Well, I agree as far as that goes, but if you also mean to suggest that a group run by informal oligarchy can't (or isn't likely to) persist in that structure in the face of value conflicts due to that erosion of loyalty, I disagree. IME small groups typically have all manner of internal conflicts, which admittedly serve to weaken the group's internal cohesion, but typically not enough so to cause the group to disintegrate altogether. (Indeed, the same is true of large groups with more formal structures.)
Does this really matter? Ultimately, yes, a small group may simply trust an oligarchy to take right decisions for them, and do what the oligarchy says. But even then, I'm not sure that this qualifies as a "decision procedure" (of either the formal or informal kind) in any politically interesting sense.
Original at Washington Examiner
http://washingtonexaminer.com/down-with-politics/article/2508882#.UGSscI0iYZm
Repost at Reason.com
http://reason.com/archive/2012/09/25/why-politics-are-bad-for-us