Updating our definition of wealth and class

What comes to your mind when you hear “upper-class”, “middle-class”, “lower-class” and various other class-related terms?

Human beings, as far as we know, are not inherently prone to dividing themselves into classes. Our tendency towards tribalism, while divisive and disruptive, does not automatically cause the formation of classes within the same society. Even pessimistic subscribers of the Tragic Vision of human nature would be hard-pressed to argue otherwise. Tribes are created and sustained by the subjective opinions and actions of groups of individuals, while classes can be identified by objective markers and are usually imposed on people without their consent (except maybe the most fortunate ones). People may choose to follow a religion or support a sports team, but they usually don’t have as much control over their level of income or education.

In modern parlance, we refer to a person’s class by their “socioeconomic status”, a vaguely defined term that mainly considers income, formal education and occupation. While this concept has been useful for some time, I believe that it will have to be adjusted in the near future. Wealth and class are influenced by external forces, so their definitions should be subject to change as the world changes.

What is “socioeconomic status” anyway?

Socioeconomic status is broadly defined as the ability to access desired resources. Traditionally this has been interpreted to be the joint result of material wealth (income and possessions) and occupational skills (formal education) as well as various privileges derived from being a member of certain racial, political, and religious groups (that is, certain tribes). These are separate but significantly correlated factors. A white-collar office worker with a four-year bachelor’s degree, on average, makes more money than someone lower down the socioeconomic ladder, such as a blue-collar factory worker who never went to a university. Even if they have roughly similar incomes, the office worker would be, in a sense, wealthier due to having access to future opportunities that are beyond the factory worker’s reach. The key to how class is defined is how the “desired resources” are defined.

The definition of wealth and class has changed over time

For some context, let us look at how societies have been historically divided into classes based on the definition of wealth.

Primitive hunter-gather societies were more or less egalitarian, not because they were so-called “noble savages”, but because accumulation of wealth was effectively impossible. Gathering food required a team effort and anyone trying to go solo was more likely to be eaten than the other way around. Even if a handful of individuals were to build up a large store of foraged berries and hunted meat, how would they preserve it (without technology) or keep it from other members of their tribe (who were hungry and expected something in return for their effort), without the benefit of laws, armies or bureaucracies (which couldn’t exist since other tribe members wouldn’t benefit from them)? Food was currency, and nobody could get enough of it to buy off others. Even political leadership was very loose, since people had no reason to take orders from someone who couldn’t enforce their authority.

Food production (agriculture and animal domestication), introduced about ten millennia ago, made hierarchies feasible. It was now possible to build up stores of excess food and buy things, such as the loyalty of a group of followers. Crucially, it also introduced a role for hierarchies. As human societies grew larger, conflict resolution and important decisions could not longer be done by sitting everyone down around a fire and hashing it out. Leaders with formal authority rose up, gathered armies to enforce their orders and extracted tribute for their services. Individuals farmers, tied to their land and unable to defend it by themselves, could afford to pay the tribute, even if they did so unwillingly. Food was still currency, but food production needed land, which became a valuable resource. Civilizations arose, governments expanded and came into contact with each other. Technological progress (extremely slow by our standards) created new areas of employment, such as those involved with making clothes, ships and weaponry. However, the majority of the population remained as peasants raising crops and livestock, presided over by a small elite class of hybrid political-economic leaders who gained wealth mainly through inheritance and conquest.

The Industrial Revolution caused another paradigm shift. Factories and offices proliferated, so land ownership was still essential. But technology became the kingmaker. It seemed to create value out of thin air, using scientific knowledge and engineering brilliance to grow wealth into more wealth – a capitalist’s wet dream. Technology greatly enhanced the efficiency and pace of wealth accumulation, allowing a handful of individuals to own a much larger portion of it than was previously possible. This value creation engine demanded a skilled workforce. Even the blue-collar factory worker – member of the new lower class which increasingly replaced the peasantry – needed some training. Formal education suddenly became far more widespread, since it was no longer confined to the role of training aristocrats to become future landowners and rulers. It created an educated middle class that provided intermediary services rather than being involved directly in wealth generation.

Initially, the computer did not change this class structure, because it was just another bulky, expensive, specialized machine used for niche tasks. But, starting in the mid-1980s, computers have become pervasive, pushing their way into all aspects of our everyday life, becoming cheaper and more portable with each iteration: the personal computer, the laptop, the smartphone. The Information Revolution, as it is often called, may be the catalyst for another overhaul of the class structure.

Socioeconomic status is not really about money

Socioeconomic class is defined by privilege, which is positively correlated with income and education. Privilege, at the most basic level, is the ability to ensure physical and mental well-being. In prehistoric times, this only required finding shelter and hunting or gathering enough food, so any able-bodied person in a given environment was on an equal footing. The onset of agriculture and settled societies introduced some new requirements: the ability to defer gratification (waiting for crops to grow and livestock to mature) and obey authority. However, a relatively wealthy and powerful minority were subject to a more relaxed version of these requirements. The story of industrialization is similar: education (numeracy, literacy, training in the arts and sciences) became the putative requirement for a “good life” for the vast majority, but an optional afterthought for a much smaller minority. In each case, privilege (that is, the “access to desired resources”) became constrained by something that helped create and sustain wealth, with the least wealthy being the most constrained.

Wealth is a secondary marker, whether we measure it in food, land, cash, or Instagram followers. Aside the from the biological necessity of food, wealth is a just a means to an end. Classes can truly be distinguished on the basis of privilege. However, wealth is highly correlated with privilege, because we assign privilege to those we consider to be wealthy. Even if we want to expand the privilege of the less wealthy, our efforts are undermined by our definition of wealth. It is all fine and dandy to wish for a wealthy, prosperous society, but first we must decide what that looks like.

A good example of how flawed definitions can cause subpar outcomes can be found in higher education. The common knowledge that more education equals more income has pushed many countries head-first into a narrow policy of simply increasing the number of university graduates. Often this has resulted in a glut of graduates without a corresponding glut of high-paying jobs. In some countries, such as the United States, it has also resulted in an explosion in the amount of debt as more and more students take out loans to fund an increasingly expensive college education without the guarantee of a stable and well-paid job after graduation. Without a broader understanding of class and wealth, outcomes like this will probably be the rule rather than the exception.

The new markers of class distinction, that have existed all along but have suddenly gained promience

This is by no means an exhaustive list, but I believe these to be the most important ones. Unlike formal education and land ownership, which were inventions brought about by the transformation of human societies, these have been with us all along, codified in our culture and stories, hovering below the level of conscious awareness until now, when their peculiar absence has put a spotlight on them.

Attention

Have you noticed recently how hard it has become to pay attention to something for any amount of time unless you are compelled to do so? You are not alone. Your attention has been hijacked by highly addictive devices (mostly smartphones) that supply an endless stream of usually meaningless and sometimes harmful information: emails, ads, social media feedback. Even as I type these works, I keep getting distracted by my phone. Try watching a movie or reading a book, and count how many minutes you can go without feeling the urge to scroll through a news or social media feed for no apparent reason. Worst of all, you know this is bad for you, but you can’t help it and you cannot really unplug from this Matrix. People who manage to eliminate or minimize this problem are usually educated, high-income individuals who have some understanding of the risks and can afford to let go without severely disrupting their lives.

Community

Here is a trite phrase that comes up again and again: “humans are social animals.” It happens to be true. Going to parties and other group gatherings is not everyone’s cup of tea, but we are driven to seek out meaningful, reciprocal relationships with other people. Throughout most of history, such relationships developed naturally within local communities, which occupied very limited geographical areas and were held together by familial, ethnic, and religious bonds. Today, a much smaller portion of the population live in such communities, which have become rarer. Those lucky enough to grow up in one may soon have to move away because of education and career opportunities elsewhere. Governments, social reformers and even for-profit corporations have tried hard to replicate the support functions of communities, but there is always something missing. Community is much more than a touchy-feely notion or corporate slogan, it has real-world impacts on people’s mental health, professional success, and general well-being.

Skill

We supposed live in an age of abundant information where it is possible to learn professional skills without actually going to school. While this is technically true, how well this works out in reality is a different matter altogether. Truly mastering something requires motivation and continuous focus, which have nothing to do with ease of access. If you pull it off and learn something that is in demand, congratulations, now you must compete against a thousand others who did the same thing. It’s like the stock market: on average, you cannot beat the market, without having a real advantage. Easily accessible information simply means that the saturation effect kicks in faster as people scramble to acquire the latest in-demand skills. Ironically, this temporary limelight distracts from essential skills that matter in the long run, not just for the short-term goal of finding jobs but the long-term benefit of society.

The definition of wealth (and class) should be updated

Is it a step too far to classify these valuable but diminishing resources as a form of wealth? They have not been considered so because we have never faced the prospect of losing them, nor have we had occasion to reflect on their importance. These are things we took for granted.

Why the sudden spotlight? Part of the reason is that a vast portion of humanity is subject to surveillance and manipulation by gigantic online platforms that, motivated by commercial incentives, attempt to take over more and more of your life. Side-effects of this takeover are inevitably bad for the users, no matter how much the corporations try to downplay them. Another explanation is the breaking up of traditional local communities by the joint forces of urbanization and commercialization. Regardless of the true causes, the disruption in our ability to access these resources has been strong enough to cast the spotlight on them.

There is mounting evidence that the way define we wealth and prosperity is problematic, because we let it drive policy goals and skew incentives in a harmful direction. Why not expand the definition? Throughout most of human history, the necessities for physical and mental well-being has been confined to the basics: food, shelter, and clothing. Over the last couple of centuries, education has become important enough to be included in this category. But I do believe this list needs to be expanded. Only then can we start to align our efforts with what really matters.