The two economic developments that have garnered the most attention in recent years are the concentration of massive wealth in the richest one percent of the world’s population and the tremendous, growth-driven decline in extreme poverty in the developing world, especially in China. But just as important has been the emergence of large middle classes in developing countries around the planet. This phenomenon—the result of more than two decades of nearly continuous fast-paced global economic growth—has been good not only for economies but also for governance. After all, history suggests that a large and secure middle class is a solid foundation on which to build and sustain an effective, democratic state. Middle classes not only have the wherewithal to finance vital services such as roads and public education through taxes; they also demand regulations, the fair enforcement of contracts, and the rule of law more generally—public goods that create a level social and economic playing field on which all can prosper.
The birth of new middle classes all over the world therefore qualifies as a triumph of capitalism and globalization. But it is a fragile victory. For the world now faces a period of prolonged slow growth. That is bad news, not only because it could halt the impressive declines in poverty but also because it could set back hopes for better governance and fair-minded economic policy across the developing world, harming both middle classes and the far larger populations of poorer people in the developing world who are the chief victims of weak or abusive governments. The rich world could lose out, too, since improvements in governance allow poor countries to collaborate with the international community in managing the risks posed by pandemics, terrorist groups, climate change, waves of political refugees, and other regional and global problems. Governments in the developing world and in rich countries alike would do well to nurture and protect the legitimate interests of the new middle classes.
WHO IS MIDDLE CLASS?