nairiporter (nairiporter) wrote in talk_politics,

The invisible revolution

There were a couple of posts here recently, touching on the subject of the Russian middle class. Well, I would like to expand a bit beyond just one country. We could say that for the last decade or so the world has become a witness of an invisible revolution. More than a billion people have joined the rising middle class. Of course by the Western standard these people are hardly wealthy, but still they have turned their back to poverty, they have more time and resources at their disposal, and that goes beyond the mere survival.

Purely statistically, the surge of this middle class is mostly due to huge emerging economies like China and India, and the trend will probably continue despite the global financial crisis. Up till now nearly half of the middle class worldwide used to live in Europe and North America, and some other wealthy countries (Australia, Japan, Singapore, etc). But the projections show that by 2030, 2/3 of the world's middle class, which is expected to number 5 billion people, will already be from the developing countries, mostly the emerging economies in Asia and South America.

Curiously, we could say that the middle class is something like a historical freak. Most people who have ever lived were extremely poor. The infamous Marx and Engels who were contemporaries to the birth of industrialisation, wrote, "Society is further splitting into two hostile camps, two opposing classes - bourgeoisie and proletariat".

But what they could not foresee was that the significant rise in salaries would make the working class not poorer, but wealthier overall - at least in the industrialised countries. So instead of deeper division the industrial society created conditions for the emergence of a broad, diverse, and sustainable middle class.

This is a rare moment of success in history. Of course the new system has many flaws that we can see manifested today, but it is evident that society has generally transformed in a positive direction since then. Now when we often complain about the dismal condition of the economy, or the inadequacy of our political leaders, we shouldn't forget that societies where the larger part of the population enjoys an efficient health care, excellent education, plenty of free time and active participation in the political process, are still a rarity. The societies that could boast of such achievements could be counted on the fingers of your hands, and maybe the toes of your feet.

Not so long ago, these societies were even fewer. Even today most of the world's population unfortunately remains below the poverty threshold. But things are gradually changing - the middle class could now spread far and wide around the world. And this is important, even if meanwhile millions of other people would still remain in poverty.

There are many reasons we should be striving for the betterment and broadening of the global middle class, especially now. A broader middle class can be an engine for growth of the economy. It is an essential part of a positive cycle where wealth leads to even more wealth, and the wheel keeps turning, and economic succes is permanent, and even the boom and bust cycle, where present, tends to be smoothened by the presence of a viable middle class. Because it is the middle class who takes most of the burden in such moments.

The influence of a broader middle class goes way beyond its own limits. For instance it could positively influence the poor, because by paying taxes it finances a social system from which the poorest segments of society would benefit. The members of the middle class usually seek better education and they actively participate in the political life, and that stimulates democracy and is an obstacle to authoritarianism.

The middle class itself benefits the most from the primacy of law, the presence of an independent judicial system and as a whole, better transparency and responsible attitude of the politicians, especially those in power, and more accountability about their activities and the decision-making process. With these requirements that are inherent to the way the middle class participates in politics, public institutions are encouraged to improve, and there are chances of having a "smart government" and responsible private business, as opposed to oligarchic structures suffocating society. Such good examples could be found in the Scandinavian countries, Australia, New Zealand and Canada.

Of course the growth of the middle class doesn't only have advantages, it comes with a price. More pressure on the environment for the sake of economic growth, for example. The living conditions of millions of people may have improved because of the extensive use of natural resources and exponential development of science and technology, but on the other hand this puts pressure on the planet's self-regulating capabilities, and it ultimately backfires on human society itself, through costly natural disasters and struggling industries due to dwindling resources and deteriorating quality of the environment. Often, by sparing a few dollars today, we bring a much more serious problem upon ourselves a bit later, which is many times more expensive to deal with, if possible at all. The most recent side effect from achieving an improved life, is of course climate change.

The downside of the whole process being that if the growth of the global middle class continues at its present rate, and with the same or similar side effects for the environment that we observe in the industrialised countries, then there is indeed a reason for concern.

Given the current dynamics of the distribution of wealth around the world, especially the processes in India and China, it seems logical to expect that the focus of the world economy will continue to shift towards Asia in the near future. Some forecasts say that by 2030 Europe's population will have shrunken, while the middle class in India could reach half a billion people. This means more than the entire population of the European Union. So think about it, this is huge.

But that may not be the biggest challenge. In fact this new middle class is not exactly like the conventional understanding for a Western-type middle class. No one really knows what the consequences for global geopolitics and the balance of powers this change of dynamics would have. So we should be careful when making conclusions based on our prior experience. It may no longer apply in the new conditions. Indeed, this new middle class looks very different from what we are used to seeing in the industrialised countries. For instance the usual annual income for the German or French middle class member may be, let's say, 20,000 euros... But the new middle class in the emerging economies is defined by completely differrent criteria - a Chinese or a Brazilian might have a 3,000 euro annual income and still consider themselves member of the middle class. At least for now the global middle class mostly consists of people who have only recently passed the poverty threshold, as is the case with my family.

Our knowledge of the world might be too one-sided if we decide to rely on old definitions. What we are used to calling a common human behaviour until now, might have been a mere whim of a tiny group of people that was an extraordinary deviation from the general norm - one that mostly applies to the Western world, particularly its northern half. And nothing beyond that.

We still know too little about the behaviour of this vast new influx of new consumers. And then, even this new group itself is very diverse from place to place. Where would they prefer to buy goods - in the big supermarkets like the people in Rio de Janeiro and Johannesburg? Or would they continue shopping from street stalls like the residents of Shanghai and Jakarta? Would they remain devoted to public transport like in Hong Kong, or they would rely on private vehicles like in Moscow?

And their future political and cultural role is even more unknown. From the Chinese and Indian example we can see how the relative homogenisation of the income in two big but very different systems could bring different results and prop up different social institutions that operate in very different ways. Would the wealthier Chinese population put pressure for political reform in their country, or the emerging middle class would voluntarily quit the thought of risking the stability of a one-party system? Would the higher income in India strengthen or weaken the traditionally important family values, and how would that reflect on the Indian society and subsequently, the Indian democracy?

Let's face it. There are no models that could give proper answers to these questions in their entirety. And for any future policy-maker this is an unexpected challenge. Let's just say that for the time being the top priority is alleviating poverty, so that more people could join the new middle class worldwide. That is just step one. But in a fast changing world, the new task might well be the management of prosperity.

Tags: class, economy, society
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