Half the globe is now middle class. Is that sustainable?

The emergence of a global middle class might seem unremarkable when compared with flashier transformations such as the digital revolution, globalization, or artificial intelligence.

Yet it may be one of the more consequential shifts in human history. That’s the case economist Homi Kharas makes in his book “The Rise of the Global Middle Class: How the Search for the Good Life Can Change the World.”

Until the early 19th century, less than 1% of the world’s population could be considered middle class. Today over half the world’s population is middle class, defined in the book as having the resources to spend at least $12 a day. As Kharas sees it, this vast sector of humanity – freed from many of the stresses of daily survival – has unprecedented power to shape the decisions of world leaders in politics and business alike. 

Middle-class aspirations existed long before the classification came to be. Aristotle believed a society constituted primarily by the middle class would be stabler, better governed, and more resilient against the threats of factionalism and division. “Wisely then did Phocylides pray – ‘Many things are best in the mean; I desire to be of a middle condition in my city,’” he wrote in 350 B.C.E., referencing a thinker who lived centuries earlier. Today, middle-class status is widely associated with the potential for a relatively comfortable and fulfilling life.

But for the first time since the middle class began to emerge, its promise is uncertain. Even in places where incomes are continuing to rise, life satisfaction is dropping. And with Earth’s resources being pushed beyond its limits, the viability of a Western middle-class lifestyle for all is under question. These are the dilemmas at the heart of “The Rise of the Global Middle Class.” 

Before getting there, Kharas traces the emergence of the middle class around the world, detailing its growth billion by billion. The first billion came out of a century and a half of industrialization, technological innovation, and capitalist growth in the West between 1830 and 1975. The second billion took shape over the next three decades of growth in East Asia and Latin America and the globalization of trade and free-market economic policies. China’s “economic miracle” between 2006 and 2014 largely explains the third billion. The fourth and most recent billion was driven by economic liberalization and urbanization in India, especially in the last 10 years. 

These paths were each unique. Despite Western predictions, a formidable middle class in China has not brought with it democratization or greater individual freedoms. India seems to have jumped over the manufacturing stage of economic development directly to the massive expansion of professional services like those for information technology, especially software. Most Latin American countries have achieved upper-middle-income status, but many have struggled to build out a strong middle class because of poor economic management and reliance on natural resource exports. 

Nevertheless, Kharas sees a common thread of citizens around the globe who have found enough economic freedom and agency to aspire to Aristotle’s “good life.” He points to an agreement among 130 countries in 2022 to implement a minimum tax on multinational companies. “The presence of a sizable middle class in many large economies demanding ‘fairness’ can lead to international cooperation despite differing contexts and starting points,” he writes. Others around the world are pushing for more ethical and environmental business practices.

Kharas outlines the growing threats to the world’s newfound middle-class prosperity. The obvious one is disregard for environmental limits. The consumerist “take-make-dispose” approach to the economy is polluting the world and affecting human health. Another challenge he unpacks is the provision of decent, meaningful work in an age of automation. High- and low-wage jobs have grown in recent decades, but middle-wage jobs have declined. 

Kharas argues the 21st-century middle class is searching for a new narrative. “The last two centuries have been unbelievably successful in delivering material prosperity – more consumption of goods and services – and in delivering a life of stability, security, and respect,” he writes. But in recent decades, it has done so by working longer and longer hours, on top of rising levels of stress and mental health challenges. “The middle-class lifestyle of today is no longer satisfying, and the happiness that the middle class seeks is still elusive,” he adds. 

In a sober yet hopeful tone, Kharas argues it is up to this vast group of people to demand the systemic change humanity needs. To do that, he writes, the middle class will need to re-imagine the meaning of the good life.