A little more than 160 years ago, a powerful analysis of the
role of the middle class in economic development was unleashed on the Victorian
public. It described how monopolistic guilds had been "pushed on one side by
the manufacturing middle class" which "developed [and] increased its capital"
as it reformed economies and polities. The middle class had "created more
massive and more colossal productive forces than have all preceding generations
together," the text suggested.
A century and a half
later, few subscribe to the political doctrines of that analysis, Karl Marx
and Friedrich Engels's
Communist Manifesto.
Yet the idea of the middle class as central to economic growth and
democratization is still very popular. Indeed, the view that "bourgeois" values
-- seen by Marx as an important stepping stone on the way to revolution and utopia
-- are a vital part of progress to the
end
of history is almost universally
held among middle-class historians and middle-class political scientists. Why
did Britain lead the world in the 19th century? Because of "the great English
middle class," answers Harvard University economic historian David Landes in his
magisterial book,
The Wealth and Poverty of Nations.
For the future,
continuing worldwide growth through closer integration in the 21st century will
"depend on what can be done for the great global middle," suggests U.S. President
Barack Obama's former economic advisor Larry Summers. It is hard to think of
any greater shibboleth in American politics; in January 2010 Obama
convened
a task force dedicated entirely to its needs. But this isn't just an
American mania; it is worldwide. Indian Prime Minister Manmohan Singh, for
example, has
called
for "thinking people … from
enlightened middle classes" to play a larger role in public life.
But is there any
evidence to support the argument that the middle class is so vital to prospects
for stability and economic growth? In fact, the middle class exhibits little more
of the entrepreneurship or social progressiveness that is typically ascribed
to it than do poor people.
And who, exactly, is in the middle
class? That is a matter of some confusion. In their
paper, "What Is Middle Class About the Middle Classes Around the World?" MIT economists Abhijit
Banerjee and Esther Duflo use a historical estimate based on the British
middle class, which is often thought to be critical to Britain's rise as a world power.
They suggest that income for a
family living off the wages of a clerk in his 30s in Britain in 1825 would
be about $10 per person per day in today's U.S. dollars. They define a middle
class as people with incomes between that level and the global poverty line of
$2 a day. Economist
Homi Kharas at the Brookings Institution,
meanwhile, uses a definition stretching the other direction from the $10 mark,
between $10 and $100 a day. Nobody is middle class according to both
definitions.
And that terminological inexactitude illustrates the fact that, regardless of where the line delineating the
middle class is drawn, there is not much evidence of the politicians' well-worn
claim that people on one side of it are more productive, creative, risk-taking,
and public-spirited than those on the other side. Take the entrepreneurialism
for which they are so often celebrated. Banerjee and Duflo suggest that the
majority of enterprises owned by people earning between $2 and $10 a day
worldwide are shops. Many of those shops sell the same small stock of goods as
the ones just down the road: basic foodstuffs, sweets, soap, and a few other
products. They make a few sales a day; in India, surveys suggest their average
profit is somewhere around $133 a year. These are not enterprises that are
going to become the next Infosys. The same lack of potential -- and ambition --
holds true in the United States. According to
survey evidence from economists Erik Hurst and Ben Pugsley
of the University of Chicago, "most small businesses have little
desire to grow big or to innovate in any observable way." They just want
to provide an existing service to an existing customer base.
What the worldwide
evidence suggests is that becoming middle class doesn't suddenly turn you into
an entrepreneur or an innovator. Indeed, quite the opposite is true: The reason
that most in the middle classes are richer is because more of them have stable
9-to-5 jobs, with weekly or monthly paychecks. By contrast, poor people are
more likely to work in casual labor, usually paid by the hour, often going
stretches without employment. We may talk about every new graduate into the
middle class as a potential next Bill Gates, but the fact is that most more
realistically aspire to be the next Walmart associate.
Conversely, if an
income below $10 a day condemned people to listless apathy, then nobody would
be rich today. A hundred years ago, the great majority of people in even the
richest countries earned less than that in current dollars. In fact, the
World Bank's study
Moving
Out of Poverty, which interviewed 60,000 poor and near-poor people
across 15 countries, demonstrates that the idea of a "culture of poverty" is
considerably at odds with the activities and attitudes of most poor people
themselves. They are confident about the future despite often having to run
multiple microenterprises to get by.
It is true that middle
class people do have somewhat different attitudes than poorer people. A Pew
Research Center
study of the attitudes of the global middle class -- there defined as people
who had incomes greater than $4,268 per year -- found them less likely to
prioritize freedom from poverty on a list of freedoms that also included
freedom from crime and violence and freedom of speech and religion. No surprise
there -- you're surely less likely to care about the problem of poverty if you
aren't poor.
But the values
traditionally thought of as "middle class" -- the value of investing in
education or of political rights, for example -- are widely held by people who
are out of that class by whatever definition you chose. Everyone values education,
enough so that primary-school enrollments are reaching universal levels in even the world's
poorest countries. If 80 percent of the majority-poor population of Africa
thinks that democracy is the best system of government, then it isn't a middle-class
value in any traditional sense of the word. The democracy protests of the Arab
Spring, meanwhile, were set off by a Tunisian man forced into life as a harried
street vendor for lack of other opportunities. It was sustained by a reserve
army of the young unemployed -- not by middle-class Tunisians safely ensconced
in the few large government-favored firms.
If, rather than
looking at the confused economic literature on the subject, you just
ask people what class they are, then
large proportions everywhere plump for the middle. Ninety-one percent of Americans
self-identify as upper-middle, middle, or lower-middle class.
And even in much poorer India, 48 percent of people self-identify as middle
class according to the World Values Survey -- a proportion about 10 times
higher than that suggested by a definition based on an income of $10 a
day or more.
Given that so many people
consider themselves middle class even in the world's poorer countries,
politicians worldwide are surely wise to praise the wonders of middle-class
values as a result. But the rest of us should know better. Instead, let's celebrate
the fact that people are not waiting to reach an income of $10 or even $2 a day
before they play a role in upholding democratic values, ensuring their children
go to school, or helping to sustain economic development -- which helps to
explain why political rights, education, and
growth are spreading even to the
world's poorest countries and communities.
Martin H. Simon-Pool/Getty Images
- See more at: http://www.foreignpolicy.com/articles/2011/09/19/the_myth_of_the_middle_class#sthash.KgJHWOPO.dpuf
A little more than 160 years ago, a powerful analysis of the
role of the middle class in economic development was unleashed on the Victorian
public. It described how monopolistic guilds had been "pushed on one side by
the manufacturing middle class" which "developed [and] increased its capital"
as it reformed economies and polities. The middle class had "created more
massive and more colossal productive forces than have all preceding generations
together," the text suggested.
A century and a half
later, few subscribe to the political doctrines of that analysis, Karl Marx
and Friedrich Engels's
Communist Manifesto.
Yet the idea of the middle class as central to economic growth and
democratization is still very popular. Indeed, the view that "bourgeois" values
-- seen by Marx as an important stepping stone on the way to revolution and utopia
-- are a vital part of progress to the
end
of history is almost universally
held among middle-class historians and middle-class political scientists. Why
did Britain lead the world in the 19th century? Because of "the great English
middle class," answers Harvard University economic historian David Landes in his
magisterial book,
The Wealth and Poverty of Nations.
For the future,
continuing worldwide growth through closer integration in the 21st century will
"depend on what can be done for the great global middle," suggests U.S. President
Barack Obama's former economic advisor Larry Summers. It is hard to think of
any greater shibboleth in American politics; in January 2010 Obama
convened
a task force dedicated entirely to its needs. But this isn't just an
American mania; it is worldwide. Indian Prime Minister Manmohan Singh, for
example, has
called
for "thinking people … from
enlightened middle classes" to play a larger role in public life.
But is there any
evidence to support the argument that the middle class is so vital to prospects
for stability and economic growth? In fact, the middle class exhibits little more
of the entrepreneurship or social progressiveness that is typically ascribed
to it than do poor people.
And who, exactly, is in the middle
class? That is a matter of some confusion. In their
paper, "What Is Middle Class About the Middle Classes Around the World?" MIT economists Abhijit
Banerjee and Esther Duflo use a historical estimate based on the British
middle class, which is often thought to be critical to Britain's rise as a world power.
They suggest that income for a
family living off the wages of a clerk in his 30s in Britain in 1825 would
be about $10 per person per day in today's U.S. dollars. They define a middle
class as people with incomes between that level and the global poverty line of
$2 a day. Economist
Homi Kharas at the Brookings Institution,
meanwhile, uses a definition stretching the other direction from the $10 mark,
between $10 and $100 a day. Nobody is middle class according to both
definitions.
And that terminological inexactitude illustrates the fact that, regardless of where the line delineating the
middle class is drawn, there is not much evidence of the politicians' well-worn
claim that people on one side of it are more productive, creative, risk-taking,
and public-spirited than those on the other side. Take the entrepreneurialism
for which they are so often celebrated. Banerjee and Duflo suggest that the
majority of enterprises owned by people earning between $2 and $10 a day
worldwide are shops. Many of those shops sell the same small stock of goods as
the ones just down the road: basic foodstuffs, sweets, soap, and a few other
products. They make a few sales a day; in India, surveys suggest their average
profit is somewhere around $133 a year. These are not enterprises that are
going to become the next Infosys. The same lack of potential -- and ambition --
holds true in the United States. According to
survey evidence from economists Erik Hurst and Ben Pugsley
of the University of Chicago, "most small businesses have little
desire to grow big or to innovate in any observable way." They just want
to provide an existing service to an existing customer base.
What the worldwide
evidence suggests is that becoming middle class doesn't suddenly turn you into
an entrepreneur or an innovator. Indeed, quite the opposite is true: The reason
that most in the middle classes are richer is because more of them have stable
9-to-5 jobs, with weekly or monthly paychecks. By contrast, poor people are
more likely to work in casual labor, usually paid by the hour, often going
stretches without employment. We may talk about every new graduate into the
middle class as a potential next Bill Gates, but the fact is that most more
realistically aspire to be the next Walmart associate.
Conversely, if an
income below $10 a day condemned people to listless apathy, then nobody would
be rich today. A hundred years ago, the great majority of people in even the
richest countries earned less than that in current dollars. In fact, the
World Bank's study
Moving
Out of Poverty, which interviewed 60,000 poor and near-poor people
across 15 countries, demonstrates that the idea of a "culture of poverty" is
considerably at odds with the activities and attitudes of most poor people
themselves. They are confident about the future despite often having to run
multiple microenterprises to get by.
It is true that middle
class people do have somewhat different attitudes than poorer people. A Pew
Research Center
study of the attitudes of the global middle class -- there defined as people
who had incomes greater than $4,268 per year -- found them less likely to
prioritize freedom from poverty on a list of freedoms that also included
freedom from crime and violence and freedom of speech and religion. No surprise
there -- you're surely less likely to care about the problem of poverty if you
aren't poor.
But the values
traditionally thought of as "middle class" -- the value of investing in
education or of political rights, for example -- are widely held by people who
are out of that class by whatever definition you chose. Everyone values education,
enough so that primary-school enrollments are reaching universal levels in even the world's
poorest countries. If 80 percent of the majority-poor population of Africa
thinks that democracy is the best system of government, then it isn't a middle-class
value in any traditional sense of the word. The democracy protests of the Arab
Spring, meanwhile, were set off by a Tunisian man forced into life as a harried
street vendor for lack of other opportunities. It was sustained by a reserve
army of the young unemployed -- not by middle-class Tunisians safely ensconced
in the few large government-favored firms.
If, rather than
looking at the confused economic literature on the subject, you just
ask people what class they are, then
large proportions everywhere plump for the middle. Ninety-one percent of Americans
self-identify as upper-middle, middle, or lower-middle class.
And even in much poorer India, 48 percent of people self-identify as middle
class according to the World Values Survey -- a proportion about 10 times
higher than that suggested by a definition based on an income of $10 a
day or more.
Given that so many people
consider themselves middle class even in the world's poorer countries,
politicians worldwide are surely wise to praise the wonders of middle-class
values as a result. But the rest of us should know better. Instead, let's celebrate
the fact that people are not waiting to reach an income of $10 or even $2 a day
before they play a role in upholding democratic values, ensuring their children
go to school, or helping to sustain economic development -- which helps to
explain why political rights, education, and
growth are spreading even to the
world's poorest countries and communities.
Martin H. Simon-Pool/Getty Image
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