Updated February 04, 2025 at 14:11 PM ET
We had a talk on Morning Edition about oligarchy.
People across the political spectrum have been using the term as President Trump appointed billionaires to his Cabinet, invited tech leaders to sit on his inauguration stage and gave Tesla CEO Elon Musk control of DOGE ("Department of Government Efficiency"), an entity tasked with reducing spending and bureaucracy in the federal government.
Business and wealth are always connected to politics. But the link is rarely so explicitly on display. So we contacted David Hoffman, an expert on another country where very wealthy men grew very close to the state: Russia.
Oligarchy means rule by the few, and the word "oligarchs" entered Russia's popular discourse beginning in the 1990s. Hoffman lived in Moscow as a journalist then and later wrote a book called The Oligarchs. He described a Russian oligarchy that developed in stages:
Russia's oligarchs became wealthy thanks to the weakness of the state
The collapse of the Soviet Union in 1991 left state-owned industries open to privatization. Hoffman says a few men captured companies dealing in natural resources. "Timber, diamonds, oil, you name it," Hoffman said. He added that the entrepreneurs were "these young hustlers, kids who had not been part of the Communist Party. And seven of them became prominent businessmen by glomming on to these big valuable assets."
The oligarchs became involved in politics
In 1996, when Russian President Boris Yeltsin stood for reelection, the oligarchs feared victory by a Communist candidate who might have undermined their position. "So they rallied behind Yeltsin and they used their media, one of their most powerful tools. They all had television and they had newspapers to support Yeltsin, and he was reelected," Hoffman said. As a reward, "they collected a whole new round of factories and assets."
Their fortunes turned under a new president
Vladimir Putin, who abruptly replaced Yeltsin at the end of 1999, took a different attitude. "The oligarchs were not really very popular in Russia," Hoffman said. "And when Putin came in, his attitude was very much reflective of this envy and resentment in the population. He said at the beginning: I will eliminate the oligarchs as a class." Putin said: "The state holds a club, which it uses only once," and warned, "If we get angry … we will use the club without hesitation."
The oligarchs didn't take the hint
"Very early on, two of the most prominent of the first generation, Vladimir Gusinsky, who is a real entrepreneur, who had a television station and a prominent newspaper, [was] forced out. Boris Berezovsky, who had helped make Yeltsin and was even involved in picking Putin and had the biggest television station, [was] forced out. And then in 2003, [Putin] had a big roundtable with all the remaining businessmen. And at this roundtable, one of the remaining oligarchs, Mikhail Khodorkovsky, made a comment that suggested that the Kremlin was trying to extract … a big payoff in an oil company sale. And Putin was furious. And this remark was followed by Khodorkovsky's arrest."
Putin's seemingly populist moves consolidated his own power
Oligarchs who supported independent media were the first to go. The few who remained "were cowed into staying out of Putin's way. Furthermore, as time went by, Putin didn't change the system. What he did was he installed his own people as oligarchs. He changed the guy sitting in this chairs, but he didn't change the chairs."
America's superwealthy are different — but some of the hazards are the same
Hoffman credits U.S. business leaders with more entrepreneurial spirit. They generally created their own companies rather than plucking them from the state — although some, like Musk's SpaceX, have depended heavily on federal contracts.
What bothers Hoffman is the union of money and political power. "Capitalism needs the ability to get rich. What changed, though, is when they get involved as unelected power brokers, when they pull the levers from behind the scenes, then they become unaccountable," Hoffman said. "And this is the danger, not that they are sitting at the inaugural or at a ball or even visiting the White House. Remember, Ronald Reagan had a kitchen cabinet of wealthy guys that he liked to pal around with. … That's not the problem. But when they begin to make decisions, that's a merger of wealth and power that warps our democracy."
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