Who is an oligarch? A taxonomy from one ruminant’s backside

“I dismantled oligarchy in PH without declaring martial law…” was President Rodrigo Duterte’s boast to the soldiery in Jolo, Philippines, on July 13. This inspired a mushroom cloud of reactions. Some pointed to the lie of the avowed neutrality of Malacañang on the ABS-CBN franchise issue; others to the claimed dismantling of the oligarchy as premature; still others, to the possible mere replacement of one set of oligarchs by another of a friendlier persuasion.

Duterte’s claim coming after the franchise denial to ABS-CBN was commonly understood as gloating over the take down of the Lopez family. The Lopez group, though no longer among the most powerful among the business groups, still wears the unique distinction of surviving the ire, and figuratively getting the better of the dictator Ferdinand Marcos. A similar gloating followed the giving up under duress by Manuel “Manny” V. Pangilinan (MVP) and Jaime Augusto Zobel de Ayala (JAZA) of their respective company’s claim to the billions of pesos awarded by the international arbitral courts in Singapore. These novel thrusts against those previously viewed as untouchable overlords serve as object lessons to the oligarchy.

President Duterte, looking bored and unengaged through most of his July 27 State of the Nation Address (the aside “Kung hindi nyo naintindihan, lalo na ako!” [If you do not understand it, I especially don’t] was revealing) came alive when entering his comfort zone calling out and demonizing enemies: the drug lords, the owners of the two telcos, and Senator Franklin Drilon. Congress was chastised for wasting time on political dynasties when it should be dismantling true oligarchs.

There clearly was a disconnect between Duterte’s and Drilon’s use of the term “oligarch.” The disconnect, so off-footing and yet so ubiquitous, got me ruminating. If you loathe what blows out of a ruminant’s backside, cease reading or don a face mask.

Many current discussions on oligarchs and oligarchy become quickly tedious for lack of common definitions. The question “Who is an oligarch?” elicits different answers. President Duterte’s call out of MVP and JAZA as true oligarchs implies a definition that, at first blush, does not stray from the textbook oligarchy: the rule by a few. This goes back to Aristotle who wrote in Politics Book 3 that “oligarchy is when men of property have the government in their hands; democracy, the opposite, when the indigent, and not the men of property, are the rulers.” MVP and JAZA are “men of property” and there are a scant “few” others in their club. In most discourses, this rule by a few causes discord and poverty and is roundly denounced. Not to Aristotle: the ideal government in Politics is an “oligarchy of virtuous men.” Oxymoron?

In Aristotle as well, great economic wealth curves the political space in favor of its owner regardless of the owner’s behavior — a type of iron law echoing Robert Michel’s The Iron Law of Oligarchy (1911). Among the Greeks of that era, democracy had a dark synonym with chaos. Thus, salvation lies only with virtuous oligarchs who, either by temperament or by study of philosophy, pull their preponderant weight to advance not their own but the welfare of all. Was Aristotle naïve?

That virtue and wealth can coexist in the same person has been exiled from many well-meaning minds following anarchist Pierre-Joseph Proudhon’s new doctrine of property: “Property is theft.” Oligarchs are thus thieves covered in legal finery. Somewhere along the way, either they or their forebears had hoodwinked the community. This thieving kind has to be erased from the face of the earth, a goal which Stalin in Ukraine and Pol Pot in Kampuchea accomplished with clinical brutality.

Senator Drilon defines the “oligarch” differently: “It is not in wealth that you are an oligarch; you are an oligarch if you use your power to promote through the political system your own interests.” (July 15, 2020, Online Media Forum). To be an oligarch in Drilon’s sense requires three elements: (i) he is a man of wealth and property, (ii) he employs his wealth to bend the political space (iii) to advance or protect his exclusive interest. Drilon departs somewhat from the contemporary textbook definition of oligarch, given, say, in Winters’ Oligarchy (2011): you are one if you belong to the few who own “…massive material resource that can (italics mine) be deployed to defend or enhance… your exclusive social position.” For Drilon, being an oligarch is a behavior: you are consciously employing wealth to bend rules in your favor; for Winters, being an oligarch is a state: having enormous wealth curves the political space in your favor despite the owner’s proclivities. Winter’s and thus the textbook oligarch echoes Aristotle’s by virtue of great wealth’s automatic curving of the political space; Drilon’s oligarch is closer to Aristotle’s by virtue of behavior: he can bend rules for himself but can also bend rules for all. Warren Buffet’s support of a higher income tax on the rich seems to instantiate this genre! By contrast, Proudhon’s “oligarchs as thieves” is alien to Aristotle and progeny.

Duterte’s oligarch, however, seems closer to Proudhon’s: expropriation of the oligarch’s property on the presumption of theft. Both MVP and JAZA, who occupy most of the telco landscape, also have long-term contracts with the government on the distribution of water. These contracts have been adjudged by international arbitral courts as valid and above board. And yet Duterte threatened them with expropriation, even after forcing them to give up their claim on the arbitral awards. That is how you treat Proudhon’s property owners. Perhaps a case of JM Keynes’ “Practical men (being) the slaves of some defunct economist.”

Every science begins with a taxonomy: the classification of phenomena into well-defined groups, say, into different taxa (biology) or into different flavors (in particle physics). Without  proper definitions, we run around in circles forever. Clearly, by the Aristotle-Drilon definition, the “robber barons” of the Gilded Age of the USA were oligarchs — they were fabulously wealthy and they rode the US Congress to secure or protect exclusive benefits. But this baronetcy of robbers also led to the creation of millions of productive jobs and a world-beating US economy. Warren Buffet and Jeff Bezos, who built fabulous wealth away from the political sphere and judiciously avoided overt political involvement for exclusive interests are, by definition, not in the same fold. By contrast, Kapitan Lucio Tan, whose political connections were said to have led to the blocking of “sin tax” adjustment bills for decades, was an oligarch. So was the late “Danding” Cojuangco who actually headed a political party and shaped policy on the Tobacco Levy. JAZA and MVP are clearly out of their league. By the Proudhon-Duterte definition, however, they all are the same banana deserving of expropriation.

With convenient exceptions, of course.

Raul V. Fabella is a retired professor of the UP School of Economics, a member of the National Academy of Science and Technology and an honorary professor of the Asian Institute of Management. He gets his dopamine fix from bicycling intra-subdivision and tending to flowers with wife Teena.