Goods and services are exchanged for money,
which pays production costs, salaries and profits. Added together these
exchanges make up a nation’s produce, but the proportionate balance of goods
and services has changed considerably over time. Classic economists, from
Quesnay to Marx and beyond, argued that the only wealth produced had the
material form of goods, that service providers did not add wealth but partook
in the wealth produced by others. At the time, 18th and 19th
centuries, a large portion of the urban working class was employed as domestic
servants – an estimated 1.9 million in Victorian England – while lawyers,
doctors and teachers also provided the upper classes. Services were just part
of a bourgeois household’s consumption.
The social upheavals and wars that shook
Western society in the first half of the 20th century all but eliminated
domestic employment. By mid-century middle-class housewives were managing
chores on their own, assisted by electrical appliances such as washing machines
and vacuum-cleaners. Instead of overseeing servants, they were left on their
own. This isolation could be resolved by a “mother’s little helper”, but many
women chose to grapple with the wider world, in universities, businesses and
employment. Gender equality became a major political battle that overshadowed
social and racial disparities. Meanwhile economic theory had changed attitude
and had integrated services into the production of wealth.
Services are immaterial and goods are made
up of matter, but the two are often combined. A doctor, for example, will make
an immaterial diagnostic which involves the taking of a material medicine. This
led to a sort of scale, with “pure” goods at one end, “pure” services at the
other, and a varying mix in between. Notwithstanding this ambiguity, around
three quarters of the wealth produced in developed countries is now attributed
to services. In fact, economic growth in these countries over the past four
decades has been largely due to the fast expansion of services, notably
financial and personal services, looking after people’s money and lives. Vast
sums had accumulated to provision insurance and pensions, and women were
qualifying for all jobs. The result was a lot of lending to keep money
circulating, and countless domestic employees to replace absent housewives.
The model middle-class home of fifty years
ago has disappeared, and stay-at-home parents, male or female, have become
curiosities. But the presence of women in the work-place has not doubled household
incomes, because of strong gender disparities and because salaries in general
have contracted. The post-WW2 middle-class had benefited from the wild growth
rates of the 1950s and 60s. It increased in numbers and proportional wealth,
thanks to productivity, global dominion and the survival of wartime
egalitarianism. This changed with the war in Vietnam, OPEC, Women’s Liberation
and Black Power, dropping out, etc. In Europe, the pre-war elites had
compromised themselves with fascist regimes. As a class they had lost the war
twice, in 1940 and in 1945. Their defeat opened up social mobility, and allowed
a rapid expansion of the middle-classes. But the 1970s fractured the ideal
beyond repair.
With hindsight, the late 1960s and early 1970s
were a turning point (they felt quite revolutionary at the time). The war and
post-war social and industrial model had run its course. Mass production, mass
media, homogeneity, and drab black and white, were confronted by individuality,
diversity and a blaze of colours. Pressured by technology the world had to
change, and it did. But in stepping forward, it seems to have stepped back.
Thomas Piketty has pointed out that wealth distribution in developed countries
is comparable to what it was at the end of the 19th century: a few
very rich people, a lot of working poor and not much in between. The
middle-classes stopped their expansion in the 1970s, and their numbers have
been shrinking for the past decade or so. It began as a rebellion against the
nine-to-five office job in private or public administration, against a
pointless and brutal war in South-East Asia, against all sorts of
discrimination, against a morality shaped by religious prejudice, against a
power structure that was completely redundant, against black or white, and for
a rainbow nation. The empire resisted the onslaught. It hired public relations
specialists to change its image and presented a new liberal facade, but the
middle-classes were moribund. The levelling project born in the uniformity of
total war had failed because it was dull and grey, and because mechanical
processes were being replaced by electronic ones. The mind-set of coal and
steel could not apply to a world of plastics and processors.
The access to middle-class jobs by
middle-class women improved gender equality, but it was also a loss of status.
After all, working-class women had been toiling away at disparaged and
demeaning work for most of recorded history. Being employed meant that
middle-class women abandoned the role of household goddess comforting
homecoming harassed bread-winners. Couples became partners and domestic chores
were outsourced. This new female work-force provoked a surge in the services
sector. Middle-class women were employed in banking, retailing and education,
while their absence from home meant hiring a variety of domestic workers. The
movement of women joining the corporate and professional rat-race and breaking
“glass ceilings” was a profound cultural change, as well as an economic
re-composition. The service sector’s expansion was the result of doubling the
potential work-force, outsourcing manufacturing and an increasing demand for
care and upkeep. And it was all profitable for employers.
A global bi-gender workforce strengthened
the competition for jobs, across borders for manufacturing and internally for
services. It was a great opportunity to cut labour costs. So factories were
moved abroad to “developing” countries, and middle-class households were
finding that their living standard with two salaries was no better, or worse,
than it had been previously with just one salary. Housing was more expensive,
children’s education was a financial burden and working incomes had stagnated,
reaping no profit from the increase in wealth production. The middle-classes
have been contracting for a while – the brief Yuppie revival twenty years ago
did not outlive the millennium, and the millennial generation is struggling not
to be déclassé – and this contraction is polarising society.
The middle-classes are a buffer between
capital and labour. They accept, partake in and propagate capitalist ideology,
with some social and material advantages, and they provide the models for
working-class aspirations. They are the backbone of the electoral machine and
its semblance of democracy. Their ongoing destruction by shrinking incomes and
debts will push the contradiction between labour and capital into the spot
light. And, as it did a century ago, capital is reacting by hiring more
mercenaries and expressing belligerence. The service economy has the 99%
serving the 1% and its hirelings, but precedents show that the levels of
violence needed to maintain that imbalance quickly escalate and get out of
hand. Capitalism functions most effectively with confident and affluent
middle-classes, but its fundamental mechanism of infinite accumulation opposes
egalitarian social structures. The middle-classes are the produce of
capitalism, of entrepreneurship and social mobility, but capitalism must
ultimately swallow them. Expansion, with growing markets and new technology,
ends up in concentration and corporate might, in rising debts and middle-class
servitude. This concentration phase is only interrupted by a new expansion.
Something that might be somewhere over the horizon, but considering the size of
today’s concentration, it will be hard put to have a significant global impact.
The process seems condemned to continue until it brings about a complete
institutional breakdown, and no one can foretell what will happen then.
