OTHER DEFINITIONS OF THE TERM CLASS

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1 In the previous chapter I discussed the surplus: what it was, how to measure how much surplus was generated, and what determined the quantity of surplus produced within an economy. I turn now to discuss who receives and controls the surplus generated within an economy. I also consider what the surplus receivers/controllers do with the surplus. ECONOMIC CLASS WHO GETS THE SURPLUS? Who gets the surplus is important for at least three reasons. First, control of the surplus often brings to those who control it a higher standard of living than those in the rest of society. This is simply because those who get the surplus very possibly might decide to use part of it to enhance their own lives. Others who do not get the surplus do are not able to benefit in this way. It matters, then, who controls the surplus as it determines, in part, the relative material standard of living enjoyed by different groups in the society. Second, those who control the surplus decide what the surplus will be used for. As just noted, those who control the surplus might decide to use some or all to enhance their own lives. Or, they could use part of the surplus to achieve other ends. For instance, those who control the surplus might decide to put much of it back into the economy, and this might lead to economic growth. Or, those who control the surplus might decide to use it to build large buildings, monuments, and other things intended to impress others in society. Alternatively, those who control the surplus can decide to use it to provide education and healthcare systems. The choices made by those who control the surplus clearly shape the economy and the wider society. Third, if economic growth depends partly on reinvestment of the surplus into the economy, those who control the surplus can control the rate of economic growth. And, indeed, others in society who do not control the surplus might find they are

2 22 ECONOMIC CLASS dependent on the decisions of the surplus controls about how much to reinvest in the economy. This fact might give those who control the surplus more power than others in society. Control of the surplus is important. At one extreme, the whole society might control the surplus. Perhaps everyone within the society comes to a big meeting at which they decide what to do with the surplus that they collectively control. At the other extreme, a small group of people perhaps even a single individual might control the surplus. This small group, or individual, alone decides what to do with the surplus. Because of the importance of how the surplus is used within an economy, economies are characterized according to who controls the surplus and how they get control of it. ECONOMIC CLASS An economic class is a group of people who share the same position (as regards the surplus) within the economy. Those who have positions in the economy that gives them the ability to claim the surplus produced by others are members of one class. This class is called the dominant class. Those who have positions in the economy intended to produce a surplus (for others) are members of a second class. This class is called the subordinate class. They are also called direct producers. The dominant and subordinate classes are defined in relationship to each other. A dominant class requires that someone produces a surplus, that is, that a subordinate class exists. If a subordinate class exists, then someone must be there to take the surplus the members of the subordinate classes produce, that is, a dominant class exists. Not everyone within the economy needs to belong to either the dominant or the subordinate class. Some people do not receive/control the surplus or act as direct producers generating surplus. They are not members of either of the two economic classes. Still others might fit in between the two classes by, say, being mostly a direct producer but also having very limited control over the surplus. However, in this introductory text I will generally ignore people who do not fit into one of the two major economic classes. Much can be learned about the operation of a wide range of economic systems, including capitalism, by limiting our focus to the two major classes.

3 ECONOMIC CLASS 23 OTHER DEFINITIONS OF THE TERM CLASS WHAT THEY ARE The economic class of an individual indicates whether this person has the ability to claim the surplus produced by others or who have positions in the economy intended to produce a surplus (for others). In this book, class is used to denote economic class. You have no doubt encountered other definitions of class. These other definitions of class are not wrong, but they different from the definition used in this book. For instance, some social scientists and the mass media use the term class to refer to income level. For instance, such analysts might identify people as being in the middle class if these people are neither rich nor poor. In this perspective, the wealthy (however defined) are the class above the middle class. The poor are the class below the middle class. Other people use the term class in discussions of political power. The ruling class includes those who have sufficient political power to determine the direction taken by the government. In this approach, class membership is determined by political power. In still other approaches, class refers to a set of characteristics such as being socially esteemed, displaying appropriate social behavior, and/or appreciating art and culture. As stated above, these three definitions of class are not wrong. But they are different from the way class that is, economic class is used in this text. ECONOMIC CLASS AND THE ATTAINMENT OF INCOME, WEALTH, POLITICAL POWER, AND SOCIAL STANDING Economic class refers only to a group s relationship to the production and control of surplus. Importantly, the dominant economic class almost always has wealth/income, political power, and social standing. For instance, those who receive/control the surplus often have greater wealth and income than others in society. This is because receiving the surplus is generally a more lucrative way to get income than being a direct producer. But this need not be true for all members of the class: while the average member of the dominant class might have a higher-than-average income, some members of the dominant class might possible be poor. Those who receive the surplus also often have more political power than others in society who do not receive the surplus. On the one hand, those who control the surplus can use the surplus in ways that establish, maintain, and increase their

4 24 ECONOMIC CLASS political power. That is, those who control the surplus tend to become politically powerful. On the other hand, if being a surplus receiver is a better position that being a direct producer as is almost always the case then those who already have political power might use this power to gain the economic position of being a surplus receiver. Those who are politically powerful tend to become surplus receivers. Finally, those who receive the surplus often go out of their way to learn to appreciate the sort of art and culture esteemed within their society. And, it is likely that the type of art and culture liked by the surplus receivers gain a higher profile in society because the dominant class is able to fund such art and culture much more than others are able to do for their own art and culture. And, to the extent that only refined people like high culture, the interest that the dominant class has in such cultural products might be part of process that justifies the economic, social, and political positions of the dominant class. The appreciation of high culture is not limited to the dominant class. Others in society might also have the same appreciation. It is possible that some who are not members of the dominant class might seem themselves aligned with members of the dominant class because of their shared culture and this might serve to gain support from others in the economy for the dominant classes and their economic position. CLASS CONFLICT Class conflict: 1. over how pie is distributed between classes 2. whether this system should continue or be replaced. The dominant and subordinate classes can be in conflict. All economic systems are shaped by this conflict and/or by social forces that develop to manage this potential conflict between the dominant and subordinate classes. 1 Consider the definition of surplus, taken from the previous chapter: Surplus = Output minus (Initial Materials + Tools used up + What Goes to Direct Producers) This can be expressed differently as, 1 Here I consider only conflict between classes over the division of society s output. The different economic classes within a society might also have conflicts over other matters not directly related to the division of output: conflicts over law, over military action, over education, and so on. For the sake of conciseness I will not consider these other conflicts in this chapter although they can be quite important in any given society.

5 ECONOMIC CLASS 25 Surplus = Output - (What Goes to Direct Producers) - (Initial Materials + Tools used up) An increase in What Goes to Direct Producers will reduce the surplus. The members of the subordinate class the direct producers likely desire an increase in their standard of living. This could be accomplished by gaining an increase in What Goes to Direct Producers. A surplus would fall as a result. Further, direct producers also might desire to work less (and receive the same standard of living as before). Less work and the same standard of living would likely benefit the direct producers. But less work would likely lead to less output. This would lead the surplus to fall. In both cases, a smaller surplus means less will go to the dominant class. As a result, those who control the surplus might dislike improvements in the standard of living of the direct producers or a reduction in the level of labor provided by the direct producers. Similarly taking the point of view of the dominant class one way to increase the surplus is to reduce what is given to the direct producers or to have the direct producers provide more work. The dominant class, therefore, might attempt to reduce what is provided to the direct producers and/or to get the direct producers to work longer and harder. Direct producers will most likely dislike these plans. Conflict might exist, then, between the direct producers and those who control the surplus. This conflict can exist over how much goes to the direct producers and over how hard and how long the direct producers work. Such a potential for conflict, however, does not imply that conflict always exists. It is conceptually possible that the members of the subordinate class do not desire to reduce how hard they work or to increase how much they receive as direct producers. At the same time it is conceptually possible that those who receive the surplus do not desire to increase the surplus. No conflict over how to share the economy s output need exist in this society. But, even in such an economy it is not clear what would happen if, say, bad weather led less to be produced in the economy. It would be impossible for both classes to have what they had before something must change. This situation could lead to conflict although no conflict existed before. In addition, if conflict did exist between the dominant and subordinate class, this conflict could be fairly mild or it could be extreme. We must know more about a given economy to know the extent of conflict between the economic classes to know how much conflict existed within the economy over the level of the surplus.

6 26 ECONOMIC CLASS COERCION AND CONSENT In many economic systems surplus receivers are in a difficult position: the number of direct producers far exceeds the number of surplus receivers. If the surplus receivers are to remain as surplus receivers they must find a way to keep the direct producers from taking over. 2 COERCION The surplus receivers can use coercion threats of physical power or actual use of this power to keep the direct producers in line. Coercion, however, can lead to a cycle of violence that might get out of control, as the direct producers might feel unjustly oppressed and sometimes rebel against the coercion they face. Further, coercion sometimes leads to more and more coercion over time. Economic systems that rely on coercion can experience frequent periods of violence and upheaval. The mechanisms of coercion might involve a set of explicit rules perhaps even laws supporting the position of surplus receivers. Or coercion might be informal and based the use of extra-legal force. CONSENT Alternatively, the surplus receivers might maintain their economic position because the direct producers grant their consent to the existing economic system. Consent exists when the direct producers come to believe that the economic system and the dominant class has a right to exist. That is, the members of the subordinate class the direct producers might come to believe that it is fair and just that the dominant class exists and that the economic, political, and social power held by the dominant class is legitimate. When consent for the economic systems develops within the subordinate class, then economic system can function and the dominant class continues to receive and control the surplus without the use of overt coercion. This situation the existence of consent rather than the use of coercion tends to lead to a more stable society: when coerced, people tend to get upset and sometimes rebel. Consent for the economic system among the subordinate class might develop spontaneously on its own. For reasons that might be unclear to all in society, members of society might come to see the economic system as being fair and just. This consent 2 I am presuming here that the surplus receivers desire to keep their position within the economy. One can imagine, however, that sometimes the surplus receivers are not willing to fight to keep their economic position and willingly give up their class position as surplus receivers to others. But, it seems reasonable to presume that while this can happen, it is not frequently seen.

7 ECONOMIC CLASS 27 might appear unplanned by anyone in the society. Sometimes this spontaneous consent appears because people within society come to see the existing economic arrangements as traditional as they have been in place so long. Not remembering when things were ever any different, people can come to accept the existing situation because it is all they have known. Often, however, consent appears within the subordinate classes in large part because the dominant class actively seeks to develop this consent for the existing economic system. The surplus receivers can attempt to convince the direct producers that the economic system as it then exists has a right to exist and to continue. Or, rather than engaging in a campaign trying to argue their case in a rational fashion, the surplus receivers can try to mold society so that the direct producers are trained in or indoctrinated with the idea that the existing economic system has a right to exist and that the surplus receivers have a moral right to receive the surplus. This is one possible use of the surplus. The surplus receivers use part of the surplus they use to pay for the development of activities and institutions that are aimed to generate consent among the subordinate classes. Here, of course, the surplus is used as a means to generate consent for the existing economic and social arrangements in society. Whether this leads to human flourishing, however, is not clear. The mechanisms that generate consent differ by society. Sometimes ideas that support the existing class system might be taught within a family. Sometimes religious institutions might contribute to the teaching of ideas that support the dominant class. Or, formal education in schools might contribute to consent among the members of a population. COERCION VERSUS CONSENT; COERCION AND CONSENT One difference between coercion and consent might be the relative predictability of the outcomes within the economy. Coercion might lead to occasional extreme outcomes while consent might lead to more predictable and stable outcomes. In most societies the dominant class uses part of the surplus to help generate consent among members of the subordinate class. Perhaps the dominant class uses the surplus to fund educational programs or mass media entertainment that portrays the current economic system as the best, the most efficient, the most appropriate, the most consistent with human nature, and/or the most moral economic system possible. At the same time, the dominant class often uses some of the surplus to give them the ability to implement coercive tactics to maintain their position within the economy if consent breaks down. From the point of view of the surplus receivers, it is always good to have a fallback. And, of course, regardless of how successful any consent

8 28 ECONOMIC CLASS program is, some individuals within the society will act in ways contrary to the interests of the surplus receivers. Coercion might be needed to keep these individuals in line. The mix of coercion and consent used within any given society will be determined by many different factors: the general cultural makeup of society, the relative ease with which consent or coercion can be used (this might depend, in part, on the technology available within the society), and the history of a given society. OTHER CONFLICTS IN SOCIETY Conflict exists between the direct producers and those who control the surplus. Some of the surplus in any society goes to manage the conflict so that the surplus receivers are able to keep their positions within the economy. Although the conflict between surplus receivers and direct producers is often quite important, it is not the only conflict. Many other potential or actual conflicts exist: conflicts between races, ethnic groups, religions, sexes, nations, and so on. There is no general rule about which type of conflict is most important in a given place at a given time. However, as economics is the study of the economy it plays special attention to conflict within the economy and considers other conflicts only when the directly affect the economy or are linked somehow with class conflict. This is one of the strengths of economics: if takes a narrow and clear focus on one aspect of society. But this is also a weakness: this incessant focus on conflict within the economy might lead it to overlook other types of conflict that might be of equal, or even greater, importance in particular societies in a given time.

9 ECONOMIC CLASS 29 WHAT HAPPENS TO THE SURPLUS? When a surplus appears, those who receive the surplus the members of the dominant class determine what happens to it. In this way they both receive and control it. What will those who receive the surplus do with it? We can t provide any general principles of how the dominant class will use the surplus. It might seem reasonable, however, to presume that they might desire to use the surplus in a way that benefits themselves: perhaps enhancing their own material standard of living and/or by using the surplus in a way that permits them to retain their position as surplus receivers. Although this might be reasonable to us, no guarantee exists that those who receive the surplus necessarily look at things that way. It is possible, indeed, that the surplus receivers truly desire to help others in society. But this does not seem to always be the case. In short, no general rules exist in determining the motivations behind the decisions made by the dominant class about what to do with the surplus. Among the many possible uses of the surplus are:

10 30 ECONOMIC CLASS the surplus might be shared with all in society to increase the standard of living; the surplus might be given to the most needy in society to supplement their too-low standard of living; the surplus receivers might use the surplus to boost their standard of living; the surplus might be used to build monuments (such as temples, pyramids, and other big buildings); the surplus might be used to appease the local gods; the surplus might be used to permit some people to not engage in the production of goods and services but to do other activities produce art, run the legal system, have deep thoughts, provide religious instruction, play polo, and so on; the surplus might be used to provide entertainment, education, or perhaps propaganda to the members of the society; the surplus might be used to hire an army to use against some enemy inside or outside the country; the surplus might be used to start off next year with more seed so that more might be produced the following year; the surplus might be used to look for better ways of producing corn, to improve the tools, and even to invent more tasty corn; and/or to enhance the ability of people in society to live a fulfilling life. This list is incomplete. Many other potential uses of the surplus exist: the uses of the surplus are limited only by the imagination. The surplus receivers might decide to use most of the surplus in one way (say, build monuments) or they might decide to use the surplus in multiple ways: part of it to build monuments, part to appease the local gods, part to improve the standard of living of some in society, part to find better ways of producing corn, and so on. The use of the surplus in multiple ways is more common then the use of the surplus in a single manner. While the surplus receivers have the freedom to use the surplus however they like, they often find they face clear limits on this freedom. First, the surrounding culture might place limits on what is perceived to be appropriate uses for the surplus. Second, surplus receivers might find that the economic system in which they live requires them to use the surplus in certain ways. I will discuss come of these limitations in the next chapter. As noted in this chapter, the dominant class might very likely use the surplus in a way that (it hopes) will reproduce the dominant class s position in the economy. That

11 ECONOMIC CLASS 31 is, the surplus is used as a means to promote the maintenance of the existing economic and social arrangements. But whether the maintenance of any given existing set of societal arrangements is a good thing is not always clear.

12 32 ECONOMIC CLASS

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