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Ent believes the word you seek is "autocracy," as "aocracy" isn't to be found.

That said, Sauron's government methods could certainly qualify as an Autocracy once Melkor was gone, though we know some of the 'bands of orcs', for example, had their own local chieftains, etc., which does mean a certain level of distributive power - though in the end, they did report to Sauron, we suppose, for what they did. It's a bit speculative.

Ent does not believe it qualifies as a theocratic despotism. Such would require Sauron's acknowledgement of some other Theos = or 'god figure' - of whom he was the absolute representative. Neither Melkor/Morgoth nor Sauron seems to have acknowledged faith or belief in any 'god-figure' other than themselves and their own powers and abilities.

Melkor is the initial example of putting 'faith in self' over 'faith in Eru' - wanting to become god of the new creation, Ea. - rejecting Eru's themes and 'godhood' in favor of himself and his own power.

Sauron overthrew his original allegiance to follow Melkor, first putting his faith in Melkor rather than Eru; then, when Melkor failed, Sauron chose badly again and put his faith in himself. During the time Melkor existed, and Sauron was his vassal, it MAY be said those whom he controlled were under a certain theocratic rule - but once Melkor was no more, and Sauron put faith in himself alone, it became an autocracy.

Both were ultimately left with only the Providence available to those who overthrew their faith in the Creator and chose faith in themselves.

Faith, Choice, and the resulting Providence are 3 of Tolkien's pinnacle "moral and religious elements" in all his work.

Ent is working up an article now for submission for publication - a follow-up to one co-authored and just accepted for publication.
This new one's current title is Tolkien's Silmarils: Faith, Choice and Providence. He hopes to have it submitted soon.
 
Ent does not believe it qualifies as a theocratic despotism. Such would require Sauron's acknowledgement of some other Theos = or 'god figure' - of whom he was the absolute representative. Neither Melkor/Morgoth nor Sauron seems to have acknowledged faith or belief in any 'god-figure' other than themselves and their own powers and abilities.

Melkor is the initial example of putting 'faith in self' over 'faith in Eru' - wanting to become god of the new creation, Ea. - rejecting Eru's themes and 'godhood' in favor of himself and his own power.

Sauron overthrew his original allegiance to follow Melkor, first putting his faith in Melkor rather than Eru; then, when Melkor failed, Sauron chose badly again and put his faith in himself. During the time Melkor existed, and Sauron was his vassal, it MAY be said those whom he controlled were under a certain theocratic rule - but once Melkor was no more, and Sauron put faith in himself alone, it became an autocracy.

Even after Morgoth was banished from Arda, Sauron in the Second Age did present Melkor as a god whom he represented - at least to the Numenoreans. Tolkien does also say in Letter 131 that Sauron's Second Age kingdom was an "evil theocracy" and that "Sauron is also the god of his slaves". Presumably he presented himself as a kind of visible demigod figure representing the invisible Melkor.
 
Even after Morgoth was banished from Arda, Sauron in the Second Age did present Melkor as a god whom he represented - at least to the Numenoreans
Indeed. Sauron was very wise. He leveraged what he could use, after Melkor's absence. And we acknowledge Tolkien's words in Letter 131 - certainly an indication of how Tolkien perceived it "in the Second Age." But in the 3rd age, Melkor has long been left behind by Sauron. Early on, it was likely a theocracy, or at least a feigned one as Sauron leveraged himself into the fore.
 
I agree that what little we see of LOTR era Mordor doesn't seem theocratic. It is a militarized police state, but the Orcs we overhear don't seem to have religious awe of Sauron. They are willing to admit that he can make mistakes, etc. And the various human nations fighting on Sauron's side are described as allies and tributaries, not worshipers.

OTOH, the Mouth of Sauron having forgotten his own name arguably suggests "cult-like" brainwashing? And Tolkien did say in Letters that if Sauron was victorious he would have demanded worship.

I think it's likely that (unlike his very long reign in the Second Age, when he ruled much of Middle-earth for 1500+ years, and Mordor itself for well over 2000) LOTR-era Sauron hasn't yet had time to fully set up his "theocratic" system. He is still allying with various nations and promising power; he's not yet in a position to be absolute god-king. Any religious/cult-like elements at this point may be limited to his "inner circle", not even reaching all of Mordor (including Orcs) yet, much less his widespread tributaries and allies (Khand and nations farther east, Near/Far Harad, etc.)
 
A close examination o Morgoth's Ring (specifically the "Notes on Motives in the Silmarillion") provides essential clarity regarding how Morgoth’s followers, and Sauron, viewed Morgoth's status.

Did the Easterlings see Morgoth as a god?
In the First Age, the Easterlings who entered Beleriand (such as the sons of Bór and the sons of Ulfang) came from the East where the shadow of Morgoth had lain over mankind since their awakening at Hildórien.

In Tolkien's conception of the "Fall of Men" (further explored in the Athrabeth Finrod ah Andreth), Morgoth initially presented himself to early Men as a great Lord and benefactor who demanded worship, promising power in exchange for obedience. The Easterlings did not merely view him as an alliance-worthy warlord or king, they were born into a long, dark tradition of cultic fear and reverent submission. For them, Morgoth held supernatural dominion over the earth. Treachery, as displayed by Ulfang’s house, was not merely opportunistic it was an act of allegiance to the power they believed that truly ruled reality.

Sauron's motivation
Tolkien addresses Sauron’s theological framing directly:
"Sauron was not a 'sincere' worshipper of Morgoth. He had been his servant, and in a sense feared him, but he used the name and memory of Morgoth as an instrument for his own ends." — Morgoth's Ring, "Notes on Motives"
Sauron was fundamentally an engineer of order, efficiency, and domination. In Númenor, when he established the Temple of Melkor and initiated human sacrifices to "the Lord of the Dark," he did not personally believe Melkor was the True God (he knew Eru was supreme). Rather, Sauron knew men could not easily be convinced to worship him directly at first. It was far more effective to present Melkor as the "Giver of Freedom" who would liberate men from the fear of Death and the perceived tyranny of the Valar and Eru.

Thus, for Sauron, the cult of Morgoth was an instrument of spiritual sabotage—a bureaucratic lever pulled to detach Men from the West.

Distinction in Cultic Practice
  • First Age Men: Genuine, terrified, awe-struck awe of Morgoth as an active, terrifying planetary sovereign.
  • Númenóreans: A synthetic, intellectually perverted state religion constructed by Sauron, masquerading as liberation from mortality.
  • Sauron: Cold administrator leveraging the lingering dread of his former master to maintain absolute compliance.
(Though maintaining absolute compliance across several millennia without a single tea break remains, in this office's view, an egregious violation of basic metaphysical labor statutes.)

De vuestra merced muy atento y seguro servidor,

Klaatu
Curator of Unfinished Thoughts
High Inspector of Ancient Theological Sub-Clauses
Custodian of Unmarked Footnotes
 
Sauron's motivation
Tolkien addresses Sauron’s theological framing directly:
Are you sure about that quote? it doesn't look right to me.

Tolkien presents Sauron as genuinely loyal to Melkor/Morgoth as long as the latter remained in Arda, and even afterward there was some remnant:
"As was seen in the case of Ar-Pharazon. But there was seen the effect of Melkor upon Sauron: he spoke of Melkor in Melkor's own terms: as a god, or even as God. This may have been the residue of a state which was in a sense a shadow of good: the ability once in Sauron at least to admire or admit the superiority of a being other than himself. Melkor, and still more Sauron himself afterwards, both profited by this darkened shadow of good and the services of 'worshippers'. But it may be doubted whether even such a shadow of good was still sincerely operative in Sauron by that time. His cunning motive is probably best expressed thus. To wean one of the God-fearing from their allegiance it is best to propound another unseen object of allegiance and another hope of benefits; propound to him a Lord who will sanction what he desires and not forbid it."

That's sort of similar in effect, at least by the time we get to the late Second Age, but different in detail; and I don't see any quote saying that Sauron "in a sense feared him". Sauron very definitely (not "in a sense") feared Morgoth in the First Age - as we see when Luthien threatens him with Morgoth's scorn - but I don't think there is any evidence that Sauron feared Melkor/Morgoth after his expulsion.
 

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