Free Market Oligarchs: Is this a feature or a bug of capitalism?

Ryan Gosha
5 min readJun 9, 2022


This is the era of global free market oligarchs. Most people reserve this term for Russian oligarchs. This word does not exclusively pertain to Russia. ‘Oligarch’ simply means being a business magnate with sufficient resources and power to influence national or even global politics.

As capitalism grew out of the remains of feudalism into mercantile capitalism, the form of free markets changed. This changed again as economies added a layer of industrial capitalism above mercantile capitalism. Big American industrialists emerged to become the oligarchs. Henry Ford, Andrew Carnegie, and others were somewhat oligarchs. As financial capitalism was added as a layer on top of industrial capitalism, banking families became powerful. The 21st century ushered a new breed of oligarchs in the form of tech magnates, as ‘tech’ capitalism was plastered as a layer over and above financial capitalism. Whereas technology was generally advancing and was applied to business in general, technological advancement itself became a layer in itself in the 21st Century. Tech minted more billionaires than finance as it ate the world for breakfast.

This is how things have progressed.

  • Feudalism
  • Mercantile Capitalism
  • Industrial Capitalism
  • Financial Capitalism
  • ‘Tech’ Capitalism, for lack of a better word.

Every era and every layer produces its own oligarchs who are bigger and better financially than the previous era as capitalism finds a way to reinvent itself. The current tech era is now producing truly global oligarchs. Jack Ma (an oligarch minted in China) and Jeff Bezos (an oligarch minted in the USA) have outsized control over global e-commerce. They are the new lords of retail. They have amassed and continue to amass market power in retail trade that has never been witnessed before.

A bug or a feature?

The minting of oligarchs in Russia occurred under the privatization of state resources after the collapse of the Soviet Union. The Russian state, under Gorbachev and subsequently Putin created and sustained the Russian oligarchs as they moved from authoritarian socialism/communism to capitalism.

Whereas the Russian oligarchs were minted by the state, oligarchs in America are minted by the free market. Oil oligarchs in the middle east are minted by the state. In China, there is confusion over who is minting oligarchs there. It appears the free market is responsible for minting oligarchs, but the CCP thinks otherwise. The CCP views itself as primarily responsible for minting the modern Chinese oligarch via its policies such as providing low-cost funding to entities owned by oligarchs.

Under the free market, the minting of an oligarch is much more democratic. Those who are clever, luckier, better, etc get to be the oligarchs. The criteria are endless. Those who have access to cheap credit, those who have better business models, those who have better networks, and those who are taller, beautiful, handsome, or any remarkable attribute get to be the oligarchs. Or simply put, those who work harder than others become oligarchs.

After oligarchs are minted, we end up at the same destination, where the oligarchs have so much power that they can influence national policies and laws, either directly or indirectly. They have control over markets, economies, and countries.

Even though some parts of the world don't have full free markets, between countries and in most parts of the world, we have a global free market system. The modern oligarch is essentially a free market oligarch.

The tendency of capitalism to create oligarchs is outstanding. Is this a fault with human nature or a fault with the economic system? Is it good? Is it bad? Is it a bug or is it a feature? Is this something that we can attribute to capitalism or not? Is this a problem that needs to be fixed or is it rather an essential ingredient that makes capitalism work?

How do we mentally reconcile the existence of these oligarchs? Are these oligarchs needed for the capitalistic great leap forward? Is the existence of free market oligarchs a drag on economic performance? Given their ability to influence policy, is democracy and even autocracy under threat from these oligarchs? Given their ever-increasing ability to accumulate more, what does the future look like for the rest of us? Can we progress as a society without the oligarchs? Are they a bug or a feature?

It’s a feature?

The process of accumulation is baked into capitalism. By its very nature, accumulation is a result of profits. Productivity increases result in the creation of more value. Surplus value under capitalism belongs to the shareholder. The firm exists to maximize shareholder value. Both profits and losses accumulate to the owner.

Because of differences in strategy, starting point, etc, there is bound to be one firm that does better than another. That one firm that does better than the others tends to be rewarded for that efficiency. Those rewards come in the form of sales, which then end up accumulating as profits. These profits accumulate faster for the winning firm such that it ends up being even better resourced than its competitors. Given enough time, it swallows its competitors either via buyouts or via kicking them out of business. This process is a key mechanism of the free markets. It's the ability to weed out those who cannot produce efficiently. It is the efficiency of free markets. It makes us enjoy cheap goods and services. However, it is the very same process that creates larger-than-life entities that harness huge economies of scale.

Retail chains become nationwide, replacing every mom-and-pop shop around the corner. Energy giants become global. Car manufacturers, financial institutions, parcel deliveries, bakeries, butchers, etc become big. Yet within those big ones, some, who operate in bigger or better industries become even bigger and better than others in other industries. They accumulate surplus faster in their industries. These surpluses later need to be invested elsewhere. They end up encroaching on other business areas and swallowing the others. There is literally no end to it. Diseconomies of scale can at times creep in at the operational level but not at the investment level.

This is how capitalism tends to create and sustain oligarchs. It is a winner-take-all type of competition. As long as the economy is growing, and productivity is increasing, the gains tend to accumulate at the top. Yes, there can be some marginal benefits to those at the bottom, but the large share of the pie goes to those at the top. Who are they? The top company in the industry, the top shareholder, the top management team, the top something in anything.

Since there is no limit to accumulation at the top, what shall we do?

You cannot destroy the natural tendency of free markets to mint oligarchs via concentration of surplus accumulation. The process of surplus accumulation by its very nature tends to converge around a few and hence concentrate market power.

The winner-take-all dynamics are now baked into the new products, new innovations, and new industries. Whereas the brewer and the baker had to grow out to become big winners, the car manufacturers during the Ford era were born moderately big and quickly grew bigger. In the tech era, companies are born big. As soon as an idea is experimented with and proved to work, it's blitzscaled globally, instantly creating a behemoth, minting an oligarch in the process.

As these winner-take-all features become more prominent, power concentrates in the hands of existing oligarchs who are able to exploit opportunities, as well as newly minted oligarchs.




Ryan Gosha

Financial Analyst, Cloud Accountant, Citizen Data Scientist