The Rise of the Middle Class is one of the most inviting of all the stories told about emerging markets. The ‘middle class’, a rather humdrum label when applied to people in Middlesex, Mannheim or Maine, is transformed by a quick, exotic prefix of ‘African’, ‘Indian’, or ‘Chinese’. Suddenly it carries three alluring promises.
The first is of social change. This new middle class, we are told, will demand good, or at least better, governance, they will hold elected powers to account, and they will demand improvements in infrastructure, public services and goods. Our narrators don’t always include the reasons why the middle class are so keen on, and good at getting democracy, but improved education, greater awareness of rights, and aspirations to property ownership are commonly stated, or implied to be at work.
The second thing we know about the new middle class is that they like buying things, especially metal and plastic things: fridges, televisions, computers and cars. The middle class here are less political but more profitable, moving quietly in their millions through a series of income brackets, each one bringing a new, more expensive rectangular box1.
The third promise is perhaps the most magical of all, and that is scale. There are simply so many of these new middle classes. McKinsey identify 2 billion ‘middle class’ inhabitants of emerging markets. China has more ‘middle class’ consumers than any country except the USA2. Latin America saw a 50% rise among the middle class between 2003 and 20093. There are now, it is written, over 300 million ‘middle class’ Africans4.
All of these promises are worth examining, but it is the last one that raises the most immediate questions. If millions of people are becoming middle class, what exactly is the nature of this transformation? What is middle class – and what is its opposite? What are the criteria that we are using to define someone who has crossed the line?
Pursuing this question just a few yards down the road, you immediately find some interesting differences in definition5. McKinsey use the figure $10 a day6 to define when someone enters the ‘consuming class’ – the point when they can make more ‘discretionary purchases’ like fridges and televisions. The African Development Bank’s definition is much wider-ranging, and distinguishes between lower middle class ($4 to $10 a day PPP), upper middle class ($10 to $20 a day PPP), whilst also including those earning $2 to $4 a day in their figures. The financial institution Nomura meanwhile point to $6,000 per annum (or $16 a day) as a critical figure – above which demand for consumer goods increases rapidly7.
Even if it can be agreed, though, income alone, does not seem a very satisfying definition. What money means – how you spend it, how it frames your plans and approach to life – will be affected by comparisons: comparisons across time and across your peers. If you earn $4, 000 in a very unequal country, such as Nigeria, with very visible affluence and poverty, you are likely to value and spend the $4, 000 differently to someone in a more equal society, such as, for instance, Vietnam. Likewise, if you live in a country that is soaring economically, and where your income has recently doubled to $4,000, you will see and spend this money differently to someone living in a country that has been stagnating economically and whose income has barely risen in recent years. Although many descriptions of the new middle class imply they are on a smooth upward path, in reality progress can be far more stuttering, and the journey is not necessarily one-way. It has been estimated, for instance, that 60% of those classified as ‘middle class’ in India are vulnerable to slipping back below the poverty line8.
We might also want think about what else defines middle class, beyond cash alone. This is certainly common practice in emerged markets. From the social grades used in marketing through to the sociological models of capital used by Pierre Bourdieu, class has been defined as much more than money. Class considers our educational resources (formal knowledge and qualifications), our cultural resources (more informal, ‘softer’ forms of knowledge such as aesthetic tastes) and our social resources (the connections we have made and can use). These things matter of course equally among the new middle classes. We might choose to classify the growing number of Indian women with more than in $4,000 in household incomes as middle class. But there will be significant differences in the degree to which they can use this income to pursue their own desires and ambitions. A woman in a state such as Kerala, for instance, is likely to have more social and educational capital than a woman in a state like Uttar Pradesh, as a quick glance at data on female education and family sizes reveals9. We should be careful not to omit these dimensions, which are critical to understanding class, simply because they are harder to spot than income differentials.
This touches on another dimension to consider when thinking about the new middle classes. Most of the definitions in circulation address individual income and wealth. This information becomes much more useful, though, when you can compare it with the public resources at people’s disposal. An income of $4,000 will feel, and will be spent rather differently in a society where electricity supply is erratic, where the state does little to protect you against crime, where there is no free quality primary education or accessible healthcare. A few of the ‘new middle classes’ live without any of these concerns, but many are living with at least one of these gaps in public resources; and some with all. This has immediate implications for their daily lives, concerns and aspirations, as well as how they spend their incomes. How much of the 10 dollars they may earn each day must be spent on plugging the gaps10? How do you use a fridge when power is intermittent or your car when the city’s roads gridlocked? These questions can have immediate implications for those hoping to sell to the new middle class. In India, for instance, a growing number of the fridges being bought are not electrical, as local manufacturers like Mitticool produce fridges based on traditional clay storage, which bypass the problems of accessing a reliable power grid.
It’s also worth considering how the markers of ‘middle class’ are liable to change – not least in response to the numbers of people entering the middle class. As middle class incomes become the norm, rather than a niche, how will behaviour and desires change? What sub-groups and conflicts will arise? What new rites of passage and markers of distinction will matter? For instance, there are already signs that those with middle class incomes are looking to spend more of their money on experiences, rather than the physical goods that traditionally define the category.11
This tips us into the further, final question of how this new middle class think about ‘class’ themselves. How many of the millions we are welcoming into the middle class fold would view themselves as middle class? (And how many would think about class at all?) It’s very striking, for example, that in Brazil the doubling of ‘the middle class’ (from 15% in the 1980s to over 30% today) has been accompanied by a burgeoning confidence of working class, popular culture. I have met many Brazilians who have ‘middle class’ incomes and who are keen to emphasise their connection to their roots, and, at times their distance from the established upper middle class, whose consumption they can see as rather wasteful12.
If you visit areas of Brazil that were once favelas, and meet the growing numbers of ‘middle class’ residents, people there often identify strongly with the positive values of the local community and with its roots as a working area. They may talk with equal pride about the ways they are engaging with traditionally middle class life (through improved education, infrastructure and career opportunities) and the ways they remain outside it.
In Heliopolis, Sao Paulo I’ve heard several times a story that seems to embody this dynamic. A few years ago the architect Ruy Ohtake had told the media that Heliopolis was the ugliest part of the city. The residents replied that if he felt this way, why didn’t he come and help them to improve it. To his credit, Ohtake agreed, and the results now stand on the main streets: the bright colours associated with working class Brazil, painted on to public housing and community centres with the help of one of the country’s most famous and glamorous architects. In Heliopolis, and beyond, millions of previously marginalised Brazilians have been growing in confidence and influencing public life. Whether they are ‘becoming middle class’ is another question.
1 In 2000, for instance, just 1% of new cars were bought in China. Today it is well over 10% and China is predicted soon to be the largest market in the world.
2 Homi Khara, “The Emerging Middle Class in Developing Countries”, OECD Working Paper No.285. January 2010
3 Taken from the world Bank’s report on the middle class in Brazil and Latin America
4 Taken from African Development Bank Group’s article, here
5 As Homi Khara’s OECD Working Paper acknowledges, “The middle class is an ambiguous social classification, broadly reflecting the ability to live a comfortable life”.
6 This figure is PPP (Purchasing Power Parity) i.e. adjusted to allow for the different cost of buying goods in different countries. There are difficulties in making this adjustment itself – see Homi Khara’s paper for more detail.
7 Before tapering off at $25, 000- Figures cited by Mauricio Cardenas, Homi Kharas and Camila Henao, “Latin America’s Global Middle Class”, The Brookings Institution, April 2011
8 More here
9 Cf. Amartya Sen, “Development As Freedom”, (2001), which explores social and cultural dimensions to development, with regular references to these differences across India’s varied States.
10 The Nigerian government estimate that 60 million of the population have invested in their own, private power generators. In China, a McKinsey survey found that nearly a third of people on comfortable middle class incomes (earning over $12, 600 a year) felt it had been difficult for them to access care in public hospitals
11 For instance, according to the World Bank, in Brazil, 9.5 million people boarded an aeroplane for the first time in the year between July 2011 and July 2012
12 As one marketing consultant, a specialist in this area, explained to me “People don’t want to feel they have lost touch with their roots. For instance I was running a focus group and they saw I had an iPhone and they said ‘does it have flash…does it have TV….what megapixel is the camera?’ and then they asked me how much I paid for it. The whole group laughed and then they got out their phones. They told me ‘we have got all those things and we paid a third of the price; what is wrong with you!’” Conversation with Directors at Data Popular marketing agency in Sao Paulo.
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