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

 

 

 A Middle-Class India?

II. The Problem of Defining the Middle Class

The first thing that strikes the reader is that virtually the entire discussion among economists on defining the middle class in ‘emerging economies’ pertains to levels of consumption expenditure or income. No doubt, income is a relevant indicator, but not when taken in isolation. None of them attempts to base the definition on the concerned section’s relation to the means of production, and its place in the social organization of labour.41 Thus we are left with a motley conglomeration of people linked only by (very broad) income group, but with little else to connect them in social terms. The problem with such a definition, as we shall see in the following chapters, is that it gives us very little useful information about the nature of the society.

These studies acknowledge that there is no generally accepted definition of the middle class. So each sets about devising its own definition. Broadly, they adopt one of two methods.42 A few define the middle class in relative terms – a class standing midway between the top and the bottom; most define it in absolute terms – as possessing a particular standard of living, as measured by income or wealth.

A. In relative terms
 To define the middle class in relative terms, i.e., in relation to the rich and the poor, we start with the median consumption level. (If the population were arranged according to their level of consumption, from the highest to the lowest, the ‘median’ would be the person in the middle, with an equal number of persons on either side.) From the Government’s National Sample Surveys (NSS) of consumption, one can locate the median consumption level. A World Bank study43 did just this to arrive at what it called India’s “middle class”. Its startling finding was, in the Bank’s words, that “India’s middle class lives barely or not far above India’s poverty line, and below international poverty lines, especially in the rural areas.” (see chart below, reproduced from the World Bank’s study).


Chart One
Source: World Bank, Perspectives on Poverty in India: Stylized Facts from Survey Data, 2011. Authors’ estimates from National Sample Survey 2004-05.

A large number of officially ‘non-poor’ people in India are clustered just above the official poverty line, so that even a small increase in the poverty line adds large numbers to the figure of the poor.44 Moreover, as the World Bank noted,45 not only did people move out of poverty during any given period, but others also moved back into it, for various reasons such as illness. A large section of those officially deemed ‘non-poor’ belonged to the same social group as the officially poor.

Difficult to separate from the poor
The National Sample Survey (NSS), on which the World Bank calculations are based, collects data on household expenditure, but not on income. The 2005 Indian Human Development Survey (IHDS 2005, fielded by the University of Maryland and NCAER), on the other hand, gives us data on income as well. Using the IHDS 2005, Vanneman and Dubey defined middle-income households in relative terms, as those whose income is above half and below twice the all-India median.46 Their data place the median per capita income for 2004 at Rs 5,708, or Rs 15.64/day.47 This is lower than the lower of the World Bank’s two international poverty lines.48 Three-fourths of the population would fall under the higher of the two World Bank lines.

Vanneman and Dubey define individuals in households below half the median as poor, and those in households with income higher than twice the median as affluent. By this definition, the middle income group consist of the middle 60 percent of households, because 18 percent of individuals are in households with less than half the median income (i.e., are defined as “relatively poor”) and 22 percent are in households with more than twice the median income (i.e., are defined as “relatively affluent”).

Vanneman and Dubey clarify that although placing the thresholds at half and twice the median

is a conventional definition of relative poverty and affluence, this middle-income group is not what would be considered middle class in any global sense.... Most of these households depend on small farms or wage labor for their living. (emphasis added)

Rather, it is the top section that comes somewhat nearer a global “middle class”:

A more recognizable “middle class” would be the households identified as “affluent” with incomes more than twice the Indian median. These households... [are] hardly well-off by OECD [i.e., developed country] standards but comfortable in the Indian context. Most of these households are based on income from relatively secure, salaried positions, and most own or aspire to an array of consumer goods that make them targets for modern marketing.

The real condition of households at the middle of India’s income distribution is brought out by the “multidimensional poverty index” (MPI), which measures deprivation in various elementary needs (education, health, and living standards): 55.3 per cent of Indians were deemed to be “MPI poor” in 2005. Another 18.2 per cent were considered to be “near multidimensional poverty.”49 In brief, if we were to define India’s ‘middle class’ in relative terms, it would be difficult to separate it from the poor. 

This is precisely why the National Commission for Enterprises in the Unorganised Sector (NCEUS, also known as the Arjun Sengupta committee) devised the term “poor and vulnerable” for those with a per capita daily consumption of up to Rs 20 (in 2004-05). The cut-off was placed at two times the official poverty line of the time (this was also close to the figure for the higher of the World Bank’s two international poverty lines). The NCEUS found that this segment of “poor and vulnerable” included 77 per cent of the population. It termed the segment just above this, i.e., those whose consumption level was two to four times the official poverty line, “middle income.” The average per capita consumption expenditure of this group, which made up 19.3 per cent of the population, was just Rs 37 per day in 2004-05. The last group, which the NCEUS termed “high income”, constituted 4 per cent of the population, and had an average consumption of Rs 93 per day in 2004-05. That is, the NCEUS’s “middle income” group was nowhere near the median; rather it was in the top quarter of the population.

All the above is not to deny that there are degrees of poverty. Let us say we set aside the official poverty lines and acknowledge the glaring truth that the majority of the population are poor (if the word “poverty” is to have any meaning at all). Even so, the poor are not a homogenous mass; there are gradations even among the ranks of the poor. Basing itself on the official poverty line, the NCEUS had used the categories “Extremely Poor”, “Poor”, “Marginally Poor”, and “Vulnerable”; even if we decide to choose other terms, it would still be useful to measure different levels of poverty in order to understand its dynamics. Just as, in the caste system, there is a hierarchy even among the vast majority of the ‘low-born’, the social and political role of the very poor and the somewhat poor may differ, and even collide in the absence of a political leadership that can unite them in their basic common interest.

B. In absolute terms
While defining the middle class in relative terms may thus gain us insights into the actual condition of the masses of people, it cannot be used to show the growth of some income group  (here, a ‘middle class’ defined by some income level) over time. For that reason, most of the studies reviewed here have taken, not a relative, but an absolute, definition. That is, “the middle class is the section that earns/spends at least so many and at most so many rupees per day (or month, or year).” And to compare the size of the middle class across different countries, the absolute definition must be in terms of a single currency. However, this project runs into some problems.

In the first place, there is no accepted definition of middle class status in terms of an income range. That is not surprising, as there is no generally accepted definition of poverty; different countries have their own, very different, poverty lines, and these are fiercely contested. The World Bank’s two international poverty lines are (more or less arbitrarily) based on a per capita income/consumption in different countries equivalent to what one could buy in the US for $2 and for $1.25 per day, i.e., in Purchasing Power Parity (PPP) dollars (see below). The first is the World Bank’s definition of poverty; the second its definition of extreme povery.t50 It uses the latter definition ($1.25 PPP) to measure progress in achieving the United Nations’ Millenium Development Goals related to poverty.

Purchasing Power Parity and poverty
To clarify: We all know that, even though the exchange rate of the rupee is, say, Rs 60 per US $1, in fact one can buy more goods and services in India with Rs 60 than one can buy in the US with $1. In other words, the purchasing power of the rupee within India is more than its external value. So, in order to compare incomes across different countries, the World Bank uses local price data from each country, and then tries to work out how much of each local currency is required to buy the equivalent of the goods and services one can buy for $1 in the US. In this way, local currency is translated into “Purchasing Power Parity” (PPP) dollars. One PPP dollar is thus worth much fewer units of the local currency than the dollar exchange rate. For example, in 2011, when the official exchange rate of the dollar was Rs 45, the PPP dollar was only Rs 15, i.e., in India one could buy for Rs 15 what one could buy in the US for $1 – at least, that is the claim the World Bank makes. On this basis the World Bank finds out how many people earn less than PPP $1.25, or PPP $2, in each country.

However, the World Bank’s PPP-based poverty line is untenable. First, we all know it is not possible for a person to survive in the US on $1.25 a day, or even $2 a day. The fact that such a measure is being widely used shows that the definition of poverty is not anchored in any definition of minimum human requirements. Sanjay Reddy and Thomas Pogge demonstrate51 that the very concept of PPP is based on methodological errors. (One error is as follows: It is only possible to compare the prices of specific goods in two currencies, such as the rupee and the dollar. One might be able to buy a book for $10 in the US, and Rs 200 in India, i.e. $1 PPP = Rs 20. But a strip of paracetamol might cost, say, $5 in the US and Rs 20 in India, i.e. $1 PPP = Rs 4. Hence it is not possible to construct any general/abstract rate of purchasing power equivalence between the two currencies [i.e., one PPP dollar = so many Indian rupees]. Indeed, any such rate must refer to a specific basket of goods [i.e., specific quantities of particular goods] and services being purchased in the two countries. The basket of goods and services actually purchased will differ for different classes. So, to work out a PPP for the purpose of measuring poverty, we need to first ascertain the bundle of goods and services needed for a person not to be called ‘poor’. Another problem arises with the attempt to extend PPPs based in a particular year over time, backward or forward. These problems are so serious as to render the measure of little practical use.) The fundamental problem is that the World Bank poverty lines do not even attempt to ascertain whether the persons with incomes/consumption expenditures over these lines can achieve certain minimum requirements of dignified human existence – such as minimum nutrition, water, housing, sanitation, clothing, health care, education, and electricity. It is possible to avoid all problems of international comparison by simply calculating the rough sum (in the local currency) required in each country to achieve a common minimum set of requirements; and then to see what share of the population in fact has incomes lower than that sum. Such an ‘achievements-based’ exercise may find that much larger numbers than indicated by the World Bank’s measures do not, in fact, enjoy the income needed to purchase these minimum requirements; this is indeed why the number of those suffering multiple deprivations is much higher than those officially defined ‘poor’. Instead of the achievements-based poverty line proposed by Reddy and Pogge, the World Bank pushes a purely arbitrary money-metric international poverty line that is more or less useless for any real understanding of the well-being of people. (Even within the logic of the World Bank’s own PPPs, there remains the question of which cut-off level to choose. The very low level at which the World Bank sets its lower line – at $1.25 – helps show progress in poverty reduction over time. Had the line been set instead at $2.50, it would have shown a worsening trend over 1990-2005, i.e., an increasing share of the world’s population falling below the line over the period.52)

Estimates differ vastly according to definitions
Almost all the studies we looked at define the middle class in PPP dollar terms; they differ in the specific range they select as ‘middle class’. Broadly, they adopt one of two approaches. Some choose to set the lower threshold very low, and thus find that the middle class is already very large. A second approach is to set the lower threshold much higher, and find that the middle class is small.53 Some studies in the latter group nevertheless proceed to project that the middle class will grow phenomenally in coming years, and constitute the bulk of the population.

India’s $2 middle class
(i) The problems with the World Bank poverty line reproduce themselves in the studies in the first group. These set the lower threshold (for entry into the middle class) at $2 PPP/day (i.e. above the World Bank’s definition of poverty). For example, the Asian Development Bank (ADB) takes those with consumption expenditures of $2-$20 PPP/per day as middle class. On this basis, it finds that 25 per cent (using the World Bank database) or 38.1 per cent (using India’s NSS data) of India’s population qualify as middle class. Indeed, 56 per cent of the population of Asian developing countries qualify, too, making it, presumably, a ‘middle-class continent’.

However, the ADB does seem to have some qualms about its definition. It therefore divides its middle class into three segments, $2-$4, $4-$10, and $10-$20, and finds that the overwhelming bulk are in the first segment, “leaving them highly vulnerable to slipping back into poverty due to economic shocks.” In India’s case, of the 38.1 per cent figure, 22.3 per cent fall in the first category, 12.3 per cent in the second category, and just 3.5 per cent in the third category.

The World Bank’s Martin Ravallion – the man who devised the World Bank’s definition of poverty – faces a similar problem.54 He too takes $2 PPP/day as the lower threshold, and $13 PPP/day, the US poverty line at the time, as the upper threshold. In other words, if we were to take the PPP concept seriously, all those who qualify in Ravallion’s ‘middle class’ would be deemed poor in the US. He explains that he distinguishes between a ‘developing world middle class’ and a ‘Western middle class’; entry into the latter is on crossing the $13 level.55 On this basis, Ravallion finds that in 2005 India’s middle class was 263.7 million, or 24.1 per cent of the population.

The merit of the study by Abhijit Banerjee and Esther Duflo is that they try to find out what their defined ‘middle class’ do for a living. Taking the middle class as those with a consumption of $2 to $10 PPP a day, Banerjee and Duflo carried out surveys of 13 developing countries to discover “what is middle class about the middle classes”.56 Note that their upper threshold is $3 below the then US poverty line. Given the low bar they set for defining the middle class, it is not surprising that they find that the middle class are much like the poor:

...it is striking how much the poor in a particular country have in common with the middle class, in terms of how budgets are allocated.... At first blush, the occupational patterns of the middle class seem surprisingly similar to that of the poor.... in urban areas, the broad occupational patterns are remarkably similar between the poor and the middle class...

The businesses of the Banerjee-Duflo middle class “are severely under-capitalized, because the middle class, much like the poor, does not have particularly good access to capital.” The two economists are puzzled in the failure of their ‘middle class’ to save from their income: “The striking fact about business investments, especially given the differences in potential to save, is how little difference there is between those of the middle class and those of the poor.” What are these middle class ‘businesses’?

...[T]he type of business they operate is also not very different from that of the poor. The number of employees who are not family members is still tiny: specifically, the businesses of those with daily per capita expenditures between $6 and $10 have on average only 0.5 to 1 more paid employee. Businesses owned by the middle class still seem to operate with very little in the way of assets, such as machinery or a form of transport.

Little wonder, as the Banerjee-Duflo ‘middle class’ businesses include fruit and vegetable vending, rag-picking, selling milk, and collecting cow-dung. They find that ‘middle class’ businesses “are also the most common businesses among those with consumption under $2 a day...” Perhaps the Banerjee-Duflo developing-country ‘middle class’ behave like the poor because they are poor, and they are unaware that, having been defined as ‘not poor’ by the World Bank, they should behave differently.

Finally, Banerjee-Duflo conclude that “The single most important characteristic of the middle class seems to be that they are more likely to be holding a steady job.” The instance they cite from their field trips is of a relatively better-off village in Udaipur, Rajasthan:

There are very few people who live on more than $4 per day in our Udaipur sample but we accidentally met several of them on one of our trips.... Signs of their relative well-being were apparent: a corrugated metal roof, two motorcycles in the courtyard, and a teenager in a starched school uniform. It turns out that, in the families we interviewed in the village, everyone of working age was working in the local zinc factory.

It would appear that zinc factory workers lie in the upper range of the Banerjee-Duflo middle class. Perhaps that should have alerted them to the fact that something was seriously amiss with their definition.

India’s 6 per cent middle class

(ii) The second approach, of setting the lower threshold at around $10 PPP, is taken by a number of studies.57

Table 1: Some Estimates of India’s Middle Class

Author

Definition of Middle Class* (Consumption in $PPP)

Estimated Size of India’s Middle Class (for -- Year)

Projected Future Size of India’s Middle Class

Kharas

$10-$100 per capita per day

5-10 per cent of population (2010)

90 per cent in 2040

Ernst & Young

$10-$100 per capita per day

5 per cent of population (2010)

475 million by 2030

Goldman Sachs

$16-$82 per capita per day

5 per cent of population (2008)

“Vast majority” by 2040

McKinsey Global Institute

$64-$322 per household per day

5 per cent (2005)

41 per cent, or 583 million by 2025

NCAER (2004)

$8.2-$41 per capita per day**

5.7 per cent (2001-02)

 

Meyer and Birdsall

$10-$50 per capita per day

6 per cent, or 70 million people (2009/10)

No projection

Milanovic (2012)

$10-$22 per capita per day

Very small (2005)

No projection

Edward and Sumner

‘Global secure consumption layer’ $10-$50 per capita per day

Less than one per cent (2010)

No projection

* Except for Edward and Sumner; see text.
** Household income of Rs 2,00,000-Rs 10,00,000 per year, converted to per capita per day $PPP for 2001-02.


As can be seen from Table 1, these studies estimate the present size of India’s ‘middle class’ at 6 per cent or less of the population. The last two, using the World Bank database rather than India’s NSS or NCAER, arrive at even lower figures than the rest. (Note: Edward and Sumner emphatically do not use the phrase ‘middle class’, because, as they correctly note, “‘class’ is a social and political identity not necessarily linked to estimates of expenditures per capita.” Instead they refer to ‘consumption layers’, of which the layer ‘global secure’ approximates the category being described by the other studies.58

These studies arrive at low estimates for the size of India’s middle class, despite the fact that $10 PPP per day is quite a low international cut-off for defining the ‘middle class’: it is the average of poverty lines in Portugal and Italy, and is considerably below the poverty line of the US. Nevertheless, using this measure, India’s ‘middle class’ is to be found in the top 10 per cent, or even less, of the population.  “In other words,” the World Bank notes, “being classified as middle class at the global level is equivalent to being at the top of the distribution in many low-income countries.”59 Meyer and Birdsall conclude that

if to be middle class is to be reasonably secure in material terms, then India’s ‘middle class’ constitutes less than 100 million people, and is crowded into the top decile along with the much smaller number of “rich” households. In that sense India does not yet look much like the middle class “societies” of Latin America, let alone of the mature western democracies.

Even more emphatically, Milanovic:

Clearly, there are millionaires in India as well as other people who are quite rich, and the same graph with percentiles (rather than ventiles [i.e., groups of 5 per cent]) would have shown the top end of India’s income distribution to be a little bit higher, but even in that case it would not go past the global 80th percentile. So these rich Indians, as a group, barely match the average income of middle-class Americans. Note that these are indeed very large groups of people and that the averages may conceal some very high individual incomes: if I use ventiles, each Indian ventile consists of some 60 million people, if I use percentile each percentile is 12 million people. The latter figure is equal to the population of the municipality of Mumbai. But the key point is that although there are in India some very rich, and even some extravagantly rich people, their numbers are not statistically significant, and the number of people who have the standard of living of the American middle class is still very limited.

While Kharas, Ernst & Young, Goldman Sachs, and McKinsey do estimate India’s middle class at present to be small, the main focus of their studies is their projection that India’s middle class will expand very rapidly in the coming years. How do they arrive at these projections?

Typically, they take the existing distribution of consumption; they project some rate of growth of national income; and finally they assume that the income distribution will not become more unequal, so that the entire curve simply shifts to the right. Since the vast majority of people are at the lower end of the existing income distribution, the number of those spending over $10 PPP/day must at some point suddenly boom, given the assumptions made.60

In passing, it is worth noting that, if indeed India were to develop a giant middle class with the monstrous pattern of consumption typical of its counterparts in the developed world, it would trigger many other political and environmental consequences for the world. Yet none of the studies celebrating the rise of the Indian middle class feels the need to explore these implications.61

It is unlikely that anyone thirty years hence will check whether or not these scenarios were borne out; and even if someone were to so check, no one gets penalized for wrong projections, so it is safe to predict almost anything fashionable today. The downturn in the BRICs economies during 2013 did not embarrass Goldman Sachs or its economists:

Thirteen years ago, Jim O’Neill, a chief economist at Goldman Sachs, coined the term “Brics” to describe the four countries he predicted would be among the next global economic giants: Brazil, Russia, India and China. The acronym caught on, to an extent that O’Neill describes as “flattering” – but he also feels “irritated” by having to defend his theory.

“Someone has just written a book called Broken Brics, and I’m just like, yawn,” he says, collapsing into his seat with feigned exhaustion. “If I dreamt it up again today, I’d probably just call it ‘C’,” he adds, perking up. “China’s one and a half times bigger than the rest of them put together.”...

I’m meeting him at a private members’ club in central London to discuss his newest acronym, Mint, and the accompanying Radio 4 series. “Mint” stands for Mexico, Indonesia, Nigeria and Turkey: four countries that O’Neill forecasts could be among the ten largest economies in the next 30 years. It was originally Mist, with the S standing for South Korea – but the BBC convinced him that it would be better to include Nigeria.62

This disarming unconcern with the real world is shared by several studies, although they generally insert provisos in their footnotes. For example, Kharas tells us: “I have ignored natural resource constraints and the effects of climate change in this scenario. This may prove to be quite unrealistic but to take these into account would require a far more sophisticated model of global growth.” Apparently, the inability to create a realistic scenario should not constrain one from creating a scenario.

 

NEXT: III. The Reality: Gaping Inequality

 

Notes:

41. A few of them comment on the social role of the middle class, but only after having defined it on the basis of income/consumption layers. (back)

42. Another possible method of estimating the size of the middle class is to find out how many people consider themselves to be middle class. The available data on this question are not very useful. The World Values Survey does include, as part of its periodic surveys, the question “Would you describe yourself as belonging to the upper class, upper middle class, lower middle class, working class, or lower class?” Data regarding India are available on the website (www.worldvaluessurvey.org) for years 1990, 1995, 2001, 2006, and for some year during the period 2010-13. The latest data show that 37 per cent of those surveyed considered themselves to be lower middle class, and 18 per cent upper middle class; whereas in 1995, 31 per cent considered themselves lower middle class, and 25 per cent upper middle class. While more than half the surveyed thus termed themselves ‘middle class’, this figure has not grown at all over time. At any rate, the survey is not focussed on this question (which is just one out of more than 200 questions asked), and is of very limited use for our purposes.

A World Bank study (D. Narayan, ed., Moving out of Poverty: The Promise of Empowerment and Democracy in India, 2009. Overview at http://siteresources.worldbank.org/INDIAEXTN/Resources/Reports-Publications/366387-1244786182191/MOP-India-Overview.pdf.) addressed a related question, namely, what people consider to be poverty. It surveyed 30,000 villagers in 300 villages of U.P., A. P., West Bengal and Assam. Discussion groups of local people were asked by the study teams to identify the point at which households were no longer considered poor; this was used to draw a community poverty line (CPL). Not surprisingly, the study found that the official poverty lines (OPLs) systematically underestimated poverty. When the discussion groups in the villages were informed of the OPL in their state, many participants jeered and said that it was impossible to live on such a small income. Many expressed anger that the better-off people expected them, the poor, to live such a meagre existence. In the four states, 81 per cent of the villages placed the CPL above the OPL, and the gap was sizeable. (back)

43. World Bank, Perspectives on Poverty in India: Stylized Facts from Survey Data, 2011, p. 71. (back)

44. A. Sengupta, G. Raveendran and K.P. Kannan, “India’s Common People: Who Are They, How Many Are They, and How Do They Live?” EPW, 15/3/2008. (back)

45. World Bank, Perspectives on Poverty in India, p. 69. (back)

46.Vanneman and Dubey, 2013. (back)

47. See Vanneman and Dubey, 2010. Actually, Vanneman and Dubey, 2013, does not use a per capita measure, since such a measure does not reflect the economies of scale obtained by the members of a larger household. They therefore calculate a different measure, “equivalized annual income”, by dividing the household income by the square root of the number of members of the household. However, most studies use the per capita measure, and so we have quoted it from Vanneman and Dubey’s online data (at http://www.sup.org/html/book_pages/0804778248/appendices/Appendix-A.pdf ) to make comparison easier. (back)

48. Using the latest revision of PPP rates for 2004, the median per capita income comes to $1.15/day; the lower of the two World Bank poverty lines is $1.25/day. (The PPP rate for 2004 was Rs 13.65/$: Alan Heston, Robert Summers and Bettina Aten, Penn World Table Version 7.1, Center for International Comparisons of Production, Income and Prices at the University of Pennsylvania, November 2012.) (back)

49. United Nations Development Programme (UNDP), Human Development Report 2014. (back)

50. The $1.25 figure is the median of the official poverty lines of the 15 poorest countries; the $2 figure is the median of the official poverty lines of 70 countries. However that does not make either of them any less arbitrary. (back)

51. Sanjay G. Reddy and Thomas Pogge, “How Not to Count the Poor”, http://www.columbia.edu/~sr793/count.pdf. (back)

52. Thomas Pogge, “Where the Line is Drawn: A Rejoinder to Ravallion”, http://www.ipc-undp.org/pub/IPCOnePager69.pdf (back)

53. One study stands alone: Surjit Bhalla (http://www.oxusinvestments.com/files/pdf/NE20090106.pdf) says that the middle class starts at a lower threshold of $10 PPP per day, but still finds that the Indian middle class is very large – 38 per cent of the population in 2006. But then Bhalla has devised his own data set through a unique procedure which sizeably inflates estimates of incomes at every level. Despite the fact that his procedure is not accepted even by pro-establishment economists (see, for example, http://www.iie.com/publications/papers/ravallion0203.pdf and https://www.princeton.edu/rpds/papers/pdfs/deaton_worlds_poor.pdf),  his work is cited by those who wish to downplay poverty and promote neoliberal policies. (back)

54. M. Ravallion, “The Developing World’s Bulging (But Vulnerable) “Middle Class”, 2009. (back)

55. Ravallion explains that if one were not to make such a distinction, one would get absurd results. However, since the fundamental justification for the PPP measure is that it enables meaningful comparisons across all countries, developed and developing, Ravallion’s term ‘developing world middle class’ questions either the PPP measure or the claim that there is a sizeable middle class in the developing countries; it cannot support both. (back)

56. A. V. Banerjee, E. Duflo, “What is middle class about the middle classes around the world?”. (back)

57. It is worth noting that there is no overlap between the ‘middle class’ of the studies described below, and the ‘middle class’ of Banerjee-Duflo; and there is only a small overlap with Ravallion’s definition. (back)

58. The other layers are the ‘global poor’ ($0-$2), ‘global insecure’ ($2-$10), and ‘global rich’ ($50+). (back)

59. World Bank, Global Economic Prospects 2007, p. 74. (back)

60. Kharas assumes that India (as well as China, and many other countries in Asia) will ‘converge’ with the developed countries, but he himself acknowledges that Brazil, with a much higher per capita income than India, stopped ‘converging’ decades ago. A slightly longer memory would remind us that Argentina was considered virtually a developed country till the Great Depression hit it in the 1930s, and it slid into the upper ranges of the Third World. (back)

61. By contrast, imperialist intelligence agencies actively study questions such as middle class growth and the growth of demand for food, fuel and water, with a view to shaping outcomes in favour of imperialism. The US National Intelligence Council asserts: “It is our contention that the future is not set in stone, but is malleable, the result of an interplay among megatrends, game-changers and, above all, human agency. Our effort is to encourage decisionmakers—whether in government or outside—to think and plan for the long term so that negative futures do not occur and positive ones have a better chance of unfolding.” See National Intelligence Council, Global Trends 2030: Alternative Worlds, December 2012. (back)

62. Sophie McBain, “Jim O’Neill interview: Why the Mints come after the Brics”, New Statesman, 23/1/14. (back)

 


 

| Home| About Us | Current Issue | Back Issues | Contact Us |

All material © copyright 2015 by Research Unit for Political Economy