How important is the Middle Class for strong market economies and democracy ?

[ Disclosure: All this OP might be totally biased due to the fact that I am middle class myself. ]

Discussing with a student of mine some time ago I defended the point of view that the US was very strong in part due to a pretty beefed up middle class. Not only did the US have a strong and numerous middle class but the middle class also has very heavy participation thru shares in companies compared to other countries. 

Europeans thou they have a big middle class ... these seem to have less economic power in comparison. South America has a small middle class and Asia tends to create more big money millionaires than middle class members.

 Middle Class fuels the economy by consuming way more overall than the Rich Class. They all provide the specialized workforce and government bureaucracy. 

 So is the Middle Class the main stalwart of US economic success ? Or are the Upper classes the true job creators by investing and creating factories ?

 Since then the Tech Bubble and other stocks have "robbed" billions from middle class shareholders... Bush has pushed Big Business interests pretty strongly. Are we seeing an ever diminishing power, usually moderates, of the Suburbans and city people ? What are the effects of a even more "weakened" US middle class ? 

 Electorally speaking the middle class is becoming less relevant ? Having neither the numbers (therefore votes) of the lower classes or the financial power of the upper class is the middle class losing ground in the political arena ?

Businesses are just an economic tool for getting things done, not a “class”. And business interests and the interests of the people who run them, work for them, and buy from them are more often than not one and the same. So helping Big Business usually means helping everyone associated with that business, from the workers to the consumers to the management and stockholders. Such a policy is generally beneficial to the middle class.

Posted by adaher:

That is not entirely true, adaher. “Businesses” as such are indeed merely an economic tool. On the other hand, there is a clearly identifiable “business class” in the United States.

The most compelling analysis of the class system in America I’ve read in the past ten years comes from The Next American Nation by Michael Lind (New York: Free Press Paperbacks, 1996), pp. 141-145:

Another interesting analysis is from Class: A Guide to the American Status System, by Paul Fussell (New York: Summit Books, 1983), pp. 27-50:

My researches have persuaded me that there are nine classes in this country, as follows:

Top out-of-sight
Upper middle

High proletarian
Low proletarian

Bottom out-of-sight

One thing to get clear at the outset is this: it’s not riches alone that define these clases. . . . “Economically, no doubt, there are only two classes, the rich and the poor,” says George Orwell, “but socially there is a whole hierarchy of classes, and the manners and traditions learned by each class in childhood are not only very different but – this is the essential point – generally persist from birth to death. . . . It is . . . very difficult to escape, culturally, from the class into which you have been born.” When John Fitzgerald Kennedy, watching Richard Nixon on television, turned to his friends and, horror-struck, said, “The guy has no class,” he was not talking about money.

Not that the three classes at the top don’t have money. The point is that money alone doesn’t define them, for the way they have their money is largely what matters. . . . The main thing distinguishing the top three classes from each other is the amount of money inherited in relation to the amount currently earned. The top-out-of-sight class (Rockefellers, Pres, DuPonts, Mellons, Fords, Vanderbilts) lives on inherited capital entirely. . . .

“When I think of a really rich man,” says a Boston blue-collar, “I think of one of those estates where you can’t see the house from the road.” Hence the name of the top class, which could just as well be called “the class in hiding.” Their houses are never seen from the street or road. They like to hide away deep in the hills or way off on Greek or Caribbean islands (which they tend to own), safe, for the moment, from envy and its ultimate attendants, confiscatory taxation and finally expropriation. . . .

The next class down, the upper class, differs from the top-out-of-sight class in two main ways. First, although it inherits a lot of its money, it earns quite a bit too, usually from some attractive, if slight, work, without which it would feel bored and even ashamed. It’s likely to make its money by controlling banks and the more historic corporations, think tanks, and foundations, and to busy itself with things like the older universities, the Council on Foreign Relations, the Foreign Policy Association, the Committee for Economic Development, and the like, together with the executive branch of the federal government, and often the Senate. . . . And secondly, unlike the top-out-of-sights, the upper class is visible, often ostentatiously so. . . . When you pass a house with a would-be impressive facade visible from the street or highway, you know it’s occupied by a member of the upper class. . . .

We now come to the upper-middle class. It may possess virtually as much as the two classes above it. The difference is that it has earned most of it, in law, medicine, oil, shipping, real estate, or even the more honorific kinds of trade, like buying and selling works of art. Although they may enjoy some inherited money and use inherited “things” (silver, Oriental rugs), the upper-middles suffer from a bourgeois sense of shame, a conviction that to live on the earnings of others, even forebears, is not nice.

Caste marks of the upper-middles would include living in a house with more rooms than you need, except perhaps when a lot of “overnight guests” are present to help you imitate upper-class style. . . . This class is also the most “role-reversed” of all: men think nothing of cooking and doing housework, women of working out of the house in journalism, theater, or real estate. (If the wife stays home all the time, the family’s middle-class only.) Upper-middles like to show off their costly educations by naming their cats Spinoza, Clytemnestra, and Candide, which means, as you’ll have inferred already, that it’s in large part the class depicted by Lisa Birnbach and others’ Official Preppy Handbook, that significantly popular artifact of 1980.

. . . The middle class is distinguishable more by its earnestness and psychic insecurity than by its middle income. I have known some very rich people who remain stubbornly middle-class, which is to say they remain terrified at what others think of them, and to avoid criticism are obsessed with doing everything right. . . .

“Status panic”: that’s the affliction of the middle class, according to C. Wright Mills, author of White Collar (1951) and The Power Elite (1956). Hence the middles’ need to accumulate credit cards and take in The New Yorker, which it imagines registers upper-middle taste. . . .

If the audience for that sort of thing used to seem the most deeply rooted in time and place, today it seems the class that’s the most rootless. Members of the middle class are not only the sort of people who buy their own heirlooms, silver, etc. They’re also the people who do most of the moving long-distance (generally to very unstylish places), commanded every few years to pull up stakes by the corporations they’re in bondage to. They are the geologist employed by the oil company, the computer programmer, the aeronautical engineer, the salesman assigned to a new territory, and the “marketing” (formerly sales) manager deputed to keep an eye on him. . . . IBM and DuPont hire these people from second-rate colleges and teach them that they are nothing if not members of the team. Virtually no latitude is permitted to individuality or the milder forms of eccentricity, and these employees soon learn to avoid all ideological statements. . . . Terrified of losing their jobs, these people grow passive, their humanity diminished as they perceive themselves mere parts of an infinitely larger structure. Interchangeable parts, too. “The training makes our men interchangeable,” an IBM executive was once heard to say.

. . . Oddity, introversion, and love of privacy are the big enemies, a total reversal of the values of the secure upper orders. Among the middles there’s a convention that erecting a fence or even a tall hedge is an affront. And there’s also a convention that you may drop in on neighbors and friends without a telephone inquiry first. . . .

. . . Proceeding downward, we would normally expect to meet next the lower-middle class. But it doesn’t exist as such any longer, having been pauperized by the inflation of the 1960s and 1970s and transformed into the high-proletarian class. What’s the difference? A further lack of freedom and self-respect. Our former lower-middle class, the new high proles, now head “the masses,” and even if they are positioned at the top of the proletarian classes, still they are identifiable as people things are done to. They are in bondage – to monetary policy, rip-off advertising, crazes and delusions, mass low culture, fast food, consumer schlock. Back in the 1940s there was still a real lower-middle class in this country, whose solid high-school education and addiction to “saving” and “planning” maintained it in a position – often precarious, to be sure – above the working class. . . . These former low-white-collar people are now simply working machines, and the wife usually works as well as the husband.

The kind of work performed and the sort of anxiety that besets one as a result of work are ways to divide the working class into its three strata. The high proles are the skilled workers, crafstmen, like printers. The mid-proles are operators, like Ralph Kramden, the bus driver. The low proles are unskilled labor, like longshoremen. The special anxiety of high proles is fear about loss or reduction of status: you’re proud to be a master carpenter, and you want the world to understand clearly the difference between you and a laborer. The special anxiety of the mid-proles is fear of losing the job. And of the low proles, the gnawing perception that you’re probably never going to make enough or earn enough freedom to have and do the things you want.

But high proles are quite smart, or at least shrewd. Because often their work is not closely supervised, they have pride and a conviction of independence, and they feel some contempt for those who have not made it as far as they have. The are, as the sociologist E. E. LeMasters calls them and titles his book, Blue-Collar Aristocrats (1975), and their disdain for the middle class is like the aristocrat’s from the other direction. . . . Like other aristocrats, says LeMasters, these “have gone to the top of their social world and need not expend time or energy on ‘social climbing.’” . . .

Since they’re not consumed with worry about choosing the correct status emblems, these people can be remarkably relaxed and unself-conscious. They can do, say, wear, and look like pretty much anything they want without undue feelings of shame, which belong to their betters, the middle class, shame being largely a bourgeois feeling. . . .

High proles are nice. It’s down among the mid- and low proles that features some might find offensive begin to show themselves. These are people who feel bitter about their work, often because they are closely supervised and regulated and generally treated like wayward children. . . . Andrew Levinson, author of The Working-Class Majority (1974), invites us to imagine what it would be like to be under the constant eye of a foreman, “a figure who has absolutely no counterpart in middle-class society. Salaried professionals often do have people above them, but it is impossible to imagine professors or executives being required to bring a doctor’s note if they are absent a day or having to justify the number of trips they take to the bathroom.” . . .

The degree of supervision, indeed, is often a more eloquent class indicator than mere income, which suggests that the whole class system is more a recognition of the value of freedom than a proclamation of the value of sheer cash. . . . One is a mid- or low prole if one’s servitude is constantly emphasized. Occupational class depends largely on doing work for which the consquences of error or failure are distant or remote, or better, invisible, rather than immediately apparent to a superior and thus instantly humiliating to the performer.

Constantly demeaned at work, the lower sorts of proles suffer from poor morale. As one woman worker says, “Most of us . . . have jobs that are too small for our spirits.”

At the bottom of the working class, the low prole is identifiable by the gross uncertainty of his employment. This class would include illegal aliens like Mexican fruit pickers as well as other migrant workers. Social isolation is the norm here, and what Hoggart says of the lower working class in Britain applies elsewhere as well: “Socially . . . each day and each week is almost unplanned. There is no diary, no book of engagements, and few letters are sent or received.” Remoteness and isolation, as in the valleys of Appalachia, are characteristics, and down here we find people who, trained for nothing, are likely out of sheer despair to join the Army.

Still, they’re better off than the destitute, who never have even seasonal work and who live wholly on welfare. They differ from the bottom-out-of-sights less because they’re much better off than because they’re more visible, in the form of Bowery bums, bag ladies, people who stand in public places lecturing and delivering harangues about their grievances, people who drink out of paper bags, people whose need for some recognition impels them to “act” in front of audiences in the street. When delinquency and distress grow desperate, you sink into the bottom-out-of-sight class, staying all day in your welfare room or contriving to get taken into an institution, whether charitable or correctional doesn’t matter much.

In the concluding chapter, Fussell identifies a tenth class, a “Category X” of declassed bohemians and intellectuals.

Darn… only managed to get back now. Won’t have time to read everything… but took a quick glance. Seems very interesting. I read a good part of the Lind book. Interesting.

 Basically my underlying idea is that the middle class is under assault in many ways. Electorally ignorable (like I said before little votes and not enough cash). Tax wise heavily hit since they don't have accountants and cooked books. Crime and unemployement hit them stronger too than the "business class".

  I am basing myself more on the US and Brazil examples which I follow closely. Overhere the Middle Class is paying more taxes than companies do percent wise and total. Government here is totally overtaken by business interests that manipulate at will.... good business and competition suffer since its easier to buy political influence. Something the US should be wary of.

  Adaher you are wrong in the fact that if a company can gain a lot by stepping all over employees rights and salaries... it will. It might even be justified by competitive pressures... or greed pressures. It's easier paying lobbies than seeking efficiency sometimes... Big Business doesn't need government protection as much as the middle class. The rich can fend for themselves way better than the middle class during crisis.... (Business is necessary... I am not a power to the proletariat wacko). 

  Still its like killing the golden goose... middle class is the source of heavy consuming, savings and specialized labor. They carry an industrial economy onwards. By sucking them dry you creat an oligarchy tended political environment ?

Posted by Rashak Mani:

Rashak, could you please tell us a bit more about the class structure in Brazil? I always thought the middle class there was negligible; perhaps I was wrong. But in the same book I quoted above, The Next American Nation, Michael Lind uses Brazil as an exemplar for what the U.S. must avoid becoming. From p. 216:

Wow, color me confused. I am of German but also Polish descent, Catholic, with a graduate degree but from a state university, have traveled to Paris and plan to visit London, but I have also visited Las Vegas, Atlantic City, and Orlando, and I like Velveeta and drink beer. So am I a member of the white overclass? If saving money for a trip to London is all it takes, I am, but the Velveeta-eating might give me away.

OTOH, your “cites” are hogwash. And you might want to read the FAQ and/or consult with a moderator about what constitutes fair use on the SDMB. Your quotes of other people’s works, even attributed, are kinda long.

Posted by milroyj:

Well, that’s why Lind uses words like “probably.” Class distinctions cannot be hard and sharp in a society like ours, with no history of a caste system, except for the systematic exclusion and degradation of nonwhites. But that’s not important. The American white overclass might be a bit blurry around the edges, but it does exist. It is a social class just as real as the British gentry, and almost as self-conscious.

Posted by milroyj:

Could you please be more specific? Do you think I’m making this stuff up? Or do you mean that Lind and Fussell are fundamentally wrong in their analyses? If the latter, you really ought to provide some better-reasoned criticism than the word “hogwash.”

I watched this interview on cspan several weeks ago. The writer makes the interesting point that the exporting of free market democracy has resulted in creating a wealthy minority class that ends up being hated and targeted.


Posted by jacksen9:

So how does that relate to the OP? Which is, whether the middle class or the business class is more important in creating a nation’s wealth. Does this “wealthy minority” you’re talking about create wealth in their countries where there is no middle class to speak of?

I think the situation results in widening the gap between rich and poor. The upper class creates wealth but the benefits of this wealth is not enjoyed by the lower classes. I would suppose the underclass sees little opportunity for themselves, focuses on the increasing wealth of this upper class minority, and begins to hate them more and more. So no, I would think this situation would cause unrest, instability, etc and lead to limited economic growth or perhaps no growth at all.

Specifically, I think Lind is a Loony Left nutbag. Yeah, let’s divide California into 8 states, and Florida into 4, including one called, of all things, Epcot. :rolleyes: And you take this person seriously?

Someone is off their meds, and for once it ain’t me.

And the whole business about the “white overclass” comes dangerously close to outright racism, IMHO.

 I will be generalizing a lot... but nothing "incorrect" to my knowledge. I agree with Lind that Brazil is an example not to be followed.

In Brazil a rich black is a RICH person first... race isnt as much an issue as it might seem in the US. The fact thou is that most blacks and indian are poor. When they do acheive good education racism does become an issue and they tend to be less contracted than whites thou.

Its not a rigid thing… but in the end the results are rigid. Blacks do end remaining mainly in the lower classes. When I see dopers talking so smugly of US social darwinism I see that its not working in the US anymore. A smart intelligent black will go up… but most won’t. Most won’t because they don’t have the same educational and health opportunities. This creates a tendency to view whites as the upper class and “Brazilianization” sets in.

Racial tension barely exists in Brazil too... slavery was pretty "sucessful" here and the culture reflects this view that blacks are inferior. Most brazilians have black blood and are mixed... even the elite to a point... but its common to view a badly done job as a "black's job" for example. The status quo is hardly challenged as Brazil has a history of "appeasement" as far as social and political problems go. (No Civil war or no major revolts last century) Also there are many shades of black here. In the US your either white or black... here there are more "browns". We don't have as much US style polarization in the race issue.

Since Linds book was written thou Brazil passed thru some economic reforms and stability that gave a chance of a widening and more "black" middle class. The poor got some economic clout and were starting to invest in education and consumer goods boomed. This stimulated the economy and promised an increase in jobs and more growth. The world recession and internal economics stopped all that. Ever increasing taxes and unemployement checked and now is strangling the middle class. The bigger than ever lower middle class where many mixed blood were going up was hit pretty bad too since they tended to be less qualified... 

The Brazilian middle class is based heavily on government jobs and small companies. There are many areas where Brazil is strong and the workers are highly educated.... but numbers wise the middle class is much smaller as compared to the US. Economically too. Still economic hardships and governments tendency to get taxes from those who cant "escape" is strangling the middle class badly. My parents are government employees and havent had a raise in roughly 8 years. Inflation in this period was small compared to the past... but still 5-7% a year.

Like a student of mine said... we don't practice "real" capitalism here. Its a half capitalism with lots of oligarchy mixed with a heavy informal economy. Corporativism is a major reason why we are dead in the water economically and why political power remains a big business exclusive. Historically speaking Brazil was close to the US in economic development until the 1700's. Socially we fell behind long before. We were richer in fact than the future US during export booms of sugar, then gold and then rubber. Colonial and hierarchical mindset never left us completely. American colonists were intent on leaving behind the structures of the past.... this allowed a more balanced society.

 Does the US have a major risk of falling in the same errors of Brazilian past ? I think so. Not in the same scale... but with similar problems.
DO you really think the "white overclass" doesn't exist ? If it does exist even in a limited way... talking about it is not racism... just analysis. The US is melting pot with the white staying on top ? I think so... doesnt make me racist. Pretending it is not so might be more dangerous. So don't dismiss it as left loneybag but tell us why you think its not so.
Free Market economy has had centuries to develop in Europe and some of the colonies in America (the continent). In Asia and the thirld world you see distorted economic models based on foreign investment and government corruption. Growth was rapid... but not enough time for a more balanced economy or social structure.