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Wednesday, July 1, 2015
- The rise of the “global middle class” is widely attributed to the gradual eradication of extreme poverty in the developing world, even as the United Nations says that millions of people in countries such as India, China and Brazil have graduated from the ranks of the indigent.
But is there unintended negative fallout indirectly linking poverty alleviation to the current rise in middle class street protests in Brazil, Turkey, Tunisia and Egypt, among others?
Praising Latin America for its success in “lifting millions out of poverty”, Helen Clark, the administrator of the U.N. Development Programme (UNDP), said last week that “protests and events around the world remind us that citizens want a greater say in the decisions which impact on their lives.”
And U.N. Assistant Secretary-General Heraldo Munoz points out that “many of the street protests in Latin America are sparked by a new middle class, increasingly indebted, who aspire for more, and demand quality public services and decent treatment.”
The challenge is to enhance institutions so they can respond to a new high-level intensity, says Munoz, who is also UNDP’s director of Latin America.
The UNDP estimates that more than 80 percent of the world’s middle class will be living in developing countries by 2030. According to the European Union Institute of Security Studies, the estimated size of the global middle class by 2030 will be about 4.9 billion, up from 1.8 billion in 2009.
In an article in the Wall Street Journal last month, Francis Fukuyama, a senior fellow at Stanford University’s Freeman Spogli Institute of International Studies, says in Turkey and Brazil, as in Tunisia and Egypt before them, political protest has been led not by the poor but by young people with higher-than-average levels of education and income.
“The new middle class is not just a challenge for authoritarian regimes or new democracies. No established democracy should believe it can rest on its laurels simply because it holds elections and has leaders who do well in opinion polls,” says Fukuyama, author of ‘the Origins of Political Order: From Prehuman Times to the French Revolution.’
And corporations are salivating at the prospect of this emerging middle class because it represents a vast pool of new consumers, he notes.
Dean Baker, co-director of the Washington-based Center for Economic and Policy Research, told IPS, “I wouldn’t claim to be a great expert on this, but I would expect that as societies become richer and populations more educated, there will be increased demand for democracy.
“I’m sure that is part of what we are seeing in Brazil, Turkey, and Egypt, but in each case I am sure the nature of the discontent is more complicated.”
In any case, he said, an increased democratisation of society goes along with greater wealth.
In Brazil, the recent protests were directed at the rising cost of living (including an increase in bus fares), high-level political corruption and extravagant spending on next year’s World Cup soccer tournament, estimated at more than 13 billion dollars compared to the deteriorating state of schools and hospitals in poor neighbourhoods.
The protests have been described as “the awakening of the new middle class” emerging out of poverty.
Richard Jolly, honorary professor and research associate at the Institute of Development Studies at the University of Sussex, told IPS, “It’s certainly an interesting theme though one to be written about with many question marks, rather than dogmatic certainties.
“I hope you will also consider some reference to the recent rise of ‘assertive religion’ – meaning fundamentalist versions of Christianity and Judaism, as well as Islam, which Emanuel de Kadt has just published a book about, with the same name.
“I think also of a book written decades ago which argued that revolution starts not when the poor are ground down in poverty but after some improvements in living standards which stirs hopes and demands for something more,” said Jolly, a former assistant secretary-general at the U.N. children’s agency UNICEF.
Dr. Yilmaz Akyuz, chief economist at the Geneva-based South Centre, however, remains sceptical.
“I find the rise of the global middle class story not very convincing,” he said.
Akyuz said it is closely linked to the “rise of the South” story – “something I questioned in various papers I have written since 2010 (see e.g. The Staggering Rise of the South? or Waving or Drowning: Developing Countries After the Financial Crisis)”.
It is now increasingly understood that this is a myth, said Akyuz, a former director and chief economist at the U.N. Conference on Trade and Development (UNCTAD).
He pointed to two developments: declines in poverty and increased income and wealth inequality. “But these two do not give us bigger middle class,” he argued. “Bringing the poor above the poverty line would not make them middle class (as conventionally defined).”
This, together with greater inequality would produce hollowing out since the top would be gaining at the expense of the middle class.
Middle classes in the South are increasingly internationalised in vision and better informed through access to the internet, social media, etc. This is why Turkish Prime Minister Recep Tayyip Erdogan called social media a menace, he said.
At the same time, governments in countries heavily dependent on foreign capital and vulnerable to financial instability are well aware that increased political instability could lead to capital flight and economic collapse, Akyuz said.
“This exerts a restraining influence on them against rioters. Turkey cannot become an Iran or even Malaysia because, inter alia, it lacks natural resources,” he noted. “If middles classes run away with their money, the economy could collapse.”