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In Ancient Greek, the word despotes simply meant "master" or "lord," and connoted a person who wielded absolute authority over another person. It was typically used in reference to a master of slaves or the master of a household. It was also used to refer to certain deities, and only occasionally to the ruler of a state or dominion, in which case it suggested a conquered or enslaved people.

In the Byzantine Empire, it was occasionally used to refer to the Byzantine Emperor, and as a form of polite address to superiors, as in the English "my lord." Then in the 12th century, Emperor Manuel I made "Despot" an official title of a rank of noble, in charge of a certain set of duties in a certain area of the Empire.

As the Byzantine Empire began to collapse in the 13th century, various Despots carved out independent splinter kingdoms, most famously in Epirus, Morea, and Serbia. These realms are known in English as "Despotates." The word "despot" first entered western languages in reference to these splinter principalities, and initially did not have the negative connotations it has in modern English.

The word "despot" first acquired its modern sense of a tyrannical or oppressive ruler during the French Revolution, when the revolutionaries took to calling anyone they disliked a "despot." The earliest known English usage of the word in this sense is actually in a poetic 1781 sermon by William Cowper, entitled Expostulation:

Hast thou, though suckled at fair freedom's breast,
Exported slavery to the conquer'd East?
Pull'd down the tyrants India served with dread,
And raised thyself, a greater, in their stead?
Gone thither, arm'd and hungry, return'd full,
Fed from the richest veins of the Mogul,
A despot big with power obtain'd by wealth,
And that obtain'd by rapine and by stealth?

The modern Greek word despotes simply refers to a bishop.