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For The New Middle Class, Greater Democracy Or Authoritarian 'Stability?'

Russians listen to an address by then-President Vladimir Putin. Growing wealth in Russia has come at the expense of civil society and certain freedoms.
Russians listen to an address by then-President Vladimir Putin. Growing wealth in Russia has come at the expense of civil society and certain freedoms.
By Charles Recknagel
Decades of disruptions have hindered the middle class across much of Eurasia. But with time and the development of commerce, the middle class should get stronger. As it does, will it seek greater democracy? Or will it support authoritarian systems that promise stability? RFE/RL looks at the question in the last of a three-part series on the middle class.

Are time and economic progress the greatest friends of the middle class?

Across much of the globe, recent years seem to have shown that to be true.

In China, India, and the Southeast Asian “tigers,” in parts of South America and parts of the former Soviet Union, a new commercial class has risen.

It consists of people who, by local standards, have about a third of their income left for discretionary spending after providing for food and shelter.

In much of the world, members of this new middle class earn between $2 and $10 a day, according to John Parker, globalization correspondent for "The Economist" magazine. “They are 2.5 billion people; they are more than half of all emerging markets. They wouldn't be middle class by [Western] standards but I think they are the sort of the emerging market's own middle class,” he said.

Parker says this class has become the majority of the developing world’s population “in the past year or two.” It constituted just 33 percent in 1990.

Of course, the progress varies widely from country to country. While the new commercial class surges in China and India -- the workshops of the globalized economy -- it grows in fits and starts in places like Russia and Kazakhstan, where economies swing from boom to bust with the price of their energy exports.

Still, there is reason to hope the size of this new bourgeoisie will keep growing. And as it does the question becomes what kind of future will its members seek.

Will the new middle class be a force for greater democracy, as it historically has been in the West and more recently in some emerging economies? Or -- given the trauma of still-recent experiences -- will it support authoritarian systems that promise social stability above all else?

The Postcommunist Middle Class

Across a wide region of Eurasia, in countries that have the experience of decades of communism, or recent revolutions or wars, the question is particularly pertinent.

Many observers in the region note that their new commercial classes lack a significant trait of the Western middle class: altruism.

In the West, middle class altruism forms a basis for much civic action: from creating charities which help the disadvantaged to organizing Green parties which protect the environment.

But those who are between poor and rich in the developing world tend to put their first priority on gaining further financial security.

The Balkans offers a poignant example. Sarajevo, which once had a thriving cultural life, today only infrequently stages cultural events.

Halid Kuburovic, an event organizer in the Bosnian capital, explains that “if the middle class is made up of the intellectuals, educated people who've been through university, through art academies -- that could be considered the middle class -- these people can't afford more than three or four cultural events in one month. The main theatrical temple in Bosnia, the National Theatre, is often half-empty.”

Along with the concerts, plays and recitals, a whole forum for humanism and the appreciation of individual talent without regard for ethnic background has disappeared. And without those values, the West’s postwar peace-building efforts in the Balkans continue to founder on ethnic mistrust and fear.

WATCH: In Bosnia, the devastating war of the 1990s has had a lasting economic effect on the middle class.



Influence Of Putinism

In many post-Soviet countries, the tendency today is to again leave charitable efforts and social work to the state.

The trend is particularly noticeable in Russia. In 1996, a few years after the collapse of communism, there was a mushrooming of private charitable organizations. But many have closed with the resurgent Kremlin of Vladimir Putin, which regards private NGOs, particularly ones with ties to the West, with suspicion and has tightened state control over them.

Putin’s philosophy, referred to in Russia simply as Putinism, is that Russia is a strong state able to take care of its citizens. And there is no place or need for “concerned citizens” in that comforting but eerily Soviet message.

One result is the re-emergence of a Soviet-sized bureaucracy in Russia, Moscow political scientist Dmitry Oreshkin tells RFE/RL’s Russian Service.

Boris Gryzlov, the chairman of Russia's Duma, “complained at the congress of the United Russia Party that our bureaucracy has grown by about 100,000 people per year over the past eight years,” Oreshkin said. “He said that during the past eight years we had 800,000 new additional bureaucrats and, as a result, we in Russia now have more bureaucrats than in the Soviet Union, which, of course, is a natural outcome of the construction of the ‘power vertical’ -- the strengthening of the hierarchy of bureaucracy.”

Putin’s strengthening of the government is not an anomaly. It is in line with a particular concept of free-market economics that has taken root in much of the post-communist world and is known as “authoritarian capitalism.”

Under authoritarian capitalism, the state maintains a monopoly over key economic resources and social services. Elections are limited to parties that do not challenge the status quo and citizens are best advised to focus on commerce, not politics.

Proponents of authoritarian capitalism say the system brings social stability and delivers economic development. And there are many who see that as the correct priority, particularly in times of uncertainty such as the recent global economic crisis.

Indeed, authoritarian capitalism has proved attractive enough that some historians, such as British writer and Oxford historian Timothy Garton Ash, now see it as the greatest challenge to Western ideas of democracy and the free market since the collapse of communism.

“I actually think the larger picture is that, for the first time since 1989, democratic capitalism has a very serious competitor, and that is authoritarian capitalism in the Russian or the Chinese versions,” Garton Ash said. “That's not attractive to people in the West, but it is attractive to a lot of people in developing countries. So for the first time I would say in 20 years, we have a serious competitor.”

Conditions For Development

But there are still many people in the developing world who want democratic capitalism and are ready to work for it. They pin their hopes on carving out a greater space for classic middle class values within their societies and are confident others will join them.

One is Dorin Chirtoaca, the young mayor of Moldava’s capital city, Chisinau. He is a leading figure in the pro-Western coalition which came to power in 2009 after challenging vote fixing by the former communist-led government.

“To foster a middle class in the Republic of Moldova, it’s necessary to improve the material side,” Chirtoaca says. The middle class exists and always has existed in terms of values shared by intellectuals, by informed people and good citizens. Unfortunately, from the material point of view, they are poor people. Our goal is to create proper conditions for economic development.”

Chirtoaca acknowledges that will require a long struggle lasting well beyond the five years before the next election. But it’s a beginning -- and an important message for middle classes elsewhere, too.

For the middle class to advance, it must choose to engage in both politics and economics simultaneously. Progress in one helps create the conditions needed for progress in the other.

And it is through this cumulative process that people gain a permanent voice in how their society is governed and guarantee respect for their individual freedoms.

That system of social democracy, achieved by the middle class, today characterizes the world’s most free and prosperous societies.

It remains to be seen whether authoritarian capitalism -- which does not rest upon the middle class -- can produce any comparable level of wellbeing.

RFE/RL's Russian, Balkan and Moldovan Services contributed to this report
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by: Sergey from: Chicago, Illinois, USA
January 14, 2010 13:32
First of all, the modern political economy term like "democratic capitalism" is largely meaningless because it tries to connect together two forces that are quite different in nature and often at odds with each other. Democracy (literal translation could be either "rule of the people" or "rule of the crowd" from Greek) is about the desire of majorities of a given country or region to impose their rules by peaceful means (i.e. elections of representatives, public referendums, etc.). Capitalism by its very nature is non-democratic, because its a very tough game of the survival of the fittest where relatively small percentage of entrepreneurs and financiers will succeed. Entrepreneurs, investors and financiers before investing their money and energy into some projects in a given country or region look first and foremost at whether their property rights, capital and financial gains (if any) will be protected and if they could achieve profitability at the lowest cost possible of labor, raw materials and other economic inputs (i.e. equipment). Most of entrepreneurs or investorsj, let's face it, do not really care much if they are protected by democratic, authocratic (or even totalitarian) regimes. Most of them care first and foremost about return on their investment. I am not some Marxist, socialist or social moralist who likes to whine about it. It's just a nature of capitalism.

Another term we need to be critical of is "liberal democracy". Civil liberties and democracy are also two very different things that could also be easily at odds with each other. The recent examples are the election of two populist and socialist thugs as presidents of Venezuela and Bolivia--Hugo Chaves and Evo Morales. Both of them enjoy broad popular support at home and they have practically free hand to opress, intimidate and even murder dissenters, or conduct socialist and racist policies of property confiscation from land owners (often of European descent) as they see fit.

The bottom line is that in order to achieve really humane society where people of all "classes" can live in harmony, tranquility and prosperity, it is important to place reasonable restraints on capitalism, democracry and civil liberties. For instance, few would argue that capitalism need to be restrained if a particular entrepreneur engages in business practices that undermine public morality or basic decency (i.e. peddling of pornography, especially child pornography). It's hard to argue against punishing entrepreneurs who engage in outright fraud (Madoff Enron executives cases are just a small sample). It is certainly difficult to argue against preventing enterprises from corrupting democratic institutions through shady lobbying, election financing and other activities to drive out competitors or gain immunity from persecution if enterprise is shady or outright criminal.

Democratic institutions also require proper restraints, checks and balances to avoid degeneration into an unbridled mob rule. I.e. there are cases when ethnic minorities need protections against ethnic majority attempts to pass laws that would severely curtail civil liberties of minorities. However, ethnic or other types of minorities also need to be restrained if they try to force something that majority does not want. I.e. homosexual lobbies should be prevented to force the society to recognize homosexual domestic unions as "marriage" undermining traditional understanding of marriage.

To summarize, in order for any society to function successfully, it needs to find a right balance between liberties and responsibilities. Unfortunately, there is no prescribed formula where this right balance is and each country or society will have to answer this question individually. To achieve the right balance between liberties and responsibilities, however, each society will need both democratic and non-democratic institutions and the trick is again to find a right balance between them.

by: Tatiana from: Shereshevo
January 15, 2010 18:27
Great comment Sergei from Chicago! Right to the point.
Very weak article by Charles Recknagel - obviously does not understand post socialist countries development. I would not recommend to publish such articles - they are bringing confusions.
Middle class ideology does not exist in former USSR. New rich people(mobs, corrupted bureaucracy,corrupted business) do not have any ideology and morals and cannot be named as a middle class as they are usually corrupted and have illegal business(legal business is very difficult to have). Society without rules to make money and without moral norms to make money - this is where we are. Society approves money even illegal corrupted money. This period of cruelty will be long and will destroy many lives. This period will end only when former empire will be fully transformed into new society. I recommend to author to read 1984. Please do not write naive articles!

by: Sergey from: Chicago, Illinois, USA
January 18, 2010 06:29
Thank You, Tatiana for kind words ! However, I would object to harshly criticizing business class of the former USSR. They certainly do many things that would be considered illegal and immoral in a normal country, but it is first and foremost due to the post-Soviet governments being grossly corrupt and abusive that they give no room to business folks to conduct business affairs honestly and transparently. In other words, let's not forget that the main culprit is corrupt and inefficient authorities that create atmosphere for the corrupt business practices.

Back to the subject of democracy, the bottom line is that demcoratic institutions without proper restrictions, restraints, checks and balances can be easily corrupted, perverted and become tools of the populist thugs, shady individuals and mafia clans as we can see since the fall of Berlin Wall in 1989. I.e. the brutal ethno-religious wars in former Yugoslavia was the result of rapid democratization of the late 1980's that propelled to power the likes of Milosevic in Serbia, Tudjman in Croatia and Izetbegovich in Bosnia--all 3 used ethnic and religious chauvinism to win elections that resulted in subsequent wars with hundreds of thousands of former Yugoslav citizens (Serbs, Croats and Bosniaks) dead and many more displaced. I'd rather have Yugoslavia under the thumb of someone like Marshal Tito for another few decades instead of such "democratization".

By the way, United States of America was never designed to be a popular democracy. The founding fathers of the US were great students of history and they understood very well that if you give too much power to the crowds and popular sentiments of the day, nothing good will come out of it in the long run. United States was intended to be a representative government where various social, economic and regional groups can be represented in government to protect their interests (i.e. "No Taxation Without Representation", Electoral College to prevent large urban centers dominating the elections of the president, etc.) within the framework of law and with separation of powers (executive, legislative and judicial), but it never was meant to be a popular democracy.

Here are the quotes from a few prominent America's Founding Fathers about democracy:

"Democracy...while it lasts, is more bloody than either monarchy or aristocracy. Remember, democracy never lasts long. It soon wastes, exhausts and murders itself. There was never a democracy that did not commit suicide."

John Adams, 2nd President of The United States in a private letter from 1814.

"A democracy is nothing more than mob rule, where 51 percent of the people may take away the rights of the other 49."

Thomas Jefferson, 3rd President of the United States.

by: sirivanhoe98 from: Sydney, Australia
January 24, 2010 02:39
Sergey. What you are really advocating is not lessening liberties, but strengthening the rule of law.

The highest law making body in a democracy is Parliament in which the elected representatives are the chief lawmakers, whose job it is to balance a range of issues and values before a law is passed to deal with a particular issue . Laws are reviewed by a separate house/chamber of parliament before ebacted.

The laws apply equally to all, without favour. Law exist for corporations and their officers to ensure consistency of standards.

Controlling capital is nearly impossible. By this people usually mean controlling flow of capital. You can regulate corporations anyway you like, but if in the process the cost of capital and risks of doing business in a jurisdiction are increased capital will move to a more favourable regulatory environment.

By passing favourable laws (ensuring property rights, better contract laws, lower taxes, easier employment laws etc) making a more attractive invesment environment, Governments compete for inflow of foreign capital, to stimulate their local economies. So Governments generally provide a cpital friendly regulatory environment and they provide access to their market i.e. the consumption patterns of the population. The larger the population, the bigger the markets and the more attractive it is to investors, particularly if the regulations are favourable.

That is the main reason why China is so sucessful. Vast influx of foreign investment, moving from high-cost highly regulated jurisdictions to its low cost, more liberal low tax jurisdictions. Often this capital shifts can destabilise a country's economy. But it is nearly impossible to stop it short of freezing bank accouts or nationalising banks.

This is one example where it is difficult tio regulate or control capital. The more restrictions lawmakers put on it, the more it is likely to go elsewhere. These large capital flows into China has made that country wealthy to the detriment of other nations. To a lerge extent the Global Financial Crisis is a reflection of these dynamics. Mass transfer of investments into China and India with consequent loss of American jobs, who could not be re-employed fast enough by the stagnant American economy, with consequent default on mortgages.

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