"America isn't easy. America is advanced democracy."
-Andrew Shepard, The American President
A little bit of basic civics education, just in case your teachers growing up were so overworked, underpaid, and stressed out that they weren't able to get to it and/or were terrible teachers kept on the payroll, unable to be fired because of the teachers union's stranglehold on your local government.
Oligarchy is rule by the few. How few depends on the nation, its population, and the political and economic climate. Most monarchies and dictatorships have existed as oligarchies. There is a head honcho who looks like he's in complete control, but there is usually an elite inner circle with a great deal of power, such as a British king and the nobles, or Hosni Mubarak and the military council in Egypt.
Democracy is rule by the people. Historically, this has been a point of embarrassment, as democracies tend to exclude some people from the vote. People who didn't own land, minorities, and women are the people typically excluded, though today we still don't allow children and felons at the poll.
A republic is simply an organizational tool, because legislating is time consuming, and despite the performance of may of our representatives, it does require a degree of education on the issues and some technical legal expertise.
The consensus structure used by Occupy Wall Street is really interesting, and seems to produce more agreeable results than our republican form of government, but it has two huge structural limitations. First, it doesn't scale up. Even if you were able to take care of the technological issues, if everyone has a chance to be heard on every matter, a group more than a few thousand strong will collapse. In a nation of more than 300 million, if only 1 million want to speak, and are only given 90 seconds, a single discussion would take 4 years. It is, amazingly, a system that would work even slower than the Senate.
The second structural limitation in the OWS consensus is the power to enforce a decision. Or rather, the lack there of. Consensus works great when the decision asks only for voluntary action. "Seems like most of us want to march to Washington Square Park," that's easy, people who want to go will go, people who disagree with the decision won't go. OWS has already seen issues in trying to enforce decisions. When they decided to clean up the park to combat Bloomberg's plan to kick them out, some people didn't want to give up their space or move their tents. Consensus, as it works with OWS, has no enforcement mechanism. You want to keep shouting when someone else is trying to talk? They can't shut you up. Just ask the drum circles.
Our republican model solves both of these problems. The big group of (most) everyone elects a much smaller group of representatives to debate and vote on issues to resolve the scale problem. Then they make laws that are enforced through courts and the police.
Our republican model does have a pretty big flaw, as you may have learned if you ever tried to follow how decisions get made in Washington. While we do elect our leaders and on the face of it, we have a democratic republic, in practice we have an oligarchy. It's not the elected representatives who are the ruling few, but rather a small number of perennial players who wield massive influence. There are of course the big corporate interests and the money they contribute to campaigns and lobbying. But, they're not the only power players. There's also unions, which give tons of money and also hold a great deal of power at the ballot box, something corporations and rich individuals lack. Similar to the unions, there's the AARP which uses both its money and its power to influence the votes of its members to pressure Congress. And then there's a group no one ever mentions, the parties themselves. The DNC and GOP are the most powerful fundraising organizations in Washington, and the party leaders use their finances to keep the rank and file representatives in line.
Big corporations and unions and other special interests buy off the parties, but it's the parties that do most of the buying of individual members. Your campaign contribution limit to an individual candidate is only $2500 per election. Donations to the national party committee are $30,800 per year.
How we got to this oligarchy is quite simple. The average voter created a power vacuum. We cast our votes once every two or four years, often without having any idea what the candidates really stand for or how they're qualified for the position. Then, we go in to a political coma, only to wake from it a couple years later, yell for a month, vote blindly again, and fall back asleep.
The few who run Washington didn't brutally kick everyone out and consolidate power. Nope. All they had to do was show up. If the average voter read fact checking websites every other week, wrote to his representatives every other month, kicked in a few bucks towards the campaigns of people he liked, and stopped checking the box at the top of the ballot that says "Fuck it, I don't really care, just make sure my team wins," the oligarchy would collapse, and we'd be back in a true democratic republic.
That's advanced democracy. Many of the reforms being called for from OWS, and which are perennial complaints really, such as campaign finance reform and getting lobbyists out of DC, would still keep the oligarchy in place. They are essentially saying "Fix Washington so that I can go back and hibernate some more." No matter what reforms get put in place, the oligarchy will proceed to chip away at it. Those in power aren't going home in the off season. They work to get their way day in and day out, and even without money and votes behind them they'd still get it merely because the squeaky wheel gets the grease. Campaign and ethics laws may improve things for one election, but probably not even that much. Two cycles later and you won't even be able to tell a reform had been passed.
To see what's necessary for a true democracy to work, all you really have to do is remember what a democracy is: Rule by the people. Not apathy by the people, or passivity by the people. It's people contributing their time, energy, and yes, even their money, on a regular basis. There are plenty of systems that allow the average Joe to not give a shit about his government, but trying to have a democracy where you don't have to work is like trying to lose weight by buying a treadmill and then never running on it.