Executive Summary

• Why the woes of the middle class will worsen from here
• The tax-burdened middle class vs the "dependent" class that pays no taxes
• The pinched middle class vs the gluttonous plutocrats
• How the many ensuing class wars will end

If you have not yet read Part 1: The Coming Class Wars, It's Time To Worry available free to all readers, please click here to read it first.

In Part 1, we briefly surveyed the nature of class war in advanced capitalism, starting with the Marxist analysis that such conflict was inevitable. We then moved to the present: the Grand Truce that produced the middle class is eroding, social mobility is declining, and a sharp economic and cultural chasm has opened between the unprotected working class and the protected upper-middle class.

Why Is the Middle Class Eroding?

The big question is: why is the middle class eroding? Why is the longstanding accord between labor and capital breaking down? 

Peter Turchin’s recent book Ages of Discord sheds light on the historical context.  History’s economic and social cycles can be divided into two fundamental phases: integrative eras in which cooperation between competing forces is rewarded and disintegrative eras in which cooperation dissolves into conflict and discord.

Turchin’s analysis identifies three key drivers of social and economic disintegration:

1. An over-supply of labor that suppresses real (inflation-adjusted) wages

2. An overproduction of parasitic (unproductive) Elites

3. A deterioration in central state finances (over-indebtedness, declining tax revenues, increase in state dependents, fiscal burdens of war, etc.)

It’s clear that globalization, open immigration and automation are generating an oversupply of labor that is suppressing wages, especially for the lower-skilled work force (the working class).

The entitled upper-middle class that expects a university degree to secure a well-paid career is expanding far more rapidly than the number of protected jobs, and the stresses on state finances are visible virtually everywhere: governments have gone on borrowing sprees to fund military expansion, burdened social safety nets, entitled elites and an expanding army of permanent state dependents.