The "hooligan middle class" will drag down China's economic development

What does the future hold for China's economy, politics and society? Since the time that the reform and opening up policy was implemented, material economic indicators such as avoiding the middle income trap and becoming a high-income economy have been relatively easy to define; material pursuits, undertaken by individuals, have also been understandably self-serving and self-motivated. That said, as societies are made up of individuals, any discussion on economic development has to start from a holistic consideration of the individual.

It is often said that human achievement is proportionate to the potential of the mind. It follows, then, that a country's economic achievement is dependent on its collective consciousness. While this does not necessarily connote the possession of independent thought by every individual, the society's progress must be led by a thinking cultural middle class. This is because material progress may not lead to overall progress and may even be disastrous for society, such as the irrational pursuit of single-minded economic development and the pursuit of the various interpretations of utopia, among others.

The positive and negative relationships between culture and economic growth have been discussed at length by many scholars. In his book The Protestant Ethic and the Spirit of Capitalism, German sociologist Max Weber described and analysed the influence of the Protestant ethic on Western capitalism, where enterprises and entrepreneurs epitomise the spirit of hard work in the pursuit of wealth and possessions. In contrast, in The Theory of the Leisure Class: An Economic Study of Institutions, Thorstein Veblen reflected upon the negative impact of the culture of conspicuous consumption on economic growth at the time. Contemporary economist Benjamin Friedman, in his book The Moral Consequences of Economic Growth, explored the relationship between the economy and morality, and argued that periods of growth have coincided with progress toward fairness, social mobility and openness, while periods of stagnation have coincided with retreat from progressive goals.

It is commonly observed that once a society reaches a certain stage of economic development, how cultured it becomes has a direct impact on further development. This is because economic development is ultimately dependent on consumption and technology. While human consumption is finite, cultural consumption is unlimited. And in the post-industrial world and information technology era, the cultural middle class's imagination is crucial to technological advancement. In essence, societal affluence depends on cultural richness. Some studies have found that high-end technology and capital have been retained within these Western societies despite the challenges of globalisation and economic difficulties. The cultural middle class is the mainstay of Western societies that supports the retention of high-end technology and capital, and accounts for the slower-than-anticipated decline of the West.

What is the relevance of the cultural middle class to China? Over the past four decades, China's economic miracle has transformed a poor country into the second largest economy in the world, with a per capita income of about US$10,000. More importantly, nearly 800 million Chinese have bid farewell to poverty with China's extensive poverty alleviation effort, resulting in the explosion of the middle class in the material sense.

Unfortunately, the material middle class remains "culturally-bereft", and can perhaps even be called a "hooligan middle class". How, when even the wealthiest groups have not escaped this predicament, will China avoid the middle income trap? How will China transform from quantitative to qualitative economic growth? How can the material middle class avoid excessive material consumption through thoughtful cultural consumption? How can nurturing a cultural middle class result in a robust consumer society? These questions are pertinent to the future of China's economy and the Chinese society.

Cultural poverty manifests itself in every aspect of daily life. Incivility occurs in both the bottom and the wealthiest strata of the Chinese society. Many people in high-end residential districts have already attained or exceeded middle class status in material life, but remain culturally impoverished. The typical person is irrational, rapacious and does not abide by the law. While he keeps the interior of his apartment magnificent, he goes outside and leaves a shambolic mess without a sense of public order. Despite a sizeable indoor living space, he invades and occupies the public space. This lack of public order is the product of a dearth of public morality, which in turn is caused by the absence of the cultural middle class.

In the absence of the cultural middle class, the ideology of Chinese society is Latin-Americanised, oscillating between the extreme left and the extreme right. People are emotionally charged and irrational, and this is typically reflected between the poor and the rich who hate each other. Envious, the former constantly schemes to raid the riches of the latter so that wealth can be redistributed. Unsympathetic, the latter believes money is power and acts above the law. The hostility is obvious.

Cultural poverty has an impact on the corruption of officials as well. The people unabashedly demand upright and moral officials to survive on air while serving them. Whether due to public pressure or self-imposed, the leaders at various levels of officialdom implement a low-wage policy. The type of governance that results is unreliable, perhaps even ineffective. Officials are human beings too and need to be rewards-motivated. However, they are also public figures whose benefits must be moderated. A low-wage policy results in unwritten rules that in turn leads to corruption, which angers the people and intensifies tensions between the government and the people.

Delusion, conjecture and supposition arise out of cultural poverty as the latter causes people to lose their interest in and ability to think rationally. The utopia in Chinese history are products of delusion, conjecture and supposition, and stand in stark contrast to the modern utopia in Western rationalism. The concept of utopia, including those outlined in early utopian socialism, was based on limited social experiments, and came about only when the ideal was popularised for replication. An ideal which is not practically feasible remains only a dream.

Sadly, these "culturally-bereft ideals" have become deeply entrenched as a culture that modifies our ways of thinking and behaviour. This culture is "exquisitely obnoxious" and has none of the underlying humility and benevolence of traditional cultures. Although some connection exists between culture and education, the cultural middle class cannot be measured by the level of education because a highly educated person is not necessarily more cultured. The "exquisite egoist", whose selfish and mercenary nature increases with educational level, hence becomes prevalent in today's culturally-bereft environment.

What is the relationship between China's economic development and the cultural middle class? In the West, the same issue may be explored from numerous perspectives, but the simple question to address is: why are original ideas and technologies a rarity in China? The economic impact of originality is obvious when discussed in the context of China's supply-side reforms. Simply put, without the supply of originality, there is no impetus from the supply side.

There are countless reasons for a lack of originality, but it ultimately boils down to a very simple answer: few people ever look at the stars as advocated by German philosopher Immanuel Kant.

Technological applications are brought to market promptly for benefit and profit. Although China is the largest market for US technologies, the US has recently accused China of stealing them. Instead of claiming that China is the world's largest manufacturing base, which is an overstatement, it is more precise to suggest that China is the world's largest assembly base. The adoption of Western technology in China, though, typically results in infringement of intellectual property rights as bootleg products flood the market.

Emulation has occurred in almost all developed countries. For example, when developing their economies, the US, Germany and others emulated the UK, Japan emulated the US and Europe, and Korea emulated Japan. These countries quickly made the transition from emulation to innovation. However, the protracted lack of interest in originality and ability to innovate in China has put the country in a passive predicament of making low value-added products. The trade war between China and the US in the past two years has surfaced the vast disparity between the two countries, where many overwhelming gaps currently exist.

The ultimate goal of the US in the trade war with China is to keep China's industries at the bottom of the industrial value chain. With this move, the US retains world supremacy as long as China's technologies do not challenge or surpass those of the US. China, recognising the importance of original technologies, is determined to heavily invest in research and development. It is debatable whether catching up with the US, which will take much time, is achievable. More importantly, the jury is still out on whether China can maintain its trajectory without the cultural middle class.

The lack of culture manifests itself sociologically too, resulting in the loss of domestic and international discursive rights. Many Chinese scholars are compradors of Western knowledge but are unable to offer useful knowledge of their own, despite China's unprecedented transformation and the West's desire in understanding China. Clearly, the West is not interested in China's imported Western knowledge because it does not explain the reality in China.

For instance, Marxism can be regarded as a contemporary equivalent to high learning in traditional China, and China leads the world in the study of Marxism with the largest number of research centres and researchers. In all fairness, however, how much original research has resulted from the vast investment of financial and human resources? The efforts made in the sinicisation of Marxism since Mao Zedong's revolution that led to the founding of the PRC has yielded little.

Many have pointed to political and management institutions as the reasons that the intellectual community use to account for the current state of China's knowledge system. While these are important, they are not the only reasons. It is overly simplistic to attribute the lack of effective knowledge to the lack of freedom of speech. In China's history, neither the concentration of political power nor the decentralisation or disintegration of state powers has obstructed the creation of new knowledge or prevented the emergence of new ideas. Regardless of the external environment, the intellectual community must reflect on its interest, ability and methodologies to create effective knowledge.

In the 1980s and 1990s, the lack of resources was blamed for the intellectual community's lack of focus in new knowledge creation. Have the significantly improved conditions, especially for the renowned professors, helped? Now, it is absurd that the more money there is, the more corrupt the intellectual community is. When money was scarce, there was a focus on creating some knowledge. With more money available, however, the focus has shifted to acquiring funding, to the detriment of knowledge creation.

The social media era has accelerated the decline of the intellectual community. To compete for fame or money, many intellectuals now jostle for online traffic, and some research institutions have even openly use online traffic to measure academic performance. Pandering to the masses will only debase the intellectual community.

The only solution is to first cultivate a cultural middle class, upon which to nurture a group of "cultural aristocrats". Instead of aristocracy in the traditional and material sense, the "cultural aristocrats" are a community with the time, interest and ability to look at the stars. This solution provides the only hope for the economy, the country and the people.

Since its economic reform, China has adopted the Four Modernisations and later included the modernisation of systems. However, human modernisation, of which the cultural middle class is undoubtedly its theme, has been omitted. Its purpose is to cultivate cultural affluence to aid in the country's development and the sustenance of its wealth.

Based on the experience of the West and the developmental journeys of Asian societies such as Japan, Korean and Taiwan, the cultivation of the cultural middle class begins with the elites, who possess the power, wealth and knowledge. More importantly, the elites must undertake the burden of responsibility, without which problems will arise even in the best of societies, now seen in populist movements in the West. China will be no different.