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Although the United States remains stuck in the economic doldrums, it is fair to call these the best of times for the world as a whole.
Thanks to rapid growth in China, India, and other less-developed countries, recent decades have brought about greater improvements in material welfare than any corresponding period in history. According to the World Bank, 42 percent of people in less-developed countries lived in extreme poverty as of 1990. By 2005, the number had shrunk to 25 percent. Hundreds of millions of people have been liberated from the tyranny of acute scarcity.
IN PHOTOS: The Rising Global Middle Class
As poverty recedes, a new global middle class is emerging. Twenty years ago, the middle class – those who make between $10 and $100 a day – made up one-third of the world population. By 2006, it was closer to three-fifths, estimates economist Surjit Bhalla. That increase represents the crossing of a crucially important threshold: Disposable income has gone from the exception to the rule. For the first time ever, most people around the world can now make meaningful choices about their material surroundings.
The rise of the global middle class will have a profound impact on the center of economic and political gravity, shifting it eastward and southward, from North America and Europe toward Africa, Latin America, and Asia. But just as important is the global cultural revolution that is now under way.
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For all of human history, beliefs, values, and social norms were adapted to a world of mass poverty – where choices were limited and generational change was imperceptible. As the new social reality of spreading affluence asserts itself, cultural transformation is unavoidable as attitudes and behaviors change to reflect the new conditions of expanding choice and accelerating change.
Recall the psychologist Abraham Maslow and his hierarchy of needs. "It is quite true that man lives by bread alone – when there is no bread," Maslow wrote in 1943. "But what happens to men's desires when there is plenty of bread and when his belly is chronically filled?" Other psychic needs come to the fore – including, ultimately, the need for "self-actualization" or realizing one's inner potential.
Maslow's analysis applies to societies as well. When capitalist wealth-creation carries a society past the threshold of mass affluence, at which point most people don't worry about meeting basic material needs, aspirations shift upward to quality of life and personal fulfillment. And any beliefs or practices that hinder the new quest for self-actualization tend to meet with increasingly stout resistance.
In this regard, it's important to recognize that economic growth isn't just about having more stuff. Growth also means development: the continuing discovery and development of human capabilities. Specifically, the richer and more advanced the economy grows, the more complex it becomes. That in turn triggers a rising demand for more highly skilled "knowledge workers."
The result is a global boom in what economists call "human capital." Adult illiteracy was cut in half between 1970 and 2005. And formal education levels are rising around the world. In China, the land of mind-boggling statistics, the number of higher-ed students roughly quadruped from 2003 to 2009. Occupational structures are changing rapidly, too, as development boosts the need for elite workers. In Taiwan, white-collar workers made up 46 percent of the workforce in 1990, but 61 percent in 2005. In Turkey, the number of professional and technical workers doubled over the same period.
The explosive growth of choices and capabilities is ushering in a fundamental reorientation of culture: away from subservience to age-old tradition and established authority, and toward a new ethos of autonomy and self-realization. People who experience the freedom of making choices about economic matters start demanding more of a say in the decisions affecting the rest of their lives.
For a sneak peek at what's in store, we can look to American history. In the postwar boom of the 1950s, mass prosperity became the norm. For the first time in history, a generation of kids – the baby boomers – was raised with their material needs taken for granted. And the economy had reached new heights of complexity: By 1960, as author Todd Gitlin notes, the US became the first society with more college students than farmers.
What followed was the cultural upheaval of the 1960s and '70s. Groups long marginalized or stigmatized – blacks, women, gays and lesbians – rose up to challenge the established order. New values – in particular, environmentalism and hedonism (sex, drugs, and rock 'n' roll) – emerged as reflections of the new focus on quality of life and personal fulfillment.
The resulting tumult produced ideological divisions that persist to this day. The left brought together those who were most eager to explore the new possibilities of mass prosperity but who at the same time questioned the market and the middle-class work ethic that created those possibilities. The right dutifully defended the institutions that had created prosperity, but feared the cultural change they were unleashing. One side rejected capitalism but gobbled up its fruits; the other rejected the fruits while praising the system that bore them. Sound familiar?
While the details differ from country to country, the American drama is now playing out on a global scale. For evidence, there's no better source than the World Values Survey, a worldwide effort to track changing cultural attitudes. The director of the survey, Ronald Inglehart, has found a clear pattern: As development widens the circle of people who enjoy material security and amass human capital, "survival" values wane and "self-expression" values strengthen. People start caring more about personal growth and less about mere acquisition, and they grow more tolerant and less deferential to authority.
Economists talk about capitalism's "creative destruction" as old firms and industries topple to make room for new ones. But creative destruction isn't confined to the economic sphere; it's occurring in the cultural realm as well. And the rise of the global middle class promises to unleash this disruptive but liberating force as never before.