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A Few Dollars More

‘‘By almost any measure, the world is better than it has ever been,” Bill Gates wrote last year. His sunny outlook might reflect his own good fortune as the world’s richest man but, despite the economic crisis, neoliberal institutions and organisations that represent workers have similar sentiments. Do they reflect reality, or echo the thoughts of the mega-rich? Philosopher Michel Foucault explains that though discourses describe the world, they are inscribed with power relations, and contribute to the reproduction of that world for the benefit of the powerful when those without power use the language of the powerful and identify with their objectives.

Advocates of neoliberalism, from the World Bank to the media, have spent three decades generating a discourse about the poverty-reducing benefits of global capitalism, lately identifying a rapidly expanding middle class — and the developmental hopes that may bring. The power of neoliberal institutions makes it unsurprising that their discourse shapes the way other organisations think. Even so, it’s disappointing that the International Labour Organisation (ILO), representing the interests of the working class, has taken up this discourse, which is an attempt to obscure the real class relations in contemporary capitalism and to divide the working class: it is a tacit admission that being working class in the developing world means being poor.

In a recent paper, the ILO (1) classifies the developing world middle class (DWMC) as earning between $4 and $13 a day, claims that in 2011 over 40% of workers were middle class and above, and predicts the figure will rise to over 50% by 2017. The definition of the DWMC follows the approach of Martin Ravallion, one of the World Bank’s economists and proponents of neoliberalism (2), 2010. ]]. He places the DWMC at between $2 and $13 a day, just above the poverty line. He made his name in the 1990s by formulating the World Bank’s poverty line — $1 a day — which the UN uses to measure trends in poverty: it is committed to reducing this under the Millennium Development Goals.

The poverty line is a conservative exercise in discourse construction. The New Economics Foundation calculates that “between one in six and one in twelve of all children in households at … the $1 a day poverty line … die before their fifth birthday” (3). But this figure minimises poverty under global capitalism. There are better estimates, $3 to $5 to $10 a day, that give a different picture with far larger percentages living in poverty. The World Bank and UN lines are extremely and unrealistically low. So is the Ravallion-ILO starting point for the DWMC, which defines class according to individual or family income, and is an absolute definition of classes, as aggregates of individuals within the same income band, ignoring relations between classes. This complements neoliberal discourse, presenting the class structure as a hierarchy that can be ascended through hard work and increased income. It obscures relations between classes, and how poverty relates to wealth.

According to the ILO, key DWMC characteristics include smaller and healthier families with better access to electricity, running water and sanitation; higher spending on medical care and education; and greater access to bank credit and health and life insurance. The ILO hopes that an expanding DWMC will contribute to higher rates of economic growth and poverty reduction, entrepreneurial values, and demands for more democratic societies (4). It does not consider middle class support for military coups and dictatorships in Brazil, Chile and Argentina in the 1960s and 1970s, nor current middle class attempts to undermine the democratically elected government of Venezuela. Nor does it mention middle class support for the current military-led counterrevolution in Egypt. In these cases, the middle class felt undermined by workers’ gains, and responded by supporting military offensives against workers’ organisations.

Work does not pay

Supporters of neoliberalism emphasise the virtue of work as a path out of poverty. What the DWMC discourse reveals, however, is that they equate poverty with being working class. It also reveals their contempt for the poor.

In many pre-modern societies labouring to survive was a mark of inferiority. In ancient Greece, labour was incompatible with citizenship: “to labour meant to be enslaved by necessity” (4). But since the emergence of capitalism, work has been held out as the salvation of the poor. Without irony, Britain’s work and pensions minister Iain Duncan Smith argues that “work actually
selwynsets you free”. Yet the fundamental class division across capitalist societies is between those who own and control wealth (including social wealth) and can live off its returns, and those who must sell their labour to survive.

There are divisions between and within social classes. In Britain, the well organised National Union of Rail, Maritime and Transport Workers (RMT) has, through strike action, been able to raise the incomes of some London Underground train drivers to up to £50,000 a year. This contrasts with immigrant cleaners who barely earn a living wage. Yet the drivers are as much a part of the working class as the cleaners: they both sell their labour.

Recent research on the DWMC confirms the relational approach to class. Economists at the Massachusetts Institute of Technology, Abhijit Banerjee and Esther Duflo, note that the DWMC’s defining characteristic is a steady, waged job: Indian middle class families’ signs of affluence are to have a metal roof and send their children to secondary school (5). BBC journalist Paul Mason writes that being part of the DWMC “means often living in a chaotic mega-city, cheek-by-jowl with abject poverty and crime, crowding on to makeshift public transport systems and seeing your income leach away into the pockets of all kinds of corrupt officials” (6). Cambodian workers who in 2013 earned a $75 a month minimum wage are middle class, according to Ravallion, but the Asian Floor Wage Alliance calculates that a living wage — enough to provide for a family’s basic needs — is $283 a month, almost four times the minimum wage (7). Only according to neoliberal ideology does earning $75 a month make you middle class. Before neoliberalism, the DWMC would have been described as working class, albeit members who are less poor because they work longer hours for regular wages. On examination, the DWMC discourse reveals how neoliberalism is based on downward mobility, where previously working class jobs are now considered the preserve of the middle class.

Divide and rule

After the second world war, states in advanced and developing worlds instituted compromises between capitalist and working classes. In advanced economies, these meant commitments to full employment and rising wages. In developing economies, states attempted development through establishing industries and generating new working classes. Since the economic crises of the 1970s, neoliberal policies have tried to dismantle these compromises and all concessions made by states and firms to workers. The rate of exploitation of labour has been raised by creating a global working class that competes ever more intensely against itself.

Neoliberal exploitation strategies are pursued through demobilising trade unions to reduce their ability to represent labour; outsourcing production via networks that span the world to exploit cheap labour; gendering work where women are paid less than men; dismantling welfare such as health provision and education so that workers must depend on the market; driving down wages and intensifying work to create a workforce that needs more (badly paid) work to survive; imposing precarious contracts; and maintaining large surplus populations that cannot find work to increase pressure on workers to accept worse pay and conditions.

Rural populations have been dispossessed of their land, and have migrated to what Mike Davis calls the planet of slums (8). Under these conditions, the global working class has expanded from around 1 billion in 1980 to over 3 billion today, its expansion carefully managed by global neoliberal institutions. One study illustrates how workers in countries that implemented IMF stabilisation agreements were 60% less likely to be in a trade union after the programme (9). The global working class is now highly fragmented along lines of race, gender, occupation, contract, stability and pay rates. Those slightly less precarious and poor are now labelled DWMC.

The discourse appeals to this class to think in terms of individual advancement, rather than building solidarity with other workers. But there are admissions that the DWMC is vulnerable: as Ravallion notes, “Many of those who recently joined the middle class could easily fall back into poverty” (10).

When global elites speak of harnessing the opportunities of the market they mean the ability of capital to exploit the working class. Oxfam recently reported that the richest 85 people own as much wealth as the bottom 50% of the world’s population, and describes the elite as engaged in a power grab. Working class organisations have to see through the discourse, with its promises of slight betterment for a few, and promote a counter-discourse and practice of solidarity.

Ben Selwyn is senior lecturer in international development at the School of Global Studies, University of Sussex and the author of The Global Development Crisis, Polity, Cambridge, 2014.

Notes.

(1) Steven Kapsos and Evangelia Bourmpoula, Employment and Economic Class in the Developing World (PDF), ILO Research Paper, no 6, Geneva, 2013.

(2) Martin Ravallion, “The Developing World’s Bulging (but Vulnerable) Middle Class” (PDF), World Development, vol 38 [[ Kapsos and Bourmpoula, op cit.

(3) “How poor is ‘poor’?”, New Economics Foundation, London, 2013.

(4) Hannah Arendt, The Human Condition,University of Chicago Press, Chicago and London, 5th edition, 1969.

(5) Abhijit V Banerjee and Esther Duflo, “What is Middle Class About the Middle Classes Around the World?” (PDF), MIT Department of Economics working paper, no 07-29, 2007.

(6) Paul Mason, “Who are the new middle classes around the world?”The Guardian, London, 20 January 2014.

(7) «The Asia Floor Wage Alliance», cleanclothes.org.

(8) Mike Davis, Planet of Slums, Verso, London, 2006.

(9) Nathan D Martin and David Brady, “Workers of the Less Developed World Unite?” (PDF), American Sociological Review, vol 72, no 4, 2007.

(10) Ravallion, op cit.

This article appears in the excellent Le Monde Diplomatique, whose English language edition can be found at mondediplo.com. This full text appears by agreement with Le Monde Diplomatique. CounterPunch features two or three articles from LMD every month.

 

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