Summary of Pareto's arguments:
Following the ideas of Machiavelli, he distinguished two main types of elite group:
a. "Lion elites" who were able to rule by force (for example, military regimes).
b. "Fox elites" who were able to rule by manipulation (for example, liberal democratic regimes).
Given that Pareto's view of political power was pretty-much all-encompassing, he attempted to resolve the problem of political change (how, if an elite was effectively all-powerful, could it be replaced by another elite?) by reference to the idea that elites, after they achieve power, have a relatively limited life-span. That is, they grow decadent, decay, lose their vigour and so forth and, in turn, come to be replaced by other, more-vigorous, elite groups.
In this respect, we can see the theory of "circulating elites": powerful groups arise in society, take power, lose their political vitality over time and are replaced.
A contemporary example might be the Conservative party 1970 - 1990. Within this party, various elite grouping existed that rose to prominence, took power within the party and, after a few years, began to decay (Heath, through Thatcher, to Major...).
There are, however, numerous problems with this form of analysis:
1. Pareto, for example, simply assumes that elite groups are somehow superior to all other groups in society. He gives little real idea about how and why they are supposedly superior.
2. The distinction between types of elite is simplistic and does not recognize the fact that, in democratic societies, the politically powerful may rule through a combination of economic, military, political and ideological power.
3. His explanation for the replacement of elites is over-simplistic, insofar as he provides no real explanation as to why elites should necessarily become decadent or decay.
4. For Pareto, there appears to be little basic difference between democratic societies and totalitarian societies.