By Andre Damon
July 11, 2015
World Socialist Web Site
Despite significant advances in communications, agriculture and bio-technology over the past 15 years, the overwhelming majority of the world population continues to live in economic privation, according to a report on global incomes published this week by the Pew Research Center.
The report, entitled “A Global Middle Class is More Promise than Reality,” classifies 71 percent of the world population as either poor or low-income, subsisting on less than $10 per day. The report concludes that 84 percent lives on less than $20 per day, or $7,300 per year, an income level associated with “deep poverty” in developed countries.
Only seven percent of the world population lives on what the report calls a “high” income level of more than $50 per day, or $18,000 per year. The great majority of these people live in Europe or America.
In the years following the turn of the millennium, and especially before the 2008 financial crash, the supposed emergence of a new “global middle class,” particularly in developing countries, was touted by the political establishment as proof that the capitalist system was capable of bringing economic prosperity to people living in poverty in Asia, Latin America and Africa.
The Pew report pours cold water on such claims. “The global middle class is smaller than we think, it is less well off than we think, and it is more regionally concentrated than we think,” Rakesh Kochhar, the study’s lead author, told the Financial Times .
The report finds that even countries that “sharply” reduced the worst forms of poverty “experienced little change in the share of middle-income populations.” While the report notes that there has been a reduction in the number of people living on less than $2 per day, it points out that those who have ascended from the lowest depths have for the most part landed in the “low-income” category of $2-10 per day—a level that would classify them as living in extreme poverty by US standards.
The report uses the latest purchasing power parity data to analyze and compare the distribution of incomes throughout the world. It covers 111 countries, which account for 88 percent of the world’s population, and spans the years 2001 through 2011.
Over that period, the share of the world’s population classified as “upper-middle income,” making between $20 and $50 per day, grew from 7 percent to 9 percent. This was significantly less than the growth of the share of the population making between $10 and $20 per day, which increased from 7 percent to 13 percent between 2001 and 2011.
The great majority of the increase in “middle income” people occurred in China and other high-growth countries in the Pacific whose economies have rapidly expanded over this period.
The report notes, “Home to more than 1.3 billion people, or nearly 20 percent of the world’s population, China alone accounted for more than one in two additions to the global middle-income population from 2001 to 2011.”
The story was much different for other “developing” countries, with next to no increase in the number of “middle income” earners in Africa, India, Central America and Southeast Asia.
The report states, “In contrast to China, most other Asian countries had relatively little growth in their middle classes. India is a case in point. Although the poverty rate in India fell from 35 percent in 2001 to 20 percent in 2011, the share of the Indian population that could be considered middle income increased from 1 percent to just 3 percent. Instead of a burgeoning middle class, India’s ranks of low-income earners swelled.”
Africa fared little better. The report notes that on that continent “most of the movement was from poverty to low-income status.” It says: “Ethiopia, for example, experienced a decline of 27 percentage points in the share of people who could be considered poor. This translated into an increase of 26 percentage points in the country’s share of low-income earners and only a 1-point increase in middle-income earners.”
Similarly, “In Nigeria, one of the region’s most dynamic economies, the share of the poor fell 18 percentage points from 2001 to 2011, resulting in a 17 percentage point increase in low-income earners and just a 1-point boost in the share of the population that could be considered middle income.”
Despite the significant social and economic changes that have taken place since 2001, the great majority of high-income people continued to reside in the developed countries in North America and Europe. In 2011, 87 percent of “high-income” people—those subsisting on at least $50 per day, or $18,250 per year—lived in these countries.
Despite modest improvements in living standards in some parts of the world, incomes dropped in the United States. As the report states, “The US economy stumbled through the decade from 2001 to 2011, growing at less than 1 percent annually on average. Even these slight gains did not make their way to American families, whose median income actually decreased from 2001 to 2011.”
Amid falling incomes in the United States and continued mass poverty in the rest of the world, the wealth of the global financial oligarchy has continued to soar. Last year, the wealth of the world’s billionaires hit $7 trillion, having more than doubled in the time covered in the Pew report. The astronomical enrichment of this social layer is inseparable from the impoverishment of the world’s workers.
The statistics presented in the Pew report underscore the basic fact that the capitalist system has proven incapable of providing a decent standard of living for the vast majority of the world’s people.