What We Do...

Leadership

Innovation

Team Coaching

Sports Coaching

Executive Coaching

Mediation

Change Management

Article

You're All Class

07-05-2009

YOU’RE ALL CLASS

A February 2009 article in The Economist magazine by John Parker was entitled “the burgeoning bourgeoisie”. It described a massive increase in the number of people in the so called middle class, mainly in China, India and some areas of South America. Definitions of the middle class vary, but include one where they have disposable income of at least one third having paid all living expenses. Another definition (perhaps more applicable to third world countries) is that persons in the middle class earn between $10 and $100 per day. Either way, this group of people has a steady income stream, usually as a result of regular employment.

The middle class traditionally sat between the aristocracy and the peasantry in former times. Its prominence became evident in the latter part of the middle ages in Europe (14th and 15th centuries). It consisted mainly of skilled artisans, small businessmen and traders.

The first surge in the growth of the middle classes was in 19th century, mainly in Western Europe, England and the United States. This followed the industrial revolution. The middle classes became wealthy and influential at the same time as the hereditary aristocracy was losing sway. As a group the middle classes favored democracy and free trade as they were consistent with the growth and development of innovation and commerce. Democracy also wanted to wrest control (both political and financial) from the traditional ruling classes in Europe. The middle classes also dominated government bureaucracies and the professional classes.

Riding the wave of technological advance during the 20th Century, the more successful members of this group became enormously powerful economically, valued education and progress, and exerted great political influence (sometimes with a sinister flavour eg. Nazi Germany). Recent advances in communication via the internet have facilitated exchanges of views amongst this large group.

There have been two recent “surges” in the growth of the middle class. The first was the so called “baby boomers” of mainly western civilizations. This occurred between 1950 and 1980 and the next surge in the growth of the middle class is from 1990 that is still in progress. This has occurred mainly in China and India as they have become prominent world economic powers.

In China and India cheap labour available for manufacturing resulted in manufactured goods which have been very successfully marketed world wide. The resultant expansion of the economies of these countries has resulted in a general increase in incomes, producing the so called “surge” in the size of the middle classes. This process usually continues for approximately 2 decades. At around this time the prices for labour have increased and these countries then have to compete with more established manufacturing countries.

Parker believes that the numbers of persons in the middle class world wide at the moment exceeds 2.5 billion. This large number provides a ready market for manufactured products as well as a source of investment in new enterprises and technology. Indeed, the middle class is seen by the World Bank as the most significant factor in overcoming the current economic crisis.

What happens then when a recession of the magnitude of the current one affects this group? It now constitutes something like 62% of the population of China, for example. They often enjoy an expensive life style and have borrowed to support this.

As one who has previously worked in mental health the possible psychological sequelae of the current recession holds some interest. These will presumably worsen the longer the current financial situation persists.

During the two world wars rates of depressive illness actually fell across most cultures. The accepted wisdom is that people were galvanized against a recognizable and clearly defined enemy. There was a common purpose. This is called the “cohort effect” and it also describes an increase in rates of depression in those born after 1960.

The global economic crisis has some features in common with terrorism. There is no clearly defined enemy apart from some woolly notions such as “ the excesses of capitalism”. There is no target for blame or anger. There is no obvious culprit.

In countries more severely effected by the current recession eg. Iceland and Ireland, anger and fear find their expression in anti government sentiment. People “blame” the government for the current crisis. Political figures are clearly defined and recognis able. They therefore become an obvious target in these circumstances.

In my opinion there are many possible psychological outcomes of the current crisis. The middle classes, especially those most recently to join this group, have most to lose. The seriously wealthy will survive, despite temporary discomforts. The seriously poor don’t have far to fall.

1 It is likely that rates of stress related problems will increase and these include depressive and anxiety disorders.

2 Self treatment is common in these circumstances so the drug and alcohol problems could well increase.

3 Mass fear and disillusionment might well be expressed towards current systems of government, resulting in increased political instability. This is more likely to occur in countries where democracy is not as well established.

4 A priority of national interests is likely to reverse previous trends towards “globilisation” of finance and markets. This could act to weld people’s fears, expressed in beliefs, that particular nations are somehow more responsible for the current situation than others.

5 In the context of this crisis, governments might well consider ways of moderating the affects of future recessions. This might focus on certain groups, eg. banking and finance, as they are seen to be more “responsible” for the current situation. A move towards increased regulation in these sectors is likely.

The situation in China is of particular interest. A dramatically expanding capitalist economy has occurred despite the government of the country being officially Communist. How the fine line between repressive government and the encouragement of commercial expansion is trod will be an interesting scenario to follow. As a major consumer of raw materials, the Chinese economy affects most other economies in the world. As is common when industrialization occurs there has been a shift by many millions of Chinese from rural situations toward the urban manufacturing centres. It is hard to imagine members of the middle class in China opting for a return to a rural life style.

Latest Articles

19-02-2010
Death in the Luge in Vancouver - Is This a Symptom of Something Else?

22-01-2010
Erwin Rommel - Lessons for Leadership and Management in the 21st Century

09-12-2009
Christmas Business

05-11-2009
Functional Foods, Fads or Pharmacy by Another Name

29-10-2009
Immigration: Populate and/or Perish

Work Fit Analysis

Archive

What We Do...

Article

You're All Class

Latest Articles

Newsletter