The end of the Peloponnesian War did not bring peace to the troubled Greece, at least not for any significant length of time, because it did not resolve the basic underlying issues the caused the war. Thucydides saw the underlying cause of the war as lying in great power rivalry and the balance of power, specifically, the power of the Athenian Empire and the threat it posed to Sparta and the Peloponnesian League. That could be said to have been resolved by Spartan victory. Sparta was clearly the dominant hegemon over all of eastern Greece without rival. Yet its hegemony along was enough to inspire other city-states to combine against it. In that sense, one can say that the balance of power is never fully resolved.
But another issue was at stake as well. Athenian hegemony was mightily resented in its weaker allies as an infringement on their independent sovereignty. They resented the dominant hegemon's infringement on it, in such forms as collecting tribute, misappropriating the tribute to domestic use instead of the common treasury, imposing garrisons, demanding that all matters involving the alliance be tried in Athens (at considerable inconvenience to the allies), and used force when an allied refused to pay tribute. The allies wanted nothing short of complete independence and sovereignty. Yet city-states as independent sovereigns were simply not viable entities. Inherently, they would be of unequal power and the stronger ones would tend to emerge has hegemons. Besides, city states were too small to defend themselves against might empires and were bound to be swallowed up if left to themselves. This is not necessarily to say that the only alternatives were either being a shark or being a minnow; at least the Greeks did not regard those as the only alternatives. Indeed, all of Greek history from their defeat of the Persians to their conquest by the Macedonians might be seen as an ultimately unsuccessful attempt to find some sort of alternative to being a shark or being a minnow.
The Delian League was the first such attempt, yet it ended up turning into an Athenian Empire. The Peloponnesian War was in large part a revolt against the Athenian Empire, with Sparta in the role of liberator, proudly boasting that they did not "enslave" allies by levying tribute against them or imposing garrisons on them. Yet in the end, the Greeks turned out simply to be replacing one imperial power with a worse one. Part of this could be put down to Lysander's bloody-mindedness and some to problems inherent in Sparta, but much of it was simply the logic inherent in being the hegemonic power over a naval empire. Let us address these one at a time.
Lysander's atrocities: Lysander, along with Sulla, is the closest Plutarch comes to writing a biography of a straight-up villain. We have already witnessed his atrocities and the despised juntas he established in friend and foe alike. The juntas proceeded to massacre the democratic leaders, and to kill off wealthy residents to seize their property for themselves. He also established garrisons with commanders (harmosts) throughout Asian Greece and levied tribute. We know very little about this phase in Asian Greece. Our main sources are Diodorus, Plutarch, and Athenian orators, all of whom emphasize the oppressiveness of the decarchies, but none of whom go into detail. Presumably the example of Athens was typical, except that it had a junta of thirty instead of ten. Diodorus does give one example that is atypical in involving a Spartan dictator instead of a local junta. Byzantium was experiencing factional strife and war with the Thracians and appealed to Sparta for a general. Sparta sent Clearchus, a reasonable choice in that he represented their city's interests in Sparta,* but in his previous command of Byzantium he had alienated the population with his harsh and arrogant behavior. This time proved worse. He proceeded to massacre the city's leading officials and wealthier citizens, seize their property, and use it to hire a mercenary army to support him. The Spartan government, learning of his doings, attempted to recall him and, when he did not respond, dispatched an army to remove him by force. Clearchus fled to Persia and took up service with Prince Cyrus in that country's civil war. The Spartan government gave little heed to complaints against Lysander until the Persian Satrap Pharnabazus complained about Lysander pillaging his territory at which point he was recalled.
Xenophon, strongly pro-Sparta, does not mention any of these awkward incidents (except the Thirty in Athens, which he personally witnessed), nor does he mention any discreditable story about Clearchus, who was his commanding officer in Persia. He does, however, indirectly acknowledge Lysander's juntas when he mentions that when Lysander returned to Asia after his recall he hoped to restore the decarchies that Xenophon did not previously see fit to mention. Certainly all sources seem to agree that the Ephors soon withdrew support from these juntas and allowed cities to return to their traditional governments. No account exists of how the various city-states (other than Athens and Byzantium) got rid of these juntas, who presumably did not go down without a fight. It does seem a safe assumption, though that this took place soon after Lysander was recalled. Xenophon implies that at the end of the Peloponnesian War Sparta had real moral authority, but ultimately forfeited it by later misconduct. But Lysander's behavior must have dealt their moral authority a severe blow from the very start.
The inherent nature of a naval hegemon. Still, appalling as Lysander's behavior was, it could be dismissed as the action of an aberrant individual. Certainly he could not be considered typical or unavoidable. What did prove unavoidable were many of the actions Athens had done that gave offense to their subject/allies. At the outset of the war, it was a matter of pride to Sparta that unlike those dastardly Athenians, they did not levy tribute on their allies, or impose garrisons on them. Yet the matter of tribute turned out not to be the result of any moral superiority on the part of Sparta, but simply because a navy is more expensive to maintain than an army. Consider. When the Athenian navy dominated the Aegean, it kept the Persians at bay, protected the Asian Greeks from a Persian resurgence,** suppressed piracy, and allowed trade to flourish. All Aegean Greeks, and not just Athens as hegemon, benefited from this arrangement. The navy was expensive to maintain. Was it reasonable that the hegemon alone should bear the expense of protecting the Aegean when everyone benefited? Furthermore, it was clear from the experience of the Delian League that making a contribution of money was less burdensome, especially for the smaller and weaker cities, than providing ships or sailors. Furthermore, protecting the entire sea from Persians and pirates more or less inherently implies stationing garrisons in strategic or vulnerable locations to be able to act when needed. Conflict between the garrison and the town is inevitable, and local courts are invariably biased in favor of their fellow citizens and against the garrison. Finally, there was the free rider problem. The navy not only protected the Aegean Greeks from Persians and pirates, it had no way of excluding a member who refused to contribute. The league was in danger of collapsing under the weight of all these defections unless it had some coercive means of collecting tribute from a member who refused to pay. And, of course, once force was used, it ceased being a league and became an empire.
None of this was to suggest that Athens' actions were justifiable, or that no better alternatives were available. Perhaps Athens could have financed its navy by a tax on commerce with the Black Sea. This would have had the advantage of causing less friction because people would pay only indirectly, through higher prices, and the disadvantage of having a single choke point and therefore being easily disrupted. Certainly Athens was not justified in misappropriating league funds to is domestic use. (This, too, could perhaps have been avoided by the tax on trade). Garrisons were not just used for defense, but to fight domestic unemployment by sending poor men abroad to seek their fortune, often at the expense of local residents. Requiring anyone with a dispute regarding the league to come to Athens to try it was a hardship for the travel and simply replaced courts biased against Athenians for courts biased in their favor. A more neutral system of arbitration would have been better. And Athens often used its domination of the Aegean to its own advantage at the expense of allies. No doubt some system of meeting was needed that would give allies a voice in such matters without being so unwieldy as to prevent anything from ever being done.
But this was not due to any unusual wickedness on the part of Athens; it simply means that power tends to be abused, and that the Athenians were neither better nor worse than most in this regard. All hegemonic powers ended up abusing their powers to varying degrees. But these overall structural problems would apply regardless of who was hegemon. And Sparta had a number of traits that made it particularly ill-suited to run a naval empire.
Problems peculiar to Sparta. All these problems would have applied regardless of who was hegemon, and the problems caused by Lysander could be avoided simply by substituting someone else. But there were some additional problems that Sparta suffered above and beyond most naval hegemons, and that were not so easily addressed simply by replacing guilty individuals. The Spartan commander who alienated the local population with his harsh and arrogant behavior was so widespread as to become a cliche. Certainly there were honorable exceptions, like Brasidas or Callicratides, but a certain degree of frequency suggests that the problem was not just in the individuals, but with the overall culture.
There were more systemic problems as well. From the very start, Sparta's barracks existence was not (as so many admirers foolishly believed) a voluntary lifestyle choice, but a matter forced on it by internal security problems. A small citizen body was holding down a huge subjugated population. They could ill afford to add any more. Furthermore, the problems of a small citizen body just kept getting worse. Large numbers of men were being killed in wars. Their system made no provisions for men to have more than one wife, or for children of an unmarried woman to become citizens, and made it difficult to promote non-citizens. On the other hand, it was extremely easy to demote citizens. Famously, eligible participants were required to eat in communal dining halls. Each man must pay for his own meals. Any man unable to do so lost his citizenship. Is it any wonder, then, that the citizen body kept shrinking. Xenophon reports a potential rebel as saying that of 4000 people in the agora, only 40 besides the Council and Ephors were citizens, and that on country estates, only one, the master, would be a citizen.
As that last comment implies, Sparta's internal security problems were a serious disadvantage in fighting overseas wars. The citizen army was needed at home for domestic security. At most, they could fight local wars on the Peloponnese with perhaps occasional deployments to other parts of mainland Greece. Thucydides recounts the shocking story of how the Spartans offered freedom to any helot who could give an account of the services he had done the state and them massacred the claimants who came forward, some 2000 of them, believing that these were the most aggressive and energetic and most likely to revolt. But when Brasidas wanted to make an extended overland march, they liberated some 700 helots and sent the with him. This proved to be an effective way to kill two birds with one stone -- to add much-needed manpower to their army and to send potential trouble makers out of the country. Presumably the liberated helots were encouraged to settle down in foreign countries and make their fortunes there, a nice, safe distance away. Thus we hear of forces consisting of 1000 liberated helots and 4000 allies, or 2000 liberated helots, 6000 allies, and a mere 30 citizens. Many garrisons stationed abroad were have only one citizen -- the commander. Presumably sending the most enterprising and ambitious of the helots abroad relieved internal security problems from that quarter, but the ever-shrinking citizen body gave rise to a new domestic security problem -- revolts by disenfranchised ex-citizens. Xenophon gives one such account, and presumably there were others.
And then there was the problem of money. Sparta had banned precious metals and instead used an iron currency, too plentiful to be made valuable by scarcity, deliberately treated with vinegar to make it useless as iron, and too large to be convenient, let alone to hide.*** But a naval power needs a "hard" currency (in the sense of one universally accepted). The need is stronger if the power has a serious shortage of citizens and must also hire mercenary troops. Gold and silver coin did not just circulate in the empire, but necessarily came home to Sparta as well. Keep in mind that a Spartan was supposed to be stern and incorruptible, indifferent to wealth. But love of wealth appears to be part of human nature. Certainly, it is not equal in all people. Some people are truly indifferent to wealth beyond a certain subsistence level, but such people are rare. And it turned out that Spartans had the same love of wealth as anyone else. And, since any participant who could not pay his mess hall fees was disenfranchised, they had ample reason to fear poverty. It would seem that Spartan incorruptibility was rather like Mark Twain's imaginary town of Hadleyburg, where the people took such pride in their reputation for honesty that every resident was shielded from the earliest age from any opportunity to be dishonest. As a result, the people of Hadleyburg never had any practice in resisting temptation and, when exposed to temptation, promptly succumbed. At least since the end of the Persian War, Spartans serving abroad and exposed to wealth and luxury for the first time showed a marked tendency to succumb to temptation. (Again, with honorable exceptions, but honorably exceptions are a poor basis for policy). When all that wealth came home, the result was massive corruption, starting with Gylippus, the officer tasked with bringing home the sealed sacks of loot, who opened them at the bottom and helped himself. (His father, incidentally, went into exile when charged with a similar offense).
So, in short, the basic problems that led to the revolt against the Athenian empire, remained, and were, if anything, made worse. A whole series of wars followed. I will address them, though hopefully in less detail that the Pelponnesian War. They did not directly lead to the downfall of democracy in Athens. (I await to see if they overturned democracy in other cities). But they led to the downfall of the whole city-state system that made self-government of the day possible, as the Greeks so weakened each other with constant warfare that Phillip of Macedon was able to move in and conquer the whole lot.
*It was considered perfectly acceptable and honorable for a Greek to act as proxenos, or agent, of a foreign city with his own government.
**The Delian League was to some extent a victim of its own success in this. The longer it succeeded in keeping the Persians at bay, the more members were convinced that Persian power was a thing of the past and was simply being used as a bogey to scare them. Subsequent events would prove them very wrong.
***Modern historians have questioned this, but classical historians have unanimously supported it, including Xenophon, who actually witnessed the transition to precious metals.