I recently got a request for an interview by the editor of a business magazine, Investor.ge. The magazine is produced by the American Chamber of Commerce in Georgia (the country). For those aware of recent events on The Middle Class Forum this is quite ironic. There is a recent commenter out there rolling his eyes over the fact that a magazine called “Investor.ge” wants my insight based on what she has read here. The editor gave me four questions in preparation for the interview. Here is my response to the first question.
(1) To begin at the beginning, how do you define the middle class? Do you think it is beneficial to have different definitions when talking about it in an economic, social and culture contexts?
I define the middle class by first defining the system of resource distribution (economics) that a society should have. We can treat this like a dichotomous key with two steps (I warned you I’m a science geek).
The first step is determining whether society should have markets or not. The argument against markets is we naturally evolved as an altruistic species that functioned communally in small social bands. It should be noted that communism differs from communalism in that the former is centralized, very unlike our natural roots as a decentralized species. With communalism, like the modern kibbutz, everyone becomes the middle class.
I favor markets as the basis of resource distribution and defining the middle class, but we should never lose sight of our natural roots as an altruistic species, in stark contradiction to what Thomas Hobbes and some other Enlightenment philosophers might say on the matter. Human nature is variable, encompassing both greed and generosity, but greed as an adaptive social trait is an unnatural offspring of civilization.
I favor markets despite our natural altruism because we also naturally evolved as a curious and flexible species. This gave us great diversity and adaptability and enhanced our survival. Markets nurture this curiosity and flexibility. Markets encourage the liberty to specialize and, with that specialization, the progress we associate with civilization. However, resource distribution via markets can be driven by either one of two conditions, merit or greed.
By definition greed gladly accumulates resources whether they are merited in an exchange or not. Receiving more resources than merited implies other people receiving less. An economic system that legitimizes greed will necessarily result in greater wealth disparity than merited. In such a system the middle class will fall along a curve skewed towards the poor, such as you find with feudalism or western colonialism.
To play devil’s advocate for a moment, some types of progress depend on large concentrations of resources. The pyramids could not have been created in a merit based system of resource distribution. In contrast, you would not have had everyone in middle class America driving Model Ts at the turn of the twentieth century, save for Henry Ford’s pioneering decision to make resource distribution more merit based. I’m for the type of progress that gives most ordinary folk Model Ts, rather than pyramids for entombing icons. Hence, I’m an advocate of merit based market exchange.
You would expect merit to be normally distributed in a society. Therefore resource distribution among the population should reflect a normal (Bell) curve with the middle class forming the huge center, tapering off to smaller populations of rich and poor. That is how I normatively define the middle class, based solely on economics.
There are political and cultural implications behind merit based economics, but I do not think they provide a satisfactory basis for defining the middle class. Our inherent curiosity and flexibility makes us all vastly different. Equating economic status with certain types of education or social status would constrain our overall liberty. However, in a merit based system the extremes in educational and/or social status would shrink, as these extremes depend on extremes in resource distribution resulting from greed.
Tags: Free Market Merit, Middle Class Culture, Middle Class Economics, Middle Class Politics
