This post is a reading of Robert Michels' discussion of the iron law of oligarchy. Two questions underlie the reading: what is his critique of the party and what is the relation of his idea of the crowd to this critique? At this point, I only sketch some of the components of the latter idea rather than provide much of an analysis.
Robert Michels' Political Parties (1911) is the classic critique of not just the revolutionary party (or the 'modern party as a fighting organization') but the party form in general. His basic claim is well known. Parties tend to oligarchy -- it's an iron law. Sometimes overlooked is the fact that Michels' argument applies to democracy (or any kind of mass or collective governance) overall: democracy, of any kind, tends to oligarchy. What might work for a small group can't be carried out by masses directly, so they have to divide the tasks, delegate, specialize, report, and assign. Because leadership is technically indispensable, democracy leads to oligarchy.
The problem for socialists is that socialism, too, tends to oligarchy (Michels was a member of the SPD and then the PSI; Lenin refers to him as 'the garrulous Michels'). Even those parties one might most expect to remain in tune with and accountable to the workers, even those organizations animated by ideals of democratic participation, even those championing the cause of the proletariat ultimately take on a whole slew of oligarchical characteristics. It's a sad but true fact of modern political life
Consider some of the specific criticisms of the socialist party: the party as an entity is not identifiable with the totality of its members. It is created as a means to an end, but quickly becomes an end in itself, with interests of its own, detached from the class it ostensibly represents. It can well be, then, that the interests of the party do not coincide with those of the masses at all. A problem with the socialist party, then, is that a party is a program (here I think Michels is mistaken, as will become clearer below; Michels describes multiple ways in which the party is more than a program; his larger argument, then, undercuts this claim). The party is not a social or economic unity. The socialist party might have a program based on the working class but its members can be from any class; class struggle reappears within the party. (The idea that class struggle will appear in the party seems right to me.)
Michels notes as well that the socialist party (which he understands to be a parliamentary party) 'gives a life to certain strata of the working class,' raising them up out of their proletarian position. In effect, the socialist party removes from the proletariat some of its best members. This may be involuntary, but in happens insofar as these members come to hold office in the party. The effect is that the 'involuntary task' of the socialist party is to deproletarianize the proletariat (which could perhaps even be thought of as prefiguring the abolition of the proletariat as a class; in practice, though, it is a form of embourgeoisement).
According to Michels, 'who says organization, says oligarchy.' Or, more specifically, once there are paid officials, a distinction between electors and elected, a division of labor, and the necessity of leadership, all which seem necessary components of an organized party, union, association, or state, then we are deep in the midst of oligarchy.