Friday, November 19, 2010

Definition of Middle Class

I believe that the distribution of wealth is far more important than the distribution of income.

Income refers to the amount of money that a person receives in a year. Individual wealth refers to the resources that one owns over a life time.

In the scheme of things, one's income is derivative of ones wealth. Income is simply a slice of one's life long wealth.

I contend that if a society has a healthy distribution of wealth, it will naturally have a health distribution of income.

Conversely, a society with a healthy distribution of wealth might have an uneven distribution of income as people make different amount during different years of their life.

My last post spoke about the changing definition of the Middle Class.

The original definition of middle class was based on the distribution of wealth.

One could split the ancient regime into three primary classes. There was a small ruling class, a very large working class of peasants and workers and a middle class between the two.

The ruling class derived its wealth and power from the state. The working class sold its labor for subsistance.

The middle class learned to re-invest the proceeds of the labor to improve their productivity. This middle class of merchants and manufacturers re-invested the profit from their endeavors to build capital.

Note, both the ruling class and working class were largely dependent on the state. As the middle class built capital, it gained a certain amount of independence from the state.

Intellectuals despised this middle class with its independence.

Because this despised middle class was very good at creating wealth, it systematically pulled millions of people out of poverty and the ranks of the capital owning middle class swelled.

In this traditional paradigm, the term middle class (bourgeoisie) was based on the distribution of wealth. The distinguishing feature of the middle class was that it owned and controlled capital.

Progressives hate this property owning middle class with a deep abiding passion.

Progressives took a tool developed by Hegel and perfected by Marx called sublation. Sublate is a process which one can use to turn a term into its opposite.

The defining characteristic of the middle class was the ownership of capital (its wealth). Progressives simply made income, not wealth, the defining characteristic of wealth.

Income, like most statistical phenomena, falls into a simple bell curve. Progressives took to calling the middle section of the bell curve of income "The Middle Class."

For a variety of economic reasons, the reported incomes of the ruling class, middle class and upper segment of the working class will fall in the middle of the bell curve of income. The really successful business owners fall in the upper section of the bell curve, unsuccessful workers make up the bottom of the bell curve.

By changing the focus of the middle class from wealth to its derivative income, progressives successfully sublated the term "middle class."

Middle class no longer refers to the productive business owners who built up the wealth of the nation. It now includes the parasitic ruling class and some of the higher paid workers.

The term "middle class" now means its opposite. The group of capital owners who sat between the rulers and working class is now in a separate vilified class, while the proletariat is lionized as the middle class.

Of course the progressive definition of middle class is absurd. By simple economic laws, most people will fall in the middle of the distribution of income.

It is the distribution of capital that matters! With a centralized economy, control of the wealth of the nation falls into an increasingly small number of very corrupt hands.

While progressives pound the sublated definition of "middle class" the real middle class that gave us our prosperity is being systematically destroyed.

No comments: