exploit Rising Uncertainty 19 Are Oligarchs Bad? 22 Oligarchs from the Victims’ Perspectives 24 Chapter 2 What Do We Know About Oligarchs? 29 Definitions and Concepts 29 The Oligarch Literatures 34 Classifying Oligarchs 45 Doing the Math on Oligarchs: A Global and Historical Phenomenon The Math on Oligarchs: Net Worth, Power, and Strategy 49 Chapter 3 Business Oligarchs

53

Chapter 4 Political Oligarchs

87

17

47

Part II: Strategies Chapter 5 Oligarchs Are Entrepreneurial

119

Chapter 6 Friends with Benefits – Oligarch Alliances and Competition

139

Chapter 7 Waiting for the Main Chance – How Oligarchs Exploit Strategic Timing

158

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Contents

Chapter 8 Flying Under the Radar – How Oligarchs Employ Secrecy and Stealthiness

Part III: Endings Chapter 9 Oligarchs in History

205

Chapter 10 W(h)ither Oligarchs 229 What the Future Might Hold for Oligarchs 229 The Impact of Rising Authoritarianism 229 The Impact of Existential Challenges 232 Withering Oligarchs? The Long-term Rise in Economic, Political, and Social Equality 235 What the Future Might Hold for Oligarch Studies 236 Oligarch Ethics 239 Oligarch Self-governance 241 Policy Actions 242 Sanctions 246 Anti-corruption 247 Competition Policy 247 De-oligarchization 249 Transparency 251 Chapter 11 Conclusion 257 Theoretical Implications 257 Practical Implications 263 Assessing Oligarch Performance – Who’s the Greatest? Limitations of the Study 269 List of Principal Characters (in Alphabetical Order) A Selective Oligarch Chronology Appendix 1: Methodology

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Contents

Appendix 2: How We Constructed the Lingelbach-Rodríguez Oligarch Index 283 A Guide to Further Reading References

287

List of Figures About the Authors Index

307

303 305

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Part I: Types

In Part I we describe oligarchs, starting with their general characteristics (Chapters 1 and 2) and then digging deeper into their two main types: business oligarchs (Chapter 3) and political oligarchs (Chapter 4). In Chapter 1, we introduce oligarchs, explain why they are important, and bring forward for the first time our analytical model, which we develop in Part II. In Chapter 2, we review the diverse oligarch literatures, provide a typology, and describe oligarchs’ characteristics. Chapter 3 then looks at business oligarchs, illustrating their distinctive features through portraits drawn from our case studies. Chapter 4 does the same for political oligarchs.

https://doi.org/10.1515/9783111028255-001

Chapter 1 Introduction In September 1995, David was in a bit of a pickle. One that only the notorious oligarch Vladimir Putin could fix. Putin had sponsored the venture capital fund David was running in Saint Petersburg, Russia. Putin was the first deputy mayor there. David and his family were returning to Russia from vacation in Turkey. They discovered that David’s sister had obtained the wrong visa. David phoned his office, asking them to contact Putin’s office to see what could be done. David and his family arrived at the Saint Petersburg airport and were escorted into a sparsely furnished room. Two desks. At one sat a female immigration official. At the other: Putin. Putin was there, but he wasn’t there. He was gray, featureless, and yet very much in charge. Thinning hair. Nondescript suit. Friendly but formal. A bit shorter than David. Both were buff . . . not. Whatever muscle tone he had in the past, Putin now had a bureaucrat’s body. They communicated in their usual mixture of Russian, English, and German. Papers were signed, stamped, and passed back and forth between the official and Putin. Back and forth. In silence. Having never met David’s sister before, Putin vouched for her. She got her visa. They thanked Putin and left. Why the help from this already powerful person who had many other claims on his time? Putin owed David and his family nothing. His gesture did him no obvious good. What was he thinking? As one of the world’s most powerful people, and with wealth we conservatively estimate at $6 billion, Putin is an oligarch. Four years later, another oligarch, another enigmatic gesture. In March 1999, David stood in the Moscow office of Mikhail Fridman. He was and is – despite sanctions – one of the world’s wealthiest oligarchs. Fridman’s office was spacious but nondescript. It was housed in a massive “modern” Soviet-era office building. That structure was arrayed like a beached whale along Academician Sakharov Avenue. The Leningradsky train station – where Anna Karenina first met Count Vronsky – wasn’t far away. As usual, Fridman was cordial but direct. He was dressed in an off-the-rack suit that did not flatter his figure. A younger Fridman could have starred in a Russian Big Bang Theory. Fridman was Misha to his friends. He and David weren’t friends. They concluded some difficult debt restructuring business. Then Fridman reached across his desk and smiled knowingly. He handed David his dog-eared copy of Jon Krakauer’s Into Thin Air. This book is an account of the fatal 1996 ascent of Mount Everest. That enigmatic smile has never left David. Leaving Fridman’s office, he wondered: “What was he trying to tell me? That my bank’s investment in his bank was going to disappear into thin air? That it was dangerous for one or both of us to be trying to climb this high in our business lives? Maybe he was only trying to get some clutter off his desk.” Then and now, Fridman was and is an oligarch. With wealth estimated at https://doi.org/10.1515/9783111028255-002

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Chapter 1 Introduction

$12 billion, and the behind-the-scenes power that enabled much of that wealth, Fridman is different than Putin. But, as we will see, both oligarchs use the same strategies to gain wealth and power. What did Putin’s and Fridman’s gestures mean? The key question this book answers is: How do oligarchs like them dominate our world? David has spent more than 25 years trying to answer this question. He is convinced that these gestures opened a wormhole into how people like Putin and Fridman thought. We two co-authors first met in 2021 in Bogotá, Colombia. The city then was in the midst of the pandemic and the paro nacional. The two of us saw clearly that we had both experienced oligarchs, but in very different ways. David had been their banker and long-time student. But his stories about Putin over coffees at Juan Valdez brought up strong emotions for Valentina about oligarchs. She has been their victim and object. She grew up in a society dominated by oligarchs of one sort or another. Her country has been ruled by them – directly or indirectly – since Colombia’s independence from Spain in 1810. That society had been traumatized by violence generated in part by oligarchic rule. That violence now lurked below the surface but was quick to re-emerge. That violence had killed 450,000 Colombians since 1985 and displaced over seven million, creating one of the largest internally displaced populations in the world. Oligarchs have shaped and would continue to shape the opportunities available to Valentina and millions of other young Colombians. She is reminded of this every day, when she walks by a fancy newish engineering building on her campus at Universidad Nacional de Colombia. That building was funded by the university’s wealthiest alumnus and a leading Colombian oligarch, Luis Carlos Sarmiento. He is just one of the latest in a long line of oligarchs stretching back to Simón Bolívar, Colombia’s founder. What is an oligarch? In this book, we define an oligarch as someone who secures and reproduces wealth or power, then transforms one into the other. They fuse wealth and power. Oligarchs are those relatively rare humans who can do three complex activities well: generate wealth, gain power, and make the transition between the two. The oligarchs on which we focus typically have a net worth of at least $20 million. Their power is sufficient to be noticed by those who research the powerful. Oligarchs dominate our world. What is the evidence for this claim? In 2023 approximately 10% of the world’s population is governed by an oligarch serving as head of state or government, generating approximately 11.9% of global GDP (PPP) in 2021. These percentages are comparable to those of people across the world who have disabilities, suffer from chronic hunger, live in extreme poverty, or experience mental health issues. Beyond those who are directly ruled by oligarchs are the billions of others who have been influenced by them, or have had their thoughts and actions shaped subtly by oligarchs’ work. Unless you are a hermit living off the grid, you are very likely to have had your life touched by an oligarch. And not just touched. Shaped in ways you may only dimly perceive. Shaped in ways that both open and limit your opportunity set. Oligarchs have come to dominate the way we live and work.

Chapter 1 Introduction

7

And how exactly do oligarchs dominate our world? In this book, we develop a simple analytical model – the Lingelbach-Rodríguez Oligarch Model (LROM) – to answer this question (Figure 1.1):

Entrepreneurial

Friends with benefits

Waiting for the main chance

Secrecy and stealthiness

Figure 1.1: Lingelbach-Rodríguez Oligarch Model.

As we explain in greater detail in Chapter 5, this model describes a process of four strategies that oligarchs employ to secure and reproduce wealth and power, then transform one into the other. How did we develop this model? More details can be found in Appendix 1, but here’s a brief sketch. After determining what type of processes oligarchs were most likely to employ, we next developed some propositions to explain how oligarchs secured and reproduced wealth and power, then transformed one into the other. The propositions were based on our observations of oligarch decision-making and actions over more than 25 years. Ultimately, we created a framework consisting of four non-sequential strategies. First, oligarchs are entrepreneurial. They employ elements of effectuation (Sarasvathy, 2001) to develop opportunities to acquire wealth and power, and then make the transition between the two. In this way, they utilize mechanisms of entrepreneurial action. Second, oligarchs partner with other stakeholders – government officials, other oligarchs, and ordinary businesspeople – using a “friends with benefits” approach of repeated coupling and decoupling. Third, like tycoons (Villette and Vuillermot, 2009), oligarchs employ strategic timing, waiting for their main chance to secure and reproduce wealth and power, and then to transform one into the other. Fourth, as they develop opportunities, partnerships, and strategic timing, oligarchs emphasize the virtues of secrecy and stealthiness (Stohl and Stohl, 2011) to fly under the radar. Oligarchs are entrepreneurial and employ a modified form of effectuation, a mechanism of entrepreneurial action. Effectuation was first observed among expert entrepreneurs, those who had launched more than one startup successfully. The high levels of uncertainty that entrepreneurs face is strikingly similar to that faced by oligarchs as they navigate to and then between wealth and power. To control that uncertainty, oligarchs begin their use of effectuation by determining their means. They assess their personal characteristics, knowledge bases, and networks. Next, oligarchs evaluate what they can afford to lose, ensuring that this amount of money, time, or missed opportunity isn’t exceeded. Finally, when the inevitable and often negative surprise hits, oligarchs lean into that crisis, leveraging the new opportunities that arise.

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Chapter 1 Introduction

We will not talk much about Donald Trump, one of the more famous oligarchs of recent years. But he is a good example of how oligarchs use effectuation. Trump shaped his 2016 presidential campaign and presidency around his unusual means: his deal-making and self-promotion skills, propensity for risk-taking, and networks somewhat disconnected from the American political establishment. Trump’s limited commitment of his own financial resources to his campaign is an example of using effectuation’s affordable loss principle. Trump’s response throughout his checkered business career to repeated setbacks, including bankruptcies, is an example of leaning into surprise. Trump effectuated. Oligarchs effectuate. The oligarchs’ second strategy – never getting too close to those partners with whom they are co-creating – modifies their use of effectuation. Oligarchs repeatedly couple and uncouple with their partners, acting more like friends with benefits than individuals in a committed relationship. The temporary and often short-term nature of these relationships ensures that effective oligarchs are not captured by their partners. It also limits the long-term nature of their oligarchic enterprise. Oligarchs are not loners, choosing instead to form intensive but short-term partnerships with others with whom they co-create businesses, political campaigns, and administrations. Trump’s relationship with Steve Bannon during the 2016 presidential campaign comes to mind here, along with the host of former allies he has left in his wake.1 The oligarchs’ third strategy – waiting for the main chance to pounce on the big deal – reflects the winner-take-all nature of contemporary economic and political life. Waiting for the right pitch (to use an American baseball term) is more important for an oligarch than swinging at whatever comes close. This strategy requires judgment and a particular type of patience. Oligarchs think much the same way. They accumulate their wealth or power in one big deal, then make the transition between wealth and power in a second big deal. Donald Trump made his big move from wealth to power in 2016, when his candidacy turned into election as America’s 45th president and one of the world’s most powerful people. In Vladimir Putin’s case, his first big deal – the one that brought him to power – was his appointment in 1999 as Boris Yeltsin’s last prime minister and heir apparent. The oligarchs’ fourth strategy – flying under the radar to avoid attention – responds to the inherently vulnerable nature of their position. This vulnerability can be difficult for non-oligarchs to understand. Wealth does not guarantee power. Power does not ensure wealth. And both are fragile. Democracies in particular have mixed feelings about oligarchs and their ilk. While waiting for the main chance, therefore, effective oligarchs hide themselves in plain sight. In their early stages they don’t seek publicity or celebrity. They don’t like to give interviews or otherwise reveal to the public their intentions. They

 Are oligarchs more likely to be sociopaths or psychopaths than the general population? We are grateful to Roberto Cavazos for this question.

The Oligarchs we will Study

9

are afraid – and rightly so – that such a revelation will be seized upon by other oligarchs, closing the window that might take them to the summit where wealth and power meet.2 Oligarchs are rarely prominent as they accumulate wealth or power. Mikhail Fridman – a master of this craft – accumulated wealth later than many like him in Russia and still remains relatively unknown. This has been true even with the sanctions imposed on him due to the Ukraine war. Other Russian oligarchs – Mikhail Khodorkovsky, Boris Berezovsky, and Vladimir Gusinsky, to name three – flew too close to the sun and paid the price. The first spent 10 years in a Russian prison for being too prominent. The second self-exiled to the United Kingdom and died in 2013 under questionable circumstances. The third self-exiled to Israel, where he lives with a fraction of his once great fortune and power.

The Oligarchs we will Study The findings from this book are based on case studies of 16 oligarchs active since 1946 (Figure 1.2):3 Oligarch

Region, country

Type

Wealth (June , USD billions, our estimate) See Figure . for details

Power (number of times ranked in three major studies) See Figure . for details

East Asia and Pacific Thaksin Shinawatra

Thailand

Business

.



Tung Chee-hwa

Hong Kong

Business

.



Europe and Central Asia Mikhail Fridman

Russia

Business

.



Vladimir Putin

Russia

Political

.



Yulia Tymoshenko

Ukraine

Business

.



Figure 1.2: The Oligarchs in This Book.

 The question of how oligarchs manage their exposure to other oligarchs is an important one, deserving further investigation.  Orwell (1946/1968) asserted that “[f]or quite fifty years past the general drift has almost certainly been towards oligarchy” (p. 177). We’ve chosen to focus on the post-World War II era to capture the more recent acceleration in the number of oligarchs. However, Orwell’s comment helps to make the point we advance throughout the book: oligarchs are a historical phenomenon.

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Chapter 1 Introduction

(continued) Oligarch

Region, country

Type

Wealth (June , USD billions, our estimate) See Figure . for details

Power (number of times ranked in three major studies) See Figure . for details

Latin America & the Caribbean Nayib Bukele

El Salvador

Business

.



Alejandro (Alex) Char

Colombia

Business

.



Sebastian Piñera

Chile

Business

.



Middle East and North Africa Mohammed bin Laden

Saudi Arabia

Business

.



Rafic Hariri

Lebanon

Business

.



North America Al Gore

United States

Political

.



Charles Koch

United States

Business

.



Larry Page

United States

Business

.



Political

.



South Asia Asif Ali Zardari

Pakistan Sub-Saharan Africa

Isabel Dos Santos

Angola

Political

.



Cyril Ramaphosa

South Africa

Political

.



Figure 1.2: The Oligarchs in This Book.

These cases were selected from our dataset, which we created in 2018. The dataset currently contains 178 oligarchs. As we elaborate in Chapter 2, oligarchs possess three types of power: decision-making, agenda-setting, and ideological (Lukes, 2021). Of the oligarchs in our dataset, 123 are decision-making, 34 are agenda-setting, and 21 are ideological. While incomplete, this database is believed to be the most comprehensive of its kind in the world. Five criteria were used to select our sample from the dataset. For the 10 decisionmaking oligarchs selected, first, the case subject must own or control at least $20 million USD (current dollars) in net worth. Second, the subject must have been either a head of

The Oligarchs we will Study

11

state or government of a recognized country or political entity. We made one exception by including Char to gain an appropriate weighting of Latin American cases. Third, the subject must have one or more rigorous biographies or equivalent studies written about them. Fourth, only subjects active since 1946 were selected. Fifth, subjects were selected to ensure that a balanced mix of institutional contexts and geographical settings were represented, as well as an appropriate balance of oligarch types and of other relevant demographic variables, such as gender. To complement the emphasis in the current literature on political oligarchs, 11 of the 16 cases are of business oligarchs. To select the four agenda-setting and two ideological oligarch case studies, four of the five criteria used for selecting decision-making oligarchs were employed to maintain rigor and consistency (the head of state/government criterion was not relevant). A fifth criterion – exercising significant power through agenda-setting or ideology – was included. Case selection in these two categories was made by the authors based on “judgment calls” that heavily weighted the known impact of possible cases and, in one instance, unique data access. By choosing to focus on these oligarchs, we recognize that there are thousands of other oligarchs in the world today, and likely tens of thousands across history. Thus, our dataset and this book are just a start, albeit a robust one, in better understanding oligarchs. A few examples of those oligarchs we did not include in our book will help to give a more rounded picture. For example, some oligarchs are legislators. In China, several billionaires serve in its National People’s Congress. These include Wang Jianlin (once China’s richest person) and Ma Huateng, founder of Tencent. Other oligarchs are cabinet ministers. Mohamed Mansour is one of Egypt’s wealthiest people and served as minister of transport in one of Hosni Mubarak’s cabinets. Still other oligarchs work at the regional, state, or local levels. Mohamed Nur was a successful businessman in the UK before returning to Somalia to serve as mayor of Mogadishu. Savitri Jindal is currently the richest woman in India, with a net worth (including family members) estimated at $17.9 billion by Forbes. She is the chair of the Jindal Group and a former minister in the Haryana state government. She took over her husband’s business interests after he died in a 2005 helicopter crash. Some oligarchs mix ministerial and regional roles as decision-makers, such as Blairo Maggi, heir to his family’s Brazilian soybean empire. With a net worth estimated by Forbes at $1.6 billion, he has served as governor of that country’s Mato Grosso state and as minister of agriculture. The most difficult oligarchs to observe are those whose power is either agendasetting or ideological. For example, in Latin America, everyone “knows” oligarchs have exercised this combination of wealth and power for centuries. And the results of their work are clear, mostly in unequal income and wealth distributions. We try to capture the significance of these oligarchs through case studies like Alex Char, the heir to a large Colombian family conglomerate that dominates politics along that country’s Caribbean coast. We recognize that such cases – oligarchs who truly are hiding in plain sight – are centrally important to Latin America’s economic, political, and social development over the past 500-plus years.

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Chapter 1 Introduction

Our book is based on hundreds of hours of interviews and conversations conducted since 1995, supplemented with archival research since 2012. We have spoken with three of the oligarchs on which this account focuses (Fridman, Gore, and Putin), as well as with other oligarchs not included in the study, academics, journalists, businesspeople, financiers, government officials, non-profit executives, and ordinary citizens. We have visited, lived, and worked in the countries of 14 of our 16 oligarch subjects. Our archival research includes internal documents, contemporary journalistic accounts, literature reviews, and many happy hours in actual archives, ranging from the Library of Congress to the Communist Party archives in Lviv, Ukraine. Appendix 2 provides a fuller description of our research methodology. Each of the 16 oligarchs we study has a distinctive story to tell, and those stories help illuminate the process by which they secure and reproduce wealth and power, and then transform one into the other. Bin Laden fathered Osama, whose impact on the geopolitical order continues to this day. Bukele is inventing a social media-driven “millennial authoritarianism” that has been very popular both with Salvadorans and others in the Americas, even as it raises human rights concerns. Char and his family have created a dynasty that dominates economic and political life on Colombia’s Caribbean coast. He is representative of the shadowy oligarchs that have dominated Latin America behind the scenes for centuries. Dos Santos is one of two female oligarchs in our study and a case study in an oligarch’s fall from grace. Fridman, despite his recent decline in fortune due to sanctions imposed after Putin’s 2022 invasion of Ukraine, remains one of the most subtle and ruthless oligarchs we study here. Gore’s failure to become a head of state or government paved the way for his enormous power as a climate change activist. Hariri is perhaps the most tragic figure in our book, a mixture of greed and civic responsibility destroyed by Lebanon’s continuing sectarian violence; his children continue to live under his shadow. Koch’s funding of right-wing causes has been one of the principal drivers of America’s current political dysfunction, a conclusion he has reached himself. Without really intending to, Page has exploited digitalization to become among the wealthiest and most powerful oligarchs we will explore in this book. Like Hariri, Piñera is another tragic figure – a Harvard-trained Fulbrighter whose tone deafness sealed his fate during Chile’s 2019 social protests. Putin, of course, looms large in this book as its most important figure, whose legacy remains TBD but is increasingly clouded by the Ukraine war. Ramaphosa is likely to be an important historic figure as a key actor in apartheid’s ending, although ethical considerations may cloud his legacy. Shinawatra’s wealth-fueled populist politics presaged Trump and continue to echo through Thai politics to this day. Tung gives us a glimpse into the role of oligarchs in the Chinese context. Tymoshenko is the second female oligarch we study and an example of Ukraine’s oligarch-rich environment. Zardari gives us an insight into the South Asian oligarch space; his story is marked, like Hariri’s, with violence. A diverse lot of oligarchs. Reflecting the oligarch population, 14 of the 16 case studies are male; 62% are people of color (of African, Hispanic/Latinx, Asian, Middle

The Oligarchs we will Study

13

Eastern, and/or Indigenous descent); 44% are Christian, 25% have not declared a religious affiliation, 19% are Muslim, and 6% each are Jewish or Buddhist; 81% completed at least the bachelor’s level of university education. All of the oligarchs we study in this book have been married, with an average of 1.3 spouses per oligarch.4 They are prolific, with an average of 3.2 children. The average age at which they became an oligarch is 44 years, ranging from a very youthful 24 years (Isabel Dos Santos) to a more senior 61 years (Sebastian Piñera). These 16 oligarchs originate from 13 different economies. Five of these economies are relatively large and have GDPs (PPP) greater than $1 trillion (United States, Russia, Saudi Arabia, Thailand, and Pakistan). Three more are medium-sized and have GDPs (PPP) between $500 billion and $1 trillion (Colombia, South Africa, and Ukraine). The remaining five are small and have GDPs (PPP) below $500 billion (Angola, Chile, El Salvador, Hong Kong, and Lebanon). We have chosen not to include oligarchs from China and India in the core group of oligarchs we study, although they are included in our database and historical oligarchs from these geographies are discussed in Chapter 9. Corruption and state capture in China (Alonso, Palma, and Simon-Yarza, 2022; Shum, 2021) and India (Crabtree, 2018) are well documented, offering a seedbed from which oligarchs can emerge. Contemporary Chinese and Indian decision-making oligarchs are predominantly active at the sub-national and legislative levels, and we have chosen to focus on the national level in this book. Agenda-setting and ideological oligarchs are particularly difficult to study in these relatively more opaque settings, and we have assessed that the data challenges remain too large to generate reliable information. We are hopeful that future studies will look into these contexts more closely. Some readers may also notice that our European cases (Fridman, Putin, and Tymoshenko) are drawn from the former Soviet Union, and that oligarchs situated in Western, Central, and Eastern Europe have not been included in this study. There are two reasons for this choice. First, we include several historical (pre-1946) Western European oligarchs in Chapter 9 (e.g., Leopold II), and there are other historical examples of European agenda-setting oligarchs such as the businesspeople who backed Hitler (De Jong, 2022; Vuillard, 2017; Manchester, 2003). Second, since 1946, the Western, Central, and Eastern European political orders have produced only three notable decision-making oligarchs: Italy’s Silvio Berlusconi, who has been studied extensively by others (e.g., Ben Ghiat, 2020; Friedman, 2015; Ginsborg, 2004); Hungary’s Viktor Orbán (Szelényi, 2022); and Turkey’s Recep Tayyip Erdoğan (Cagaptay, 2020).5

 We exclude Mohammed bin Laden from the data about children and wives in this section. He had 22 known wives (and was getting ready to marry a 23rd when he died in a plane crash) and had at least 52 children, including Osama bin Laden.  Central and Eastern Europe have produced several lesser decision-making oligarchs since 1946, including Babiš (Czech Republic), Golob (Slovenia), Kiska and Matovič (Slovakia), Pacolli (Kosovo), and Petkov (Bulgaria).

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Chapter 1 Introduction

These cases are arrayed along the wealth and power spectra as follows in Figure 1.3: Relatively higher power

Relatively lower power

Relatively higher wealth ($ billion or greater)

Quadrant I Koch Page Putin

Quadrant II Bin Laden Dos Santos Fridman Hariri Piñera Shinawatra Tung Zardari

Relatively lower wealth (Less than $ billion)

Quadrant III Gore Ramaphosa

Quadrant IV Bukele Char Tymoshenko

Figure 1.3: Oligarchs Along the Wealth and Power Spectra.6

The über-oligarchs (Quadrant I) all have net worths estimated at $2 billion or more and exercise substantial power along the decision-making (Putin), agenda-setting (Koch) or ideological (Page) dimensions. These are the most impactful oligarchs we study. At the other end of the distribution is Quadrant IV, where both wealth and power are fairly limited in comparison to other oligarchs in this book. For example, Bukele is the head of state of a small and relatively poor country, and is modestly wealthy even in comparison to other Salvadoran oligarchs. Still, despite limited impact, Bukele is an important case study as an early millennial oligarch. Quadrant II is the most populous and contains many “mainstream” business oligarchs who may be relatively wealthy, but have exercised limited power due either to their smaller and/or less wealthy country of origin (Hariri, Piñera, Shinawatra, and Tung), the limited powers of their office (Zardari), or because their agenda-setting power has been more limited, by choice (Fridman) or due to institutional constraints (Bin Laden and Dos Santos). Fridman is a particularly interesting oligarch, given his

 Categorization as “relatively more powerful” or “relatively less powerful” is based in part on Figure 2.6, adjusted by the authors. For example, Ramaphosa is not ranked by any of the three ranking systems depicted in Figure 2.6, yet the authors categorize him as “relatively more powerful” based on his central role in ending apartheid in South Africa. Conversely, Hariri and Shinawatra are both ranked in Figure 2.6, but the authors have categorized both as “relatively less powerful.” In Hariri’s case, this categorization reflects Lebanon’s relatively minor role in the global economy, while in Shinawatra’s case this categorization reflects the work-in-progress status of the populism that he introduced into Thailand’s politics and its modest impact on the country’s formal and informal institutions to date.

The Oligarchs we will Study

15

multiple transitions between wealth and power and the subtlety of his ascent until the 2022 sanctions. Quadrant III oligarchs have substantial power (Gore due to his ideological reframing of climate change as an existential threat, Ramaphosa as head of state of a BRICS member), but more limited wealth relative to others. Oligarchs must do three things successfully: acquire wealth, acquire power, and make the transition between the two. That transition is accomplished using the same four-strategy process that oligarchs use to gain wealth and power. The following figure describes the transition(s) that the oligarchs we study in this book have made (Figure 1.4):

Oligarch

Year They Became an Oligarch

Transition type

Transition detail

Bin Laden



From wealth to power

Provided funding to Saudi government during financial crisis

Bukele



From wealth to power

Elected president of El Salvador in free and fair election

Char



From wealth to power

Elected governor of Atlántico department in Colombia

Dos Santos



From power to wealth

Family connections enabled access to wealthproducing business and investment in Angola

Fridman



From wealth to power, from power to wealth

Helped fund Russian president Yeltsin’s presidential re-election, used connections to acquire assets cheaply and resell them later to the state

Gore



From wealth to power, from power to wealth

Family inheritance enabled political success, position as former US vice president enabled access to investment opportunities; initial transition when writes and stars in An Inconvenient Truth

Hariri



From wealth to power, from power to wealth

Business wealth paved way to selection as Lebanese prime minister, once in office used access to generate further wealth; initial transition when first appointed as prime minister

Koch



From wealth to power

Donated funds to US think tanks, political campaigns, and anti-climate change efforts; transition when co-founds Cato Institute

Page



Wealth and power commingled

Founded US-based Google; transition when Google becomes dominant search engine

Figure 1.4: When They Became Oligarchs – Transitions Between Wealth and Power.

16

Chapter 1 Introduction

(continued) Oligarch

Year They Became an Oligarch

Transition type

Transition detail

Piñera



From wealth to power

Business wealth funded Chilean presidential campaigns and related political efforts; transition when first elected president

Putin



From power to wealth

Political positions enabled access to wealth acquisition opportunities; initial transition when appointed Russian prime minister

Ramaphosa



From power to wealth, from wealth to power

Senior ANC role in South Africa enabled access to black empowerment-related and other investment opportunities; transition when founds investment firm

Shinawatra



From wealth to power

Business success in Thailand enabled entry into politics as relatively independent figure; transition when appointed prime minister

Tung



From wealth to power

Hong Kong-based family company bailed out by Beijing, resulting in his loyalty which translated into selection as first chief executive

Tymoshenko



From wealth to power

Business success provided access to political connections; transition when appointed Ukrainian prime minister

Zardari



From wealth to power, from power to wealth

Family business wealth provided access to politics, political position provided new investment opportunities; initial transition when elected president of Pakistan

Figure 1.4: When They Became Oligarchs – Transitions Between Wealth and Power.

Eight oligarchs in our study transitioned from wealth to power, three from power to wealth, four transitioned in both directions, and one (Page) commingled wealth and power from the outset. Six made their transitions in the 2000s, five in the 1990s, two in the 2010s, and one each in the 1940s, 1970s, and 1980s.

Why are Oligarchs Important? Oligarchs have become increasingly consequential political and economic actors. They are important for three main reasons. First, they increasingly dominate economic and

Why are Oligarchs Important?

17

political systems. Second, oligarchs cut across the political and economic spectrums. Third, they exploit rising uncertainty.

Oligarchs Increasingly Dominate Economic and Political Systems One metric we use to measure the influence of oligarchs around the world is to track the number of them who serve as heads of state and government. We believe this measure to be a proxy for the total number of oligarchs. Since the end of World War II, this number has steadily increased. This rise has been particularly notable since 1988, as shown in the below figure: Number of Oligarchs as Heads of State or Government 25 20 15 10

0

1946 1948 1950 1952 1954 1956 1958 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022

5

Number of Oligarchs as Heads of State or Government

Figure 1.5: The Rise of the Oligarchs 1946–2023. Source: Calculations in May 2023 by Lingelbach and Rodríguez Guerra (authors)

Not only has the number of countries ruled or governed by oligarchs been increasing, the percentage of the world’s population under their rule has also increased. In 1988, according to our calculations, 5.2% of the world’s population lived under oligarchs. By 2023 that number had almost doubled to 10%. Similarly, the impact of oligarch-run economies has also increased. While in 1988 no oligarch-run economies ranked in the top 50 in the world, in 2023 eight of them did. These include four in the top 20: the United Kingdom, Russia, Turkey, and Saudi Arabia. When we move beyond heads of state and government, the dominance of oligarchs in our contemporary world becomes even clearer. From Larry Page’s Google, which has transformed how we think and act, to Charles Koch’s funding of the American radical right, oligarchs have profoundly shaped the economic and political systems in which we live.

18

Chapter 1 Introduction

Oligarchs Cut Across the Political and Economic Spectrums Oligarchs exist and prosper in a wide variety of political and economic systems: democracies and autocracies; free-market economies and those where the state plays a big role; rich countries and poor. If we take a snapshot of oligarch-run countries in 2023, we see that oligarchs exist in a wide variety of political systems. Using Freedom House’s Global Freedom Score as one measure, 45% of these countries are partly free, 35% are not free, and 20% are free.7 Similarly, using the Heritage Foundation’s Index of Economic Freedom, we can assess whether oligarch-ruled economies are free market-oriented or not. Here, 61% are some variety of unfree, while 39% are a variety of free.8 Oligarch-run countries also vary by income level, with 32% classified as high income by the World Bank, 37% upper middle income, 26% lower middle income, and 5% low income.9 Relatedly, using Gapminder’s four income levels (from the highest level of 4 to the lowest level of 1), 42% are classified as level 4, 37% as level 3, 16% as level 2, and 5% as level 1. Oligarchs can and do exist anywhere. Oligarchs have also existed in societies with a wide variety of formal and informal institutions. What are institutions? They are the “rules of the game” in a society, or, more formally, “the humanly devised constraints that shape human interaction” (North, 1990, p. 3). Institutions have regulatory, cognitive, and normative pillars (Scott, 2014). Regulatory pillars are more formal and consist of laws, regulations, and the enforcement of both. By contrast, cognitive and normative pillars are more informal. They are concerned with the norms and standards by which societies regulate themselves. Using an index of formal institutional quality (Li and Zahra, 2012) based on data from the Worldwide Governance Indicators project at the World Bank, the 16 oligarchs in our study operate on average in countries with below institutional quality. But they can exist in both very high levels of formal institutional development (e.g., the United States, Hong Kong), as well as those with quite low levels (e.g., Pakistan, Lebanon). Similarly, when looking at a culture’s level of informal institutions, oligarchs can prosper with both high and low levels of the main measures of informal institutions: power distance, individualism, uncertainty avoidance, masculinity, long-term orientation, and indulgence (Hofstede, 2010). On average, they are found in societies with somewhat higher levels of power distance and uncertainty avoidance, and somewhat lower levels of indulgence. As far as formal and informal institutions are concerned, Thailand in 2002 (the year after Thaksin Shinawatra became prime minister) is an archetypal oligarch society.

 Freedom House does not provide a Global Freedom Score for Artsakh.  The Index of Economic Freedom does not assess several oligarch-ruled economies, including Abkhazia, Libya, and Artsakh.  Abkhazia and Artsakh are not ranked by income level by the World Bank.

Why are Oligarchs Important?

19

Oligarchs Exploit Rising Uncertainty Are there some common themes that contribute to an oligarch’s rise or, conversely, hold them back? Let’s start with the Lingelbach-Rodríguez Oligarch Model. Why, as our model suggests, do oligarchs behave entrepreneurially? Why do they have many friends with benefits? Why do they wait for their main chance? Why do they behave secretly and stealthily? All of these strategies, we believe, result from institutional change. Higher levels of institutional change cause higher levels of uncertainty, which is the seedbed for opportunities that oligarchs seek to develop. Oligarchs are masters of uncertainty. In addition to returns on capital exceeding economic growth rates (Piketty, 2014) and Kuznets waves creating macro changes (Milanovic, 2016), the rise of the oligarchs can also be understood as the result of institutional change due to the global conflict variously described as the “long war” (1914–90) (Bobbitt, 2002) or the “short twentieth century” (1914–91) (Hobsbawm, 1994). This conflict was fought primarily to determine what type of 20th-century industrial state – fascist, communist, or democratic – would become the dominant form to replace 19th-century imperial states. The outcome, as claimed by Bobbitt, has been to replace the nation-state with the market-state (Crace, 2009). Market-states maximize opportunities for their citizens, rather than their welfare. Bobbitt (2002) identifies three types of market-states. First, the entrepreneurial market-state minimizes state intervention in the economy and the lives of its citizens. The United States is one example. Second, the mercantile market-state employs a strong central government to maximize international competitiveness and ensure social cohesiveness. Many Asian economies fit into this category; Thailand is one such economy included in our study. Third, the managerial market-state advocates for free and open markets with a regional trading system, pursuing the goal of social equality. Most of contemporary Europe fits into this category. Oligarchs have prospered in this emerging system of market-states, which integrate wealth and power to a greater degree than nation-states have done. They have also prospered amidst the resultant institutional change, which has created new wealth- and power-generating opportunities. In examining the impact of institutional quality and change on oligarch development, we use 1996–2020 data from the World Bank’s Worldwide Governance Indicators program and a composite index of formal institutional quality developed in Li and Zahra (2012). The following figure (Figure 1.6) depicts how the oligarchs in this study relate to these data: These results suggest that oligarchs arise in a wide variety of institutional and institutional change contexts. Looking more qualitatively beyond formal institutional change (North, 1990), some oligarch-intensive societies have also experienced structural breaks or critical junctures that have fractured existing institutions and scrambled political and economic opportunity sets. A significant number of these societies were impacted by the

20

Chapter 1 Introduction

Initial formal institutional quality >

Initial formal institutional quality $B)

Relatively moderate degree of business success (net worth $–B)

Relatively low degree of business success (net worth < $B)

Hariri Koch Page

Bin Laden Fridman

Bukele Char Piñera Shinawatra Tung Tymoshenko

Figure 3.1: Business Oligarch Success.

Based on this assessment, the majority of business oligarchs we study on average have a relatively low degree of business success. And there is a substantial bias in our analysis. We study business oligarchs who were effective enough to generate substantial net worths and power positions. In this study, what we have not focused on are those aspiring oligarchs who had similar initial conditions and opportunities to those we have studied, but did not succeed. Or they succeeded, then failed. So, this conclusion must be taken with a grain of salt. To gain a better understanding of the success of business oligarchs, we have looked at matched pairs of them. One suggestive matched pairing of an effective oligarch with a less effective one could be the combination of Fridman with another oligarch who started in Russia at the same time, but fell from grace: Boris Berezovsky.32 Berezovsky was older than Fridman, better educated, and more of a dealmaker and corporate raider than an entrepreneur. And, from the beginning, he was closer to power. In 1996 he was appointed the deputy secretary of Russia’s Security Council and was the government’s principal interlocutor with Chechnya during the First Chechen War. In 1997 his net worth peaked at $3 billion, according to Forbes. But Berezovsky, despite playing a role in Putin’s accession to power, did not fare well in the Putin era. After publicly criticizing Putin, he moved to the UK in 2000, where he remained until his death under questionable circumstances in 2013. Before that, his allies Litvinenko and Patarkatsishvili died similarly. The essential difference between Berezovsky and Fridman is that Fridman read Putin better than Berezovsky did. He avoided coming into conflict with him. Fridman was more of a businessperson, while Berezovsky was more of a politician. And Fridman was the superior oligarch. Business oligarchs have some common sources of wealth. Examining these sources may give a better idea of how capable these oligarchs are as businesspeople. Most business oligarchs operate in lower-technology industries, with energy and construc-

 For the record, it must be noted that David’s bank lost money to a Berezovsky-controlled bank due to a clerical error.

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83

tion the two most common. Industry attractiveness is a function of the economic moats that firm incumbents can construct and maintain. These moats are synonymous with sustainable competitive advantage, which is the ability of a business to generate high returns on capital for extended periods of time. As described by Warren Buffett, “The key to investing is [. . .] determining the competitive advantage of any given company and, above all, the durability of that advantage. The products or services that have wide, sustainable moats around them are the ones that deliver rewards to investors” (Buffett and Loomis, 1999, as quoted in Brilliant and Collins, 2014, pp. 2–3). One rule of thumb is that returns on capital in excess of 15% over 10 or more years indicates a sustainable competitive advantage (Greenwald and Kahn, 2007). Economic moats can be developed from five sources: intangible assets, cost advantage, switching costs, network effect, and efficient scale. Intangible assets include brands, patents, and licenses. Cost advantage refers to the ability to provide goods or services at a lower price than rivals, and includes economies of scale. Switching costs are one-time inconveniences or expenses incurred by customers moving from one product or service to another. The network effect happens when a good’s or service’s value increases as more people use it. Efficient scale indicates markets of limited size that can be served effectively by just one or a few firms (Brilliant and Collins, 2014). The greatest businesses have one or more large economic moats that prevent competitors from entering the market and reducing incumbent profitability. To the extent that a business oligarch owns or controls a business with strong economic moats, their wealth is likely to be larger and more secure. So how do our business oligarchs stack up? Figure 3.2 offers our assessment. What is striking about the analysis in Figure 3.2 is the large number of business oligarchs (five of 11) who have weak (or even no) economic moats in their principal businesses. In the cases of four of the five oligarchs with weak moats, government connections were a principal reason for the weakness of these moats. In short, the economics of these oligarchs’ businesses are unattractive because profitability depends on the whim of politicians and bureaucrats. This assessment does not take away from the cleverness of these oligarchs in manipulating the political system to their business advantage. But it does recognize that, absent that cleverness, their wealth is likely to be significantly lower. An excellent example of this vulnerability is Fridman. He moved to the UK in 2015, following the 2013 sale of his principal business, TNK-BP, and the establishment of LetterOne as an offshore holding company. While he maintained a number of businesses in Russia (e.g., Alfa-Bank), Fridman’s move was likely an attempt to diversify away from Russia and reduce the ability of Putin (with whom he maintained good relations) to control or influence him. However, in 2022, Fridman was sanctioned by the EU and UK, and his assets in those domiciles became illiquid. His businesses became vulnerable as a result, and his net worth fell from $15.5 billion in 2021 to $11.8 billion following Russia’s invasion of Ukraine in February 2022. His net worth has since recovered somewhat, but appears to be substantially illiquid. In March 2023, Fridman and his business partner Petr Aven announced the sale of their stakes in

84

Chapter 3 Business Oligarchs

Business oligarch

Primary industry

Economic moat requirements

Assessment

Bin Laden

Construction

Cost advantage

Weak – relied on speed to completion and government connections

Bukele

Consumer products Brand and cost distribution advantage, sometimes efficient scale

Moderate – based mainly on product brand (Yamaha), but only distributor in market

Char

Consumer products Cost advantage, brand, retail efficient scale

Strong – has regional near-monopoly due to political connections

Fridman

Oil and gas

Cost advantage

Weak – based on government connections, joint venture partner’s technology Has become a more diversified investor recently, but constrained by sanctions

Hariri

Construction

Cost advantage

Weak – based mainly on speed to completion and government connections, similar to Bin Laden

Koch

Oil and gas

Cost advantage

Strong – refining operations have built-in raw materials advantage

Page

Internet services

Intangible assets, network effect

Strong – dominant search player, now diversifying, some recent government regulatory action

Piñera

Banking

Cost advantage, switching costs

Strong (initially) – first in market

Shinawatra

Telecommunication Network effect, efficient Strong – first mover services scale

Tung

Marine transportation

Tymoshenko Oil and gas transportation

None

Weak to none

Efficient scale

Weak – based on government connections

Figure 3.2: Business Oligarchs and Their Economic Moats (At Peak). Note: Industry assessments of economic moats drawn from Brilliant and Collins (2014). Authors’ estimates for the construction industry.

Alfa Bank to their unsanctioned business partner, Andrei Kosogov, for $2.3 billion. Unlike a few other Russian oligarchs who also relocated to the UK, Fridman does not appear to have built sufficiently strong political connections to protect his wealth. By contrast, five business oligarchs (Char, Koch, Page, Piñera, and Shinawatra) are assessed as having developed strong economic moats. Four of these oligarchs operate or operated businesses in the service sector, where they were first/early movers. Char is interesting, because he is a counterexample of an oligarch whose wealth rests mainly on

Chapter 3 Business Oligarchs

85

political connections. His family is so dominant in their region of Colombia that their competitive advantage can be assessed as both strong and sustainable. The fifth (Koch) is believed to have generated high returns on capital through a combination of effective business and corporate strategies, including structural cost advantages at his firm’s principal oil refinery and diversification into industries with low levels of regulation. A third common characteristic of business oligarchs is that they have generated their wealth in economies with high levels of institutional change. One set of measures of institutional change is the World Bank’s Worldwide Governance Indicators. These indicators are currently available from 1996 to 2020. A composite index of these measures has been developed (Li and Zahra, 2012). As depicted in Figure 3.3, when we look at the institutional change occurring in the primary country in which the oligarchs are doing or were doing business, we see an average standard deviation in this change of 25.4% over the periods during which these oligarchs are/were active in business:

Business oligarch

Domicile

Years active in business

Bukele Char Fridman Hariri Koch Page Piñera Shinawatra Tymoshenko

El Salvador Colombia Russia Lebanon United States United States Chile Thailand Ukraine

– –present –present – –present –present – – –

Average

Standard deviation of institutional change during years in business .% .% .% .% .% .% .% .% .% .%

Figure 3.3: Business Oligarchs and Institutional Change. Note: Institutional change measured by composite index developed in Li and Zahra (2012). Based on data from 1996–2021. Bin Laden and Tung are not included in this analysis as they were active in business prior to 1996 when no data on institutional change was available. Hariri’s domicile is identified as Lebanon, even though he lived in Saudi Arabia from 1964 to 1982. Data is not available for that period.

Why does institutional change tend to be associated with business oligarch wealth generation? The cliché that change creates opportunity really does apply. As we document elsewhere (Lingelbach, 2015), higher levels of institutional change contribute to opportunity-sensitive economic activity, such as venture capital. Finally, when we turn to the ways in which business oligarchs transition from wealth to power, we see a wide variety of mechanisms, as illustrated in Figure 3.4. These transitions span virtually the entire post-World War II era, from Bin Laden’s first contributions to the Saudi royal family in 1949 to Bukele’s election as El Salvador’s president in 2019. Transition mechanisms are equally divided between election (five), appointment (two), and financial contribution (three), with technology (one) being a

86

Chapter 3 Business Oligarchs

Business oligarch

Mechanism to transition from wealth to power

Power type

Transition date

Current power status

Bin Laden

Financial contribution

Agenda-setting



Died 

Bukele

Election

Decision-making



Ongoing

Char

Election

Decision-making, agenda-setting



Ongoing, no longer in decisionmaking position, transitioned to agenda-setting, but likely to run for election again in 

Fridman

Financial contribution

Agenda-setting



Ongoing

Hariri

Appointment

Decision-making



Died 

Koch

Financial contribution

Agenda-setting



Ongoing

Page

Technology

Ideological



Ongoing

Piñera

Election

Decision-making



Lost  election

Shinawatra

Election

Decision-making



Deposed in  coup

Tung

Election

Decision-making



Resigned in  for health reasons

Tymoshenko

Appointment

Decision-making



Lost  vote of confidence, following presidential election

Figure 3.4: How Business Oligarchs Transition to Power.

unique mechanism. Five of the 11 business oligarchs remain active in power, while others have lost elections, been deposed in coups, or died. ✶✶✶ Business oligarchs have been an understudied phenomenon. This chapter has demonstrated that they have been active and successful on every settled continent since World War II. Although each case is informative, those who have employed technology to secure and reproduce wealth and/or power (Page and Bukele being noteworthy, in very different ways) are of special interest as we look ahead. Technology enables oligarchs to utilize wealth and power in more indirect ways. As a result, oligarchs become even more challenging to understand and regulate. We turn next to political oligarchs. As already noted, other scholars have sketched portraits of some of these actors. Entire literatures have sprung up now on some of them. While they approach the wealth-power nexus from different origins than business oligarchs, both end up on the same playing field.

Chapter 4 Political Oligarchs Chapter 4 introduces political oligarchs and contrasts them with business oligarchs. The two types come from different origins, but end up on the same playing field. Political oligarchs first gain power, then translate that into wealth from business activity. We then explore the distinctive characteristics of political oligarchs, using the cases of Dos Santos, Gore, Putin, Ramaphosa, and Zardari. This chapter discriminates carefully between explicit corruption and kleptocracy on the one hand, and, on the other hand, the more subtle ways in which some political oligarchs acquire wealth. The micro-foundations of political oligarchs are described, divided between how they acquire power and then how they utilize that power to gain wealth. The chapter also contrasts political oligarchs in decision-making roles (Putin, Ramaphosa, and Zardari) with those in agenda-setting (Dos Santos) and ideological roles (Gore). ✶✶✶ Money and power have gone together since the time of the ancient pharaohs. There has always been a higher sphere where money and power meet. A Geneva associate of Vladimir Putin, quoted in Belton (2020)

For many people, political oligarchs are their first encounter with oligarchs overall. And with the recent rise in authoritarianism around the world, political oligarchs tend to get confused with authoritarians, autocrats, dictators, strongmen, tyrants, and the like. Political oligarchs also tend to be better known, because they can occupy decision-making positions of power that are subject to greater media scrutiny. So, in introducing political oligarchs in this chapter, we’ve made a choice to focus on some that we have researched extensively over a long period of time and about whom there is a developed literature (Putin), others where we know the context in which they arose and where there has been some research (Ramaphosa), and three others for whom the literature is still in its early stages, but where we believe an important aspect of the political oligarch story is being told (Dos Santos, Gore, and Zardari). In making these selections, we do not shy away from political oligarchs who are clearly corrupt (Dos Santos and Zardari). But we also recognize that to paint all political oligarchs as just corrupt is too simple. Nor are we unafraid of taking on one of the most consequential and controversial figures of modern times – Vladimir Putin – who is, as we write this, embroiled in a prolonged war with Ukraine. We have studied Putin closely for more than a quarter century. We have also written of him regularly in the international media since the 2022 invasion. We have decided to complement the work of other researchers who have illuminated political oligarchs such as Suharto and Marcos (Winters, 2011), and Berlusconi and Trump (Ben Ghiat, 2020), rather than to include those important case studies here. https://doi.org/10.1515/9783111028255-005

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In this chapter, we are seeking to show the full range of political oligarch behavior, ranging from rank corruption and warmongering to activism that has changed the way we think and act about one of the central challenges of our time: climate change. As we will see, while the political oligarchs we study are wealthy, and have often used power to gain wealth, they are, as a whole, less accomplished businesspeople than the business oligarchs who became powerful. We think that’s an interesting finding, given that power is a generally harder concept to define and grasp. So, what are a few words that can be said about the political oligarchs in this chapter? Isabel Dos Santos: attractive, corrupt, and now fallen from grace. Al Gore: earnest, and a shapeshifter who moved from one type of power (decision-making) to another (ideological), and had more impact with the latter, all while making himself wealthy. Vladimir Putin: once the cleverest person David had ever met, now seemingly reaching the limits of his power and wealth over a war that he sought in part to change the international order. Cyril Ramaphosa: inscrutable by all accounts, trading on good postapartheid vibrations to mint a small fortune. And Asif Ali Zardari: a relatively powerless man now in an important country, whose wealth has come from marrying up. Let us see what we can learn from these oligarchs that can round out the picture from the previous chapter. We will tell the story as we did in the last chapter, as political oligarchs have come into their own since World War II. The story starts in 1988 in one of the world’s most important, but least understood, countries: Pakistan. This is the year in which oligarchs – political and business – began to increase decisively in their numbers around the world. Let’s start with Asif Ali Zardari. ✶✶✶ Oligarchs are skilled at hiding in plain sight, being that person at the party in the corner, the one you see out of the corner of your eye. Flying under the radar. Like Fridman, Asif Ali Zardari is a master of this strategy of the oligarch process. Pakistan’s oligarchs have always been based on the land. They secure and reproduce their wealth in feudal ways, often relying on violence and corruption to do so. Mueenuddin (2009, 2021) provide authentic fictional portrayals of this world. At the national level, wealth and power freely intermingle. Some of Pakistan’s heads of state and government are also among the country’s wealthiest citizens, notably Nawaz Sharif and Zardari. Historically, the Zardaris have had relatively low social standing amongst the elites in Pakistan, even though they owned lots of land around Nawabshah, a medium-sized city in Sindh province. Zardari was born in Karachi, Pakistan’s largest city and Sindh’s capital, in 1955. His upbringing was undistinguished: graduation from a naval college, Cadet College Petaro, near Hyderabad (rather than from the prestigious Karachi Grammar School); a brief attendance at St. Patrick’s High School in Karachi, where he failed the final exam; and a childhood appearance in a movie. Those who remember him at the time said that he craved status, touted cinema tickets, and ran a

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disco in his basement (Bennett-Jones, 2022). Most of his 20s have largely disappeared from history. By 1983 he had lost a district council election in his tribe’s hometown and had started in the construction business. Then the impossible happened. Benazir Bhutto, heiress to Pakistan’s greatest political dynasty, was looking for a husband and was having a hard time. She was an assertive woman in a male chauvinist society. She was also in her mid-30s and close to being dubbed damaged goods. The Zardari family pushed their only son forward. Zardari said all the right things. Bhutto really had no other option. So, in 1987, Zardari and Bhutto were engaged in London, then married in Karachi in celebrations with 100,000 guests. Since Zardari’s wealth and power are inextricably linked to the Bhuttos, it’s worth saying a few words about them. The Bhuttos are wealthy landowners from Pakistan’s Sindh province. In that sense, they are not so different from the Zardaris and many other feudal landlords. What makes the Bhuttos different is their power. That power was accumulated in two main stages. First, Benazir’s father, Zulfikar, was Pakistan’s president from 1971 to 1973, then prime minister from 1973 to 1977. He was a nationalist and secular internationalist, but was deposed by a military coup and executed in 1977. He remains controversial in Pakistan to this day. In the second stage of power accumulation, Benazir was elected prime minister twice: from 1988 to 1990, then from 1993 to 1996. The Bhuttos have paid dearly for whatever wealth and power they have: Zulfikar was executed by hanging; Benazir was assassinated by bombing and shooting; her two brothers died unnatural deaths. Following his marriage into this tempestuous family, Zardari went from being a near-nobody to the spouse of one of Pakistan’s most prominent politicians. Granted, General Zia-ul-Haq was still in power, so Bhutto’s power was limited. But, in 1988, Zia died in a plane crash, Bhutto was elected prime minister, and Zardari gained access to real wealth through her office. His corruption became apparent by 1989 when he began accumulating property (his preferred asset class, along with cash). That corruption got Bhutto kicked out of office in 1990 and Zardari jailed until 1993. The pattern repeated itself when Bhutto was elected for a second time that year, only this time Zardari was also charged with conspiracy to murder her brother Murtaza in 1996. He went to prison a second time that year and was not released until 2004. Zardari’s corruption has been well documented in the media and pursued not only by Pakistan, but also by Switzerland. Increasingly, Bhutto became a party to Zardari’s corruption. Their intertwined story was one of indictment, exile, and, in Zardari’s case, health issues. All of this culminated in a 2006 Interpol red notice for the couple’s arrest. Then came 2007, the couple’s annus horribilis. Bhutto announced her return to Pakistan, which had been run by General Musharraf since 1999, in hopes for a Bhutto-Musharraf coalition. She was assassinated in Rawalpindi, while Zardari remained in Dubai.

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The Bhutto assassination paved the way for Zardari to gain decision-making power. He was elected as president in 2008 and then dismantled that office’s principal powers. He supported the US war in Afghanistan, signed a major economic agreement with China, and, when he stepped down in 2013, was the first Pakistani president to complete a full term in office. Zardari remains an unpopular and divisive figure in Pakistan, with an approval rating of between 11% and 14% when he left office. He continued to be indicted on corruption and money laundering charges as recently as 2020. Yet, he is a major force in national politics, supporting the rise of his son Bilawal as the heir of the Bhutto dynasty. Since 2022 Bilawal has served as foreign minister in Shehbaz Sharif’s government. Zardari remains one of the wealthiest people in Pakistan, with a net worth estimated in 2020 at $1.8 billion. This figure is consistent with other estimates that Zardari and Bhutto took $2–3 billion from Pakistan’s coffers (Allen, 2022). Aside from his business holdings, which are believed to be mainly in agriculture, he owns three principal residences in Pakistan (Bilawal House I in Karachi, Bilawal House II in Lahore, and Zardari House in Islamabad) and properties in the United Kingdom (Surrey and London’s West End), the United States (a Manhattan apartment), Dubai, and France (Normandy). Undoubtedly, Pakistan has seen many other politicians who were more powerful than Zardari: Bhutto’s father, Zulfikar; Bhutto herself; Musharraf; Nawaz Sharif, Shehbaz’s brother. And there are a few other Pakistanis who are wealthier. Some live abroad – Shahid Khan and Anwar Pervez. Some live in Pakistan – Mian Mansha and Sadruddin Hashwani. But Zardari, underestimated and overshadowed his entire life, hid in plain sight and became wealthy and powerful by working behind the scenes. And waiting for his main chance, the woman he married and eventually came to love, Benazir Bhutto. We will talk more about this aspect of Zardari’s oligarch strategy in Chapter 7. ✶✶✶ Zardari made his move from power to wealth on his wife’s back. Nine years later, in 1997, Isabel Dos Santos made a similar move. Her move was with the help of her father. What’s particularly interesting about Dos Santos’ story is this. So far, we have emphasized how oligarchs secure and reproduce wealth and power, and transform one into the other. We sketched quite a number of success stories. Now it is time to look at how oligarchs fall apart. This is a particularly poignant story, as “[n]o trajectory illustrates this yearning to transcend the origins of Angola’s great fortunes better than that of Isabel Dos Santos [. . . .] [She was] the poster child of Angola’s oligarchic decade [. . .] [and was] wildly diversified” (Soares de Oliveira, 2015, pp. 151–52). Dos Santos is also interesting as a case study because the study of female oligarchs can be complicated by the “deep seated misogyny towards women, especially African women who display an interest in business” (Pitcher and Rodrigues Sanches, 2019,

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p. 599).33 This theme is also relevant to our discussion of Yulia Tymoshenko, which began in the previous chapter. Of all the oligarchs we study in this book, few have fallen further and faster from grace than Isabel Dos Santos. In January 2020 the International Consortium of Investigative Journalists (ICIJ) released its report, entitled Luanda Leaks, that exposed how Isabel became a billionaire through corrupt business deals facilitated by her inscrutable, authoritarian father, José Eduardo Dos Santos, president of Angola from 1979 to 2017 (Freedberg, Alecci, Fitzgibbon, Dalby & Reuter, 2020). Three days later, her personal wealth manager was found dead in his garage. In April 2020 Forbes estimated Isabel’s net worth at $1.4 billion. In October 2020 her husband Sindika Dokolo died in a diving accident in Dubai. By January 2021 Forbes had removed her from its World’s Billionaires list after her assets were frozen in Angola, Portugal, and the Netherlands. In December 2021 she was barred from traveling to the United States. She cannot return to her home country for fear of arrest and trial, so lives in exile – like Shinawatra – in Dubai. As of March 2023, investigations into Isabel’s businesses continue. Isabel was born in 1973 in Baku, then the capital of the Azerbaijan Soviet Socialist Republic. Her father was then an official of the People’s Movement for the Liberation of Angola (MPLA) studying at the Azerbaijani Oil and Chemistry Institute (now called the Azerbaijan State Oil and Industry University). This higher education institute has a prominent set of alumni/ae, who, in addition to Dos Santos, include Vagit Alekperov (CEO of Russian oil company Lukoil from 1993 to 2022) and Heydar Aliyev (Azerbaijan’s first post-communist leader). The MPLA was a Marxist-Leninist liberation movement dedicated to the removal of Portugal as a colonial power from Angola. Isabel’s mother was Tatiana Kukanova, a Russian chess champion studying at the institute whom father Dos Santos had married in 1966. After earning degrees in petroleum engineering and radar communications, Dos Santos père returned to Angola in 1970 as the MPLA expanded its war against Portugal. Angola gained independence from Portugal in November 1975, but not before a civil war involving the MPLA (backed by Cuba and the Soviet Union), the National Union for the Total Independence of Angola (backed first by China and then South Africa and the United States) had commenced, and the National Liberation Front of Angola (backed by the United States) had commenced. Dos Santos’ military duties were not central to the conflict, but his political acumen led to his appointment as the MPLA’s representative to Yugoslavia, Zaire, and China. He became a Central Committee and Politburo member in 1974 and, when the MPLA prevailed in the independence struggle, he became minister of foreign affairs in the first post-independence government. Dos Santos became Angola’s president in 1979 upon the death of Agostinho Neto from cancer.  Pitcher and Rodrigues Sanches (2019) also note the case of Valentina Guebuza, the now-deceased daughter of former Mozambican president Armando Guebuza. In 2012, Forbes estimated her net worth at $170 million. Until her death in 2016, she was also considered the most powerful woman in Mozambique.

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The year 1979 was also the year when Isabel’s parents divorced, and she and her mother moved to the United Kingdom. Here the chronology becomes a bit unclear. She attended Cobham Hall School in Kent, a small, independent girls school founded in 1962 with a middling reputation. Sometime thereafter, she transferred for her final two years to what is now the UK’s leading girls’ school, St. Paul’s Girls’ School in London. Such a move prepared Isabel to move into the UK’s elite. What remains unclear is how she and her mother supported themselves during these years. This support seems likely to have come from Dos Santos the father, but Angola’s market liberalization (and thus the real opportunities for state capture and corruption) didn’t begin until 1992. This time is approximately the same as Isabel’s graduation from St. Paul’s Girls’ School. From there Isabel enrolled at King’s College London. There she studied business management and electrical engineering. King’s routinely ranks amongst the best universities in the UK. She graduated in 1995. After graduation she worked in consulting. By 1997 Isabel had returned to Angola, there to buy a Luanda nightclub called Miami Beach. Actually, she was brought into this business by Rui Barata, its owner, in order to keep government regulators off his back (Dolan, 2013). At around the same time, Isabel became a partner in Research and Development Resources (RDR), which explored for and sold rough Angolan diamonds without having a concession from the Angolan government or the concession-holder, the state-owned Endiama (Dolan, 2013). This transaction enabled the MPLA to pay one of Isabel’s RDR partners for the arms they sold to MPLA in defiance of UN sanctions (Sharife and Grobler, 2013). In circa 2000 the Angolan government created the Angolan Diamond Selling Corporation (Ascorp) to legalize the Angolan diamond trade while depriving De Beers (which controlled the global diamond trade) of any participation in that trade. While Ascorp was 51% state-owned, Isabel and her mother owned 24.5% of the company through Trans Africa Investment Services (TAIS); Isabel owned 75% and her mother 25% (Gomes, 2016). Isabel dropped her investment in TAIS in 2000 due to the blood diamonds issue, and TAIS became Iaxonh and owned 100% by Isabel’s mother. Isabel is her sole heir. Iaxonh then took over TAIS’ 24.5% interest in Ascorp. Isabel’s investment in the diamond industry increased in 2014 when she acquired 75% of De Grisogono, a jeweler based in Geneva, in partnership with the Angolan state through Sodiam, which is owned in part by TAIS and Isabel’s mother. Her nowdeceased husband, Sindika Dokolo, established a rough diamond trading company, Nemesis International, in 2015. In 1999 Isabel opened up a second industry focus. President Dos Santos granted Unitel the first private mobile operator license in Angola. Isabel acquired a 25% stake, but the source of her capital contribution remains unclear. In 2005 she entered a third industry. Isabel co-founded Banco Internacional de Crédito (BIC) in Angola in partnership with Portuguese cork billionaire Américo Amorim and Fernando Teles. BIC became a profitable lender to the Angolan government. In 2008, Isa-

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bel, Amorim, and Teles opened a bank in Portugal, BIC Portugal, which in 2012 bought Banco Português de Negócios (BPN) from the Portuguese government. Isabel and Teles took control of BIC Portugal in 2014, with Isabel owning 42.5%. However, they were denied Portuguese regulatory approval to operate BIC Portugal, due to concerns about BIC’s ties to drug and human trafficking and money laundering. Isabel also acquired a 19% stake in Banco Português de Investimento (BPI), which in turn owns 49.9% of Banco de Fomento Angola (BFA). Isabel controls BFA through this stake, as well as Unitel’s shares in BFA. A 2007 attempted merger between BPI and Banco Comercial Português (now Portugal’s largest private bank, and 20% owned by Sonangol, the country’s state-owned oil and gas concern) failed due to an inability to reach terms. Isabel’s fourth industry focus is oil and gas. She is the indirect beneficial owner of 6% of Galp Energia, Portugal’s largest oil and gas concern. Her ownership was acquired from Sonangol and through an investment vehicle established by her partner Amorim. Isabel’s further connections to Sonangol will be explored a bit later. The fifth industry in which Isabel has invested is cement. She owned Ciminvest, which acquired a stake in Nova Cimangola. Her sixth industry investment was in electric power. In 2015 she purchased 65% of Efacec Power Solutions, a Portuguese energy and engineering group, in partnership with Angola’s National Electricity Distribution Company. In summary, Isabel appears to have a diversified investment strategy. As noted earlier, wildly diversified. This is similar to those of business groups in many emerging markets. However, much of Isabel’s wealth to make these investments appears to have been provided, directly or indirectly, via Angolan government funds. So it was not surprising that her father appointed her as chief executive of Sonangol in 2016. She remained in this position until 2017, when her father retired. Gomes (2016) summarizes Isabel’s path to wealth and power: The dividends of the initial business ventures in the Angolan diamond industry allowed Isabel Dos Santos to build sufficient wealth to invest outside Angola, namely in Portugal, where, according to the Portuguese press, she has invested 3 billion EUR – in oil and gas (Galp Energia, from 2005), banking (BIC Portugal and BPI), telecommunications and media (starting in 2009 with a participation in ZON Multimedia, now NOS) and, in 2015, in Efacec, an engineering and electricity company. (p. 9). The origin of PEP [note: politically exposed person] Isabel Dos Santos’ wealth is, as demonstrated, the result of abuse of power, nepotism, corruption and the plundering of Angolan resources for the benefit of a small elite, in a regime where her father, Mr. José Eduardo Dos Santos, is the President since 1975, enjoying complete lack of effective ministerial, parliamentary, judicial and free media oversight of his activities as President (p.10).

Isabel is an example of oligarchs that are common across sub-Saharan Africa – kleptocrats who use state capture to enrich themselves. But she is more than that. She is an attractive, articulate, well-educated woman with the skill set and network

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to have been so much more accomplished. How did one of the richest women in the world fall so far? Let’s start with the context in which she made her wealth and gave her power: Angola. The country is the second poorest oligarch domicile we study in this book, with 2020 per capita GDP (PPP) estimated at $5,980 and life expectancy at 65.8 years. This makes Angola one of the more developed African economies, and slightly less developed than India. Yet, one leading Angola scholar refers to the country as a “successful failed state” (Soares de Oliveira, 2007). Unlike other Portuguese African colonies, Angola was less impacted by its anticolonial war (1961–1975). Following independence, the ruling MPLA pursued MarxistLeninist policies, supported by its Soviet and Cuban allies. This stance lasted until the end of the Cold War. There was one exception to these policies: Sonangol, the state oil company. From inception, this company was always seen as an instrument of the Angolan president and his clique (the Futungo de Belas), one that accounted for more than 90% of the government’s revenues. For much of its history, Sonangol has maintained a positive international reputation, although some have criticized its aggressiveness and lack of transparency (Soares de Oliveira, 2007). The Futungo parallel state (aka state capture) laid the foundation for Isabel’s fortune. Indeed, she was a central Futungo player. The source of Isabel’s wealth and power was her father, Eduardo, who became the country’s ruler after his party, the MPLA, secured Angola’s independence from Portugal in 1975. Without her father, Isabel would be just another semi-accomplished cosmopolitan businessperson. Angola’s key assets are its oil and gas fields and diamond mines. And these assets have been the source of Isabel’s wealth. Sonangol has served as a cash cow for Isabel, financing her acquisition of assets such as the stake in Galp Energia, Portugal’s largest oil and gas firm (Frontline, 2020). Similar to Saudi Arabia – but unlike Russia – Angola holds oil and gas in a state-owned company, Sonangol, which was self-regulating until 2019. In 2021, Angola was the 18th largest oil producer in the world, generating approximately 1.1 million barrels per day. In 2021 Angola was the sixth largest diamond producer in the world. In 2016, its diamond exports generated revenues of $1.9 billion. Angola’s Catoca diamond mine is the fourth largest in the world. Attempts at building a Sonangol-like state company in diamonds, Endiama, appear to have failed (Soares de Oliveira, 2007). Isabel’s status as Eduardo’s daughter, and the latter’s corruption, gave her a significant degree of agenda-setting power since she became active in business in the mid-1990s. To that power was added an additional decision-making dimension, when Isabel was named as CEO of state-owned Sonangol in 2016. At its peak, Isabel’s wealth (including that of her now-deceased husband) was predominantly centered in five assets: Banco BIC (42.5% ownership), one of Angola’s largest banks; Unitel (25%), an Angola mobile operator; Nos (a controlling stake), a Portuguese

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telecommunications and media company; Galp Energia (33%), Portugal’s leading oil and gas firm; De Grisogono (majority control), a Swiss diamond retailer;34 and cash. Isabel’s fall began in 2017 when her father retired. His appointed successor, João Lourenço, wasted little time before dismissing her as CEO of Sonangol. This power transition from Dos Santos to Lourenço appears to have been much less successful from the perspective of the predecessor than that from Yeltsin to Putin, with the latter guaranteeing the former’s wealth and freedom, and that of his family. By 2018 the Angolan government began prosecuting Isabel for her past corruption, which they claimed led to Angola’s then-current recession. Then in 2019 Angola froze her Angolan bank accounts and seized her stakes in local companies including Unitel and BFA. She then self-exiled to Dubai. Matters only got worse. In 2020 her husband died in a diving accident in Dubai. Angola began efforts to seize her Portuguese assets. And the ICIJ published Luanda Leaks, probably the largest single data source on an oligarch ever made public. In 2021, further Isabel assets were frozen in Angola, Portugal, and the Netherlands, and she was barred from entering the United States. And in 2022, Interpol reportedly issued a red notice for Isabel’s arrest on corruption charges35 as part of Angola’s attempt to improve its international reputation for corruption (Reuters, 2022). Angola’s Corruption Perception Index has improved somewhat since Lourenço became president, but is ranked 116 out of 180 countries in 2022. That same year, Isabel announced that she was considering a presidential bid in the next election. Why has Isabel lost more wealth and power more quickly than any other oligarch we study? As we will see, she has below-average skills as an oligarch. Her power and wealth were too dependent on one person. And Angola’s institutions changed in an unfavorable direction. She is still young and may well survive Angola’s attempts to prosecute her. But, in comparison to other oligarchs also facing international legal efforts, she has few friends and allies. Isabel’s chances do not look compelling at present. ✶✶✶ In 1999, two years after Dos Santos moved from power to wealth, a then-unknown Russian was appointed acting prime minister by an ailing Boris Yeltsin. That unknown figure quickly accumulated wealth and power, becoming one of the most consequential oligarchs since World War II. Who is Vladimir Putin? We have been studying him longer than almost anyone else, and the answer remains unclear. David knew him starting in 1995, when he was running an American venture capital fund in Saint Petersburg. He always found Putin above board and easy to deal with. More than that, actually. For David, Putin was the

 In 2020, De Grisogono went bankrupt and was purchased by an Emirati real estate group.  A search of Interpol’s red notice database on March 23, 2023 did not reveal any notice with Isabel Dos Santos’ name.

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cleverest person he had ever met. That remains true, although Putin’s 2022 invasion of Ukraine has brought that judgment into question. Among those who have studied Putin most closely, five main narratives about him have emerged. The dominant narrative to date is that he is a KGB operative (Hill and Gaddy, 2015; Belton, 2020) with totalitarian tendencies (Gessen, 2012). A second narrative is that he is a kleptocrat (Dawisha, 2014). A more telling third perspective is that Putin is complex and paradoxical (Sakwa, 2007, 2014). A fourth narrative is that he can be seen as a new tsar (Zygar, 2016; Myers, 2015), a point of view with which Putin would probably agree. A fifth perspective thinks of Putin as a strongman (Roxburgh, 2012; Ben Ghiat, 2020) or, relatedly, a macho man (Sperling, 2014). Most of these narratives have been constructed by non-Russians (Gessen and Zygar are the exceptions), although all these authors have studied him for long periods. On the whole, their assessments of him are negative (only Putin [2000] and Short [2022] offer a less negative view) and as an actor who is a subject dominating his environment rather than an object being acted on by it. Our view is that Vladimir Putin may be all of these things, but he is also an oligarch. Measured by wealth and power, he is one of the most accomplished oligarchs since World War II; a billionaire with nuclear weapons. We will build out our narrative about Putin in the pages ahead, but let’s start with a glimpse of his life story to date. When Putin was a teenager, his parents kept a dacha outside of Leningrad. Hanging above his desk there was a picture of Jan Berzin, the Soviet military spymaster from 1920 to 1935. Berzin, an adventurous opportunist who remained out of the limelight until arrested by the Soviet Union’s People’s Commissariat of Internal Affairs (NKVD) in 1938 and executed as part of the Great Purge, was the young Putin’s hero. When Putin was first deputy mayor of Saint Petersburg in the 1990s, he kept a second picture above his desk, one that David saw when he visited there. This one was of Peter the Great, the brutal, endlessly curious, modernizing tsar of the 1700s. Berzin and Peter the Great. We can tell a lot about a person by the heroes they keep close. Putin was born in 1952 in Leningrad (Saint Petersburg from 1703 to 1914 and since 1991), which is Lviv on steroids. A city with identity issues and blood-soaked, smashed between Nazi and Soviet totalitarianisms. Like Fridman and Lviv, Putin is from Leningrad, not of it. The city of Pushkin, Dostoyevsky, Akhmatova, Balanchine, Shostakovich, Mayakovsky, and Brodsky is not, for the most part, Putin’s world.36 Putin’s family was minor proletarian “nobility.” His paternal grandfather, Spiridon, cooked for Lenin and his wife, as well as at a Moscow retreat used occasionally by Stalin. His father, Vladimir, was a hero during the Leningrad siege, parachuting behind Nazi lines.

 During Russia’s war with Ukraine, Brodsky’s unpublished poem On Ukraine’s Independence has been used by both Russian and Ukrainian nationalists to support their views.

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Those studying his childhood have come up with a variety of adjectives: fond of old people; agnostic toward both communism and Russian Orthodoxy; ecumenical tolerance and disdain for anti-Semitism; slight of stature; likely bullied; rash; physically violent; had a temper; was doted on; not socially adept; an indifferent student; petulant; impulsive; disruptive; pugnacious; unbending; a hooligan; intelligent but disorganized; disdainful of drinking, smoking, sloth, and disorder; a judoist and samboist; dreamed of being a sailor, a pilot, and finally a spy. Putin was a complex and not terribly well-adjusted kid. Despite that checkered background, Putin got himself admitted to Leningrad State University’s law faculty in 1970, probably on the strength of his athletic record in sambo. Leningrad State was one of the top two universities in the Soviet Union at that time. Lenin, Kerensky, Blok, Stravinsky, and Diaghilev preceded him there. After the KGB approached him, Putin was hired by them in 1975. He was on his way. Assessing Putin’s KGB career (1975–91, 1998–99) is tricky. Usually, researchers have divided the first period into pre-Dresden (1975–85) and Dresden (1985–90) periods. The first, boring and inconsequential; disappointing for Putin. The second, more interesting. We now know that Putin’s early KGB years were more substantial than first thought, including visits to New Zealand in the disguise of a Bata shoe salesman. These visits suggest a quicker progression up the career ladder than earlier believed. Putin’s time in Dresden was arguably the most important formative period in his professional career. As he once said, “I have two natures and one of them is German.” The parallels between Dresden and Leningrad were significant. Both cities are creations or reinventions of great builder monarchs who were also friends and allies: Frederick Augustus II (Augustus the Strong) and Peter the Great. Both became artistic and cultural centers. Both were heavily scarred by war. Both were provincial cities when Putin lived in them. As Markus Wolf, the former head of the East German intelligence (Stasi) said, Dresden was the least important KGB post in the country. Putin’s time in Dresden was marked by Gorbachev’s tenure as the last Soviet leader, a time he initially found exhilarating. He was promoted in both rank (to lieutenant colonel) and twice in grade (ultimately to senior assistant head of department), an unusually rapid progression made possible in part by his bosses’ connections. In November 1989 the Berlin Wall came down, and in January 1990 Putin was summoned to a meeting in Berlin with a KGB general, leading to his recall to Leningrad in February. He was being given a new assignment “which would lay the groundwork for everything that followed” (Short, 2022, p. 119). That assignment was to get close to Anatoly Sobchak, a Leningrad State University law professor who was one of the leading liberal voices in the late Soviet Union. Putin began as assistant to the vice rector for international affairs at the university. By May 1990 Sobchak was elected chair of Lensoviet, the equivalent of Leningrad’s mayor. Shortly thereafter, Putin became his adviser on international relations and was known to Sobchak as a KGB officer on active reserve. The next year, 1991, Sobchak was elected as mayor, and following the August putsch by elements of the security services, the So-

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viet Union ended. A 1991 food shortage led to Putin’s organization of a barter deal, in which Russian raw materials were exported to Western Europe in exchange for food. A scandal arose, when intermediaries sold the raw materials, but the city didn’t receive food imports. Whether some of the missing funds (estimated at $100 million) ended up in Putin’s pocket remains unproven. But sometime in the early years of the Sobchak administration, Putin began to accumulate wealth using a model that had three elements: smuggling, friendly firms, and trusted custodians (Belton, 2020). At this stage, neither his wealth nor his power was notable. Neither yet made him an oligarch. After Sobchak lost his re-election in 1996, Putin moved to Moscow, into Yeltsin’s presidential administration. Within two years, he was appointed head of the Federal Security Service (FSB), and the next year was appointed prime minister and, late in 1999, Yeltsin’s successor as president. Now he became an oligarch. How did he reach the pinnacle of power so quickly? Some argue that this was the KGB’s plan all along, to capture the commanding heights of post-communist Russia. Putin was simply their agent. Others claim that they maneuvered Putin into this position; Berezovsky, Abramovich, and Pugachev are the names most frequently mentioned as puppetmasters. But another possibility exists: that Putin acted, largely on his own, to seize the extraordinary opportunity that he had been offered. An opportunity for which, wittingly or not, he had been preparing himself. We will come back to that later. In a sense, the rest is less important. Putin has been Russia’s head of state or government continuously since August 1999. That has given him control over a power that very few other leaders have: access to nuclear weapons, estimated to total 5,977 warheads as of 2022 – the largest stockpile in the world. And his decision-making power has enabled him to accumulate wealth that is estimated somewhere between $6 billion (David’s estimate)37 and $200 billion (Bill Browder’s estimate). That wealth has been managed through trusted custodians, including Yuri Kovalchuk (who also controls key media assets promoting Putin’s message), Arkady and Boris Rotenberg, and others. Others, such as Vladimir Bogdanov at Surgutneftegaz and Viktor Zubkov and Alexey Miller at Gazprom, manage Putin’s key wealth-producing assets. Putin is believed to control 37% of Surgutneftegaz’s shares and 4.5% of Gazprom. Gazprom is also a key Russian strategic asset, enabling Putin to put pressure on its European customers. On February 24, 2022, Putin launched a second invasion of Ukraine. What does his decision to launch this war say about him as an oligarch? What might the consequences of that decision and the resultant events be for him, Russia, and the international order? What does Putin’s war decision say about oligarchs more generally? To address this last question another way: Are oligarchs warmongers? Do they profit directly and/or indirectly from war? Figure 4.1 lays out the wartime and military experiences of the oligarchs in our book:

 Based on current market prices for the shares Putin is believed to control in Gazprom and Surgutneftegaz.

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Oligarch

War-related activity

Military experience

Other violence-related experience

Bin Laden

None

None

None

Bukele

None

None

Ordered arrests of ,+ gang members, brought military into Legislative Assembly

Char

None

None

Family linked to paramilitary groups

Dos Santos

None

None

None

Fridman

None

None

Reputation as ruthless, but no direct evidence

Gore

Voted for US Senate resolution authorizing military action against Iraq in 

US Army None (–) Specialist  rank, Vietnam service

Hariri

None

None

Assassinated

Koch

None

None

None

Page

None

None

None

Piñera

None

None

– social protests violently suppressed by national police

Putin

Initiated or participated in five wars: Second Chechen War (–, Russian victory), Russo-Georgian War (, Russian victory), Russo-Ukrainian War (–present, ongoing), Syrian civil war (–present, ongoing), and Central African Republic Civil War (–present, ongoing)

KGB (–) colonel rank, East Germany service

Extensive involvement with violent suppression of opponents, both in Russia and abroad, including assassinations

Ramaphosa

None

None

Involved in anti-apartheid struggle but not believed to be engaged in violence

Shinawatra

Escalated military and police response to South Thailand insurgency in 

None

Royal Thai Police (–) lieutenant colonel rank, Thailand service

Tung

None

None

None

Figure 4.1: Oligarchs: War, Military, and Violence Experience.

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(continued) Oligarch

War-related activity

Military experience

Other violence-related experience

Tymoshenko

None

None

None

Zardari

None

None

Wife assassinated

Total count/ percentage

 (%)

 (%)

 (%)

Figure 4.1: Oligarchs: War, Military, and Violence Experience.

Taken as a whole, oligarchs appear to be relatively non-violent. Nine out of the 16 oligarchs (56%) had war-related, military, or other violence-related experience. Two of these oligarchs had violence visited upon them, either through their own assassination (Hariri) or that of a close family member (Zardari). This relatively non-violent experience becomes more stark when we compare them with the strongmen in Ben Ghiat (2020), as depicted in Figure 4.2: Strongman

War-related activity

Military experience

Amin

Initiated or participated in four wars: Mau Mau uprising (–, British victory), Ugandan coup d’état (, Amin victory), Ugandan invasion (, Uganda victory), and UgandaTanzania War (–, Tanzania victory)

British Empire ,–, (–) lieutenant Ugandans killed during rank, Uganda, –, his regime field marshal

Barre

Initiated or participated in eight wars: Second Italo-Ethiopian War (–, Italian victory), East African campaign of World War II (–, Allied victory), Ethiopian-Somali Border War (, stalemate), Ogaden War (–, Ethiopian victory), Somaliland War of Independence (–, Somali National Movement victory), Ethiopian-Somali Border War (, peace treaty), Somali Rebellion (–, rebel victory), Somali Civil War (–present, ongoing)

Kingdom of Italy Isaaq genocide (–), Somali (–), Republic (–), and ,–, dead Somali Democratic Republic (–), major general in Somali National Army

Figure 4.2: Strongmen – War, Military, and Violence Experience.

Other violencerelated experience

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(continued) Strongman

War-related activity

Military experience

Other violencerelated experience

Berlusconi

None

None

None

Bolsonaro

None

Brazilian Army (–), captain

None

Duterte

None

None

Extrajudicial killings of drug users and other criminals

Erdoğan

Participated in two wars: KurdishTurkish conflict (–present, ongoing), Syrian civil war (– present, ongoing)

None

– purges and intimidation related to attempted coup

Franco

Participated in or initiated: Second Melillan campaign (, Spanish victory), Rif War (–, Spanish victory), Spanish Revolution (, government eliminates rebellions), Spanish Civil War (–, Franco victory), Ifni War (–, Spanish victory)

Kingdom of Spain (–), Spanish Republic (–), Spanish State (–), captain general

,–, killed during White Terror (–), tens of thousands killed during regime

Gaddafi

Initiated: Libyan coup d’état (, Gaddafi victory), Egyptian-Libyan War (, cease fire), Chadian-Libyan conflict (–, Chadian victory), Uganda-Tanzania War (–, Tanzania victory), US bombing of Libya (, US victory), First Liberian Civil War (–, Libya and allies victory), First Libyan Civil War (, NATO/anti-Gaddafi victory)

Kingdom of Libya (–), Libyan Arab Republic (–), Socialist Libyan Arab Jamahiriya (–) Great Socialist Libyan Arab Jamahiriya (=), colonel

Human rights abuses domestically, support for terrorism internationally, killed after leaving office

Hitler

Participated or initiated in WWI (–) and WWII (–)

German Empire and Weimar Republic (–), corporal

Responsible for the death of . million civilians or prisoners of war, . million soldiers in European theater of WWII, committed suicide

Figure 4.2: Strongmen – War, Military, and Violence Experience.

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(continued) Strongman

War-related activity

Military experience

Other violencerelated experience

Hussein

Initiated or participated in: IraqiKurdish conflict (–, Kurdistan Region formation), IranIraq War (–, stalemate), Iraqi invasion of Kuwait (, Iraqi victory), Gulf War (–, US victory), Iraq War (–, political change including Hussein’s toppling and execution)

Iraqi Armed Forces, marshal

,+ arbitrary killings, arrested and killed by occupation authorities

Mobutu

Initiated or participated in: Congo Crisis (–, Mobutu takes power), First Congo War (–, AFDL victory)

Force Publique, Armée Widespread human Nationale Congolaise, rights violations Forces Armées Zaïroises (–), field marshal

Modi

None

None

Mussolini

Initiated or participated in: WWI Royal Italian Army (–, Allied victory), Second Italo- (–), corporal Senussi War (–, Italian victory), Second Italo-Ethiopian War (–, Italian victory), Spanish Civil War (–, Italy and allies won), Italian invasion of Albania (, Italian victory), WWII (–, Allied victory)

Thousands of political opponents killed, killed in office

Orbán

None

Hungarian Army (–)

 migrant crisis – deployed military against refugees and in some instances used force against them

Pinochet

Participated in or initiated: Operation Condor (–, ended with fall of Berlin Wall), Tanquetazo (, government won), Coup d’état (, Pinochet victory), Chilean armed resistance (–, government victory following election)

Chilean Army (–), captain general

Tens of thousands killed and imprisoned

Figure 4.2: Strongmen – War, Military, and Violence Experience.

Complicit in  antiMuslim riots, , died

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(continued) Strongman

War-related activity

Military experience

Other violencerelated experience

Putin

Initiated or participated in five wars: KGB, –, colonel Second Chechen War (–, rank, East Germany Russian victory), Russo-Georgian War service (, Russian victory), RussoUkrainian War (–present, ongoing), Syrian civil war (– present, ongoing), and Central African Republic Civil War (–present, ongoing)

Extensive involvement with violent suppression of opponents, both in Russia and abroad, including assassinations

Trump

Remained engaged in Afghanistan War

None

Has encouraged violent action by his followers, including January ,  insurrection

Total count/ percentage

 (%)

 (%)

 (%)

Figure 4.2: Strongmen – War, Military, and Violence Experience.

Sixteen of the 17 (94%) strongmen in Ben Ghiat (2020) engaged in war-making, military service, or other violence-related activities – a much higher percentage than oligarchs. Putin, who features both in our study and Ben Ghiat (2020), turns out to be a pretty typical strongman, but a very atypical oligarch when it comes to war-making and other violent activities. In other respects, however, Putin’s decision to go to war with Ukraine fits into a more general pattern followed by oligarchs. That decision – like Putin’s 2014 decision to invade Ukraine for the first time and annex Crimea – is profoundly opportunistic. He read the emerging China-led international order and the wobbly NATO alliance as a chance to expand Russian-controlled territory and help shape that new international order. Where others saw the resultant chaos as something to be avoided, we suspect that Putin saw it as creating additional opportunities to expand his power and wealth. While other analysts argue that Russia’s failure to achieve victory (as of July 2023) will pave the way for Putin’s demise, we think that each new action initiated by Russia in this war is at least in part a scramble out of the pocket (to use an American football term) in the confident search by Putin for new openings. It seems distinctly possible, however, that Putin may have finally overplayed his hand with the prosecution of this war. And what are the consequences for Putin, for Russia, and for the international order of the war with Ukraine? Russia has been dominated by oligarchs of one sort or another since the fall of communism in 1991. Putin has redefined what an oligarch

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means in the Russian context, shifting away from the business oligarchs that predominated under Yeltsin to a political oligarch-driven system under his control. It seems likely that Putin will remain an oligarch for the remainder of his active life, although the size and composition of his wealth and power elements may shift over time. For example, we can imagine that Putin may seek to legitimize some or all of his current wealth, perhaps as a consequence of some future war settlement. It is also possible that his power may shift away from decision-making to agenda-setting and ideology, a kind of elder statesman arguing for a distinctive and valuable Russian worldview. What are the consequences for Russia of a war against Ukraine led by an oligarch named Putin? We take the long view on this question. So long as the income and health of the average Russian aren’t compromised significantly, and so long as the average Russian remains to some degree xenophobic, it seems likely to us that the Ukraine war will not be fundamentally destabilizing for Russia. It’s useful to keep in mind these statistics, as depicted in Figure 4.3:

Life expectancy (years) GDP per capita, in thousands of US dollars (PPP, inflation-adjusted)









 .

. .

. .

. .

Figure 4.3: Russian Health and Wealth 1917–2022. Source: www.gapminder.org

These figures depict a development success story. Despite the turbulence of two regime changes (from tsarism to communism, and from communism to post-communism) and two world wars, Russian life expectancy and GDP per capita have improved significantly under both communist and post-communist regimes. It is important to note as well that under the brief democratic portion of the post-communist period (1991–99), Russia’s development moved backward. It is also important to recognize that, whatever sort of oligarchs dominated Russia in the post-communist period, the Russian people on average have experienced a significant improvement in their standard of living. And all of the improvement occurred during Putin’s regime. So, there is a constituency for oligarchs and for Putin in Russia. A very large constituency. But as we did with Putin’s war-making, it’s worthwhile to take a moment and ask: Is this unique to Putin? To do that, we look at the other oligarchs in our study and how they have performed on health and income improvements. Figure 4.4 depicts these results. Putin’s results are average for improvements in health, as measured by life expectancy. But well above average when it comes to income per capita. Among the above oligarchs, Putin ranks third out of eight on that dimension.

Chapter 4 Political Oligarchs

Oligarch

CAGR life expectancy

Compound annual growth rate in income per capita (PPP)

Bukele

.%

.%

Hariri

.% (first period in office) .% (second period in office)

.% (first period) -.% (second period)

Piñera

.% (first period) .% (second period)

.% (first period) .% (second period)

Putin

.%

.%

Ramaphosa

.%

−.%

Shinawatra

.%

.%

Tymoshenko

.%

−.%

Zardari

.%

.%

Average

.%

.%

105

Figure 4.4: Oligarchs and Development.

In summary, our take on Putin is different from the conventional wisdom. While his performance as an oligarch has slipped since 2022, he remains amongst the most consequential ones that we study. ✶✶✶ In 2001, as Putin was settling into his role as Russia’s president, a powerful black African – more accomplished and less rapacious than Dos Santos – made his own transition from power to wealth. When we encounter Cyril Ramaphosa, we face the chicken-or-egg question. What came first: wealth or power? This question is not unique to Ramaphosa. We have seen it with Fridman, Hariri, Page, and Zardari so far, and will see it with Gore soon. Particularly later in his career, Ramaphosa intermingled power and wealth in ways that appear to be more and more problematic for him. That is unfortunate, because he has had a significant positive impact on the life chances of his fellow black South Africans. That impact began to be felt quite early in his career. Politically active in his early 20s, Ramaphosa’s big break came in 1982, when he was asked by the Council of Unions of South Africa (CUSA) to form a National Union of Mineworkers (NUM). Since mining is the heart of the South African economy, NUM’s members became an important fulcrum as the African National Congress (ANC) worked to end apartheid. In 1985, NUM broke away from CUSA, and Ramaphosa helped to establish the Congress of South African Trade Unions (COSATU) with NUM as a key member. He became COSATU’s gen-

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eral secretary. Ramaphosa also became an important link between COSATU and the ANC. In 1990 he was named chair of the committee working for the release of Nelson Mandela from prison. In 1991 he stepped down from his role at COSATU and became the ANC’s secretary general, that organization’s third highest position. Thus began Ramaphosa’s most important work; the work for which he will be remembered. He headed the ANC team negotiating with South Africa’s white government to end apartheid. Not only was it difficult to agree terms with the apartheid government, but also Ramaphosa had to negotiate with various black South African interests, including left-wing groups and the leaders of the independent black homelands. The effort was rebooted in 1993 and eventually led to an interim constitution and 1994 general elections resulting in Mandela’s accession as South Africa’s president. Although Mandela and F.W. de Klerk (South Africa’s last apartheid president) were awarded the Nobel Peace Prize for these efforts, it can and has been argued that Ramaphosa and the other negotiators are the true heroes of the story. Ramaphosa moved sideways once apartheid ended. He became a member of parliament and was elected chair of its constitutional assembly, but his power waned considerably. This became evident in 1996, when Thabo Mbeki beat Ramaphosa in the race to succeed Mandela. That’s when Ramaphosa made his move from (rapidly dwindling) power to wealth, moving to the private sector as deputy chair of New Africa Investments Limited (NAIL), South Africa’s largest new black-owned business. This investment fund sought to take advantage of the many opportunities opening up for black African investors as a result of the government’s policy of black economic empowerment (BEE). Ramaphosa has indicated that this move from politics into wealth generation was a product of his long-standing entrepreneurial spirit (Hartley, 2018). Ramaphosa led NAIL’s acquisition of Anglo American’s Johnnic, the industrial holding company for Anglo’s subsidiary, Johnnie’s. Johnnic held substantial, non-controlling stakes in companies like South African Breweries, Toyota South Africa, Premier Foods, and Omni Media. Its sale to NAIL was the first large BEE deal. To gain access to the deal, NAIL forced its way into the National Empowerment Consortium (NEC) and, given NAIL’s capital, essentially took it over. NEC purchased 20% of Johnnic, and then increased its stake to 34%, with Ramaphosa acting as a mediator between the interests of the investors. He then became non-executive chair. NAIL’s later attempt to acquire Anglo’s JCI (a mining concern) failed due to a better offer from a competing BEE investment group (Butler, 2011). Ramaphosa then spent the next few years rationalizing Johnnic into a media and telecoms group, but its asset disposal strategy didn’t meet investor expectations. Johnnic was taken over by competitor HCI in 2006, and Ramaphosa stepped down as chair. Interestingly, he admitted that he had none of his own money invested in Johnnic. One observer noted that Ramaphosa has a blind spot for seizing opportunities to create personal wealth (Butler, 2011). So, where did Ramaphosa get wealthy? This appears to have happened through the BEE investments made since 2000 by his personal investment vehicle, Shanduka Group. Thirty percent of Shanduka was owned by the Ramaphosa family. Its investments included Alexander Forbes (16%), Standard Bank (1.2%), Liberty Life (1.5%), and Bidvest

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(2.25%). It also had other, more hands-on investments in resources (Butler, 2011). By 2014, Ramaphosa’s stake in Shanduka was valued at $225 million at then-prevailing exchange rates (Hartley, 2018). The title of Mark Gevisser’s 1996 profile of this South African oligarch captured Ramaphosa’s sequence in history well: Rhodes, Rupert, Ramaphosa. Cecil Rhodes, the first South African oligarch, mining magnate, then prime minister of the Cape Colony, and target of anti-racist protests. Anton Rupert, consumer goods billionaire and oligarch deeply involved behind the scenes in moderating the worst tendencies of the apartheid regime. And, Ramaphosa (Gevisser, 1996). Ramaphosa exploited his political connections when, in 1998, he was named as the chair of a BEE Commission organized by the Black Business Council. BEE was focused on increasing black ownership in the economy, and has been criticized as benefiting a small, well-connected elite (of which Ramaphosa was a prominent member). In 2001 Ramaphosa formed Shanduka to invest in natural resources, energy, real estate, banking, insurance, and telecoms. This investment strategy is as “wildly diversified” as that pursued by Dos Santos next door in Angola beginning around the same time. In 2011 his investments expanded further when he bought a 20-year master franchise agreement to operate 145 South African McDonald’s restaurants. Taken together, his investments generated a net worth estimated at $450 million in 2018. In an astonishing role reversal, Ramaphosa – the former mineworker union leader – used his political connections in 2012 to pressure the police to take action against mineworkers at the Marikana platinum mine in which he held an ownership interest. The resulting massacre led to the death of 34 striking miners (Gevisser, 2017). In 2012 Ramaphosa began his return to power, this time seeking to reach the top. He was elected the ANC’s deputy president, a time-honored step to become South Africa’s president (both Mbeki and Jacob Zuma had served in this role). And Ramaphosa was patient, holding this office and building support for five years. Time he spent announcing his divestment from Shanduka (or at least his intent) and freeing himself from the McDonald’s franchise agreement. Time spent being elevated to deputy president of South Africa in 2014. Time spent moving against Zuma as an anti-corruption advocate, beginning in 2015. Then, in 2017, he was elected ANC president. And the next year, Ramaphosa was elected as South Africa’s president. Ramaphosa has faced many challenges as president: Zuma’s ongoing prosecution; allegations concerning his own corruption; challenges to his authority within the ANC; national electricity shortages; COVID-19, where South Africa’s excess mortality rate has been amongst the highest in Africa; and the Russia-Ukraine war, on which South Africa has remained neutral. Most recently, in December 2022, he faced an impeachment vote in connection with a robbery at one of his farms. He survived that vote and around the same time was re-elected to a second term as the ANC’s president. And, as host of the August 2023 BRICS summit, Ramaphosa faces the possible challenge of welcoming fellow oligarch Putin, who has an International Criminal Court arrest warrant issued against him.

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Fundamentally, Ramaphosa is a negotiator: charming, charismatic, ruthless, enigmatic (Hartley, 2018). But he is also an oligarch, demonstrating a key oligarch strategy: waiting for the main chance. A cartoon by South Africa’s leading political cartoonist captures Ramaphosa’s trajectory (Figure 4.5):

Figure 4.5: Ramaphosa’s Path to Wealth and Power. Source: © Zapiro 2012 First published in Mail & Guardian. All rights reserved.

✶✶✶ While one can admire Zardari’s stealthiness in his climb to wealth and power, or even Putin’s ruthlessness, many readers may also feel the need to take a shower after considering their oligarchic ascents. So perhaps it is time to consider a political oligarch with a more positive reputation: Al Gore. Gore is one of two examples in our study of ideological oligarchs: those who exert great power by changing the way that we think and act. He has also held significant decision-making positions, notably as vice president of the United States. But his real power came after he left political office in 2001. Gore was born into privilege and some power and wealth. His father was a US representative and senator. Gore attended one of the top private schools in DC, then headed to Harvard, where he graduated cum laude in 1969. His early career didn’t suggest an oligarchic instinct for wealth and power: dutiful Vietnam service, in part to help out his father’s re-election effort; worked as a reporter for a Nashville paper; enrolled in divinity school, then left; enrolled in law school, then left. The path of a somewhat spoiled daddy’s boy. Or of someone just trying to figure it out.

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Then, trading on his father’s reputation, Gore decided to run for the US House of Representatives. And he won. And he used his office as a platform for what eventually became his ideology: combating global climate change. This theme continued as he became a US senator and then mounted his first campaign for president in 1988. In all of this, Gore did not come across as an ideologue; someone seeking to change how people think and act. His policy positions were generally middle of the road, and they fit well with Bill Clinton’s presidential platform. After Clinton won, and was reelected, Gore became his chief adviser as vice president. And positioned himself to become president in 2000, winning every primary and caucus beforehand. But then he lost the electoral college vote, lost Bush v. Gore that challenged the Florida recount, and demonstrated no ruthlessness in the aftermath. He simply folded his tent and walked away. He was 53 and had neither power nor any real wealth. That all changed in a very big way in 2006, when An Inconvenient Truth was released. Written by and starring Gore, the documentary sought to change the way the world thought about climate change. It succeeded in doing so, massively. And the world started bending toward Gore. The film won two Oscars, and Gore was awarded the 2007 Nobel Peace Prize. He was more powerful than he had ever been as vice president. And the money came too. Gore had co-founded Generation Investment Management in 2004, integrating finance and sustainability as its investment thesis. By 2022, the fund had more than $36 billion under management. Kleiner Perkins, one of the world’s premier venture capital firms, made him a partner in 2007. He co-founded Current TV in 2005 and sold it to Al Jazeera for $100 million in 2012. Taken together, these business efforts have generated a net worth estimated at $300 million in 2023. Ideological oligarchs are rare. Aside from Gore and Page in this study, only Friedrich Engels comes to mind. Gore’s interest in environmental issues is longstanding, fuelled by college courses, congressional hearings, and, before An Inconvenient Truth, the best-selling Earth in the Balance. So, Gore displayed intentionality to shift the debate on climate change. But even he was surprised by the late-in-career impact of his work. Like Page, he has truly changed the way in which we think and act. And he enriched himself in the process. ✶✶✶ In this concluding section of the chapter, we summarize some additional higher-level data to help make more sense of political oligarchs. In comparison to business oligarchs, political oligarchs have a comparative advantage in analyzing and exercising power. One significant dimension of these activities is reading and affecting changes in their societies’ formal institutions. These institutions are laws and regulation, and their enforcement. If oligarchs can benefit from institutional change, or cause it to happen, they create opportunities to secure and reproduce wealth and power. Figure 4.6 depicts the institutional change in the period when these political oligarchs are or were in power:

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Political oligarch Domicile Years active in politics

Standard deviation of Standard deviation of institutional change institutional change for five during years in years prior to entering politics politics

Dos Santos

Angola

–present %

Data not available Angolan Civil War –

Gore

United States

–

Data not available prior to 

Putin

Russia

–present %

%

Ramaphosa

South Africa

–present %

%

Zardari

Pakistan

–

%

%

.%

.%

Average

% (for –)

Figure 4.6: Political Oligarchs and Institutional Change. Note: Institutional change measured by composite index developed in Li and Zahra (2012). Based on data from 1996–2020.

The levels of institutional change that political oligarchs experienced during their period in political office is significant, although somewhat lower on average than those experienced by business oligarchs. In that sense, political oligarchs may be sources of political stability. When institutional change for the five years preceding political office is considered, the pattern is different and more consistent with business oligarchs. Institutional change levels were almost twice before political office than they were for political oligarchs once they gain office. These higher levels of change may also have been a source of opportunity to gain power for political oligarchs. Once in office, however, political oligarchs may no longer seek change to gain wealth. Instead, they may pursue wealth through other means. Economic moats could be another means for oligarchs to gain wealth, although, as we showed in the previous chapter, few business oligarchs possess such moats. Similarly, once they gain power, political oligarchs can construct political moats, which we define as sustainable, structural barriers that prevent others from depriving them of their power. Figure 4.7 summarizes our assessment of those moats. As with business oligarchs, political oligarchs have relatively weak and vulnerable moats. This vulnerability reinforces a point we have made already: contrary to their public image of invulnerability, oligarchs are more likely to be looking over their shoulders. As we did with business oligarchs, let’s now take a look at how these political oligarchs compare to one another, and then, taken as a group, to business oligarchs. Let’s start with the basics. How do these political oligarchs rate as people who exercise power? And how does that power compare to that acquired by business oli-

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Political oligarch

Primary power type

Political moat requirements

Assessment

Dos Santos

Agendasetting

Father remains president and she remains close to her father

Strong as long as father remained president (–), weak to nonexistent thereafter

Gore

Ideological Ability to change how people think and act

Moderate – opposing forces (such as Koch) have been more successful in limiting effective climate change mitigation to date

Putin

Decisionmaking

Remain president through constitutional means

Strong to date, but appears to be weakening due to Ukraine war

Ramaphosa

Decisionmaking

Remain president through constitutional means

Weak to moderate, due to structural challenges

Zardari

Decisionmaking

Remain president through constitutional means

Weak, as election depended significantly on popularity of deceased wife

Figure 4.7: Political Oligarchs and Their Moats.

garchs? We must keep in mind that power is quite difficult to measure and measurements are very likely to be subjective. Nonetheless, we can make some guesses based on the rankings aggregated in Figure 2.6. To do so, we started by grouping oligarchs into four categories: mentioned on all three lists in Figure 2.6, mentioned on two lists, mentioned on one list, and mentioned on no lists. Then we looked at the rankings themselves on each list, making adjustments upward or downward. Finally, we made a number of judgment calls where we assessed that the lists did not completely capture a particular oligarch’s power or lack thereof. On average, as Figure 4.8 demonstrates, political oligarchs are less powerful than business oligarchs: Relatively high power

Moderate power

Relatively low power

Gore Koch Page Putin

Hariri Piñera Ramaphosa Shinawatra

Bin Laden Bukele Char Dos Santos Fridman Tung Tymoshenko Zardari

Figure 4.8: Oligarch Power. Note: unranked in each category, political oligarchs italicized

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In Figure 4.9 we group political oligarchs by their net worths. When we compare this distribution to that of business oligarchs in Figure 3.1, we find that political oligarchs are less able to generate higher levels of net worth. Relatively high net worth (> $B)

Moderate net worth ($–B)

Relatively low net worth (. >. .–. – >. . . . No estimate

Figure 9.1: Selected Major Historical Oligarchs. Note: Ranked by power. Wealth estimates are in 2023 dollars and are based on various sources

Our choice of oligarchs in the above table is based in part on power and wealth data, in part on the availability of historical studies, and in part on our judgment about these actors’ historical significance, even if that significance is not captured in the available quantitative measures of power and wealth. To start our deep dive into historical oligarchs, let’s begin with some of the most greedy and power-hungry oligarchs of all time: the Spanish conquistadores and the Latin American oligarchs who came in their wake: Hernán Cortés, Francisco Pizarro, and Simón Bolívar. ✶✶✶ Of all the oligarchs in history, the conquistadores may have had a greater impact than any other. Some of that impact was unintentional, such as the spread from the European east to the Western Hemisphere west of plants, animals, technologies, and disease (Diamond, 1997). But much was intentional. The conquistadores were there to explore,

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yes, but ultimately conquer, subjugate, and exploit on behalf of the Spanish and Portuguese kings. And, wherever possible, to gain wealth and power for themselves. Who were these conquistador oligarchs? There were two main ones. Hernán Cortés, who conquered the Aztec Empire between 1519 and 1521. And Francisco Pizarro, who subdued the Inca Empire, ultimately between 1529 and 1532. Cortés and Pizarro had their minions, who also became wealthy, powerful oligarchs. In the case of Cortés, Pedro de Alvarado, who conquered the Mayan kingdoms across much of Central America beginning in 1524. Alvarado laid the basis for the oligarchies that sprang up in Central America. (He paved the way for oligarchs like Bukele.) And Hernando de Soto, better known for his conquests in the southeastern United States. He gained all of his wealth by assisting Pizarro in conquering the Incas. The conquistadores were almost entirely political oligarchs. They projected power through the barrel of a gun, sanctioned by the Spanish and Portuguese empires. That power enabled them to acquire vast stocks of wealth, some of which they retained for themselves. Most of this wealth was in essence plundered from the peoples that they conquered. Over time, this plunder was transformed into business activity in the form of mines, agriculture, and related businesses. Many of these businesses relied on involuntary labor in the form of slavery and indenture to generate profitable revenues. Taken together, these oligarch activities played the central role in shaping Latin America. Oligarch roots run very deep in this region and have changed over time. How did the original oligarchs of the Americas secure and reproduce their wealth and power? Let’s start with one of the first: Hernán Cortés. ✶✶✶ As an oligarch, Cortés’ accomplishments were consequential far beyond the period in which he lived. But it is difficult, even with the passage of time, to assess objectively the nature of those accomplishments. The many myths associated with the Spanish conquest of the Americas have hindered our clear-eyed understanding of Cortés and other conquistadores (Restall, 2003). The central facts are these: Cortés was born in 1485 in Castile, Spain, the son of lesser nobility (hidalgo), and went on to comprise the core of the conquistadores. He arrived in the Americas in 1504, assisted in the 1511 conquest of Cuba, and set sail for Mexico in 1519 in mutinous disregard for the governor of Cuba. After warfare against the Aztec Empire and in alliance with indigenous peoples, he conquered Tenochtitlán (renamed Mexico City) in 1521 and was named governor of New Spain until 1524. After the Aztec conquest, he encountered internal resistance even as he began founding new cities, imposing encomiendas on the local land, and seized neighboring Honduras from a rival conquistador. He gained new titles, new lands, and new wealth until he returned to Spain in 1541, only to die there in 1547 from pleurisy. Cortés was controversial in his time, and he remains so. Viewed as an oligarch, however, that controversy melts away. He was a political oligarch who converted his conquests into vast wealth that passed down through his descendants until Mexico

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became independent in 1810. As governor of New Spain, his decision-making power was substantial. An accurate estimate of his wealth doesn’t exist, and he incurred substantial debts during his lifetime. However, it does not seem far-fetched to estimate Cortés’ net worth in the billions of US dollars by 2023 standards. How do Cortés’ activities fit with the oligarch model we have been developing in this book? First, it is clear that he was entrepreneurial. Cortés had a clear sense of the means at his disposal. The most significant of those means was his leadership ability, which only became apparent to others when he mounted the expedition against the Aztec Empire. Cortés also showed clear evidence of utilizing the affordable loss principle. In particular, his mutiny against his erstwhile mentor and sponsor, Diego Velásquez, demonstrated his assessment that he had little or nothing to lose by sailing for Mexico. And during his conquest, Cortés showed his ability, over and over, to lean into surprise. Lacking any military expertise, and with limited material resources, Cortés burned his ships when he arrived in Mexico. This surprising action forced him and his men to improvise a victory against the Aztecs, ranking him as one of the greatest military leaders of all time (Lanning, 2002). Cortés was also a master of the second element of our model: friends with benefits. Once he was in the Americas, he repeatedly coupled and decoupled with strategic partners: Velásquez, Cuba’s first governor, who advanced him but against whom Cortés then mutinied; his Mexican indigenous allies – principally the Totonacs and Nahuas; to a certain extent, King Charles I; his numerous wives and sexual partners, and their children. Cortés was in it for himself. Cortés was also a master of the third element of our model: waiting for the main chance. In this way, he reminded us of Mikhail Fridman. Spain’s conquest of the Americas began in 1492, but Cortés waited until 1519 – 15 years after he arrived – to make his big move on Mexico. And that move was the only one that mattered for Cortés. He secured all of his power and wealth with that one, perfectly executed, action. His big deal. Finally, underpinning Cortés’ decisions was the use of secrecy and stealthiness. His mutiny against Velásquez and his burning of his boats were both unexpected clandestine actions that gave Cortés the upper hand with his potential adversaries. So, what do we conclude? Cortés behaved very much like the other contemporary oligarchs that we have studied in detail. The oligarch way was the conquistador way, perhaps. To get some confirmation of that finding, let’s look next at another major conquistador, Francisco Pizarro. ✶✶✶ On one of our research trips to Chile, we found ourselves in pretty rough air over Peru. The turbulence reminded us of that country’s disrupted past, its centrality to South American history, and Pizarro’s role in the middle of all that turbulence. Oligarchs like change, and, if things are too stable, they like to shake things up. Pizarro accomplished that.

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His origins were much more modest than Cortés’. He was illegitimate and grew up illiterate. In 1509, at the age of 31, he arrived in the Americas. His big break came four years later, when he joined Vasco Núñez de Balboa’s expedition across Panama. Pizarro became close to Balboa’s replacement, Pedro Arias Dávila, and was mayor of the newly founded Panama City from 1519 to 1523. Pizarro was motivated by Cortés’ Mexican conquest and rumors of gold to the south to form a partnership with Hernando de Luque and Diego de Almagro, priest and soldier, respectively. Dubbed Empresa del Levante (the company of the east), this partnership would be headed by Pizarro. Its objective was the conquest of Peru. Pizarro’s three expeditions were all sanctioned by the local competent authority, Dávila. The first expedition in 1524 was a failure and got no further than Colombia. Dávila and his successor Pedro de los Ríos approved a second expedition in 1526, the former reluctantly. This one was more successful, ultimately taking Pizarro, Luque, and Almagro to Tumbes in northwestern Peru. There they saw the first clear evidence of gold and silver in significant quantities. Before returning to Panama in 1528 to plan a third, final expedition, the threesome sailed as far south as nine degrees south. The third expedition was also difficult. The local governor wouldn’t approve it, so Pizarro returned to Spain to convince King Charles I. He and Queen Isabel consented in 1529, naming Pizarro governor of New Castile, a territory running for 600 miles along the newly “discovered” coast. Pizarro recruited family and friends from Spain to join him, but could not raise enough men to meet the terms of the royal capitulation. So, in a Cortés-like act of defiance, he left Spain clandestinely for the Americas, then departed Panama on this third expedition in 1530. The rest of the story is well known. The Spanish conquered the Inca Empire by 1533, and Pizarro founded Lima in 1535, an act he considered one of the most important in his life. But his partnership with Almagro frayed over time and his son’s followers assassinated Pizarro in Lima in 1541. Pizarro’s descendants returned to Spain as wealthy people, although, like with Cortés, the exact amount of Pizarro’s wealth has never been accurately determined. A guess of billions of US dollars by 2023 standards is probably not far wrong. Like Cortés, Pizarro was a political oligarch. His power was reflected in his decision-making role as the first governor of New Castile (1529–1541), and expanded substantially after defeating the Incan Empire in 1533. But how closely does he fit the model we have developed in this book? The evidence in support of Pizarro being entrepreneurial (the first part of our model) is weaker than it is with Cortés. Although he formed something that looked very much like a startup, there is limited evidence that he determined his means, calculated his affordable loss, or leaned into surprises. Instead, his conquest of Peru looks like an exercise in causation, a well-planned expedition with some deviations from what was predicted. Did Pizarro employ a friends with benefits strategy? Here the evidence is more solid in support. His strategic partners were many and most were temporary: Alonso de Ojeda,

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who he accompanied on an expedition to the Gulf of Urabá in 1509; Balboa and then Dávila in Panama; his two partners in the Peruvian expeditions, Luque and Almagro – his split with the latter proved to be fatal; and King Charles I and Queen Isabel, who were constant partners after 1528, even though he violated the terms of their capitulation. Did Pizarro wait for his main chance? As with Cortés, Pizarro identified his one big opportunity: the conquest of the Incan Empire. And his relentless pursuit of that opportunity across nine years and three expeditions demonstrates his commitment. Finally, like all effective oligarchs, Pizarro employed secrecy and stealthiness as he secured and reproduced his wealth and power. For example, he departed secretly from Spain in 1530 after failing to raise enough men for his third expedition. So, while the evidence isn’t quite as strong as with Cortés, Pizarro displayed many of the elements of the book’s model. To complete our look back at historical oligarchs in Latin America, let’s look now at Latin America’s greatest liberator from the Spanish conquests: Simón Bolívar. ✶✶✶ Bolívar is among the most impactful oligarchs in the Americas since the conquistadores. He unwound the bulk of Pizarro’s conquests, establishing the modern-day countries of Colombia, Venezuela, Ecuador, Peru, Panama, and Bolivia. He served as head of state for Colombia (1819–30), Peru (1824–27), and Bolivia (1825). Unlike Cortés and Pizarro, Bolívar was a business oligarch, inheriting one of the largest estates in Venezuela upon his parents’ deaths before he was 10. However, he lost much of his wealth during the course of the revolutionary wars. As his wealth declined, however, Bolívar became the most powerful figure in Latin America. These wealth and power dynamics are somewhat different than those we have seen amongst contemporary oligarchs. As with the conquistadores, Bolívar’s legacy is complex to disentangle. First, his wealth needs to be detailed. Lynch (2006) describes it thusly: Simón’s father owned two cacao plantations, four houses in Caracas and others in La Guaira, sugar cane on the San Mateo estate, three cattle ranches in the llanos, an indigo plantation and a copper mine, and he left 350,000 pesos to his family, including the young Simón (p. 30).

Each peso (also known as a piece of eight) contained 24.25 grams of silver. These assets translated into a collective net worth in US dollars estimated at more than $40 million by 2013 standards (Arana, 2013). While relatively modest by contemporary standards, the Bolívar family was one of the wealthiest in colonial Venezuela. Bolívar shared this estate with his four siblings, with his oldest brother, Juan Vicente, inheriting a disproportionate share. Lynch (2006) estimates Bolívar’s wealth at 200,000 pesos at the time the Spanish confiscated it. The US dollar was established at par with the peso, so Bolívar’s wealth was equivalent to approximately $200,000 USD at the date of confiscation (1805), which is equal to $5.1 million USD by 2023 standards. We estimate Bolívar’s net worth as the average of the estimates from Arana (2013), updated to 2023 dollars, and Lynch

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(2006): approximately $29 million in 2023 dollars. While modest in comparison to the conquistadores, Bolívar’s wealth allowed him the freedom to pursue his eventual passion: Latin America’s independence from the Spanish Empire. Subsequent to that independence, several of the new states awarded Bolívar lifetime pensions, but those disappeared over time. Arana (2013) sums up Bolívar’s wealth toward the end of his life this way: [t]he man who had freed Americans from Panama to Potosí, who had commandeered the gold and silver of the Indies – who had been awarded jewel-encrusted crowns and scabbards and milliondollar bonuses, and given it all away – had little to show for the sacrifice. He had claimed he didn’t care about money, that he needed no more than what was given any soldier. But he had ended up with less: he had no income and no pension. Eventually, when Venezuela outlawed the sale of the Aroa mines completely, all hope that he would ever recover his rightful inheritance was lost. (p. 433)

With respect to power accumulation, we have a bit of data. Skiena and Ward (2014) estimate that Bolívar is the 448th most significant figure in world history, and the most significant in Latin American history.57 The source of Bolívar’s power was his effectiveness as a military commander. In one study he was ranked as the 12th most influential military leader of all time (Lanning, 2002). How does Bolívar fit with our model? As an institutional entrepreneur, he was entrepreneurial. In terms of assessing his means, he had extraordinary self-knowledge that enabled him, despite no formal military training, to become an effective general. This is similar to Cortés and Pizarro. He was prepared to lose everything, including his wealth and life, displaying affordable loss thinking. His attack on New Grenada in 1819 is considered one of the most daring in military history, showing how to leverage surprise. Bolívar also repeatedly coupled and decoupled with a wide variety of strategic partners. It’s hard to identify one person who remained by his side through his military campaigns or thereafter. His romantic relationship with Manuela Sáenz lasted for eight years and was among the longest relationships in his short life. Other allies didn’t last as long: Francisco de Miranda – arrested by Bolívar in 1813 and turned over to the Spanish, dying in prison three years later; old family friend Francisco Iturbe, who helped out Bolívar early in the independence struggle, but then left for Mexico; Alexandre Sabès Pétion, Haiti’s first president, who supported his third campaign; Antonio José de Sucre, who succeeded him as Bolivian president; and Franciso de Paula Santander, who contested with him for power in Colombia. More arguable is whether Bolívar adopted the third strategy in our model: waiting for the main chance. His wars against the Spanish stretched out over eight years, and with the exception of the Battle of Boyacá, didn’t show evidence that he had found the critical moment and place in which to act. Instead, it was his dogged determination to prevail that marked his prosecution of the revolutionary wars.

 As noted earlier, these rankings have been criticized for their Western bias.

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Finally, was Bolívar secretive and stealthy in his actions? Not particularly. He was open about his intention to kick the Spanish Empire out of Latin America, and he did not hide his preparations and actions related to this intention. Bolívar was one of the most talented leaders of the 19th century. A great reader, writer, lover, general, diplomat, and, to a lesser degree, head of state. But a truly tragic figure. Stripped of his decision-making powers, his wealth reduced to nothing, and disillusioned that his center-of-the-road ideology was not being pursued by the countries he helped establish, Bolívar died of tuberculosis at 47. His rise and fall is far more dramatic than some of the other contemporary oligarchs we’ve studied. Also worthy of note is that Bolívar showed no signs of the corruption that has marked contemporary oligarchs on which we have focused in this book. Was he an oligarch? Yes. But our model has only limited use in explaining his path to secure and reproduce wealth and power. The historical oligarchs we study in Latin America are illustrative only. As Gilbert (2017) and Bro (2022) have explained, most of the region’s oligarchs are far more lowkey historically. They owned land (the old oligarchs) or engaged in industry, mining, and commerce (the new oligarchs). But, with a few exceptions, they did not seek office as heads of state or government. Their dominant model of wealth accumulation was low-risk, and their preferred political position was behind the scenes, setting their society’s political agenda. Other than Bolívar, none were ideological oligarchs – ones who changed the ways in which Latin Americans think and act. Low-key, subtle, but omnipresent, historical Latin oligarchs have made the Americas an oligarch epicenter. As have their counterparts in El Norte – the North American oligarchs in history, to whom we turn next. ✶✶✶ A few years ago, David was giving a talk about oligarchs at Universidad Nacional de Colombia’s campus in Manizales, the capital of the country’s coffee region. Vale was listening in. He started by saying that the United States and Colombia had one very important thing in common: both countries had been founded by oligarchs. Bolívar, as we have just seen, and George Washington, among several other Founding Fathers. The listeners found this comment arresting. It’s one of the most important things to know about the United States that most people don’t know. In 1913, progressive historian Charles A. Beard published An Economic Interpretation of the Constitution of the United States. A later interpretation of Beard’s work argued that “a chief aim of the framers of the US Constitution was to protect private property, favoring the economic interests of wealthy merchants and plantation owners rather than the interests of the then-majority small farmers, laborers, and craft workers” (Gilens and Page, 2014, p. 566). While Beard’s argument was dismissed over time, more recent research demonstrated that “economic elites and organized groups representing business interests have substantial independent impacts on US government policy, while average citizens and mass-based interest groups have little or no independent influence” (Gilens and Page, 2014, p. 564). In other words, Beard was

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right. The United States was designed to be an oligarchy. Of the seven oligarchs who became American presidents, a majority (57%) were carefully filtered by the country’s elites. This compares with 51% of all presidents (Mukunda, 2022). The most notable of these was George Washington. We’ve been conditioned to see him as a great military leader and a statesman. What we tend to forget is that Washington was also an accomplished entrepreneur (Berlau, 2020; Lengel, 2016). Prior to Donald Trump, Washington was the wealthiest US president, with a net worth estimated at $707 million by 2023 standards. Washington was a business oligarch, who secured wealth and translated it into power. Let’s consider how he did that. Washington came from a wealthy family of land speculators and tobacco farmers. And he became well off himself at age 11, when he inherited Ferry Farm and 10 slaves from his father Augustine. By age 20 he owned over 2,000 acres in Culpeper County, Virginia. At age 29 he inherited his half-brother Lawrence’s Mount Vernon, which produced tobacco and wheat. With his marriage to Martha Custis in 1759, he acquired a one-third interest in the 18,000-acre Custis estate and managed the other two-thirds on behalf of her children. As a consequence, he was Virginia’s wealthiest person. Virginia was the wealthiest of the 13 American colonies. Throughout the 1760s and 1770s, Washington continued to acquire more land and slaves. Erosion caused him to shift Mount Vernon’s production away from tobacco and to wheat. He also began to capture more value by developing a flour mill, and, late in his life, built a whisky distillery that used corn and rye grown at Mount Vernon. The distillery was the largest and most profitable in the United States in the late 1700s. He also diversified into fishing. While most of Washington’s business ventures were successful, one – the Potomac Company – was not. The startup was founded in 1784–5 to improve the navigability of the Potomac River by building a canal and associated locks, thus opening up the markets in the Northwest Territories. Washington was the president and owned about 12% of the firm, which he was gifted. If successfully completed, the canal would have substantially boosted the value of land that Washington owned adjacent to the Potomac River. However, difficulties in raising finance, labor problems, poor engineering advice, and other issues led ultimately to the company becoming defunct in 1825. Of course, we can’t talk about Washington’s net worth without mentioning the central role that slavery played in its creation. He owned slaves for much of his life, and 317 slaves lived at Mount Vernon at the time of his death. His views about slavery evolved over his life, and he privately pursued some attempts to free the slaves that he controlled. However, those efforts were unsuccessful. The bulk of Washington’s net worth was built on the backs of slaves, directly or indirectly. Washington’s moves to power occurred after he accumulated much of his net worth. The two signal events in this process were his appointment as commander-inchief of the Continental Army in 1775 and his 1789 election as the first president of the United States. His wealth appears to have played no direct role in either of these

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roles. Indirectly, however, Washington’s wealth gave him greater freedom and, perhaps more importantly, an increased ability to take on the uncertainty associated with these roles. How well does Washington fit with our model? While previous studies have indicated that he was an entrepreneur, that doesn’t necessarily mean that he is entrepreneurial. In fact, there is limited evidence that he assessed his means or determined his affordable loss. However, he was a master of leveraging surprise. The best example of that was his surprise attack of the Hessian garrison at Trenton on Christmas night in 1776 (Fischer, 2004). Did Washington follow a friends with benefits strategy? Actually, the evidence is to the contrary. Washington maintained and developed many strategic partnerships over his career as an oligarch. While Washington had his enemies, rivals, detractors, and frenemies like Thomas Jefferson, James Madison, James Monroe, and Thomas Paine (Coe, 2020), it is hard to identify anyone from whom Washington decoupled as a strategic partner. Of course, Benedict Arnold very decisively abandoned Washington through his treachery. And, well, there were the British, who trained him as a military officer. Did Washington wait for his main chance? Here the evidence strongly supports an answer of yes. That moment came in 1775, when he was appointed commander of the Continental Army. He had only one main rival for the job, John Hancock, who had no military experience. Of course, the position came with very high risks, not least of which was that the revolutionaries weren’t expected to win. But Washington grew into his role as commander-in-chief from a fairly ordinary and inexperienced background, similar to many of the other Founding Fathers (Rakove, 2010). And what role did secrecy and stealthiness play, if any, in Washington becoming an oligarch? The evidence is very limited that Washington secured and reproduced wealth and power through the use of these strategies. In summary, while Washington was a very consequential political oligarch, his decisions and actions largely do not conform to our model. With America’s colonial origins partly in England, let’s now take a look at one of that country’s most interesting oligarchs: Thomas Cromwell. ✶✶✶ Most of us had not thought much about Cromwell until Hilary Mantel began publishing her brilliant series on the man, beginning with Wolf Hall. For David, it became clear that Cromwell was an oligarch when he saw the Broadway adaptation of this novel. But was Cromwell really an oligarch? Let’s start with the wealth. We don’t have a precise estimate of that number, but we can make a pretty good guess. According to the Tower of London’s website, Cromwell’s annual income in 1537 was estimated at

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around £12,000 – equivalent to more than £3.5 million in today’s money.58 That’s $4.3 million by 2023 standards. If one capitalizes that figure at, say, 5%, then Cromwell’s net worth from these income sources alone can be estimated at $86 million. One biographer states: “His wealth and property at the end of his life surpassed that of all except the King himself and the ‘old money’ of the Duke of Norfolk” (Hutchinson, 2009, p. 267). Upon death, Henry VIII’s wealth was estimated at $250 million. So, a net worth estimate for Cromwell in the $100 million range does not seem entirely unreasonable, including all income and properties. With regard to his power, Cromwell can be classified as having decision-making power and, to a lesser extent, agenda-setting power as well. He was Henry VIII’s chief minister from 1534 to 1540 and in that role exercised exceptional delegated authority. But his agenda-setting power was equally vast as one of the main proponents of the English Reformation, which eliminated papal authority in England and led, among other things, to the dissolution of English monasteries. This created enormous wealth for a new class, including Cromwell, and was “one of the most revolutionary acts in English history” (Bernard, 2011, p. 390). So, Cromwell was an oligarch, one whose wealth came mainly as a consequence of his power, and hence a political oligarch. How closely does his securing and reproducing of wealth and power fit with our model? Cromwell was opportunistic, but was he entrepreneurial? To a limited degree, yes. He determined his means, which consisted of his high intelligence and ability to network broadly. There is limited evidence that he explicitly calculated his affordable loss. However, there is a lot of evidence to show that Cromwell leveraged surprise: his successful leap from Cardinal Thomas Wolsey’s patronage to King Henry VIII’s; navigating successfully most of Henry VIII’s mercurial moves. With regard to pursuing a friends with benefits strategy, Cromwell was someone who mainly managed upward, cultivating his strategic partnerships with Wolsey and Henry VIII. He seemed less interested in forming other partnerships, although he played an important role in advancing William Cecil and Nicholas Bacon, key figures in Queen Elizabeth I’s reign (MacCulloch, 2018). Did Cromwell wait for his main chance? The evidence here is hard to see. Henry VIII was such a dominant figure during his reign and his forcefield shaped everyone’s opportunity set to a large degree. Having said that, Cromwell’s role in the dissolution of the monasteries was a match with his skill set, requiring an attention to detail and ruthlessness that perhaps no other person in England could bring off. With regard to secrecy and stealthiness, Cromwell was a master of quiet, behind-thescenes maneuvering. For example, his effort to cause the fall of Queen Anne Boleyn – with or without Henry VIII’s direction remains unclear – was conducted sub rosa. However, this maneuver ultimately led to Cromwell’s own downfall and execution.

 https://www.hrp.org.uk/tower-of-london/history-and-stories/thomas-cromwell/#gs.z2kmmo.

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In summary, we find some evidence that Cromwell’s decisions and actions are consistent with the book’s model. Let’s cross the English Channel now, and go back in time 100 years or so, to consider another fascinating oligarch: Cosimo de’ Medici. ✶✶✶ Sometime in 1503 or 1504, Thomas Cromwell turned up in Florence, then one of the largest cities in Europe and an oligarchic republic that had been dominated by the Medici family from 1434 to 1503. Cromwell was apparently rescued from the streets by a member of the Frescobaldi family. The Frescobaldis were a prominent merchant family, not quite as wealthy and powerful as the Medicis, who had ruled during a kind of golden age in which the Italian Renaissance was launched. At the heart of this consequential historical movement was Cosimo de’ Medici. Cosimo was born in 1389 into a family that was already wealthy, but not yet significantly powerful. His father Giovanni had founded the Medici Bank in 1397. Eventually, the bank became the largest and most respected bank in Europe. Cosimo appears to have become active in the bank around 1420 and took full control upon his father’s death in 1429. As usual, Machiavelli’s assessment at this juncture was astute and a bit threatening: “Those who rejoiced at Giovanni’s death, now regretted it, perceiving what manner of man Cosimo was” (Machiavelli, 1532/1995, as quoted in Strathern, 2005, p. 50). Cosimo’s wealth enabled him to exercise power in Florence by controlling the votes of the municipal council’s office holders. However, this agenda-setting power angered his enemies, leading to imprisonment and then exile to Venice in 1433. But the economic consequences of this exile were so grave for Florence that Cosimo was allowed to return in 1434, and became the Lord of Florence until his death in 1464. Thus, Cosimo was a business oligarch who gained decision-making power as Florence’s head of state. As noted, he also had agenda-setting power before rising to formal power. But he also had agenda-setting power – perhaps even ideological power – as the principal funding source for the Italian Renaissance. This patronage consisted of buildings across Florence, including funding Brunelleschi to complete il Duomo. He also funded painter Fra Angelico and sculptor Donatello, who produced his wellknown David. He also founded Florence’s first public library. These cultural artifacts had a significant impact on how people, in Florence and throughout the world since then, have thought and acted. In order to assess whether Cosimo’s decisions and actions fit with the book’s model, it’s useful to start by sharing a few assessments by historians of the Medici family. For example, Strathern (2005) states that “Cosimo has frequently been characterized as a master schemer” (p. 57). Or this quote from one of Cosimo’s humanist friends, also from Strathern (2005): “[W]henever he wished to achieve something, he saw to it, in order to escape envy as much as possible, that the initiative appeared to come from others and not from him” (p. 77); also “[a]n instinctively cautious man”

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(p. 113); and “Cosimo had always been a withdrawn man, while his urbanity and his self-composure earned him a reputation for inscrutability” (p. 124). Hibbert (1974) is worth quoting at length on Cosimo’s character: [H]e seemed anxious to remain, as far as possible, out of the public eye. He was rarely to be seen walking the streets of the city, never with more than one servant in attendance and always quietly dressed, scrupulous in giving the wall to older citizens and ‘showing the utmost deference to the magistrates.’ He left it to the scions of other rich families to play the parts of paladins. [. . .] When people came to him for help or to ask his advice about some business matter, he would listen to them carefully and quietly and then tell them what he thought in a few, short words, almost brusquely, as though unwilling to commit himself to friendship. [. . .] [T]here was something in his manner that commanded affection rather than awe. (p. 38)

Sounds like Don Corleone in The Godfather, doesn’t it? Now let’s consider the evidence that Cosimo fits with the book’s model. Was he entrepreneurial? He had a clear self-awareness of the means available to him, notably his family’s wealth and, more importantly for a banker, his reputation. He was, as noted, extremely cautious, showing that he was aware of what he could afford to lose. Less evidence exists to show that Cosimo leveraged surprise. What about his use of the friends with benefits strategy? Did he couple and decouple from many strategic partners throughout his career? Particularly when he became Florence’s ruler, he did not rule through an iron fist. He was viewed as first among equals. But one gets the sense that Cosimo was his own man, who used others – such as the Pitti and Soderini families – to exercise power. Did he wait for his main chance? Again, the evidence here is pretty weak. He was wealthy early in life, and powerful soon thereafter. His career was a steady upward arc, with a few blips along the way, rather than one big deal leading to the rapid accumulation of wealth and power. Only in secrecy and stealthiness do we find plenty of evidence from Cosimo in support of our model. His work as a banker required frequent clandestine activity and the gathering of information unknown to others. Likewise, in Florence’s factionladen politics, Cosimo acted by necessity behind the scenes, as the above quotes indicate. Overall, Cosimo de’ Medici provides rather weak support for our model. He is one of the most consequential oligarchs of all time, mostly because he was a central sponsor of the Italian Renaissance and thus a generator of tremendous agenda-setting and ideological power. But he marched to his own drum. The Italian peninsula has been an oligarch’s cockpit since ancient times. Let’s stay there, but move back in time to ancient Rome to consider our next historical oligarch: Marcus Licinius Crassus, or Crassus for short. ✶✶✶ When thinking about Rome, a good place to start is Mary Beard. She describes Crassus as “the Roman plutocrat who notoriously remarked that you could count no one rich if he

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did not have the cash to raise his own private army” (Beard, 2016, p. 26) and estimates his wealth at 200 million sesterces (anywhere from $200 million to $20 billion by 2023 dollars, depending on assumptions). This makes him one of the wealthiest Romans. Plutarch captured the essence of Crassus: “People are wont to say that the many virtues of Crassus were darkened by the one vice of avarice, and indeed he seemed to have no other but that; for it being the most predominant, obscured others to which he was inclined” (Plutarch, 2001, p. 724). And this: “But Crassus is very generally blamed for his changeableness in his friendships and enmities, for his unfaithfulness, and his mean and underhand proceedings; since he himself could not deny that to compass the consulship he hired men to lay violent hands upon Domitius and Cato” (p. 752). And more, on his character as a general: “A brave man anywhere but in the field” (p. 752). Plutarch did not think much of Crassus. Crassus operated at the nexus of wealth and power from the start, so it is difficult to classify him as either a business or political oligarch. Like Washington, Cortés, Pizarro, and Bolívar, his military career was central to his power. He held decision-making power only briefly, as consul in 70 BCE and again in 55 BCE. More importantly, he was part of the First Triumvirate, an unofficial political alliance, with Julius Caesar and Pompey. This alliance dominated Roman politics from somewhere around 60 BCE to 49 BCE. Crassus came from a similarly wealthy and prominent background to that of Cosimo. His family was considered one of Rome’s most celebrated (Holland, 2003). His father was a distinguished plebian senator who had served as consul and governor of Spain. Alongside being a politician, Crassus pater was also active in the import-export trade, which was unusual for someone of his station. He recognized that “wealth was the surest foundation of power” (Holland, 2003, p. 88). Some of Crassus’ wealth came from the purchase of fortunes proscribed by Sulla, who had overthrown the Roman establishment in 88 BCE. He also built wealth through slave trafficking, silver mining, and real estate speculation. Much of the latter rested on buying burnt properties, then rebuilding them. His modus operandi was an oligarch’s: “This was how he preferred to operate, without ties or obligations to any cause except his own. Principles, to Crassus, were merely gambits in a vast and complex game, to be adopted then sacrificed as strategy required. Rather than risk leaving his fingermarks on anything, he employed proxies to test the limits on his behalf” (p. 137). And this: “Money was easily Crassus’ favorite instrument of power. The threads of gold he spun entangled the whole Republic. Little could happen in Rome of which Crassus was not immediately aware, sensitive as he was to every tremor, every fluttering of every fly caught in his web” (p. 138). Following military success against Spartacus, Crassus became consul for the first time in 70 BCE. During the next 10 years, he became Julius Caesar’s principal patron, who in turn mediated between Crassus and Pompey to create the First Triumvirate. In 55 BCE he was made governor of Syria, which should have made him vastly more wealthy, but his military ambition got the better of him, and he died at the hands of the Parthians in 53 BCE.

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How closely do Crassus’ decisions and actions fit our book’s model? First, he appears to have been very entrepreneurial. He was self-aware of his means, which were dominated by his overwhelming avarice. He practiced affordable loss thinking, rarely parting with his wealth. And he continuously leveraged surprise, for example Sulla’s victory in Rome’s first civil war and Spartacus’ revolt. Crassus was a master of the friends with benefits strategy. All of his major strategic partners – Sulla, Julius Caesar, and especially Pompey – were contingent. As Rome’s wealthiest man, he saw himself as more the puppet master than a partner, even with Caesar. Crassus was also a master of waiting for his main chance. In lesser ways that was true in his alliance with Sulla and the revolt by Spartacus. His real big deal came with the formation of the First Triumvirate. Had he not been too confident of his military skills and died at the Battle of Carrhae against the Parthians, his governorship of Syria could have made him one of the wealthiest people in history. Finally, Crassus operated behind the scenes to secure and reproduce his wealth and power. For example, one stealthy technique was his formation of a private fire brigade. The brigade would show up at house fires and offer its services to the owner, in exchange for the owner selling the house at a reduced price. If the owner agreed, the brigade put out the fire and Crassus owned the house. If the owner refused, the house burned to the ground and Crassus snapped up the property, and the devalued ones around it, at fire-sale prices. Unproven was whether Crassus started the fires in the first place. As an oligarch, Crassus is one of the most consequential figures in this book. His actions as an oligarch provide strong support for our model. However, it is fair to say that he was not well-liked. That negative reputation, however, pales in comparison to the next historical oligarch we will sketch. We cross the Mediterranean now to Africa and head south to the Congo. ✶✶✶ Throughout his career, David has always liked to seek out and try to understand big, messy countries that seem less well understood than they should be: Russia. Pakistan, Indonesia, South Africa, and Vale’s Colombia. But the one country he has not yet visited, the country that is so important in world history since the 19th century but still so underappreciated, is what is now called the Democratic Republic of the Congo. Formerly Zaire. For shorthand purposes, we’ll just call it the Congo. Because that’s what our next oligarch, King Leopold II of Belgium, called it. On the whole, oligarchs can be a nasty lot. There are a few exceptions: George Washington, Herbert Hoover (the American that saved more lives than any other), Tung Chee-hwa. With Leopold II, though, we enter the realm of genuine evil on a scale that we believe is unmatched by anyone else in our study and ranks with more contemporary figures like Hitler, Stalin, and Mao.

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Leopold II is a representative of the Belle Époque, a period in European history from 1870 to 1914. This period is notable for its similarity to the contemporary period in the United States. The Belle Époque was “a system which is nominally democratic but where the concentration of wealth is so high and lacking proper rules about political finance, political influence, that the democratic system is not enabled to have a common-sense reaction to this excessive level of inequality” (interview of Thomas Piketty, quoted in Marchese, 2022). Therefore, it is especially important that we stick close to the facts of Leopold II’s life and focus exclusively on whether the data from his life help confirm or disconfirm our model. Leopold’s singular contribution to world history was the creation of the Congo Free State, which existed from 1885 to 1908 and was founded and owned by him after the Berlin Conference of 1884–85. This territory had been assembled for him by Henry Morton Stanley, the famous explorer. Consequently, he became the richest person in the world at that time, with a net worth estimated at $1.1 billion by 1998 standards (Hochschild, 1998).59 His net worth was in part invested in buildings, urban projects and, public works in Belgium, earning him the ironic (to be diplomatic) name of “Builder King.” In 1900 he created the Royal Trust to manage his wealth in perpetuity. The basis of Leopold’s wealth was the export of ivory and rubber from the Congo Free State. Utilizing forced labor and colonial monopoly policies adapted from the East Indies, and employed to varying extents by Germany, France, and Portugal in their African colonies, Leopold rode the wave of exploding global demand for rubber due to increased production of bicycles and automobiles. It is estimated that roughly half of the population of the Congo Free State died during its existence, translating into an estimated population decline of 10 million (Hochschild, 1998). The Congo Free State required large amounts of capital in order to generate export revenues – generated by offering concessions to international companies and entrepreneurs. Leopold took the approach of a venture capitalist, attracting capital while retaining 50% of the shares. His control of the state was exercised through the notorious Force Publique. How closely does Leopold II fit our model? He remains one of history’s great ciphers, limiting the reliable data on which to make assessments. Was he entrepreneurial? His great achievement must be judged to be his persuasion of other European heads of state and government, notably Otto von Bismarck, to grant him the Congo Free State. To that extent, he demonstrated self-awareness of his ability to persuade. In terms of affordable loss, as noted above, he reduced his own financial risk by syndicating investment in the Congo Free State. He leveraged surprise by moving quickly from ivory to rubber as the latter’s demand grew.

 This estimate is based on a letter received by Hochschild from Jules Marchel, the leading historian of the colonial period in the Belgian Congo. This is equivalent to $2.05 billion in 2023.

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Did Leopold employ a friends with benefits strategy? This is difficult to see. He does not seem to have had any major strategic partners. Did he wait for his main chance? Sort of. Before the Congo, he had set his sights on the Philippines as Belgium’s big deal. When he couldn’t persuade Spain to sell it to him, then his eyes shifted to Africa. But, finally, was he secretive and stealthy? Absolutely. This was especially true once international criticism mounted against the forced labor practices and other brutalities in the Congo Free State. He had its archives burned and stated that no one had a right to know what he did there. So, the evidence that Leopold fits with our model is fairly limited. Before leaving the African continent, we want to sketch out one last oligarch: Stewart Gore-Browne. One whose legacy David has some experience with. ✶✶✶ In 2014 David traveled to Zambia. While doing his PhD research in South Africa and Botswana, he had heard about a place that seemed like a kind of African Shangri-la, an estate called Shiwa Ng’andu. The estate was built, beginning in 1920, by Stewart Gore-Browne, a British military surveyor who helped lay out the border between the Belgian Congo and Northern Rhodesia in 1911 (Lamb, 2004). Shiwa Ng’andu’s territory measures approximately 22,000 acres and includes an airstrip at which British mail planes used to stop on their way from Cairo to Cape Town. Gore-Browne was born to some wealth, and Shiwa Ng’andu added significantly to that. So, he can be considered as a business oligarch. As a white man during a time when African independence movements were beginning to develop, he created a path to power that was unique in sub-Saharan Africa. He was not threatened by the end of colonialism or the prospect that Africans would control Northern Rhodesia. He ran Shiwa Ng’andu in a paternalistic fashion, but his relationships with the 7,000 to 8,000 Africans who lived on the estate remained friendly until his death in 1967, and that attitude has persisted to this day. He served in the legislative council from 1935 to 1951, and from 1938 represented African interests there. He became friendly with Kenneth Kaunda, the eventual leader of post-independence Zambia, and worked hard to prevent the merger of Northern Rhodesia with white settler-dominated Southern Rhodesia (now Zimbabwe). He became an advocate for a multiracial Zambia – a rare fish indeed in Africa. Kaunda attended his state funeral, the only one for a white person in Zambia to date, and gave the eulogy. Gore-Browne is one of a very few whites whose memory remains revered across central Africa (Rotberg, 1977). While he had neither the wealth nor the power that Leopold II extracted from next-door Congo, Gore-Browne was a kind of relatively good oligarch that remains relatively unusual. How do Gore-Browne’s decisions and actions fit with our model? First, was he entrepreneurial? He knew that his skills as a military officer and surveyor would get him

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to Africa, but beyond that, it’s unclear if he assessed his means. He also doesn’t show evidence of affordable loss calculation. And he didn’t appear to leverage surprise. Did Gore-Browne follow a friends with benefits strategy? He partnered with Roy Welensky, a trade union leader, but parted ways with him over the latter’s advocacy to combine Northern and Southern Rhodesia; he remained close to Kaunda until his death. So, there is little evidence of strategic coupling and decoupling. Did he wait for his main chance? Again, not really. His progress as a minor oligarch was steady until his retirement in the early 1960s. Nor do we find much evidence for Gore-Browne acting in a secretive fashion. In summary, the evidence from Stewart Gore-Browne’s life doesn’t support our model. ✶✶✶ Before departing for points east, we’d like to sketch out one final European oligarch, the Larry Page of his time: Friedrich Engels. Most of the oligarchs we have studied have either decision-making or agenda-setting power. Few have what Lukes (2021) called the third dimension of power: ideological power. The ability to change how we think and act. As Karl Marx’s friend, partner, and political heir, Engels may have been the most consequential oligarch of the 19th century. Even more so than Leopold II. He qualifies as an oligarch, because he worked in his father’s textile firm near Manchester, Ermen and Engels. This factory was a joint venture with another German businessman. His role there was to protect his father’s investment, but over time his income from the firm came to support Karl Marx as he wrote Das Kapital in London. When Engels died, his net worth was £2.2 million by 2009 standards money (£3.8 million in 2023, equivalent to $4.9 million) (Hunt, 2009). What makes Engels so interesting, however, is that he was an intellectual in his own right. While in Manchester, he wrote several works, including The Condition of the Working Class in England (1845). Marx and Engels later came to co-author The Communist Manifesto (1848), one of the most influential books of the past 200 years. Later Marxists, especially Russians such as Lenin, considered Engels’ lines of thought as “Marxist philosophy par excellence” (Kolakowski, 1978, p. 400). Engels largely achieved the objective of becoming the “complete man” that he and Marx desired: “Something of the kind Engels certainly achieved, with his business, his conviviality, his sport, his languages, his natural sciences, his economics, his military studies, his article-writing, his books, his drawings, and verses, and his politics” (Wilson, 1940/ 2003, p. 214). How closely, if at all, does Engels fit our book’s model? The first strategy of that model – oligarchs are entrepreneurial – has three parts: means determination, affordable loss calculation, and leveraging surprise. With regard to means determination, one senses that Engels emergently identified his means, in particular his ability to write concisely and powerfully. Regarding affordable loss, Engels’ downside risk was protected by the income provided to him by his father’s business. Engels leveraged

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surprise in one important instance: when he met Karl Marx in Cologne in 1842 on the way to Manchester. The second strategy of the model is a friends with benefits strategy of coupling and decoupling from a wide variety of partners. The evidence is that once Engels partnered with someone, he was unlikely to decouple from them. So, the data from Engels doesn’t support this strategy of the model. The third strategy of the model is waiting for the main chance – the importance of strategic timing. While strategic timing wasn’t central to Engels’ development as an oligarch, he did recognize the importance of it in his investing activity (Macdonald, 2019). The fourth and final strategy of the model focuses on the use of secrecy and stealthiness. Here, again, there is limited evidence in support of this strategy in Engels’ life. In summary, there is little support from Engels’ data for our book’s model. ✶✶✶ Now we move to the east, to India, and the oligarch Robert Clive. Clive was the principal advocate for the establishment of British East India Company (EIC) rule in Bengal, which it gained in the Battle of Plassey in 1757. Clive then became the first governor of the presidency of Fort William, otherwise the de facto head of state. The EIC itself was “the most powerful corporation in history, as Edmund Burke famously put it, ‘a state in the guise of a merchant’” (Dalrymple, 2019, p. 3). It’s hard to better Dalrymple’s (2019) description of Clive: East India Company accountant who rose through his remarkable military talents to be Governor of Bengal. Thickset, laconic, but fiercely ambitious and unusually forceful, he proved to be a violent and ruthless but extremely capable leader of the Company and its military forces in India. He had a streetfighter’s eye for sizing up an opponent, a talent at seizing the opportunities presented by happenchance, a willingness to take great risks and a breathtaking, aggressive audacity. It was he who established the political and military supremacy of the East India Company in Bengal, Bihar and Orissa, and laid the foundations for British rule in India (p. xiii).

And he was also “an unstable sociopath” (Dalrymple, 2015). In short, Clive was an oligarch. A business oligarch, to be specific. He is believed to have died with a fortune estimated at £33 million by 2023 standards ($43 million), earned from his time in India (1744–53, 1755–60, and 1765–67), although that figure may have been diminished by his debts. At its peak, his power in the United Kingdom may have been superseded only by King George II. When he returned from India, he used his wealth to buy both an Irish barony and a seat in parliament. But these were just baubles. His real power came from thwarting French imperialism in India and gaining EIC control over Bengal, thus establishing the British Raj. How closely did Clive follow our model? He was clearly opportunistic. He demonstrated means determination, largely by figuring out in his junior-level military activities that he was much more audacious than the other British in India. This became

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clear during the 1751 siege of Arcot. In terms of affordable loss, there’s not much evidence to support this behavior. Did he leverage surprise? Repeatedly. So, there is some evidence that Clive was entrepreneurial, the model’s first strategy. Did he use a friends with benefits strategy? It appears that Clive largely made his way through sheer military ability and force of will in an environment that rewarded both. And did he wait for his main chance? India was clearly that chance, but he played little role in being sent there by his father in 1744. But he chose to return the second time in 1755, where his power and wealth was secured at the Battle of Plassey. Finally, did he employ secrecy and stealthiness? To the extent that he behaved audaciously, he often surprised his opponents. But, as such, he was not particularly secretive. In summary, Clive provides some support for our model. ✶✶✶ By now, some readers may be wondering: Where is China in this book? Aside from Han Feizi’s intriguing quote early on, and the Tung Chee-hwa case study, we have not talked much about the largest country in the world by population. We address that now by ending this chapter with a very interesting Chinese oligarch: Soong Tse-vung, often known in the West as T.V. Soong. The Soong family is intimately connected with the modern histories of China, Taiwan, and the United States. T.V. was prime minister of the Republic of China from 1945 to 1947, and acting prime minister in 1930. His sister May-ling was married to T.V.’s boss, Chiang Kai-shek, president of the Republic of China in its various forms from 1930 until 1975. Another sister, Ching-ling, was married to Sun Yat-sen, considered the father of modern China by both communists and non-communists. Equally importantly, she was the first female head of state of the People’s Republic of China, serving in that role from 1968 to 1972 when Mao was the supreme leader and Zhou Enlai was premier. T.V.’s other sister Ai-ling married H.H. Kung, who also served as the Republic of China’s prime minister from 1938 to 1939. Other brothers (T.A. and T.L.) were financiers. The Soongs were the equivalent of China’s Kennedys. His father was Charlie Soong, who had been born in China but then adopted by a maternal relative and moved to Boston. Charlie was educated at Duke and Vanderbilt, then sent back to China as a missionary. He didn’t last long in that role, becoming a publisher, revolutionary, and financial supporter of Sun Yat-sen. He saw his children educated in the United States. Born in 1894, T.V. earned a bachelor’s degree in economics from Harvard in 1915, then worked for the International Banking Corporation (now Citibank) in New York while studying for a graduate degree at Columbia. He returned to China in 1917, where he was secretary at the famous Han-Yeh-Ping Iron and Coal Company. In 1923, he became politically active as part of Sun Yat-sen’s campaign to unify China, serving as Sun’s secretary and then in various positions in Sun’s Canton government, including as central bank manager and finance minister. Then T.V. joined the Nationalist

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government, led by the KMT, in 1928, serving as finance minister (1928–33), central bank governor (1928–34), and acting prime minister (1930, 1932–33). T.V. successfully executed many policies in these roles, including tax system simplification, increases in tax revenue, and the establishment of China’s first stock and bond markets. In 1931 he helped found the National Economic Council, which was renamed the China Development Finance Corporation in 1934, which became the main vehicle for the government to raise foreign investment (Kuo and Lin, 2006). T.V. left Chinese politics in 1934, only to return in 1940 as Chiang Kai-shek’s personal representative to Washington. His objective was to obtain American funding of the Chinese war effort. He served as prime minister from 1945 to 1947, but once the communists defeated the nationalists in 1949, T.V. moved to New York and died in San Francisco in 1971. This brief biography is illuminating, because it really gives no clue as to the source of T.V.’s wealth. During the 1940s he was believed to be the richest person in the world with a net worth of $600 million in today’s dollars. How did he come by that wealth? There are only two logical answers. First, he could have inherited his father’s business and parlayed that into extraordinary wealth. That seems unlikely. Second, he could have appropriated Chinese treasury funds for his own use. As his New York Times obituary suggested, he is not the only nationalist official that may have done so. At first glance, T.V. Soong appears to be a business oligarch. After all, he started out in business. But, if his wealth arose from his political positions, then he is a political oligarch, albeit one with unusual skills in banking and finance. How does T.V. fit our model? Was he entrepreneurial? He determined his means, which were based on his unusual cross-cultural and financial skills. Did he practice affordable loss thinking? It appears that he never put any of his own money at risk. Did he leverage surprise? What could have presented more surprises than the ongoing civil war in China in the 1910s, 1920s, 1930s, and 1940s? A feast of surprises that T.V. exploited. Did he practice a friends with benefits strategy? Yes, he coupled with Sun Yat-sen, then decoupled from him and moved to his rival Chiang Kai-shek. And he built many strategic partnerships in the United States, including with FDR. Did he wait for his main chance? Yes. His move back to China in 1917 was brilliantly timed to land at the early end of China’s most transformative and tumultuous period in modern times. And, finally, did he use secrecy and stealthiness? In spades. How else did he accumulate $600 million? T.V. Soong fits all of the strategies of our model. He was a master oligarch. ✶✶✶ We summarize the evidence from historical oligarchs in support of our model as follows (Figure 9.2):

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Oligarch

Century active

Bolívar Clive Cortés Crassus Cromwell Medici Engels Gore-Browne Leopold II Pizarro Soong Washington

th th th st (BCE) th th th th th th th th

Total

Strong support

Moderate support

Little/no support

Countersupport

X X X X X X X X X X X X  (%)

 (%)

 (%)

 (%)

Figure 9.2: Historical Oligarchs vs. Our Model.

What were the results? The book’s model was supported strongly or moderately by 50% of the historical oligarchs we sketched. In 42% of these cases, little or no evidence was found to support the model. In one instance, the evidence argued that the model wasn’t valid. And what do these results suggest? To us they support the general validity of the model, which is based on data since 1946. That said, we recognize that the historical evidence we’ve shared here has some significant gaps in it: no cases from the Middle Ages, for example; no black or brown oligarchs. Still, these results suggest that, as we have argued from the beginning, oligarchs are a historical phenomenon. ✶✶✶ In Chapter 4, we considered the oligarchs on which we focus from the perspective of violence and war (see Figure 4.1 for a summary). It’s also worthwhile to ask a related historical question: How do oligarchs stack up as military leaders? Four oligarchs show up on at least some of the lists of history’s greatest generals: Washington, Cortés, Bolívar, and Pizarro. These four oligarch generals are notable because they were all successful in irregular warfare against numerically superior forces. Of course, not all irregular or guerrilla fighters become oligarchs. But the overlapping skill set between irregular warfare, entrepreneurship, and oligarchs seems obvious. This is an interesting theoretical question, as well as a historical one. What we are really asking is: Do some oligarchs have three control mechanisms: wealth, power, and violence? Having mastered two control mechanisms, oligarchs seem more likely than others to be capable of mastering a third mechanism. This logic is similar to language. Those who can speak one foreign language will find it easier to master

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a second, and so on. This is especially so if the languages are related. English speakers who learn French find it easier to then learn Spanish or Italian. Mandarin speakers are able to learn Cantonese more easily, and then Shanghainese. Likewise, oligarchs who speak “wealth” are more likely to be able to speak “power.” And those who speak those two “languages” are more likely to be able to speak “violence.” ✶✶✶ For quite fifty years past the general drift has almost certainly been toward oligarchy. George Orwell

Before we close out this chapter, we want to pose a larger question: How can the study of oligarchs contribute to our study of history? And does viewing history through an oligarch lens help us to better illuminate the past? We considered the relationship between oligarchs and history in Chapter 2, but we want to say a bit more here. It would be easy to say that Marx has already covered this territory – capital accumulation leads to socialism, then communism. So, viewing history through the materialist lens that oligarch studies would seem to suggest seems like a bit of a dead end. Unless we stop and return to our model. Oligarchs are opportunists; they exploit uncertainty. Effectuation has already argued that opportunistic entrepreneurs have a worldview – an explorer’s view – that is fundamentally different from the betterknown, planning-oriented approach. As Sarasvathy (2008) argued, there’s a big difference in viewpoints between the causal thinkers like most great generals, and the explorers: Genghis Khan and Christopher Columbus live in different worlds. So, a history of the world could be written from this exploring perspective that oligarchs exemplify. One in which uncertainty becomes the dominant environmental factor. And where progress depends on how individuals, organizations, and societies respond to and exploit that uncertainty. A history of the world that foregrounds The Odyssey, rather than The Iliad. That might make for a different view of the past. Of course, oligarchs are just one type of explorer. Other, more traditional explorers include, in addition to Columbus, Cook, Shackleton, and Nansen. And then there are the non-white explorers, such as China’s Admiral Zheng He. Such an enterprise could be linked to the management literature on the organizational tension between “the exploration of new possibilities and the exploitation of old certainties” (March, 1991, p. 71). A history as seen from the office of the oligarchs would complement works that have reconceived history as the spread of networks (McNeill and McNeill, 2003), written constitutions (Colley, 2021), or pandemics (McNeill, 1976; Harper, 2021). Or it could extend earlier works that focused on history as risk management (Bernstein, 1998) to focus on history as uncertainty exploitation. ✶✶✶

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This chapter has considered the historical evidence for oligarchs. We can see that they exist across time and space, and that their behavior is on average consistent with the model we developed earlier in the book from data since 1946. What conclusion can be drawn? Simply: oligarchs are not a consequence of capitalism or other institutional frameworks from modern history. Instead, while oligarchs can’t be said to be a reflection of fundamental human attributes such as creativity, they do arise in all types of social systems. They are a type of explorer which employs strategies to secure and reproduce wealth and power, especially when high levels of uncertainty exist. Having looked back in time, let’s look forward now. What are the prospects for oligarchs?

Chapter 10 W(h)ither Oligarchs Chapter 10 is the most speculative and normative in the book. It considers what the future of oligarchs might be in a world of increasing uncertainty, rising authoritarianism, and a variety of existential challenges such as climate change, nuclear conflict, and artificial intelligence. It also lays out policy actions that governments and citizens might consider to better regulate oligarch behavior and outcomes. ✶✶✶

An oligarchy of private capital cannot be effectively checked even by a democratically organized political society because under existing conditions, private capitalists inevitably control, directly or indirectly, the main sources of information. Albert Einstein

What the Future Might Hold for Oligarchs There are two compelling reasons to think that the future is bright for oligarchs. First, inequality is a persistent feature of human society, not just a function of modern civilization (Graeber and Wengrow, 2021). Income inequality happens when investment returns exceed economic growth, which seems likely to continue (Piketty, 2014). Income and wealth inequality are related. Therefore, wealth inequality seems likely to continue to grow. Second, uncertainty is driven in part by institutional change, which has been increasing. Therefore, it seems unlikely that oligarchs – who are masters of exploiting uncertainty – are going away anytime soon. But what, specifically, might make the future even more oligarch-friendly?

The Impact of Rising Authoritarianism As we mentioned at the outset, it can become easy to elide the concepts of authoritarianism and oligarchy. In recent studies of strongmen, oligarchs such as Putin, Trump, MBS, Orbán, Erdoğan, and Berlusconi can be found (Rachman, 2022; Ben Ghiat, 2020). Most of these are political oligarchs. But of the oligarchs we study here, only a few can be categorized as authoritarians. The more interesting question is: What impact does rising authoritarianism have on the number and characteristics of oligarchs? First, it is important to establish that authoritarianism is on the rise. One reliable source is Freedom House’s Freedom in

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the World reports, which have been published annually since 1972. From 2005 to 2021 the percentage of the world’s population living in free political environments fell sharply from 46% to 20% (Repucci and Slipowitz, 2022). Put another way, 80% of the world’s population now lives in partly free or unfree countries. Two drivers may be at play here. First, authoritarianism itself might breed oligarchs directly. Second, change in institutions, leading to rising authoritarianism, may create opportunities that oligarchs can exploit. Some examples might help. Rising authoritarianism in Russia under Putin has bred a new generation of oligarchs who have secured and reproduced wealth by remaining loyal to Putin. These new Russian oligarchs have generally low levels of power. As capo di tutti capi, Putin has concentrated power with himself, while also securing significant wealth. Some firstgeneration oligarchs from the Yeltsin era – most notably, Vladimir Potanin – have been able to maintain and even increase their wealth under Putin by remaining loyal. By contrast, in Erdoğan’s Turkey, oligarchs have more modest wealth and longstanding oligarch families, such as the Koč family, have seen their fortunes decline significantly. In another instance, El Salvador’s president, Nayib Bukele, has become increasingly popular and authoritarian as he has responded to that country’s declining public safety and economic prospects. It remains unclear if he has enhanced his wealth, although claims have been made that he enriched others to whom he is allied (Sención Villalona, 2022). Another clue is this: the number of oligarchs who occupied decision-making positions as heads of state or government began to increase decisively in 1989, a decade before contemporary authoritarianism began to rise starting with Putin’s appointment as prime minister in 1999. Unlike authoritarianism, which had key milestones in its development – Putin in 1999, Erdoğan in 2003, Xi in 2012, Modi in 2014, Trump in 2016, MBS in 2017, and Bolsonaro in 2018 – oligarchs entered global affairs more quietly and less controversially, often in smaller countries. One or two additions every year during the period 1989–99, when oligarchs consolidated their global position: George H.W. Bush (United States) and Akbar Hashemi Rafsanjani (Iran) in 1989; Nawaz Sharif (Pakistan) in 1990; Ali Mahdi Muhammad (Somalia) and Khamtai Siphandone (Laos) in 1991; Rafic Hariri (Lebanon) in 1992; Yukhym Zvyahilsky (Ukraine) in 1993; Silvio Berlusconi (Italy) in 1994; Banharn Silpa-archa (Thailand) and Andris Šķēle (Latvia) in 1995; Pavel Lazarenko (Ukraine) and Abdul Karim Kabariti (Jordan) in 1996; Sharif (a second time in Pakistan) and Tung Chee-hwa (Hong Kong) in 1997; Viktor Orbán (Hungary) in 1998; Olusegun Obasanjo (Nigeria), Šķēle (a second time in Latvia), and, finally, Vladimir Putin (Russia) in 1999. With the exception of Berlusconi at the time, none of these moves were seen as a particularly big deal. The period 1989–99 was also when agenda-setting oligarchs became much more active, particularly in the former Soviet Union. The “original gangsta” Russian oligarchs of the Yeltsin era established their power in part through their funding of Yeltsin’s 1996 re-election and the related loans-for-shares scheme. These included Mikhail

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Fridman, Vladimir Potanin, Boris Berezovsky, Vladimir Gusinsky, Alexander Smolensky, and Mikhail Khodorkovsky. During this period, the most significant ideological oligarchs also began their rise. This group was dominated by tech entrepreneurs, such as Larry Page. With the rise in oligarchs leading the rise in authoritarianism by 15 years, it’s natural to ask: Do oligarchs cause authoritarianism? There is some evidence that oligarchs as heads of state or government result in a growth in authoritarianism in these countries. Using Freedom House’s categorization, the following table (Figure 10.1) shows this relationship clearly for the oligarchs in this book: Oligarch

Freedom House category five years before inception

Freedom House category at inception

Freedom House category at conclusion or present

Bukele Hariri Piñera Putin Ramaphosa Shinawatra Tymoshenko Zardari

Free Partly free Free Partly free Free Partly free Partly free Not free

Free Partly free Free Partly free Free Free Free Partly free

Partly free Partly free Free Not free Free Not free Partly free Partly free

Change between inception and conclusion or present −   −  − − 

Figure 10.1: Oligarchs and Rising Authoritarianism.

Of these oligarchs, 50% have seen an increase in authoritarianism under their rule. In two instances (Bukele and Putin), this increase can be directly attributed to these oligarchs and their policies. But in two other instances (Shinawatra and Tymoshenko), the linkage is more difficult to determine. In none of these cases did an oligarch as head of state or government lead to a move away from authoritarianism. Let’s look at the opposite question: Does authoritarianism lead to oligarchs? When we look at the Freedom House categorization five years prior to oligarchs assuming office, three of the eight oligarchs (37.5%) emerged in environments that were more authoritarian in the period before they assumed office. In Shinawatra’s case, Thailand’s royal family remained stable during the five years prior to his accession, but three prime ministers (one an oligarch, another a former army general, and a third a long-time politician) contributed to a more authoritarian system. Tymoshenko was preceded in office by, among others, the authoritarian Viktor Yanukovych. Ukraine’s president during this period, Leonid Kuchma, was an authoritarian figure. Zardari was preceded in office by the authoritarian Pervez Musharraf, who took power in a military coup. While it is important to acknowledge these cases, it is perhaps more notable that the majority of oligarchs we study in this book did not arise in an environment of rising

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authoritarianism. In three instances (Bukele, Piñera, and Ramaphosa), these oligarchs arose in free political environments. Also of note is the fact that none of these oligarchs emerged in environments categorized by Freedom House as “not free.” Of course, it is distinctly possible that oligarchs could arise in “not free” environments in the future. The relationship between authoritarianism and oligarchs is a complex one, and more work is needed to disentangle the direction of causality between these two phenomena. One important step in this work would be to take “pure form” authoritarian regimes (those without oligarchs) and “pure form” oligarchs (those who are not authoritarian) to separate the underlying factors of these different, but related, phenomena.

The Impact of Existential Challenges Uncertainty is a central environmental factor in the rise of oligarchs. Uncertainty is caused by several factors, but existential challenges are especially impactful. Three such challenges can be identified at present: climate change, nuclear war, and artificial intelligence (AI). Each of these challenges is different from the others and thus contribute in differing ways to uncertainty and the environment in which oligarchs secure and reproduce wealth and power. Let’s start with climate change. Uncertainty arises here from two main sources: the extent of climate change, and the consequences of that change. Regarding the extent of climate change, we have an incomplete understanding of both the physical climate system (e.g., how cloud cover is changing) and how humans will react to climate change to attempt to reduce its impact. The consequences of that change are highly likely to include adversity for a growing percentage of the world’s population. Such adversity could lead to an increasing popularity for authoritarianism. Authoritarians frequently promise improved living standards as a basis for their election or popularity. As we have already seen, authoritarianism and oligarchs have a sort of a relationship with one another. In addition, all of the unknowns associated with climate change create a rich palate of wealth-generating opportunities for oligarchs. Some of these opportunities will be short-term trading windows in response to various types of market volatility. Other opportunities will be longer-term investment windows, almost certainly not in the obvious directions (e.g., clean energy). Following the 1945 detonation of two nuclear bombs in Japan by the United States, nuclear war became a theoretical possibility. That possibility gained plausibility with the Soviet Union’s 1949 detonation of a nuclear weapon. Today, nine nations have acquired nuclear weapons. Of these, four – the United States, Russia, the United Kingdom, and Pakistan – have been or are being ruled by oligarchs. One oligarch – Vladimir Putin – has threatened the use of nuclear weapons that he directly controls. Another – Asif Zardari – voluntarily relinquished his control over Pakistan’s nuclear arsenal. The probability of nuclear warfare has been assessed regularly since 1947 by the Federation of American Scientists (FAS). That assessment is communicated using the

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notion of a Doomsday Clock, with fewer minutes until midnight on the clock indicating a higher probability of nuclear war. The clock commenced in 1947 at seven minutes until midnight and reached its lowest probability in 1991 at 17 minutes to midnight. Since that time, the clock has moved steadily toward midnight and stands at 90 seconds to midnight since January 2023.60 This is the highest probability of nuclear conflict since 1947. Other expert estimates of nuclear conflict include a 33% probability (as of June 2023) that a nuclear weapon will be detonated in a war by 2050, a number that has increased from 19% in August 2020.61 Nuclear conflict increases uncertainty, because its prospect, antecedents, and consequences are not easily modeled. In what ways does nuclear-related uncertainty impact oligarchs’ ability to secure and reproduce wealth and power? As Putin has already demonstrated, the mere possession of nuclear weapons secures the power and, to a lesser extent, wealth of an oligarch. In addition, threats to use nuclear weapons create uncertainty in the minds of opponents, which can be translated into additional opportunities to gain power and wealth, or at least not lose the power and wealth that the oligarch already has. Is there any logical, causal relationship between the steady increase in the probability of nuclear war since the early 1990s and the concomitant rise of the oligarchs? The obvious answer is that, to the extent that the increasing probability of nuclear conflict contributes to generalized uncertainty, it creates new opportunities that oligarchs are better able to exploit. But it is difficult to tie the rise of any particular oligarch to the growing possibility of nuclear war. Related to the possibility of nuclear war is the concept of World War III. More than just a gaming premise or techno-thriller plot, World War III has been discussed since 1941 and was a significant concern throughout the Cold War. Russia’s invasion of Ukraine in 2022 renewed discussion about its possibility. Most notably, Fiona Hill, a well-regarded US foreign policy expert specializing in Russia, has stated that “we’ve been in this [World War III] for a long time, and we’ve failed to recognize it” (Hill, as quoted in Glasser, 2022). Anatol Lieven, another respected foreign policy expert, is more skeptical that World War III has already started, although he notes that “if however Ukraine goes on to try to reconquer Crimea, which the overwhelming majority of Russians regard as simply Russian territory, the chances of an escalation to nuclear war become extremely high” (Lieven, 2022). Wars of all sorts increase uncertainty and thus create windows for profit-making by oligarchs. T.V. Soong is one example of an oligarch who enriched himself during

 It’s worth noting that the clock failed to capture the 1956 Suez Crisis, the 1961 Berlin Crisis, the 1963 Cuban Missile Crisis, and the 1983 Soviet nuclear false alarm incident. All of these incidents significantly increased the possibility of nuclear conflict.  Metaculus is an online prediction engine established in 2015. It has a good reputation in the scholarly community. The probability of nuclear conflict is based on the predictions of 227 forecasters as of June 2023. Details can be found here: https://www.metaculus.com/questions/4779/at-least-1-nucleardetonation-in-war-by-2050/.

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World War II. A global conflict like World War III – assuming that it did not lead to nuclear war and consequent global annihilation – would offer extraordinary opportunities to secure and reproduce wealth and power. A counter-perspective is provided in Scheidel (2017), which argues that war, other forms of mass violence, and catastrophes reduce the inequality that is an incubator for oligarchs. Specifically, “mass mobilization warfare, transformative revolution, state failure, and lethal pandemics” (p. 6) have served to reduce inequality. Further, Most wars did not have any systematic effect on the distribution of resources: although archaic forms of conflict that thrived on conquest and plunder were likely to enrich victorious elites and impoverish those on the losing side, less clear-cut endings failed to have predictable consequences. For war to level disparities in income and wealth, it needed to penetrate society as a whole, to mobilize people and resources on a scale that was often only feasible in modern nation-states. This explains why the two world wars were among the greatest levelers in history (p. 6).

Mass mobilization warfare has led to a transformative revolution, which also reduced inequality. Internal conflicts and civil wars have generally not reduced inequality. These revolutions have generally occurred most frequently in the 20th century, and have been very violent. Communist revolutions in Russia, China, Vietnam, North Korea, Cuba, Cambodia, and elsewhere have reduced inequality dramatically. State failure or collapse also reduces inequality dramatically. Historical examples abound: Tang China, the Western Roman Empire, the Late Bronze Age Mediterranean, pre-Columbian America, ancient Egypt, and contemporary Somalia. And, finally and most relevantly to the contemporary period, pandemics have decreased inequality across history (Scheidel, 2017). When we consider how to regulate oligarchs, and note how ineffective more peaceful alternatives to violence might be in reducing inequality, humility must be exercised. Scheidel’s (2017) argument conditions how we should think about the role of war for oligarchs. This argument suggests that oligarchs benefit from wars that are not mass mobilization in nature, internal conflicts and civil wars that don’t become transformative revolutions, weakening states that don’t collapse, and epidemics that don’t become pandemics. Oligarchs seem to benefit from a kind of Goldilocks type of uncertainty – not transformative and chaotic, but not anywhere close to predictable either. Like many social phenomena, it’s a U-shaped curve that appears to be at work in the relationship between oligarchs and uncertainty. AI has already become the source of wealth and power for one oligarch in this book (Larry Page). Relatively low levels of AI are required for Google’s advanced search function that generated this wealth and power. How might AI affect oligarchs and their behavior in the future? AI is concentrated in the hands of a few technology players – who not coincidentally are some of the ideological oligarchs. This is creating knowledge inequality that translates into increasing power and wealth for those who control AI’s commanding heights. AI generates increases in uncertainty in other ways that oligarchs can then exploit. This occurs in a number of different ways. First, AI may increase technological unemployment, eliminating

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middle-class jobs and thus shifting both competitiveness in impacted industries and consumer demand. For example, the AI-driven chatbot ChatGPT may have disruptive consequences in education. Second, AI creates a variety of tools that can be employed by bad actors for surveillance and as weaponry. These tools are already reshaping the nature of the political systems employing these tools and are playing a significant role in the reinvention of contemporary warfare through, for example, the expanded use of lethal autonomous weapons. These changes are increasing political uncertainty, as they make it almost impossible to calculate relative military positions and thus whether a particular military stance deters attack or not. Third, algorithmic bias has already arisen from the learning that AI programs do from actual data. These biases are unpredictable and lead to impacts, including various types of discrimination. Fourth, superintelligence could pose an existential risk to humankind. While the debate on this topic continues, it is at least theoretically possible that such advanced AI could define its interests in a way that excludes humanity’s existence. All of AI’s dimensions create opportunities for oligarchs to exploit, given the high levels of uncertainty. Some oligarchs, such as Elon Musk and Peter Thiel, favor continued AI development despite the identified risks. This is reflected in their investment in ChatGPT. Finally, it is worth noting that the probabilities attached to these existential threats are subject to debate. For example, domain experts estimate the probability of AI causing human extinction by 2100 at 3%, while superforecasters estimate this probability at 0.38%. For nuclear weapons, the probabilities are 0.55% and 0.074%, respectively. Overall, experts predict a 6% probability of human extinction from all causes by 2100, while superforecasters assign a 1% probability (Karger, Rosenberg, Jacobs, Hickman, Hadshar, Gamin, Smith, Williams, McCaslin, and Tetlock, 2023).

Withering Oligarchs? The Long-term Rise in Economic, Political, and Social Equality Piketty (2022) argues that, despite increasing inequality around the world over the past two generations, the long-term trend is toward increasing equality. This process of increasing economic, political, and social equality began with the French and American revolutions and is contingent and political. Political mobilization is required to maintain the long-term trend toward equality, including policy initiatives such as progressive income taxation (the 16th Amendment to the US Constitution), a wealth tax (the Ultra-Millionaire Tax Act of 2021 in the US, introduced by Senator Elizabeth Warren), and a possible global asset registry. In opposition to these policy initiatives in support of increasing equality are the systems and structures of political and media finance, the sometimes weak functioning of democratic institutions, and the possibility that as neoliberalism declines, it will be replaced by neo-nationalism that avoids wealth redistribution (Piketty, as described in Marchese, 2022). Piketty’s optimism is rooted in his reading of income and wealth inequality data, as well as his judgment that policies will be constructed around the world that will lead to wealth redistribution.

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What the Future Might Hold for Oligarch Studies As we have seen so far, since 1989 oligarchs have become an increasingly significant economic and political phenomenon. We have shown that oligarchs are entrepreneurial. Many oligarchs are examples of the dark side of entrepreneurship (Shepherd, 2019) as they engage in unproductive and destructive economic activities including rent-seeking and organized crime (Baumol, 1990). The contemporary popularity of the term “oligarch” can be traced to post-communist Russia, where the phenomenon has been described by both scholars (Guriev and Rachinsky, 2005) and journalists (Hoffman, 2002). The concept of oligarchs has been researched in other institutional settings across Asia (Winters, 2011) and modeled across time (Acemoglu, 2008), establishing it as a feature of contemporary global society. Despite – or perhaps because of – the growing interest in oligarchs across a wide variety of social science disciplines, including economics (Milanovic, 2016; Piketty, 2014), sociology (Leach, 2005), political science (Winters, 2011), and management (Khatri, Tsang, and Begley, 2006), the oligarch concept continues to be used mainly as a metaphor rather than as a construct with unclear relationships to extant theories in these disciplines and others, such as entrepreneurship. Oligarch studies, which complement the study of entrepreneurship’s productive activities that dominate the literature, has the potential to be theoretically fruitful (Shepherd, 2019). Like other emergent fields, such as entrepreneurial ecosystems (Wurth, Stam, and Spigel, 2022), oligarch studies, or at least oligarchs, have reached “buzzword” status, particularly in popular discourse. However, the basic ideas underlying oligarch studies remain unclear, despite an intellectual lineage extending back to Aristotle (1996). This book has attempted to clarify the definition of oligarchs and to distinguish them from other related phenomena. As an academic field, however, oligarch studies is not yet grounded in strong research traditions, but provides a way to synthesize literatures to open up new research questions that have significant implications for both policy and social science, such as the understanding and exploitation of uncertainty (Lingelbach, 2020a). As suggested by Wurth et al. (2022), a coherent research program is built around five elements: concept, framework, model, theory, and mechanisms. The concept is “an abstract idea of a real-world phenomenon” (Wurth et al., 2022, p. 2) that is centered on its definition. The framework is an organized set of factors most relevant to understanding the concept. The framework provides the structure for the model, which is the hypothetical relationships between variables. These hypotheses are derived from theories, which, in the case of process theories such as the one advanced in this book, describe causal mechanisms that explain development and change (Van de Ven and Poole, 1995). When we assess oligarch studies against this research program framework, we can see that much work remains to be done. First, with regard to the concept, we have proposed a clear definition in this book, rooted in Aristotle (1996) and Winters (2011), and building on Lingelbach (2020a). That definition builds on intellectual traditions ranging from philosophy to political science and business and management studies. However,

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that definition, while non-controversial, is new and must be debated by scholars in order to be accepted. That debate must carefully distinguish between oligarchs and similar – but different – phenomena such as authoritarians, kleptocrats, and tycoons. By defining oligarchs as actors who secure and reproduce wealth and power, and then utilize one to acquire the other, the oligarch concept makes the following advances over prior approaches. First, it emphasizes that oligarchs secure two separate mechanisms of control: wealth and power. Second, it acknowledges that, by holding two separate control mechanisms, oligarchs are better able to exploit uncertainty than other economic and political actors who hold only one control mechanism. Third, this oligarch concept reorients research to include business and management studies, as it clarifies that wealth generation and management are central to the oligarchs’ effectiveness. Research on oligarchs entails a shift in the unit of analysis away from oligarchy – defined as groups of oligarchs – to individual oligarchs, their decision-making, and actions. As we have described in this book, this shift also entails another shift, from variance studies (answering “what” questions) to process studies (answering “how” questions). It foregrounds research questions about individual agency and the abilities of oligarchs to transform the institutional environments in which they operate. Second, when looking at the framework and its factors relevant to understanding the oligarch concept, a generalized structure based on Stam (2015) is envisioned, as depicted in Figure 10.2: Framework conditions Uncertainty

Institutions

Inequality

Process conditions Entrepreneurial capacity

Capacity to couple and decouple with multiple strategic partners

Capacity to wait for main chance

Capacity for secrecy and stealthiness

Outputs Securing and reproducing wealth and power, and transforming one into the other

Outcomes Oligarchs with increasing wealth and power

Figure 10.2: Oligarch Research Framework.

The oligarch framework is organized into four components that proceed in a sequential fashion: framework conditions, process conditions, outputs, and outcomes. Frame-

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work conditions include uncertainty, institutions (both formal and informal, and incorporating institutional change), and economic, political, and social inequality. These framework conditions lead to the process conditions that enable oligarchs. These are the heart of the model developed in this book. They include capacities to be entrepreneurial, to couple and decouple with multiple strategic partners, to wait for the main chance, and to behave with secrecy and stealthiness. Those process conditions next lead to one principal output: the ability to secure and reproduce wealth and power, and transform one into the other. Finally, that output leads to the outcome of oligarchs in increasing numbers and with increasing wealth and power. Third, the framework provides a way of thinking about the model – the hypothesized relationships between the variables. Those hypotheses can be derived from the fourth element of the research program – theories – which help explain the fifth element – causal mechanisms – which explain development and change (Van de Ven and Poole, 1995). It is these three elements – model, theory, and mechanism – that remain underdeveloped in oligarch studies to date. Thus, the first order of business in oligarch studies is to develop these three elements. But in order to do so, we must now talk about research methodologies and measurements. The largest single challenge in advancing oligarch studies as a field of study is the relative paucity of data, particularly quantitative data, about the phenomenon and its components and processes. Measures of oligarch wealth remain dominated by Forbes and Bloomberg datasets, which are reliable and transparent as far as they go. However, both largely exclude political oligarchs (such as Putin), requiring researchers to rely on much less transparent estimates that cannot be compared easily to one another. With regard to power measurements, there are as yet no reliable longitudinal data that is as rigorous as other similar types of perception-based estimates, such as institutional quality or corruption. Research on oligarchs remains dominated by observations and case studies, rather than experiments. Therefore, as is the case with many other disciplines in business and management studies, it is difficult to infer causality. While more robust theoretically, experimental research design is quite difficult to conceive for oligarch studies at present, given the secrecy of these data sources. More promising are mixed-method approaches. Longitudinal databases (such as the one we continue to develop), “big data” approaches (e.g., mining the social media activity of oligarchs such as Trump and Musk), and, over time, replication studies as more studies of oligarchs are published will all increase the reliability of knowledge in the field. When we turn to the three interrelated elements of model, theory, and mechanism, we can see that the oligarch concept has been applied against a wide variety of theoretical lenses. However, no theoretical approach has yet emerged as a dominant one, nor have attempts been made (other than in this book) to integrate existing theories. This is true for both variance studies looking at the causes and consequences of oligarchs, as well as process studies such as this book looking at “how” questions.

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Aside from the theories we’ve advanced in this book, theoretical perspectives that seem likely to have useful contributions to make to oligarch studies include institutional theory, social capital theories, and resource-based theories. Beyond these theories, however, oligarch studies will benefit from a fuller understanding of how pre-existing wealth, income, and power inequalities contribute to oligarchs’ characteristics and behaviors; the extent to which oligarchs have agency; how oligarchs evolve over time and space; the individual characteristics and personalities (the “Who am I?” questions from effectuation) that impact oligarch performance; and the relationship between uncertainty types and levels and oligarch behavior. This is a suggestive and non-exhaustive list of possible theoretical directions. As we discuss later in this chapter, there is an important policy dimension to oligarch studies. A key issue is the measurement and evaluation of policies designed to regulate oligarch behavior. In order to begin to address this issue, policy objectives must first be developed. The recent sanctions of Russian oligarchs point out one possible objective: influencing policies of regimes to which oligarchs are linked. Other possible objectives, including limiting oligarch wealth and power, can also be imagined and are likely to be country-specific.

Oligarch Ethics In thinking about policies that regulate oligarch behavior, a question naturally arises: Can oligarchs regulate themselves? Such self-regulation takes us into the realm of what we will call oligarch ethics. The political philosopher Michael Sandel gets us started: Aristotle criticizes what he takes to be the two major claimants to political authority – oligarchs and democrats. Each has a claim, he says, but only a partial claim. The oligarchs maintain that they, the wealthy, should rule. The democrats maintain that free birth should be the sole criterion of citizenship and political authority. But both groups exaggerate their claims, because both misconstrue the purpose of political community. The oligarchs are wrong because political community isn’t only about protecting property or promoting economic prosperity. If it were only about those things, then property owners would deserve the greatest share of political authority. For their part, the democrats are wrong because political community isn’t only about giving the majority its way. By democrats, Aristotle means what we would call majoritarians. He rejects the notion that the purpose of politics is to satisfy the preferences of the majority. [. . .] For Aristotle, politics is about something higher. It’s about learning how to live a good life. (Sandel, 2009, p. 193)

Aristotle recognized oligarchy and oligarchs as a deviant constitutional form – deviant because it was less just. So, ethical oligarch behavior is self-liquidation, in the sense that oligarchs would need to become aristocrats (society’s best people), not society’s wealthiest people. To the extent that oligarchs help a society’s members to live a good life, they are moving in that direction.

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Philanthropy may be one way in which oligarchs can make that transition. The following figure (Figure 10.3) lists some of the philanthropic initiatives associated with the oligarchs in this book: Oligarch

Philanthropic initiatives

Bin Laden

No formal initiatives

Bukele

No formal initiatives

Char

No formal initiatives

Dos Santos

No formal initiatives

Fridman

Russian Jewish Congress European Jewish Fund Genesis Philanthropy Group Babyn Yar Holocaust Memorial Center Alfa Jazz Fest (Leopolis Jazz Fest since ) Alfa Future People Festival

Gore

The Climate Reality Project

Hariri

Islamic Association for Culture and Education (renamed the Hariri Foundation) Donations to victims of South Lebanon conflict

Koch

Mainly for political purposes Some funding of local sports Koch Cultural Trust

Page

Singularity University Promoting advanced digital technologies to create abundance Carl Victor Page Memorial Fund

Piñera

Fundación Futuro

Putin

No formal initiatives as a private citizen

Ramaphosa

Pledged half his presidential salary to the Nelson Mandela Foundation Cyril Ramaphosa Foundation

Shinawatra

No formal initiatives

Tung

China-United States Exchange Foundation, but mainly a political vehicle promoting Chinese interests

Tymoshenko

No formal initiatives

Zardari

No formal initiatives

Figure 10.3: Oligarchs and Philanthropy.

 Fridman resigned from the Center’s Supervisory Board in March 2022 due to the Ukraine warrelated sanctions imposed on him.

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241

Is there such a thing as a “good oligarch”? Like all humans, oligarchs are flawed figures. So far, the oligarch that comes closest to that title in many minds is George Washington. However, Washington’s legacy remains clouded (as are those of many of the other Founding Fathers) by slave ownership. A more compelling candidate for good oligarch is Herbert Hoover, the 31st president of the United States. A full portrait of Hoover must include not only his disastrous economic management, which led to the Great Depression, but also his leadership of the American Relief Administration (ARA) after World War I. A recent historian of the ARA effort put the Russian part of the effort this way: Facing one of the worst famines in history, the Soviet government invited the American Relief Administration, the brainchild of Herbert Hoover, future president of the United States, to save Russia from ruin. For two years, the ARA fed over ten million men, women, and children across a million square miles of territory in what was the largest humanitarian operation in history. Its efforts prevented a catastrophe of incalculable proportions–the loss of millions of lives, social unrest on a massive scale, and, quite possibly, the collapse of the Soviet state. (Smith, 2019, p. 5)

Keynes assessed ARA’s contribution as follows: Never was a nobler work of disinterested goodwill carried through with more tenacity and sincerity and skill, and with less thanks either asked or given. The ungrateful Governments of Europe owe much more to the statesmanship and insight of Mr. Hoover and his band of American workers than they have yet appreciated or will ever acknowledge. [. . .] It was their efforts, their energy, and the American resources placed by the President at their disposal, often acting in the teeth of European obstruction, which not only saved an immense amount of human suffering, but averted a widespread breakdown of the European system. (as quoted in Whyte, 2017, pp. 225–26)

In short, Hoover’s ARA efforts likely saved more people’s lives than any other act in American history. That seems like a pretty good example of a good oligarch to us.

Oligarch Self-governance But what if oligarchs aren’t good? Can they regulate themselves to be less bad? Since Aristotle and Plato began writing about oligarchs, the presumption has been that oligarchs somehow were organized as a group, as an oligarchy. The further presumption has been that this group was somehow self-regulating. That is what an oligarchy has come to be seen as. Yet, as this book has argued, that presumption may or may not be true. We know for certain that oligarchs are individuals, hence the model in this book which emphasizes their individual decision-making, strategies, and actions. Of course, individual oligarchs share common objectives. As Winters (2011) points out, wealth defense is one such objective. Ancient Greek oligarchs faced this issue of self-governance. They recognized the essential need for all oligarchs to be treated equally, if the oligarchy was to persist.

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The techniques they employed to ensure equal treatment included multiple veto points in the voting process, consensus-building, and the secret ballot. Oligarch expenditures were regulated through legislation to ensure that no one oligarch could become preeminent. Escalation in judicial proceedings was limited through keeping dispute resolution constrained, courteous, and respectful. As a final resort, exile was used to punish oligarchs who violated these laws and norms (Simonton, 2017). While they worked for the ancient Greeks, these techniques seem unrealistic in the contemporary dog-eat-dog oligarch environment. One contemporary example of how oligarchs coordinated their interests and governed themselves was the 1996 Davos Pact between some Russian oligarchs and the related loans-for-shares program. Faced with the prospect of Yeltsin losing the 1996 presidential election, seven oligarchs (known in Russian as semibankirschina) agreed among themselves and with Yeltsin’s circle to promote Yeltsin’s re-election and provide loans to the Russian government to finance its budget deficit. In exchange, these oligarchs received (usually) minority stakes in 12 large state-owned companies to manage in trust: “If the loans were not repaid by September 1996, the creditors were then allowed to auction off the tranches and keep 30% of any profit. In the event, the government did not repay the loans, and the creditors sold the stakes, usually to themselves. Competition was kept to a minimum through careful rigging of the auctions” (Treisman, 2010, p. 208). As our book has noted, such corrupt relationships are common across both the developing and developed world. What is interesting about the Davos Pact and the loansfor-shares program was the way in which the Russian oligarchs coordinated their activities in a way that minimized explicit conflict. One dimension of this coordination were the roles of: Anatoly Chubais, who had recently resigned from the Russian government and was managing Yeltsin’s campaign; Boris Berezovsky, who played a leading role in conceiving the Davos Pact; and Vladimir Potanin, who conceptualized the loans-forshares program. The Davos Pact played a significant role in Yeltsin’s subsequent reelection, while the loans-for-shares program has had numerous impacts, including as a catalyst to Russia’s subsequent economic growth (Treisman, 2010). Important research questions that emerge from this example are 1) what are the principal factors that influence oligarch self-governance, 2) what is the relative influence of oligarch self-governance and policies that regulate oligarch behavior, and 3) how do formal and informal institutions impact oligarch self-governance?

Policy Actions If oligarchs can’t regulate themselves, how can societies control them? When we speak about policy actions that might control oligarch behavior, it is important to start by being clear about the extent to which these actors have engaged in illegal activities. The following table (Figure 10.4) summarizes those activities:

Policy Actions

Oligarch

Convicted Went Charged Accused of of a to with a illegal or crime trial crime unconstitutional activity

NonImpact on judicial wealth or legal power action

Bin Laden

243

Note

None

Bukele

X

Increased power

Extended term in office without constitutional change, accusations of human rights violation, corruption

Char

X

Increased wealth and power

Accused of vote-buying scheme, corruption

Dos Santos

X

X

X

Decrease in both wealth and power

Charged with corruption by Angolan government, international arrest warrant issued, banned from US travel

Fridman

X

X

Decrease in wealth

Sanctioned by UK, US and EU, Spanish and Ukrainian investigations, ongoing UK money laundering investigation

Gore

X

Figure 10.4: Oligarchs’ Illegal Activities – Actual and Potential.

No significant Accused of impact inappropriate sexual contact

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Chapter 10 W(h)ither Oligarchs

(continued)

Oligarch

Convicted Went Charged Accused of of a to with a illegal or crime trial crime unconstitutional activity

Hariri

NonImpact on judicial wealth or legal power action

X

Corruption may have increased wealth, but accusations themselves had no significant impact

Note

Accused of corruption

Koch

None

Page

None

Piñera

X

X

X

Decrease in power

Charged by Chilean authorities with banking law violations but acquitted by Supreme Court, accused of bribe-taking, impeached by lower house but acquitted by senate

Putin

X

X

X

Decrease in power and wealth

Sanctioned, arrest warrant issued by International Criminal Court on charges of war crimes

Figure 10.4: Oligarchs’ Illegal Activities – Actual and Potential.

Policy Actions

245

(continued)

Oligarch

Convicted Went Charged Accused of of a to with a illegal or crime trial crime unconstitutional activity

Ramaphosa

Shinawatra

X

X

X

NonImpact on judicial wealth or legal power action

Note

X

X

Slight decrease in power

Various accusations, impeachment vote failed in parliament

X

X

Decrease in power

Corruptionrelated charges after coup, convicted of abuse of power, but never jailed

Tung

None

Tymoshenko X

X

X

X

Decrease in wealth and power

Three years in prison

Zardari

X

X

X

X

Decrease in power

Charged with kidnapping extortion, corruption, and money laundering, six years in prison

Total











Figure 10.4: Oligarchs’ Illegal Activities – Actual and Potential.

Of the oligarchs we study in this book, 75% have been charged convicted, charged, or accused of a crime, or have had a non-judicial legal action taken against them. Two have served time in prison for their crimes, one has been convicted but not imprisoned, two more have been charged but not convicted, six have had allegations of illegal activity made against them but have not been charged, and six faced non-judicial legal actions such as sanctions or impeachment. However, 25% of the oligarchs have not faced any legal charges or accusations. It is these “clean” oligarchs for whom there are, at present, no effective means of control or regulation.

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Sanctions Sanctions have recently become a popular form of control over some oligarchs. They have four major objectives. First, they seek to compel a target to restore the status quo ante. Second, they try to deter future actions by threatening retaliation. Third, sanctions are used to cause regime change. Fourth, they uphold the international order by condemning unacceptable behavior and reaffirming existing norms and rules (Gould-Davies, 2020). Despite lofty objectives, sanctions are unlikely to be effective. Economic sanctions are at least partially successful 34% of the time (Hufbauer, Schott, Elliott, and Oegg, 2009). In 2018, US sanctions against Russian oligarchs and other elites were justified as a general response to Russian malign behavior, including electoral interference, cyber hacking, and military intervention in Syria. The individual sanctions were justified on the basis that the oligarchs benefited disproportionately from the Russian system (Gould-Davies, 2020). There is no evidence that these sanctions influenced the behavior it sought to deter. This is a common pattern. While economic sanctions have been a common tool in international relations, there is little evidence that they work (Pape, 1997). Sanctions deliver large economic shocks with significant externalities, but are also easier to evade (Mulder, 2022). In order to improve the efficacy of sanctions, the concept of targeted or smart sanctions has been developed. Targeted sanctions are believed to be more humane but less likely to coerce target governments into altering their behavior. In this regard, financial sanctions are somewhat more successful than trade sanctions (Drezner, 2011). Sanctions against oligarchs have become more significant as a consequence of the Russian invasion of Ukraine in 2022. These sanctions have had two specific purposes. First, they have been part of an overall sanctions strategy designed to pressure Putin – himself an oligarch – to withdraw from Ukraine and perhaps compel him to leave power. The logic has been based on the assumption that Russian oligarchs have the power to influence Putin’s actions. Second, individual sanctions against oligarchs have had a performative aspect, appealing to Western publics eager to exact some revenge against Russian targets, especially wealthy and powerful ones. The United States, the European Union, and other countries have listed dozens of oligarchs subject to various types of sanctions. The net worths of sanctioned oligarchs have generally decreased since sanctions were introduced, although whether the sanctions are directly responsible for the decrease is unclear. Sanctions have also decreased the liquidity of these oligarchs, complicating their ability to conduct business. The example of Mikhail Fridman illustrates the impact that sanctions can have. Fridman was blacklisted by the EU and had all of his assets frozen in February 2022. The UK subsequently froze his properties in that country. He relinquished his role as chair of LetterOne, his investment holding company, and reduced his shareholdings. Fridman also reported that he was cash flow-constrained in his personal affairs. In

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247

late 2022 Fridman was allegedly detained on money laundering charges in the UK, but was subsequently released. So far, we conclude that sanctions against oligarchs have had a limited impact on their behaviors, wealth, and power.

Anti-corruption Another policy tool to regulate oligarchs is anti-corruption activities. To the extent that oligarchs are corrupt, anti-corruption activities control their ability to secure and reproduce wealth and power. Such activities can include 1) the targeting of illicit tax havens, 2) going after oligarchs’ stolen and laundered assets, 3) in the US, a proposed federal Commission on Federal Ethics, and 4) anti-shell company language in the US National Defense Authorization Act (NDAA) (Michel, 2021). In the future, Michel (2021) proposes a number of additional actions to further reduce corrupt activity, including by oligarchs: 1) closing temporary loopholes allowed by the US Patriot Act for anonymous real estate purchases and, relatedly, expanding the Geographic Targeting Orders (GTO) program, 2) adapting the UK’s Unexplained Wealth Orders program in other domiciles, 3) establishing a global asset registry (one version of which is described in ICRICT, 2022), 4) maintaining the US Treasury’s cross-border payments database, 5) expanding asset seizures, and 6) better resourcing and staffing for corruption-related regulatory bodies. To the extent that oligarchs operate in US jurisdictions, these actions may impact their ability to secure and reproduce wealth. The impact of these actions on oligarchs’ power is indirect and limited. What about anti-corruption measures against oligarchs outside the United States? The United Nations adopted a Convention Against Corruption (UNCAC) in 2003. This Convention has been ratified by virtually every member of the UN. It remains the only legally binding international, anti-corruption multilateral treaty. A Conference of States Parties (COSP) has been established to coordinate anti-corruption policy across the Convention’s signatories. The UNCAC Coalition has also been created by over 350 civil society organizations concerned with anti-corruption work. No recent studies assess the effectiveness of the UNCAC. Other studies indicate that anti-corruption activities can be effective (Torres, 2020). However, no studies have demonstrated effective policy or enforcement against oligarchs’ corrupt activities.

Competition Policy When oligarchs are able to structure and maintain monopolies, they can generate excess returns for themselves. Competition policy plays an important potential role in reducing those returns and constraining their wealth.

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Competition policy (known as anti-trust policy in the US) is defined as “the set of policies and laws which ensure that competition in the marketplace is not restricted in such a way as to reduce economic welfare” (Motta, 2004, p. xvii). These policies represent a significant potential tool to control oligarchs’ ability to secure and reproduce their wealth. Competition policy can act to restrict anti-competitive and monopolistic industry structures that generate excess profits for incumbents. Oligarchs often have access to policymakers and regulators who can “tip the scales” in their direction, allowing for oligarch wealth creation that reduces economic welfare. The following table (Figure 10.5) depicts our estimates of market share and competitiveness for the oligarchs we study in this book: Oligarch

Market share estimate

Notes

Bin Laden

High

Favored royal builder

Bukele

Low

One of several motorcycle distributors and marketing firms, older family firms had higher market shares

Char

High

Family business dominates economic activity in Barranquilla

Dos Santos

Medium

Favored access to industries that have some competition

Fridman

Medium

Operates in several competitive industries

Gore

Low

One of many investment management firms

Hariri

High

Favored builder

Koch

Medium

High market share in some industries (e.g., refining)

Page

High

.% global market share for search

Piñera

Medium/high

Near monopoly in credit cards at inception, investment in airline with high domestic market share

Putin

Medium/high

High for Gazprom, medium for Surgutneftegaz

Ramaphosa

Medium

Some investments operate in competitive sectors, others in near monopoly conditions

Shinawatra

High/medium

Exclusive mobile phone license initially, other industries more competitive

Tung

High

One of the leading global shipping firms

Tymoshenko

High

Exclusive gas distribution arrangement

Zardari

Medium

Varies by industry

Figure 10.5: Oligarchs’ Market Share.

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249

Of the oligarchs in this book, Page’s Google is the most vulnerable to anti-trust accusations. It has been fined billions by the EU for anti-trust issues, and the US government recently opened up a new anti-trust case against the company. These actions came decades after Google had established market dominance and Page reaped excess profits. In addition, for ideological oligarchs like Page who engage in surveillance capitalism, regulation becomes especially important. These oligarchs, whether intentionally or not, pose perhaps the greatest challenge to human freedom. To date, democracies have been ineffective in controlling the intrusion of Google, Facebook, and other firms into individual privacy, although there are some signs that this situation may be changing. Recent EU laws on digital services and markets have begun the process of change, as have proposed AI regulations and declarations on digital rights and principles. In order to stop and reverse the intrusion of ideological oligarchs like Page into individual lives, anti-surveillance laws would need to be enacted. Such laws would prevent gratuitous surveillance and accumulation of personal data and allow only data collection necessary to the task at hand. Any data collected would be disposed of or anonymized (Wu, 2020). In short, lawful abolition of secret massive-scale data extraction by tech companies is required to control these firms and the power of their oligarch owners. Like the proposal for a global tax on capital, abolishing data extraction would likely slow, if not stop, the rise in oligarchs that we have documented in this book. How likely are these measures? Some see hope in the defense of democracy currently underway in Ukraine, which, if successful, would also spell the end of another oligarch – Putin. We are less optimistic. Oligarchs have too many tail winds in their favor, starting with rising uncertainty, for which they are uniquely equipped to exploit. A growing percentage of the global population has come of age in a world where oligarchs are the norm, not the exception, even if they are not ruled by them in their own countries. We don’t discount the energy and innovation of a handful of actors to try to turn the oligarch tide, but that energy faces fundamental forces that are now not easily slowed, let alone reversed. Consequently, we expect that any regulation of oligarchs is likely to be piecemeal and incremental, rather than revolutionary.

De-oligarchization De-oligarchization refers to the process by which societies reduce the number and influence of oligarchs. To date two countries – Ukraine and Georgia – have developed a legal framework for de-oligarchization. Ukraine began the process of oligarch control shortly after its 2014 Revolution of Dignity. While most oligarchs emerged weaker from that revolution, and some reshuffling occurred, oligarchs remained a central feature of Ukrainian politics and business (Konończuk, 2017). Prior privatizations were not reversed, and oligarchs were pro-

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tected and allowed to continue lobbying for their interests. Following Zelensky’s election in 2019, and despite the fact that he had been financially supported by one oligarch in his presidential campaign, de-oligarchization took on a more serious tone. In 2021, a bill on oligarchs in Ukraine was introduced in the Ukrainian parliament. The law called for the creation of an oligarch register. Individuals will be added to the register by the National Security and Defense Council, if they meet three or more of the following criteria: 1) excessive media influence, 2) political life participation, 3) beneficial ownership of a monopoly company, and 4) wealth in excess of $83 million (at current exchange rates). Individuals in the register will be banned from making contributions to political parties or being a buyer in large-scale privatizations. The law was signed into law by Zelensky in late 2021, and became effective six months later. As of October 2022, a tender has been announced for the registry’s software. The law has been criticized in Ukraine as unconstitutional by the parliament’s commissioner of human rights, as it could lead to violations of human and civil rights and freedoms. External observers criticized the law for its risk to freedom of speech, and one compared it to Putin’s policies in the early 2000s that stripped media assets from unfriendly oligarchs. More broadly, some observers note that Zelensky’s concentration of power in his own hands during wartime may not be so easily undone afterward, without the countervailing force of oligarchs (Skorkin, 2022). Russia’s invasion of Ukraine in 2022 had a much larger and so far adverse impact on its oligarchs. Their net worths have plunged, in part because some of their industrial assets have been destroyed, and both the government and the general public has stepped up pressure on Ukrainian oligarchs in pursuit of a “more democratic, less corrupt and more economically diversified” country (Sullivan, Stern, and Khudov, 2022). Anti-trust laws are also being drafted to limit oligarch control of key monopolies in coal mining, electricity, and railroads. In one instance, Ukraine has stripped three oligarchs of citizenship, based on the dual citizenship law. Additionally, Ukraine has begun seizing shares of industrial companies owned by oligarchs, based on their importance to the war effort. These shares have now become property of the Ukrainian military, and will be returned to their owners or compensation paid at the end of martial law. Georgia has also begun a de-oligarchization process, in part to meet EU conditions for becoming a member candidate. A draft law was introduced in October 2022, based on Ukraine’s law. However, the context is quite different. Georgia really has only one oligarch, Bidzina Ivanishvili, a billionaire who is the country’s wealthiest citizen and behind-the-scenes ruler (Gabritchidze, 2022). His political party dominates parliament and drafted a law that excludes Ivanishvili while including other lesser oligarchs who fund political parties in opposition to his. Given Ivanishvili’s party’s dominance, the law will likely pass.

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251

Transparency Increasing public awareness of oligarchs and their activities is one of the most impactful ways in which their behavior and decisions can be influenced. As the book’s model shows, secrecy and stealthiness are essential strategies by which they secure and reproduce wealth and power. Improving oligarch transparency can be divided into three sets of actions: legal/regulatory, self-regulatory, and public interventions. Possible legal and regulatory actions begin with greater transparency about the origins and composition of oligarchs’ wealth. Particularly when they seek decisionmaking roles, oligarchs should disclose how they obtained their wealth in detail and over time so that citizens in democracies can determine the legitimacy of that wealth as well as a better sense of how effective an oligarch is as a businessperson. For example, Donald Trump is the wealthiest person to become US president, yet his wealth was built on a combination of 1) family inheritance, 2) multiple corporate bankruptcies, and 3) legitimate business acumen, centered on effective self-branding. While this wealth composition is better known today after he completed his term in office, for oligarchs seeking political office, it is vital that such information be disclosed beforehand and then be independently audited. Oligarchs who are concerned that such disclosures will undermine their future competitiveness will have to weigh the disclosure that could lead to greater decision-making power against possible future declines in their wealth as a result of greater openness. Legal and regulatory actions can also provide a clear measurement and disclosure of oligarchs’ power. As we noted in Chapter 1, measuring power is a challenging exercise. Yet, we have the capacity to apply survey research more broadly to assess relative and absolute power. The results of such research should be shared broadly, so that citizens can better determine whether and to what extent oligarchs are gaining or losing power along its three dimensions: decision-making, agenda-setting, and ideological. While greater public disclosure of oligarch wealth and power are broad initiatives that may take time to implement, other actions could be taken in the near term to improve transparency around oligarchs. Freigang and Martini (2022) identify 10 actions that governments can take to improve transparency around kleptocrats. It is important to note here that, as we explained in Chapter 1, kleptocrats and oligarchs are different economic and political actors. Many oligarchs are not kleptocrats and acquire their wealth and power in legitimate ways as defined by their home societies. Thus, actions that presume oligarch illegal behavior from the outset would likely be challenged in court. Nonetheless, these recommendations may be a useful place to start the discussion around specific actions to improve oligarch transparency. Based in part on Freigang and Martini (2022), we note where such recommendations could be adapted to oligarchs specifically.

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The recommendations include (Freigang and Martini, 2022): Proactively identifying and freezing kleptocrat assets Strengthening multilateral efforts to trace assets, and include more countries in existing multilateral efforts 3. Eliminate anonymous companies (could be applied to oligarchs) 4. Increase the transparency of trusts (could be applied to oligarchs) 5. Improve real estate sector transparency (could be applied to oligarchs) 6. Increase transparency of hedge funds, private equity funds, and other investment vehicles (could be applied to oligarchs) 7. Increase transparency of luxury goods ownership (could be applied to oligarchs) 8. Better regulate and hold accountable professional enablers (banks, trust and corporate service providers, investment fund managers, lawyers, accountants, real estate professionals, and luxury goods dealers) (could be applied to oligarchs) 9. Better resource financial crime investigative units and law enforcement 10. Strengthen mechanisms for tracing, seizing, confiscating and returning assets 1. 2.

Another recent legal and regulatory initiative that has improved oligarch transparency is public hearings by legislative bodies. The January 6 select committee of the US House of Representatives is the best-known example of this type of initiative and led to criminal referrals to the US Department of Justice for Donald Trump. The outcome of those referrals remains unclear at the time of writing, but the committee hearings produced a rich body of evidence on how one oligarch sought to extend his time in office through unconstitutional means. When we consider self-regulation as a means to improve oligarch transparency, we find little evidence that this set of activities has occurred to date. Of course, many observers might consider self-regulation as akin to cartel-like behavior. Self-regulatory organizations (SROs) are often non-profit entities that create and enforce industry or professional standards separate from government entities. SROs are common in the financial services sector and thus already exercise some indirect influence on oligarch behavior through their financial market activities. To the extent that oligarchs consider themselves a profession, and see it in their interest to be self-regulated, there is an opportunity to establish an independent, multinational SRO to improve oligarch transparency and, perhaps, regulate them to some degree. Such an SRO would face a whole host of issues, including maintaining the appearance and reality of independence and enforcement power (what actions could such an SRO take to rein in oligarch behavior?). Moreover, to the extent that oligarchs see their essence as lying beyond regulation of any sort, they may see little reason to support such an effort, other than as window dressing. Finally, we can see the many bottom-up initiatives related to oligarch behavior that have had varying degrees of impact to date. Most of them have a moralistic overtone, especially since the 2022 Russian invasion of Ukraine. Relevant examples include the Hudson Institute’s Kleptocracy Initiative (which focuses on kleptocrats, not oli-

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253

garchs), and the journalistic work of Oliver Bullough (2019, 2022) and Jane Mayer (2016. The many civil society organizations engaged in anti-corruption activity suggest that there is interest in such grassroots efforts. ✶✶✶

Weighing the evidence in this chapter, we see very little to indicate that oligarchs are going to disappear in the near future. They seem unlikely to wither. The mechanisms that enable oligarchs to secure and reproduce their wealth and power, and to transform one into the other, seem to have become well-established over the past few decades. Piketty’s arguments for how to reduce wealth inequality, and the proposals of others to regulate oligarchs, seem to be outweighed by the historical evidence, which indicates that only large-scale warfare, revolution, state collapse, or pandemics can succeed in reducing inequality, and, presumably, the numbers and influence of oligarchs. But, at the same time, we are mindful of Orwell’s (1946/1988) and Popper’s (1957/ 2002) warnings that the past does not predict the future. For if it did, “one could have demonstrated the impossibility of aeroplanes in 1900, or of motor cars in 1850” (Orwell, 1946/1968). Is the COVID-19 pandemic the kind of event that could reduce inequality and end the rise of oligarchs that has occurred since 1989? As of June 2023, the following table lists pandemics and their impact on global population (see Figure 10.6). Two points from the data in this figure are worth making. First, the COVID-19 pandemic has not killed enough people yet to rise to the level of the pandemics cited by Scheidel (2017). Relatedly, if current rates of annual excess mortality remain constant, it would take more than 10 years before COVID-19 would have an equivalent impact to one of the pandemics cited in Scheidel (2017). Second, the ongoing HIV/AIDS pandemic/epidemic has not had a significant impact on wealth or income inequality, and, indeed, has not had a widespread impact on economic and political affairs. Taken together, these two points suggest that, if current trends hold, COVID-19 is unlikely to have a significant negative impact on oligarchs and their ability to secure and reproduce wealth and power. ✶✶✶

Speaking of threats to mankind: What kind of threat do oligarchs pose to the rest of us? This has been a question lurking throughout our research. After learning more about them, we think that we can make an educated guess. First, oligarchs are not a direct existential threat to humankind. On average, oligarchs who have been heads of state or government during COVID-19 have seen higher than average excess mortality in their countries. And one oligarch – Putin – has begun a war that could yet deteriorate into a nuclear conflict, upending what we are about to say. But, taken as a whole, these threats are not of the scale of the three major existential challenges we currently face on the planet: climate change, nuclear conflict, and artificial intelligence.

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Pandemic

Deaths as percentage of global population

Notes

Black Death

–%

Example from Scheidel ()

Plague of Justinian

–%

Example from Scheidel ()

Antonine plague

–%

Example from Scheidel ()

Spanish flu

–.%

Cocoliztli epidemic of –

–%

 Mexico smallpox epidemic

–%

– Japanese smallpox epidemic

%

HIV/AIDS pandemic/ epidemic

.%

Cocoliztli epidemic of 

.–.%

COVID- pandemic

.%

– Persian epidemic

.–.%

Naples plague

.%

– Italian plague

.%

Percentage based on  global population, still in progress

Based on excess mortality as of August , still in progress

Figure 10.6: Pandemic/Epidemic Impacts.

Next, are oligarchs mass murderers on the scale of Mao, Stalin, Hitler, or Pol Pot? Certainly Leopold II was directly responsible for the deaths of millions of Congolese during his ownership of the Congo Free State. Putin’s ongoing war with Ukraine has caused hundreds of thousands of military and civilian deaths, and is very likely to cause more. But, while these deaths are not trivial, they do not rise to the levels of death that history’s mass murderers have committed. Next, are oligarchs a threat comparable to rising authoritarianism? Well, of course, some oligarchs are authoritarians and are contributing to that negative trend. As shown in Figure 10.1, 50% of the oligarchs we studied saw an increase in authoritarianism during their rules. Some, such as Putin and Bukele, are clearly authoritarian. And it is true (as Figure 1.8 lays out) that few of the oligarchs we have studied could be classified as “good.” But, as chronicled in Rachman (2022), rising authoritarianism is so much broader than the authoritarianism we observed amongst oligarchs. Putin, yes. But today’s authoritarians rule two of the world’s largest economies (Xi in

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China and Modi in India) and have already challenged democratic rule in another (Trump in the United States). Only one of these is also an oligarch. Next, since oligarchs thrive on uncertainty, can we say that they have actively caused it? Are they destabilizing forces? This is a harder question to answer. It’s difficult to disentangle the uncertainties that oligarchs might cause from those that preexisted them. Putin is certainly an example of a chaos monkey, particularly since his 2014 invasion of Ukraine. Koch has played a leading role in disrupting American political discourse. Even more disruptive has been Page. Other oligarchs, however, seem like stabilizers. Tung Chee-hwa was certainly put in place as Hong Kong’s chief executive by Beijing to smooth the transition from British rule. Others were happy to take advantage of the stability offered by the institutional framework within which they work; Bin Laden comes to mind here. Still others surfed on uncertainty that they did not initially create. For example, Gore’s climate change advocacy depended on prior global warming trends. On balance, then, oligarchs as a whole seem relatively minor contributing forces to uncertainty. Next, have oligarchs degraded competition in the industries in which they operate? If they did, then they threaten to reduce choice and increase prices for consumers in the markets served by those industries. Like many entrepreneurs, oligarchs certainly do like a good monopoly. On average, the oligarchs we’ve studied have a bit more than medium market shares (see Figure 10.5). But few actually built or owned monopolies or firms with high market shares, with the exceptions being Page in search, and Tung in container shipping. More broadly, Putin created a Russian political economy in which competition was limited by increasing barriers to entry. Other oligarchs take advantage of industry situations with pre-existing monopoly conditions, such as Bin Laden and Hariri did in Saudi construction. Some oligarchs take advantage of the limited competition in some industries (e.g., banking and telecommunications) to accumulate wealth, as Fridman and Shinawatra did. On the whole, however, we don’t see much evidence amongst the oligarchs we’ve studied that they as a whole have actively degraded competition. On the other side of the coin, in what ways have the oligarchs we have studied actually improved the human condition and reduced threats? We’ve noted philanthropic efforts and past instances of “good” oligarchs. But we want to make a broader point. We believe that oligarchs and the examples they provide have the capacity to improve the human condition. Our world is likely to face high and increasing levels of uncertainty, leading to disruption and anxiety. Our view – and it was one of the original driving forces behind this book – is that, as masters of uncertainty, oligarchs have much to teach the rest of us about how to thrive in an uncertain world. Much as epidemiologists have a sneaking admiration for the relentless, machinelike efficiency of viruses like COVID-19, we too find something in oligarchs – even the nastiest of them – that is worth incorporating into our own lives. Not the unethical, exploitative elements. But rather the productive ones.

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During the COVID-19 pandemic, for example, we have been reminded how productive it can be to lean into surprise and embrace the unexpected opportunities that can arise. For example, the two of us would never have met if not for COVID-19. If David hadn’t been willing to travel to Colombia on a Fulbright at the height of that country’s surge in infections and its paro nacional, we wouldn’t have collaborated as authors. And if we both hadn’t been willing to lean into the contingency of that relationship and push forward, we wouldn’t have been able to write the book you now hold in your hands. The model that we have developed in this book can be a guide to exploiting uncertainty for everyone who faces it. Of course, it doesn’t rise to the level of other thought systems that have proven useful in uncertain times, such as Stoicism and Buddhism. But the oligarchs’ examples offer one possible positive outcome to offset, at least somewhat, the negative impacts that these actors can have. ✶✶✶

In summary, we see a bright future for oligarchs as a whole. The distribution of those oligarchs – by geography, by industry from which they draw their wealth, by power type – seems likely to change. For example, it seems safe to predict that Russian oligarchs will become relatively less important, while Chinese ones will become more important. Wealth generation will continue to shift toward technology and technology-enabling industries. And power type seems likely to shift more and more to the stealthier forms of agenda-setting and ideological power, particularly the latter as AI becomes a central force. But, in whatever form, oligarchs seem here to stay.

Chapter 11 Conclusion The conclusion reflects on what we have learned, discusses the implications, and recapitulates the book’s six main arguments. First, oligarchs secure and reproduce wealth and power, then transform one into the other. Second, oligarchs are different from those who seek only power or wealth. Third, oligarchs originate from two sources: business and political activity. Fourth, oligarchs acquire wealth and power in various ways. Fifth, oligarchs employ four strategies: they are entrepreneurial, using effectuation; they exploit friends with benefits; they wait for their main chance; and they fly under the radar. Sixth, oligarchs are a global and historical phenomenon. ✶✶✶ We hoped for the best, but somehow it turned out like it always does. Viktor Chernomyrdin

Theoretical Implications This book began with a practical problem: How to deal with oligarchs? How to make money from them, or at least avoid losing money? How to avoid getting hurt, or even killed, in the process? To answer those questions, we eventually understood that we had to answer another question: How do they do it? Or, more formally: How do oligarchs secure and reproduce wealth and power, then transform one into the other? “How” questions are about process, which has been relatively understudied in the social sciences. And this is where we thought we could make a contribution. We felt that other scholars, such as Piketty (2014), Milanovic (2016), and Zuboff (2019), were addressing well the “what” and “why” questions associated with oligarchs, such as “what causes oligarchs?” In order to answer the question of how oligarchs do what they do, we began by considering the four general types of process models that explain change – life cycle and teleology for single entities like oligarchs, and evolution and dialectic for multiple entities. Our first contribution was to choose to study oligarchs as single entities, rather than oligarchies consisting of multiple entities. Most oligarch studies from Aristotle and Plato to the present time have focused on oligarchs as a group, so we imagined that a switch in focus to the single entity might prove fruitful. Next, in choosing between single entity-based theories of change, life cycle theories have a prescribed mode of change, while teleological theories have constructed change modes. We decided that oligarchs were likely to have a high degree of agency, constructing their pathways to wealth and power. So, we selected teleology as our general theoretical model.

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Here we encountered our first major challenge. Teleological models are cyclical in nature. Indeed, all process theories of change have some kind of feedback mechanism, whether they are cyclical or not. As we worked to construct our model, we were unable to identify such a feedback mechanism. However, we did identify the four elements of a purposeful model that explains how oligarchs secure and reproduce wealth and power. First, oligarchs are entrepreneurial. They search for and develop opportunities by employing effectuation, the leading evidence-based theory that explains how entrepreneurs develop opportunities. In particular, they employ three of the four main elements of effectuation: means determination, affordable loss calculation, and leveraging surprise. Second, oligarchs employ a friends with benefits strategy, coupling with and decoupling from multiple strategic partners over time. Strategic partnerships are the fourth element in effectuation, but what we observed is that oligarchs are not committed to their stakeholders in the same way that effectuation would predict. Third, oligarchs wait for the main chance, employing strategic timing to execute the big deals that brings them wealth, power, and the transformation of one into the other. And fourth, underpinning these three strategies, oligarchs utilize secrecy and stealthiness. So, the model we have developed, while directional, doesn’t feed back to the beginning. While we are confident that oligarchs begin by entrepreneurially developing opportunities, it is possible that the sequence of strategies after that (friends with benefits, then waiting for the main chance) may be in a different order. However, we think that being entrepreneurial plus friends with benefits yields fully cooked opportunities to secure wealth or power, which then are seized depending on when the timing is right. This logic makes sense to us, as well as the fact that secrecy and stealthiness infuse everything that oligarchs do. This four-strategy model is our book’s major theoretical contribution. Our other contributions are definitional and descriptive in nature. We carefully define oligarchs, separating them from adjacent phenomena such as authoritarians and tycoons. We delineate oligarchs into two types: business and political. Following Lukes (2021), we group oligarch power into three categories: decision-making, agendasetting, and ideological. And, finally, we show that oligarchs are both historical and global in nature. So what? What, dear reader, do you know now that you have read this book? Let’s start with the definition of an oligarch. Put simply, oligarchs secure and reproduce wealth and power, then transform one into the other. They fuse wealth and power. We are hopeful that our definition helps to refine understanding of what an oligarch actually is. We think that this book also contributes by calling attention to the need for more process studies of economic and political phenomena such as oligarchs. For example, we can imagine scholars applying such an approach to adjacent phenomena such as authoritarians, tycoons, or kleptocrats. Thinking about answers to “how” questions is

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important in itself, but it also helps to illuminate possible questions and answers around the “what” and “why” questions to which variance theories attend. More specifically, we see a central contribution of this book as thinking about oligarchs as entrepreneurial; as economic and political actors who develop opportunities to secure and reproduce wealth and power in a particular way. This insight begins to open up the oligarch black box and removes a great deal of mystery from their activities. By contrasting an entrepreneurial approach grounded in effectuation with one that is planning-oriented, we believe that one fundamental aspect of oligarchs is revealed: their opportunism. Recently, we have applied this insight in analyzing Putin’s actions and decisions related to his invasion of Ukraine in 2022.63 Beyond an entrepreneurial approach, the four-strategy model that we have built has drawn from a variety of disciplines: psychology (friends with benefits), strategy (waiting for the main chance), and information theory (secrecy and stealthiness). This eclectic approach reminds us of John Dunning’s influential eclectic paradigm (also known as the OLI model) of international business (Dunning, 1980) and is in the spirit of the garbage can model (Cohen, March, and Olsen, 1972). While our model and the other findings in this book are important for the further development of oligarch studies, the model may also have a larger utility for researchers in other fields. First, we have chosen to make a turn from the aggregate to the individual level. While group-level studies remain central to all social science disciplines, a renewed focus on individual agency may offer additional theoretical insights. In particular, a richer exploration of non-rational motivations for individual actions by economic and political actors seems worthwhile. Next, we study a phenomenon that can be described as a small-N one, requiring small-N research designs focusing on individuals as the replication unit. Given the challenges that large-N studies using null hypothesis significance testing have faced, there have been growing calls for a move to small-N designs (Smith and Little, 2018). We support those moves. Next, oligarch studies reminds us that data often needs to be drawn from a wide variety of sources, and that these data often must be modeled in different ways, drawing on different theories. Our own model in this book reflects the need for triangulation in methods and models (Van de Ven, 2007), but it doesn’t go far enough. For example, while literature and literary analysis can often provide powerful insights into social phenomena, we have chosen not to extend our modeling in this direction in this book. Similarly, the study of the architectural artifacts created by oligarchs can also yield important insights (Sudjic, 2005). The design of residences, libraries, museums, office buildings, furniture, and even yachts (such as the one on our book’s cover) contains valuable data about the aesthetics and intentions of oligarchs, particularly if

 Our opinion pieces on this subject have been published in The Hill and The Messenger, beginning in February 2022.

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we begin to dig under the obvious motivations such as the desire to impress, glorify, or intimidate. Entire cities have now been reshaped in response to oligarchs’ preferences (e.g., Baku, dominated by oligarchs in the post-Soviet period, see Grant, 2014). We see that such cross-disciplinary studies, drawing on multiple theoretical perspectives, can and should be employed in oligarch studies and in other social science fields as well. Are there alternative explanations for how oligarchs secure and reproduce wealth and power, and then transform one into the other? Several alternative explanations can be imagined. First, oligarchs could operate as groups – as oligarchies – as much of the extant literature has assumed. Second, assuming that oligarchs operate as individuals, they may act in a causal fashion, rather than in an effectual one. Third, assuming that oligarchs operate effectually, they may co-create with committed stakeholders, rather than in a friends with benefits fashion. Fourth, assuming that oligarchs are entrepreneurial, and use a friends with benefits strategy, they may be continuously on the hunt for opportunities, rather than waiting for the main chance. Fifth, assuming that oligarchs are entrepreneurial, employ a friends with benefits strategy, and wait for the main chance, they operate in the open, rather than by secrecy and stealth. In essence, each of these five alternative explanations takes the opposite position of one element of the model we’ve advanced. Let’s consider each alternative. First, if oligarchs operate as groups, then a theory would have to be advanced that explains how they secure and reproduce their wealth and power as a group, and then transform one into the other. Such a theory would need to explain how oligarchs, acting as a group, coordinate their actions and decisions. Simonton (2017) described how ancient Greek oligarchs governed themselves. That description could form one part of a theory of how oligarchs do what they do. Another part of that theory could include how oligarchs organize to defend their wealth, as Winters (2011) suggests. Second, if oligarchs are individuals acting causally, as opposed to effectually, we have a rich variety of theoretical perspectives on which to draw to explain how they gain wealth and power. Those perspectives form the basis for much of business and management studies (Sarasvathy, 2001, 2008). They assume rationality and predictability, which enable planning and therefore control. For example, we can imagine a theoretical model grounded in economics and finance that explains how oligarchs calculate the risk-adjusted return of each potential opportunity before selecting one or more that maximizes that return. Based on those selections, such a theory would demonstrate how an oligarch would then plan for and execute on each. A third alternative explanation is based on the full incorporation of the effectuation model, including co-creation with committed stakeholders. As described previously, this model is well-established in the literature and has been replicated in a variety of contexts. A fourth explanation accepts the first two parts of our model (oligarchs are entrepreneurial, and friends with benefits), while replacing the model’s third element

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(waiting for the main chance) with its opposite: the development of portfolios of wealth and power over time. Such portfolios, one can imagine, might be created and managed using risk management techniques that are grounded in statistics and probability theory. A fifth and final alternative explanation could accept the first three elements of the book’s model, but model oligarchs as being open and transparent rather than secretive. One way that this could be theorized is that oligarchs gain a sustainable competitive advantage in securing and reproducing wealth and power by being transparent. This theorization could draw on literatures on good governance and responsible business management. Of these five alternative explanations, which ones hold water and which don’t? And do the ones that hold up offer a better explanation than the one we have proposed? Let’s start with the explanation that is difficult to support. The fifth explanation – modeling oligarchs based on openness – is very unlikely to find any meaningful empirical support. The remaining four alternatives are plausible, with the first two – oligarchs as groups, and oligarchs as causal – likely to find the largest amounts of empirical and theoretical support. Looking forward, what do this book’s findings “tell us about underlying theoretical constructs, principles, and their relationships? When do these patterns emerge, and in what context? How do they refine appreciation of the underlying theory?” And why do these relationships operate the way that they do (Geletkanycz and Tepper, 2012, p. 257). We have demonstrated a simple and powerful oligarch process theory: the Lingelbach-Rodríguez Oligarch Model (LROM). That theory argues that, if an oligarch is entrepreneurial, follows a friends with benefits alliance strategy, waits for the main chance, and employs secrecy and stealthiness, then they are more likely to secure and reproduce wealth and power, then transform one into the other. In short, LROM is the logic that, if implemented, explains how oligarchs do what they do. LROM opens up the black box of oligarch behavior by explicating the mechanisms by which oligarchs first secure and reproduce wealth and power, then transform one into the other. Prior to this book, those mechanisms were not clearly understood. Prior to this book, scholars had developed some understanding of what caused oligarchs – what acted on them, or the contexts that supported their development. But the engine room in which oligarchs did their entrepreneurial, flexible, patient, and secretive work remained dimly understood. LROM has opened the door to that engine room. We have also begun to establish the contexts in which LROM is most likely to operate: high uncertainty, changing formal and informal institutions, and growing wealth inequality (see Figure 10.2). These three conditions may be related to one another. For example, increasing wealth inequality may help cause growing uncertainty. Also, oligarchs (one consequence of these conditions) may also cause a change in these conditions. For example, some oligarchs might change formal institutions and

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their enforcement in ways that allow them to secure and reproduce more wealth and power. Or alternatively, perhaps some oligarchs go too far, causing a backlash that impede their ability to secure and reproduce wealth and power or even takes some of that wealth and power away from them. The theoretical constructs currently underlying these oligarch framework conditions include literatures on uncertainty (e.g., Knight, 1921; Keynes, 1937; Shackle, 1968; Binmore, 2009; Taleb, 2001, 2007; Kay and King, 2020), institutions (e.g., North, 1990; Scott, 2014), and inequality (e.g., Piketty, 2014; Milanovic, 2016). These literatures are dominated by economics and sociology. In this book, we have argued that other constructs drawn from entrepreneurship, psychology, strategy, and information theory may also contribute to a fuller understanding of the oligarch phenomenon. Recognizing that other disciplines such as political science (Winters, 2011) and history (Simonton, 2017) have also made important contributions to oligarch studies, we still wonder whether the dominance of economics in the study of oligarchs is a healthy thing. Along with other critics (e.g., Skidelsky, 2021; Graeber, 2011, 2019), we wonder if the core methodology of economics – individualistic, analytical, and, most importantly, ahistorical, asocial, and apolitical – is fit to purpose for the study of oligarchs. Certainly, we share the emphasis on the individual in our model. But the study of oligarchs, at a minimum, is an exercise in political economy. This requires bringing in politics and power to the conversation from the beginning. After all, that’s one dimension in which oligarchs are different from other economic actors – they seek power. We also advocate for a historical approach to the study of oligarchs. This book takes in the entire post-World War II period as its focus, and also looks back to historical periods as far distant in time as ancient Greece for additional insights. Economic history remains marginalized in economics. In short, if economics is to become more relevant for the study of oligarchs, heterodox theories are going to have to be incorporated into its mainstream. We have already identified institutional theory as one heterodox perspective that is central to oligarch studies. Although not explicitly recognized as such, effectuation is likely seen by many mainstream economists as heterodox as well. Given the importance of inequality as a framework condition, we also imagine that Marxist or Marxian perspectives may make a contribution to theory development. And the predominance of male oligarchs also suggests that another heterodox theory, feminist economics, can offer insights into the gendered aspects of how oligarchs secure and reproduce wealth and power. And why does LROM enable oligarchs to secure and reproduce wealth and power, then transform one into the other? Here we are drawn back to Piñera and the concept of the pillo, and Fridman, the guy at the cocktail party that you see out of the corner of your eye. We are reminded from mythology of the trickster, the boundary-crosser and shape-shifter. Hermes, the Greek god who was the patron of thieves and the inventor of lying, whose arts were passed on to Odysseus and the underdog school of strategy (Hyde, 1998). The four LROM strategies – being entrepreneurial, friends with benefits,

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waiting for the main chance, and secrecy and stealthiness – are all trickster-friendly strategies. However, oligarchs and tricksters are adjacent phenomena. They are not identical. Finally, when we step back and consider the theory advanced in this book, how can we evaluate it? Augmenting Dubin (1969), Arend, Sarooghi, and Burkemper (2015) proposed a theory evaluation framework built on three stages: experience, explain, and establish. As they describe it: “Researchers experience the focal phenomenon they wish to theorize about through observation and literature review. They then explain the phenomenon through a model (i.e., defining the units, laws, bounds, and so on) of the causal processes and relationships involved. Finally, they establish the viability and value of the proposed theory through empirical testing, idea diffusion, and practical application” (p. 634). They then advance criteria by which to assess each stage. This theory evaluation framework is particularly relevant, as it was used to evaluate effectuation theory and generated a rich conversation. The following figure (Figure 11.1) depicts the stages, criteria, and our assessment of our model against the criteria. We adopt and extend Arend et al.’s (2015) assessment typology (success, some success, indeterminate, some failure, failure). In summary, the model we propose in this book is a start and a work in progress, not a final answer. The figure depicts that, like most theories, our model of how oligarchs secure and reproduce wealth and power, and then transform one into another, is a mix of successes and failures. The strengths of the model include, under experience, its foundation on existing literature; under explain, boundary specification and reasonable assumptions; and, under establish, its value to practitioners. Its biggest failures (under explain, no system state; under establish, no diffusion in the literature) are partly the result of its novelty. We also recognize that the above framework is grounded in a positivist worldview, when our process model, as effectuation does, “takes a pragmatist stance of seeing the world as in-the-making and therefore makeable through human action” (Read, Sarasvathy, Dew, and Wiltbank, 2016, p. 528, emphasis in the original). Other researchers have reinforced the argument that effectuation is a process model that cannot be assessed by variance theory standards (Garud and Gehman, 2016; Gupta, Chiles, and McMullen, 2016). Since our model not only incorporates effectuation but is also process-oriented in nature, we take these reflections seriously. Therefore, the self-critique in the above table can be regarded as suggestive and just a starting point.

Practical Implications Research on oligarchs is a sensitive topic, one that is capable of generating controversy, divisiveness, and harm to individuals, organizations, and societies. We feel a great responsibility to see our findings used to improve the current and future world.

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Stage

Criteria

Assessment

Experience

Built on existing literature

Some success – built on effectuation, psychology, strategy, and information theory

Built on valid observation

Some failure – low N; no studies beyond this book

Units – Comprehensive – Parsimonious

Some failure – missing important units in oligarch ecosystem

Laws clear (about unit interaction)

Some failure – how and why of interaction of model stages unclear; directionality needs to be better specified

Boundaries specified: precise rules

Some success – landscape defined more clearly than before; performance metrics more clearly specified

System states exist

Failure – no stable state specified

Propositions consistent with model

Some failure – not of required types

Assumptions reasonable

Some success – relatively clear about oligarchs’ characteristics and contexts

Logic – Causality explicit – No tautologies – Coherent

Some failure – why do stages of model work in the way they do, and interact with one another

Empirically testable

Indeterminate – lack of system state problematic; model difficult to replicate in experimental setting

Diffused in the literature

Failure – first published in this book

Practitioner value – Understandable – Non-obvious – Implementable

Some success – written with practitioners in mind; some elements (oligarchs are entrepreneurial) non-obvious; could be utilized by analysts or prospective practitioners

Explain

Establish

Figure 11.1: Theory-Building Criteria and Assessment of Oligarch Model.

As researchers committed to responsible and ethical use of our work, we ask: What are the practical implications of this book? Oligarchs have complex practical implications. On the one hand, they represent a significant challenge in the economies and polities in which they operate. On the other hand, they are unusually proficient themselves in exploiting one of the contem-

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porary world’s greatest challenges: high and rising uncertainty. Oligarchs create both harm and benefit. So, an important first question is: How many and what kind of oligarchs is optimal? Balancing the costs and benefits of interventions to alter oligarch behavior or change their influence is an important step for researchers, as has been the case in other literature streams such as corporate social responsibility (Hideg, DeCelles, and Tihanyi, 2020). Research must also consider its implications for actors harmed by oligarchs. These actors include already vulnerable and disadvantaged populations harmed by oligarchs’ wealth and power accumulation; citizens of democracies increasingly controlled by oligarchs’ actions; consumers who find that they have fewer, more expensive, and lower-quality product and service choices as a result of oligarchs creating and sustaining monopolies and oligopolies; investors who are directly or indirectly impacted by oligarch ownership of firms; competitors who lose out on the uneven playing fields on which they face oligarchs; and employees of and service providers to oligarchs and the organizations they control. At the same time, researchers must work to reduce the inaccurate and sensational impressions about oligarchs that often feature in the contemporary media. We must work to provide an independent, balanced, and objective analysis of oligarchs and their behavior and avoid reinforcing less nuanced and popular impressions that can sometimes impact public policy in unintelligent ways. The process model that we advance in this book has a number of important, specific, practical implications for those who are impacted by or are part of the oligarch ecosystem. First, for those interested in increasing the positive impact that oligarchs can have, our model’s first strategy – oligarchs are entrepreneurial – offers important guidance. Specifically, oligarchs can be incentivized to pursue productive opportunities and avoid unproductive and destructive ones. These incentives can take many forms and are not necessarily economic. For example, Ukraine’s robust defense against Putin’s 2022 invasion has provided oligarchs – and others considering such a move – with a strong incentive to avoid pursuing such a destructive opportunity in the future. Second, since secrecy and stealthiness are a foundational set of strategies for oligarchs, actions that promote greater openness and transparency about oligarch activities seem likely to change the shape and mix of oligarchs in a positive direction. As business and management scholars, we are particularly interested in the practical implications for those who must deal with oligarchs in business settings: competitors, employees, and service providers, among others. Our model suggests that a third practical implication is the need for organizations facing oligarchs as competitors or adversaries to maintain the maximum degree of flexibility. Not only does this allow these organizations to best respond to oligarch advances, but it also allows them to anticipate opportunities and develop them before oligarchs do. At the same time, however, our model argues that competitors seeking to face off successfully against oligarchs must be better than they are at waiting for the main chance – more patient, more focused, and more able to act quickly when the moment of the big deal finally presents itself.

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What about employees of and service providers to oligarchs? David has been the latter in Russia. A fourth practical implication for this group is to understand how oligarchs think. Our book’s initial motivation – formed back in the mid-1990s when David was working with oligarchs like Putin and Fridman – was to better understand them, in order to make money and stay safe. This book is one large step in the direction of greater understanding. For those who seek to shape public policy that better regulates oligarchs, what are the practical implications of our book? We are sympathetic to efforts by Piketty, Zuboff, and others to rein in the number and influence of oligarchs. However, we are not optimistic that their bottom-up proposals are likely to have a major impact. After all, oligarchs are entrepreneurial, and therefore endlessly adaptive to changing circumstances. Sanctioned in the EU, US, and UK? No problem! With a little advance notice, move assets to other, friendlier domiciles. Instead, we suggest looking at oligarchs who have been pushed off their pinnacles of wealth and power, and better understand how that occurred. In our study, several oligarchs have faced serious setbacks, notably Dos Santos, Fridman, Piñera, Putin, Shinawatra, and Tymoshenko. In many of these cases, a change in formal institutions led to unexpected consequences to which the oligarch in question couldn’t adapt quickly enough. When Dos Santos’ father resigned as Angola’s president, her power evaporated and her wealth became exposed quickly, forcing her into exile. Fridman was caught out (apparently) by Putin’s invasion of Ukraine and had too much of his wealth concentrated in the UK and EU; consequently, his wealth has fallen by approximately 16% since 2019 and become substantially illiquid. Piñera badly misread rising Chilean sentiment against inequality and mishandled the response, leading to a loss of power, although limited impact on his wealth. Putin appears to have misjudged US resolve to support Ukraine and has suffered some loss of power and wealth as a result. Shinawatra led a populist political movement but misestimated the response of Thai traditionalists, leading to his exile and fall from power, but limited loss of wealth. Tymoshenko’s case seems to be an exception, where her personality limited her ability to find a place in the Ukrainian political space; her wealth, linked to political connections, has fallen as a result. With the exception of Fridman, none of these falls from grace came about as a deliberate attempt to rein in oligarchs. Instead, these falls were consequences of uncertainties that these oligarchs failed to manage appropriately. Finally, we raise a cheeky question: What are the practical implications of our study for aspiring oligarchs? First, if you want to be an oligarch, be opportunistic. Go where the uncertainty is high and rising. For decades, David has told his graduate students, when asked, that the place to go to find opportunities is sub-Saharan Africa. Whether that remains true today or not, aspiring oligarchs need to put themselves in the flow of opportunities to secure wealth or power. But, second, aspiring oligarchs must be patient, embedding themselves for years, even decades, to wait for the right pitch. The big deals are coming more frequently today than they did in the recent past, but an oligarch-to-be needs to be clear, as our model suggests, about their unique

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means that fit with the big deal or deals coming their way. Third, aspiring oligarchs should become stealthy early in their careers. For example, a very strong case could be made for these aspirants to delete all of their social media accounts and activity. Be reticent and mysterious. Listen, don’t talk. Observe, but don’t act . . . until you strike. But, finally, develop a trusted inner circle of potential strategic partners on whom you can call. Just never get too close to any of them.

Assessing Oligarch Performance – Who’s the Greatest? Having reached the end of this study, we now feel better able to make an educated assessment about oligarch performance. Looking across time and space, who is or was the greatest oligarch? Many other phenomena are assessed this way: military leaders (is Napoleon the greatest general? Or is it Alexander the Great? Or Caesar?); American football coaches (is it Lombardi? Or maybe Belichick?); or business leaders (Ford? Buffett? Welch?). These assessments remain largely subjective and reflect the perspective of those who are doing the assessment. Moreover, while some aspects of performance assessment can be quantified, even those numbers are subject to interpretation. For example, which metric matters most? With regard to oligarchs, there are three different ways to answer this question of performance assessment. First, we can focus on past oligarch effectiveness, which consists of their ability to secure and reproduce wealth and power, then translate one into the other. Second, we can look at how consequential oligarchs are, the impact that they have had with their wealth and power. Third, we can inquire into how much capability oligarchs have to further dominate our world. To assess these three dimensions, we have developed the Lingelbach-Rodríguez Oligarch Index, based on our research for this book. This index consists of four measures, each employing a five-point scale. The first two measures assess oligarch effectiveness. First, utilizing the data in Figure 2.5, we rank the oligarchs by their wealth. Second, using Figure 2.6’s data, we rank oligarchs by their power. Third, to assess oligarchs’ impact, we utilize Brown’s (2014) leader typology (ranging from revolutionary, to transformational, to redefining) to assess how consequential each oligarch is. Fourth, we use Figure 8.3 to measure each oligarch’s capacity to secure and reproduce wealth and power in the future, then transform one into the other, based on how closely each follows the Lingelbach-Rodríguez Oligarch Model. Figure 11.2 reports the results for this index. What about oligarchs not included in our study? Our index methodology allows us to make some rough estimates. These estimates are summarized in Figure 11.3. This index calls attention to the need for more systematic, quantitative analysis of oligarchs. We envision much greater usage of data analytics in this field, similar to sabermetrics in baseball (Hakes and Sauer, 2006), which has begun to be applied in

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Wealth

Power

Impact

Capacity

Index

               

               

               

               

. . . . . . . . . . . . . . . .

Bin Laden Bukele Char Dos Santos Fridman Gore Hariri Koch Page Piñera Putin Ramaphosa Shinawatra Tung Tymoshenko Zardari

Figure 11.2: The Lingelbach-Rodríguez Oligarch Index. Note: Index on a 0–10 scale, each index component is measured on a 0–4 scale. Appendix 2 provides additional details on how we constructed the index.

Oligarch Ambani Bolívar Crassus Medici Ma Musk Soong Trump Washington

Wealth

Power

Impact

Capacity (estimated)

Index

        

        

        

        

. . . . . . . . .

Figure 11.3: Index Estimates for Selected Other Oligarchs.

the study of consequential political actors such as generals (Arsht, 2017). An important challenge to overcome in this initiative is developing sufficiently large datasets that capture a much larger number of oligarchs. Most of the new data is likely to originate from agenda-setting and sub-national decision-making oligarchs. So, to summarize, who is the greatest oligarch in history? Not so quick. Valentina says that this analysis so far seems too gringo-centric, as if oligarchs outside of the Atlantic community don’t matter as much. Why aren’t the conquistadores on the list of finalists, especially when it comes to impact? Why is Latin America still the forgotten continent (Reid, 2017)? Come to think of it, she asks,

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by leaving China and India on the sidelines in this book, are we missing something essential? Has the Global South been left too much out of the picture? There is no question that the Global South has produced many oligarchs since World War II, and a number before that. Nine of the 16 oligarchs on which we focus in this book come from the Global South. And we include four more in Figure 11.3. However, until quite recently, those oligarchs’ capacity to generate – let alone secure and reproduce – wealth and power has been more limited in comparison to those located in the Global North. To be blunt, until fairly recently, the Global South has been on the margins of the international order. That is changing rapidly. We do believe that the story of the Americas is one driven by oligarchs from the moment of European exploration. To the extent that the Americas impacts the global economic and political system, its oligarchs are likely to make a bigger impact. The destruction of the Aztec, Incan, and to a lesser extent, Mayan, civilizations by oligarch conquistadores is an important part of human history. But in relative terms, simply because wealth and power talk, that story is not as central as those we assess here. With that recognition and the humility that comes with it, who do we think are the greatest oligarchs? Our index identifies Putin as the greatest oligarch on which we focus in this book; Page and Koch follow close behind. Based on rough estimates of other oligarchs on which we didn’t focus, we don’t see others who might equal or best these three at present. Historical oligarchs – even high-impact ones like Bolívar – were unable to generate sufficient wealth and, to a lesser degree, power, to compete with the oligarchs that have emerged since World War II. And even new oligarchs such as Musk would need to improve their index score through measured increases in their power or impact in order to join the top two.

Limitations of the Study There is a lot missing from this book; we have not sought to cover every aspect of oligarchs. It’s worth noting some of the most important gaps. First, four major institutional contexts are left largely uncovered in the theorybuilding part of the book: China, India, Western Europe, and Brazil. As we noted earlier, China is difficult to research when it comes to oligarchs. Our choice of Tung Chee-hwa (born in Shanghai) is one small, sidewise attempt to address this gap, as is the brief mention of T.V. Soong. Zhu (2022) discusses a group of corrupt political oligarchs brought low by Xi Jinping, focusing on Zhou Yongkang (Politburo member and Secretary of the Central Political and Legal Affairs Commission, 2007–12) and Ling Jihua (vice chair of the Chinese People’s Political Consultative Conference, 2013–15), but also mentioning Bo Xilai (Chongqing party chief, 2007–12), Guo Boxiong (vice chair of China’s Central Military Commission, 2003–13), Xu Caihou (also vice chair of China’s Central Military Commission, 2005–13), and Sun Zhengcai (Chongqing party chief, 2012–17). Business oligarchs have also acquired significant agenda-setting and

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ideological power in China. For example, Ma Huateng, founder of Tencent, has the ability to influence speech through the company’s WeChat app and has a mutually beneficial relationship with the Chinese Communist Party (Chen, 2022). India also has its fair share of oligarchs, although they have largely avoided high national political office to date. As is the case with China, Indian oligarchs are especially shadowy, and thus more challenging to research. One example is Gautam Adani, the third richest person in Asia and the 24th richest in the world as of June 2023 according to Forbes.64 His fortune has been built in part on his relationship with Indian prime minister Narendra Modi. Crabtree (2018) describes their relationship this way: The two men enjoyed symbiotic careers. Modi’s pro-business policies helped Adani expand. Adani’s own companies, meanwhile, built many of the grand projects that came to symbolize Modi’s ‘Gujarat model’, with its emphasis on infrastructure investment, attracting foreign capital and export industries. There were temperamental bonds too: both were self-made men with little formal education; both were traditional in their tastes, guarded their privacy and were distrustful of outsiders; both spoke in halting English; both, in general, avoided talking to the press. Where other Gujarati industrialists like Mukesh Ambani often settled in Mumbai, Adani stayed in Ahmedabad, becoming the state’s most recognizable businessman. The duo were said to get on well. Adani was loyal, too, defending Modi in the aftermath of the bloody Hindu-Muslim riots that hit Gujarat in 2002, a time when Modi faced fierce public criticism. (p. 56)

Political oligarchs are common in India, especially since the neoliberal reforms beginning in 1991. Dubbed “political entrepreneurs,” these actors sought to own equity in the businesses they favored in their contract awards. A good example of this is Y.S. Rajasekhara Reddy (YSR), chief minister of Andhra Pradesh from 2004 to 2009, and his son, Y.S. Jagan Mohan Reddy. The latter established a number of successful businesses during the former’s tenure. More significantly, “investors were said to have bought stock at hugely inflated rates in exchange for favors from his father’s government” (Crabtree, 2018, p. 169). Another Indian family fortune – the Ambanis – was built in substantial part on its political connections (McDonald, 2010), and one family member – Mukesh – is the only Indian ranked in the top 50 wealthiest people in the world by Forbes as of June 2023. Western European oligarchs were plentiful prior to 1946. We have already portrayed some of these historical figures: Crassus, Cromwell, and Leopold II. Since 1946, business oligarchs have been active in the region and include Italy’s Silvio Berlusconi, France’s Vincent Bolloré, and, most recently, the UK’s Rishi Sunak, the richest prime minister that country has ever seen. Perhaps the most impactful Western European business oligarch since 1946 was Jean Monnet, a founding father of the European Union. His contribution was described by a leading biographer this way: “[Monnet was] the one thoroughgoing internationalist so far who has made a marked impact on

 Adani’s wealth was reduced significantly in 2023 due to allegations of accounting fraud and stock manipulation. The outcome of this affair remains unknown as of this writing.

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history. [. . .] He seized a brief opportunity to achieve one of the rarest feats in history, the deliberate introduction of a new theme” (Duchêne, 1994). Since World War II, Western Europe has adopted in varying degrees and styles the “European Social Model” which promised “job security, progressive tax rates and large social transfer payments” (Judt, 2005, p. 793). This model aspired to “the balance of social rights, civic solidarity and collective responsibility” (p. 793). Needless to say, this model was not particularly friendly to oligarchs, both because it sought to reduce inequality and because it sought to stabilize a region that had suffered the uncertainties of war from 1914 to 1945 and described as an “age of catastrophe” (Hobsbawm, 1994). As Latin America’s largest economy, Brazil has also had its fair share of oligarchs across history. Traditionally, their wealth and power derived from two sources: land and slaves (Frank, 2001). Since World War II, while the fortunes of some oligarchs remain attached to land, their agricultural output has shifted from sugar to soybeans and beef. Beef-based oligarchs have played a consequential role as agenda-setters in support of Bolsonaro’s right-wing populism (Lapper, 2021), while construction-based oligarchs supported Lula’s earlier and current left-wing governments. And that seems to have been the case with Brazilian oligarchs generally, who exercise power behind the scenes and have generally avoided political office since World War II (Cuadros, 2016). We have also chosen to focus on the most consequential oligarchs in the period since 1946. As a result, we’ve mostly left out oligarchs that, on the political side, operate below the level of head of state or government (Alex Char is the exception). These oligarchs hold ministerial, advisory, legislative, judicial, and sub-national decision-making positions. For example, Tahnoun bin Zayed al-Nahyan is the United Arab Emirates’ national security adviser and member of the al-Nahyan family that has dominated the UAE since its establishment in 1971. The al-Nahyans are judged to be the world’s wealthiest family at present, with a collective net worth of more than $300 billion (Pendleton, Bartenstein, Elbahrawy, and Parasie, 2022). In addition to his national security responsibilities, Tahnoun also heads: ADQ, one of Abu Dhabi’s three wealth funds with assets of $157 billion as of October 2022; First Abu Dhabi Bank, the country’s largest and one of the 100 largest in the world by Tier 1 capital; Royal Group, a diversified conglomerate; and International Holding Co., the UAE’s most valuable listed company with a market capitalization greater than McDonald’s, Nike, and Blackstone (Pendleton et al., 2022). Taken together, these roles make Tahnoun an oligarch comparable to Saudi Arabia’s MBS, although his formal decision-making position is lower. Other than Char, another example of a sub-national oligarch is Mike Bloomberg, the world’s 12th wealthiest person as of June 2023 and mayor of New York City from 2002 to 2013. He spent a record $935 million on his failed campaign to secure the Democratic nomination for president in 2020. A second limitation of our book is that, by choosing to focus on the “how” of oligarchs, we have devoted limited space to the “why” and “what” questions of what

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causes oligarchs. We have suggested some drivers, such as institutional change, but this topic deserves to be explored in much greater detail in a separate study. A third limitation is that the process theory we’ve elaborated in this book – how oligarchs secure and reproduce wealth and power, and transform one into the other – needs to be validated. This book is a beginning, not an end. ✶✶✶ The study of oligarchs is an exercise in shades of gray, not blacks and whites. Oligarchs as a whole do not pose an existential challenge to human civilization, to market capitalism, or to democracy. Most oligarchs, most of the time, have an incremental impact – often negative – on wealth inequality and democracy. But oligarchs are more consequence than cause of the negative macro trends in the global order. We argue that we can learn how to better manage – even exploit – uncertainty by studying how oligarchs secure and reproduce their wealth and power, then transform one into the other. So, oligarchs don’t themselves pose a fundamental problem looking for a solution. Sure, they need to be better regulated and their activities made more transparent. But the presence of oligarchs themselves does not pose a fundamental threat to the societies in which they exist. The example of the United States, founded by oligarchs and ruled by seven of them so far in its history, shows that representative democracy can coexist for long periods of time alongside oligarchs. However, if we take seriously what Zuboff and others (Scheiner, 2015; Wu, 2020) have said about contemporary ideological oligarchs like Page, we must admit that contemporary oligarchs in the tails of the distribution (those with exceptional wealth and power) do pose outsized, historic risks. If the surveillance capitalism that Page and others have created is indeed engaged in a “death match” with the democratic order (Zuboff, 2022), then oligarchs will quickly be much more of a threat to our civilization than even the strongmen on whom we are currently focused, or any other oligarchs in history. Should ideological oligarchs like these prevail, it is easy to imagine a world in which other, lesser oligarchs (decision-making and agenda-setting) will fade. Not to mention that average citizens and their behavior will, around the world, be under ideological oligarchs’ control. ✶✶✶ When we began work on this book, we wanted to better explain how oligarchs secure and reproduce their wealth and power, and transform one into another. We did not take it as a given that wealthy people would become powerful, or that powerful people would gain wealth. Instead, we had a hunch that they had to fuse wealth and power deliberately. Fuse, according to one of its many definitions in the Oxford English Dictionary, involves blending intimately, amalgamating, and uniting into one whole, as by melting together. That process of blending, amalgamating, uniting, and melting together is the one we have tried to elaborate on in these past pages.

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There are four parts to the process. First, oligarchs secure, reproduce, and transform wealth and power by being entrepreneurial. Specifically, oligarchs develop the opportunities presented to them by behaving effectually. To do this, they determine the means available to them (characteristics, skills, and networks), calculate what they can afford to lose, and lean in to surprise. Second, oligarchs employ a friends with benefits strategy, coupling with and decoupling from many strategic partners as they develop opportunities to secure and reproduce wealth and power. Third, oligarchs wait for their main chance to 1) secure wealth, 2) secure power, and 3) make the transition between the two. Fourth, all of these moves are underpinned by secrecy and stealthiness. That process is one of the six points we make with this book. But it wouldn’t be worth your while to consider that theory if oligarchs were a local phenomenon confined to a point in time. That brings us back to our second point: oligarchs are a global and historical phenomenon. We have identified them across all major geographies and historical periods. And we have also shown that oligarchs have become particularly prominent since 1989. Rising uncertainty has had something to do with that, and neoliberalism has likely played a role as well. The third point we’ve made is that oligarchs can be usefully grouped into two categories: business and political. Business oligarchs are the ones who make their money first, then transform that wealth into power. Political oligarchs gain power first, then employ that to acquire wealth. Our fourth point is that oligarchs gain wealth and power in various ways. They acquire wealth mainly through entrepreneurial activities, and sometimes from connections and family inheritance. They gain and exercise power in three ways: decision-making, agenda-setting, and ideology. Our fifth point is that oligarchs are not synonymous with other controversial and consequential actors such as authoritarians, tycoons, or kleptocrats. What makes oligarchs fundamentally different, and in our judgment more effective, is that, unlike these other actors, they possess two mechanisms of control: wealth and power. Having a portfolio of control mechanisms like this enables oligarchs to better exploit the increasing uncertainty that they face. It allows them to be wealthier and more powerful for longer periods of time than actors who are only powerful or wealthy. And our sixth and final point is the one with which we started this book: oligarchs are economic and political actors who secure and reproduce wealth and power, then transform one into the other. That makes them different from other adjacent actors. Oligarchs fuse wealth and power. ✶✶✶ Shortly before we finished the manuscript, we had an opportunity to share it with an oligarch for comment. Not one of those featured in this book, but someone who has helped to keep us honest through the writing process.

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Over tequilas, gin and tonics, and juices on a sultry night, in a place where we had to talk quietly to avoid surveillance, and as the oligarch’s security team lurked invisibly in the darkness, we asked this oligarch if our model makes sense; if it describes accurately how oligarchs secure and reproduce wealth and power, then transform one into the other; if it meets the same test that Machiavelli applied to himself when he wrote The Prince for Lorenzo de’ Medici. “Yes,” this oligarch said, “your model is accurate. It captures most of what people like me do. It makes me a little uncomfortable,” the oligarch said. It was then that we knew that our work was at least a good start in better understanding oligarchs. ✶✶✶ In Joseph Conrad’s masterwork, Nostromo, he depicts a Colombian oligarch, Charles Gould, the King of Sulaco. Gould is emptied out by his obsession for his San Tomé silver mine. He allies himself with Nostromo, a charismatic longshoreman, who assists Gould in attempting to export his silver under the noses of revolutionaries. Dr. Monygham, an English physician, utters the words that open The Oligarchs’ Grip. He (really Conrad) analyzes the oligarch mentality perfectly. No peace. No rest. Inhuman expediency. Without rectitude. It is oligarchs’ restless amorality, their relentless quest to secure and reproduce wealth and power, and then transform one into the other, that make them unique, consequential, and controversial actors in our world. You may not be interested in oligarchs, and oligarchs may not be interested in you, but they are interested in what you have – your wealth; your power. Now you know how they get it.

List of Principal Characters (in Alphabetical Order) Mohammed bin Laden (Saudi Arabia, born 1908, died 1967), founder of Saudi Binladin Group, 1931–67. Nayib Bukele (El Salvador, born 1981), businessperson, 1999–2015, President of El Salvador, 2019–present. Alejandro (Alex) Char Chaljub (Colombia, born 1966), businessperson, Mayor of Barranquilla, 2008–11, 2016–19, presidential candidate, 2021–22. Isabel dos Santos (Angola, born 1973), daughter of former Angolan President José Eduardo dos Santos, entrepreneur and investor, 1997–present. Mikhail Fridman (Russia, born 1964), co-founder and chair of Alfa Group, 1989–present, founder of LetterOne, 2013–present. Al Gore (United States, born 1948), former Vice President of the United States, 1993–2001, co-founder and chair of Generation Investment Management, 2004–present. Rafic Hariri (Lebanon, born 1944, died 2005), founder of Saudi Oger, 1978–2005, Prime Minister of Lebanon, 1992–98, 2000–04. Charles Koch (United States, born 1935), chair and CEO of Koch Industries, 1968–present. Larry Page (United States, born 1973), co-founder of Google, 1998–present, and of Alphabet, 2015–present. Sebastian Piñera (Chile, born 1949), founder of Bancard, 1976–present, President of Chile, 2010–14, 2018–22. Vladimir Putin (Russia, born 1952), President of Russia (de facto and de jure) 2000–present. Cyril Ramaphosa (South Africa, born 1952), founder of Shanduka, 2001–15, President of South Africa, 2018–present. Thaksin Shinawatra (Thailand, born 1949), founder of Advanced Info Service, 1985–2006, Prime Minister of Thailand, 2001–06. Tung Chee-hwa (Hong Kong, born 1937), CEO of Orient Overseas Container Line, 1982–96, Chief Executive of Hong Kong, 1997–2005. Yulia Tymoshenko (Ukraine, born 1960), co-founder of Terminal, 1988–91, Ukrainian Petrol Corporation/ United Energy Systems of Ukraine, 1991–97, Prime Minister of Ukraine, 2005, 2007–10. Asif Ali Zardari (Pakistan, born 1955), President of Pakistan, 2008–13, husband of former Prime Minister Benazir Bhutto, assassinated 2007, owner of numerous businesses and real estate, at home and abroad.

https://doi.org/10.1515/9783111028255-015

A Selective Oligarch Chronology c.a.  BCE  BCE  BCE  BCE  BCE  BCE  BCE      c.a.                                  

Cleon born into wealthy commercial family, Athens Cleon becomes leader of Athens Cleon dies, Battle of Amphipolis, Macedonia Marcus Licinius Crassus born, Rome Crassus becomes consul for first time Crassus becomes consul for second time Crassus dies, Battle of Carrhae, Upper Mesopotamia Cosimo de’ Medici born, Republic of Florence De’ Medici becomes co-head, Banco Medici De’ Medici becomes Lord of Florence De’ Medici dies, Republic of Florence Francisco Pizarro born, Castile, Spain Thomas Cromwell born, Putney, Surrey, England Pizarro appointed first governor, New Castile Cromwell becomes Henry VIII’s chief minister Cromwell executed, Tower of London Pizarro dies, Lima, New Castile Robert Clive born, Shropshire, England George Washington born, Virginia, British America Clive becomes Commander-in-Chief, India Clive becomes governor, Presidency of Fort William Clive dies, London Simón Bolívar born, Caracas, Spanish Empire Washington elected first president, United States of America Washington dies, Virginia, United States of America Bolívar becomes first president, Colombia Friedrich Engels born, Prussia Bolívar becomes sixth president, Peru Bolívar becomes first president, Bolivia Bolívar dies, Santa Marta, Gran Colombia Leopold II born, Belgium Engels writes The Communist Manifesto with Karl Marx Leopold II becomes King of the Belgians Leopold II becomes sovereign of the Congo Free State T.V. Soong born, Shanghai, Qing Dynasty Engels dies, London Mohammed bin Laden born, Hadhramaut, Yemen, Ottoman Empire Leopold II dies, Belgium Soong becomes acting premier, Republic of China Bin Laden founds Saudi Binladin Group Tung Chee-hwa born, Shanghai, Republic of China Charles Koch born, Wichita, Kansas, United States Rafic Hariri born, Sidon, Lebanon Soong becomes premier, Republic of China Al Gore born, Washington, DC, United States Sebastian Piñera born, Santiago, Chile Thaksin Shinawatra born, San Kamphaeng, Chiang Mai, Thailand Bin Laden provides financial assistance to Saudi government

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                                   

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A Selective Oligarch Chronology

Vladimir Putin born, Leningrad, Russian SFSR, Soviet Union Cyril Ramaphosa born, Soweto, Transvaal Province, Union of South Africa Asif Ali Zardari born, Karachi, Pakistan Yulia Tymoshenko born, Dnipropetrovsk, Ukrainian SSR, Soviet Union Mikhail Fridman born, Lvov, Ukrainian SSR, Soviet Union Alex Char born, Barranquilla, Colombia Bin Laden dies, Usran, Asir Province, Saudi Arabia Koch becomes chair, CEO and % owner of Koch Industries Soong dies, San Francisco, United States of America Larry Page born, Lansing, Michigan, United States Isabel Dos Santos born, Baku, Azerbaijan SSR, Soviet Union Piñera founds Bancard Hariri founds Saudi Oger Nayib Bukele born, San Salvador, El Salvador Tung becomes CEO, Orient Overseas Container Line Zardari enters real estate business Shinawatra founds Advanced Info Service Tymoshenko co-founds Terminal Fridman co-founds Alfa Group Hariri appointed prime minister of Lebanon for first time Tung appointed first chief executive of Hong Kong Page co-founds Google Putin appointed prime minister of Russia for first time, named Yeltsin’s successor Ramaphosa founds Shanduka Shinawatra appointed prime minister of Thailand Char elected governor, Atlántico department, Colombia Gore co-founds Generation Investment Management Hariri dies, Beirut, Lebanon Tymoshenko appointed prime minister of Ukraine for first time Shinawatra deposed as prime minister of Thailand in military coup Gore awarded Nobel Peace Prize Zardari’s wife, Benazir Bhutto, assassinated Zardari elected president of Pakistan Char elected mayor for first time, Barranquilla, Colombia Piñera elected president of Chile for first time Putin invades Ukraine for first time Char elected mayor for second time, Barranquilla, Colombia Dos Santos appointed director of Sonangol Ramaphosa elected president of South Africa Bukele elected president of El Salvador Char announces candidacy for president of Colombia Putin invades Ukraine for second time Fridman sanctioned by EU and UK over Russian invasion of Ukraine Bukele declares state of emergency, announces plan to seek re-election despite constitutional prohibition Fridman sanctioned by US, Shinawatra returns to Thailand and is jailed

Appendix 1: Methodology This book consists of both a description of oligarchs and a study of them. The study constitutes Part II of the book. That study is a process study using a multiple-case design that allows for replication logic. It was based on recommendations for theorybuilding from case studies (e.g., Eisenhardt, 1989; Eisenhardt and Graebner, 2007; Yin, 2009) and guidance specific to process studies (e.g., Langley, 1999; Langley, Smallman, Tsoukas, and Van de Ven, 2013). It is an example of a study that sees process as a sequence of events that describe how particular things (in this case, oligarchs’ wealth and power, and the transformation of one into the other) change over time, where the focus is on distal outcomes (McMullen and Dimov, 2013). Each case serves to confirm or disconfirm the inferences drawn from others. The study seeks to answer this question: How do oligarchs secure and reproduce wealth and power, then transform one into the other? The study focuses on a single level of analysis: the individual oligarch. The book’s List of Principal Characters provides brief descriptions of each of the 16 case studies. The study employs abduction, rather than deduction or induction, to develop its theoretical model. “Abduction is an inferential procedure in which we create a conjecture that, if it were correct, would make the surprising anomaly part of our normal understanding of the world” (Van de Ven, 2007). After years of observing oligarchs, we began to theorize about their process when one of them referred to that process as “opportunistic” (Fridman, 2010). That led us to the first proposed part of our model – oligarchs are opportunistic, therefore entrepreneurial. Other parts of the model were added based on observations of oligarch behavior.

The Book’s Analytical Framework With a clear definition and typology of oligarchs, our next step is to develop an analytical framework. With this framework, we return to the book’s central question: How do oligarchs secure and reproduce their wealth and power, then transform one into the other? This question is one of process. In the social sciences, the vast majority of research has focused on “what” questions. To answer such questions, variance models are built that explain how input factors (independent variables) statistically explain output factors (dependent variables) (Van de Van, 2007). By contrast, questions of process (“how” questions) “require a process model or ‘event-driven’ explanation of temporal order and sequence in which a discrete set of events occurs based on a story or historical narrative” (p. 145). Process theories come in four types. One of these four general types will be the jumping-off point for our analytical framework, (Figure A.1):

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EVOLUTION Variation

Selection

DIALECTIC Retention

Multiple Entities

Unit of Change

Single Entity

Thesis

Synthesis

Conflict

Antithesis Pluralism (Diversity) Confrontation Conflict

Populaton scarcity Environmental selection Competition LIFE CYCLE Stage 4 (Terminate)

TELEOLOGY Dissatisfaction Stage 1 (Start-up)

Stage 3 (Harvest)

Implement Goals

Search/ Interact

Stage 2 (Grow)

Set/Envision Goals

Immanent program Regulation Compliant adaptation

Purposeful enactment Social construction Consensus

Prescribed

Mode of Change

Constructive

Figure A.1: Process Theories. Source: Van de Ven and Poole (1995)

Life cycle (or regulated) theories (lower left quadrant) explain change as progressing through a necessary sequence of stages or phases. We associate such theories with the French philosopher Auguste Comte (1830–42, 1851–54/1968–70), who developed positivism; the liberal utilitarian English political theorist Herbert Spencer (1874–96/1897); and the Swiss psychologist Jean Piaget (1975), a central figure in theories of child development. In such theories, events proceed in a linear and irreversible sequence powered by nature, logic, or institutions. Teleological (or planned) theories (lower right quadrant) explain change as a cycle of goal formulation, implementation, evaluation, and modification. Exemplars of this approach include George Herbert Mead (1934/2015), the American sociologist who developed symbolic interactionism; Max Weber (1904–05/2002), the German sociologist most closely associated with the idea of the Protestant ethic; and Herbert A. Simon (1957), the American economist who developed the idea of bounded rationality. Events proceed in this theory type in a recurrent and discontinuous sequence, powered by the enactment of goals. Dialectical theories (upper right quadrant) explain change as the result of conflict between entities with opposing theses and antitheses, resulting in syntheses. Thinkers associated with this theory type include Georg Wilhelm Friedrich Hegel (1831/2010), the German philosopher with contributions across many literatures; Karl Marx (1857–58, 1939/1993), the German thinker who, along with Engels, conceived of the materialist

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conception of history that has become known as Marxism; and Sigmund Freud (1899/ 2010), the Austrian neurologist who founded psychotherapy. Confrontation and conflict are the drivers of this theory type and lead to a synthesis between contradictory values and events. Evolutionary theories (upper left quadrant) explain change as a progression of variation, selection, and retention amongst entities in a population. Here the most important theorist is Charles Darwin (1859/2009), the English naturalist and biologist who, along with Alfred Russel Wallace (1858), developed the theory of evolution. These theories envision competition for survival in a recurrent probabilistic sequence of variation, selection, and retention. These theories can be applied to single (life cycle or teleological) or multiple entities (evolution or dialectic). To date, most oligarch-related theories (e.g., Winters’ [2011] wealth defense) have focused on multiple entities. They have conceptualized oligarchs as a part of an oligarchy, a group of the wealthy few who govern us. In this book, by contrast, we focus on individual oligarchs and how they secure and reproduce wealth and power, and then transform one into the other. As can be seen from the figure above, two theory types focus on single entities as the unit of change: life cycle and teleological. We assume that oligarchs have a significant degree of agency, which rules out life cycle theories that presume that entities have within them the underlying form, logic, program, or code that leads to development. In short, we do not believe that there is anything like an “oligarch code.” Therefore, our analytical framework is built around a teleological theory framework.

Data Sources There were five data sources: 1) documentation, 2) archival records, 3) direct observations, 4) participant observation, and 5) semi-structured interviews. Each case study had a different mix of data sources, although multiple data sources were used to generate each case study. Oligarch studies is challenged by both limited and problematic theory, and data access. In response, our approach to data collection has been similar to the casual ethnography employed in other disciplines, such as international business (Westney and Van Maanen, 2011). Our data has been collected since 1994. We met and had direct interaction with three of the case studies, two of which were on repeated occasions. These meetings were not research-oriented in nature, but nonetheless allowed for unusual interaction that provided data that has been central to this study. One author worked and lived in Russia for five years, during which time he had many formal and informal interactions with oligarchs, most of whom are not included in our study. We have also visited most of the institutional contexts in which the case studies are based: Chile (2001, 2022), Colombia (2000–present), El Salvador (2022), Hong Kong (2019), Lebanon (2000), Pakistan (2002, 2014), Russia (1994–99, 2011), South Africa (2007–09,

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2012, 2014), Thailand (2005, 2019), Ukraine (1998, 2018), and United States (1961–present). In most instances, these visits were research-oriented. But we have also hung out in oligarch settings – located in pre-war Moscow, London, Sandton, and Zapallar, among others – to get a better “feel” for the institutional environments that foster oligarchs. In 2022–23 we conducted interviews with journalists, academics, politicians, government officials, and businesspeople in Chile and El Salvador. We have chosen to keep their names confidential, given the nature of this study. Given the secretive nature of the case studies, we have had to rely on a wide variety of secondary sources. These include: hundreds of biographies and other booklength publications; thousands of newspaper and other media articles; financial reports; Twitter feeds; videos; photographs; artwork; and music.

Data Analysis The data were analyzed as follows. Case studies were prepared for each of the 16 oligarchs. Given the paucity of available data, a case study protocol was not formally employed. Instead, one general case selection criterion was the presence of at least one rigorous book-length biography of the oligarch.65 We used that data source as a jumping-off point, then gathered additional data to fill out the case study. In writing each case study, our focus as a process study was on the key events that led each oligarch to secure and reproduce wealth and power, and then transform one into the other. At a minimum to be complete, each case study had to 1) identify and describe how the oligarch secured and reproduced wealth, or 2) identify and describe how the oligarch secured and reproduced power, and 3) how they transformed wealth into power, or power into wealth. Then, we used pattern matching to compare the cases against the proposed theoretical model. We also considered alternative theoretical models as an explanation for the patterns we observed, and examined alternative cases and whether or not their data fit with our proposed model. The resulting analysis was a subset of pattern matching known as explanation building (Yin, 2009). As is common with this type of analysis, our model varied as we tested it against the case data. For example, what began as a simple stage model became a model consisting of three strategies, perhaps implemented in a linear fashion, underpinned by a fourth strategy. Also, what began as a model inspired by a teleological process with feedback, turned into something quite different, even if it retained teleological inspirations.

 In the case of the Char case study, such a book-length study was not available.

Appendix 2: How We Constructed the Lingelbach-Rodríguez Oligarch Index The index has its origins in a comment that David’s brother-in-law, Ken Sandlin, made over lunch one day: How can I easily tell which oligarch is better than another? At that time, we were only able to offer qualitative assessments, which sometimes seemed little better than opinions proffered in a dark bar somewhere. Then we recognized that we already had much of the data required to construct an index that would rank oligarchs. We had data about their wealth (Figure 2.5), which we could present in 2023 dollars to be consistent. We had data about their power (Figure 2.6), which was based on three independent information sources. And we had data about our focus oligarchs’ fit with the Lingelbach-Rodríguez Oligarch Model (LROM), which is a proxy for their future capacity to secure and reproduce wealth and power, then transform it from one into the other. What we lacked was a measure of impact. To construct one, we started with Brown’s (2014) typology of leaders and their impact. This study organizes leaders into three types: revolutionary, transformational, and redefining. We then made estimates for each oligarch, using examples from Brown (2014) as a guide. For each of our four measures, we developed a five-point scale as follows. For wealth, four points were assigned for net worths greater than $20 billion, three points for those from $5 billion to $20 billion, two points for those from $1 billion to $4.9 billion, one point for those from $20 million to $999 million, and no points for net worths below $20 million. For power, four points were assigned if an oligarch was ranked in each of the three data sources we referenced, three points if ranked in two of those sources, two points if ranked in one of those sources, one point if not ranked in these sources but included in our database, and no points if not included in either these sources or our database. We recognize that there is a contemporary bias in this measure, as two of the three data sources we use are recent rankings of contemporary actors. For capacity, four points were assigned if an oligarch scored from 75 to 100 points in the LROM, three points for a score of 50 to 74, two points for a score of 25 to 49, one point for a score from 0 to 24, and no points if data is not available to make an estimate. For impact, four points were assigned if an oligarch was assessed by us to be a revolutionary leader, three points if they were a transformational leader, two points if they were a redefining leader, one point if they were a minor leader, and no points if we assessed that they were not a leader. Once we calculated these individual measures, we next considered how to construct the index. We opted for an equal weighting (25% each) of each measure, as we could not come up with a credible argument for weighting one measure over another.

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Next, we coded each of the 16 oligarchs on which we focused in this book. With each of the four measures on a 0–4 scale, the resultant range of raw measures could range from 0–16. Once we completed these codings, we took the raw measure, divided it by 16, and expressed the resultant percentage on a 0–10 range. As with other such indices, we expect to refine the index over time and to share our results on a website (www.oligarchsgrip.com) currently under construction.

A Guide to Further Reading Although the references that follow this section provide a formal list of books and other resources consulted, some readers may be interested in our take on what they should read after finishing our book. The foundational reads for oligarch studies are Thomas Piketty’s Capital in the Twenty-First Century, Shoshana Zuboff’s The Age of Surveillance Capitalism, and Jeffrey A. Winters’ Oligarchy. To our mind, Zuboff is the most compelling read, although some readers might find her tone a bit polemical. Piketty and Winters are more cool and analytical, but very insightful. After reading these three, and our book, a reader can consider themselves reasonably well-informed about the oligarch phenomenon. Our next move would be to fiction – getting inside oligarchs’ heads can often be best accomplished through literature. We have already highlighted Joseph Conrad’s Nostromo. Hilary Mantel’s depiction of Thomas Cromwell in Wolf Hall, Bring Up the Bodies, and The Mirror and the Light is compelling. Mario Puzo’s The Godfather and The Last Don are also insightful. Gary Shteyngart’s Absurdistan is funny and penetrating. Carlos Fuentes’ The Death of Artemio Cruz and Gabriel García Márquez’s The General in His Labyrinth give us a glimpse into the very crowded landscape of Latin American oligarchs. Sometimes, character sketches of oligarchs as a part of larger works can offer a glimpse into their icy world. Joe Mungo Reed’s Hammer provides one such sketch, as does Chris Morgan Jones’ The Silent Oligarch. Komarovsky in Boris Pasternak’s Doctor Zhivago should be studied. Some recent sociological studies have also helped peer into the oligarch world. For example, Caroline Knowles’ Serious Money focuses on London as one setting in which oligarchs are particularly thick on the ground at present. Elisabeth Schimpfössl’s Rich Russians is more focused and academic, but does something similar. Finally, when it’s possible, reading oligarchs in their own words can be useful. Putin’s First Person is a good start and not terribly long. It has the advantage of having been published early in his reign, although it does not rank for literary quality with Catherine the Great’s Memoirs. Unless you are a serious oligarch researcher, you can safely give work by Trump, Gore, and Koch a pass.

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List of Figures Figure 1.1 Figure 1.2 Figure 1.3 Figure 1.4 Figure 1.5 Figure 1.6 Figure 1.7 Figure 1.8 Figure 2.1 Figure 2.2 Figure 2.3 Figure 2.4 Figure 2.5 Figure 2.6 Figure 2.7 Figure 3.1 Figure 3.2 Figure 3.3 Figure 3.4 Figure 4.1 Figure 4.2 Figure 4.3 Figure 4.4 Figure 4.5 Figure 4.6 Figure 4.7 Figure 4.8 Figure 4.9 Figure 4.10 Figure 5.1 Figure 5.2 Figure 5.3 Figure 5.4 Figure 6.1 Figure 6.2 Figure 6.3 Figure 6.4 Figure 6.5 Figure 6.6 Figure 7.1 Figure 7.2 Figure 7.3 Figure 8.1 Figure 8.2 Figure 8.3 Figure 8.4

Lingelbach-Rodríguez Oligarch Model 7 The Oligarchs in the Book 9 Oligarchs Along the Wealth and Power Spectra 14 When They Became Oligarchs – Transitions Between Wealth and Power 15 The Rise of the Oligarchs, 1946–2023 17 Oligarchs, Formal Institutions, and Institutional Change (Change While an Oligarch) 20 Forms of Rule According to Aristotle 22 Oligarchs’ Ethical Spectrum – The Case Studies 23 Winters’ (2011) Oligarch Typology 37 Our Oligarch Classification 46 Oligarch Distribution 47 Oligarchs and Their Pandemic Performance 49 Oligarchs’ Net Worths and Origins 50 Power Rankings for the Book’s Case Studies 51 Oligarchs as Strategists 51 Business Oligarch Success 82 Business Oligarchs and Their Economic Moats (At Peak) 84 Business Oligarchs and Institutional Change 85 How Business Oligarchs Transition to Power 86 Oligarchs – War, Military, and Violence Experience 99 Strongmen – War, Military, and Violence Experience 100 Russian Health and Wealth, 1917–2020 104 Oligarchs and Development 105 Ramaphosa’s Path to Wealth and Power 108 Political Oligarchs and Institutional Change 110 Political Oligarchs and Their Moats 111 Oligarch Power 111 Political Oligarchs and Their Net Worths 112 How Political Oligarchs Transition to Wealth 112 Lingelbach-Rodríguez Oligarch Model 119 Oligarch Effectuation Process 126 Measures of Oligarch Effectuation Strategies 129 Summary of Evidence for Oligarchs Being Entrepreneurial 137 Fridman’s Friends with Benefits 142 Gore’s Friends with Benefits 144 Putin’s Friends with Benefits 147 Bin Laden’s Friends with Benefits 149 Tymoshenko’s Friends with Benefits 153 Summary of Oligarchs’ Alliances/Competition 156 Oligarchs and Their Strategy Schools 160 Time Concepts Across Strategy in Two Cultures 162 Oligarch Strategic Timing 173 Oligarch Usage of Social Media 188 Oligarch Secrecy and Stealthiness 194 The Oligarch Process – Percentage of Each Strategy’s Dimensions 195 How Oligarchs Performed Against Our Model 196

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Figure 8.5 Figure 8.6 Figure 8.7 Figure 9.1 Figure 9.2 Figure 10.1 Figure 10.2 Figure 10.3 Figure 10.4 Figure 10.5 Figure 10.6 Figure 11.1 Figure 11.2 Figure 11.3 Figure A.1

List of Figures

Oligarch Performance vs. Our Model – Another Cut 196 Comparison Cases 197 Strongmen and Tycoons – Performance Against Model 199 Selected Major Historical Oligarchs (pre-1946) 206 Historical Oligarchs vs. Our Model 226 Oligarchs and Rising Authoritarianism 231 Oligarch Research Framework 237 Oligarchs and Philanthropy 240 Oligarchs’ Illegal Activities 243 Oligarchs’ Market Share 248 Pandemic Impacts 254 Theory-Building Criteria and Assessment of Oligarch Model 264 The Lingelbach-Rodríguez Oligarch Index 268 Index Estimates for Selected Other Oligarchs 268 Process Theories 280

About the Authors David Lingelbach is professor of entrepreneurship at the Merrick School of Business, University of Baltimore. He was educated at MIT, London School of Economics and Political Science, and the University of Exeter, from which he received a Ph.D. Prior to becoming an academic, David served in senior roles in finance and international development, including as CEO of Bank of America’s businesses in the former Soviet Union. He has been a Fulbright Scholar (Myanmar/Burma, 2018–19) and Fulbright Specialist (Colombia, 2021) and has been nominated twice for an Andrew Carnegie Fellowship. Valentina Rodríguez Guerra is an author, oligarch researcher, and graduate student in business administration, Facultad de Ciencias Económicas, Universidad Nacional de Colombia. Together, they are regular opinion contributors to The Hill and The Messenger on Vladimir Putin and oligarchs.

https://doi.org/10.1515/9783111028255-022

Index Abramovich, R. 148 Achilles 162, 197 Advanced Info Service (AIS) 71, 169 African National Congress (ANC) 105–107, 132 agenda-setting oligarchs 10, 11, 13, 14, 36, 42, 45, 46, 53, 58, 87, 94, 104, 175, 181, 182, 215–217, 230, 256, 269 The Age of Surveillance Capitalism (Zuboff) 68, 183 Aksyonenko, N. 171 Alba, V. 39 Alexander, K. C. 42 Alfa-Access-Renova (AAR) 143 Alfa-Bank 63, 84, 141–144, 180, 192 Alfa Group 121, 143 Alfa Group Consortium 63, 142 Alireza, M. 151 Allende, S. 76 aloof partners strategy 139 Alvarado, P. de 207 American Civil War 39 American oligarchs 20 American Relief Administration (ARA) 241 Amorim, A. 92, 93 ancien regime 121 Andropov, Y. 63, 147, 170 Angola 91–94 – Corruption Perception Index 95 – successful failed state 94 anthropologists 42 anti-corruption 247 apartheid 132 Arabian American Oil Co. (Aramco) 149–150 Arana, M. 211 Aristotle 22, 23, 30, 31, 35, 38, 40, 53, 239, 241 – common interest, rule 22 – polity 38 – self-interest, rule 22 Aron, R. 40 artificial intelligence (AI) 69, 234–235 The Art of War (Sun Tzu) 162–163 Atari Democrats, members of 145 Atlas of Economic Complexity project, Harvard’s 177 Augustus II, F. 97 authoritarian/authoritarianism 12, 27, 33, 51, 53, 65, 67, 70, 87, 141, 151, 152, 187, 229–232 https://doi.org/10.1515/9783111028255-023

Aven, P. 63, 83, 142–143 Aztec Empire 207, 208 Bachelet, M. 78 Bakai, I. 75 Bancard S.A 78, 134, 192 Banco de Fomento Angola (BFA) 93 Banco Internacional de Crédito (BIC) 92–94 Banco Português de Investimento (BPI) 93 Banco Serfinanza 191–192 Bank of America (BofA) 119–120, 141 Bannon, S. 8 Banque Méditerranée (BankMed) 168–169 Baumann, H. 43 Baumol, W. 34 Beard, C. A. 38, 39, 212–213 Belkovsky, S. 113 Belle Époque 220 Belton, C. 87, 113, 114 Ben Ghiat, R., strongmen 100–103 Berezovsky, B. 9, 82, 146, 148 Bergen, P. 149 Berlin, I., foxes 40–41 Berlusconi, S. 13 Berzin, J. 96, 130 Bhutto, B. 89–90, 166 – assassination of 90, 136, 166 Big Bang Theory 5 Bildt, C. 143 Bin Laden, M. 55, 57, 85, 167–168 – architectural contracts/commissions of 150–151 – death of 152 – FWB strategy of (partnerships) 149–152 Bin Laden, O. 139, 166, 179 Bin Mahfouz, S. A. 151 bin Salman, M. 54, 61 biographers 43 Blavatnik, L. 64, 143 Blood, D. 146 Bloomberg 49, 55 Bobbitt, P. 19 Bolívar, S. 6, 23, 205, 206, 210–212, 218, 226, 268, 269 Bolsheviks 130 bounded rationality 123 Bo Xilai 66 BP 142, 143, 180–181

308

Index

Bradley, H. 182 Bradley, L. 182 Brezhnev, L. 63, 74, 154 bricolage 123, 137 Brin, S. 69, 135, 182 Bro, N. 212 Brown, A. 47, 267, 283 Browne, L. 143 Bukele, A. 185 Bukele, H. 185 Bukele, N. 12, 14, 51, 54, 73, 79–81, 85, 175, 184, 230–232, 254 – family businesses of 185–187 – and mass grave 187 – popularity, reason for 188 – and social media 188–189 Bullough, O. 253 Burgis, T. 42 Burke, E. 223 Burnham, J. 21 Burry, M. 161 Bush, G. H. W. 20, 57, 230 Bush v. Gore 109 business – cycle 160 – and management studies 26, 41–42 – and political classes 21 business oligarchs 3, 11, 14, 27, 47, 53, 75, 81, 152, 191, 223, 269–270, 273. See also specific business oligarchs – categories 81, 82 – characteristics 81, 85 – economic moats 83–84 – entrepreneurs 81 – and institutional change 85 – sources of wealth 82 – success of 81–82 – transition to power 85–86 California-Arabian Standard Oil Co. (CASOC) 149–150 Cantillon, R. 122 cartel theory 38 Casaús Arzu, M. 41 case studies 9–10, 12, 23, 38, 39 caste system 22 categorization 14, 45–46 causal logics 123, 125. See also effectual logics causation, effectuation and 123, 125, 128

censorship 178 Char, A. 11, 12, 54, 73, 84, 175, 189, 191 – family businesses of 191–192 – as immigrant (to Barranquilla, Colombia) 189–191 Char, F. 189, 191 ChatGPT 235 Chernenko, K. 63 Chile/Chileans 12, 34, 76–78, 134–135, 200 – civil war 77 – human rights, abuses and violations 77 – oligarchic renewal 77 – oligarchs 77, 79 – social protests 12 China 133, 161, 166, 173, 269–270 – Communist Revolution 65 – corruption and state capture 13 – Hong Kong 67–68 – oligarchs 13, 22, 65–66 – shipping industry 66–67 Chubais, A. 242 civil oligarchs 37 Clan del Golfo 73 clandestine techniques 176 Claro, R. 134 climate change 15, 53, 57–58, 70, 88, 109, 182, 232 Climate Change Performance Index (CCPI) 48 Clinton, B. 109, 145 Clive, R. 36, 39, 205, 206, 223, 224, 226 cognitive school 159 Coll, S. 43 Colombia 26, 189, 190, 211, 212 – Autodefensas Unidas de Colombia (AUC) 27 – Caribbean coast 54, 72 – La Violencia (1948–1958) 26 – youth unemployment 25 Columbus, C. 227 commercial entrepreneurship 125–126, 137 The Communist Manifesto (Marx & Engels) 222 competition policy 247–249 The Condition of the Working Class in England (Engels) 222 Conference of States Parties (COSP) 247 configuration school 159 Conflicto armado interno de Colombia (1964–present) 26 Congo Free State 220, 221, 254 Congress of South African Trade Unions (COSATU) 105–106, 132

Index

conquistadores 41, 72, 122, 205–207, 210–211, 268–269 Conrad, J. 43, 274 control mechanisms 33–34 Coors family 182 Coppin, C. 58 CORFO, Chilean development corporation 134 corporate social responsibility 53 corruption 13, 36, 48, 75, 87–90, 94, 95, 166–167, 190, 212 Cortés, H. 206–211, 218, 226 Cosimo de’ Medici 205, 206, 216, 217, 226, 268 cost advantage 83, 85 coupon clippers 45 COVID-19 pandemic 48, 132–133, 148, 253, 255, 256 – morbidity 48, 49 Crabtree, J. 270 Crassus, M. L. 205–206, 217–219, 226, 268, 270 credit cycle 160 Crimea 103, 161, 170, 233 Cromwell, T. 43, 205, 206, 214–216, 226, 270 cronyism 41 Cuban oligarchs 39 cultural school 159 Cunctator (the Delayer) 164 Current TV 109, 146 C.Y. Tung Group 172 Da Empoli, G. 43 Daes brothers (José Manuel & Christian) 192 Dalrymple, W. 223 Danske Bank affair 24 Das Kapital (Marx) 69 Dávila, P. A. 209, 210 Davos Pact 242 Dawisha, K. 114 decision-making oligarchs 7, 10, 11, 13, 14, 20, 28, 34, 45, 46, 53, 55, 87, 90, 98, 189, 208, 212, 215, 216, 222, 237, 268 definitions and concepts 29–34 Democratic Party 145 de-oligarchization 249–250 descriptive strategy schools. See also prescriptive strategy schools – cognitive school 159 – cultural school 159 – entrepreneurial school 159 – environmental school 159

309

– learning school 159 – power school 159 design school 159 DeVos family 182 Diamond Selling Corporation (Ascorp) 92 Diefenbach, T. 32 digitization 41, 44 Doctor Zhivago (Pasternak) 44 Dokolo, S. 91, 92 Dosal, P. J. 39 Dos Santos, I. 12, 34, 88, 90–93, 107, 113, 137, 139, 144, 166, 188, 200 – FWB strategy of (partnerships) 152–153 – power transition 95 – wealth and power 94 Dos Santos, J. E. 91, 93, 152 Dubai 144 Duque, I. 73 Earth in the Balance (Gore) 109 East India Company (EIC) 223 Economic Complexity Index (ECI) 177 economic moats 83–84, 110 Economics of Education in Developing Countries. A Collection of Essays 78 economies 13, 17, 42, 48, 81, 85, 94 economists 35–36 Edison, T. 183 effective entrepreneurs 119, 158, 164 effectual logics 125, 127. See also causal logics effectuation/effectuation strategies 7–8, 28, 119–120, 123–124, 126, 131–133, 137–138, 162–163, 174, 193–194 – assessing means/means assessment 126, 127, 128–129, 133, 137, 139 – and causation 123, 125 – characteristics and attributes 119 – co-creating with stakeholders 128 – knowledge and skills 119 – leveraging surprise 126, 128, 129, 131–132, 136–137, 139 – measures of 129 – networks 119 – principles (see principles of effectuation theory) – as process-based theory 124 – what they know 126, 127 – whom they know 126 – who they are 126 efficient scale 83

310

Index

Ellen III, B. P. 42 Ellison, L. 33 El Salvador, oligarchs 14, 79 – neoliberalism 80–81 Engels, F. 205, 206, 222–223, 226 entrepreneurs/entrepreneurial 119–125, 134–139, 162, 179, 194–195 – action 7, 27, 34 – bricolage 123, 137 – effective (see effective entrepreneurs) – entrepreneurial school 159 – evidence for oligarchs being 137 – expert 124, 132 – institutional 123, 126 – market-state 19 – opportunistic/opportunity development 121–124, 179 – uncertainty 122, 123–124 entrepreneurship 122, 124, 134, 165, 236 – commercial 125–126, 137 environmental school 159 Erdoğan, R. T. 13 Europe, oligarchs 13, 143, 222, 246, 269, 270 European Social Model 271 Fabian strategy 164 Faccio, M. 36 Facebook/Meta 183, 249 Fahd, King 168 Farabundo Martí National Liberation Front (FMLN) 186–187 Fatjo, T. 127, 128 Federal Security Service (FSB) 181 Federation of American Scientists (FAS) 232–233 Feizi, H. 30, 224 female oligarchs 12, 54, 74, 90. See also specific female oligarchs Feynman, R. 183 firm-level knowledge 176 Fok, H. 67, 172–173 Forbes 11, 30, 45, 48, 55, 57, 61, 65, 69, 72, 73, 82, 91 formal institutions 18, 19, 36. See also informal institutions Foweraker, J. 38 Francis, D. 41 Freedom House, Global Freedom Score 18 Freeland, C. 42 Freigang, V. 251

Fridman, M. 5, 6, 9, 12, 14, 22, 37, 38, 49, 54, 62–64, 68, 74, 82, 83, 121, 137, 139, 155, 175, 200, 208, 246–247 – FWB strategies of (partnerships) 141–144 – secrecy and stealthiness startegy of 180–181 Friedrich Engels 45 friends with benefits (FWB) strategy 7, 8, 27, 28, 120, 139–141, 174, 177, 193, 195 – of Bin Laden 149–152 – commitment demonstration 139 – coupling and decoupling 7, 139–140, 157, 177, 195, 222–223 – of Dos Santos 152–153 – emergent actors 140 – emergent and dynamic relationships 140 – firm viability enhancement 139 – of Fridman 141–144 – of Gore 144–146 – greater entanglement 140 – oligarch’s alliance formation and dissolution 155–157 – of Putin 146–149 – reputation building 139 – strategic alliances 140 – of Tymoshenko 153–155 – uncertainty hedging 139 Fuentes, C. 43 Fuller, J. F. C. 164 Gaddis, J. L. 205 García Márquez, G. 43 gas princess. See Tymoshenko, Y. gender 11, 26, 74 generational cycle 160 Generation Investment Management 146 Georgia 250 Gevisser, M. 107 Gilbert, D. 41, 212 Gilens, M. 38 globalization 20, 75 Goldwater, B. 181 Gomes, A. 93 Goodman, P. S. 42 Google/Alphabet 69, 70, 136, 146, 182–184 – investors in 1998 135 – Zuboff on 183–184 Gorbachev, M. 63, 97, 131 Gore, A. 12, 33, 44, 88, 108–109, 137, 139, 144, 182 – FWB strategy of (partnerships of) 144–146

Index

– net worth of 146 Gore, T. 44, 145 Gore-Browne, S. 221–222 Graeber, D. 42 Grant, U. S. 165 Gravets, O. 154 Great Purge (1938) 130 The Great series 146 Grupo Empresarial Olímpica 191 Guatemala 39, 41 guerrillas 130, 164, 179, 226 Guitiérrez, F. 193 Guriev, S. 32, 36 Gusinsky, V. 9 halo effect 200 Han Feizi (Feizi) 30–31 Hariri, R. 12, 33, 34, 43, 54, 59–61, 119, 130, 135, 137, 150, 158 – indirect approach strategy of 167–169 – net worth of 169 Hartley, R. 43 Hayek, F. 58 Hayem, M. 185 Hellman, J. S. 36 Henry VIII 215 Heritage Foundation, Index of Economic Freedom 18 Hibbert, C. 217 Hill, F. 233 Ho Chi Minh 163 Hoffman, D. E. 42 Honig, M. 43 Hoover, H. 20, 23, 33, 219, 241 Howard, M. 164 Hussain, S. S. 41 Hyatt, J. 146 Ibrahim, M. 23 ideological oligarchs 10, 11, 13, 14, 41, 45, 53, 87, 108, 109, 175, 182, 212, 231, 234, 249, 272 immigration/immigrants 189–190 impediments – managerialism 21 – societies 21 – socio-political features 21–22 An Inconvenient Truth (Gore) 109 India 11, 13, 22, 39, 63, 94, 223, 224, 255, 269, 270 indirect approach strategy 158, 164

311

– of Hariri 167–169 – of Zardari 165–167 individual oligarchs 120, 122, 237, 241, 279, 281 industry attractiveness 83 influencers 45 informal institutions 14, 18, 242, 261. See also formal institutions informational autocracy 178–9, 181 initial public offering (IPO) 81 Instagram 188 institutional entrepreneurs 123, 126, 211 institutional quality and change 18–20, 26, 80, 81, 85, 109–110 intangible assets 83 Into Thin Air (Krakauer) 5 inverted totalitarianism 39 investors 83, 106, 134, 135, 161, 184, 265, 270 The Invisible One oligarch 46 Iran 135 Israel 9, 60, 61, 144, 168 Italy 13, 37 Ivanov, I. 172 Ivanov, S. 171 Jackson, A. 20 Jindal, S. 11 Jobs, S. 120 Johnson, L. B. 47 Jones, C. M. 43 Jones, G. 36 journalists 42 Joyce, G. 25 Kapferer, B. 42 Karasev, F. 147 Karenina, A. 5 Kaufmann, D. 36 Kaunda, K. 221, 222 Kfar Falous project 168 KGB 130–132, 146–147, 149, 175, 180 Khalid, King 167 Khan, G. 62, 63, 142, 143, 227 Khatri, N. 41 Khodorkovsky, M. 9 Khristenko, V. 171 Kissinger, H. 38 Klebanov, I. 171 Kleiner Perkins 109, 135 Knaster, A. 143

312

Index

Knight, F. 122, 124 Knowles, C. 41 Koch, C. 12, 17, 43, 49, 51, 54, 57, 58, 81, 138, 157, 174–175, 200 – secrecy and stealthiness strategy of 181–182 Koch Industries 182 Kornbluth, S. 33 Koshman, N. 171 Kosogov, A. 84, 143 Kotkin, S. 39 Kovalchuk, Y. 113, 148 Kozak, D. 171 Kozlov, A. 24 Krakauer, J. 5 Kravchuk, L. 154 Kuchma, L. 74, 75, 154, 155, 231 Kukanova, T. 91 Ķuzis, P. See Berzin, J. Kuzmichev, A. 63, 142, 143 L1 Energy (LetterOne’s energy) 143 Latin America/LatinAmerican 11, 26, 38, 39, 41, 43, 72–73, 75, 80, 121–122, 134, 188, 206, 207, 210–212, 268, 271 Lazarenko, P. 74, 154–155 Leach, D. 31, 32 leadership styles 42 learning school 159 Lebanon/Lebanese 12, 60, 135, 167–169 – Beirut 135, 169 – Lebanese Civil War (1975–90) 34 Ledeneva, A. V. 37, 38 Lenin, V. 120 Leonard, C. 43, 58 Leopold II, King 205, 206, 219–222, 226, 254, 270 Leshchev, Y. 147 liberal democratic political culture 31 Liddell Hart, B. 158, 162–165. See also indirect approach strategy The Light Touch oligarch 46 Lincoln, A. 165 Lingelbach, D. 32, 43 Lingelbach-Rodríguez Oligarch Model (LROM) 7, 19, 119, 129, 193, 261–263, 267, 268 Li Peng 66 literatures, oligarch 3, 29, 34–45 – anthropologists 42 – biographers 43 – business and management researchers 41–42

– economists 35–36 – historians 39–40 – journalists 42 – novelists 43 – political scientists 36–39 – sociologists 40–41 Litvinenko, A. 148 Locombia 27 López, F. 185 Luanda Leaks 91, 95 Lukes, S. 31, 45, 222, 258 Lynch, J. 210 Machiavelli, N. 40, 205–206, 216, 274 Machiavellianism, characteristics of 179 Mackey, J. D. 42 macro power strategy 160–161 Maggi, B. 11 Ma Huateng 11 main chance, waiting 7, 8, 27, 28, 90, 108 managerial market-state 19 Mandela, N. 106, 132 Mansel, P. 60 Mansour, M. 11 Mantel, H. 43, 214 al-Maqasid Foundation organization 168 market-based management (MBM) 182 market capitalization 114, 136, 150, 271 market-states 19 Márquez, G. G. (Gabo) 190–191 Martini, M. 251 Marx, K. 48, 58, 69, 122, 222 mass mobilization warfare 234 math on oligarchs 29 – global and historical phenomenon 47–49 – net worth, power, and strategy 49–52 Matveev, L. 147 Matvienko, V. 172 Mayer, J. 42, 253 Mayville, L. 39 Mbeki, T. 132–133 McAllister, C. P. 42 Méditerranée Investors Group (MIG) 168 Medvedev, D. 146, 148 mercantile market-state 19 Mesopotamia (3100–530 BCE) 122 Michel, C. 247 Michels, R. 31, 32, 40 micro power strategy 160

Index

The Middle East 128, 135 Milanovic, B. 35 millennial authoritarianism 12, 54 Miller, A. 148 mindshapers 45 Miranda, F. d. 211 Modi, N. 270 moguls 35 Monnet, J. 270–271 Morari, N. 24 Mosca, G. 40 Mubarak, H. 11 Mueenuddin, D. 88 Musharraf, P. 136, 165–166, 231 Musk, E. 183, 188 al-Nahyan, T. b. Z. 271 Napoleon 163, 176, 267 National Commercial Bank (NCB) 151 National Company for Electrical Power 151 The National Intelligence Directorate (DNIA) 77 nationalization of private companies 76 National Union of Mineworkers (NUM) 105, 132 Neill, S. 43 neoliberals/neoliberalism 21, 79–81, 145 network effect 83 Nixon, R. 181 novelists 43 nuclear conflict 233 Nur, M. 11 Occidental Petroleum 146 Odysseus 162 Ojeda, A. d. 209–210 oligarchs 3, 6, 27, 258 – anti-corruption 247 – causes and consequences 35 – characteristics 3 – comparison case studies 197–199 – competition policy 247–249 – de-oligarchization 249–250 – and development 105 – distribution 47 – dominate economic and political systems 17 – economic, political, and social equality 235 – ethical spectrum 23 – ethics 239–241 – existential challenges 232–235 – framework 237–238

313

– future 229, 236–239 – in history 205–228 – performances 196, 267–269 – and philanthropy 240 – policy actions 242–245 – political and economic spectrums 18 – power rankings for book’s case studies 51 – practical implications 263–267 – recommendations 251–252 – and rising authoritarianism 229–232 – sanctions 246–247 – self-governance 241–242 – as strategists 51 – strongmen and tycoons 199–200 – transparency 251–253 – types 37 – uncertainty 19–22 oligarkia 30 Olin, J. M. 182 operators 45 OPM (other people’s money) 135 OPP (other people’s power) 135 opportunistic/opportunity development 121–124 organizational oligarchy 31 organizational secrecy 178 organizational settings 31, 32 organization-level process theory (oligarchization) 32 Orient Overseas Container Line (OOCL) 67, 68, 172 Orient Overseas (International) Limited (OOIL) 172–173 Ortega, A. 33 Oxford English Dictionary 32 Pact, D. 242 Page, L. 17, 38, 51, 54, 69, 70, 119, 130, 135–138, 155, 157, 174–175 – secrecy and stealthiness strategy of 182–184 Pakistan 165–166 – oligarchs 88–90 Pakistan People’s Party (PPP) 136 Pamplona Capital Management 143 Panama Papers 65, 113 Pareto, V. 40 Parker, M. 41 Parrish, K. 192 partners with stakeholders 7–8, 27 Pasternak, B. 43, 44 Patrushev, N. 148–149, 171

314

Index

Paulson, J. 161 Pears, I. 43 People’s Movement for the Liberation of Angola (MPLA) 91–92, 94 Peter the Great 96, 97, 132 Pétion, A. S. 211 Petro, G. 73 philanthropy 240 Piketty, T. 29, 35, 44, 235, 253, 257, 266 pillo 135, 262 Pinchuk, V. 74 Piñera, S. 12, 34, 54, 75–80, 119, 130, 134–135, 192, 200 – Claro and 134 Piñeragate 78 Pinochet, A. 76, 77, 80, 135 Pizarro, F. 206–211, 218, 226 planning school 159 Plato 30, 241 plutocrat 35 political oligarchs 3, 11, 24, 27, 47, 54, 87, 109 – authoritarianism 87 – fortunes 113 – institutional change 110 – and moats 110–111 – and net worths 112 – power 111, 114 – transition to wealth 112–113 political scientists 36–39 Politics (Aristotle) 30 Poroshenko, P. 155 positioning school 159 post-communist Russia 119, 126, 131, 134, 143 power 8, 9, 29, 30, 111 – measuring 30 – school 159 – in strategy 160 – types of 10 prescriptive strategy schools. See also descriptive strategy schools – design school 159 – planning school 159 – positioning school 159 The Prince (Machiavelli) 205, 274 principles of effectuation theory – affordable loss 124, 128, 129, 131, 134, 135, 137, 139 – bird in the hand 124 – crazy quilt 139

– lemonade 124 – means determination 124, 134, 158 – patchwork quilt 124 – pilot on the plane 124 private wealth 29 Prussia 161 public enterprises 20 Pugachev, S. 146, 148 Putin, V. 5–6, 8, 12, 24, 38, 43, 44, 82, 83, 87, 95–97, 113–114, 119, 125, 126, 127, 137–139, 141, 143, 155, 157–158, 161, 174, 181, 200, 230–233, 238, 246, 249, 250, 253–255, 259, 265, 266, 269 – and Aven 142–143 – and Ben Ghiat 100–103 – during COVID-19 132 – FWB strategy of (partnerships) 146–149 – inspirational heroes of 130–131 – invasion of Ukraine 132, 141, 144, 148, 161, 170, 175, 183, 200 – KGB career 97–98 – mentors of 147 – net worth of 131 – power transition 104–105 – shares 114 – strategic timing of 161, 170–172 – time in Dresden 97 – wealth-producing assets 98 Puzo, M. 43 Rabinovych, V. 75 Rachinsky, A. 32, 36 Rachman, G. 254 radar, flying under 8, 27, 28, 54, 57, 88 Ramaphosa, C. 12, 15, 43, 88, 105, 119, 130, 132, 200 – Black Business Council 107 – challenges as president 107 – COSATU and ANC 105–106 – investment strategy 107 – power transition 106 – wealth and power 108 Ramseyer, J. M. 38 al-Rashid, N. 167 al-Rashid, N. 60, 61 Reagan, R. 181 Reddy, Y. S. R. 270 Red Terror, Lenin’s 130 rent-seeking behavior 35–36

Index

The Republic (Plato) 30 Rodríguez Guerra, V. 6, 24, 25, 27 Rosenbluth, M. 38 Rosneft oil company 181 Rossiya Bank 148 Rotenberg Brothers (Boris and Arkady) 147 rugged individualism 39 ruling oligarchs 37 Rumelt, R. P. 49, 52 Rupert, A. 107 Russia 119, 131–132, 141–142, 155, 170–171, 175, 183 – and Bank of America 119–120, 141 – financial crisis in 141, 170, 180 – health and wealth (1917–2020) 104 – invasion of Ukraine 132, 141, 144, 148, 161, 170, 175, 183, 200 – oligarchs 24–25, 42 – Russian Revolution 141 Sáenz, M. 211 Salam, S. 168 sanctions 246–247 Sandel, M. 239 Santander, F. d. P. 211 Sarasvathy, S. D. 123, 227 Sarmiento, L. C. 6 al-Saud, F. b. A. 149–152, 167–168 Saudi Arabia 55, 135, 150–151, 167, 169 Saudi Binladin Group 55–56 Saudi Oger 167 Scaife, R. M. 182 Scheidel, W. 234, 253 schemers 46 Schiffbauer, M. T. 41 Schimpfössl, E. 41 Schumpeter, J. 122 Sechin, I. 148 secrecy and stealthiness strategy 7, 28, 59, 119–120, 141, 157, 159, 162, 175–178, 193–195 – of Bukele 184–189 – of Char 189–193 – concealment 178 – economics 178 – of Fridman 180–181 – information 176–179 – of Koch 181–182 – obfuscation 178 – organizational secrecy 178 – of Page 182–184

315

– privacy 178 – signaling and screening 178–179 – strongmen and tycoons 199–200 – true secrecy 178 self-knowledge 130 self-made oligarchs 45 self-regulatory organizations (SROs) 252 Sense Bank 144 Sequoia Capital 135 Sergeev, I. 172 Sharif, N. 88 Sherman, B. 158, 164–165 Shinawatra, P. 166, 169 Shinawatra, T. 12, 43, 51, 54, 70, 71, 80, 119, 126, 130, 137, 144, 158, 166, 169, 172, 200, 231, 255, 266 – political innovation 71 – Thai Raksa Chart party 72 – from wealth to power 71 Shinawatra, Y. 166, 169 Shin Corporation 169 Shiwa Ng’andu 221 Shleifer, A. 36 Short, P. 43 Shteyngart, G. 43 Shumylovych, B. 63 Sidanco oil company 180 Silicon Valley 135, 183–184 The Silver Spoons 45 Simonton, M. 38, 260 Sinclair, U. 43 Skiena, S. 30, 49, 211 Sobchak, A. 97–98, 131, 146, 147–148 social media, oligarch usage of 188 sociologists 40–41 Solidere 168–169 Sonangol oil company 153 Soong, T. V. 205, 206, 224–226, 233, 268, 269 Sorge, R. 130 South Africa 132 – HIV pandemic in 133 – mortality rate (2023) 133 Soviet Union 130, 134, 141, 170, 175 stakeholders 120, 128, 140–142, 155, 195 Stalin (Kotkin) 39 Stalin, J. 120 Stam, E. 237 Standard Oil of California 150 Stepashin, S. 170

316

Index

Stephenson, N. 183 strategic timing 120, 157–8, 160–165, 195 – cycles of 160 – during global financial crisis of 2007–08 161 – of Liddell Hart 164–165 – oligarchs’ usage of 173 – of Putin 161, 170–172 – of Sherman 164–165 – of Shinawatra 169 – strategic patience 162 – strength against weakness 158 – of Sun Tzu 160–163 – time (in different cultures) 161–162 – of Zardari 165–167 strategy, definitions of 159 strategy schools of oligarchs. See specific schools Strathern, P. 216 Studwell, J. 42 Suleiman, A. 55–56, 150, 151 sultanistic oligarchs 37 Sun Tzu 158, 160–163 – Fabian strategy 164 – strategy elements of 163 – theory of control 164 Surkis, H. 75 Surkov, V. 43, 63, 146 switching costs 83 Syria/Syrian 135, 168 tacit knowledge 176 Taif Agreement (1989) 168 Teles, F. 92–93 Tesla, N. 183 Thailand 18, 19, 70, 126, 169 Thai Rak Thai (TRT) party 169 Thatcher, M. 133 Time 30 TNK-BP 142, 143 transformational change 47–48 transitions (wealth to power) 15–16, 71, 81, 85, 86, 105, 112 transparency 251–253 Trump, D. 8, 20, 48, 57, 59, 71, 181, 188, 213 Tsang, E. W. K. 41 Tung Chao-yung 66, 67, 172–173 Tung Chee-hwa 54, 65, 67, 70, 119, 130, 133, 158, 172, 255 Twitter 183, 188–189 tycoons 35, 42, 199–200

Tymoshenko, Y. 12, 54, 74, 75, 80, 91, 133–134, 139, 155 – FWB strategy of (partnerships) 153–155 – net worth of 154 typology 3, 37 Tyumen Oil, acquisition of 141–143 über-oligarchs 14 Ukraine 12, 62, 75, 80, 132, 134, 142, 144, 154–155, 161, 249–250 – corruption 75 – Dnipropetrovsk 154 – Russia’s invasion of 62, 64, 74, 83, 114, 132, 141, 144, 148, 161, 170, 175, 183, 200 Ukrainian Petrol Corporation. See United Energy Systems of Ukraine (UESU) uncertainty 7, 19–23, 27, 33, 40, 48, 53, 80, 122, 123–124, 128, 130, 139–140, 152, 163, 170, 195, 232 United Arab Emirates 144 United Energy Systems of Ukraine (UESU) 154 United Nations adopted a Convention Against Corruption (UNCAC) 247 The United States 133, 177 Vekselberg, V. 62, 143 Velásquez, D. 208 venture creation 122 victims’ perspectives 24–25 Vietnam 145, 163 Vishny, R. 36 Von Clausewitz, C. 161 von Mises, L. 58 von Stierlitz, M. O. 131 vulnerability 8, 83 Wang Jianlin 11 Ward, C. B. 30, 49, 211 war/military/violence experience 99–103 warring oligarchs 37 Washington, G. 20, 23, 33, 48, 205, 206, 212–214, 218–219, 225, 226, 241, 268 wealth and power 8, 9, 11, 27, 29, 31, 33, 40, 53, 55, 120–121, 123–125, 127, 139, 168, 175, 179, 194, 196 – connections 46 – equality 21 – family inheritance 45 – and income inequality 21

Index

– self-made oligarchs 45 – spectra 14 wealth defense 31, 33, 37 Wedel, J. R. 42 Wengrow, D. 42 Whitney, R. 39 Winters, J. A. 31, 33, 37, 241, 260 Wolin, S. 39 Wolsey, T. 215 World Bank, Worldwide Governance Indicators project 18, 19, 85 World War I 20 World War II 20, 48, 55, 62, 63, 86, 88, 95, 96, 271 World War III 233 Wurth, B. 236 Xiaoping, D. 133, 163 Xi Jinping 65–66 Yanukovych, V. 74, 155 Yeltsin, B. 8, 24, 63, 95, 98, 104, 120, 131, 146, 148, 170–172

Yew, L. K. 133 Yumashev, V. 148 Yushchenko, V. 155 Zardari, A. A. 12, 80, 88–89, 108, 113, 119, 130, 136–137, 144, 155, 158, 172, 174 – corruption 89, 166–167 – indirect approach startegy of 165–167 – wealth and power 89–90 Zardari, B. B. 136, 167 Zedong, M. 179 Zelenskyy, V. 144, 154–155 Zemin, J. 173 Zhu, J. 269 Zuboff, S. 41, 44, 68, 70 – on Google 183–184 Zuckerberg, M. 183 Zuma, J. 132 Zygar, M. 38

317