No. 58, Sept. 2014

No. 58
(Sept. 2014):

A Middle-Class India?
Introduction

I. Behind the Sudden Interest in India’s Middle Class

II. The Problem of Defining the Middle Class

III. The Reality: Gaping Inequality

IV. The Reality: A Deformed Structure of Employment

V. India’s Middle Class

VI. Conclusion

Appendix: Putting ‘Middle Class’ Consumption in Perspective: Some Figures

I. Behind the Sudden Interest in India’s Middle Class

There has been a flood of studies in the last decade or so attempting to estimate the size of the middle class in India and other ‘emerging economies’; some venture to project its growth over the next few decades. Having ploughed our way through a number of these studies,¹⁷ we can make a few points about these studies and their agenda.

The virtues of the middle class
With very few exceptions, these studies find much to like about the middle class. Some studies claim that mere entry into the middle-income group endows the entrants with thrifty, growth-enhancing qualities.¹⁸ Thus the Economist tells us that “there is indeed something special about the contribution the middle classes make to economic development.”¹⁹ In fact, “it is the middle class that is the real motor of economic growth,” because it “is more likely to invest in new products and new technologies than the rich... It is better able than the poor to leap barriers to entry into business and can therefore set up companies big enough to generate jobs. With its aspirations and capacity for delayed gratification, the middle class is more likely to invest in education and other sources of human capital, which are vital to prosperity.”²⁰ Along similar lines, Kharas asserts that “Middle class values... emphasize education, hard work and thrift. Thus the middle class is the source of all the needed inputs for growth in a neoclassical economy – new ideas, physical capital accumulation and human capital accumulation.”²¹ Bhalla calls them “Development’s secret weapon.”²²

Directly to the contrary, though, other enthusiasts of the rising middle class note that “new consumerism”, not thrift, defines the present middle class: a constant “upscaling of lifestyle norms; the pervasiveness of conspicuous, status goods and of competition for acquiring them; and the growing disconnect between consumer desires and incomes”, which is bridged by consumer credit.²³ This spendthrift, instant-gratification, attitude is nevertheless also considered a virtue: the “willingness of the middle class consumer to pay a little extra for quality” is “a force that encourages product differentiation and thereby feeds investment in production and marketing of new goods”.²⁴

One economist even connects the growth of the middle class in India to the range of consumer durables available. In the pre-liberalization era, he complains, there was nothing to “aspire” for:

In the 1960s and early 1970s, it was difficult to find a variety of quality refrigerators, toasters and electric irons in the market. The “aspirers” – just above the poverty line – such as small shopkeepers, marginal farmers, and semi-skilled workers, did not have much to aspire for. In such a milieu, the Indian middle class could not compete with the growth of its counterparts in east Asian countries such as Korea and Taiwan.²⁵

Evidently, it was only when liberalization dawned, and one could choose from a range of quality refrigerators, that it was worth the effort to raise oneself from semi-poverty to the middle class.

Undisguised class viewpoint
Some writers speak glowingly of the social contributions of the middle class. Sanjaya Baru declares: “From taking the lead in the national movement and heading powerful institutions of governance, to creating world-class higher education and research institutions and nurturing among the best and brightest in the corporate and financial sectors, the Indian middle class has been a powerhouse of talent and enterprise for the greater part of this century.”²⁶ Implicitly, the lower classes remained where they were for lack of talent and enterprise, not lack of resources. Along similar lines, Bhalla asserts that “the middle class is a class that believes in education, and merit. Indeed, belief in merit maybe the middle class’s signature view.”²⁷ Any Indian who reads those quotations cannot fail to register their caste dimension: the middle class of the past century was almost exclusively upper caste, suffering only a slight dilution in recent years.

Indeed, the theme of the middle class seems to encourage writers to drop all their inhibitions and flaunt quite naked class prejudice. The Economist approvingly quotes Brazilian economist Eduardo Giannetti da Fonseca describing the middle class as “people who are not resigned to a life of poverty, who are prepared to make sacrifices to create a better life for themselves...” Ashok Lahiri, a former chief economic advisor to the Government of India, adds his own weight to this apathy theory of poverty: “While there is a sense of hopelessness and resignation among the extremely poor, the middle class is a more determined lot, ready to better themselves on their own through struggle as well as by educating their children...”

By and large, these sweeping historical and socio-psychological claims are merely asserted, and little effort is made to support them. True, a few writers passingly cite references to other works. The Asian Development Bank (ADB), for example, tells us that “Economic historians such as Adelman and Morris (1967) and Landes (1998), among others, have argued that the middle class was a driving force in the faster pace of economic development in the United Kingdom and continental Europe in the 19th century.” But they do not attempt any serious historical examination of the question.

Political conclusions
These studies draw important political conclusions from their claims of middle class ascendancy. Goldman Sachs’ researchers tell us that the middle class “has been seen as an engine of growth, a source of demand, and a critical support for political openness and democracy.” The Economist agrees: “As people emerge into the middle class... They think and behave differently. They are more open-minded, more concerned about their children’s future, more influenced by abstract values.... Ideologically, they lean towards free markets and democracy...”

Nor do the observed political activities and sympathies of vocal sections of the middle class in India, Ukraine, Venezuela, and elsewhere suggest that they necessarily “lean towards” democracy.

Chávez’s “autocracy” consisted in the fact that he ignored the resistance of the propertied classes, as well as those under their influence, and attempted to redistribute some of the income from the country’s natural wealth to the working masses.³⁰ The ADB study warns that, where the middle class is relatively small, demands for redistribution may arise: “... societies with a small middle class are generally extremely polarized, and find it difficult to reach consensus on economic issues; they are overly focused on the redistribution of resources between the elite and the impoverished masses...” (emphasis added)

Whether or not the elite-mass cleavage has vanished, as these writers claim, they clearly wish that talk of the cleavage would vanish. Such talk impedes ‘economic liberalization,’ and may incite the impoverished masses to nurture dark designs of redistributing resources. Lahiri says the growth of the middle classes in India could have been stronger if it were not for the “urge to remove poverty here and now”, and the “obsession with inequality”. He admits that “there is undeniable force in the argument that the focus should be on the poorest of the poor.” But, he explains, the total sum required to be transferred in a country like India to raise the poor over the poverty line “may be too high to allow the government to maintain fiscal sustainability and macroeconomic balance.” Instead, “The meaningful transformation of India’s economic woes must focus more attention on the problems of the middle class.... This focus on policy impacts on the middle class offers a strategy that takes us away from an economy split between the poor and the rich....”

Class polarization and the middle class
These efforts to do away with talk of the “elite-mass cleavage” have a long history. Long ago, they arose explicitly in response to Marx. In the Communist Manifesto, Marx and Engels said that

Our epoch, the epoch of the bourgeoisie, possesses, however, this distinct feature: it has
simplified class antagonisms. Society as a whole is more and more splitting up into two great hostile camps, into two great classes directly facing each other – Bourgeoisie and Proletariat.... Of all the classes that stand face to face with the bourgeoisie today, the proletariat alone is a really revolutionary class. The other classes decay and finally disappear in the face of Modern Industry; the proletariat is its special and essential product.... The lower strata of the middle class – the small tradespeople, shopkeepers, and retired tradesmen generally, the handicraftsmen and peasants – all these sink gradually into the proletariat...

Small tradespeople, shopkeepers, handicraftsmen and peasants made up the petty bourgeoisie. The petty bourgeoisie had some meagre means of production of their own, and relied mainly on their own labour power, including that of their families, with at most a few hired hands. No doubt these strata in the capitalist countries did shrink, as the Manifesto said, but new middle strata emerged, and grew. In the unfinished last chapter of Capital, vol. III, Marx observed that even in the most developed capitalist country of the time, England, “the stratification of classes does not appear in its pure form. Middle and intermediate strata even here obliterate lines of demarcation everywhere.”³² (Nor was the proletariat a homogenous mass: “infinite fragmentation of interest and rank into which the division of social labour splits labourers.”) Elsewhere Marx described how the further development of capitalism gave rise to the growth of a managerial class in industry, workers in the credit and banking system, and commercial wage workers for the “calculation of prices, bookkeeping, managing funds.”³³ These sections lived by wage labour, but their labour embodied a higher level of education and training than that of the industrial working class. These were the ranks of what would later be called a “new middle class”.

Systematic ideological agenda
Despite Marx’s own treatment of the question, bourgeois ideologists welcomed the emergence of the “new middle classes” as proof that Marx’s theory of class polarization was outdated. This effort at disproving the polarization of classes began soon after Marx, and continues to date. The celebrated Harvard sociologist, Daniel Bell, in works such as The Coming of Post-Industrial Society: A Venture in Social Forecasting (1974), argued that the industrial worker was now increasingly irrelevant; a new post-industrial services-led society was emerging, based on information systems and knowledge workers. This new society would render old concepts of classes and class struggle obsolete (indeed, Bell titled a 1960 work The End of Ideology). He claimed: “not only are we a white-collar society, we’re quite definitely a middle-class society.”³⁵

As James Petras points out, Bell’s theories were rapidly disproved by events: “the relative decline of manufacturing and the rise of the service industry did not lead to the growth of better paid white collar work for the children of the displaced industrial workers: the vast majority of the new service workers were poorly paid (averaging less than 60 per cent of the unionized factory workers income) and engaged in menial manual labor.” Moreover, the 1960s and early 1970s witnessed sharp class struggle from below in the US, and the 1980s witnessed sharp class struggle from above (as the ruling classes smashed the trade union movement).³⁶ As for the US becoming a “middle-class society”, Thomas Piketty’s new book Capital in the Twenty-First Century has documented what the public instinctively felt from its own experience³⁷: the extraordinary levels of inequality that prevail in the US and other developed countries, which have been steadily rising over the decades and hark back to the levels of the 1920s. Indeed, political commentators in the US now express the fear that the ‘middle class’ there is disappearing.³⁸

The fact that the predictions made by Bell and others of his ilk proved false never became an impediment to the currency of those predictions. Instead these theories, repeated ad nauseam by television pundits and politicians, helped shape, and warp, working people’s conception of their own place in society. Thus in 2008 a Pew survey found that 91 per cent of people in the US considered themselves ‘middle class.’ Paul Krugman observes that

One of the odd things about the United States has long been the immense range of people who consider themselves to be middle class – and are deluding themselves. Low-paid workers who would be considered poor by international standards, say with incomes below half the median, nonetheless consider themselves lower-middle-class...³⁹

The terms used matter. Fred Magdoff and John Bellamy Foster point out that

the term “working class” is hardly used in the dominant discourse in the United States today. Many workers conceive of themselves as part of the “middle class” because they have come to think of their income as providing them with a “middle-class lifestyle”—and because they consider themselves above “the poor,” who have been converted in the ruling ideology into the entire lower class (or underclass), leaving out the working class altogether.⁴⁰

The effort to portray ‘emerging market economies’ like India as increasingly middle class, then, is not merely wishful thinking on the part of neoliberal thinkers, but part of a systematic ideological agenda of long standing, an attempt to mould the thinking of the people. We shall return to this theme later in this article.

The middle class in the colonies and semi-colonies
While the Manifesto’s “lower strata of the middle class” – small tradespeople, handicraftsmen, and peasants – declined in western Europe, north America, and Japan with the advance of capitalism, they survived in large numbers in the countries in which capitalism developed later, and in particularly large numbers in colonized/semi-colonized countries where imperialist domination kept alive pre-capitalist relations to one extent or another (albeit in an altered form). Marxist theory developed in order to take account of the phenomenon of persisting petty producers, and their potential. Thus the peasantry played a very important role in the Russian revolution, and became the main force of the Chinese revolution. Indeed, Mao Zedong, in his “Analysis of the Classes in Chinese Society” (1926), classified the petty bourgeoisie of China firmly among the revolutionary classes, and among the proletariat’s “closest friends”:

Included in this category are the owner-peasants [middle peasants], the master handicraftsmen, the lower levels of the intellectuals – students, primary and secondary school teachers, lower government functionaries, office clerks, small lawyers – and the small traders. Both because of its size and class character, this class deserves very close attention.

In this definition, Mao combined those labouring sections who owned their own means of production and those whose labour power embodied some higher level of education. Further, he divided the petty bourgeoisie into three wings, depending on their economic status: the “right wing” was able to retain more than it consumed, and dreamt of becoming rich; a numerous middle section stayed afloat by working ever longer and harder; and a “left wing” saw its standard of living sliding despite its efforts. When the revolutionary tide ran high, he declared, the middle section might join the left wing in revolutionary struggle, and even the right wing would have to go along.

The role of the peasantry in the Chinese revolution is well known; in the context of the present discussion, we need to note the role of other sections of the petty bourgeoisie. Notably, the May 4th Movement of 1919, initiated by students, awakened a nationwide anti-imperialist upsurge and marked a new stage in China’s revolution. Some of the future founders of the Communist Party of China (CPC) emerged as leaders during this movement.

Chinese society, then, was not polarized into “two great classes” of Bourgeoisie and Proletariat; rather, it comprised several classes, including what would be called “middle classes.” But the middle classes of China failed to act as a bulwark against revolution. China did indeed split into “two great hostile camps,” but a sizeable section of the middle classes joined the revolutionary camp, and contributed to its victory. Apart from the difference in the quality of political leadership of the two camps, the deteriorating objective conditions of the middle classes in China of the time must have played a role in this outcome.

Against this background, let us return to the studies on the middle class of India, its growth and implications.

NEXT: II. The Problem of Defining the Middle Class

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