Oligarchiyya, Lebanese Style (Part 2 of 2)
Day 112: Wednesday, February 5, 2020
Oligarchs abound in Lebanon. Although comprehensive wealth measures are hard to come by (the rich are good at hiding their assets across borders and taking refuge in tax havens), we can draw on some figures, incomplete and flawed as they may be. Income tax data between 2005 and 2014 reveals that the richest 0.1 percent of Lebanon’s population (around 3,700 people) earns as much as the bottom 50 percent, almost 2 million people. Bank deposit data from 2017 shows that about 1 percent of all deposit accounts hold about half of all deposits in the system.
In defending this stratification, Lebanon’s oligarchs have established a modern version of the classical ruling oligarchy (see Part 1 for a discussion of different types of oligarchies). For one, they are directly engaged in supplying the coercion that protects their wealth. Lebanese oligarchs personally possess coercive resources ranging from militias, to private security services, to private guards who shield barricaded homes and beachfronts from citizens demanding equality, and who close roads and other public spaces at whim. In addition to hiring and deploying their own coercive forces, they rely on those hired and deployed with their collective consent by the state apparatus. And they can count on an alliance with a powerful non-state coercive force that is commanded by someone who is not himself an oligarch.
Lebanon is also a ruling oligarchy because many oligarchs are directly engaged in governing. Political offices in Lebanon are peppered with oligarchs: By one measure, eight political families control 32 percent (more than $7 billion) of the commercial banking sector’s total assets. Like most modern oligarchs around the world, Lebanese oligarchs who choose to govern directly have to contest elections, and therefore to build constituencies large enough to win. To do so, oligarchs primarily rely on material power in the form of patronage networks, one-time vote buying, or even the promise of future wealth accumulation (though some oligarchs also have the luxury of additional forms of power such as, for example, mobilizational skills). Once in political office, oligarchs exploit political power to enhance their material power. Lebanese elections, like elections elsewhere, have presented no limitations to oligarchs. Instead, they are another means of pursuing individual and collective oligarchic interests. In fact, elections have been the making of many an oligarch: Some political elites first ascended to office through elections, then used their position to become oligarchs.
Once in political office, oligarchs exploit political power to enhance their material power. Lebanese elections, like elections elsewhere, have presented no limitations to oligarchs. Instead, they are another means of pursuing individual and collective oligarchic interests.
The popular uprising that began on October 17 raises two main questions about the fate of oligarchy: Might Lebanon’s ruling oligarchy transition to another form of oligarchy? And, more crucially, could Lebanon leave oligarchy behind altogether?
On the first question, given the fragmented Lebanese political landscape, it is difficult to conceive of ever witnessing a “sultanistic” oligarchy, where one oligarch has a monopoly on the means of coercion and uses it to manage wealth defense for others. And though Lebanon’s history of past and present warlords creates the spectre of possible descent into warring oligarchy, Lebanese ruling oligarchy is proving remarkably unified.
If anything, Lebanon increasingly exhibits features of the most stable form of oligarchy: civil oligarchy. For one, the state’s coercive apparatus is increasingly willing to violently defend wealth stratification. The most important historical shift in the character of oligarchy worldwide, according to Jeffrey A. Winters's 2011 book Oligarchy, was the change of the locus of coercive power from the individual to the state. Oligarchs surrendered a direct role in ruling and defending their riches through violence because they trusted the violence of the state to do their work for them. Lebanon is by no means at the precipice of such a complete transition. But on some nights, when witnessing the violence perpetrated by the state on protesters demanding socioeconomic equality, one could be forgiven for the thought. In this context, the acknowledgement that state violence is often deployed in the service of oligarchs, also provides an antidote to those obsessed with the need for the state to monopolize coercive power — as if that were the solution to all, including brutalizing inequality.
Moreover, like in civil oligarchies across the world, Lebanon’s oligarchs resort to wealth defense through bureaucratic institutions and the legal system, imposing regressive spending, tax, and debt-servicing policies that exacerbate wealth inequality. They also invest in charity, corporate social responsibility (CSR), and other forms of symbolic and non-compulsory redistribution — what has been called "CSR-washing" — none of which makes a dent in economic stratification.
There is another way in which Lebanon fits the global trend in oligarchy: the increasing financialization of wealth. In fact, Lebanon leads on this front: The total profit of the top 14 banks in Lebanon has hovered around 4.5 percent of GDP since 2015, compared to less than 1 percent of GDP in the UK; 0.2 percent in Germany; and 0.9 percent in the United States. Oligarchs in Lebanon have profited greatly from a crony banking sector, which throughout Lebanon’s history served the interests of oligarchic local bankers. Although the current deep crisis may eventually reveal tensions, thus far the banking sector has protected oligarchic interests.. The Association of Banks in Lebanon has colluded to enact unofficial, brutal capital controls on the vast majority of Lebanese citizens since September 2019, while allowing oligarchs to rescue their deposits. As recent figures show, 98 percent of deposits ($15.3 billion) that exited the country in 2019 came out of deposits of over $1 million. $5.6 billion of those came from only 112 accounts, of which 44 were fully liquidated.
The formation of a technocratic government is another hint of civil oligarchy, in which oligarchs need not engage in direct rule to pursue wealth defense. They can simply use their enormous resources to continue to shape political and economic outcomes in their favor — in this case by delegating to their favorite technocrats. The formation of a technocratic government is another hint of civil oligarchy, in which oligarchs need not engage in direct rule to pursue wealth defense. They can simply use their enormous resources to continue to shape political and economic outcomes in their favor — in this case by delegating to their favorite technocrats. The case of the United States, where a wealth defense industry populated by technocrats works hard to ensure wealth is not distributed, should dampen hopes that a technocratic government will be progressive. In its “civil” version, oligarchy thrives when the political landscape is depoliticized.
Moving beyond transitions between forms of oligarchy, could we imagine a future in which Lebanon leaves oligarchy behind altogether? Could a more open political system as some are prioritizing — a new electoral law, more civil liberties and citizenship rights, an independent judiciary, freer elections, and even (let’s dream big) an abolition of political sectarianism — make a dent in socioeconomic stratification?
Such illusions are quickly dispelled by a look around the world, to find that most “democracies" (meaning systems with regular free elections — not democracy in the Aristoteleian sense where he explicitly distinguishes it from oligarchy) are captured and dominated by oligarchs. As Winters and increasingly many other mainstream social scientists put it: As long as electoral democracies tolerate the extreme concentration of wealth, there is no inherent conflict between oligarchy and democracy. We may be able to secure all the positive changes listed above, and still have our lives severely constrained by oligarchs defending their wealth. It is only when expanded and meaningful participation challenges material stratification specifically — when extreme wealth held by oligarchs is dispersed — that oligarchy and participatory democracy finally clash.
It is only when expanded and meaningful participation challenges material stratification specifically — when extreme wealth held by oligarchs is dispersed — that oligarchy and participatory democracy finally clash. Wealth dispersion has happened many times in history — as a consequence of war, conquest, or revolution. But as Winters reminds us: “It has never been successfully attempted as a democratic decision.” That fact should give pause to all those who argue that socioeconomic equality may come by way of a more perfect electoral democracy. They should take heed of the protesters who insist on making socioeconomic equality the priority. What is more idealistic? To believe we will be the first to disperse wealth through procedural democracy? Or to recognize that we may be standing in a long line of revolutionary moments that did achieve greater equality?