Read With : MiddleClassAndManufacturing

JosephStiglitz : One of America's great glories had been the growth of its middle class. Still, we almost completely ignored the equity implications of policies we urged on other nations - and the increasingly inescapable fact that globalisation, as it was actually practised, tended to make poor societies more rather than less unequal. (AmericanHypocrisy)

One of the things you realize reading this and DigitalDeathRattleOfTheAmericanMiddleClass is that the middle-class itself is an aberation from the perspective of the unfettered market.

It basically consists of two groups :

  • high-paid professionals
  • succesful small business / petty borgoise (small shop-keepers, contractors, SMEs)

The first group are just high-paid workers. And the market's natural tendency is to try to minimize this cost. For capital, high-paid workers are just a symptom of the failure of a sufficiently large supply of commodity priced workers. (And it will naturally try to correct this, by OffShoring, DeSkilling or training until the supply is large enough.)

The second group are naturally squeezed out by the greater EconomiesOfScale of larger enterprises, who ultimately evolve into monopolies and oligarchs, preventing them from reforming.

Counter

I suppose the anrgument against this is that the middle-classes need always to be re-inventing themselves as sources of new value which aren't yet commoditized. Perhaps that's the role of the CreativeClass?

Is this is a responsibility unfairly forced on them by capital or is it just their doom. Perhaps creative classes must always be inventing the future (or whatever is the use of them?) And stagnation is bad under any economic system. The extra push given by capitalism is quite mild and benefits.

Criticism

WilliamMorris (in UsefulWorkVsUselessToil) :

Here then is another class, this time very numerous and all-powerful, which produces very little and consumes enormously, and is therefore in the main supported, as paupers are, by the real producers. The class that remains to be considered produces all that is produced, and supports both itself and the other classes, though it is placed in a position of inferiority to them; real inferiority, mind you, involving a degradation both of mind and body. But it is a necessary consequence of this tyranny and folly that again many of these workers are not producers. A vast number of them once more are merely parasites of property, some of them openly so, as the soldiers by land and sea who are kept on foot for the perpetuating of national rivalries and enmities, and for the purposes of the national struggle for the share of the product of unpaid labour. But besides this obvious burden on the producers and the scarcely less obvious one of domestic servants, there is first the army of clerks, shop-assistants, and so forth, who are engaged in the service of the private war for wealth, which, as above said, is the real occupation of the well-to-do middle class. This is a larger body of workers than might be supposed, for it includes amongst others all those engaged in what I should call competitive salesmanship, or, to use a less dignified word, the puffery of wares, which has now got to such a pitch that there are many things which cost far more to sell than they do to make.

August 2004, a depressing prediction that Bush will win partly on the basis of increase in the size of the middle class.

We've left some important economic/demographic indicators for last. They may prove the most important. Contrary to Kerry's contention in his convention speech that the US middle class is shrinking and its income declining, US Internal Revenue Service (the federal tax collector) statistics show that the number of tax returns in the $75,000-$100,000 bracket increased by 8% between 2000 and 2002 while the number of returns in the above-$200,000 categories dropped by anywhere from 10-50%. Incomes of those earning $100,000 or less advanced marginally, while incomes of the big earners above $100,000 declined substantially.

http://www.atimes.com/atimes/Front_Page/FH31Aa04.html

Quora Answer : What is happening to the middle class?

Jun 16, 2015

The middle-class is an unsustainable fiction. It basically consists of workers who are highly paid.

Capitalism doesn't want workers who are highly paid. Capitalism is run by OWNERS of businesses who consider workers a cost that they would like to minimize.

Some workers, nevertheless have been highly paid because :

1) they worked for the government. (The government traditionally prioritizes doing whatever it thinks its job is, over minimizing its costs, and so has allowed its employees higher wages)

2) unionization. Collective bargaining, backed up by a credible threat of strikes has helped the workers grab a larger share of the pie

3) industry and manufacturing have required technically knowledgeable and skilled workers whose supply is limited by the cost of investing in their education.

What is happening to the middle-class is :

1) a concerted attack on the idea of government spending, leading politicians to promise to reduce their costs. This is largely achieved by outsourcing government jobs to private companies. These private companies still charge the government a lot of money (that's why government spending doesn't go down much), but DO manage to reduce the wages of the people they employ.

2) unionization is declining. This is partly, once again, because of successful political attacks on the idea, and changes in legislation that make collective bargaining harder. But it's also because of the fragmentation of work into a more casual, more fluid and less structured environment, where you don't have such large blocks of workers whose interests are so self-evidently aligned.

3a) Europe and the US have been haemorrhaging manufacturing and industry jobs to other parts of the world and replacing them by service and retail jobs. At the bottom end, these service and retail jobs require fewer technical / education-derived skills, so a larger pool of people is competing for them. At the top end, these service and retail jobs often require more soft / cultural skills which are mainly gained informally and reflect class values. Consider the stereotypical son or daughter of the upper-middle-classes who finds a role for themselves in public relations or investment banking. Their qualifications largely consist on being the kind of cultural animal that fits such professions, rather than anything that a studious but poorer child could learn from books.

The result is that this tranche of the middle-class survives, but it's largely a hereditary position.

Meanwhile, in the parts of the world where the industry and manufacturing have gone to, a new technical middle-class is growing.

3b) Automation is rapidly making certain kinds of skills and knowledge redundant. This is an accelerating trend that's only just getting started.

End result ... the middle-class is being wiped out in the US and Europe. What will be left of it is a few strands of "cultural middle-class", the aforementioned PR people and bankers, and some eg. hipsters, intellectuals, artists etc. who lack monetary wealth but hold on to some cultural differentiating signifiers.

In Asia and other developing parts of the world, a technical, educated middle-class is growing, but automation is rapidly catching up with it.