An oligarchy is defined in political theory as a system of government where a small group of individuals or families holds substantial power and makes decisions for the larger population. This power can be based on various criteria, including wealth, social status, or military control. Oligarchies often prioritize the interests of the few over the many, leading to potential inequality and limited political representation for the general populace. Due to their concentration of power, oligarchies can impede democratic governance and suppress dissent.