By GEFIRA Foundation
Oct 6, 2017
Aristotle was the first to point out how a thriving middle class is a condition sine qua non for a functioning democracy: “A constitution based on the middle class is the mean between the extremes of the rule by the rich and the rule by the poor.” That the middle [constitution] is best is evident, for it is the freest from faction: where the middle class is numerous, there least occur factions and divisions among citizens” – For those who possess the goods of fortune in moderation find it “easiest to obey the rule of reason”. . When we speak of the middle class we therefore mean the median group of society, the one representing the largest group of people by income. To clarify with a simple example, in a population of 2000 people, if 500 earn 1000€ a month, 1400 people earn 2000€ a month and 100 earn 10000€ a month, then the 1400 people are the ”middle class”.
A prosperous, educated middle class is the best bulwark against extremes. Ganesh Sitaraman of Vanderbilt University argues: “From the time of the ancients, statesmen and philosophers were deeply worried about the problem of economic inequality. They worried that either the rich would oppress the poor or the poor would seek to confiscate the wealth of the rich, and the result would be violence, instability, even revolution.” Sitaraman worked for US Senator (Dem) Elizabeth Warren from 2011 to 2013. If Democrats had bothered listening to him and looking at what is actually happening, maybe Hillary Clinton wouldn’t have needed to write her own book “What Happened”, trying to explain her electoral debacle.
The Western middle class is necessary for political centrism
After the Second World War, the Western world saw itself reaching new peaks of prosperity. As the Western middle class prospered, political extremes faded. By the 1990s political extremes in the form of fascism from the right and communism from the left had been reduced to insignificance. Center-right “liberals” and center-left “social-democrats” both moved towards the center of politics to appease the large, moderate electorate i.e. the middle class. As the economic issues lost importance in the political debate, the focus shifted to social ones like gay rights or climate. Center leaning political parties were so indistinguishable on core issues that it often made little difference for voters.
In the 1990s however, a game changing process started whose name was globalization in the form of free capital flow, outsourcing and, to a lesser and yet significant extent, free movement of people. This entailed problems: financial crisis from capital mobility, ghettos, crimes and then even terrorism from immigration. What few noticed was also the economic impact of globalization on the Western middle-class: it began to collapse. The winners were the elites and the now growing middle-class of the developing world.
Paying attention to Dr. Milanovic’s studies on inequality over the years could easily help predicting what was going to happen. Opposition in the 2000s started to grow but it was too insignificant little to have an impact on political cycles.
A decade has passed and it is now exploding: Donald Trump won the US elections on an economic nationalist ticket, while on the left Hillary struggled to contain the socialist Sanders. In the UK, Theresa May is trying (and failing) to adopt an approach similar to Trump’s, which clashes with the traditional elitist Tory message, while the socialist Jeremy Corbyn ousted centrist Blairites from the command of Labour. In France, the centrist Emmanuel Macron won, yes, but the share of the extremes (left and right combined) went from 31% in the first turn and 0% in the second turn in 2012, to almost 50% in the first turn and 34% in the second in 2017. Half of the country is fed up and only the difference on what extreme approach to adopt does keep centrism alive so far. Italy and Spain share similar situations, where the center-left and center-right parties, that at their peak could muster 80% of the votes, now have shrunk to barely above half. Germany with its approaching elections seems so far partially immune, but even here the combined share of extremes is likely to have doubled since the last elections.
Over 2000 years later, Aristotle’s theory still holds good: the middle-class voters are the moderate ones; if the middle-class shrinks, slowly but surely it will show in the electoral results. The survival of centrism depends on the prosperity of the middle-class.
“Populism” is here to stay
If our reasoning is correct then there’s only one solution to the “populist upheaval” of the economically displaced former middle-class. It shouldn’t be a surprise to anyone that the message that carries the day is: “Make the Western Middle-Class Great Again.” Will it happen? After all, the survival of the liberal elite, occupying the center of politics for the past 70-plus years is at stake. If we have to look at the reaction of the liberal elite, flailing angrily against “fake news” and “post-truth politics” and consequently using that as an excuse for repressing dissent with censorship, then the answer is clearly no. Unfortunately for the elite, the collapse of the middle-class is real and not stopping any time soon as long as globalization continues. We’ll see why in a bit. The political repression, if we stick to Aristotle, means that we are moving towards the oligarchical phase, where the rich rule; a dangerous path leading to revolution.
Why can’t the elite fix the middle-class and thus save democracy? They are certainly educated enough to read Aristotle, and IMF’s Lagarde at Davos 2017 (the biggest aggregation of elite individuals) warned about the suffering of the middle-class, so there’s a degree of awareness. She also called for some degree of compensation for the losers of globalization. So why is it not happening? The answer is, once again, globalization.
It is the ideology of the elite and they adhere to it in its totality. As such, they don’t care about the Western middle-class, the world is their ostrich. They have zero loyalty towards their countries, often hold dual-citizenship and marry trans-nationally. You will hear from them answers like: “The West? So what? Global GDP is growing!” or “The global middle-class is growing!” It matters nothing to them that they swear on constitutions or God to serve the “nation”. They resent Trump’s “America First”. The question is when will this disloyalty towards their own countries be termed as treason. It still does not matter to them. While the ground under their feet, their core support is crumbling, the globalist elites’ focus is on rather trivial issues like “diversity” or the “gender gap”.
The “compensation for the losers” of globalization is also not going to happen or never in the size needed to re-invigorate hundreds of millions of individuals of the middle-class. No centrist party makes it a core element of its policies to begin with. Even if they did, it would require a significant increase in the taxation of high income individuals and their wealth but, thanks to globalization and capital mobility that results in offshore tax havens, it’s something that states can’t touch. Does anyone really believe that the Western globalist elites would bring back its offshore wealth and enact a heavy taxation on it?
In conclusion, despite the fact that the survival of the liberal centre depends on the economic well-being of the middle-class, the liberal elites do not care enough to salvage it. Their attitude towards the issue is a mix of sufficiency, contempt and plain unwillingness to change a system that they perceive as beneficial to them.
Sticking once again to Aristotle, revolution seems inevitable. For democracy to survive, the winners of the revolution should do what the current elites refuse to do: rescue the middle-class. Otherwise we will see oligarchy or the tyranny of the poor.