Well, I'm sure that this won't be a popular opinion, but I believe in original sin. I don't believe children are born pure and perfect, and develop bad behaviors only through the evils of society or bad parenting; I believe they have a natural, inherent desire for control and dominance, a natural selfishness, a natural greed and so on. I don't believe it manifests at birth, mind you - I don't think babies are mentally capable of acting maliciously or manipulatively - but I believe it emerges just like other aspects of humanity (the desire to be loved and liked, to communicate, to do things independently and so on). Sure, society can influence whether the good or bad aspects of a child's nature are rewarded (deliberately or not), but it certainly doesn't surprise me when a small child exhibits viciousness or cruelty.
And I think kids tend to bring out the worst in each other. I've noticed toddlers will often spontaneously share with an adult, but not with another toddler. Is it because they know and like the adult (their mother, often) better? Or because they know they'll get lavish praise for sharing, whereas their peer probably won't thank them? Or because they know the adult will promptly return the toy if requested, whereas the other kid might want to keep it? Or simply because the adult has prompted them about sharing in the past, and the other kid hasn't? Who knows. :p But I don't think the sharing reflects the "natural" unspoiled nature of the child, and the not-sharing reflects abusive parenting or the Problem with Capitalism. They're both just what kids do.
Plus, I think most people in peer groups act worse when they're alone. Kids act better with an adult around, but I also think a group of adults will tend to act better with a kid around. I notice groups of women are sometimes less catty when there's a man around, and groups of men are sometimes less sexist/ogly when there's a woman in the group. Put an older person in with younger people and they may clean up their language; put a younger person in with older people and they may be more cautious about making nasty comments about Young People Today. And so on and so forth - with any demographic from mums to plumbers to academics. It's harder for a group to judge the petty things they get hung up about when an outsider is present, by her very presence making those things seem trivial or ridiculous by comparison. Even kids tend to feel a bit silly making snarky comments about another kid's sneakers in the presence of an adult.
In other words, I plan to homeschool. :p I'm sure my theory isn't all-encompassing, but it does explain why so much bullying is observed with kids very close in age. (For instance, isn't it a general trend for kids to be bullied by other kids in their class, not older or younger kids? Because kids of different ages are less hung up about the intricate social rules of the very specific group - they may not even realise that in Grade 3, growing potatoes instead of tomatoes is really lame, or that in Grade 4 you're not allowed to wear yellow. They have different things to worry about - their own little set of rules.)