FYI
Keith Rankin's Thursday Column Whither the Bourgeoisie?
We frequently hear these days about the plight of the middle class, or the
middle classes. But who are the middle classes? Are they simply those people
(or households?) who earn between the median income and the 90th or 95th
percentile? Can we really regard salaried persons as middle class? (After
all, salaries started out as stipends of salt paid to soldiers.)
Historically, the bourgeoisie were urban capitalists: merchants, financiers,
self-employed professionals, manufacturers. The middle classes were
entrepreneurs; they worked for profit, not wages. They came to be seen as
dour, because - unlike the upper (landed) and lower classes - they (being
insecure, with less tangible assets than land) saved like crazy. Because
they ploughed their savings back into their enterprises, or into others'
enterprises, they were seen by the classical economists as the agents
(although not the ultimate beneficiaries) of economic growth.
The classes were defined according to the sources of persons' incomes: land
rent (upper class), profit (middle class) and wages or peasant farming
(lower class). The class system arose because most people received all their
income from a single "fund" (eg the "wage fund").
(You could even define whole nations according to this class system.
Countries like Australia, New Zealand, Argentina and Saudi Arabia, which
derived their income mainly from land, were upper class. Western Europe was
middle class. The Third World was lower class.)
Classical economics predicted that the lower classes would be something of a
reserve army of labour (in perpetual oversupply), while the middle class
capitalists would make the key investments. The upper classes would sit back
and collect the rent, eventually leaving everyone else in penury. As late as
the 1950s, this class division seemed to make sense, both for households and
for nations.
The class system went awry with the emergence of a salaried professional
class, and the replacement of proprietorial and partnership businesses with
the corporate business sector. "Businessmen" became managers. By the 1970s,
the social elite, in fulfilment of Joseph Schumpeter's predictions in 1945
(Capitalism, Socialism and Democracy), were working for wages. (Could any of
us imagine Jane Austen's social elite being employees?)
So, when we muse over the plight of the middle classes, are we musing about
the future of professional employees? Or are we musing about
entrepreneurship? Will those in the vanguard of the brave new knowledge
economies be employees of corporate organisations? Or will they be
electronically connected individuals selling their ideas to the highest
bidders?
Maybe we should bury the class system as a relic of the fading millennium.
The era of the highly paid full-lifetime employee is dying, if not dead.
Those 40-somethings who identify with that kind of career path, and who have
made financial commitments on the expectation of fulltime careers with ever
rising salaries, really do feel a sense of dread. Their perceptions of their
standing in society are determined by both the particular professions that
they are in, and the size of their salary packages. Although their social
status is displayed through conspicuous consumption, their social status
means much more to them than does the mere consumption of goods and
services.
The irony of the present times is that economic circumstances are propelling
them from elite working class towards something more closely resembling the
nineteenth century middle class, with all the insecurities that that
implies.
The key difference is that our worried salarymen will not lose all of their
security. They will not end up in a debtors' prison if their incomes fall in
Dickensian fashion from "20s 6d" to "19/6d" while their expenses remain at
"£1". We have already come to live from multiple income streams.
It is now normal for families to derive their incomes from a variety of
sources; some from wages/salaries, some from profits, some from
rents/interest/benefits (and some from crime). The class system ceases to
have meaning when we no longer depend on income from a single class fund.
The class system vanished:
1.. with the multiple-income household becoming the norm. Many people
receiving entrepreneurial income have partners who receive wage income. 2..
with individuals increasingly working through varieties of contracts, many
of which are much closer to customer-supplier than employer-employee
relationships. An individual with two or more jobs is not unusual. At least
one of those "jobs" might involve some creative activity that might yield a
substantial profit but more likely will not. 3.. with the creation of the
welfare state, and its evolution into a welfare society. Beneficiaries are
analogous to the landlords of the ancien regime. Benefits are paid out of a
social wage fund that represents a return on all our forms of collective
capital: our bequest from nature (read "environment" in place of the
classical "land"), our past social investments, and our present social and
intellectual capital. We are all beneficiaries. We all depend in full or in
part on the public purse. Indeed, those in Treasury who worry about "middle
class capture", acknowledge that our well paid salarymen and women receive
considerable support from our social wage fund.
We are all landlords on account of our public property rights. That's why
our lives are will continue to be much more secure than those of the
Victorian-era bourgeoisie. When our income from one private source fades, we
have incomes from other sources to fall back on. Our social wage, as our
most stable income source, protects us from the catastrophic consequences of
economic failure that blighted our past.
When we know that we have at least one secure "income stream" - albeit a
collectively sourced stream labelled "benefit" - then we can take risks with
our private activities. That's what I mean when I see an almost unlimited
set of entrepreneurial opportunities ahead of us. Most of our sources of
"profit" in the future will not return enough to support a person or a
family on their own. Most of us will sustain ourselves in comfort through a
mixture of wages, benefits and profits. Probably, most of us do already.
We have been embracing an economy of uncertainty since the 1970s. The 1980s
were a time of wages/salaries or benefits. The 2000s will be a time of
profits and benefits.
The new economy of uncertainty will be a vast improvement on the career
straightjackets of the 1950s and 1960s. That is, it will be an improvement
so long as private incomes continue to be buttressed by the institutional
apparatus of a welfare society.
We still have a long way to go. We must get rid of the sense of guilt that
arises from our acceptance of benefit income. And we need to make our
welfare institutions efficient. Our social welfare gatekeepers are
beneficiaries masquerading as salaried professionals.
The bourgeoisie is dead. Long live the bourgeoisie.
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© 1999 Keith Rankin
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Thursday Column Archive (1999): http://pl.net/~keithr/thursday1999.html
http://www.scoop.co.nz/stories/HL9908/S00075.htm
