The Middle Classes and Economic Growth

One of the most commonly held assumptions in the field of development is that middle classes are the bounty of economic modernization and growth. As countries gradually transcend their agrarian past and become urbanized and industrialized, so the logic goes, middle classes emerge and gain in number, complexity, cultural influence, social prominence, and political authority. Yet this is only half the story. Middle classes shape industrial and economic development, rather than being merely its product; and the particular ways in which middle classes shape themselves – and the ways historical conditions shape them – influence development trajectories in multiple ways. This is especially true in late industrializers. Whether they choose rapid and successful export-oriented industrialization (EOI) grounded in an integrated and robust sectoral development based on strong forward and backward linkages, or whether they remain overly wedded to industrial policies that protect import-substitution activities (ISI) and reinforce sectoral imbalances and a disarticulated domestic economy careening from one economic crisis to the next, will depend on the alliances, character, composition, and political sway of their middle classes, both rural and urban, and the extent to which these forces and conditions engender strong state disciplining of capitalists and laborers in the service of national development.

This claim rests on several interrelated premises, themselves built on a definitional understanding of middle classes as comprised of three basic occupational categories: 1) salaried employees in commerce, services, industry, and the professions, as well as those employed by the state; 2) self-employed artisans, craftsmen, and other independent rural and urban-based producers, who in developing countries are frequently called petty commodity producers (or yeomen farmers in the rural sector); and 3) owners and operators of small enterprises, including family firms, in service, industry, and agriculture.