Peilin Li, M K Gorshkov, Celi Scalon, K L Sharma - Handbook On Social Stratification in The BRIC Countries - Change and Perspective-World Scientific Publishing Company (2013)

Handbook on
Social Stratification
in the
BRIC Countries
Change and Perspective
March 5, 2013 16:48 9in x 6in Handbook on Social Stratification in The BRIC Countries:. . . b1344-fm
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Handbook on
Social Stratification in the
BRIC Countries
Editors
LI Peilin
Chinese Academy of Social Sciences, China
M.K. Gorshkov
Russian Academy of Sciences, Russia
Celi Scalon
Brazilian Sociological Society, Brazil
K.L. Sharma
Jaipur National University, India
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HANDBOOK ON SOCIAL STRATIFICATION IN THE BRIC COUNTRIES

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Contents
Acknowledgments xi
Introduction xv
Li Peilin
List of Contributors xxvii
Part One: Changes in Social Stratification 1

1. Social Stratification and Its Transformation in Brazil 3
C. Scalon
2. Changes in the Social Structure of Russian Society

Within a Period of Transformation 21
Z. T. Golenkova and M. K. Gorshkov
3. Social Stratification and Change in Contemporary India 37

K. L. Sharma
4. Changes in China’s Social Stratification Since 1978 59

Li Peilin
Part Two: The Working Class 85

5. Labor, Workers, and Politics in Contemporary Brazil:
1980–2010 87
M. A. Santana
v
vi Contents
6. The Working Class in a Transitional Society:

From the Soviet Union to the Russian Republic 111
Z. T. Golenkova and E. D. Igitkhanian
7. The Urban Industrial Working Class and the Rural
Peasant Working Class in India 129
K. L. Sharma
8. The Status Quo and Change to the Working Class

in Contemporary China 139
Li Wei and Tian Feng
Part Three: Peasants 161

9. The Brazilian Peasantry: A History of Resistance 163
M. de Nazareth Baudel Wanderley
10. The Transformation of the Social Structure

in Modern Rural Russia 181
A. A. Hagurov
11. The Differentiation of the Peasantry in India
since Independence 201
K. L. Sharma
12. Rural Society and Peasants in China 221

Fan Ping
Part Four: Enterprises and Entrepreneurship 251

13. Innovative Entrepreneurship in Brazil 253
S. K. Guimarães
14. The Development of Entrepreneurship in Russia:
Main Trends and the Status Quo 273
A. Chepurenko
15. Tradition and Entrepreneurship of Indian Private

Entrepreneurs 299
K. L. Sharma
Contents vii
16. China’s Fledgling Private Entrepreneurs

in a Transitional Economy 315
Chen Guangjin
Part Five: The Middle Class 337

17. The Formation of the Middle Class in Brazil:
History and Prospects 339
A. Salata and C. Scalon
18. The Middle Class in Russian Society: Homogeneity

or Heterogeneity? 359
N. E. Tichonova and S. V. Mareyeva
19. The Rise of the Middle Class in India since Independence 379
K. L. Sharma
20. The Heterogeneous Composition and Multiple Identities

of China’s Middle Class 395
Li Chunling
Part Six: Income Inequality 419

21. Income Inequality and Social Stratification in Brazil:
Key Determining Factors and Changes in the First
Decade of the 21st Century 421
L. G. Costa and C. Scalon
22. Income Inequality in Russia 439

Y. Epikhina
23. Poverty and Income Inequality in India’s Urban

and Rural Areas 455
K. L. Sharma
24. Structural Characteristics and Trends of Income

Inequality in China 481
Chen Guangjin
viii Contents
Part Seven: Educational Inequality 499

25. Educational Inequality and Social Stratification in Brazil 501
M. da Costa, M. C. Koslinski and L. G. Costa
26. Inequality in Education: The Case of Russia 525

D. L. Konstantinovskiy
27. Education and Social Stratification in India:
Systematic Inequality 549
K. L. Sharma
28. Educational Inequality and Educational Expansion in China 569

Li Chunling
Part Eight: Consumption 593

29. Beyond Social Stratification: A New Angle on Consumer
Practices in Contemporary Brazil 595
M. Castañeda
30. Consumption and Lifestyle in Russia 611

P. M. Kozyreva, A. E. Nizamova and A. I. Smirnov
31. The New Emerging Consumption Class and Their Lifestyles 637
K. L. Sharma
32. The Stratification of Consumption among Social Classes,
Occupational Groups, and Identity Groups in China 649
Tian Feng
Part Nine: Class Consciousness and Values 675

33. Working Class Formation in Brazil: From Unions
to State Power 677
A. Cardoso
34. The Research of Class and Group Consciousness

in Contemporary Russian Society 703
M. F. Chernysh
Contents ix
35. Social-Class Connection and Class Identity

in Urban and Rural Areas 717
K. L. Sharma
36. Stratum Consciousness and Stratum Identification in China 733
Li Wei
List of Tables and Figures 755

List of Abbreviations 767
References 771
Index 819

Acknowledgments
In 2009, the Chinese Academy of Social Sciences (CASS) and Russian Foun-
dation for Humanities (RFH) signed a collaboration agreement. One impor-
tant point of the agreement was that the Institute of Sociology at CASS
and the Institute of Sociology at Russian Academy of Sciences (RAS) would
work together on a comparative study of social stratification between China
and Russia starting from 2010. This comparative study was scheduled to be
based on field investigations, but for the purpose of early-stage preparation,
the two parties decided to hold two seminars before the investigations. In
order to make the seminars more productive, we agreed to write the semi-
nar papers under a common framework, so that a book could be published
after the seminars.
The year 2010 marked the 30th anniversary of the Institute of Soci-
ology at CASS, and a grand celebration was held in April 2010. As the
resident of the Chinese Sociological Association and Director-General of
the Institute of Sociology at CASS, I invited Tom Dwyer (former President
of Brazilian Sociological Society, who had just finished his presidency at
that time), Valery Mansurov (President of the Russian Society of Sociolo-
gists), and Uttam B. Bhoit (President of the Indian Sociological Society) to
join the celebration and deliver speeches. As one of the celebration events, a
conference entitled “Globalization and Social Development” was held, with
participants from the BRIC countries (Brazil, Russia, India, and China).
Professor Ishwar Modi, the Secretary-General of the Indian Sociological
Society, and Tavares dos Santos, the former President of the Brazilian Soci-
ological Society, also attended the conference.
Tom and I could be called “old friends” — I knew him several years ago
when he was still the President of Brazilian Sociological Society through
Professor Shen Mingming of Beijing University. Before that, our institute
had almost no connection to Latin America’s world of academic sociology.
xi
xii Acknowledgments
After an initial contact, Tom invited me to attend the annual conference of

the Brazilian Sociological Society, and arranged my meeting with Fernando
Henique Cardoso, a renowned Brazilian sociologist and former President of
Brazil. Tom is an enthusiast who actively advocates communication and
cooperation among sociologists of BRIC countries.
I spoke to him about the joint research project between China and
Russia on social stratification to Brazilian and Indian sociologists at the
Beijing “Globalization and Social Development” conference, and invited
them to participate as well, so we could expand the joint research between
China and Russia into a collaboration project among the four BRIC coun-
tries. In July 2010, I was invited by Professor Michel Wieviorka, President
of the International Sociological Association (ISA), to give a keynote speech
at the presidential plenary of XVII/17th ISA World Congress of Sociology
held in Gothenburg, Sweden. I also attended the BRIC Sociologists special
session organized by Tom. Also at the Congress, I met Professor Celi Scalon
(President of Brazilian Sociological Society) again. Tom told me that she
is one of the best sociologists doing social stratification research in Brazil.
After the Congress, Celi formed a group of Brazilian sociologists who were
writing papers on the Brazilian social structure. In India, I established
a connection with Professor K. L. Sharma of Jaipur National University
through the introduction of Professor Ishwar Modi, the Secretary-General
of the Indian Sociological Society. Although Professor Sharma is quite senior
in age, he is very courageous and hardworking — he wrote all the nine chap-
ters on Indian social stratification.
In the fall of 2010, I led the research team of CASS Institute of Soci-
ology to participate in a seminar on Sino–Russian social structure com-
parison in Moscow, which was jointly sponsored by the RAS Institute of
Sociology and the CASS Institute of Sociology. The two parties reviewed
each other’s paper drafts and proposed revision suggestions to each other.
I know the Director-General of the RAS Institute of Sociology Professor
M. K. Gorshkov and the deputy Director-General of the Institute Professor
Z. T. Golenkova quite well — both of them even visited my institute in
Beijing. I know Professor Z. T. Golenkova particularly well — she visited
my institute several times, and she is also an expert on social stratifica-
tion research in Russia. The President of Russian Society of Sociologists,
Valery Mansurov, is also the Deputy Director-General of the RAS Institute
of Sociology. Another Deputy Director-General is Polina M. Kozyreva. Here
I would like to extend my special thanks to Polina, who was in charge of
almost all the coordination and communications between Russian scholars
and our side.
Acknowledgments xiii
The collaboration among sociologists of BRIC countries turned out to

be much more complicated than I expected, because our final goal was to
write an English book collectively on the social structures of BRIC countries,
but many of the authors from Brazil, Russia, and China could not write in
English, and it is almost impossible to find a person who can translate Russian
and Portuguese papers into English in China. In the end, I would like to
acknowledge the Director-General of the RAS Institute of Sociology Professor
M. K. Gorshkov and the President of Brazilian Sociological Society Professor
Celi Scalon for their support in translating the papers written in Russian
and Portuguese into English, before they were sent to China. In this book,
papers written by Brazilian and Indian authors were translated into Chinese
from English, while papers written by Russian authors were translated into
Chinese directly from Russian. In October 2010, a conference on the social
structures of BRIC countries was held in Beijing, and [the Chinese version
of this book] was scheduled to be published before the conference.
I firmly believe that this book will have significant influence after its
publication. That’s why I have devoted my enormous time and energy in
organizing this book. The influence not only results from the contents of
the papers, but more from the impact of the rise of BRIC countries on the
future global economic and political regime.
I would like to extend my special thanks to Wang Lei, the Deputy
Director-General of the Bureau of International Cooperation (BIC) at
CASS, and Jin Zhe, the Deputy Director of the European–Asian Divi-
sion of BIC, who paid close attention to this collaboration research and
provided us with tremendous support throughout the project. I also want
to thank my research team, whose productive and excellent work made
this collaboration project move smoothly. Professor Chen Guangjin, the
Deputy Director-General of my institute, and Mr. Zhao Kebin, the Direc-
tor of the Division of Research Administration of my institute, assisted
me throughout the process and did lots of work related to this research.
Professor Li Chunling was in charge of the communications with authors
from the BRIC countries, while assistant research fellow Dr. Lu Peng did
lots of editorial work for the unification and formalization of this book.
Mr. Xie Shouguang, the Director of Social Sciences Academic Press under
CASS, and Tong Genxing, the editor of this book, gave huge support to the
publication of this book, for which I would like to thank them sincerely.
Li Peilin
June 30, 2011, Beijing

Introduction
Li Peilin
It is by chance as well as a historical inevitability that the term BRICs (or

BRIC countries) has become so popular. Jim O’Neill, the chief economist
of the internationally renowned investment bank Goldman Sachs originally
coined the term ten years ago, in 2001. An economist with a Manchester
working class family background, O’Neill is now world famous because of
this brilliant coinage, even though at the time of its birth he had visited
only the “C” of the BRICs — China.
O’Neill first proposed the concept of BRICs on 20 November 2001 in a
Goldman Sachs economic research report entitled “The World Needs Better
Economic BRICs”. In 2003, O’Neill and his team at Goldman released a
research report “Dreaming with BRICs: The Path to 2050”, which boldly
predicted that the world economic regime would be reshuffled: Brazil would
overtake Italy in 2025 and France in 2031, while Russia would overtake
Britain in 2027 and Germany in 2028; India would overtake Japan in 2032,
and in 2041, if all things go smoothly, China would overtake the United
States as the world’s largest economy. The total gross domestic product
(GDP) of the BRICs would exceed that of the major six Western industri-
alized countries (G7 without Canada), and therefore, the world’s major eco-
nomic powers would become China, United States, India, Japan, Brazil, and
Russia. However sensational it sounded then, this Goldman Sachs report
has drawn close attention from investors, financiers as well as policy-makers.
Obviously, people were not taking this prediction as a sheer utopian idea,
but rather regarded it as an actual development trend. While China is called
xv
xvi Li Peilin
“the world’s factory”, Brazil is considered “the world’s raw material base”,
Russia “the world’s gas station”, and India “the world’s office”.
It was indeed a bold and rather ingenious idea to bring the four coun-
tries together and craft the concept of “BRICs”. In many respects, the four
countries are sharply different from each other, but they are all emerging
economic powers. Whether looking from a geographical, historical, or a cul-
tural perspective or taking their religions, languages, and values into consid-
eration, the four countries are quite different. More importantly, the term
“BRICs” by itself sounds far more powerful and promising than phrases like
“emerging economies”. In Chinese, “BRICs” is translated into jin zhuan
(meaning golden bricks), which is even more vivid and expressive.
To Western scholarly ears, the BRIC concept sounded a bit like a non-
Western alliance bent on challenging the dominance of developed Western
countries, and it therefore produced a certain amount of anxiety. Moreover,
the concept was much more than a rhetorical flourish. On 6 June 2009, the
first BRIC summit was held in Yekaterinburg, Russia, after which a second
was held in Brazil’s capital city Brasilia during 15–16 April 2010, when a
Joint Declaration was issued and the cooperative mechanism of the BRICs
was inaugurated. One year later, on 14 April, a third BRIC summit was held
in Sanya, China, when the Sanya Declaration was released as a blueprint for
future cooperation. The BRIC countries’ leaders also unanimously agreed
to admit South Africa into this “BRIC countries club” and scheduled the
fourth meeting in India for 2012. We can see that the concept of “BRICs”
has rapidly developed from an abstract economic and financial concept to
international political and economic reality.
There are two frequently mentioned theoretical frameworks of compar-
ison when analyzing China. One is the “East Asian Development Model”,
which proposes a flock of geese pattern of development in the East Asian
Confucian cultural context, with Japan as the leading goose, followed by
South Korea, Singapore, Taiwan, Hong Kong, or “the four Asian tigers”,
and then the massive economy in the back — China. All these countries and
regions, when they were in their high-speed development stage, were char-
acterized by high levels of savings, investment, and exports. In the global
economy after World War II, for instance, Japan and the Asian tigers were
among the very few countries and regions who successfully transcended the
boundaries of “core–semi-peripheral–peripheral”. The other popular frame-
work of comparison is that of “Transition Countries”, which argues that
China, just like Soviet Union and Eastern European countries, is transi-
tioning from a planned economy to a market economy, a vital role in the
Introduction xvii
development of transition countries. New institutionalism is the leading

theory in this comparison framework.
Now we have a brand new theoretical comparison framework within
China studies — the “BRICs” framework. It is different from the East
Asian Development Model, which is based on cultural and geographical
similarities; it is also different from the Transition Countries framework,
because it is not established on the basis of shared patterns of market
transition. Probably the only justification for comparison among the BRIC
countries lies in the fact that they are all emerging economic powers and
share common interests in restructuring the global economic and social
regime.
As for the overall economic power of the BRICs, China accounts for
more than half. The total GDP of the BRICs in 2009 was $8,948.849 billion,
of which China accounted for 54.9%, while Brazil accounted for 17.6%, India
13.8%, and Russia 13.7%. However, viewed in terms of GDP per capita,
Russia and Brazil were both considered as developed countries in 2008,
with the former exceeding $10,000 to $11,796.92, and the latter $8,235.49;
China and India, however, were still developing countries, with a GDP per
capita of $3,312 for the former and $1,022.34 for India, and it is the first
time for India to exceed $1,000.
The differences between the development levels of Russia and Brazil
and China and India are evident not only in their per capita outputs, but
also in the structure of their industries. Considering the breakdown among
the agricultural, industrial, and service sectors within GDP in 2009, Brazil
(6.1%, 25.4%, 68.5%) and Russia (4.7%, 32.9%, 62.4%) had basically com-
pleted their industrialization and urbanization, while China (10.6%, 46.8%,
42.6%) and India (17.2%, 28.4%, 54.4%) still had a substantial proportion
of farmers.
Housing prices in the capitals of Brazil, Russia, India and China also
reflect, to some extent, the living standards of the four BRIC countries. By
2009, the average housing price in Brasilia was R$12,000/m2, equivalent
to $6,666/m2, and 156,400 rubles/m2 in Moscow, equivalent to $5,320/m2,
while the average housing price in Beijing was 15,808 yuan/m2 , equivalent
to $2,325/m2, and 65,000 rupees/m2 in New Delhi, equivalent to $1,411/m2.
These statistical comparisons, however, are far from enough for us to
have a deep understanding about the BRICs. Actually, the four great pow-
ers have pioneered new paths of development, which are quite different
from the traditional theory of modernization. In other words, the patterns
of modernization in the four countries are dramatically different from those
xviii Li Peilin
of the Western countries and their practices would probably require that
scholars rewrite modernization theory.
“Football” springs to mind whenever Brazil is mentioned. As the largest
country in Latin America, and the fifth largest in the world, Brazil also
ranks fifth in the world in terms of its population, at more than 190 million.
Brazil was historically a colony of Portugal, with Portuguese as the national
language and a majority of Catholic population. It is also a multi-racial
country, in which the white people account for 49.4% of the population,
mixed-blood 42.3%, Afro-Latin American 7.4%, with the remainder made
up by a small number of Asian Latin Americans, natives and Indians.
In 1960, Brazilians living in rural areas still accounted for 55% of the
total population, but by 2010 this proportion had fallen to 16%. There are
also significant regional disparities in Brazil. The Southeastern regions of
Brazil are far more developed than the Northeastern regions, which are
more rural and stuck at levels of industrialization and urbanization far
below the national average. As in China, the term “farmer” in Brazil, to
some degree, is still synonymous with “poor person”. Although the arable
land per capita for Brazilian farmers is much larger than that of their
Chinese counterparts, comparatively speaking, regions with more agricul-
tural workers are still economically backward regions.
During the 30 years between 1950 and 1980, Brazil enjoyed a remarkable
average economic growth rate of 7%, largely thanks to the shift of laborers
from rural to urban areas. With its rapid economic growth, the income gap
between the rich and the poor increased dramatically. At certain points, the
income gap was so high that the Gini coefficient was over 0.6. Some scholars
argue that it is one of the major reasons why Brazil became ensnared by the
“middle-income countries trap”. However, Brazil’s Gini coefficient started
to decline in 1997, and had fallen from 0.6 to 0.53 by the end of 2007. Its
impoverished population has also decreased significantly during the same
decade, and by 2011 the number of Brazilians living below the poverty line
with a monthly income of less than R$70 had fallen to 16.2 million.
Surprisingly, the rigidification of Brazil’s social stratification structure
is very significant looking from a long term — during the eight years from
2001 to 2009, there have hardly been any notable changes to social stratifica-
tion. Brazil is still not a majority middle class society. In 2009, white-collar
workers accounted for 30% of the urban population, while manual labor
made up 47.6% of the labor force.
Russia is a country that has tremendous influence on modern China.
Most people who formed the current backbone of China had grown up
Introduction xix
reading Russian literature. As the world’s largest country by both land

and water areas, Russia spans from Eastern Europe to Northern Asia, with
a total population of about 140 million, of which the European portion
accounts for four-fifths. The population in the Eastern part is compar-
atively small given the vast land area, with a population density lower
than one person per square kilometer. Russia has completed its industri-
alization and urbanization, with the urban population accounting for 73%
of the total population. Orthodoxy Christianity is the dominant religion
in Russia, followed by Islam, the second largest. 55% of Russian people
have religious beliefs, among which approximately 90% are Orthodox, 5%
Muslim, with smaller percentages of Catholics, Jews, Buddhists and so
on. Russia is also a multi-ethnic country and the great majority are the
Russian people, which have a population of roughly 115 million. Russia is
a federal state, and the Russian Federation consists of 89 federal subjects
(21 republics, six territories, 49 regions, two federal cities, one autonomous
region, and 10 autonomous areas), which are subsequently incorporated
into seven federal districts by geographical locations.
Serfdom was still legal in Russia in the 17th century, when many
European countries were enjoying rapid industrial development. In order
to follow the examples of countries in the West, Peter the Great (Peter I)
sent a mission to Western Europe in 1697 and traveled himself under a
pseudonym. After returning to Russia he implemented a series of reforms,
known as the Reforms of Peter the Great, which greatly improved the over-
all national strength of Russia. In 1721, Peter the Great declared Russia
an empire. After that, during the reign of Catherine II, Russia enjoyed
an unprecedented expansion of territory, a period generally known as the
“golden age of the Russian Empire”. In 1917, Russia established the world’s
first socialist state, and later at the end of 1922, the Union of Soviet Socialist
Republics, commonly known as the Soviet, was established.
During the Soviet era, Russia took the whole world by surprise with
some of its achievements. In 1954, the Soviet Union built the world’s first
nuclear power plant; in 1957, it launched the first artificial satellite; and
four years later, in 1961, the first manned spacecraft. By 1977, the national
economic strength of the Soviet Union had reached 70% of the Unites States
figure, its GDP 58% and per capita income 40% of the United States. From
the end of World War II to the early 1980s, the Soviet Union was regarded
as the world’s second economic power, before it started to suffer economic
stagnation and an eventual decline in national strength. The year 1991 saw
the dissolution of both the Soviet Union and the Soviet Communist Party,
xx Li Peilin
which put an end to the half-century Cold War between the Eastern and
Western camps led by the Soviet Union and the United States, respectively.
Russia’s economy underwent a severe recession after the collapse of the
Soviet Union. Since the beginning of the new century, thanks to the soaring oil
prices, Russia has witnessed rapid economic growth and become an important
member of the emerging economies. In 2000, Russia’s GDP was $205 billion,
and by 2008 it reached a record-breaking $1.67 trillion, a several-fold increase
within eight years. In 2009, due to the tremendous impact of the international
financial crisis, Russia’s GDP decreased to $1.23 trillion. According to the
World Bank data, before the international financial crisis, Russian economic
output had entered the top 10 worldwide, and its national GDP at purchasing
power parity (PPP) had ranked seventh or eighth.
With rapid economic recovery and growth, the living standards of
the Russian people have greatly improved. In 2000, the national average
monthly wage in Russia was 2,223 rubles (about $82); by 2010 it had
reached 20,815 rubles (about $682).
Although Russia has basically completed its industrialization and urb-
anization, its rural population still accounts for 27% of the total population.
Nevertheless, with its market transition underway, Russia’s social structure
has changed dramatically, which is reflected in many aspects such as prop-
erty relations, income distribution, labor organizations, and social mobility.
A new social stratification structure has gradually emerged, with some new
classes and social groups coming to the fore, such as big landlords, small-
to mid-sized entrepreneurs, managers, the “new poor”, marginal groups,
the unemployed, and immigrants. Some studies by Russian scholars have
suggested that in 2009 relatively wealthy families accounted for 41%, less
wealthy families accounted for 27%, while relatively poor and poor families
both accounted for 16% of the population. Russia has also faced problems
relating to increasing income disparity and the polarization between the
rich and the poor during the market transition. In February 2008, the Rus-
sian Kommersant reported official statistics that the gross income of the
richest 10% of Russia was 16.8 times that of the bottom 10% in 2007.
Russian scholars estimated that the Gini coefficient reached 0.4 in 2009.
Nevertheless, it is already much lower than the peak 0.56 in 1996.
India, with a population of 1.21 billion in 2011, is the world’s second
most populous country, second only to China. The 2001 Census revealed
that 72.22% of Indian people reside in over 550,000 villages, with the rest in
more than 2,000 towns and cities. India is a multi-ethnic country with a long
history, and its two main ethnic groups, the Indo-Aryans and the Dravidian,
Introduction xxi
account for 72% and 25% of the population, respectively. Religion is almost
universal in India. The most popular religion in India is Hinduism, with
believers making up 72% of the Indian population, followed by Islam (12%),
Christianity (2.3%), Sikhism (1.9%), Buddhism (0.8%), Jainism (0.4%), and
some others. This is in stark contrast to China, where the majority of people
are non-religious. Although the proportion of Buddhists is not high, India
was the birthplace of Buddhism, which is one of the three major religions of
the world. Most of the Hindu scriptures were written in Sanskrit language.
In terms of social stratification, India is marked by its Hindu caste sys-
tem, a very unique social hierarchy that permeates its history. After the
invasion by Aryans in the seventh century B.C., the Brahmans advocated
the caste system, in which Hindu society was categorized by four varnas:
Brahmana (mostly priests), Kshatriya (kings and nobles), Vaishya (civil-
ians), and Sudras (slaves). There were strict boundaries between varnas —
people were forbidden to marry outside their varnas; they could pursue only
those professions that were allowed by their varna, for example, a trader
belonging to Vaishya varna could only engage in trading activities and so
on, and strict adherence to hierarchy of the varna was advocated where the
Brahmana at the top and Sudra was at the bottom. Excluded and shunned
by the society were the “untouchables” — the Chandra (now called “Dal-
its”), which consisted of war prisoners and people resisting the caste system.
Though many new religions in India, such as Buddhism, were introduced
as a way to resist the caste system, after the Brahmanism was integrated
with Hinduism it has maintained its influence on society. Even today, long
after the right to equality had been enshrined in the Indian constitution,
traces of caste discrimination can be found.
Indian culture has had a tremendous impact on Western society. After
a thorough study of the Indian village system, Karl Marx came to the con-
clusion that the self-sufficient peasant economy is the key to understanding
Asian social structures. He wrote: “This simply arranged organization of
production provides us a key to understanding the mystery that although
Asian countries have experienced a series of disintegration and reconstruc-
tion, with ever-shifting dynasties, there oddly have not been any noticeable
changes in Asian societies. The social structure and fundamental economic
elements have always remained the same in spite of the sweeping shifts of
political powers.” (Marx, 1963).
It was during recent decades that India witnessed unprecedented and
profound changes to its social structure stemming from rapid economic
growth. The social structural changes also had a significant impact on
xxii Li Peilin
sociological studies of Indian social stratification. According to one of the

authors of this book, Professor Sharma, studies of Indian stratification
by sociologists mostly focused on the caste system, class relations, land
ownership and issues related to social elites in the 1960s. However, in the
1970s, scholars began to shift their focus to theories and methods of social
stratification. There has been a proliferation of discussions and studies on
various topics from different perspectives, such as the theoretical and his-
torical analysis of social stratification, power politics, caste and classes,
land problems, urban industrialization, and issues related to women and
other vulnerable groups. By the 1980s, although the caste system as a form
of social stratification had become quite weak, research on caste was still
an important part of Indian social stratification studies, and caste as a
political interest group identity is still important in India. By now, the
paradigm of India’s social stratification research has changed greatly. More
and more scholars are using the latest statistical methods and survey data,
conducting new social stratification studies on various aspects of Indian
society, such as income, occupation, education, land ownership, property,
class-consciousness, lifestyle, etc. Moreover, since India has a fairly devel-
oped service sector, in stark contrast to China, studies about the Indian
middle class have also gained in significance.
China is the world’s most populous country, with a long history and pro-
found culture. According to the results of its sixth census in 2010, China’s
total population had reached 1,339.7 million, an increase over 73.90 million
over 10 years. People aged 0–14 accounted for 16.60% of the population,
15–59 accounted for 70.14%, and 13.26% of the population was 60 and over.
Although China is a multi-ethnic country, 92% of the population is Han Chi-
nese. The majority of Chinese people are still farmers, despite the fact that
China has come to the middle stage of industrialization and urbanization.
In 2010, 49.68% of the population lived in urban areas versus 50.32% in
rural areas.
Since reform and opening-up policies of the late 1970s, China’s social-
ist market economy has developed deeply and rapidly. At the same time,
Chinese society has also undergone tremendous changes, which are so rapid,
dynamic, widely spread and far-reaching that they are practically unpar-
alleled in the world’s history of modernization. Changes have taken places
mainly along the following dimensions of Chinese society:
First, there have been great changes in class structure. The original simple
class structure consisting of workers, peasants, cadres and intellectuals has
Introduction xxiii
been transformed into a complex class structure composed of diverse inter-

est groups and new classes, such as the self-employed, private entrepreneurs,
executives in foreign-owned enterprises, scientific and technical personnels
in non-state enterprises, employees in various social intermediary organiza-
tions, freelancers, and so on. Quite a lot of people of the new social classes
are from the old classes of workers, peasants, cadres, and intellectuals. Even
within the same social class, the social status and economic interests of
people differ greatly. As in the case of the worker class, there are workers
in monopoly industries, workers in foreign-owned enterprises, city workers
in competitive industries, as well as migrant workers. Therefore, how to
integrate and coordinate the different interests between and within classes,
and establish a dynamically competitive and harmonious social order under
this new situation, has become one of the most important tasks of social
development.
Second, the urban–rural structure has changed greatly. Since reform
and opening up of the economy, more than 200 million farmers have left
the ancestral farming lands that they had occupied for generations. Many
left their villages and became workers engaged in the secondary and ter-
tiary industries in cities and towns. As a result, China has experienced the
world’s largest industrialization and urbanization process to date. The rapid
social mobility of such a large population has posed new issues for societal
management. How to help migrant workers from rural areas integrate into
the new social system of urban life and establish a new balanced system of
urban–rural integration has become a major challenge for current societal
management.
Third, the income distribution has changed in significant ways. Over
30 years, China’s income distribution, which used to have a fairly high
degree of equality, has changed to one defined by large income disparities
compared to other countries in the world. Income inequality, unfair distribu-
tion, and the related corruption have triggered resentments between cadres
and the masses, and are the fundamental reasons behind various social
problems. How to adjust the income distribution structure and establish a
fair and equitable income distribution system has become a pressing issue
to be addressed for maintaining social harmony and stability.
Fourth, the population structure and family structure have also expe-
rienced great changes. Along with profound changes to China’s population
structure, family miniaturization and the aging of the population have also
accelerated greatly. Many of the problems that could have been solved
with the help of members of a bigger family, such as elderly-care, the
xxiv Li Peilin
single-parent problem, mental disorders, disability and intergenerational

conflict, have gradually turned into social problems. The traditional pen-
sion model, which had been universally practiced for thousands of years
by the Chinese people, has become unsustainable due to changes in family
structure, intergenerational relations, and social mobility. These are all new
challenges Chinese society is facing now.
Fifth, there have also been changes to the patterns of social organiza-
tion. With profound changes affecting the economic system, Chinese social
life has shifted from “work unit-oriented” to “society-oriented”. On the one
hand, with reforms implemented in work units to achieve goals such as
“self-owned housing, market-based employment, socialized social security,
market-based logistic services”, “work unit” as both the fundamental of the
traditional management system and the grassroots organization of the soci-
ety have weakened their own role in solving social problems, while some of
them have completely disintegrated. On the other hand, the diversification
of employment has accelerated social mobility. The new working entities
established after reform and opening up have all adopted the “non-unit”
management system. There are no longer “all-around units”; they are only
working places now. More and more members of society have changed from
a “work unit person” into a “social person”. The proportion of “work unit
people” in the total urban employed population used to be more than 90%,
but now it has dropped to about 25%.
Last but not least, important changes have occurred in people’s social
norms and values. While the market transformation has enhanced economic
development and significantly improved people’s livelihood, it has also trig-
gered changes in social norms and values. While the pursuit of personal
interests has been legitimized, the code of conduct restraining and super-
vising the pursuit of personal interests has not been effectively enforced;
while the complexity of social life and production activities has greatly
increased, a sophisticated and suitable social management and monitor-
ing system has not been established; and while the values of people have
changed profoundly since the introduction of market economics, the con-
struction of a social morality and credit system suitable to these changes is
still lagging behind.
In a word, analyzing social structural changes, especially changes in the
social stratification structures of the BRIC countries, is a special sociologi-
cal perspective in the study and analysis of social issues. This unique soci-
ological perspective is necessary to help us achieve a better understanding
of the economic growth and social development of the emerging economic
Introduction xxv
powers. This very special perspective will also help us unveil the mystery
of how these emerging powers, with such dramatic differences in history,
geography, culture, language, religion, etc., could in some instances share a
common will and take joint action. In any event, it is the profound social
structural changes in these countries that determine their own future and,
to a large extent, will shape the socio-economic landscape of the future
world.

List of Contributors
A. A. Hagurov is a leading scholar at the Institute of Sociology in the

Russian Academy of Science and a Professor of the Department of Sociol-
ogy of Kuban State University. He is an active participant in International
Congresses and Conferences: Worldwide Congress (Poland, 1976), Euro-
pean Congress (Budapest, 1983 and Belgrade, 1996) and others. He is the
author of many articles and books dealing with the methods and method-
ology of sociological research and social problems of Russian rural areas.
The recent monographs are “Human Capital in Russian Rural Area”, M.
2005; “Sociology of Russian Rural Area”, M. 2010.
A. E. Nizamova is a senior researcher at the Institute of Sociology, Rus-
sian Academy of Sciences. She also serves as the Deputy Director of the
Center for Longitudinal Studies of the National Research University, Higher
School of Economics.
A. I. Smirnov is a senior researcher at the Institute of Sociology, Russian
Academy of Sciences, in Moscow. He earned his PhD in philosophy in 1992.
His major interests include: Political sociology, social factors of Russian
society consolidation (including institutional changes in army, family, etc.),
the dynamics of socio-economic conditions of Russian population, and the
standard of living of elder citizens in modern society.
Adalberto Cardoso is a Professor at the Institute of Social and Political
Studies at the State University of Rio de Janeiro (IESP–UERJ). His main
interests are in the fields of the sociology of work (class formation, labor
movement, labor market, job mobility, transitions from school to work,
income distribution and social structure) and social theory.
Alexander Chepurenko is a leading researcher at the Institute of Sociol-
ogy at the Russian Academy of Science and Professor in Economic Sociology
xxvii
xxviii List of Contributors
and Dean of the Faculty of Sociology at the National Research University —

Higher School of Economics, Moscow. He is also one of the leading experts
on private entrepreneurship development in Russia, especially on small- and
medium-sized enterprises.
Andre Salata is a PhD student in Sociology at Programa de Pós-
graduação em Antropologia e Sociologia (PPGSA) da Universidade Federal
do Rio de Janeiro.
Celi Scalon is a PhD in Sociology, Full Professor at Universidade Federal
do Rio de Janeiro, and currently the President of the Brazilian Sociologi-
cal Society (SBS). Her research interests are: inequality, stratification, and
public policies.
Chen Guangjin got his PhD at the Graduate School of the Chinese
Academy of Social Sciences in 1997. He is now a research fellow at the
Institute of Sociology at the Chinese Academy of Social Sciences, and the
Deputy Director of this institute. The main fields of his academic research
include rural sociology, social stratification and inequality, and social devel-
opment in China.
D. L. Konstantinovskiy is a Doctor of Sociology, Chair of the Depart-
ment of Sociology of Education, Science and Culture at the Institute of
Sociology, Russian Academy of Sciences in Moscow. He is also a Professor
at the Moscow Higher School of Social and Economic Sciences and State
Academic University of Humanitarian Sciences. His publications are in the
areas of sociology of education and youth studies.
Fan Ping is a Deputy Research Fellow of the Institute of Sociology at
the Chinese Academy of Social Sciences. His primary research interests
are rural social class, rural organization and society construction, and the
relationship between urban and rural areas.
K. L. Sharma is Vice-Chancellor of Jaipur National University (JNU),
Jaipur (India). Formerly, he was a Professor of Sociology and Rector (Pro-
V.C.) at JNU, New Delhi and Vice-Chancellor of Rajasthan University
(2003–2005). Professor Sharma was also a Visiting Professor at the College
de France, Paris, for five times between 1991–2006. He is an author of more
than 20 books and 70 research papers, Professor Sharma is widely read by
students and teachers of Sociology and other Social Sciences.
Li Chunling is a Research Fellow at the Institute of Sociology of the
Chinese Academy of Social Sciences. Her primary research interests are
List of Contributors xxix
inequality and stratification, as well as sociology of education and gender

studies.
Li Peilin is a Research Fellow and Director of the Institute of Sociology,
Chinese Academy of Social Sciences, which is the largest national socio-
logical institute in China. He also serves as the President of the Chinese
Sociological Association and the Editor-in-Chief of Sociological Studies, the
most important sociological journal in China. He was selected as an Aca-
demic Fellow of the Chinese Academy of Social Sciences in 2011.
Li Wei is an Associate Professor at the Institute of Sociology, Chinese
Academy of Social Sciences. He received his PhD degree from the same
institute in 1999. His main research areas are developmental sociology and
economic sociology.
Lygia Costa earned her PhD in Sociology from the Instituto Universitário
de Pesquisas do Rio de Janeiro–UCAM in 2009. During her PhD program,
she was a visiting scholar at Columbia University (2005–2006) in New York.
She has had a post-doctoral position at the Department of Instituto de
Pesquisa e Planejamento Urbano e Regional at Universidade Federal do
Rio de Janeiro since September 2009, and her major interests are social
inequality, urban development, and social stratification.
M. K. Gorshkov is an Associate of the Russian Academy of Sciences,
Laureate of the Russian Federation State Prize in the sphere of science and
technology, and Director of the Institute of Sociology, Russian Academy
of Sciences, which is the largest and leading national sociological insti-
tute in Russia. His works and scientific interests focus on the methodology
and methods of sociological research, theory and practice of public opin-
ion investigation, sociology of mass consciousness, sociology of political and
socio-political processes, and the sociology of identity.
Marcelo Castañeda is a social scientist, working on his PhD at
CPDA/UFRRJ (Social Science Program for Agricultural, Development and
Society at the Federal Rural University of Rio de Janeiro). His research
interests include Methodology and Epistemology, Anthropology and Soci-
ology, especially consumption and technology, with concentrations in politi-
cal action, environmental issues, gastronomy, the internet, new information
technologies, material culture and lifestyles.
Marcio da Costa is an Associate Professor of Education at the Brazil
Rio Federal University. He is also on the Brazilian Society’s education
xxx List of Contributors
committee, as well as the national coordinator of the graduate education

research and scientific committees.
Marco Aurélio Santana is a Professor of Sociology in the Sociology
Department and also the Graduate Program in Sociology and Anthropology
at the Federal University of Rio de Janeiro (UFRJ).
Maria de Nazareth Baudel Wanderley is a retired Professor at the
State University of Campinas, Assistant Professor at PPGS/UFPE, and
study holder at CNPq (National Council for Scientific and Technological
Development). Her major fields of interest are within the Rural Sociology,
especially studies of peasantry, family farmers, and modern rurality. Cur-
rently, she is the leader of the Laboratory of Rural Studies at UFPE.
Mariane C. Koslinski is Professor in the Education Department of the
Federal University of Rio de Janeiro (UFRJ). She earned her PhD at the
Institute of Philosophy and Social Science of the same university in 2007
and was a visiting scholar at the Center on Organizational Innovation at
Columbia University in 2005–2006. She is the author of many articles on
the sociology of education and political sociology focusing the theme of
educational and social inequalities.
Mikhail F. Chernysh is Head of the Sector of Social Mobility Studies of
the Institute of Sociology of the Russian Academy of Sciences. His main
interests are in the fields of class analysis, social structure, social mobility,
and social justice theory.
N. E. Tichonova is a Doctor of Sociology (2000), Deputy Director of the
Institute of Sociology at the Russian Academy of Sciences, Department
Head at the National Research University — Higher School of Economics,
a member of the international editorial board of the journal Vestnik of
Institute of Sociology. She is a recognized specialist in cultural dynamics,
social stratification and social policy.
P. M. Kozyreva is a Doctor of Sociology and First Deputy Director of
the Institute of Sociology, Russian Academy of Sciences. She also serves as
Director of the Center for Longitudinal Studies at the National Research
University Higher School of Economics.
S. V. Mareyeva is a senior researcher at the Institute of Sociology, Russian
Academy of Sciences. She holds a PhD in Sociology from the Institute of
Sociology (2009). Her main areas of interest include social stratification,
the middle class, socio-cultural modernization and cultural dynamics.
List of Contributors xxxi
Tian Feng is an Associate Professor at the Institute of Sociology, Chinese

Academy of Social Sciences. He received his PhD degree at the same insti-
tute. His main research areas are consumption stratification, the floating
population and migrant workers, families and population.
Yu Epikhina is a researcher at the Institute of Sociology of the Russian
Academy of Sciences. Her interests are in social inequality, education, and
religion.
Z. T. Golenkova is the Deputy Director of the Institute of Sociology,
Russian Academy of Sciences. She is a leading sociologist on society’s social
structure, Russian sociology history, and the sociology of East European
countries.

March 5, 2013 16:47 9in x 6in Handbook on Social Stratification in The BRIC Countries:. . . b1344-ch01
Part One
Changes in Social Stratification
1
2
1
Social Stratification and Its
Transformation in Brazil
C. Scalon
Inequality and Stratification

According to Grusky (2008: 13), “The task of identifying the essential
dynamics underlying social change has long been fundamental to Sociology,
but nowhere is this interest better developed or more fundamental than
within the field of inequality analysis.”
Thus social transformation cannot be discussed without also taking
into consideration transformations in the distribution of wealth and how
individuals are allocated within the social structure. This is all the more
important given that inequality is the most expressive trait of Brazilian
society, appearing as a multi-dimensional, transversal, and durable phe-
nomenon. Inequality is largely the result of the way in which social strat-
ification is configured within a given society. It depends on circumstances
and on choices made throughout the history of each society. This is why
analyzing class structure is so relevant to understanding Brazil.
All contemporary societies are unequal and the inequality is manifested
in many different ways: power, wealth, income, and prestige, among others.
Its origins are as varied as its manifestations. What makes Brazil distinct
is that such historical inequality persists even though the country has been
going through an accelerated process of modernization. This trend becomes
clearer when looking at the extremely elevated rates of income inequality.
Even as the Gini coefficient has steadily decreased over the last decade, the
degree of inequality in income is still quite high, even when considering how
unequal the Latin American continent is as a whole.
3
4 C. Scalon
100
90
80
70
Percentage
60
50 Urban
40
30 Rural
20
10
0
1940 1950 1960 1970 1980 1991 2000 2010
Fig. 1.1. Brazilian population in rural and urban areas by decade.

Source: Population censuses, Brazilian Institute of Geography and Statistics (IBGE).
It is therefore crucial that we take a better look at the structural

changes that have taken place in emerging countries during the last few
decades. In Brazil, the greatest transformation in the country’s social struc-
ture in the last decades is still, to this day, the transference of labor force
from the countryside to the city. Until 1960, the population was still mostly
rural, with 54.92% living in the countryside. Since then there has been sig-
nificant growth within the urban population (see Fig. 1.1).
According to the 2010 census, Brazil has a population of 190,732,694
inhabitants, 84.35% of whom (160,879,708) live in urban areas. These rates
vary from region to region, for instance, the urbanization rate in the South-
east is 92.92%, while in the Northeast the rate is 73.13%. Note that the lat-
ter is the poorest region of the country, having the largest rural population,
approximately 27%.
On a purely demographic level, this transformation is meaningful since
it incorporates transformations in the occupational and economic struc-
tures, as well as access to goods and services. Naturally, this transformation
also has an impact on the composition of the labor force because every year
legions of workers become employed in urban sectors.
Brazil’s economy grew at an average rate of 7% per year between 1950
and 1980, a development rate made possible because of the transference of
labor force from country to city, and also because of importing technology.
These factors were also facilitated by the accelerating growth of the GDP
and rising productivity.
The country started industrializing at the end of the 19th century, but
industrial growth started accelerating only after 1950. Until then, Brazil’s
Social Stratification and Its Transformation in Brazil 5
economy was based on traditional labor relationships. With modernization,

an increasingly unequal income distribution has run parallel to this
development.
In 1940 and 1950, over 60% of the EAP (Economically Active Popu-
lation1 ) was employed in the primary sector, but in 1980, this percentage
dropped to 31%, further dropping to 26% in 1996. This reduction is still in
progress since demographic statistics from the year 2000 census show that
out of an EAP2 comprising 87.2 million people or 48.5% of the country’s
total population, only 24.2% still worked in the primary sector. Here, special
attention should be given to the progressive mechanization of agricultural
work in the country.
The secondary sector employed 19.3% of the EAP in the year 2000. This
small proportion may be explained by mechanization and robotization in
industrial activity. In any case, this phenomenon may be explained by the
de-industrializing process that took place in Brazil during the 1980s and
1990s. Already in the 1980s, workers in the secondary sector only comprised
29% of the EAP.
The tertiary sector currently employs the greatest number of Brazilian
workers, corresponding in 2000 to 56.5% of the EAP. Activities that in 1960
incorporated merely 33.3% rose to 40% in 1980. However, we need to keep in
mind that this kind of work is not dominated by modern businesses but, on
the contrary, personal care and services that generally employ unqualified
labor.
The tertiary sector enjoyed the greatest growth rate in the country. In
1940, it employed only 20% of the EAP; in 1980 this proportion had dou-
bled and by 1996 it had already come to incorporate 56% of the 68 million
people making up the economically active population in the country. The
tertiarization of Brazil’s economy, which reached a peak during the 1980s
economic crisis, relocated labor force from the secondary and primary sec-
tors to the tertiary sector, and grew at a rate of 16% between 1980 and
1996.
Figure 1.2 shows the evolution of the distribution of the three sectors
between 1940 and 2000.
1 The Economically Active Population (EAP) corresponds to individuals who are cur-
rently employed or are effectively seeking for employment.
2 This number represents 48.5% of the Brazilian population in 2000. However, it can
be underestimated, considering that many workers are not registered, such as children,
teenagers, domestic workers and street vendors, among others.
6 C. Scalon
Fig. 1.2. Economic sectors by year.

Source: Population censuses and 1996 demographic counting, IBGE.
In 2009, of the 162.8 million people who were 10 years or older, 101.1
million were economically active. Out of these, 92.7 million were employed
and 8.4 million were looking for work during the week the survey was carried
out (PNAD, 2009). In other words, the unemployment rate was 8.3%.
Urbanization and industrialization led to the appearance of new urban
social groups with ties to the modernized sector of the national economy.
At the same time, however, the urban industrial sector remained concen-
trated in the Southeast (Rio de Janeiro and São Paulo) and these new classes
lived alongside traditional structures located in less developed regions.
This is the typical scenario throughout Latin America. As Shanin
(1976: 53) has affirmed: “In Latin America capitalist production is com-
bined in a variety of ways with other modes of production, thus constituting
a degree of complexity difficult to comprehend.” In addition, urban develop-
ment in Brazil has increased at a much greater rate than industrial develop-
ment. Consequently, the economy is incapable of absorbing all of the available
labor force, thus resulting in unemployment and underemployment.
In 2009, merely 50% of the salary-earning workforce had registered jobs,
44.7% were either independent or working without signed documents, and
4.4% worked merely for their own subsistence (PNAD, 2009).
Different from poverty, which is more visible and easier to target for
specific eradication policies, inequality is not always perceived and framed
as a problem. As an all-encompassing and diffuse problem, inequality may
be found wherever we look: income, education, employment, physically
0.61
0.6
0.59
0.58
0.57
0.56
0.55
0.54
0.53
0.52
0.51
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Fig. 1.3. Evolution of the Gini Index for Brazil (1995–2005).

Source: Paes de Barros et al. (2007).
occupying geographic space, and even citizenship are stratified and

unequally distributed.
Despite a decrease in income inequality (see Fig. 1.3), with a 0.05 drop
in the Gini index within a decade, Brazil still possesses one of the worst
income concentration rates in the world. In 2009, the Gini still hovered
at 0.54.
In Brazil, it is clear that poverty is the result of an unequal income dis-
tribution. Poor people work and may thus be considered to be “deserving
poor ”. Yet due to a lack of capital — both educational capital and prop-
erty — they actually earn much less than what would be necessary to lead
a dignified life.
There has been some debate over the methodologies used to measure
the poverty line. These discussions end up revealing divergences over the
concept of poverty itself. For example, one may speak in terms of absolute
and relative poverty. According to Nobel Prize winner Amartya Sen, depri-
vation cannot be understood in absolute terms since it is present at diverse
levels. As such, the concept of poverty cannot be reduced to the notion
of unstable income; poverty must be understood in a more complex and
encompassing way as a lack of basic capabilities that lead to vulnerability,
exclusion, exposure to fear and violence lack of power, participation, and
voice. In sum, this amounts to being excluded from basic rights and well-
being. Hence, the problem of inequality should not be limited to income,
since this factor is related to other forms of inequality, such as race, gender,
8 C. Scalon
class, and citizenship, among innumerous other dimensions of social real-

ity. Sociology would be reductionist to limit itself to focusing on income as
the major type of inequality; this kind of perspective is better adapted to
economics than other social sciences. This is why they are more concerned
with relationships, practices, and other dimensions of life within a society,
and not merely the economic sphere.
For Sen (2001: 171): “Even the prerequisite of ‘objectivity’ in a descrip-
tion does not require social invariability, as is sometimes supposed. What
is considered as a terrible privation may vary naturally from one society
to another, yet from the social analyst’s perspective these variations all
serve as material to be used in an objective study.” Since Sen defends the
proposition that poverty should be analyzed by considering deficiencies in
basic functional capabilities and not in terms of functions that have already
been carried out, he affirms that “As far as income is concerned, the relevant
concept of poverty should be inadequacy (to generate minimally acceptable
capabilities). A ‘poverty line’ that completely ignores individual character-
istics cannot do justice to our genuine concerns over what is most basic
to poverty; insufficient capabilities due to inadequate economical means.
It is always a better idea to group individuals together into particular cate-
gories (related to class, sex, occupational group, employment status, etc.).
If we chose to express poverty in terms of income, then the required income
will have to be linked to the causal requirements of minimum capabilities”
(Sen, 2001: 175). This would explain why the relationship between income
and capability is not the same for all social groups, but on the contrary,
varies according to age, place of residence, race, and sex, among other social
factors.
Here, it is worth emphasizing that Sen’s theory has been elaborated
around the concept of an individual’s capability to function according to
the given values of this individual. This is the basis for liberty and equality.
Even so, in order to implement and evaluate public policies used to
combat poverty, it is still necessary to establish an objective base by using
some sort of measurement of absolute poverty. This is because measuring
relative poverty would have to incorporate an extensive debate about which
particular consumer items should or should not be considered basic. Rocha
(2005: 46) maintains that “establishing a poverty line based on observed
consumer patterns consists in selecting a theoretical basis, such as the nutri-
tional necessities established by the Food and Agricultural Organization
(FAO). The value of consumption in and of itself, on the other hand, does
not permit this — nourishment is often accepted as an inevitable weakness.
There is no theoretical basis which can be used to establish the standard

on what minimally adequate consumption should be in terms of clothing,
living space, transport, etc. According to Rocha, absolute poverty refers to
a lack of the minimal conditions necessary in order to survive, while relative
poverty incorporates necessities associated to the predominant way of life
in any given society. Thus, “the absolute poverty line is tied to attending to
the nutritional needs of a determined population”, a pioneering approach
created by Rowntree in a study on poverty in the city of York in 1901
(Rocha, 1988: 257).
And yet, if relative poverty, or privation of capabilities, is not the most
adequate way of establishing an objective criteria of measurement, neither
are poverty lines based solely on income criteria, since they do not consider
differentiations in the price of consumer items necessary to meet basic needs.
There are still other relevant questions that should be taken into con-
sideration, such as the inadequacy of a single poverty line to be applied to
an entire country, since there may be significant price variation across the
country for items considered part of a basic “food basket”.3 Because of the
deep inequalities still persistent in Brazil — not only between urban and
rural areas or between two regions of the country, but also between different
localities within the same region — it is necessary to construct more than
one poverty line.
Since 2003, poverty rates have been falling in Brazil. Between 2003 and
2008, the decrease in absolute poverty rates (meaning those who earn up to
half a monthly minimum wage) and extreme poverty rates (those who earn
up to a quarter of a monthly minimum wage) fell, on average, from 3.1% to
2.1% a year, respectively. Even so, around 45 million Brazilians were still
living below the poverty line in 2009.
Figure 1.4 shows the evolution of the number of poor people in the
country.
Regional Inequalities
The Northeast where a third of the Brazilian population lives, is home to
half of the poor people of Brazil, or 23.4 million individuals. This does not
3 Othermeasurements of poverty are based on the cost of a basic food basket that fulfills
the needs of minimum caloric intake of an individual. It varies between regions, states
and urban, rural and metropolitan areas, depending on assumptions about the cost and
consumption patterns of different populations.
10 C. Scalon
80
70
60
50
40
30
20
10
0
1992 1993 1995 1996 1997 1998 1999 2001 2002 2003 2004 2005 2006 2007 2008 2009
Fig. 1.4. Number of people below the poverty line in Brazil by year (in millions).
Source: Rocha based on PNAD/IBGE.
mean that the problem is not serious in other regions, but it should be
emphasized that 44.2% of Northeasterners are in this situation. There is an
evident cleavage between regions in Brazil, with the North and Northeast
being the poorest and the South and Southeast being the richest. These
differences are expressed not only from the income distribution, but are
also manifested in the quality of life and opportunities for people.
Regional inequalities can be observed in Fig. 1.5.
These regional inequalities can be expressed in different factors that
touch directly upon poverty and inequality. Since poverty in Brazil is related
to whether one lives in the countryside or not, a greater proportion of the
inhabitants in a rural population may also indicate a greater probabil-
ity of privation. Figure 1.6 shows that the percentage of people living in
rural areas is greater in the North and Northeast than in the rest of the
country.
Furthermore, the Northeast has the lowest employment rate in Brazil,
where 55.6% of the EAP is unemployed, while the South has the highest:
61.8%. For other regions, the proportions are: North: 56.1%; Southeast:
57.2%, and Center-West: 59.7%.
Considering the evolution of domestic income per capita in Brazil as
a whole, this situation is not so distinct. In spite of being able to observe
a constant increase in income, a large gap between regions is still visible
(Fig. 1.7).
Fig. 1.5. Percentage of people living below and above the poverty line by region in
2009.
Source: Rocha4 based on PNAD/IBGE.
Fig. 1.6. Urban and rural populations by region.

Source: Census 2010.
The 2010 Census indicated other factors of inequality between regions.

The Northeast has the lowest life expectancy rate: 62.4 and 68.5 years
for men and women, respectively, while the South registered the highest
rate: 67.1 and 74.8 years, respectively. The infant mortality rate does not
4 Sonia Rocha at http://www.iets.org.br/rubrique.php3?id rubrique=12

12 C. Scalon
900
800
700
600 Brazil
500 North
Northeast
400
Center-West
300
Southeast
200
South
100
0
1992
1993
1995
1996
1997
1998
1999
2001
2002
2003
2004
2005
2006
2007
2008
2009
Fig. 1.7. Real domestic income per capita, values in Brazilian Reals in 2009, using the
INPC to measure deflation.
Source: IETS based on PNAD.5
Table 1.1. Distribution of EGP Classes by Year.
Classes 2001 2009
I — Higher-grade profs & adm 3.9 4.2

II — Lower-grade prof & adm 4.4 5.0
IIIa — Higher-grade routine non-manual 10.1 10.8
IIIb — Lower-grade routine non-manual work 8.5 9.4
IVa — “Small” proprietors, with employees 3.7 3.6
IVb — “Small” proprietors, without employees 4.5 3.9
IVc2 — Rural self-employed 5.7 4.6
IVc — Rural employers 0.9 0.5
V — Technicians and superv. manual work 1.5 2.2
VI — Skilled manual workers 16.5 17.7
VIIa — Semi- & unskilled manual workers 28.4 27.7
VIIb — Agricultural workers 12.0 10.4
Total 100.0 100.0
Source: IBGE, PNADs (2001; 2009).
present favorable statistics for the Northeast either: 58.9% for men and
46.3% for women, while in the South these percentages are 25.9% and
19.6%, respectively (See Tables 1.1 and 1.2).
5 Source: http://www.iets.org.br/. PNAD was not surveyed in 1994 and 2000.

Table 1.2. Per Capita Household Income Distribution by EGP Classes.
Classes Mean Std. Deviation
I — Higher-grade profs & adm 213.4 206.5

II — Lower-grade prof & adm 126.1 135.5
IIIa — Higher-grade routine non-manual 96.8 103.8
IIIb — Lower-grade routine non-manual work 69.2 68.1
IVa — “Small” proprietors, with employees 142.0 216.8
IVb — “Small” proprietors, without employees 58.2 69.0
IVc2 — Rural self-employed 28.4 37.9
IVc — Rural employers 106.6 247.3
V — Technicians and superv. manual work 91.9 116.5
VI — Skilled manual workers 50.7 85.7
VIIa — Semi- & unskilled manual workers 42.3 39.3
VIIb — Agricultural workers 27.0 30.1
Source: IBGE PNAD (2009).
Class and Stratification

Studying class structure fills an important gap in analyzing social stratifi-
cation, which goes back to the classical sociology of Marx and Weber. How
individuals are positioned in the class structure and what their chances
in life are of attaining social positions are a fundamental theme in soci-
ological literature. By using the bases that Marxist and Weberian theory
laid, many different theoretical-conceptual guidelines have been drawn to
analyze class.
Sociological categories of class are quite relevant for describing and
understanding the unequal distribution of opportunities and rewards in
Brazil. These categories also draw attention to the role that class plays in
mediating and conditioning the effects of other divisions as well as the social
resources used to standardize inequality. Class divisions exercise important
causal powers that affect different social processes and results, contributing
both directly and indirectly to the existence of pronounced and durable
inequality in Brazilian society (Scalon and Santos, 2010: 99).
In this chapter, we have decided to adopt the EGP (Erickson,
Goldthorpe, and Portocarrero) categories to define social strata accord-
ing to the 12 classes; this scheme is widely used in international analyses
on stratification and mobility (Breen, 2004). The scheme also incorporates
characteristics that make reference to the Weberian concept of class, view-
ing class as groups sharing similar chances in life, different from other groups
having distinct opportunities, including mobility. In his analyses of mobility,
Goldthorpe (1987; 1993) defines categories by combining both occupation
14 C. Scalon
and employment status, which both report to the general market and labor
situation in a given place (Lockwood, 1958).
In Weberian analysis, class corresponds to an aggregate of class situa-
tions, basically, market positions that do not necessarily form communities.
As such, a class refers to a group of individuals who share a common market
situation, in terms of the goods and skills they possess (Giddens, 1973).
According to Weber (1977), “class” refers to (1) a certain number of
people who have in common a specific causal component of their chances in
life as long as (2) this component is represented exclusively by an interest
in possessing income goods and opportunities and (3) is represented by
prevailing commodity and labor market conditions. For this author, the
quoted points regarding “class situation”, are expressed in what would be
considered typical chances in terms of offer of goods, external life conditions,
and personal experiences in life, and these chances are determined by a
certain quantity of power, or lack of power, which may be used to dispose
of income goods and qualifications.
Employing this class scheme, we may now summarize the class distri-
bution in Brazil, as shown in Table 1.1.
The data reveals just how stable the distribution of strata remained
during the eight-year period considered here. In spite of all the attention
given to transformations, especially regarding how such transformations
affect income or the capacity of the Brazilian population to consume, the
country’s class structure has remained practically unaltered. It is a well-
known fact that structural change is slow and demands great social trans-
formations. What we see in Table 1.1 are small variations that do not imply
more meaningful alterations in class composition in Brazil. From 2001 to
2009, limiting our consideration to those jobs varying 1% or more, are skilled
manual workers, whose numbers increased by 1.2%, the rural self-employed,
who decreased by 1.1%, and agricultural workers, who decreased by 1.6%.
We may thus observe that the rural sector is still changing more quickly
than the rest, handing over labor force to the urban sector.
In addition, the table indicates that Brazil is still far from constituting a
middle-class society, since in 2009, 47.6% of the workforce was concentrated
in manual occupations, and this percentage only includes urban jobs (V, VI,
and VIIa). In the aggregate, the urban non-manual sector grew from 2001
to 2009. White-collar positions (I, II, IIIa, and IIIb) represented, in 2001,
26.9% of the total number of people considered in this sample, while in
2009 they totaled 29.4%. However, it is difficult to affirm that this 2.5%
increase has been meaningful in transforming the Brazilian class structure.
At the very least, it seems not to have had much of an impact on the income
growth seen during this period, while it did allow for greater consumption
among a sliver of the population.
The stability of the social structure is a known fact, sustainable even
in light of the meaningful transformations occurring in the working world.
In dealing with large aggregates, occupational changes within class groups
have not seemed to have caused any sort of greater impact within the more
all-encompassing framework of class structure. Migrating from a skilled
manual job in the industrial sector to the service sector does not provoke
variations in the distribution of strata per se, as they have been defined here.
Table 1.2 shows income averages and standard deviations for the
12 EGP classes, thus permitting an evaluation of income inequality between
them.
There are clear income disparities between strata, despite significant
variation within each of them. Only the higher non-manual strata (I and II)
and individuals possessing property and domestic help, whether in the
urban (IVa) or rural sectors (IVc) have a per capita domestic income greater
than 100,00 reals. Rural workers, whether self-employed (IVc2) or employed
by others (VIIb) have the least amount of registered income. Note the
expressive cleavage between the manual and non-manual sectors, as well as
between the urban and rural sectors.
Identity is also an important factor in the composition of the social
structure. Here, we will consider gender and ethnicity. Of the diverse socio-
demographic factors that influence one’s chances of being allocated in the
class structure, and even the occupational structure, gender ends up having
the largest impact in any society. Many social groups suffer disadvantages
when competing for positions in the social structure, but few incorporate
the segmentation of the labor market as much as gender does. It may be
said that minority groups tend to be concentrated in more or less privileged
sectors, yet even so, it would be difficult to affirm that there is a segmented
labor market, such as what appears between men and women.
In this segmented market, women have their own rather peculiar place.
The unequal distribution of positions in the labor market according to
gender has been widely debated by many different authors (see Crompton
and Mann, 1986; Siltanen, 1994; Dex, 1987; Scalon, 1999). It would be an
oversight, therefore, for this study to fail to ascertain the composition of
the classes analyzed according to gender. Table 1.3 highlights the results.
The data in Table 1.3 reveals that class distribution suffers from the
effects of gender. Men and women, as observed in a previous study of class
16 C. Scalon
Table 1.3. Distribution of EGP Classes by Gender.
Classes Men Women Total
I — Higher-grade profs & adm 4.3 4.1 4.2

II — Lower-grade prof & adm 4.7 5.5 5.0
IIIa — Higher-grade routine non-manual 7.2 15.3 10.8
IIIb — Lower-grade routine non-manual work 7.2 12.2 9.4
IVa — “Small” proprietors, with employees 4.5 2.5 3.6
IVb — “Small” proprietors, without employees 3.7 4.2 3.9
IVc2 — Rural self-employed 7.1 1.3 4.6
IVc — Rural employers 0.8 0.1 0.5
V — Technicians and superv. manual work 2.7 1.5 2.2
VI — Skilled manual workers 20.9 13.8 17.7
VIIa — Semi- & unskilled manual workers 26.4 29.3 27.7
VIIb — Agricultural workers 10.5 10.2 10.4
Total 100.0 100.0 100.0
Source: IBGE, PNAD (2009).
mobility (Scalon, 1999), were placed in distinct segments of the labor mar-
ket and, consequently, are distributed in different kinds of occupations.
Hence, the stratification structure is also segmented by sex. Women are bet-
ter represented in the non-manual sectors, especially routine occupations
on the lowest ranks of this sector. And the literature shows that, within
these strata, women’s occupations enjoy less status and prestige (Scalon
and Santos, 2010).
By observing strata IVa, IVc, and IVc2, a male predominance may be
noted. Literature on work and gender has frequently pointed this charac-
teristic of the job market; categories characterized by property and control
over others’ work tend to be held by men, except for small proprietors with-
out employees (IVb), a highly precarious category, in which women are in
greater proportion.
On the other hand, within the manual sector, women are generally
employed in low-skilled occupations, while among qualified workers, tech-
nicians, and supervisors of manual labor, the proportion of male workers is
greater. This effect is certainly enhanced by domestic work, an “essentially”
female chore.
In general, women occupy jobs that reproduce domestic attributions,
i.e., activities corresponding to their social role. Thus, the spaces destined
for women in the labor market are concentrated in activities implying care-
taking and nurturing of others, such as nursing, teaching, cleaning, sales,
attending, etc. (Scalon, 2009).
Table 1.4. Distribution of EGP Classes by Race.
Classes White Black Total
I — Higher-grade profs & adm 6.5 1.8 4.1

II — Lower-grade prof & adm 6.8 3.1 5.0
IIIa — Higher-grade routine non-manual 12.7 8.7 10.8
IIIb — Lower-grade routine non-manual work 10.3 8.5 9.4
IVa — “Small” proprietors, with employees 4.9 2.2 3.5
IVb — “Small” proprietors, without employees 3.9 3.9 3.9
IVc2 — Rural self-employed 3.9 5.3 4.6
IVc — Rural employers 0.6 0.3 0.5
V — Technicians and superv. manual work 2.5 1.8 2.2
VI — Skilled manual workers 17.0 18.6 17.8
VIIa — Semi- & unskilled manual workers 23.5 32.2 27.8
VIIb — Agricultural workers 7.3 13.6 10.4
Total 100.0 100.0 100.0
Source: IBGE, PNAD (2009).
Another important dimension of inequality in the Brazilian class struc-

ture pertains to ethnic distinctions. The blacks have traditionally suffered
discrimination and systematic disadvantages throughout Brazil’s history.
Despite recent policies aimed at social inclusion, such as racial quotas in
public universities for the blacks and public school students, this gap still
has not been covered and this is most certainly a social problem that will
take decades to be addressed. Table 1.4 shows the distribution of the blacks
and the whites per social strata.
In the category of black, we joined people who identify themselves as
black and “pardos” (mixed or mullatos).
Here, inequality between the whites and the blacks is quite clear. While
6.5% of the whites, both men and women, occupy the top of the social
pyramid (class I), only 1.8% of the blacks appear in this grouping. White-
collar jobs (I, II, IIIa, and IIIb) incorporate 36.3% of the white workers,
while there are only 22.1% of black workers. When considering propri-
etors with employees (IVa), the proportion of the whites is more than
double that of the blacks. At the same time, the percentage of propri-
etors with no employees (IVb) is surprisingly similar, being equal for both
groups.
In the urban manual sector, the proportions differ more expressively in
the non-qualified manual sector which incorporates almost a third of the
black workers. That is the least well-paid and prestigious of the strata with
the lowest status. In the rural sectors as well, the blacks are concentrated
18 C. Scalon
in the lowest level, working in agriculture (VIIb), in a proportion that is

double that of registered for the whites.
It is also revealing to complement this information with an analysis of
white and black participation in the formal and informal sectors, and also
as consumers. Here it is fundamental to separate men and women, since the
labor market is segmented and women more frequently tend to carry out
activities related to their own and their families’ consumption. This is why
we have only analyzed information referring to men between 24 and 65, i.e.,
the group considered in the class analysis as a general rule. White men enjoy
more formalized employment situations; 60.2% are registered workers. This
percentage declines significantly for black men: 49.8%. A slightly higher
percentage of blacks work in the informal sector (corresponding to 47.7%.
The percentage of men who work merely for their own subsistence is low —
1.3% for whites and 2.5% for blacks.
We may therefore conclude that besides being placed in less favorable
positions in the class structure, blacks are also at a greater disadvantage in
the labor market, having more precarious jobs.
Final Considerations
Today the debate on social inequality encompasses a wide range of elements
that are part of social relationships, especially those based on identity-based
traits. A wider notion of justice and equality that contemporary societies
have developed as a common discourse has led many to strive towards more
equal living conditions. The problem of inequality stimulates debate on top-
ics such as environmental justice, for example, topics that in the past did
not bother sociologists who work with inequality. Contemporary conditions
present challenges that make evident the complexity of social relationships
and expose our theoretical and methodological limitations (Scalon and San-
tos, 2010). We should ask ourselves, as Pakulski and Waters (1996) have
already done, if classes are dead. At least, we must consider the death
of classes in the way we traditionally understood them which is before the
fragmentation and diversification brought on by contemporaneity. We must
be attentive to the rapid mutations of contemporary society that deeply
threaten sedimented concepts that no longer help us comprehend social
phenomena.
This is why it is important to reflect on stratification as a field of
study. Despite its great contributions to describing income disparities and
class inequality, little has been done to identify the causes of such dispari-
ties and inequality. More specifically, what is lacking are the political and
cultural dimensions, values, understandings and perceptions on inequality

that influence lifestyles, changes to the stratification structure and acquir-
ing status, and also delineate social agents’ place in social life. In this field of
knowledge almost no space is provided for agency, which makes it difficult
to observe and explain change in social life and in the system of opportu-
nities. I would, therefore, like to conclude by pointing out these gaps and
limitations within stratification studies, which is still largely trapped in a
generalizing perspective unable to grasp the growing complexity of social
life and has tended to reproduce the same analytical format from the 1970s
and 1980s. This kind of perspective may be adequate for economic studies,
but is insufficient for sociological analysis.

2
Changes in the Social Structure
of Russian Society Within a Period
of Transformation
Z. T. Golenkova and M. K. Gorshkov
The development of Russian social structure can only happen through the
continuous evolution of a constantly changing society. These changes can be
classified as quantitative (in proportion and in the share of different social
groups and layers) and qualitative (improving relationships between various
social groups). In the Soviet era, the general direction of these changes was
determined by several decades of industrialization and urbanization of the
country. Some social groups were growing faster at the expense of others.
The main directions of social mobility were the following: From rural to
urban, from the collective farmers to the working class, and from all social
classes and groups to the intellectual elite. Table 2.1 represents the most
common understanding of the dynamics in the social composition of the
population in the Soviet Union.
In the late 1980s, the social structure of the Soviet society reflected
many decades of dynamic, complex and multi-faceted development. In 1991,
the country’s employable human resources accounted for about 60% of the
total population. The Soviet Union in those years was a highly urbanized
country; urban citizens represented 65% of the population.
Most of the employed population represented the working class, which
accounted for 62.4% of all employees in the public sector. The second largest
group was represented by employees (28.5%) hired to do intellectual work
21
22 Z. T. Golenkova and M. K. Gorshkov
Table 2.1. Class Composition of the Population of the

USSR, %.
Social Groups 1939 1959 1975
Workers 33.5 49.5 60.9

Employees 16.7 18.8 22.0
Peasants 49.8 31.7 17.1
Source: The Economics of USSR, 1975: 38.
that did not require high qualifications, and specialists. The collective farm-
ers accounted for about 9% (National Economy of the USSR in 1988, 1989:
34 calculation).
According to the research conducted during 1970–1980, the number of
people employed in agricultural industries was decreasing, but the num-
ber of employees in industrial enterprises, in the fields of management and
service, was growing (The Social Structure of a Developed Socialist Soci-
ety in the USSR, 1976; Problems of Social Structure in the Soviet Union
and Poland, 1976, etc.). During these years, there were significant changes,
quantitatively and qualitatively, in the characteristics of trained intellectual
workers (specialists). By the early 1990s, they formed a significant portion
of the employed population of the country. One in four persons employed in
the national economy had a higher or specialized secondary education, and
more than half were employed in the manufacturing industries. The increase
in the number of specialists was much faster than that of the working class.
The research methods used at that time were the class approach and the
tripartite model (the working class, collective farmers and intellectuals as
an interclass layer).
The publicity period in Gorbachev’s perestroika opened a wide road
for the non-ideological study of social structure. The market reforms that
began in the 1990s raised many problems in a specifically Russian context,
and none of the classical theories could provide a satisfactory explanation.
The economic reforms and the pluralization of forms of ownership
have caused changes in Russia’s social structure. The social form of all
institutions (economy, politics, culture, property, and power) has changed.
A profound social revolution is happening, and the social bases and regu-
lators that form the social structure are transforming.
The very nature of the components of social structure, i.e., groups and
communities, is changing. New economic classes appear as layers or strata,
each with its own system of social conflicts and contradictions.
Changes in the Social Structure of Russian Society 23
The development of the social structure of contemporary Russian soci-

ety is characterized by spontaneity, formlessness, and uncertainty. The basis
of social structure consisted of the social strata and classes from Soviet
society, which were characterized by vertical relations such as “guidance-
subordination”, “patronage-dependence”, paternalism and the clan system,
because these definitions conformed most closely to the hierarchy of leader-
ship in the country.
In recent years, new stratams and social realities have appeared:
entrepreneurs and managers, cooperators, farmers, independent profes-
sionals, employees in the private sector, the unemployed, and others.
There are problems of social and economic inequality with elements of
class antagonisms and conflicts. The new challenge is to find a theory
that is able to adequately explain the transformation of Russian’s social
structure.
The traditional way to analyze social structure during the Soviet period
is the class approach with the tripartite model (the working class, com-
munal peasantry, and intellectuals as interclass layer), but the new social
conditions demand a new approach. In the Marxist theory of society, the
means of production, division of labor, and property relations form the
major source for the appearance of classes, and the basic criteria of social
differentiation and inequality. In previous studies on the social structure in
Soviet society, the study of the objective trends was dominant (scientific
and technical progress, the system of the public production and distribu-
tion), and the subjective aspect of social and cultural processes was ignored.
In recent years, a different paradigm for the study of social stratification
has been proposed: It represents a multi-dimensional hierarchical approach,
which uses criteria such as individual’s job profile, his/her income, his/her
position in social power, prestige, and the formation of new social group
identities.
For many decades, there has been a dispute between the stratifica-
tion approach to the analysis of social differentiation of society, inspired by
Max Weber, and the Marxist tradition of class analysis. Marx and Weber
determined the two main theories of social inequality based on three crite-
ria: wealth or income inequality, prestige, and power.
These three characteristics do not always coincide, nor do they provide
a “status consistency”. The same person or group, especially during periods
of profound social change, can occupy very different places in these three
parallel fields, but may not always be correlated on the same scale of mea-
surement. Any combination is possible — being rich, but not having the
prestige and real power; having power, but not being rich; being worthy of
respect and reverence, but still being poor and powerless, etc.
Over time, the Marxist tradition eventually narrowed all the differences
down to differences in wealth, or social class.
However, Aristotle made an observation about the existence of a three-
dimensional model of inequality and stratification — “It is the reason why
dissensions, benefits and honors occur, and something to what they are
opposed. It is also clear how important the honor is and why it causes
the inner turmoil; people are outraged as they see themselves not enjoying
this honor, and observing others, by contrast, enjoying it.” Consequently,
wealth, power, and prestige are the reasons for all social disturbances.
Conclusions by the followers of Karl Marx can be summarized thus: If
you are not equal in total, it is because you are not equal in one. The three
measurements coincide and overlap. Whatever side of social inequality we
observe, we will always discover that it narrows down to unequal relations
to property, and the three dimensions are just superficially different forms of
the underlying difference. Therefore, the stratification is one-dimensional.
Weber and his followers claim the opposite: If we are not equal in one,
it does not mean that we are not equal in total; three measurements are
not necessarily identical, they are not reducible to each other, and neither
of them is determinative; so, stratification is always three-dimensional.
Some researchers ask the questions: (1) whether societies can be strati-
fied according to a particular type which cannot be reduced to one or more
of the three dimensions — class, status, and power? (2) Are these three
dimensions the only ones by which society can be stratified?
All possible secondary signs of an individual’s position in a vertical hier-
archy of socially recognized values (for example, education level, occupation,
leadership, etc.) ultimately narrow down to one of three main dimensions
that are not amenable to further reduction. An empirical study may reveal
a strong correlation between the indicators of distribution of, for example,
power and wealth, but this does not prove that they are reducible: A single
case of impermanence in the connection between the two factors could dis-
prove the theory. Moreover, this approach undermines the idea that among
the three dimensions one is always a determinant.
It is unlikely that today someone would deny the importance of the
attitude to a method of production, but it is also unlikely that today some-
one would claim that any possible inequality in status or power is its only
function (for example, the attitude to a method of production).
On the other hand, even those who want most to emphasize the funda-
mental importance of power relations, would not want to argue that all
institutional inequalities are a function of power relations.
Many researchers are now paying particular attention to the criteria
of power in social stratification. In Russia it ended up acquiring spe-
cial influence. Anyone who has power also has access to the privileges
of wealth and prestige. This factor is also studied in Western sociol-
ogy. Thus, according to the American sociologist G. Lenski, differenti-
ation of society into various classes and strata should be explained by
the unequal distribution of power, privilege, and prestige. At the same
time, he advocates “power” over other forms of criteria. Precisely because
in earlier studies of Russian social structure, this criteria was almost
never used or was used for decorative purposes only (participation in
social activities, meetings, etc.), researchers are today paying particular
attention to the question of power and authority. Apparently, this may
explain the current increase of interest in the study of elites in Russian
society.
Using new approaches, researchers are trying to get the most complete
picture of social stratification and the most accurate model of a new civil
society. The research tends to emphasize new forms of social differentiation
and integration of social stratification.
By social and structural stratification, we mean multi-dimensional,
hierarchically organized social space in which social groups and strata differ
according to their possession of power, property, and social status. When
it comes to social layers, one layer not only has a superior position in soci-
ety, but the position is justified by greater economic and political power,
which in fact explains its dominance over the other layers. By social strata,
we mean all socio-economic groups placed differently in the global social
system, and the social inequality that exists between them (for example,
P. Sorokin claims that social space is multi-dimensional in that it has dif-
ferent criteria of differentiation — citizenship, nationality, occupation, eco-
nomic status, religious affiliation, etc.)
Social stratum can be determined objectively and subjectively, and
social stratification depends on that. Subjective determination is the assess-
ment of separate social roles performed by the individual. These roles are
ranked and distributed in his/her social values hierarchy. Each individual
produces an evaluation. People acquire their social status, and it is their
evaluation of the importance of the social role they play in a particular
society or their prestige in the eyes of others. Thus, we obtain the hierarchy
of the distribution of social positions (statuses). The totality of all social

statuses leads to the grouping of social strata. In the continuum of social
space, layers are distributed by higher and lower levels. There is a certain
distance, a social distance, between them. If the layers are open, then there
is greater social mobility.
During the objective determination of the layer, the focus is on its
specific role within the social division of labor. Here, individuals also occupy
a certain social status, based on socio-economic content: the location in the
distribution of wealth, of power, and of social prestige. Social groups that
have group social distance between them, occupy a similar social position.
It also creates the possibility of lateral mobility, depending on the degree
of closeness or openness of a particular society.
The transformation of the basic institutions of Russian society, espe-
cially the relation of property and power, significantly modifies the whole
complex of social relations. It is clear that today the world is develop-
ing in the context of globalization. The trends of globalization appear
quite specifically in every country, creating some intensive changes in dif-
ferent segments of society, including the sphere of social and structural
relationships.
By adopting the concept of social stratification structure, we mean
that it is a multi-dimensional, hierarchically organized social space in which
different social groups and strata are distinguished by factors such as their
attitude to property, possession of income, power and social status. The
requirement to consider this multi-dimensional nature suggests analysis of
the problems of social differentiation, and it should be focused not only on
inter-group, but also on intra-group differences between individual statuses.
In the spirit of the concept of social stratification along with the economic
type of social stratification, analysis of which has traditionally been the
most significant for the Marxist, we consider a professional, authoritative
status (managers and managed), prestige (educational level, qualification
and skills training), as well as the degree of adaptation to the ongoing
changes.
It is still too soon to assess the social structure of contemporary Russian
society as totally well-established. Changes are ongoing in the system of
property relations, distribution, and social organization of labor, as well
as the sphere of social mobility. The processes of transformation have led
to the emergence of new social communities and connections. Privatiza-
tion has created a new balance of social forces, accompanied by tensions
and deepening of property differentiation and the polarization of interest
groups. The concept of “polarized pluralism”, which was introduced by the

American political sociologist G. Sartori, persuasively describes the social
structure in modern Russia. Although the study of multiparty political
systems of Western countries was the initial application of this concept, its
important connotations remain relevant in the assessment of the relevance
of social stratification in the post-Soviet society. According to the concept,
the classes of owners and employees are located at opposite poles of the
social hierarchy, a result of the obvious dichotomy of society. The decisive
stimulus to the emergence of this new configuration of social forces was
the transition from a nationalized economy to a so-called mixed economic
system, where state property is combined with private, municipal property,
stock, etc.
Today, in Russia, new social groups and broader layers arrive on the
public scene, and the system of vested interests, behaviors, and social inter-
actions is changing. These disparate phenomena represent different sides of
a single process — the social transformation of society. Therefore, it is
important to study them not only individually, but to take into account
their inter-relations. There is therefore a need for sociological analysis not
only of the principles and bases of social stratification (disintegration), but
also of the actual process of integration, of the formation of a new social
model of modern Russian society. The main content of this model is the
emergence and continuous consolidation of a new strata — large propri-
etaries, medium and small entrepreneurs, a layer of managers, a marginal-
ized “new poor”, the unemployed, migrants, etc. (in other words, so-called
“positively” and “negatively” privileged owners). Their adaptation to the
emerging status and roles and their reorientation of group and individual
identities represent a huge interest for researchers. This process is objective,
whether we like it or not, and the goal of the social scientist is to analyze it
adequately, according to the dynamics of the major trends in the evolution
of socio-structural space, to show and explain changes in social relations
generated by the interaction of various actors, and to assess the magnitude
and direction of changes that began in the last decade of the last century.
The axis of social differentiation and integration is a fundamental
aspect of these changes, as is the formation of the middle class. It is impor-
tant to mention that this process captures the whole society, including both
groups involved in the private and the collective public forms of ownership,
as well as owners and a significant part of employees.
When we state that the modern social structure cannot be perceived
as a stable phenomenon, we sometimes forget that the essential features
by which it has been enriched in recent decades have shaped it as a

largely stable social formation that is developing in the direction of social
stratification.
In this regard, we should note some statistical indicators of the socio-
economic dynamics of this social transformation, in the context of the devel-
opment of its new social elements and market relations.
1. Over the past eight years, there has been a smooth increase in the num-
ber and proportion of people employed in the private sector of the econ-
omy (from 46.1% in 2000 to 57.3% in late 2008). The Federal State
Statistics Service considers both employees and self-employed in this
sector.
2. As for entrepreneurs (employers), this category of workers also increased
about 1.8 times during the same period. Thus, we can say that, despite
the presence of negative factors that hinder the development of private
enterprises, the “old middle class” is growing, at least quantitatively.
3. It is necessary to note trends in the development of Russian small
and medium businesses, because the country’s socio-economic situation
largely depends on the rapid development of entrepreneurship, partic-
ularly in the form of small firms. Moreover, the production and repro-
duction of the middle strata of society, the middle class, mostly occurs
in this sphere. By the end of 2008, there were 282,700 small businesses
(not counting micro businesses) in Russia. If we talk about the dynamics,
over the past decade, the growth amounted to 117% (Russia in Numbers,
2009: 183). Obviously, these growth rates are positive, which also indi-
cate a basis for the potential formation of a middle class. At the same
time, according to many researchers, the number of small businesses in
the country is incomparable with the number of small business in the
EU or the US.
Therefore, in order to achieve normal economic development, which
could lead to social implications, there must be a substantial increase
in growth rates. In addition, the sectoral structure of small businesses
is mainly narrowed to wholesale and retail trade — 46% of the total
number of enterprises and employed people.
4. Considering the dynamics of change in the social composition of soci-
ety, in the process of the formation of its social model, and considering
the fact that under the model we understand the unfolding, in different
aspects, of the already existing system of relations between social groups,
we should note the following two circumstances. First, the complexity of
the labor market is the most significant indicator; second, regional dif-
ferentiation is a key part of this process. The latter is complicated by the
social structure, which is sometimes undeveloped, practically without a
middle class, and with sharp social and property differentiation compli-
cating an already conflicting situation in a given region. According to
the Federal State Statistics Service, if in the first quarter of 2010, the
level of employment in general in Russian Federation was 61.0%, in the
Moscow region it was almost 70%, and in some regions of the North Cau-
casus Federal District (NCTD), it was only slightly more than 30%, while
the unemployment rate amounted to 8.8%, 2.8%, and 53.1% respectively
(Socio-economic Situation in Russia, 2010). Considering that 80% of the
unemployed are young people between 20 and 39 years which is the most
productive category of the population, it becomes obvious how econom-
ically, politically, and socially relevant is the problem of modernization
of the social structure, especially in a regional sense.
5. All of the above demonstrates the need for the formation of the mecha-
nism of social adaptation to conditions of life which are rapidly changing.
The need to adapt affects all segments of the population in the various
regions. It is obvious that in these conditions, when the form and value
of employment is changing, a variety of revenue sources are generated, so
are its institutionalized form, additional employment, informal employ-
ment etc.
In the middle of 2010, 1.8 million people had additional employment. We

also note employment in the informal sector because it is an essential factor
in the employment relationship, which nevertheless represents a segment of
the community, even if it lacks the State legal registration. This means a
deformation of employment in the labor market of a region. In the middle
of 2010, it was 5.2% in Moscow, 2.3% in St. Petersburg, and more than
40% in some regions of NCFD (Socio-economic Situation in Russia, 2010).
The main characteristic of the modern labor market is a need for pro-
fessionals who are able to realize their productive functions in a new way.
As wage labor becomes the subject of market relations, it acquires labor
market’s advantages and disadvantages. This market is currently divided
into two professional segments: The first represents professions that serve
the institution of private property; the second contains professions which
are serving public property. The demands placed upon the specialists in
these two groups are different. In the first group, the demand for specialists
is high, but its list is limited, since the institution of private property in
Russia does not cover all sectors of the economy. In the second group, the
demand for specialization is much wider, but working in this sphere often
does not satisfy the specialists’ most material needs (money). In the current
economic situation, there are professions that are constantly demanded in
both sectors of the economy. One of these professions is the “manager”. It
is definitely a profession of the market type. Skilled managers do not have
difficulties in securing jobs. Moreover, they even have the luxury of being
able to choose their place of work.
In order to compare the various professional activities of managers
and representatives of other professional groups, managers were isolated
in one professional group, and other respondents, “simple workers”, formed
another group. The study found that the group “managers” differed from
other professional groups primarily due to their economic behavior. They
had a pronounced active role not only in professional terms but also in
addressing all challenges of daily life.
The group of professional managers basically consists of people from
18 to 44 years old (74.5%), with a high level of education (56.2% have
higher education, 28.7% have secondary special education). They have
every right to be considered as high-level professionals. The continuity in
education is observed in this professional group: Two-thirds of the par-
ents of surveyed managers (65.7% of fathers and 62.9% of mothers) could
also boast a high level of education. We can therefore assume that good
education is a definite value in life and conscious choice for this group of
respondents.
The level of education is the first quality that differentiates man-
agers from other professional groups. In this group, there are half as
many representatives who have secondary special education, and three
times more with higher education. We can assume that this factor,
as well as the market-oriented nature of the acquired profession, sig-
nals significant differences between members of this professional group
and all other respondents in industrial activity, material and social
position.
The data analysis reveals that if there is a choice of place of work, pro-
fessionals tend to choose private enterprises. Managers are not an exception:
73.3% of them work in the private sector and only 19.9% in the state sector.
We used data from studies by ROMIR-monitoring (years 2004–2005)
“Social Stratification of Russian Society”, based on 17,560 respondents. It
is a nationwide Russian sample.
The market-type profession or private sector provides advantages to

managers, but it also imposes some restrictions, because, as we noted above,
the institution of private property in Russia does not cover all sectors of
the economy. Therefore, the work of managers is concentrated mostly in
trade (31.9%), industry (13.1%), media (7.6%), transport (4.8%), and con-
struction (4.0%). Other industries have a quite small percentage.
However, according to research, certain restrictions on the activities of
managers does not make the acquired profession less attractive for them and
does not prevent them from using their high qualifications and education
to achieve success and career growth.
Based on qualitative characteristics and quantitative indicators used
to describe changes to social stratification, we can draw a fundamental
conclusion that during its reform years, Russian society has developed and
formed as a new social reality.
What is the sociological expression of this reality?
According to several studies on the working class, the communal peas-
antry and social intellectuals that existed during the Soviet Union have,
in post-reform Russia, transformed into 10 social strata with stable and
distinct interests, and whose level and quality of life are fundamentally
different.
Today, sociologists are aware of a wide range of diverse methods and
approaches for describing the strata or layers that form the social structure.
Using different scales of stratification, these approaches take into account
factors and criteria of belonging to particular strata, such as level of edu-
cation, profession and qualifications, relation to property, power, income,
nature of the beyond the production activity, and others. However, the
apparent specificity of Russian society is manifested, for example, by the
fact that in today’s Russia, the level of education or position (job) does not
necessarily determine one’s income or social status.1
1 Here and below, we will refer to the results of following researches: “New Russia: Ten
Years of Reform” (Institute for Complex Social Research, 2001), “Europe and Ger-
many through the Eyes of the Russians” (Institute for Complex Social Research, 2002),
“Rich and Poor in Contemporary Russia” (Institute for Complex Social Research, 2003),
“Social Inequality in the Sociological Dimension” (Institute of Sociology, 2006), “Urban
Middle Class in Contemporary Russia” (Institute of Sociology, 2006), “Russian Identity
in Sociological Dimension” (Institute of Sociology, 2007), “The Poor in Russia: Who
Are They? How Do They Live? What Do They Tend to Want?” (Institute of Sociology,
2008), “Modernization of the Social Structure of Russian Society” (Institute of Sociol-
ogy, 2008), “What the Russians Are Afraid of” (Institute of Sociology, 2009), “Russian
Such a situation forces local researchers to propose different approaches

to the study of stratification, one of which is based on the criteria of living
standards and was developed by the Institute of Sociology. Considering this
approach, stratification can be based on the criteria of opportunities in the
field of consumption or of the so-called index of a living standard, that takes
into account not only monetary resources, but also other economic resources
available to the population (property, housing, etc.), as well as opportuni-
ties to meet the needs of groups associated with various non-production
activities (recreation, entertainment, health care, self-development, com-
munication, etc.).
The original hypothesis, used while creating the index, suggested that
the differentiation of the Russian population should be based upon a fam-
ily’s possessions and its perceptions of what it does not possess. Thus, the
evaluation of the real standard of living includes not only an assessment
of wealth, but also of deprivation level, which contains the hardship and
restrictions according to a standard basket of consumer goods. The index
is calculated using the following groups of indicators:
1. Subjective assessment of the availability of the most significant forms of

deprivation.
2. Value of property.
3. Availability of real estate.
4. Quality of housing.
5. Savings.
6. Use of paid social services.
7. Recreational opportunities associated with additional expenses
(Gorshkova et al., 2009: 272).
Within the identified model of stratification, based on the approach

described above, we allocate the first two lower strata that were unifying
16% of Russians at the beginning of 2009 (before the active phase of the
economic crisis). This is exactly the proportion of the population whose
living standard is below the poverty line.
The third and fourth strata represent the poor population and form
two sub-groups.
Daily Life in Conditions of Crisis: Point of View of Sociologists” (Institute of Sociology,

2009).
A third stratum is the first sub-group of the poor population. It has an

interim nature and unites Russians who are on the edge of poverty (16%).
This group is also called “destitute”.
The second sub-group consists of representatives of the fourth stra-
tum of the poor. It contains a part of Russian citizens who live within the
classical level of poverty in Russia, and it unites more than a quarter of
the population (27%). The standard of living of this stratum is “medial”
for a specific region of residence, and so-called modal, or the most typical.
Therefore, this portion of the population may be referred to as, indeed,
poor.
The strata from the fifth to eight, including more than one third of
the population, represent the middle strata of Russian society. Remarkably
diverse, they may be named the relatively well off. So are the representatives
of the ninth and tenth strata who, according to public opinion, belong to
the category of rich. However, according to the standards of major Western
countries, they belong to the upper layers of the middle class (6–8%).
People of this stratum (from fifth to tenth) represent the prosperous
population.
What is the result?
1. Beyond the poverty line,

2. On the edge of poverty,
3. Poor,
4. Relatively wealthy.
At the beginning of 2009, 59% of the Russian population could be

grouped under three parameters of standard of living: “Below the poverty
line”, on the edge of poverty, and “in poverty” — while 41% represented
relatively wealthy social strata (see Fig. 2.1).
The results obtained by sociologists are also confirmed by official statis-
tics. Thus, according to the Federal State Statistics Service, in the first
quarter of 2009, 17.4% of the Russian population had incomes below the
subsistence level, 5,083 rubles monthly per person (USD 148.62). It is
obvious that the above number is comparable to 16% of the population,
which occupy the two strata of Russian society below the poverty line. In
the same period in the minimum wage was fixed at 4,330 rubles (USD
126.6), accounting for 78.8% of the minimum subsistence level for the
21 USD = 34.2 rubles.

Fig. 2.1. The number of different social groups in Russian society in 2009 (%).
working-age population. A small increase in the minimum subsistence level

(8.3%), which occurred in the fourth quarter of 2008, was accompanied by
a simultaneous increase in prices, affecting food products (4.6%), non-food
products (5.3%), and services (14.3%).
Despite the apparent increasing trend in average monthly salary — for
example, in September 2009 it was 18,702 rubles (USD 606,23), 4.9% higher
than September 2008) — real disposable income (income after the deduction
of compulsory payments, adjusted to the consumer price index) decreased
from January to September of this year by 1.1%, compared with the same
period in the previous year. Moreover, a sample survey conducted by the
state in April 2009, analyzing 27.8% of Russian organizations and forms
of property (excluding small businesses) across Russia, showed that just
a little bit more than 13% of employees received a monthly salary, the
size of which was below the minimum subsistence level for the working-age
population, and 3.1% received a salary below the minimum wage.
The socio-structural modification of Russian society emphasizes prob-
lems associated with changes in social processes. By the social changes of the
social object, we mean its transition from one state to another, any trans-
formation in the social organization of society, its social institutions and
social structure, and its established patterns of behavior. The core of all
the changes is in the economic reforms during the post-Soviet period of
modernization, which qualitatively transformed socio-structural and other
relationships, deepened the differentiation of property, and polarized social
groups’ interests and political preferences.
The fully nationalized economy was replaced by a multi-sector economy
with a wide range of forms of ownership: State, private, municipal, rent,
31 USD = 30.85 rubles.

stock, mixed, etc. Denationalization and privatization have led to the crea-
tion of a new social structure, where the owners of the material elements
of work, and those who do not own it, are located at the different poles of
the social space.
Thus the multiplicity of forms of property initiated new forms of
social differentiation, and placed the owner and employee in an objectively
unequal position vis-à-vis the means of production. This has created a
complex of new class and socio-economic interests. Of course, these interests
are not yet finalized. They, just like their mediums, are still in their infancy
in the new market conditions. Nevertheless, the objective development of
modern society inevitably leads to the implementation of this modified
socio-economic model in which the internal mechanisms of structural for-
mation start to “work” supporting the materialization of an adequate social
structure.
The specifics of the Russian Federation are intensified by the fact that
these common natural processes are added to the regional specificities of
the country. The reorganization of the former Soviet Union, determined
by the specific development of the regions and their special historical and
socio-economic conditions (and consequentially, particular forms of rela-
tionships with the federal government) actively influences the formation of
their own socio-cultural elements of their internal and external communi-
cations.
Thus, the regionalization of public life is one of the main characteristics
of social modifications in general (in particular, modifications of the socio-
structural processes), and it should be considered within the paradigm of
the formation of new forms of social differentiation, which occur at differ-
ent levels of society during its transformation (including various regions
in Russia). In these circumstances, any region exists as a system with
specific socio-economic (including social and structural) connections and
relationships. But in the totality of these connections and relationships,
we can emphasize the most important aspects that dominate the develop-
ment of a country’s entire social life and its separate territories. This is
the formation of the labor market and employment; but it also refers to
employment and unemployment, living standards and the income structure
of the population, its socio-professional and general labor mobility, along
with several other characteristics. In this environment, regionally-specific
factors are more important, and a solution to this complex set of problems
can determine the extent and success of all modern social modifications to
the country at large.

March 5, 2013 16:47 9in x 6in Handbook on Social Stratification in The BRIC Countries:. . . b1344-ch03
3
Social Stratification and Change
in Contemporary India
K. L. Sharma
Introduction
Several questions can be raised in regard to the emerging patterns of social
stratification in India:
1. How are men and women shaped and reshaped in terms of socio-cultural,
economic, and political considerations?
2. What are the evaluative criteria that determine status? Which principles
take precedence over others at a given point in time in a society?
3. How do the criteria of ranking of individuals, families, and groups
undergo change, often to a considerable measure?
The answers to these questions lie in the nature of the development of

and change in the structure and culture of Indian society. The historicity
of Indian society, particularly its colonial legacy and the post-independence
policies and programs and their effects on different portions of society, have
greatly impacted the processes and directions of equality and distributive
social justice. While analyzing these broad factors, namely, the role of colo-
nialism and policies and programs in independent India, one can discern
anti-change and pro-change processes and factors that have been at work
before and after India’s independence in 1947.
The role of the British in India over a span of nearly two centuries
brought about economic, administrative, social, and cultural changes, which
were undoubtedly a product of its own preferences and priorities, and which
were best suited to colonial hegemony. Obviously, a divide created by these
changes could be seen in almost all spheres of Indian society between the
37
38 K. L. Sharma
British rulers and their henchmen and the Indian people. Divides and
cleavages were between the privileged and the underdog, between the rulers
and the ruled, and between the English-educated and those educated in the
vernacular or illiterates. The British created structures of inequalities across
all domains of social life. Almost every aspect of social life was a type of
structure of inequality. Legally and morally, the emergent independent state
of India had to discard in toto such a contrived alien system of rule and gov-
ernance. The Indian constitution provided a new paradigm and parameters
of governing, developing and advancing Indian society as a whole. This was
a challenge to the structures enacted under colonial rule. In fact, the consti-
tution and related policies and programs reflected anti-colonialism and the
ethos of the struggle for freedom. A new system that created structures of
authority and compliance, distributed positions and roles and allocated
resources and opportunities became the hallmark of post-independence
India. We may thus define social stratification as the structure and pro-
cess of the allocation and distribution of resources, and the rationale of
decision-making about the allocation of high and low positions in society.
Against this backdrop it becomes essential to know the nature and
composition of Indian society in terms of high and low groups, the fami-
lies and individuals before independence, and how this structure is being
transformed by the emergence of new status groups, classes and individu-
als following independence. The British created new structures of rule and
governance, enacted the zamindari and ryotwari as new systems of land
tenure, quietly supported conversion to Christianity, eulogized the caste
system, advocated English education and generated a sense of inferiority
(particularly racial) among the Indian people vis-à-vis English men and
women. This amounted to the genesis of a new system of social stratifi-
cation, and of all this — including the twist given to the caste system in
the censuses of 1901 and 1931 — created strong feelings of high and low
ranks and superior and inferior positions and statuses. Caste was projected
both as an ideology and practice. Caste was originally more of a social and
cultural phenomenon, but the British imbued caste with a political color.
Caste as ritual hierarchy was transformed into a hierarchy of power. In the
course of time, caste became synonymous with social stratification. Such
was the propagation of caste as an all-pervasive system, that for the first six
decades of the 20th century (1901–1960), social science literature on India
centered on caste alone.
Two approaches to the study of social stratification have lately been
in vogue. These are: (1) cognitive-historical, and (2) structural-existential.
Social Stratification and Change in Contemporary India 39
The first focuses on the study of ideas and thought processes in relation
to the social reality, while the second emphasizes understanding of the real
world. Hierarchy and inequality are determined by both, namely, values
and norms, and the actual distribution of resources and opportunities in
social life. The fact is that at any given point in a society’s history, social
stratification is the production and reproduction of a value system and
structural forces. For example, the notions of pure and impure, rules of
marriage, and norms relating to inter- and intra-caste relations have been
shaped and reshaped historically and contextually within Indian society.
In the same way, the functioning of class and polity and inter-group rela-
tions has never been static. The pre-eminence of structural changes have
led to the following queries and questions relating to social life in Indian
society.
1. Can we understand Indian social stratification within the Marxian frame

of reference?
2. What has happened to Indian society, economics, and politics as a result
of the restructuring of its social life?
3. What is its emergent mode of social relations?
4. Which units (individuals, groups, classes, and collectivities) are being
produced as a result of the present-day operations of the economy and
polity?
5. What is the nature of social interactions between the new units produced
through these post-independence social processes?
Our response to these questions is: There is no way to see Indian soci-
ety as made up as only two classes, such as owners and workers, the rich
and the poor, exploiter and exploited, etc. “Economic” factors alone do
not cause inequality and hierarchy. The role of socio-cultural and politi-
cal factors, including religion, caste, education, power politics, etc., also
shapes unequal social relations. A differentiated burgeoning middle class
has emerged in India, and it is largely independent of India’s industrial
development. The middle class has its origin in the post-independent India
and its constitution, political institutions, education, and in the processes of
urbanization, modernization, and globalization. Since industrialization has
been slow and disproportionate with India’s large population, the benefits of
urbanization, modernization, and globalization have been monopolized by
a small portion of society. As a result of these inequalitarian consequences,
development has not reached the poorest of the poor, and political free-
dom has not implied social justice in terms of just distributive shares. It is
40 K. L. Sharma
sometimes said that because of the lop-sided social transformation, today

we find persisting “semi-feudal”, “semi-capitalist” social and political rela-
tions in India. As we have previously observed: “Each generation continues
the traditional activity in completely changed circumstances, and modi-
fies the old circumstances with a completely changed activity” (Sharma,
1997b: 21).
Despite the persistence of traditional social formations alongside new or
modern institutions, a new dominant class is emerging in post-independence
India, and this class has thrown up a challenge to the persisting hierarchy
and socio-cultural arrangements. Across all walks of life the beneficiaries
of economic and political developments have been asserting their newly
acquired positions of power and authority. The entrenched castes and
classes face a threat to their traditional dominance and honor. The princi-
pal intermediate agricultural castes and the middle peasants, in particular,
are replacing the entrenched upper and upper-middle castes and classes. In
fact, such a process of change has reordered social groups, families and indi-
viduals by way of a redistribution of resources and opportunities. Today,
“social difference” and “power” are valued more highly than ritual hierarchy
and segregation.
Max Weber’s (1970: 46–50) thesis regarding role of “power” in deter-
mining the overall position of an individual seems quite relevant to con-
temporary Indian society. For Weber, classes, status groups, and political
parties are phenomena of the distribution of power. Possession of power and
authority lies in an individual. This is because it is the individual who is
ultimately an actor in a given power situation. Man is the basic element in
moments of decision — in social, economic, and political contexts. However,
it is also a fact that an individual in Indian society is influenced consider-
ably by the decision-making of his or her family and caste or community.
Values such as holism, collectivism, and transcendence, the main criteria of
the Indian tradition, are quickly losing their significance in determining and
realizing status and power. Striving for power with the support of family
and the caste or community is an activity, which is planned and enacted
by an individual. This is evident in the political, administrative, economic,
and professional fields, from top to bottom.
Opportunities are availed by the given individuals in specific fields
based on their competitive capabilities and ability to mobilize resources.
What we see today is very different from what was there on the eve
of India’s independence. There are many more beneficiaries of economic
gains and political enfranchisement. Immediately after independence, as a
result of adult franchise, land reforms, and thereafter the introduction of

the panchayati raj (village level local self-government) in 1959, a strong
new rural middle class emerged, which asserted its presence in positions
of power and authority in the countryside. In urban India, a new middle
class emerged as a result of the return and expansion of higher education.
A new India could be seen in new patterns of dominance and power. Per-
sisting hierarchization has been constantly under threat. The traditional
social arrangements, including caste gradations, class divisions, and ascrip-
tive solidarities are no longer rigid formations. Classes, such as priests,
rulers, merchants, agriculturists, artisans, laborers, in terms of an estab-
lished hierarchy, are not recognized as parallel to caste hierarchy, com-
prising Brahmins, Kshatriyas, Vaishyas, middle castes (i.e., Jats, Ahirs,
Gujars, etc.), lower castes (i.e., Khatis, Nais, Lohars, etc.), and “untouch-
able” castes (i.e., Mahars, Bairwas, Jatavs, Bhangis, etc.). A considerable
non-recognition and weakening of the correspondence between caste hierar-
chy and class stratification indicates the obvious emergence of a new system
of social stratification based on new parameters of status and power.
The new parameters include higher education accompanied by white
collar jobs, high income, social networks, etc., with regard to social status.
As a result of all these, a person may enjoy a reasonably good standard
of living, having assets, a modern house, an automobile, etc. Power, in
the political sense, implies holding an elected office, a prestigious position
in the administration or networks of a political party, voluntary organiza-
tion or caste or community association. Based on these two parameters,
namely, status and power, we can see a new system of “differences” among
the people, both rural and urban. In fact, today, this is the new process
of creation of identities and social spaces, which implies the reordering
of persisting social groups, families and individuals. We have stated else-
where that “such a change results in the distribution and redistribution of
people and resources, including making of choice and availing of opportu-
nity” (Sharma, op. cit.: 22–23). In place of ritual hierarchy and segregation,
now “social difference” and “power” have become the core of the discourse
on social stratification. Individuals and families are now considered losers
and gainers, successful and unsuccessful, etc., based on their status and
power. Resource mobilization becomes the hallmark for the appropriation
of primordial ties, economic standing, and networks by individuals, families
and groups.
An often-repeated point concerns the encompassing nature of the caste
system in India. The principle of pure and impure is the basis of higher
42 K. L. Sharma
and lower caste ranks, which means that upper most caste has the highest
level of “purity”, and the lowest has the maximum “impurity”. This would
mean that the superior castes encompass or rule over the inferior castes.
Such a thesis regarding caste gained ground in the census of 1901 (Risley,
1969), in which the ritual distance among castes was shown to legitimize
and to strengthen caste hierarchy. In recent times, Dumont (1972) has tried
to demonstrate supremacy of the “pure” over the “impure”, of the “encom-
passing” over the “encompassed”. Srinivas (1952; 1966) has explained how
the upper castes, particularly the Brahmins in a given region, are imi-
tated by the lower castes to achieve higher status in their village. Such
an explanation by Dumont and Srinivas suggests that the caste system is
an “institutionalized hierarchy”, which becomes an invincible roadblock
in the way of social mobility and change. Another point in Dumont’s
thesis is that there is an absence of the “individual” in a caste soci-
ety. Both Dumont and Srinivas have been found wrong in their theses
(Gupta, 2000). Even in ancient India (Thapar, 1974), a clear distinction
was made between the sacred and secular (profane) domains of social life.
Social mobility was possible, despite logistical constraints imposed by the
lack of a means of transport and communication, non-existence of urban
centers, and absence of industrialization. Today this is not the case. In
medieval times, due to warfare for status and power, people moved to new
places for reasons of safety and to regain lost power in new surroundings
(Panikkar, 1955).
Caste hierarchy was never absolute. For pragmatic reasons it was
always a relative phenomenon. Along with Brahmin priests, as Gould (1967)
reports, there were “contra-priests”. In practice, an element of bargaining
and a demand for seeking justice, despite hierarchical relations, could always
be found. Competition, mutual cooperation, and harmony were the normal
patterns of social relations. Whenever some differences or conflicting situ-
ations arose, they were resolved through the mechanism, such as caste and
village panchayats (councils). Individuals and families generally protected
their interests within their respective castes and also in relation to individ-
uals and members of other castes. “Individual” was always there openly or
not-so-openly within the caste system (Sharma, 2010; Gupta, op.cit.).
Social stratification is, thus, a multifaceted and multi-causal phe-
nomenon. “Caste” alone is absolutely inadequate to explain India’s diverse
and complex social relations, for stratifying people as higher and lower
individuals, families and groups. Structural criteria, such as income, occu-
pation, and assets have gained considerable significance. Cultural criteria,
namely, education, lifestyle, parentage, etc., also continue to play some

role in status-determination. Political power has also become an effec-
tive factor in status-evaluation. As a result of new permutations and
combinations of factors determining social status, shifts are occurring in
the persisting inequalities, and new hierarchical arrangements are in the
making. A reconceptualization of the caste-class-power nexus is required
to deal with the emerging social differences and distances among different
portions of society, families, and individuals. Hierarchization of differences
creates social inequality. People often look for new avenues of status and
power, which in turn create new patterns of stratification.
The main issues in the study of social stratification in the 1960s were
the caste system, scheduled castes (SCs), class relations, agrarian hierar-
chy and elites. Surveying the 1970s, we find a slight shift in focus as the
emphasis was more on issues such as approaches and theoretical orienta-
tions in the studies on social stratification. Non-Hindu communities, tribes,
and social change also received considerable attention (Singh, 1974; 1985).
A sociology of knowledge perspective to the study of caste, class, and power
could be seen in many studies and analyses (Sharma, 1985: 82–114). Studies
of social stratification attracted debates on conceptual analyses, historical
dimensions, power politics, caste and class, agrarian issues, urban-industrial
settings and marginalized communities and women (Sharma, 1992:
IX–XXVI). However, for some scholars, caste remained the focal point of
social stratification in India up to the 1980s (Gupta, 1991: 1–21). Gupta
admits that “very often when we talk of social stratification in India, we con-
centrate almost exclusively on the caste system”. Gupta, however, pleads
that stratification includes both hierarchy and differences. Differences need
to be socially known and recognized, and they may be far wider than verti-
cal and horizontal differences. In our view, studies of stratification need to
focus on: (1) the continuity of the past and incorporation of new elements;
(2) the nature and direction of social change impacting social inequality;
and (3) the coexistence of the value frame (ideology), structure, and process
of social inequality.
Today, it is apparent that caste has become quite weak as a system
of social stratification, and class and power have emerged as more effec-
tive determinants of social status. In view of such a paradigm shift, it is
imperative to analyze the emerging patterns of relations based on income,
occupation, entrepreneurship, education, land holdings, assets, class con-
sciousness, and lifestyles, etc. We have focused on these issues based on
the available recent data and studies. Our analysis clearly indicates that
44 K. L. Sharma
“caste model” of Indian society has nearly vanished, though caste as an

ephemeral phenomenon appears from time to time in the form of a sort
of device engineered by some vested interests for political and economic
gains. Recently, caste-based atrocities, including punishments awarded by
the Caste Councils (Khaps) have been declared by the Supreme Court of
India as serious offences under the highest law in the land.
A new pattern of stratification is clearly perceptible, indicative of a
significant change in values and norms. Those who have benefited from
the constitutional provisions for reservations have become a distinct class
unto themselves. They are a very different lot compared to those who have
not benefited so far from among the very same communities, namely, SCs,
scheduled tribes (STs), and the other backward classes (OBCs). The other
distinct category comprises those who have benefited from higher education,
and have taken up lucrative jobs, both in the public and private sectors.
As such, education, income, and status can be seen as congruent phenom-
ena. Below such a top layer are school teachers, clerks and other lower and
mid-level white-collar workers, who have benefited less compared to the top
layer. Another top layer consists of professionals, both in India and abroad,
working in the corporate sector. Engineers, managers, and scientists fall
into this category. Independent petty entrepreneurs, workers in the unor-
ganized and organized sectors, agriculturists, landless laborers, etc., form
the major chunk of India’s population.
Social stratification in India is no longer “closed” like it used to be in
the colonial era. “Openness” came about with India’s independence in 1947
and has accelerated in the post-globalization era. Mobility has become a
new creed. “Privatization” has created more opportunities and jobs. How-
ever, the long-term effects of liberalization and privatization are still yet
to be seen. Poverty has certainly decreased, but without a corresponding
decrease in inequality. How to reduce disparities to a certain given level?
As Sen (2000) has argued, the creation of social opportunities and removal
of impediments and capacity building for the needy people are the only
possible ways of ensuring freedom by way of development.
Family and individuals, barring the groups of people who are the bene-
ficiaries of reservations, are considered units of social stratification in terms
of education, occupation, income, assets, mobility, and positions of power
and authority. Replacement of group (caste) by family and individual would
bring about more openness and freedom in Indian society. Family and indi-
vidual community-based ascription are becoming the main concerns of sta-
tus evaluation and mobility.
Appendix: Caste as a System of Social Stratification

Caste is referred as jati (a group of people), whose status is determined at
birth. Based on birth in a given caste, members of that caste are considered
higher and lower, compared to other castes, in the caste hierarchy. Thus,
caste is a hierarchical system of inter-caste relations. Caste as a system
of social arrangements has been in existence for a very long time. A vast
literature is available on the caste system, full of conjectures, controversies
and explanations about its origin, nature and role in Indian society. Caste
has persisted through several centuries, and it has also witnessed dialectics
and dynamics of a varied nature. As such, caste has adapted itself to the new
situations and forces of change from time to time, and at the same time, it
has also absorbed even the apparently antithetical and non-cohesive factors
into its structure and process.
Dumont (1970) considers caste an all-encompassing system or ideology
governing all other relations. Caste is a hierarchy based on the idea of pure
and impure. The people born to a higher caste are “pure”, and those born
to a lower caste are “impure”. All relations between different castes, includ-
ing marriage, commensality, occupation, etc., are determined by this single
principle of pure and impure. A caste is an endogamous group. Three car-
dinal characteristic features of caste are: birth, ascription, and hereditary
occupation. Rooted in these qualities are commensal norms and prescrip-
tions that relate to eating, drinking, and social interaction. Everything,
including people, food, clothes, metals, occupations, places are seen as pure
and impure. For example, the food cooked in pure ghee (butter) by the
clean castes is considered pucca (pure), and the food cooked by the same
castes without pure ghee is not acceptable to the Brahmins (priests). Silk
is considered pure and cotton is considered impure. Gold is pure and iron
is impure. Priesthood is pure and scavenging is impure. Caste was thus a
system of hierarchy and difference among the people in regard to all aspects
of their everyday life. Caste panchayat (council of elderly caste members) at
the level of a given caste and the village panchayat (at the level of a village,
council of village elders) regulated the behavior of the caste members and
the village people as a whole.
Genesis of the Caste System

A brief recapitulation of the caste system can explain its resilience, dynam-
ics, changes, and its nexus with class and power (Sharma, 2007a: 159–184).
In the Vedic period, the emphasis was on varna (color). The term Arya
46 K. L. Sharma
was considered as fair, and the term Dasa was viewed as dark. There
was no reference to Brahmana or Kshtriya. The Aryans and the Dasas
differed not only in color, but also in their speech and worship. Thus,
racial and cultural differences divided the society into Arya Varna, com-
prising Brahmas, Rajanyas, and Vaishyas, and the non-Aryans made up
the Dasa Varna. Later on, it is conjectured that four varnas sprang up
from the mouth, arms, thighs and feet of the Purusa (God). These were
Brahman, Kshatriya, Vaishya, and Shudra, respectively, and subsequently
they became castes. At this point of time, there was no reference to the
classes as hereditary groups. Classes were merely functional. There was no
untouchability.
In the later vedic period, the notion of sacrifice gained prominence.
The doctrines of Karma, Maya, transmigration, atma (soul), mukti
(salvation) were the main tenets of Hinduism in the Upanishads. Yajnas
were performed by the Brahamans. The Aryans who had a fight with
the original inhabitants, being winners, became Kshatriyas (rulers). The
remaining Aryans became the Vaishyas (agriculturists and traders), and
the non-Aryans became the Shudras. Thus, there were four classes, no rigid
divisions, and these were varnas, not castes. In the Samriti period, rules for
every group and vocation, for every relation in society — King and subjects,
husband, wife, teacher, and pupil — though not rigid, were framed and
implemented. Brahmans and Kshatriyas introduced strictures and taboos.
From the Gupta period, the rigid separation of castes and sub-castes and
their functions began. Dining, marriage, touch, and ritual observances were
governed by specific norms and rules. Indian society became insular and
stagnant. Women were degraded. No widow remarriage was allowed. The
right to property for women was revoked. The institution of Sati (self-
immolation by widow) flourished.
The caste system was considered functional. Several sub-castes and
mixed castes emerged due to differentiation, division of labor, and migra-
tion and mobility. Varnas or castes looked like a fixed economic pyramid.
The jajmani system (the caste-based division of labor) evolved as a sys-
temic/organic necessity. Inter-caste/inter-varna interdependence became a
cherished hallmark. Such a system was considered as non-competitive, hav-
ing a balance of interests and the ability to resolve differences. Along with
the varnas/castes, there were high officials, merchants, bankers, and land-
lords from among the Aryans. Below these classes were small freeholders,
artisans, and ordinary officials. In the third place were laborers without
rights and property. At the bottom were despised and segregated labor.
Varnas/castes and classes overlapped. Up to the Smriti period, the Aryan

society of the varna system was considered a positive and useful system.
A real challenge to the caste system was posed by Buddhism. After Bud-
dhism, in the medieval period, classes or occupational distinctions crys-
tallized in the form of artisans, servants, priests, and moneylenders as
the main groups. Caste panchayats had become quite strong in regulat-
ing the behavior of its members. The Turks placed a premium on high
lineage in appointments. The nobels and officers were graded into several
ranks. Moughal rule did not adversely affect the socio-cultural aspects of
the caste system. All the four varnas continued to work as per their assigned
duties. Numerous castes, sub-castes, and sub-sub-castes arose based on
occupational and regional differences. The situation was characterized as
follows:
1. Kayasthas worked as government servants.
2. Khatris were engaged as financers and administrators.
3. Nagars, Brahmans, and Chettiyars were given financial and administra-
tive responsibilities.
In the later part of Moughal rule, the Bhakti movement, led by lower
caste saints and leaders, was launched against the rigidity of the caste sys-
tem, like the one launched by Buddhism earlier. However, caste once again
showed its capacity to adapt and survive even in a hostile environment.
British rule in India was the most critical phase in the history of India.
Based on scriptural texts, views and interpretations of caste were formu-
lated. They reflect two contradictory tendencies: (1) Caste is an undesir-
able and harmful institution as it helps the dominant caste groups; and
(2) caste is a functional institution in its ability to outline the division of
labor, ensure orderliness and regulate the behavior of the people by way of
endogamy and caste panchayats. In the first case, caste becomes a coercive
system that grants no freedom to the individual. It is a system based on
exclusion–inclusion and seclusion–rejection of the people. But caste has not
been a static system, it has always evolved, acquiring new tenets and mod-
ifying or rejecting persisting ones. Thousands of castes, sub-castes, clans
and sub-clans — as well as the diversification, differentiation and change,
inter-caste or mixed marriages, migration, change in occupations, the Bud-
dhist movement, the impact of Islam, the impact of the British, etc. —
have made caste an adaptive, living system of social relations. In indepen-
dent India, despite a lethal attack on the caste system by the constitution
and legislations, especially as relates to untouchability, marriage, divorce,
48 K. L. Sharma
sati, property, education, employment, etc., caste has survived, though in

a considerably different form and practice.
Defining Caste
An attempt to define the caste system can be made, but it is not easy.
Today, the caste system cannot be defined in terms of common name, com-
mon descent, hereditary occupation or homogeneity of caste or commu-
nity. Caste is also no longer an all-encompassing system, a comprehensive
one equated with Hindu society itself. There are inter-regional differences,
varying the caste-class nexus and the structural and cultural aspects of the
caste system. There is also a significant change to the caste system. Caste
has become more of a phenomenon, rather than a system in socio-cultural
terms, as it no longer stipulates a division of labor (the jajmani system),
which was the bedrock of inter-caste and intra-caste relations. People are
hardly concerned about the pure-impure syndrome, untouchability and jaj-
mani system due to the present-day political scene in India. At times, caste
can be seen as an “interest group”. In other contexts, it is more of a means of
identity. In some specific situations, it becomes a resource in psychological
and social terms. There is no more a “caste model” of Indian society. Caste
cannot be viewed today as an “organic” or “segmentary” or even “closed”
or “open” system of social stratification. It is “closed”, where some rigid
sanctions are imposed on intra-caste or intra-clan marriages in some parts
of India by the Khaps (caste councils).
Before we explain in somewhat detail the nature and functioning of the
caste system in general, and also in some particular contexts, it may be
desirable to mention that within each caste, in principle, all members are
equal, but in reality individuals and families have also been distinguished
and differentiated based on their achieved status, despite equal ascribed rit-
ual status, or in other words their birth in the same caste. Thus, along with
the ritual hierarchy of castes, intra-caste and inter-caste distinctions based
on non-ritual criteria were given due consideration and weight. Clearly this
implies that caste incorporated class and the congruence of these two fur-
ther implied inclusion of power in the orbit of caste. Though birth in caste
could not be mutilated, at the same time it did not rule out extra-caste con-
siderations. Thus, caste was always more than a simple hierarchy based on
the notions of “pure” and “impure” or a set of values and ideas (Dumont,
1970; Srinivas: 1952; 1962), which encompassed the entire matrix of socio-
economic and political relations.
Castes do not cooperate with each other in an accepted manner; rather,

they compete with each other and therefore are no longer caste groups,
because they behave as competing classes (Leach, 1960: 1–10). Caste is
more of a phenomenon, an idea or notion. But what, then, is its place as
a system and also as a practice in everyday life? Many scholars, partic-
ularly Gupta (1992: 63–77), consider castes as discrete groups for doing
or even not doing certain things at given points of time and in particular
situations. This is done by a select group of people in a caste, who are
in a position to appropriate caste status/identity for selfish ends. Kothari
(1970) considers caste an “interest group”, because members of castes vote
in elections for a candidate of their own caste, thinking that, if elected, he or
she is likely to protect and promote the interests and welfare of their caste/
community.
Risley (1969) and Hutton (1948) interpreted caste, keeping in view
the British colonial rule in India. Dirks (2003), while analyzing the British
interpretation of caste, considers it a modern political phenomenon, a cre-
ation that he labels “Castes of Mind”. Bayly (2002) observes that prior
to British rule, caste was more of a social arrangement rather than a rigid
system. Incorporation of the element of power in the caste system is a mod-
ern phenomenon, beginning from the Indian census of 1891, in which the
classification of castes was introduced. In the 1901 census, Risley (op.cit.)
worked out a scheme of measuring ritual distance among the castes, and
further in the 1931 census Hutton (op.cit.) eulogized the functions of the
caste system. Dirks examines such political moves of the British and calls it
a creation of “castes of mind”. The British encouraged discrete use of castes,
extended selectively caste-based favors, and bestowed patronage, as well as
creating caste- and community-based reservations and representations in
political bodies.
Even ethnosociologist Ronald B. Inden (1990: 213–262) is of the
view that castes were as political assemblages or “subject-citizens” within
medieval kingdoms. Each region had its specific schemes and groupings,
and hence no uniform all-embracing scheme of caste gradations. Caste
was a dynamic, diverse, and multi-dimensional reality of Indian society.
Bayly vehemently argues that there is nothing like an orientalist fiction or
monolithic cultural code regarding the origin and functioning of the caste
system (Op. cit.: 6). Caste has become a system of oppression, a scheme
of social disabilities and hindrances, like any other system of inequities,
mainly due to the incorporation of the element of power in its socio-cultural
fabric.
50 K. L. Sharma
Caste in Independent India

Today caste is a reality, though of a different kind than what it was before
British rule in India. It has become a crude means of political mobilization,
of discrete use for specific goals, more useful for seeking “representations”,
“reservations”, and “favors” in public domains. Caste has become a weak–
strong phenomenon. As a system, it has eroded its legitimacy and appeal,
and as a phenomenon, it has reincarnated itself as a way of reckoning and
identity.
The Indian state has played a dual role in shaping and reshaping the
caste system. As we have stated earlier, the state has twisted and muti-
lated caste in innumerable ways, and it has also recognized the signifi-
cance of the caste system by way of accepting caste as the basis of the
socio-cultural and economic standing of people as higher and lower. In the
1891 census, social groups were named as “agricultural and pastoral”, “arti-
sans and menials”, “professionals”, and “vagrants”. Rankings were made
based on local evidence of “social precedence”. Before this, in the 1881
census, profiles of over 400 “races” and “tribes” were presented. The series
of 119 volumes of imperial gazetteers also reflected “titles”, “races”, and
“stereotypes” in the context of caste. The 1901 census ranked all castes in
terms of specific varna context. “Ritual distance” was the main criterion of
caste ranking in 1901 census, and the “functions” performed by the caste
system were accorded primacy in the 1931 census (Census of India, 1891,
Vol. I; Census of India, 1901, Vol. I, Part I; Census of India, 1931, Vol. I,
Part III).
Dynamics of caste in the post-independence period are quite different
from that in the British period. No caste-based census or enumeration has
been conducted in India from 1951 to today. Only the Scheduled Castes
(SCs) and the Scheduled Tribes (STs) have been enumerated, as they have
been provided special treatment in education, jobs, and for representation
in provincial assemblies and the parliament (Lok Sabha, the Lower House).
However, in the census of 2011, all castes will be enumerated, as there
has been an increasing demand for caste-based reservations in educational
institutions and for jobs and services. There is also a demand for reserva-
tions in the private sector, including within educational institutions and
economic organizations. Based on the recommendations of the B. P. Man-
dal Commission (1980), in 1993, the government of India, headed by Prime
Minister, V. P. Singh, a 27% reservation was granted to Other Backward
Castes (OBCs). Thus, caste and politics attained new twist, the roots of
which, as we have mentioned, could be seen in the British rule of India.
The British always ignored the place of the family and individual in the
caste system. By considering family and individual, even within the caste
system, we can easily locate “class” and class-based stratification.
The propagation of the caste system as an absolute and rigid system
has done more harm to the Indian society than the caste system itself. The
projection of caste as an ideology itself became an ideology of its propa-
gators. This occurred, no doubt, even before the advent of British rule in
India, but the British granted an added impetus to both caste and feudal-
ism for reasons best known to them. Writings by Tod (1990), Risley (1969),
Hutton (1963) and many others are clear evidence of the glorification of feu-
dalism and caste as institutions of the highest merit and for good of the
Indian people. Such a doctored blasphemy helped the British to pacify the
agitated souls against their rule and also forestalled revelation of the full
facts relating to the demerits of the caste system.
Today, there are “caste leaders” and “caste parties”. The parties, such
as the Bahujan Samaj Party (BSP), Janata Dal United (JDU), Rashtriya
Janata Dal (RJD), Samajvadi Party (SP), Dravida Munnetra Kazhagam
(DMK), All India Anna Dravida Munnetra Kazhagam (AIADMK),
National Congress Party (NCP), and several others, are being controlled
and governed by caste and regional leaders. Ms Mayawati, Sharad Yadav,
Lalu Prasad Yadav, Mulayam Singh Yadav, Karuna Nidhi, Jayalalitha,
Bal Thackarey, Sharad Pawar, etc., are more of caste/regional leaders.
The idea of “justice” versus “injustice” has always been central to the
caste system. Justice was not often done to the service/functionary castes by
the jajmans (patrons). But there were some inbuilt mechanisms of grievance
redressal for seeking relief from the exploitative dominant castes. A sys-
tem of bargaining through caste panchayats was often used to seek justice.
Since the lower castes also had “status” of the “contra-priests” (Gould,
1967: 26–55), they used occasions like birth, marriage, and even death to
demand their legitimate rewards and wages for the services rendered to
their patrons. The service-castes generally received their legitimate dues
from their upper caste patrons. Today, there are no patron–client relations
in the village community. Caste has two main domains: (1) Politics, along
with muscle, men and money power, and (2) unjustified imposition of the
rules of marriage. In the former, the numerical preponderance is demon-
strated along with muscle and money power, in elections in particular,
and in everyday life in general. Such a show of power or bullying by the
members of the smaller castes is a new phenomenon. Based on this, at
local level (district, tehsil, village), some members of such castes indulge in
52 K. L. Sharma
terrorizing the weaker ones, and corner the benefits of the public resources
and opportunities. In the second case, in Haryana and parts of Western
Uttar Pradesh, in particular, caste panchayats, known as Khaps, have
been punishing young men and women and their families for violating the
so-called caste endogamy and village exogamy.
We may suggest the following points for understanding the caste
system:
1. The nexus between caste, class and power, and the continuity and change
of the nexus.
2. The changing nature of inter-caste and intra-caste relations.
3. The levels of mobility, namely, individual, family, and group/sub-group
and new patterns of caste-practices.
By and large, there exists a nexus between caste, class, and power;
in other words, the higher the caste, the higher the economic standing and
political power of an individual, a family, or at times even the caste (group).
However, this nexus has never been characterized by a one-to-one corre-
spondence. There are always some poor families and individuals among the
upper castes, and there are very well off and politically influential families
and individuals among the middle and the lower castes. After India’s inde-
pendence in 1947, several erstwhile castes have benefited as a result of the
special constitutional provisions, legislation, universal adult franchise, land
reforms, and reservations. It is not that all castes and all families and indi-
viduals in the given castes have benefited equally. The gains of the deprived
sections have been the losses of the erstwhile privileged castes and families.
Today, nearly 50% of opportunities in education and government services
are earmarked for the SCs, the STs and the OBCs. There has definitely
been a process of equalization. A “creamy layer” has emerged among the
SCs and the STs. However, the fact remains that from among the SCs and
the STs, a select section has cornered the benefits. A large chunk of people
remain still deprived and “below the poverty line”.
The traditional basis of inter-caste relations, namely, the jajmani sys-
tem, is no longer in practice, with few exceptions. Intra-caste relations are
evoked on certain occasions by the vested interests, particularly at the time
of elections. As mentioned earlier, caste councils revive themselves at times
for certain specific ends in view. Instead of organic/functional ties between
different castes, rivalries and feuds have come up due to conflicting claims
on agriculture land, distributive shares in rural programs, and for domina-
tion and power in the village community in general or in Panchayati Raj
Institutions, in particular. Intra-caste unity is witnessed in such situations,

particularly among the lower and deprived castes.
Srinivas (1952; 1966) associates cultural mobility with the concept of
“Sanskritization”. According to Srinivas, the lower castes imitate the upper
castes with regard to their way of life, because they desire to be like the
upper castes. Naturally, the upper castes are the “dominant castes”, based
on their superior ritual status, material power (landholdings), and also
sometimes because of their numerical preponderance. Such a pattern of
mobility as described by Srinivas and the principle of pure and impure
by Dumont (op.cit.) as the basis of caste hierarchy are scarcely relevant
today. Social mobility is today seen more in terms of migration, occupa-
tional change, education, political power, and the acquisition of material
assets rather than the imitation of rituals, religious practices, vegetarian-
ism, etc.
Caste as a Phenomenon
Despite this new pattern of social mobility, caste remains a distinct phe-
nomenon, if not a system of inter-group social relations. Caste is not
reducible to class, race, ethnicity, or naked power. Birth remains the basis
of caste identity, though after birth, other superstructural aspects of life
are generally of a varied nature. Connubiality, commensality, hereditary
occupation, etc., are not necessarily adhered to per birth in a given caste.
Caste remains, thus, a phenomenon, a means of identity, and a cultural
reminder. Caste has become a matter of interpretation, a purposive ratio-
nality, a description and explanation of the pathologies of the modern polity
and economy.
Several antinomies, such as “tradition–modernity”, “continuity–
change”, “hierarchy–stratification” and “organic–segmentary”, have now
become insignificant as caste is no longer a tradition-bound system char-
acterized by continuity, hierarchy, and organic ties. Caste was also not
a “harmonic” and resilient system in the past, as it has been depicted.
It has had no encompassing capacity. Dynamics, interests, individualism
and questioning have been associated with the caste system. Multiple sta-
tus hierarchies, levels of social mobility, downward social mobility, obverse
structural processes of change, and structural criteria of dominance have
weakened the caste rigidities and its cultural hegemony. We can say that
there is “caste for itself”, that is, caste is metaphoric, more as a ritual, and
54 K. L. Sharma
an episodic phenomenon. There is also “caste in itself”, that is, in every-

day life caste is a discrete, personalized, and behavioral phenomenon. One
could see many “caste-free areas” (Beteille, 1969: 17–31). There are alliances
and configurations of castes to win elections. The question is: Is that caste?
What we have today are status distinctions and cleavages within the family,
within the caste, and between the castes and families or even between the
individuals.
Gupta (2007: 115–144) talks about “competing castes” and the “asser-
tion of identities”. He writes: “Castes are now competing ferociously against
one another. Castes also play a dominant role in electoral politics. No longer
can we link certain castes with occupations as used to be the case in tra-
ditional India. This itself is a forward movement as it has freed the tra-
ditional ‘lower’ castes from performing degrading occupations. Even so, as
caste identities are still very strong, one must realize the impediments they
set for a modernist attitude to develop” (ibid.: 118). However, it is not all
in situations that caste-based voting occurs. Economic, national and other
considerations also matter a lot, particularly in certain given situations.
Caste calculations, caste alliances and caste-based propaganda are quite
common in elections. Caste alliances, such as KHAM (Kshatriya, Harijan,
Ahir, and Muslim) or AJGAR (Ahir, Jat, Gujar, and Rajput), or exag-
gerated numerical presence of castes are more of a political phenomenon,
rather than a representation of caste hierarchy.
Caste as a Discrete Device

Is caste no longer a factor in modernization, urbanization, industrializa-
tion, and democracy? We do not have a response to this question. In
metropolises, among professionals, caste is hardly an important consider-
ation in placement and social control. Caste reveals “tremendous flexibil-
ity” (Jayaram, 1996). Upper castes, particularly Brahmins and Vaishyas,
have taken non-traditional or conventionally impure occupations, such
as distillery and shoe-making, as these are quite profitable enterprises.
Harriss-White (2004: 176–199), based on her study of a town in South
India (Northern Tamil Nadu), observes the coexistence of “loose hierar-
chies” and “several alternative and overlapping hierarchies”, based on vedic
orders, diet, religion, region of “origin”/language and political categories.
The vedic order refers to Brahman, Kshatriya, Vaishya, and Shudra. The
diet as a basis implies vegetarianism and non-vegetarianism and also non-
beef eaters and beef-eaters. Religion implies Hindus, Jains, Christians, and
Muslims, each with endogenous subdivisions and dietary markers. Region

of origin/language refers to Jains/Marwaris and Muslims. The political
categories are “backward”, “SCs”, etc. (ibid.: 182). Several earlier stud-
ies have shown that caste is not antithetical to democracy (Kothari, 1970)
or industrialization (Singer, 1972; Sheth, 1968; Lambert, 1963). Likewise,
Harriss-White also observes that with libralization, markets have not disen-
gaged caste. Caste facilitates collective action, necessary for the operation
of markets. Caste associations too have added to the corporatist ethos.
Now the question is: Is caste giving way to class? If not, why? What are
the impediments? Why and how has caste become a slippery institution?
Caste cannot be transformed into class for the reasons we have explained
earlier. Caste is dynamic and resilient. It is wrong to say that “caste politics
is passé” or “development beats caste politics” (Times of India, 30 Decem-
ber 2010). It has been reported that “identity politics” has been the main
concern in the recently held elections in 2010, in Bihar. Different castes and
groups fared as follows (Hindustan Times, 30 December 2010):
Table 3.1. Representation of Castes/Communities in

Bihar Legislature in 2010.
Community Seats won
Other Backward Castes 109

Yadavs 39
Koeris 21
Kurmis 19
Banias 13
Others 17
Extremely Backward Castes/Dalits 55
Muslims 19
Upper Castes 60
Brahmins 13
Bhumihars 13
Rajputs 31
Kayasthas 03
Total Seats 243
In every election, aspiring candidates openly or quietly make caste cal-

culations and projections to seek nominations from their respective political
parties. There is no scientific basis for such projections about the numerical
strengths of different castes, and there is no definite way to know that votes
would be cast in their favor. Another common trend is to seek favor from
56 K. L. Sharma
a political party or a person in authority because one belongs to his or her

caste. At times, leaders and officers even boast at having extended favors
to their fellow caste members. Caste is a fluctuating institution in one way
or other in Indian society. It is a reality of a sort, but not as a systemic
phenomenon. Use of caste is more of a mechanism, a device, a strategy in
elections, and a means for mobilizing people for the realization of certain
goals. Caste is there, regardless of any other thing, including wealth, educa-
tion, and mobility. Caste is a marker of the difference between individuals,
families and groups, basically in terms of social origin and identity. The
realization that one belongs to a particular caste reminds him/her about
his/her socio-cultural space and future actions. Such a realization is not
uniform. If so, caste matters in minds of people, not every time, not in
every situation, but at times, and in some certain given contexts and situ-
ations. The difference one makes between himself or herself and someone
else is that he or she does not belong to his or her caste/sub-caste. Such
a state of mind has implications for the material and political aspects of
Indian society.
Concluding Remarks
Clearly, three views have been in vogue about the nature and functioning
of the caste system in India.
1. The idea of pure and impure (values and norms) are basic to the caste
system. Caste is an overarching system of social relations with a rigid
hierarchy.
2. Caste inheres class. More than a socio-cultural system, caste is an eco-
nomic phenomenon. Caste-based dominance, exploitation, and atrocities
make caste more of a politico-economic hierarchy than a simple socio-
cultural system.
3. Caste is a discrete phenomenon. The differentiation of roles, prominence
of “interests”, importance of family and the individual in social mobility,
emergence of multiple status hierarchies, downward social mobility, and
new images of status and prestige have resulted in a flexible use of caste.
In our view, caste is increasingly becoming a matter of interpretation

rather than substantialization. Caste refers to a purposive rationality. It
also provides a description and explanation of the pathologies of the modern
Indian polity and economy (Sharma, 2001: 7). As such, caste is becoming
more of a state of mind of an individual rather than an ideology directing
actions and practices. It is less of a systemic phenomenon, and more of an

episodic entity. In our view, caste is becoming a desideratum, a state of
mind, a plastic and malleable institution. The “essential” of caste is largely
delegitimized. However, at times caste poses a challenge to an individual’s
freedom and dignity, and a threat to secularism and democracy in Indian
society.

4
Changes in China’s Social
Stratification Since 1978
Li Peilin
This chapter includes four sections: Section I describes the two major
changes to China’s social and economic policies since reform and open-
ing up, namely, adjustments to the class and income distribution policies.
These policy adjustments have had a significant impact on China’s social
stratification and pattern of interest groups. Section II analyzes the changes
to China’s social stratification, including the process of change and the
status quo. Section III presents an analysis of changes in the pattern of
interests and describes the trend of widening income gaps on many lev-
els, including the gap between urban and rural areas, between different
regions, between different industries, and on an individual level. Section IV
reviews several issues on which China’s current research of social stratifica-
tion focuses, including trends in income gap, the relationship between the
market mechanism and income inequality, social justice, the middle class,
migrant workers, and so on.
The massive change that China’s social structure is undergoing is
reflected in such diverse domains as the population structure, urban–rural
structure, employment structure, family structure, organizational structure,
income and distribution structure, and lifestyle, but changes to the struc-
ture of classes and social strata doubtlessly constitute the core component
of the shift in social structure. Since the initiation of reform and open-
ing up, the shift in China’s social structure has become closely related to
adjustments to class and stratum policies.
59
60 Li Peilin
Adjustments to Class and Stratum Policies After Reform

and Opening Up
People normally define China’s reform process as market-oriented, deter-
mining its starting point to be the initiation of the rural land contract
system. The most widely accepted version of the story is the following:
In the winter of 1978, in the Xiaogang village in Fengyang county, Anhui
province, 18 peasants risked everything to sign the first land leasing con-
tract in China, marking the beginning of China’s rural reform campaign. In
fact, the prelude to, or actual starting point of reform, was the denunciation
and termination of the party line “taking the class struggle as the key link”.
Therefore, it is appropriate to say that the first item on the reform agenda
was to make a series of major adjustments to class and stratum policies
with a view to “bringing order out of chaos”.
Since 1978, when China started to enter the new era of reform and
opening up, Deng Xiaoping used a series of important speeches to propose
a few significant thoughts and ideas which, as it turned out, had profound
effects on China’s class and stratum structure in subsequent years: First,
he emphasized that the focus should shift from “taking the class struggle
as the key link” to “making economic construction central” (Deng, 1993:
33); second, he proposed to dismantle the egalitarian distribution system,
and encourage the practice of allowing some people and areas to get rich
first through hard work (Deng, 1993: 11, 155); third, he maintained that
“the criteria depend on if they can help increase productivity, help rein-
force China’s comprehensive overall power, and help promote the people’s
standard of living.” (Deng, 1993: 110); fourth, he insisted that the path of
common prosperity shall finally be followed (Deng, 1993: 372–374). As we
can see, these thoughts of Deng Xiaoping, though they underwent a process
of gradual improvement over the following decade of reform, had basically
taken shape at the very beginning of the reform program. It was under the
guidance of these thoughts that a series of major adjustments were made
to the class and stratum relations at the very start of the reform campaign.
The changes consisted of (Hu, 1991: 481–483): First, to readdress
mishandled cases and reverse false or wrong charges made in the past,
remove infamous titles such as “counter-revolutionaries”, “capitalist road
followers”, “revisionists” and “black gang members” from millions of
wronged citizens and clear their names; second, the offensive label chou lao-
jiu (“stinking intellectuals”) was rescinded, intellectuals were finally recog-
nized as a part of the working class, and most of those wrongly classified as
Changes in China’s Social Stratification Since 1978 61
“rightists” in 1957 were cleared; third, since January 1979, the labels “land-
lords” and “rich peasants” have been scrapped, and these groups started to
be treated as people’s commune members, with the family origin (chengfen)
of their children allowed to be set as “commune member”; fourth, since Jan-
uary 1979, relevant policies targeting former knowing tang (KMT) person-
nel who revolted and crossed the Strait and relatives of the Taiwanese who
lived in mainland China have been implemented, with those KMT secret
agents ranked below the regimental commander all graciously pardoned and
released; fifth, in the early 1980s, 700,000 out of the 860,000 private produc-
ers and traders were given back their legitimate status as “socialist labor-
ers”, with more clearly defined policies issued later which stipulated that
the original private producers and traders became participants in building
socialist society, and their family origins converted to “cadres” or “workers”.
These major adjustments with respect to the class and stratum rela-
tions aiming at “uniting all forces to meet future challenges” served to stim-
ulate the initiative of all social strata to engage in the process of reform
and opening up and socialist construction and expand the public founda-
tion of reform, and also indicated that the practice of simplistically adopt-
ing “political ideology” and “historical background” as the main Cultural
Revolution criteria of dividing class and stratum were officially abolished.
The economic reform that followed brought about a profound change
in the structure of social classes and strata and the interests of these social
groups. This massive change is mainly reflected in the following three
respects: First, a profound change in the ownership structure has led to
the rapid development of a non-publically-owned economy, giving rise to
such new social strata as private business owners, individual industrial and
commercial households, senior managerial personnel with foreign-funded
enterprises and private enterprises, and technical personnel; second, the
progression of industrialization and urbanization has helped transform over
200 million Chinese peasants into “new workers”; third, the ranks of the
middle stratum, a key component of modern economic systems, has rapidly
swelled, along with a large increase in social mobility.
This swift progression in industrialization and urbanization promotes
China’s transition from a traditional dual urban–rural structure to its
modern social structure. This shift in social structure involves a large
population, and has developed so rapidly and deeply that it is essentially
unparalleled in world’s history of modernization. Hundreds of millions of
peasants have left the countryside to join non-agricultural industries, where
a large portion of the rural population increasingly concentrated in cities
62 Li Peilin
and towns, has served as strong impetus for the transformation of China’s
social structure and has significantly changed people’s lifestyles, modes of
employment, and even the overall appearance of the society.
Changes in the Social Structure

Compared with the reform of China’s economic system, the changes to the
social structure have tended to be more enduring, more penetrating, and
more encompassing.
The course of industrialization and urbanization

Since reform and opening up, as the economy has grown rapidly, China’s
industrial structure has also undergone rapid changes, with the ratio
of GDP attributable to the primary industry, the secondary industry,
and the tertiary industry changing respectively from 31:45:24 in 1978 to
11.3:48.6:40.1 in 2008. During this period, China’s service industry grew
phenomenally, with the industrial sector also developing smoothly and the
proportion of agriculture making up the national economy falling sharply.
Judging from China’s current industrial structure, it is fair to say that
China has entered the intermediate stage of industrialization.
In the meantime, urbanization is also advancing steadily in China. In
1949, at the dawn of the P.R.C, China’s urban population totaled only
57 million people, representing a dismal level of urbanization (10.6%) —
three percentage points lower than the world average in 1900, making it a
typical agricultural country. During the 1949–1978 period, China’s urban-
ization level rose steadily, reaching 19.7% in 1978, but has remained below
20% ever since. Since the initiation of reform and opening up, China’s
industrialization has progressed rapidly, simultaneously giving a substan-
tial boost to the process of urbanization. Over the 29 years between 1949
and 1978, China’s urbanization process increased by little more than seven
percentage points. In contrast, within the 30-year stretch from 1978 to 2008,
the urbanization level climbed from 19.7% to 45.7%, a full 26 percentage
points higher than the 1978 figure. Currently, there are 655 cities in China,
an increase of 462 compared with 1978, among which there are 118 mega-
cities with a population of over one million and 39 super-large cities.
Urbanization in China obviously lags behind industrialization, and
although the proportion of agricultural output to GDP has been reduced
to 10%, the percentage of the employed population engaged in agriculture
is still 45%, with rural residents still constituting nearly 55%. The lag in
urbanization may be partially attributed to the household registration sys-
tem that treats urban and rural residents separately, and also contributes
to the widening gap between urban and rural development. Currently, the
per capita income of urban households is approximately three times that of
rural households, with the per capita income of non-rural laborers nearly
five to six times that of rural laborers — another important reason why
China is home to 250 million peasant workers.
Changes in the population and family structure

China’s population structure has undergone a historic transformation, tran-
sitioning from a stage of high birth rate, high mortality rate, and low growth
rate, through a stage of high birth rate, low mortality rate, and high growth
rate, to the current stage of low birth rate, low mortality rate, and low
growth rate. From 1952 to 2008, China’s total population jumped from
570 million to 1.328 billion, with its birth rate dropping from 37% to 12.14%,
its mortality rate falling from 17% to 7.06%, and the population’s natural
growth rate declining from 20% to 5.08%. The main factors prompting this
transformation include economic growth, social transformation, and family
planning policies. China has been implementing family planning since the
early 1970s, and starting from the early 1980s, a stringent birth control
policy stipulating that “a couple shall only have one child” has been rigor-
ously implemented among urban residents. As its birth rate has plummeted,
China’s population structure has also gone through a major transformation,
with its total fertility rate dropping from 6% in the early 1970s to 1.8% at
present, which means a net avoidance of 300 million births, leading to a
steady decline in the social dependency ratio and thereby contributing sub-
stantially to China’s economic and social development. At the same time,
however, within less than 30 years, China’s population has begun to grow
old. According to a nationwide 1% population sampling survey conducted
in 2005, the 60 and above population accounted for 12.9% of the total, and
aged 65 and above made up 9.07% of the total. In the coming decades,
China will see its working-age population (15–64 years old), total popula-
tion, and aging population peak; according to relevant estimates, by the
year 2016, China’s working-age population will reach a peak of 1.01 billion;
by the 2030s, the total population is expected to hit a peak of 1.5 billion;
and by the 2040s, those aged 65 and above will reach an all-time high of
320 million.
64 Li Peilin
As China’s population structure has changed, its family structure

and intergenerational structure have also undergone massive changes. The
family structure has tended to get more and more centralized, with the
number of extended families and stem families steadily decreasing; indeed,
nuclear families are increasingly becoming the dominant model of the family
structure. The average family size fell from 4.41 in 1982 to 3.17 in 2006. The
change in the intergenerational structure of families is prominently reflected
in the change in the family size of each generation, with the “four–two–one”
(i.e., four grandparents, two parents, and one child) family structure gradu-
ally forming in cities and towns and the “four–two–two” structure beginning
to emerge in rural areas. The aging of the population and the downsizing
of families have posed grave challenges to China’s traditional, family-based
elderly-support system.
Changes in the regional development structure

China also suffers from unbalanced regional development, a historical phe-
nomenon that has further intensified since reform and opening up. In
China’s geography, there is an imaginary line that divides the country into
two roughly equal parts, stretching diagonally from the city of Heihe in
the Northeastern province of Heilongjiang to the Southern city of Teng-
chong. Nearly 94% of the population lives on the Southeastern side of the
line, which makes up 42.9% of China’s landmass, while 6% of the popu-
lation lives on the Northwestern side of the line, which constitutes 57.1%.
This unique population distribution pattern is actually related to natural
conditions, since it is also a dividing line of climate, falling roughly on the
400 mm annual precipitation line that distinguishes the mostly dry and arid
Northwestern side. In addition, it is also a dividing line with historical sig-
nificance, as the Southeast has been the territory ruled by China’s various
dynasties throughout history.
Since the beginning of reform and opening up campaign, the Southeast-
ern coastal areas have taken the lead and achieved relatively rapid growth,
leading to an ever-widening gap in regional development. From 1978 to
2006, the ratio of GDP attributable to the Eastern areas, the central areas,
and the Western areas, respectively, changed from 2.36:1.82:1 to 3.17:1.68:1;
the ratio in terms of GDP per capita (with Western areas set at one) also
changed from 1.94:1.20:1 to 2.63:1.23:1. The overall tendency is that the gap
between the central and Western areas is shrinking, while that between the
Eastern areas and the central and Western areas is widening.
Changes in the ownership structure

Prior to reform and opening up, China had a highly centralized planned
economy and exclusively pursued public ownership, which basically featured
only two forms: Ownership by the whole people and collective ownership.
Since the beginning of reform and opening up, economic reforms broke the
unitary public ownership system, leading to the rapid growth of the individ-
ual economy, which in turn has given rise to a private sector comprised of
private business owners hiring eight and more employees. After the special
economic zones were established and part of the coastal areas were opened,
three types of foreign-funded enterprises, i.e., the Sino-foreign joint venture,
Sino-foreign cooperative enterprise, and foreign-invested enterprise, began
to emerge as a new component of the economy. The publically-owned econ-
omy also began to take multiple forms, with economic entities that span
urban and rural areas, different forms of ownership, different regions, and
different industries starting to emerge. Currently, the new economic system
includes the national economy, collective economy, individual economy, pri-
vate economy, and other diverse economic sectors, with public ownership
playing a dominant role and diverse forms of ownership developing side
by side.
This change in the ownership structure and the increasingly precise
division of labor have brought about changes to China’s occupational group
structure and social stratum structure, which are reflected not only in
job categories, but also in such diverse respects as social status, social
prestige, lifestyle, income, level of cultural sophistication, consumption
structure, and interpersonal relationships. The occupational group struc-
ture and social stratum structure that were highly homogenized prior to
reforms have greatly been improved, and are now becoming more and more
diversified. Currently in China the following major occupational groups
have formed — workers, cadres, agricultural workers, professional/technical
personnel, employees, managerial personnel with enterprises, individual
laborers, and private business owners. The differentiation of the social
stratum structure and the diversification of enterprise groups have led
to multiple levels of needs, with issues such as the lack of commonality
of interests, and friction between such interests. After over 30 years of
reform and opening up, China has grown from a country that ensured
equal income distribution to one that is witnessing a wide gap in income.
According to statistical analysis done by relevant departments and schol-
ars, after a decline during the first few years of reform and opening up,
the Gini coefficient, a measure of the degree of concentration of the income
66 Li Peilin
distribution, has been steadily rising since 1985, climbing from 0.25 in 1984
to 0.49 in 2006.
Changes in the organizational structure

Before reform and opening up, the basic organization through which the
government administered the society and individuals was a “work-unit
entity”, which existed within state organs, non-profit public utility sectors,
enterprises, and people’s communes in rural areas. The “work-unit entity”
was not only a workplace, but also a living community and social adminis-
tration body. The work unit was responsible for almost all matters related
to its members, from the cradle to the grave, and the work unit mem-
bers were highly dependent on it. Under these circumstances, it was the
work unit that served to structure social life, administer social behaviors,
regulate social relations, and resolve all conflicts that arose in social life.
People and resources were essentially “work-unitized”, which had hindered
social mobility and caused the society as a whole to lack vitality. In 1978,
at the start of the reform campaign, there were over 400 million “social
laborers” in China, less than 0.04% of whom worked outside “work-unit
entities” (i.e., 150,000 “urban individual laborers”). The majority of labor-
ers belonged to “work-unit entities”, including workers in state enterprises
(over 74 million) and workers in collective enterprises (over 20 million).
As for the 800 million “social laborers” in the rural areas, they were all
members of people’s communes.
After reform and opening up, as the ownership structure began to
change, large quantities of “non-work-unit entities” sprung up, most of
which adopted the market-based employment system. Currently, nearly
60% of the employed in cities and towns work for “non-work-unit enti-
ties”; as for agricultural laborers, almost all of them have broken away
from work-units since the collapse of the people’s commune system and the
introduction of the Household Contract Responsibility System.
In addition, with the progression of reforms in the government and
social system, especially the popularization of homeownership, the social-
ization of the social security system and the marketization of employment
and logistical services, the jurisdiction of work-units has shrunk consid-
erably; the basic organization for social administration has also changed
from work-unit to “community entity”, with the demand for community
service greatly increasing and the community construction based on resi-
dence administration also developing at a fast pace.
These changes to social administration methods have led to the rapid

development of all kinds of civic organizations that connect individuals
with the government. According to estimates by the Ministry of Civil
Affairs, there were little over 2,000 social organizations registered in China
at the start of reform and opening up, but by the end of 2008 the num-
ber exceeded 413,700, with their total full-time staff numbering over 4.75
million, part-time staff totaling over five million, and registered volunteers
topping 25 million. Urban and rural community-based social organizations
registered at all levels of civil affairs totaled 200,000, with the number of
the unregistered social organizations well over one million. Currently, social
organizations in China have been growing at an annual rate of 10%–15%
and are poised to play an increasingly important role in Chinese society.
Changes in the Class and Stratum Structure

and Their Interests
The progression of marketization, the reshuffling of the ownership structure,
and the shift in interest relations have all contributed to the differentiation
of socio-economic status in China, and also have brought about a profound
change in the structure of the social classes and strata.
Changes in the class and stratum structure

Before reform and opening up, China’s social classes and strata mainly com-
prised two classes (the working class and the peasant class) and one stra-
tum (the intellectuals). Since reform and opening up, however, they have
all undergone various types of differentiation. Peasant workers, individual
industrial and commercial households, and managerial personnel with all
kinds of non-publically-owned enterprises and private non-enterprise units
have all managed to separate themselves from their original classes and
strata: The original intellectuals are now counted among the professional
and technical personnel; the clerks of state departments, social organiza-
tions, and all kinds of public service units and enterprises have also acquired
new social roles and statuses under the new labor relations structure (Lu,
2004).
If we adopt two sociological paradigms of analysis as (1) class analy-
sis based on the ownership of resources, and (2) stratum analysis based
on occupation status, to examine the social class and stratum struc-
ture in modern China, we may detect roughly ten social strata — state
68 Li Peilin
state and social administrators 0.23 0.71

managerial personnels 0.14 0.56
private business owners 0.29 0.24
professional/technical personnels 3.55 10.92
clerks 0.92 8.66
individual industrial and 4.5 13.5
commercial household
employees of business and 2.16 13.15
service enterprises
industrial workers 8.16 19.72
agricultural workers 76.59 19.75
the unemployed and 3.44 12.04
semi-unemployed
rural areas N = 848610 rural areas N = 656005
Fig. 4.1. China’s social stratum structure in 2005.

Source: The nationwide 1% population sampling survey conducted by National Bureau
of Statistics of China in 2005.
and social administrators; managerial personnel; private business owners;

professional/technical personnel; clerks; individual industrial and commer-
cial households; employees of business and service enterprises; industrial
workers; agricultural laborers; and the unemployed and semi-unemployed.
According to a nationwide 1% population sampling survey conducted in
2005 and statistical data released by authorities such as the State Admin-
istration of Industry and Commerce, the urban–rural structure of China’s
social strata in 2005 was roughly as shown in Fig. 4.1.
From Fig. 4.1, we can draw three basic conclusions regarding the shift
in China’s class and stratum structure: First, there is a wide gap between
urban areas and rural areas in the class and stratum structure; second, the
class and stratum structure in rural areas is a pyramid-shaped one, too
bulky at the bottom and too narrow in the middle; third, the shift in class
and stratum structure in China is from pyramid-shaped structure in the
rural areas to an “olive-shaped” one in the urban areas.
Since reform and opening up, the rapid progression of industrialization
and urbanization has accelerated changes to the occupational structure.
From 1978 to 2008, the ratio of GDP attributable to the primary industry,
the secondary industry, and the tertiary industry respectively changed from
31:45:24 to 11.3:48.6:40.1. This shift has led to the following results: A large
number of peasants moving into cities and towns saw their occupational sta-
tus change accordingly; the rate of growth of industrial workers in material
production sectors slowed down and that of the workers in non-material
production sectors such as finance, insurance, real estate, tourism, consult-

ing, radio, TV, and service and public utility businesses started accelerating.
From 1978 to 1993, among the total employed nationwide, the percentage of
those working in the primary industry declined from 70.5% to 39.6%, those
in the secondary industry rose from 17.4% to 27.2%, and within the ter-
tiary industry the figure climbed from 12.1% to 33.2%. The advancement of
industrialization greatly promotes urbanization. During the 29 years from
1949 to 1978, China’s urbanization level only increased by a little over 7%
points; within the 30-year stretch from 1978 to 2008, by contrast, China’s
urbanization level climbed from 19.7% to 45.7%, a full 26% leap.
The social group that has undergone the biggest change since the begin-
ning of reform is the “peasants” in the traditional sense. By the end of
2008, China’s “agricultural population”, classified by household registra-
tions, constituted nearly 60% of the total population; the country’s “rural
population”, classified by place of residence, made up 45.7% of the total,
and “agricultural laborers”, classified by occupation, constituted only 39.6%
of the total number of people employed. The concept of “peasant” used in
the traditional sense in China covers all rural hukou-holders who do not
consume commodity grain and who belong to people’s communes. Since
reform and opening up, “peasants” in the traditional sense have under-
gone profound occupational differentiation. The agricultural population
now describes groups in terms of household registrations or places of res-
idence, and in reality has been divided into agricultural laborers, town-
ship enterprise workers, migrant peasant workers, rural employees, cultural
workers, teachers, technicians and medical workers in rural areas, individ-
ual industrial and commercial households in rural areas, private business
owners in rural areas, managerial personnel of township enterprises, and
rural cadres. Each group could be further divided into numerous sub-groups
by income, wealth, ownership of the means of production or occupational
prestige; agricultural laborers, for instance, could be divided into big farm-
ing households, part-time farming households, cooperative households, and
small farmers, etc. As social mobility improves and the comparative income
generated by agricultural labor further declines, and the aging of Chinese
peasants becomes more and more pronounced, more and more rural youths
choose to migrate elsewhere to seek employment, with those remaining in
the countryside engage in agricultural production in fewer and fewer num-
bers. According to the 2008 data from CGSS and CASS (Table 4.1), the
shift in the class and stratum structure in the new era boasts the following
characteristics. First, the shift in the industrial structure has strengthened
March 5, 2013
16:47
70
9in x 6in
Table 4.1. Birth Cohort Distribution by the Occupational Stratum (%).
Handbook on Social Stratification in The BRIC Countries:. . .

Civil servants Owners and Professional/
and managers of managers technical
state-owned of private personnels The self-
Birth cohort enterprises enterprises (intellectuals) Workers employed Peasants Total
1938–1956 8.04 0.51 4.19 25.07 4.98 57.22 100
Li Peilin
(52–70 years old)
1957–1965 7.13 0.86 2.66 33.67 10.26 45.42 100
(43–51 years old)
1966–1976 6.41 1.45 4.46 35.71 12.53 39.44 100
(32–42 years old)
1977–1991 6.39 1.17 3.26 55.15 8.21 25.81 100
(17–31 years old)
Note: Age used in birth cohort refers to that by the end of 2008.
Source: CGSS, CASS (2008).
b1344-ch04
occupational groups associated with a modern economy, both in terms of

the group’s size and social influence, and transformed over 200 million peas-
ants into workers; second, profound occupational differentiations have led
to the emergence of various social strata with different economic statuses
and interest characteristics within each class, with the three social indica-
tors that used to overlap — income, status, and prestige — beginning to
stand apart; third, the shift in the ownership structure has given rise to
the stratum of owners and managers of private enterprises who own certain
means of production.
Changes in the pattern of interests

The shift in the class and stratum structure has also brought about a
profound change in the original pattern of interests, with reform basically
becoming a process of reshuffling these interests.
Since reform began, the household contract operation system in rural
areas and the corporate contract operation system in cities have given rise to
household-based and enterprise-based independent interest entities; admin-
istrative decentralization and the introduction of a financial and taxation
system referred to as “fen zao chi fan” (sharing revenues and expenses
between central and local government) have also caused community-based
and region-based independent interest groups to emerge; with the unitary
public ownership system decidedly a thing of the past and diverse forms of
ownership now coexisting, enterprises such as private enterprises, foreign-
funded enterprises, and township enterprises have all formed their own inde-
pendent interests; the contract operation system, “tax-for-profit” reform,
“disbursement-to-loan” (bo gai dai) policy and joint stock system reform
of state-owned enterprises — as well as the elimination of mandatory plan-
ning and quota — have all helped make state-owned enterprises (SOEs)
closer to relatively independent interest entities. Modern corporate man-
agement and market-oriented adjustments made by a large number of pub-
lic service units have also nurtured a strong interest-entity consciousness
among them. In addition, the policy of “letting some people get rich first
through hard work” has ideologically done away with the “absolute equal-
itarianism” that used to be so prevalent, with labor efficiency becoming a
factor more important than working hours in affecting the profit of labor.
72 Li Peilin
Finally, the legal confirmation and protection of such capital gains as div-
idend, interest, and bonus have helped raise the proportion of capital-
based distribution in the overall income distribution scheme. Among the
factors that affect the income level, although such traditional factors as
occupation, technical rank, working years, industry, and region are still
important, new variables such as the work-unit distribution system, cor-
porate economic benefits, and capital ownership have also entered the
equation.
One aspect of these profound changes to the pattern of interests is
that the gap between social strata and groups in income level has steadily
widened.
The urban–rural per capita income ratio (i.e., per capita disposable
income of urban households versus per capita net income of peasants)
increased from l.72:1 in 1985 to 3.33:1 in 2008.
Before reform and opening up, workers in the remote areas of West-
ern China earned a relatively higher level of income (average salary),
but now their average salary has fallen far below those of their coun-
terparts in Eastern China. As of 2008, among all provinces and cities
in China, workers in Shanghai earned the highest annual salary, while
workers in Jiangxi province earned the lowest annual pay, with the aver-
age annual salary level of Shanghai being roughly 2.7 times that of
Jiangxi.
The salary level in the heavy industry and material production sectors
is no longer among the highest, with such industries as finance, real estate
and IT seeing a relatively higher level of annual pay and manufacturing and
mining seeing the lowest.
It is worth noting, however, that the “equal pay, huge income gap”
phenomenon, with all forms of “invisible income”, “off-payroll income”,
“second-job income”, “income in kind” and “perks” have become the impor-
tant factors that contribute to the widening gap in living standard among
urban residents.
As the gap between different social strata and groups in the income
distribution keeps widening, the Gini coefficient, a measure of the degree
of concentration of income distribution, after a decline during the first few
years of reform and opening up, has been steadily rising since 1985, climbing
from 0.25 in 1984 to 0.47 in 2005 (Fig. 4.2) and reaching a high record of
0.5 in 2008.
0.5
0.465 0.47
0.45
0.45 0.44
0.433
0.42 0.416 0.435
0.398 0.417
0.4 0.39
0.415
0.398 0.403
0.36
0.349 0.362
0.35 0.333
0.348
0.343
0.3 0.288
0.314
0.272 0.257
0.25
0.2
1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007
Fig. 4.2. The change in Gini coefficient of China’s income distribution from 1982–2006.
Source: The Gini coefficient data for 1982–2006 are collected by Bi Xianping and Jiang
Xinhua (2002); the Gini coefficient data for 2000–2005 are collected from annual statistics
released by National Bureau of Statistics of China; the Gini coefficient data for 2006 come
from the nationwide sampling survey conducted by the research group in 2005.
A Few Issues to Consider in the Study of China’s

Classes and Strata
The ever-widening income gap
On the relationship between economic growth and a country’s income dis-
tribution, the American economist Simon Smith Kuznets proposed in the
1950s the famous “inverse U-shaped hypothesis”, based on materials con-
cerning a panel of countries from 1854–1950, since then which has been held
as an iron-clad law in economic development. According to the hypothe-
sis, the income distribution trend generally shows an inverted U curve:
In the early stage of economic development there is always limited social
wealth, with the income distribution relatively even; once the economic
take-off occurs, due to the fact that savings and an accumulation of wealth
are important for economic growth, it will be largely concentrated in the
hands of a few elite people in the wealthy stratum while income inequality
extends to rural areas and the income gap widens until it stabilizes. Then,
once the late stage of the economic growth is reached and a relatively
higher level of the development is attained, improvements to the finan-
cial system (especially the estate tax as a kind of progressive income tax)
and welfare system will enable the intensification of social mobility and
an expansion of the intermediate income stratum, gradually narrowing the
income gap (Kuznets, 1955). On the one hand, this hypothesis is backed up
74 Li Peilin
by comparative studies of the synchronicity of cross sections of numerous

countries, with relevant data analysis showing that the turning point where
the income differential begins to shrink tends to occur during the period
when medium-to-lower-income countries shift to medium-to-higher-income
countries. It is also corroborated by comparative studies of the diachrony
of cross sections of some countries, with relevant analysis indicating that
the income differential in some Western developed countries improved only
after the WWII, while the income distribution of some Latin American
countries actually worsened during the 1960–1970 period of high economic
growth (Chen, 1994: 47–64)
There remains multiple explanations for why the inverted U curve
occurs. Scholars who focus on the balance of power of classes argue that
the deterioration of the income distribution situation always leads to vio-
lent social conflicts, engendering labor movements that exert strong political
pressure, thus promoting the rapid growth of labor income and also, to some
extent, working to contain the infinite expansion of capital-based income.
There are other researchers who emphasize the impact of the supply and
demand of production elements on the income distribution, contending that
the presence of the turning point where the income distribution improves
must imply that prior to this point capital was insufficient while there was
an excess of labor supply during the supply of production elements, lead-
ing to high capital gains and low labor costs, with the benefit differential
between the labor and capital increasingly being widened. After this point,
capital becomes relatively adequate, with capital gains decreased, quality
of labor greatly enhanced, and quantity of labor reduced, leading to higher
labor gains and a narrower gap in the average income.
Still others maintain that there is a trade-off between economic growth
and income equality, as witnessed in the tension between efficiency and fair-
ness; a widening income gap is the price countries aspiring toward a swift
economic take-off will simply have to pay. Historically, economic break-
throughs have always been related to the prospect of attaining huge unex-
pected gains. The associated welfare distribution theory believes that the
key to resolving the inequality problem is to enlarge the “pie” of welfare
through rapid economic growth, so that there will be more excess resources
to go around, thus ensuring that the interventionist policies of the state
that target the secondary distribution are truly effective in improving the
income distribution.
The first true empirical challenge to Kuznets hypothesis was the growth
trajectories of the emerging industrial countries and regions in Eastern Asia.
In countries and regions such as Singapore, South Korea, Hong Kong, and
Taiwan, during the 1960–1970 period of the high-growth economic take-off,
the per capita GNP grew at an impressive annual rate of nearly 7%, while
the income differential during the same period showed no signs of seri-
ous deterioration; on the contrary, under most circumstances it improved.
Except for South Korea, the Gini coefficient during this period dropped for
almost all of the cases: In Singapore, it fell from 0.49 in 1966 to 0.45 in 1980;
in Hong Kong, it dropped from 0.48 in 1966 to 0.47 in 1981; in Taiwan, it
declined from 0.46 in 1961 to 0.30 in 1980; and in South Korea, the only
place seeing a rise in the coefficient, it only slightly rose from 0.34 in 1964
to 0.38 in 1976 (Fields, 1984).
Taiwan presented a rather unique picture, with a “U-shape” detected
in the development trend of its income gap: Calculated by the household
income quintile, in 1952, the year Taiwan achieved an annual GNP per
capita of US $186, the income of the top 20% of its income distribution
was 20.47 times that of the bottom 20%; the figure dropped to 11.56 in
1961, then 5.33 in 1964, before further shrinking to 4.21 in 1981. However,
since 1981, when it achieved an annual GNP per capita of US $2,500, the
income gap has started to widen gradually, with the above figure expanding
to 5.24 in 1992 (Directorate-General of Budget, Accounting and Statistics,
DGBAS, Taiwan Executive Yuan, 1993). If factors such as the rapidly rising
household real property value and real estate price are taken into account,
the actual gap in the wealth distribution would be shown to be even more
pronounced.
China’s development over recent decades indicates that: First, from a
long-term perspective, China is now in the midst of a period where the
country is transitioning from a low-income country to a medium-income
country, and its widening income gap is therefore conforming to regular
economic rules; however, given that the income gap between the urban and
rural areas and different regions is the major factor affecting the overall
income gap, its continual widening may not change anytime soon. Conse-
quently, the ever-widening income gap as a stage-specific feature of China’s
high-growth economy is expected to last for a relatively long period of
time. Second, what sets China apart is that as the income gap in rural
areas is larger than in most cities, urbanization, either embodied by the
deruralization of the countryside and the development of small towns or
the migration of peasants into cities, will actually contribute to the shrink-
ing of the income gap as a whole, not the other way around. Third, China’s
excessively widening income gap has become so serious that it has begun
76 Li Peilin
to impair social fairness and justice and outrage the broader population,
who see it as the root cause of all kinds of social problems. It is therefore
imperative that all necessary measures in terms of finance, taxation, and
social security be taken to reverse this widening trend.
Factors affecting income inequality

It is generally held among classical economists that income inequality is
an inevitable outcome of the market mechanism, whose basic force is so
overwhelming that state intervention simply cannot make much of a differ-
ence. Economics is seen as a “dismal science about an unchangeable income
distribution”, because the labor cost, land rent, and capital profit are all
determined by market-oriented economic laws rather than political forces.
If we try to use state power to change these laws, the outcome would very
well be a smaller overall “pie” of production, which very likely would be
divided in the same old way.
Neo-classical economists tend toward the view that under an unreg-
ulated free-market system, inequality and poverty in industrial countries
in the Western world in the 19th century may have been even more grisly
than what novelists as Charles Dickens depicted in their works of social crit-
icism. But the series of reform measures taken after, such as the introduc-
tion of anti-trust laws, a progressive income tax, unemployment insurance,
social insurance, monetary and financial policies aimed at stabilizing the
economy and all kinds of welfare systems, helped these Western countries
transition from an unregulated free market system to a mixed-economy sys-
tem, enabling them to take some corrective measures targeting the income
inequality so unique to the former system, and which turned out helpful
in alleviating the rich-poor disparities. Although the disparity in terms of
economic benefits remained rather wide, the age of high mass consumption
finally arrived (Gillis et al., 1998: 93–96) The two camps disagree signifi-
cantly on the role of state intervention, but generally found themselves in
agreement on the view that the spontaneous action of the market mecha-
nism would aggravate income disparity.
In recent years, some Western scholars interested in the reforms of
Eastern Europe and China proposed different theories based on the results
of a number of comparative studies, many being prominent contributions
to the sociological framework of “new institutionalism”. They contended
that in socialist countries, during the transition from a planned economy
“redistribution” to a market-based system, the state’s decentralization of
authority and retention of profits gave effective impetus to those directly

engaged in production, leading to the emergence of a new opportunity pat-
tern centered around the realm of market, which caused portions of the
distribution to transfer to the markets at the grassroots level from the
higher-up “redistribution” circle. Therefore, in the period of economic sys-
tem transition, the introduction of the market mechanism is helpful in alle-
viating income inequality (Stark and Nee, 1989: 12–13; Nee, 1991: 267–282).
However, this theory still lacks statistical corroboration over the long term.
In over 30 years of reform and opening up, with the introduction and
expansion of the market mechanism, the income disparities in cities, rural
areas and between the two have all generally demonstrated a pattern of
initial shrinkage before widening again. This does not mean we should jump
to the conclusion that during an economic system’s transition the impact
of the market mechanism on the income gap is positive in the early stage
and will necessarily turn negative thereafter, because things that happen
in tandem do not necessarily reflect a cause-and-effect relationship. For
instance, the degree of marketization of Chinese cities is far higher than in
rural areas, but the income disparity among rural residents is greater than
the urban figures. Moreover, from a nationwide perspective, in Zhejiang
province, where both the economic development level and the degree of
marketization are fairly high, the income disparity is actually lower than
the national average.
Criteria for evaluating and judging “social justice”

In different historical periods, different social classes may have different
interpretations of “social justice” based on their own set of values. Gener-
ally, the connotation of social justice is determined by the collective value of
the majority of people in a society. However, during periods of social trans-
formation, people’s values tend to undergo profound changes, with some
of the basic social issues they used to agree on cast into doubt, leading to
different perceptions of social justice. Chinese scholars currently employ the
following definitions of social justice:
1. The core of social justice is economic equality, including equality in

income and wealth. Any sign of a widening gap in income or wealth
may be perceived as the start of social polarization.
2. Social justice does not necessarily mean absolute economic equality, but
rather a state of equality with respect to the needs of people’s lives;
in other words, it implies that “people equal in the social stature shall
78 Li Peilin
be treated in a similar fashion, and different people shall be treated

differently”.
3. Although the criterion for measuring social justice at the current stage is
the “distribution based on the labor contribution”, it cannot mean the
distribution based on the labor contribution as calculated by working
hours, but rather the labor quality, labor efficiency, and actual output
generated by labor. Therefore, it is only natural that equal amounts of
working time may be rewarded with unequal payment.
4. As social justice is based on existing laws and everyone is understood to
be equal before the law, it is appropriate to say that a lawful distribution
is a reasonable distribution, lawful income is a reasonable level of income,
and a lawful income disparity is a reasonable income disparity.
5. Unlike market fairness, which aims at promoting production efficiency
based on competition and improving the efficiency of resource allocation,
social justice is aimed at upholding social solidarity and harmony and
promoting the harmonious and stable development of society.
In order to better understand the social justice, we must distinguish

among the three concepts “economic equality”, “equal opportunity”, and
“social justice”.
Economic equality refers to the state of the income distribution, the
state of wealth ownership, and the distribution of all benefits. It is a status
of distribution that can be objectively measured.
Equal opportunity refers to a state in which the portion one is entitled
to in the distribution scheme of the society is determined by achieved char-
acteristics (such as personal efforts, choice of opportunities), rather than
ascribed characteristics (such as family background, status and identity).
Due to the fact that people differ in their endowments and capabilities,
even if equal opportunity is granted to each and every one, the outcome of
the competition may very well vary.
Social justice is based on the common set of values, and contains com-
mon understandings shared by a society concerning fundamental human
rights such as survival and development. It serves as a standard to live by
in ensuring normal social life goes on without risk of being disrupted and
shattered by social conflicts, such as when social resources cannot effec-
tively meet demand, and also provide the moral foundation on which to
build the social order and social systems.
Social justice involves wealth ownership, income distribution, acquisi-
tion of power and rights, prestige and social status, access to education, and
career choice. In a word, it involves the distribution of all social resources

and social benefits. Moreover, social justice does not just mean the allo-
cation of social benefits, but more importantly, the equal opportunity for
development. In other words, people’s rights to development opportuni-
ties (in education, employment, etc.) shall not be affected by such factors
as family background, gender, race, status, and capital ownership. Equal
opportunity for development is an important guarantee of social justice.
In addition, although social justice also compensates for market defects
and curbs excessive competition, it is not the opposite of competition and
efficiency. Social justice and economic efficiency are not necessarily based
on entirely different value systems, for it is hard to imagine that two mutu-
ally exclusive value systems and mechanisms can operate harmoniously
together in one society. The mechanism of social justice shall be help-
ful in promoting and maintaining the efficiency of resource allocation and
labor. If we propose that to uphold social justice is to sacrifice efficiency,
we are practically encouraging sloth, which will be equal to reverting to
the “everyone ate out of one big pot” practice during the pre-reform days.
In this sense, “to eat from one big pot” is also a manifestation of “social
inequality”.
The role of the middle class

In sociological studies, the “middle class” has always been an intriguing
yet elusive concept that gives rise to numerous controversies. Although all
kinds of studies have been conducted on the middle class from the angle of
occupation, income, education, prestige, consumption, gender, race, taste,
identity and socio–political attitude, their outcomes seem to only add to
the complexity of the issue, posing still more challenges for scholars, with
a consensus still rather difficult to reach (Goldthorpe, 1995). Despite the
fact that scholars of different or even mutually opposite theoretical orien-
tations have become more aligned in certain aspects of the definition and
operable measurement of the middle class, namely regarding occupation
classification as the most important measure index for defining the class
(Goldthorpe, 1990: 399–440; Erikson and Goldthorpe, 1993; Wright, 1997),
empirical research has yielded different results when it comes to the role
and the function of the middle class. Some studies indicate that it is the
main driving force behind the contemporary social transition (Lash and
Urry, 1987), some suggest that the middle class is the fortress of the tradi-
tional order (Goldthorpe, 1982: 162–185), some insist that it is the stable
80 Li Peilin
and progressive force of industrialization (Kerr et al., 1973), and others

believe it to represent the primary force for democratization (Huntington,
1973).
The important role played by the middle class during the social transi-
tion in the emerging industrialized countries and regions in East Asia has
also attracted widespread attention among sociologists, but empirical stud-
ies on the societies of South Korea, Singapore, Taiwan, and Hong Kong
tend also to show that the middle class has both assertive features and a
conservative nature (Dale and Wang, 2003).
Currently, China is experiencing the largest-scale social transformation
in the history of world modernization. In the age of globalization, such
a transformation presents extremely complicated features: The full-scale
promotion of industrialization, urbanization, marketization, and interna-
tionalization; the simultaneous execution of economic reshuffling and social
structure transformation; the coexistence of the demand for capital accu-
mulation in the early stage of industrialization, industry upgrades in the
middle stage of industrialization, and environment management in the late
stage of industrialization. These complicated features also bring about some
unique difficulties for conducting research on the middle class.
First, the proportion of the middle class is very small, and its group
boundary is not clear. On the one hand, China’s urbanization level seriously
lags behind its level of industrialization. This level is now about 90% (the
proportion of the output value of industrial and service sector in GDP),
but the urbanization level is only 45%. This makes the middle class, which
serves as the “citizen group” in a certain sense, very immature. On the other
hand, China’s economy has a very prominent feature in its chief dependence
on industry. In 2005, the industry and service sector accounted for 47.5%
and 39.7% respectively in the GDP output value structure and 22.8% and
31.4% respectively in the employment structure, resulting in a situation in
which the middle class, a kind of “service group”, did not match the level
of economic development. According to relevant estimates, China’s middle
class now accounts for roughly 12% of the total population and 25% of the
urban population.
Second, due to its inconsistency in economic, social, and political status
during the transformation period, the middle class as defined by occupa-
tion shows a relatively low economic status; it also differs greatly from the
subjective judgment of the public and the middle class defined by busi-
ness institutions from the perspective of income and consumption level or
consumption orientation.
Third, the urban–rural gap and regional differences are great in China,
the middle class as defined by occupation does not match the subjectively
recognized social “middle class”, and sometimes they even deviate with
each other. For instance, among the migrant laborer group, about 42%
think they belong to the “social middle class”.
China’s social structure differs greatly from Western societies. Those
who will lead the social development and mass consumption in the future
might not necessarily be the so-called “middle class”, but may be the “mod-
erately prosperous populace” (xiaokang dazhong). The middle class will not
constitute the bulk of Chinese society anytime soon. “Moderate prosperity”
(xiaokang) is a concept adopted in China to describe a relatively affluent
state of life. To build a xiaokang society in all respects is China’s develop-
ment goal by 2020, and by then this strata shall include 80% of the total
population.
The continuous growth of the economy, the accumulation and increase
in social benefits, the expansion and radiation of urban society, the transfer
of excess labor from rural areas and the rise of productivity, as well as a
more appropriate income distribution system, all serve as important condi-
tions for the “xiaokang dazhong” to emerge. However, at the current stage,
importance shall be attached to ensuring that the salaries of people who
rely on labor income can secure some household fixed assets and financial
assets, and agricultural laborers can secure certain means of production and
seed money. All in all, efforts shall be made to ensure that they can gain
some compensation payments in addition to regular labor income when
the capital gains grow at the fastest pace. Historically, “to store wealth
among the people” has always been an effective measure to promote social
stability.
The role of peasant workers in China’s future development

In China, those laborers that transfer from the agricultural sector to non-
agricultural sectors are collectively referred to as the “peasant workers”.
This concept mainly describes laborers who are still peasants on paper
(identified by household registrations) and have leased land, but are mainly
engaged in working in non-agricultural sectors with a salary as their main
source of income. On 18 January 2006, the State Council issued the doc-
ument “Several Opinions of the State Council on Resolving the Problem
of Peasant Workers”, which marked the first time the concept “peasant
worker” was officially introduced into government documents. Peasant
82 Li Peilin
workers consist of two groups: The first one includes those who only work in
township enterprises near their hometowns, and who “leave the farm land
but never hometown”; the second includes those who leave their hometowns
and migrate to other places to seek jobs, hence their another name: migrant
peasant workers.
Over the last decade, “peasant workers” have always been a hot topic
that has attracted the attention of academics, policymakers and the media
alike. In the early years of reform, prior to 1984, the main way for China’s
rural labor to transfer to non-agricultural sectors was through township
enterprises, as characterized by “leaving farmland but never hometown,
entering factories but not cities”, which used to be widely hailed as the
“path of urbanization with Chinese characteristics”. In 1984, the govern-
ment relaxed its limit on peasants’ migration into cities, thereby effectively
opening the floodgates of massive waves of peasants migrating into cities
to seek employment and business.
From 1985–1990, the total rural population that migrated out
amounted to only 3.35 million, and during the same period the rural labor-
ers absorbed by township enterprises totaled 22.86 million. But things had
greatly changed during the 1990–1995 period. According to the results of
numerous large-scale nationwide sampling surveys, the average proportion
of migrant peasant workers among the total employed in rural areas reached
nearly 15%; according to this estimate, by 1995 the total number of migrant
peasant workers was over 66 million, with the number of rural laborers
absorbed by township enterprises reaching 27.54 million. As indicated, the
capacity of township enterprises for rural laborers has since dwindled, but
the number of migrant peasant workers was still rapidly increasing. Accord-
ing to surveys of 68,000 rural households and 7,100 villages in 31 provinces
(regions, cities) conducted by National Bureau of Statistics of China in
2004, the peasant workers who migrated out to seek employment that year
totaled 120 million, constituting nearly 24% of the total rural labor force.
With those rural laborers working in township enterprises also counted,
the total number of peasant workers in China in 2004 came to 200 mil-
lion. Mainly engaged in working in manufacturing, construction, and the
service industry, their average age was 28 years old, and most of them
were junior high school graduates (research group, research office of the
State Council). Peasant workers are a group of migrants whose size is
difficult to calculate. The generally accepted estimate is that there are a
total of 250 million peasant workers in China, with 150 million working in
cities.
Peasant workers face numerous new challenges during the future

development:
First, as China enters the middle stage of industrialization, its industrial
structure will be continuously upgraded, with technological advances con-
tributing more and more prominently to economic growth, meaning that
the demands on laborers’ technical abilities will also rapidly rise, which
peasant workers will have to adapt themselves to in the days to come.
Second, as urbanization steadily progresses in China, due to the aging
population and the change in the labor supply, the low cost era of China’s
labor force will gradually come to an end. China’s future economic growth
will have to achieve the shift from “Made in China” to “China’s own
brands”, and the comparative advantage of China’s labor force will be
reflected more and more in the labor quality. From relevant survey analysis,
we can observe that the level of education and technical skills of peasant
workers are still rather low compared to their urban counterparts, which
also exerts a decisive impact on the income level of peasant workers.
Third, as peasant workers transfer en masse from the agricultural sector
to the industrial and service sectors, and from rural areas to cities, they will
personally experience the progression of industrialization and urbanization,
with their outlook on the world and society and life all undergoing profound
changes. This will also bring about a great change in society’s overall social
structure. The whole social administration system will have to make proper
adjustments for this massive shift, and peasant workers will also need to
make adapt themselves to the change.
Over the past 30 years, the working and living conditions and social
attitudes of peasant workers have served as important factors in affecting
China’s overall social and economic development. In the coming 30 years,
their working and living conditions and social attitude will continue to play
such a role.
The change that China’s social structure has undergone since reform
and opening up is rather profound, and the development trend fashioned
by this change will determine the direction and future of China.

Part Two
The Working Class
85
86
5
Labor, Workers, and Politics
in Contemporary Brazil: 1980–2010
M. A. Santana
By looking at the socio-economic transformations that have taken place in

Brazil in the last few decades, we may clearly see that Brazilian labor is
experiencing a different reality from that of the 1980s, 1990s, and 2000s.
If during the 1980s, labor returned to the public scene with strong con-
certed actions, in the 1990s, labor unions had to modify their practices and
strategies as the working-world was swept by deep transformations that
had a great impact on the organization of the job market and would alter
the sovereignty that its bases had enjoyed upto then. In the first decade of
the 21st century, however, due to the improved economic conditions and
new political possibilities opened during this period, Brazilian laborers may
once again make their voices heard in society.
This chapter analyzes the trajectory of the development of Brazilian
labor during this period, with special emphasis given not only on external
factors affecting labor issues, such as economic and political factors, but
also on how labor-union militancy acted in the face of and was guided by
these factors.
The 1980s: Labor and the Transition to Democracy

As a whole, Brazilian laborers and their unions had a golden age in the
1980s. Early on in this decade the country had already left a longstanding
civil-military dictatorship behind (1964–1985). The labor unions regrouped
shortly thereafter and speedily joined together with other unions in order
87
88 M. A. Santana
to coordinate with national labor federations.1 One of them, the United

Labor Federation (CUT), took the center stage of this process, conducting
innumerable protests and strikes that became part and parcel of the labor
union movement in those years, including nationwide strikes.
Facilitated by a political transition to democracy, which guaranteed
unions a field of action — and by elevated inflation, which eventually rose to
almost 100% within one month, giving them greater motives to mobilize —
the Brazilian labor union movement achieved important organizational vic-
tories, reoccupying the political space that had been seriously reduced by
the dictatorship.
It should be emphasized that this process grew even stronger dur-
ing Sarney’s (1985–1989) administration, the first post-dictatorship gov-
ernment. Sarney faced a large number of labor protests, thus setting the
stage during the 1980s for a series of strikes and consolidating the ascen-
sion of the Brazilian labor union movement that started in the previous
decade. Protests in the late 1970s were clearly dominated by metallurgic
unions, hegemonic at the time, from the ABC Paulista region, the indus-
trial belt around the city of Sao Paulo, spearheading labor’s return to the
national political scenario to fight for democracy, union autonomy, and bet-
ter salaries. In the 1980s, the labor unions expanded the job categories, such
as teachers, bank employees, oil workers, and civil servants who entered the
stage.
The force of this process may be seen in the 6,500 strikes reported
throughout this decade.2 As such, the Brazilian labor union movement
became consolidated not only as an important element in fighting for labor
rights, but also as a key player in defining the terms to be used in the
transition to democracy. Considering the force they were able to accumu-
late, workers and their representative agencies greatly inhibited the initial
moments of what would later become known as productive restructuring.
These changes would only find a favorable environment to be put into effect
in the following decade.
The 1980s were also characterized by the establishment and consoli-
dation of labor union federations, increased unionizing, and the expansion
1 Two of the most important Brazilian labor unions were created in this period; United
Labor Federation (CUT) and the General Labor Federation (CGT). The latter would
afterwards give way to the General Labor Confederation, also CGT. The Labor Power
Union was later created out of dissidents of the CGT in 1991.
2 For a more substantial and detailed analysis on strikes during this period, see Noronha
(1991).
Labor, Workers, and Politics in Contemporary Brazil: 1980–2010 89
of organized white-collar sectors. However, it may be said that despite all

of the organizational and economic advances, unionism was not able to
surpass its own traditional limits, and still had a lot of trouble rooted in
the jobs. As such, despite a discursive valuation, labor organizations at the
workplace were merely sparse and punctual experiences.
In addition, if the mobilizations were important in order to attenuate
the degenerative impacts of inflation on workers’ daily lives, they were not
able to share their gains. The heterogeneity and organizational disparity of
bargaining power among different categories was, in a certain way, restricted
by the stronger and more organized labor union. This is why they were also
not able to effectively reduce social inequalities in general.
Nonetheless, the force and space that workers and their organizations
enjoyed became evident in the 1989 elections, with the strong sign of two
important institutions created in that decade: CUT and the Workers Party
(PT), which made it possible for the PT leadership to the runoffs with a
real chance of winning the elections. The metallurgist leader, Luis Inácio
da Silva, or Lula, represented labor in running against Fernando Collor
de Mello.3 The elections were also important because they played off two
different projects for the following decade. One of them represented the
years of rising labor power, anchored in an idea of reformist socialism and
defending more wide-reaching social policies. The other project, somewhat
diffused among other candidates, given that the 1980s were thought as the
“lost economic decade”, proposed to make deep changes to the structure of
the state. This project was concerned with questioning the role of the state,
how the country should control inflation, and how it could be integrated
into the global flow.
The 1990s and Changes in the Labor World

In the 1990s, Brazil started going through a series of transformations and
the labor was certainly affected by these transformations. The victory of
Fernando Collor in the 1989 elections guaranteed that the country would
incorporate the economic adjustments that would bring trade liberalization
3 While Lula was supported by CUT, in the presidential runoff, the General Labor Con-
federation (CGT) gave its unconditioned support to Fernando Collor de Mello. According
to a pronouncement by this union’s director, Collor de Mello’s ideas were closest to the
kind of society envisioned by the CGT. After Collor de Mello won, the CGT president at
the time, Antônio Rogério Magri, was nominated as Labor Secretary, but did not finish
his term because he was charged with corruption.
90 M. A. Santana
and privatization of state enterprises in its wake. The economic stability was
brought about by the Real Plan, which was the touchstone of the two terms
of Fernando Henrique Cardoso government (1994–1998/1998–2002).4 The
decade also witnessesed the crude scence of anti-union measures, this time
in an almost systematic fashion.
Yet it must be said that the unions were still strongly mobilized in
the early years of this decade, making it imaginable that the force of these
unions would continue growing, thus guaranteeing workers protected from
the advance of measures against them. Facing the new era, Brazilian labor
unions organized a lot of strikes, some of which had great impact.5
In 1991, a new labor federation was created: Labor Force Union (Força
Sindical or FS). This new federation played an important role in supporting
the “modernization” policies proposed by the government. The FS was a
by-product of the split in the CGT. The new federation proposed “a union
of results”, halfway between the supposed “traditionalism” of the CGT and
the “radicalism” of CUT. FS became CUT’s greatest rival in the struggle
to gain hegemony over the Brazilian labor movement.
The Collor government tried to stop strikes by attempting to change the
right-to-strike law, condemning both labor protests and business lockouts.
One of the crucial points of the proposals was defining penalties, which
included arresting those who refused to maintain essential public services
in operation.
The year 1992 was an important landmark for Brazilian labor. The
year began with a dock strike, held to put pressure on members of the
congress to vote against the so-called modernization project for docks.6
However, what really centred public opinion that year were the scandals
and accusations of corruption against President Collor, who went through
impeachment hearings. Consequently, the labor union movement mainly
took to the streets to support the impeachment process. Congress voted
4 Lula ran as the opposition candidate in both of these elections, but just like in 1989,
he lost both.
5 As a general union directive, both CUT and the CGT organize general strikes in order
to put pressure on the government to establish more favorable wage policies for laborers.
The transition from the first to the second semester of this year was also marked by
important strikes, such as Ford (a work-stoppage that lasted 50 days, in which, as tensions
grew, laborers occupied the factory, and there was a major brawl and vandalism inside
the factory, which was later closed for a while, alleging that it was not in conditions to
operate) and power-utility laborers (in which there were a series of blackouts).
6 The unions were able to stop 40,000 laborers in 35 different ports. The strike was ended
a week later.
against Collor, who stepped down, but did not face trial. Itamar Franco,
the Vice President, took command and inaugurated, together with the new
Finance Minister, Fernando Henrique Cardoso who presented the Real Plan
in order to fight inflation and bring about monetary stability.
The plan’s success had an immediate impact on labor mobilizations
and later became an important tool in the 1994 presidential campaign.
The protagonists of this campaign were Fernando Henrique Cardoso, whose
Social Democracy Party (PSDB) entered into an alliance with the Liberal
Front Party (PFL); and PT candidate, Luı́s Inácio Lula da Silva, once
again allied to other left-leaning parties. The Real Plan took center stage
in creating a schism between those both for and against it. However, the
economic stability brought by the Real Plan guaranteed a sweeping victory
to the candidate seen as its creator.
In the first few months of his new government, Fernando Henrique —
one of his trademark mottos was “the Vargas era is over” — faced strong
opposition from the labor union movement. His intentions were, by way of
a constitutional revision, to privatize and end the state’s monopoly over
public services, which thus provoked a wave of strikes. In May of 1995,
attending to CUT’s demands to organize national protests against the new
government proposals, oil workers, power-utility workers, telephone and
social security employees went on strike.
The Fernando Henrique government was quick to establish its gen-
eral line of conduct against strikes, recurring to long-gone methods such
as denying pay to workers participating in the strike. However, more con-
temporary methods were also used. By way of Decree Law no. 1480, the
government could freely choose how it would deal with work stoppages of
public services.7
The government’s toughening up on strikes did not stop here. The
decree probably sought to weaken the oil worker’s strike; more than 90%
workers of this category adhered to the strike, shutting down 10 oil refiner-
ies. The government took out its legal, economic, and even repressive arse-
nal to combat the strike. The government basically wanted to break the
oil worker union’s back, and bust the labor union movement in general,
especially those unions identified with CUT. This was a turning point for
7 Trademarks of this policy: Stoppage days would be considered as absenteeism, forbid-

ding that they be justified, compensated, or even registered as working hours; supervisors
were forced to hand in lists of striking laborers under the risk of being fired; and, strikers
with commissioned post or who received bonuses could now be fired.
92 M. A. Santana
the national labor union movement, which was worsen with the advancing
economic and labor transformations.
The conjugation of economic liberalization/privatization/monetary sta-
bility to a background of high unemployment rates8 hit the labor union
movement quickly and severely, especially the more combative CUT unions.
The economic liberalization that Collor abruptly initiated brought in its
wake a “competitive” discourse (on an international level) and precipi-
tated Brazil’s insertion into a global economic network. This process led
to restructuring businesses and incorporating new standards of produc-
tion. Productive restructuring left little maneuvering space for unions, since
labor relations became more precarious and there were increasingly less
formalized jobs (with signed documents and constitutional benefits) than
before.9
For its turn, the economic stability that Brazil now enjoyed greatly
weakened the catalyzing capacity of the salary, thus weakening one of
the union’s most important banners. Privatization also reduced the labor
unions’ greatest contingent, the civil servants that had always sustained
CUT unionism, the largest and most important labor union in the coun-
try. It should also be mentioned, as we’ve seen, especially under Fer-
nando Henrique’s government, the state’s coercive role toughened up
against labor unions, as symbolized by the national oil workers’ strike in
1995.
The first few years of the Real Plan indicate that, despite the important
economic stability achieved, its benefits did not reach laborers. According
to a DIEESE analysis, the Plan “did not represent sustainable growth and
durable wealth redistribution”. The reason is that the country’s economic
growth rate dropped from around 5.5% in the early 1990s to 0.2% in 1998.
Regarding wealth distribution, the initial improvement, brought about by
the redistributive effect of the dropping inflation rate, rapidly stagnated.
Thus, wealth concentration remained elevated.
Besides not being able to reverse the trend towards increasingly precari-
ous labor market conditions, the stability plan worsened the unemployment
8 In order to have a better idea, according to statistics published by the Labor Annual
DIEESE/2000-2001, in 2000 unemployment rate rose to around 18% in Greater Sao

Paulo (approximately two million laborers).
9 According to data published by the O Globo newspaper, on 27 May 2002, formalized
work, with signed documents, regressed to 53.7% in 1991 to 43.6% in 2000. This per-
centage finally started going up again in 2002, after a decade, rising to 45%.
problem; not only did the unemployment rate rose, but the average amount
of time spent looking for a new job also rose.10
A general evaluation of the union dynamics described above was obvi-
ously not very positive. A CUT evaluation in 2000 indicate that “The
offensive against labor and union rights forces them to adopt a fragmented
and defensive agenda, limiting attempts to unifying the struggle (. . .), to
the point of actually affecting the Unionizing Campaign, which in spite of
increasing new members, still has not taken off the ground (. . .). The per-
centage of unionized CUT members, since the 6◦ Concut [1997], dropped
from 34.60% to 31.40%. (. . .). Until March 1999, this drop had been accen-
tuated. After this date, the average percentile stabilized, hovering around
31%” (Resolutions of the 7th CONCUT).”
The general climate of unemployment and precarious labor conditions
also led unions to modify their demands agenda. If, in the 1980s, the eco-
nomic wage problem was the priority subject, in the 1990s saving jobs
and controlling unemployment came to the forefront.11 In addition, unions
tried to find alternative ways of expanding their operations, contributing
towards the consolidation of a new institutionalism.12 This reformulated
logic affected from rank and file to the intra-union federation structures.
As such, the federations ended up helping their members find work through
agencies and aid centers,13 often taking a defensive stance instead of actu-
ally mobilizing laborers to protest.
Yet, it was not just the new scenario that troubled unions, diminishing
their field of operations had also forced them to seek new paths. Brazilian
labor unions also had to deal with historical difficulties, both on the micro
and macro levels, as mentioned above, in a crisis that hit unionism in a way
that had little to do with its ideological inclinations.14 Unions had trouble
10 According to DIEESE bulletin, no. 195, from June 1997, “The average time in the
Federal District, for example, is up to 52 weeks, for Metropolitan Sao Paulo, up to 39
weeks. This means that besides more unemployed individuals, this population is also
unemployed for a longer period of time.”
11 For metallurgical workers in RJ, see Ramalho and Santana (2001).
12 Sectional and Regional Councils come to mind in this sense, among others. Even
being a controversial topic within the union movement, it should still be mentioned as
an example of trying to seek alternatives. For an analysis on this topic, see, among others,
Castro (1997) and Leite (2000).
13 For more on this subject, see Souza et al. (1999). Funding for these projects came
from the Labor Support Fund (FAT), generating an intense debate within the labor
movement.
14 Santana (2000b) and Martins and Rodrigues (2000), show how in facing the tough
circumstances imposed by the new scenario, people in sectors seen as more combative
softened their views while those more inclined to negotiations slightly “radicalized” their
discourses.
94 M. A. Santana
getting articulated and universalizing their struggles, and also in planting

roots in daily shop floor practices. There were also schisms within the unions
themselves that further impeded effective action. Not only labor federations
and individual unions were split against each other, but also often within
their own ranks, translating into a lack of consensus that could potentially
lead the way to a unified action front.15
This scenario led to the labor union movement’s reorganization of its
strategies and practices in Brazil. Decreasing strikes and lack of publicity
to the cause clearly signaled a significant change in how Brazilian unionism
was positioned as a national player, and also the kind of difficulties it faced.
Obviously, the number of strikes in itself is insufficient proof of a union’s
force, but it does serve as an indication. In the 1990s this practice went into
steady decline. In 1996, there were an average of 111 strikes monthly, but
by 1999 this average had dropped to 46.16
As such, the 1990s, especially the latter years, represented a hard set-
back for Brazilian workers, bringing about new problems and intensifying
old ones. At the same time, it would not be correct to state that the national
labor union movement did not look for alternative routes, widening their
scope and finding new spaces that would keep them alive and help them
move about in a context as difficult as this one.
By analyzing the renovation of organizational strategies, as well as “lib-
eralizing” the labor market from the 1990s on, we may identify reactions
as distinct as more democratic labor relations to persisting authoritarian
practices (especially regarding unions and other labor organizations present
within the workplace) (Castro and Leite, 1994). It may also be perceived
that “liberalization” did not work as well as constant affirmations would
presume; what actually did increase were precarious jobs, precarious con-
ditions on the job, precarious wages, and growing unemployment (Martins
15 It should be pointed out, though, that there were laudable attempts at group actions,
even if in a sectarian way, such as the common front led by CUT and the FS in late 1999
to demand a 36-hour work week and a nationwide collective contract for autoworkers.
Together, they organized the so-called “Strike-Fest” that paralyzed auto factories across
the country. For a more detailed analysis of understandings and tensions among unions,
see Santana (2000b) and Martins and Rodrigues (2000).
16 According to data from the Labor Annual DIEESE/2000-2001. DIEESE also indicates
that changes occurred in how strikes were carried out. The year 1997 seems to be the
landmark year for inverting the strike situation since, according to DIEESE bulletin, no.
203, from March and April 1998, “Strikes were reduced by half in Brazil last year when
compared with the previous period: in 1997 there were 630 stoppages, against the 1,258
registered in 1996.”
and Ramalho, 1994). Some analysts have opted to qualify this process as
“spurious liberalization” (Abramo and Montero, 1995), for example.
This situation was markedly tied to economic growth and exclusion,
demonstrating the articulation between excluding productive restructuring
and poverty, especially by keeping in mind the industrial limits in countries
like Brazil, for fighting poverty (Leite and Silva, 1996; Brandão Lopes, 1993;
Telles, 1994; Castro and Leite, 1994).
This is the complex and intricate process that had sprung from the new
scenario, inspiring new kinds of analyses — on occupational trajectories,
whether of those disinherited or not and on mobility, both new and old
kinds of unemployment and poverty, and also on modes of producing and
reproducing labor force, in both the formal and informal sectors. It is clear
by following certain scholarly guidelines that the shop floor problem has
not yet exhausted the possibilities of sociology of labor to act, thinking in
terms of new analyses and obliging it to expand its horizons.
In terms of labor organization and operational procedures, the pres-
sure made by industrial restructuring on unionism shows us new ways of
managing the labor force, especially in businesses associated with global
productive chains, together with transformations in the organization of
production and job structure, putting forth new questions, demanding new
postures and putting in check the bargaining power previously accumu-
lated (Bresciani and Gitahy, 1997; Bresciani, 1994; Salerno, 1993; 1997;
Rodrigues, 1997a; 1997b).
However, the labor union movement has made meaningful efforts to
seek alternative formulas in facing the necessity of negotiating productive
reorganization, preserving jobs and salaries, and insisting on greater par-
ticipation in business decisions.
In the ABC Paulista region, for example, a traditional organized labor
fortress, despite the heavy impacts of restructuring and with the experience
that metal workers have accumulated and their representative force within
factories, has given them considerable bargaining power with employers,
who maintain the tradition of respecting the right to collective action. Even
with the number of factory workers diminishing, any negotiation must con-
sider a whole set of constructed practices.
The Sectional Council experience is probably the most important (and
controversial17) example of the auto workers union’s propositional capacity
17 Even being a controversial topic within the union movement, it should still be men-
tioned as an example of trying to seek alternatives. For an analysis on this topic, regarding
96 M. A. Santana
in the 1990s (Arbix, 1996; Castro, 1995). Analyses show important facets
of how industrial organizations and their relationships as well as the labor
market were turning into, for the first time in Brazil, problems to be nego-
tiated between actors who saw themselves as legitimate interlocutors, quite
contrary of the previous decades, in which the factory led a despotic regime
in terms of production goals and organization (Castro, 1995: 42). Changes
within CUT may also be identified, from a more combative posture to a
“conflictive cooperation”, in which the conflict is explicated, but always
with a view towards cooperation (Rodrigues, 1997a).18
This can be seen in the late 1990s when the Metal workers union made
a complex agreement in a business to save jobs in the ABC region. For
Luiz Marinho, then president of the Metal Workers of ABC, “. . . factories
are modernizing and cutting jobs, whether with union participation or not.
Our role is to negotiate the tempo of this modernization. If we do not
do anything, they will close shop here and go elsewhere to manufacture
automobiles. The difference is that if we are there, we can at least keep
some of the workers from losing their jobs, save some jobs. We have to
hang on to something, otherwise we will be left with nothing.” (Veja, 25
March 1998)
On the other hand, data and analyses vary according to the effects
of restructuring on different segments of the economy. More modern sec-
tors face more effective union action, which forces them to negotiate new
kinds of management (Cardoso, 1999a; Leite, 1997). In most of other sec-
tors, however, the current state of things shows gradually more precarious
conditions on the job and fragile labor organizations.
The union movement had trouble dealing with labor problems since
their policies and strategies seemed impotent and incapable of deterring
deteriorating rights and establishing relationships with a labor force quite
distinct from that of the large enterprises with which the movement was
accustomed to (Ramalho, 1998).
The Year 2000: The Comeback and Dilemmas

The last century came to a close with Brazilian labor and its organizations
in crisis, while the current century started under the double face of crisis
both regional and national experiences, see, among others, Castro (1997), Leite (2000),
and Galvão (1998).
18 See, also, Rodrigues (1990), Rodrigues and Cardoso (1993), Cardoso (1999b) and Boito
Jr. (1991).
and change: On the one hand, the conditions under which workers were
hired and how they worked remained unfavorable to them, and yet, on the
other hand, even if only in an incipient way, their capacity to make demands
increased.
In terms of hiring and labor conditions, the Fernando Henrique Cardoso
government, as well as business and labor sectors, in spite of the deregu-
lation process already underway in the Brazilian labor market, sought to
attain even greater liberalization, thus shifting the debate to proposals to
change the Consolidation of Labor Laws (CLT).
Laborers were greatly divided over the subject, with the two main
union federations taking opposite positions. The FS supported the changes,
pointing out positive aspects for labor; CUT, however, severely criticized
the project, evaluating that it would weaken labor rights and operational
capacities even more. CUT always insisted that any discussion on changing
labor legislation must be preceded by other changes, specifically laws on
Brazilian unionizing.
In terms of labor capacity to make new demands, the signs are still
incipient but they do exist. According to DIEESE data, the first semester
in 2000, “. . . registered more favorable conduct towards labor concerning
their being able to negotiate better wages. This was the case in the first
six months of 1999. While from January to June last year less than 55% of
the negotiations were able to catch up to or surpass the inflation of the 12
months preceding its database — and there were even greater difficulties
for those categories of jobs being readjusted in the second semester — in
2000, the percentage of categories that were able to at least compensate
losses from inflation was around 68%”.19
This would define the general picture until the end of Fernando Hen-
rique’s term. The presidential election in 2002 again represented an evalua-
tion of the past decades. Luis Inácio Lula da Silva, once again in the running,
now came forth as an alternative to the so-called “neoliberal decade”. José
Serra, from the PSDB, faced the difficult task of representing the continuity
of a government whose leader left his post with one of the highest rejection
rates in Brazilian history.
19 In a letter to the press, Sao Paulo, 22 August 2000. The document states that, “This
kind of behavior may be linked to improvements in the economic scenario expected

this year, with less turbulence in the international economy, a more stabile exchange
rate, falling interest rates, and, as has already been registered — systematically lower
unemployment rates than at the same time in 1999. This more favorable environment
and the perspective of a growing national economy tend to make negotiating wages less
difficult.”
98 M. A. Santana
Lula’s victory, despite the wide alliance that supported him, created
great expectations regarding all the structural changes he had been promis-
ing for such a long time. However, the elections were held during a time
when many anticipated an economic crisis. Because of the chances of Lula’s
winning, investments based on financial speculation threatened to leave the
country. Lula’s committee sent forth a “Letter to Brazilians” in order to
calm the market down, indicating that monetary stability would be main-
tained.
Lula’s government, throughout its two terms — 2003–2006 and 2007–
2010 — closely followed his predecessor’s economic policies. And economic
indices showed very positive results. Lula’s government may basically be
characterized by low inflation and reduced unemployment. The unemploy-
ment rates dropped from 12% in 2003 to 9% in 2007. Even though the
quality of the jobs created is subject to debate, the data itself is impressive.
From 1998 to 2007, the employment rate grew by 56%. In 1998, the formal
Brazilian labor market (in which work documents are signed) comprised
24.5 million jobs. The total number rose to 28.7 million in 2002 and by
2007 had reached 37.6 million. The best results obtained in this field were
from 2003 to 2007, when most of these jobs were created.
The minimum wage also experienced its greatest real growth among
the working population, considering the total salary amassed starting in
2003. Salaries stagnated from 1998 to 2002, having a total value of around
R$36 billion. From 2003, they started rising annually, reaching R$52 billion
in 2007. This clearly impacted the recouping of purchasing power among
the lower classes. Numerically, in eight years the minimum wage rose from
R$200 to R$510, thus representing a 150% increase. By merely considering
two examples from the industrial area, it may be seen that auto manufac-
turing attained successive productive records and the naval industry, prac-
tically in extinction, came back to life in this new environment, becoming
one of the largest of its kind on a world scale.
Government policy maintained a central focus on social programs that
could effectively reduce poverty, an effort felt throughout the decade. Pro-
grams such as Zero Hunger20 and the Family Voucher,21 were important
20 This program, established in 2003, substituted the Solidarity Community Program,
inaugurated by Fernando Henrique Cardoso, in 1995, to fight hunger and poverty at

their roots. According to official data at the time of the program’s inauguration, there
were 44 million starving people in the country.
21 This program was based on transferring income by complying with certain conditions.
In trying to unify all previously existing aid programs, the Family Voucher provides
landmarks, alleviating this chronic problem, especially the second program.

Despite its success, though, the Family Voucher program was heavily criti-
cized by progressives as well as conservatives as being mere “financial aid”,
simply “giving money to poor people”. Conservative critics believed that by
receiving government aid, poor people would stop looking for jobs. Project
defenders responded that besides relieving families in situations of extreme
poverty, the indirect result of the program would be greater bargaining
power to enter the labor market, since beneficiaries would be in a less pre-
carious position to do so.
Placing youth in the job market was also a central government project
in its early years. However, inaugurated in 2003, the My First Job program
did not obtain the expected results and was deactivated in 2006. On the
other hand, Lula’s government was significantly able to reduce servile or
slave-like work, making advances on an effort that had commenced in the
previous government.
The trademark of Lula’s government, as far as labor is concerned, is the
so-called union reform. The structure of corporate unions, created during
the Vargas government in the 1930s remained practically intact during its
70-year existence. This official labor structure outlasted both dictatorships
and democracies. The CLT to which unions were associated stated how
employees and employers were organized andxs regulated labor rights. It is
said in Brazil that Vargas “bestowed” rights to workers with the left hand
and “chained” their unions with the right hand. This structure resisted
many attempts at change from labor union militants, and with the start
of productive restructuring, was appropriated so that it could be changed,
and its usages “liberalized”. This was the case from the 1950s to the 1980s,
two shining points in Brazilian labor union careers, in which, in spite of the
persisting labor structure, workers and unions defended their interests in
memorable social movements.
Lula’s victory inspired a generation of union militants, just like him,
from the so-called “new unionism”, which is critical to this corporative
legacy. Union influence within the government led to the criticism of its
excesses at all levels of government posts. Being a campaign promise, revis-
ing union legislation came into the forefront of the government’s agenda.
financial aid to low-income families, meaning those families with per capita incomes of
R$10,00 to R$1520,00. In order to receive this aid, the families must maintain their
children and/or dependants in school and prove that they get their vaccines on a yearly
basis.
100 M. A. Santana
The Ministry of Labor organized a National Labor Forum (FNT), com-

posed of labor, employer, and government representatives, who sought to
elaborate a new union project for the country.22 Depending on whose point
of view was being considered, there were agreements, disagreements, and
questioning. Questioning went from the pre-parliamentary project, whether
it should be approved in its entirety or only at certain points. The doubts
were justified because the project made its way to congress right as national
politics were hit with scandals whose protagonists were key government per-
sonalities, even reaching the president himself. The debate on corruption
took over the parliament, leaving small room for other subjects.23 Besides
this factor, the real limits and possibilities that a new union structure might
bring about also came into question.
Inaugurated in the post 1930 “revolutionary” government and consoli-
dated in the Estado Novo dictatorship, union structures actually were refor-
mulated for the first time by the democratic constitution of 1988. The new
formula, however, basically preserved the old corporative structure, even
though it did do away with public interference in labor unions, reestab-
lished the right to go on strike, as well union and professional autonomy —
which included civil-servant organizations — and gave greater autonomy to
unions in facing state forces. The conservative character of the new direc-
tive is due to the maintenance of a single-union confederative system,24
the union tax — in which yet an additional confederate contribution was
created besides the preexisting one — and the normative power of the Min-
istry of Labor. In addition, the 1988 constitution did not solve the historical
problem of labor union federations. Despite their political and institutional
recognition, unions did not have the autonomy or legal status that would
enable them to exercise labor-union attributes.
Creating a confederative contribution gave unions an additional source
of funding, free of ties, without them having to give anything in return to
that. Some argued that it would be tied to its representative base, tak-
ing into account the union efforts to affiliate workers.25 This access to new
22 For details on how this Forum was put together and how it works, see Bargas and
Oliveira (2005) and Druck (2006).
23 The legislature was paralyzed with the so-called “Mensalão” corruption denounce-
ments. Energy was thus diverted to the Parliamentary Inquiry Commission (CPIs).
24 The “official” confederate system is constituted by unions, federations, and confeder-
ations representing professional and economical corporations.

25 The confederate contribution aims at paying for its own functioning; the value of this
contribution is fixed in a general assembly of members. Differently from the Union Tax,
this contribution comes from associated members and does not suffer the same opera-
tional and instrumental limits, since the corporation itself decides how it will be used.
sources of funds, the loosening of institutional control, and the demand for
new unions led to an avalanche of new unions. In both qualitative and quan-
titative terms, there were a number of exaggerations and aberrations,26 and
this explosion gave greater potential to the unfortunately notorious “phan-
tom unions”. The numerical increase did not mean or result in advances
in the labor union movement, nor give it greater power, but on the con-
trary, led to fragmented and weakened unions, and, to a certain degree,
decentralized and dispersed collective bargaining.
How could this new scenario, brought about by historical problems and
intensified by others coming from the 1988 constitution, be responded to?
Apparently, this has been the key question in recent union-reform debates,
especially for those in favor of it.
In Lula’s government, legislative reform for unions became an issue.
Those who proposed the reforms thought that they might take a step towards
wider reforms, not being limited to a “mere change in the legislation, but a
wide-reaching systemic legal and institutional reorganization, which, from a
normative point of view, should encompass Labor Union Law, labor legisla-
tion, Procedural Labor Law, Public Administration Labor agencies and the
Ministry of Labor” (MTE, 2005).
The set of reforms targeted by the government in this area, as stated in
documents (MTE, 2003; MTE, 2005), meant to make labor laws and insti-
tutions more compatible with what would be understood as the country’s
new social, political, and economic situation. The same documents are able
to demonstrate consequences of successively harmful economic policies and
productive restructuring, which would gravely affect labor conditions.
The project “Explanatory Memorandum” states “labor union legisla-
tive reform is one of the most important changes of this administration
because of the structural backwardness of current laws. Labor union orga-
nizations that enjoy effective autonomy from the State, fomenting collec-
tive bargaining as a fundamental tool for strengthening democracy, and
stimulating authentic representation is what we wish to accomplish” (MTE,
2005: S/P).
This necessary effort may be considered courageous, considering how
controversial the issue is for general society, as well as inter and intra coali-
tions of the National Labor Forum. By looking at a project that could
possibly inspire change, we may see that the reform was guided by a clear
26 According to MTE data (2005: S/P), at the time this union reform came into discus-
sion, there were around 18,000 unions.

102 M. A. Santana
perspective of bargaining and conflict-resolution. Some of the central point

aimed at were (MTE, 2005: S/P): “(a) strengthening labor union repre-
sentative capacities among workers, employers, at all levels of representa-
tion; (b) establishing criteria of representativeness, labor-union organization
and internal democracy; (c) delineating efficient ways of guaranteeing the
protection of the right to unionize and preventing anti-union conduct;
(d) promoting collective bargaining as the fundamental way of establish-
ing a dialogue between workers and their employers; (e) the extinction of
any kind to feature-tax cost to the unions and the creation of a collec-
tive bargaining fee; (f) stimulating voluntary conflict-resolution procedures
without hindering resource to the court system; (g) recognizing goodwill as
the key to social communication and collective bargaining; (h) managing
labor relations policies in a more democratic way by stimulating dialogue;
(i) the right to strike within a context of extensive labor-union legislation
that induces collective bargaining; (j) the provision of procedural devices
aimed at the effectiveness of substantive rights, collective action and within
the jurisdiction of the Labor Court; and, (k) defining clear rules for helping
existing labor-unions to make the transition and adapt to the new rules”.
This legislation should theoretically generate increased representative-
ness in labor-union bargaining power, its effective installment within busi-
nesses themselves, union-busting prevention measures, the end of the union
tax — with the creation of the contribution coming from negotiating col-
lective bargaining rates — and “legalizing” labor union federations. In
addition, labor-court procedures would be redesigned,27 removing the term
“abusive”, almost a given in strike and protest trials, without, however,
doing away with regulations altogether regarding strikes and protests.
The results were mixed, since positioning remained somewhere between
union “unity” and “plurality”.28 The possibility was made available for
27 In this particular case, the “alterations suggested regarding the Labor Court’s nor-
mative power, which over time came to be seen as a way of de-stimulating collective
bargaining. In order to solve collective conflicts of interests, laborers and their employers
may recur to, should they so agree, private arbitration or to a procedure of voluntary
jurisdiction in the Labor Court. Court procedures concerning strikes should also be
reviewed in order that they be adjusted to the freedom of union regime. The legal possi-
bility of ordering laborers to return to work is restricted to dire situations in which the
greater part of the community is affected or when the risk exists of irreversible damage
to persons or patrimony, whether these be the employer’s or of third party members”.
(MTE, 2005: S/P).
28 According to the part dealing with Representational Exclusivity (MTE, 2005: 39):
“Article 38. This law gives representative exclusivity to a single union for each category
there to be more than one unit per category of job base, but also existing
unions were allowed to remain “exclusive”, should they fulfill the necessary
requirements that the project demanded.29 This might serve as part of a
transition phase. What was clear is that no one, especially in a democ-
racy, would be able to make changes in something as durable, extensive,
and efficient, on all levels and for such varied actors, without running into
impasses, problems, limits and difficulties.
The reform, if it were to become law and put into practice, would gen-
erate new possibilities of action and dispute for all those sectors involved in
Brazilian unionism. However, such a law would not be without difficulties.
For example, establishing the “rate of representativeness” of each union,
which would allow it to be legalized and represent rank and file workers,
can turn into a disputed maze of numbers and statistics. “Exclusivity” as
part of a transition mechanism, would give all preexisting unions a dead-
line for reaching established representativeness rates. Given Brazilian union
maneuvering history, this could become a means of maintaining old leader-
ships in a new guise.
Yet this is not all. Since its initial steps, but especially in terms of its
results, there has been criticism of the reform from analysts as well as union
leaders.30 Such criticism goes from umbrella entities, to union organization
on the job, to state mismanagement and the right to strike.
Regarding umbrella entities, the project could end up giving them
too much power by recognizing union federations and also offering these
entities the possibility of overlapping unions at the bottom of the pyra-
mid, and creating “umbrellaism” as had once existed. As far as on-the-job
unionizing goes for workplaces with 50 or more employees, this would be
to be represented. Article 39. Any union registered, before this law was enacted, could
achieve such exclusivity in an assembly held for both affiliated and unaffiliated repre-
sentatives of a given category and by including regulations that guarantee democratic
principles so as to secure the wide reaching participation of those being represented. The
conditions stipulated for obtaining representative exclusivity must be proven within a
12 month period, starting as soon as the Ministry of Labor and Employment approves
the statuary requisitions proposed by the National Counsel of Labor Relations, during
which time the union will maintain its representative exclusivity within the scope of its
representation. Article 40. When the scope of representation is modified, another union
may be created.”
29 According to the project (MTE, 2005: 35), “The union becomes representative when
affiliation to a union, confederation, or federation reaches 20% of a category’s laboring

force.”
30 See, among others, Borges (2004), Galvão (2005), and Druck (2006). The project is
defended by Bargas and Oliveira (2005).

104 M. A. Santana
extremely limited, since this right would be limited to businesses with over
100 workers, less than 10% of all businesses in Brazil. Regarding public
mismanagement, the project would give the Ministry of Labor the right
to recognize or not legal entities, and also define which categories of jobs
fit under the MTE. The National Council of Labor Relations, a tripartite
body still to be created, would, on the other hand, lack any autonomy
whatsoever, being tied to the government. Finally, regarding the right to
strike, the reform would widen what is understood by essential activities
and further establish “productivity quotas”, which if not met, could lead
to punishment and fines in the Labor Courts.
For some critics, the spirit of the proposal would make it certain that
what’s “negotiated” would prevail over what’s “legislated” — good enough
for those few more organized, stronger unions with more solid structures,
but tragic for most labor unions that do not have the same strength.
In any case, no one knows when the reform will be approved. It made
its way into the parliamentary agenda at a complicated time for the gov-
ernment and since many different sectors resisted, it ran the risk of being
barred. With the end of this crisis, the government has sought alternatives
to labor-union legislation, if not as a set of legal dispositions, at least in a
punctual way.
The National Labor Forum itself, for example, an important player in
the setting of the debate itself, has dedicated time to important problems,
but mostly in a focalized and punctual way, that could not necessarily be
framed as union-reform friendly.31 Other players touched on labor reform
subjects, the most relevant of which was recognizing union federations.32
On 10 May 2007, in a meeting with the seven largest union fed-
erations in Brazil (CUT, Union Force (FS), New Labor Union Federa-
tion (NCST), CGT, General Federation of Brazilian Workers (CGTB),
Autonomous Worker Federation (CAT) and the Social Democracy Union
(SDS)),33 a proposal was agreed to in order to gain official recognition,
including public financial support. As such, this agreement converges with
31 In 2007, the FNT saw the three main focuses of debate as: Regulating commerce on
Sundays, outsourcing, and recognizing the federations.

32 Information on this last part was personally obtained from a Labor and Employment
Ministry employee.
33 Observe that the National Coordination of Labor Struggles (CONLUTAS), to the left
of the political-labor-union pendulum, did not participate in the meeting and criticized
its resolutions.
that made in the National Labor Forum. It also officially proposed public
financial support for these entities.
Law 11.648/2008, which officially recognizes labor union federations
as entities representing workers, was enacted on 31 March 2008. With this
law, the federations can coordinate worker representation through the labor
unions to which they are affiliated. In addition, these entities may partic-
ipate in negotiations held in forums, public agency collegiate bodies, and
other tripartite spaces to discuss and deliberate on labor interests. To qual-
ify, the federations must fulfill a set of requirements such as: No less than
100 affiliated unions distributed among the five regions of the country and
also encompassing the five sectors of economic activity. It is up to the MTE,
should this be necessary, to instruct and discipline the procedures, confer-
ring the corroborative requirements of the federations as being adequately
representative.
In order to get a better picture of new labor union affiliations during
this period, DIEESE statistics, based on PNAD/IBGE for 2006, indicate
that 89,317,241 of the population was employed, and 18.6% (16,594,477)
were affiliated with some kind of union. 81.4% (72,722,764) were not affili-
ated with any kind of union. Regarding union federations, among the three
largest, in 2001, covering a universe of 11,354 existing unions, 7,050 were
not affiliated to a federation: 2,834 unions were affiliated to CUT, 838 to
the FS, and 289 to the SDS.
A series of dispositions included standardized union federations in
Brazil, defining their attributes and prerogatives, measuring representative-
ness, establishing a minimum standard level of affiliation and appropriating
finances. The passage from political and institutional recognition (which the
unions had already earned) to legal acknowledgment obviously meant new
rights and responsibilities. For certain analysts, this might limit the orga-
nizational and operational scope of the federations, while for others it was
a fundamental step in changing the structure of labor unions. In any case,
it should be kept in mind that workers have always articulated collective
action within and out of legal boundaries, when they feel that such legal
boundaries might hinder their efforts.
Effectively acknowledging union federations’ existence promoted struc-
tural reorganization within the federations. CGT, CAT and the SDS joined
together to form the General Labor Union (UGT). CUT suffered its first
significant defections when founding sectors of this federation left to found
the Labor Federation of Brazilian Workers (CTB). In addition, CUT, even
before the changes went into effect, lost groups of members who had joined
106 M. A. Santana
CONLUTAS. Even though each has its own distinct ideology, both the
CTB and CONLUTAS criticize CUT for its clear-cut identification with
the Lula government. The sharpest criticism highlighted what would be
CUTs blind support of government policies and guidelines. A symbol of
this blind obedience would be Luiz Marinho having left the presidency of
CUT to become the Labor Minister, later migrating to Social Security. Cer-
tain sectors within CUT claim to adopt autonomous positions regarding the
State, yet, at the same time, it would be hard to not support a government
elected with its support and that will advance labor interests and conditions
in the country. Critics finally note the many government posts occupied by
those unionists having hegemony in the labor movement.
The positive evaluations of Lula’s government were quite elevated.
These evaluations were tested in the 2010 elections when Lula’s Secretary of
the State, Dilma Rousseff, won in the runoff, representing continuity against
opposition candidate José Serra. Rouseff’s victory, despite her not being a
familiar face to much of the population until then, clearly represented a vic-
tory for the government and especially Lula’s personal popularity. In terms
of our analysis, we may now ask ourselves what kind of continuity Rous-
eff will give to rearranging Brazilian labor regulations, which took off, but
then stalled, in Lula’s government. We may also ask what kind of reaction
Rouseff will receive considering that Lula was questioned by both labor and
business.
Conclusion
In three decades, the labor world and Brazilian workers went through many
transformations. The 1990s were undoubtedly the period of most clearly
delineated change, altering the state of things from how they were in the
1980s. Even with labor regrouping in the decade of 2000, these changes
are still being felt in the increase of the employment rate, for example,
resetting earlier rates in a different way, since the quality of these jobs is
still questionable, as compared with previous periods.
A general survey of three decades might indicate both similarities
and differences in terms of the limits and possibilities of labor and labor
union collective action. Some differences are clear when we observe the
labor-union movement in the periods under analysis. However, there are
still points of contrast between them, and the dilemma of Brazilian labor
unionism that have indiscriminately made it across the decades remain
the same.
The 1980s, besides intense strikes, were also marked by the organization
and consolidation of union federations and their expansion to middle-level
salaried workers and civil servants, and also by increased general unionizing,
especially within industry and banking, and finally by confronting the
authoritarian labor relations that had always characterized how the State
dealt with the labor world.
In the 1990s, on the other hand, the impact of economic change led
the Brazilian labor union movement to develop new forms of practice and
strategy,34 and, when compared to the 1980s, a notable decrease in its scope
of collective action, getting less publicity and acting more defensively. The
essential traits of the national unions were also changing in terms of its
membership profile. In facing the crises, even though absolute membership
diminished in sectors that had been important in sustaining the labor move-
ment in the 1980s — basically industry and banking — unionism was able
to follow changes in the labor market and, in the 1990s, expanded and con-
solidated its ranks due to educational and health employees, besides women
and better educated workers. This may explain why, in spite of the crisis,
affiliation rates in Brazilian unions remained stable (Cardoso, 2001).
As expected, given the distinct economic and political situations,
national unionism could not sit still and do nothing. As such, represen-
tatives of labor interests demonstrated certain vitality, whether in organiz-
ing and getting mobilized, in an offensive standard like that of the 1980s,
or in terms of taking new political stances and preserving its institutional
survival, occupying new spaces and widening its scope of concerns, as a
defensive stance, like that of 1990s; or finally, in utilizing and consolidating
these new spaces and regrouping its mobilization capacity, as in the decade
of the 2000s.
However, by looking more closely at these three periods, one can not
help but notice similar traces and even simple continuity, especially con-
cerning the historical problems that have always affected the Brazilian labor
union movement. In the 1980s, despite all its victories, unionism was not
able to surpass its traditional limits, for example, by laying roots within
the workplace itself. Even though on-the-job organization has always been
valuated in union discourse, it remained sparse and punctual. In addition,
if collective action taken was important in order to lessen the degenerative
34 See in Santana (2000b) and Martins and Rodrigues (2000), how in facing the tough
challenges imposed by the new scenario, the more apparently combative sectors softened
their position while those more given to negotiating slightly “radicalized” their discourse.
108 M. A. Santana
impacts of rising inflation on working people’s lives, it was not able to

universalize its victories, because of the organizational heterogeneity and
disparity of bargaining power among the occupational categories: This was,
to a certain extent, restricted to the stronger and better organized unions.
In the same way, the unions also were not effectively able to reduce social
inequalities, which, in a country like Brazil, carry great weight.
With the difficulties that the labor union movement faced to surpass
its own structural challenges, at a time when the potential and will to do
so was still real, in the 1980s, one can imagine even greater difficulties
in the 1990s, when the movement was forced into a more defensive stance,
encountering even greater difficulties in articulating and universalizing their
struggles, and to take their kind of collective action down to the shop floor.
Finally, the internal division among union groups made collective action
even more difficult. Federations and unions were not only divided amongst
themselves, but also within their own internal ranks. In many cases, internal
schisms led to problems in reaching a consensus on guiding unified practical
action.35 Even though, in the 1980s, this schism did not weaken the labor
union movement itself, it did limit its reach. In the 1990s, the effects of
this general period of retraction were also worsened by internal schisms
and disputes. The same may be said of other limitations that not only
weakened the movement in facing the crisis period, but also made the crisis
worse.
In consequence, unresolved struggles, despite the pungency of the 1980s,
remained unsolved and internal divisions left little leeway for unions to face
the changes of the 1990s and guarantee a different start in the year 2000.
Perhaps it would have helped if greater practical attention had been paid
to organizing workers on the job, among other issues, since this is where
the conflicts took place, to stall the almost wild impetus of liberalization
and precarious labor conditions that hit the labor world in the 1990s.
In conclusion, the rapid contrast in unionism, in two different decades,
clearly indicates a crisis in the labor union movement in the 1990s, which,
independent of its spectrum, did exist. Yet it should also be remembered
that crisis periods tend to open up new possibilities, and, as such, the 1990s
35 It should be pointed out that there were laudable attempts at group action, even if
sectional, such as the common front led by the CUT and the FS in late 1999 to demand a
36-hour work week and a nationwide contract for autoworkers. Together, they organized
the so-called “Strike-Fest” that paralyzed a series of auto factories across the country.
For a more detailed analysis of approximations and tensions among unions, see Santana
(2000b) and Martins and Rodrigues (2000).
may also be remembered as a period in which there was a return to union-

izing, even if in a punctual way, and to some of its earlier practices, taken
from its historical archive, that had been left behind little by little with
the heavy institutionalization of the 1980s. Here, it can be mentioned the
various attempts to articulate with other social movements (land, habitat,
citizenship, justice, etc.), thus showing greater openness to new topics and
demands (gender and race, citizenship in and outside of the workplace, labor
and education, whether political, unionist, or professional) and incorporat-
ing alternative practices into the collective action repertoire. This process
was better consolidated in the decade of 2000, principally in using tripartite
spaces (with representatives of the government, labor, and employers) for
negotiation. Of course, the Lula government also helped, for example, in
terms of its public policies relating to job creation.
As such, we believe that it would not be right to say that Brazilian
unionism lost all of the force it had acquired in the 1980s. Some of it really
was lost as a result of the hardships of the new scenario. However, much
of this, correctly or not, was channeled to other fronts and other kinds
of struggles. Since the golden age of the 1980s left the possibility open of
unionism being weakened in the following decade, the possibility cannot
be discarded. But in an inverse sense, it is possible to say that some of the
initiatives attempted in the 1990s, lay differentiated bases for new practices
and new kinds of organization. These bases could pave the way for new
Brazilian labor struggles, as has already been on display to some extent in
the decade beginning in 2000.

6
The Working Class in a Transitional
Society: From the Soviet Union
to the Russian Republic
Z. T. Golenkova and E. D. Igitkhanian
Socio-structural modification of present-day Russian society implicates

problems associated with changes in an entire complex of social processes.
Sociologists often speak of one obvious truth — it is time to present an
objective analysis of Russian social structure, to assess the magnitude and
direction of the changes that have happened during the years of reforms.
It was during these years that a transformation of the social bases and reg-
ulators, which form the social structure, occurred. The very nature of the
social structure, its groups and communities, has changed, as new economic
classes, layers, or strata have appeared each with its unique system of social
conflicts and contradictions.
In this chapter, we deliberate the frame of public relations, social and
cultural potential of social subjects that play the key role in the society, and
the main trends of their development. Of course, in Soviet times there was
a certain determination of the social structure. It was subdivided between
the Nomenclature (ruling elite) and the rest of the society. However, we can
emphasize some important professional and social positions that formed
the Soviet society of social class communities — working class, collective
farmers, and the intelligentsia. It is not just about differences in the nature
and content of work performed within these communities, but also the
existing ideological interpretation of the working class as a “leading force”
of society and the collective farmers as its ally, and the intellectuals having
a special place in social stratum.
111
112 Z. T. Golenkova and E. D. Igitkhanian
Conversely, as claimed by many researchers, it represents an “ideolo-

geme”, because by the alienation of property and power, these classes were
not subjects of social activism. From our point of view, the social struc-
ture prevailing in Soviet society indicated the existence of real classes and
social groups, their unconditional role in upward mobility, and in forming
the stimulus of social labor activity and decision-making. First of all, the
society refers to the working class as the most widespread and integrated
social group. In this chapter, we do not aim to give a complete description
of its position and role in the social hierarchy, but rather focus only on the
most fundamental indicators of the personnel and number of workers prior
to the implementation of large-scale market reforms in the country. Thus,
by the end of the 1980s, the working class overwhelmingly represented the
majority of the employed population. There were more than 80 million
people in the working class or 68.6% of the employed population (National
Economy of the USSR in 1989, 1990: 34–38).
It is important to note that, in comparison with the pre-war year of
1940, the number of workers increased nearly fourfold. A significant mech-
anism of horizontal linkages has developed during these years, when after
the Second World War, millions of farmers who were demobilized from the
Soviet Army, became industrial workers. Industrial production demanded
a constant replenishment of the working class. So, if in the early post-
war years its industrial unit consistently prevailed in the total number, by
the time of the beginning of economic reforms, the employment in non-
manufacturing industries increased.
Let us dwell on some of the principal indicators of this development.
1. Training of skilled workers in special technical and vocational schools.

2. Increasing the quality and skills of workers in enterprises, institutions,
and organizations. By 1989, 2,537,000 skilled workers had been trained
and graduated, 50% more than in 1970 and 1.04% more than in 1980
(ibid.: 55–58). Many daytime vocational secondary schools and evening
shift vocational schools focused on technical and vocational education.
It is important to emphasize another important aspect in the develop-
ment of the Soviet working class, which is the formation of the inner layers
of differentiation, which entailed a complex system of economic and social
interests. This system was then later upgraded in the different conditions of
post-Soviet market reality (this problem will be discussed further). In the
1980s, many researchers were writing about this issue: Some were focusing
on the workers performing low, medium, and high skilled levels of activities,
The Working Class in a Transitional Society 113
while others were talking about the workers performing the pre-industrial,
“early industrial” and “scientific-industrial” types of activities (Filippov,
1989: 12–34).
Summing up the information, we emphasize the following: The working
class in Soviet times was not just a “structural category” (Galkin, 1988: 4),
but an important part of the employed population (making up nearly two-
thirds). Moreover, it actively participated in mass education within the
class and was a powerful factor in economic and social development. The
working class can be described as a social group that has the potential and
real basis for recreation, proof of which is the dynamic and functioning
system of reproduction of the workforce at different levels of qualification.
In the 1990s, transformational processes began to take shape in the
Russian society. The private form of ownership became dominant in 2003
(50.2%). In late 2008, it had risen to 57.3%, among which the state-
municipal type represented 31.4%, the properties of public and religious
organizations was 0.5%, joint Russian properties were 6.3%, and foreign or
joint Russian and foreign comprised 4.5% (Russia in Numbers, 2009: 93).
The sectoral shifts (types of economic activity) in the economy, however,
are treated ambiguously. Some researchers tend to treat them as a transi-
tion to a more modern structure of economy. Currently, employment in the
services domain is dominating. Thus, at the end of 2008, within the sectors
that produce goods (industry, agriculture and forestry, transport, communi-
cations, construction) 38.9% were hired as full-time workers, while within the
service industry the total was 61.1% (ibid.: 94). But this does not capture the
tendency in Russia, to develop the scientific-industrial level of the economy,
but rather experiences the continuing decline in production, deindustrializa-
tion of the economy, and the crisis in economic development. Even in different
types of productive activities such as mining, manufacturing, and the distribu-
tion of electricity, gas, and water, the proportion of workers has been decreas-
ing annually. The current offloading of employees from the industries is not
only the result of pushing out the production of possible redundant products,
increased productivity, intensity of labor etc., but also of the unsuitability of
the market for technically well-developed enterprises.
Economic changes have transformed the social and occupational struc-
ture of the population. By late 2008, the proportion of workers within
this structure was 41.2%. In 2001, 2003, and 2007, it was 58.2%, 46.9%,
and 41.7%, respectively (see Table 6.1, from Survey on Employment, 2003:
98–99; Survey on Employment, 2007: 100–101; Survey on Employment,
2008: 110–111).
Table 6.1. Percentage of Workers in the Structure of Employed Population (%).
Types of workers 2001 2003 2007 2008 2010
Skilled workers of agriculture, forestry and 5.6 4.8 3.5 3.9 3.0
hunting
Skilled workers of large and small industrial 24.0 16.0 14.9 14.0 13.9
enterprises, crafts, construction,
communications, geology
Operators, all types of machinists, mechanics 14.0 13.9 12.0 12.2 12.5
and fitters
Unqualified workers 14.6 12.2 11.3 11.0 10.9
Table 6.2. Unemployment Rate Among Workers (%).
Types of workers 2003 2007 2009
Skilled workers of agriculture, forestry and hunting 4.6 5.1 2.7

Skilled workers of large and small industrial enterprises, 8.5 4.9 15.2
crafts, construction, communications, geology
Operators, all types of machinists, mechanics and fitters 7.6 4.3 10.6
Unqualified workers 10.3 8.1 16.4
Source: The calculated data is based on Survey on Employment, 2003, p. 263; 2007,
p. 212; 2009, Table 4.46.
As we can see, there is a decrease in all categories of workers, skilled

and unskilled labor, who are employed in various types of economic
activities.
This decline in production leads to the emergence of a layer of unem-
ployed workers. By late 2009, the overall unemployment rate in Russia
amounted to 8.2%, with an average age of 34.9 years for the economically
active population (Russia in Numbers, 2009: 101–102; Socio-economic Sit-
uation in Russia, 2010).
Attention should be drawn here to the fact that skilled workers within
industrial enterprises represent the large set of unemployed population, and
the number has increased nearly 1.8 times over the past two years during
2007 to 2009 (see Table 6.2). Of course, this fact is related to the real
consequences of the deteriorating economic situation in the country. During
2008–2009, many companies were not able to generate enough profits, so
they began to dismiss people. We emphasize once again that we are talking
about the professional workforce, about those who are now unemployed.
The unemployment could be related to the modernization of social life in
the Russian society. Their relevance (or lack thereof) in the social sphere
does not only radically change the behavior, the level, and conditions of life
for this social group, but also deprives them of their capability to adapt
to the market conditions, and hence to the social role of “chain” of social
transformation.
Current changes in the socio-economic area of employment are fol-
lowed by the emergence of new forms of employment: Partial (incomplete,
part-time), temporary, secondary, and optional (additional), etc. optional
(additional) employment has become the most corrective factor of the
professional structure in modern Russia. According to RosStat (Russian
Statistics) data, additional employment has become widespread in the last
decade. Its institutionalization as a real form of labor became possible after
the removal of barriers for additional part-time jobs. In addition, the dif-
ficult situation of workers during the aforementioned economic crisis stim-
ulated representatives of various social groups to become involved in this
field. The presence of such an employment option is applicable to both
employers and employees, and in the material and non-material produc-
tion activities. By late 2009, the number of employees with an additional
part-time job totaled 2,064,000 among all full-time employees (see Table 6.3
Survey on Employment, 2003: 116; 2007: 96, 114; 2009: 41). What is the
role of workers in this system?
Of course, this type of employment as additional work, as we have
already mentioned, is an important mechanism of social adaptation, which
is affecting all social groups and population. Workers are no exception.
However, how intensively they are getting included in this sphere of life
depends primarily on the type of economic activity. The most active are
usually workers in agriculture, forestry, and the least active tend to be in
industrial production. Unskilled workers in all forms of economic activities
Table 6.3. Percentage of Workers with Part-time Jobs (%).
Types of workers 2003 2007 2009
Skilled workers of agriculture, forestry, hunting 60.8 53.2 49.0

Skilled workers of large and small industrial enterprises, 1.8 0.1 2.1
crafts, construction, communications, geology
Operators, all types of machinists, mechanics and fitters 1.2 0.2 1.4
Unqualified workers 2.2 2.0 2.6
Source: The calculated data is based on Survey on Employment, 2003, p. 116, 142; 2007,
p. 96, 114; 2009, C. 41.
remain approximately at the same level of additional employment in recent

years.
As we mentioned above, there is a gradual increase in the number
of employed and self-employed in the private sector. Workers who receive
salaries represent a particular interest and form an essential part of the
Russian population. However, they are socially differentiated according to
their socio-professional status, the industry sector of the enterprise, region
of residence, etc. Here are some common indicators of the social status
of workers in various sectors of the economy. We will use the data from
the Russian Longitudinal Monitoring Survey (RLMS) of the health of the
population, 1994–2008.1
First of all, this data captured the dynamics of change in the number
of workers in the public and private sectors of economy for a specified time
period. So, if in 1994 it was 74.8% and in the non-federal 25.2%, then in
2008 it was 46.4% and 53.6%. These dynamics can be explained by the
fact that socio-economic life in Russia experienced a qualitative change in
form of ownership. When compared with 1992, the employed population in
the private sector increased almost three times by 2008, and in the public
sector it decreased by two to three times (Russia in Numbers, 2009: 93), so
the change in the proportion of employees, including workers, is obvious.
The impact (if any) of other factors on the dynamics of the process will be
discussed in the remaining parts of this chapter.
How does the average age of workers vary within the analyzed sectors?
The average age of members in this social group in 2008 was 42.1 years, 44.9
years in the public sector, 40.3 years in the non-public or private sector. As
we can see, the fundamental differences are not presented, although as it
will be discussed, this problem is ambiguous and has different aspects.
One of the natural indicators of social development in a market econ-
omy is the difference in income levels of certain social groups, the source of
their income, expenditure patterns, accumulated properties, and other char-
acteristics of the material well-being of a family. In sociology, these issues of
social differentiation and their parameters have begun to be discussed, and
the income distribution pattern has been measured. For example, the decile
ratio between the incomes of the richest and poorest 10% of the population
1 Monitoring survey is conducted by a probabilistic, stratified multistage area frame,

represented at the federal level. Monitoring survey is conducted by Institute of Social
Sciences, Research Center Demoscope, Higher School of Economics and University of
North Carolina at Chapel Hill (USA).
was 1:15.8 in the second half of 2010. The Gini coefficient (index of income
concentration) is equal to 0.414. Compared to 1994, it increased by almost
half, indicating a more and more unequal income distribution in the society
(Operational data of Rosstat).
In fact, according to the monitoring data, during the same period
(1994–2010) there have been changes made in the level of workers’ indi-
vidual monthly incomes, which increased by two to three times. Similar
dynamics were observed among all the respondents. In this respect, there is
a fundamental difference between workers of different qualification groups.
We analyzed the extreme groups — low qualifications and high qualifi-
cations. The trend is sufficiently stable and constant through the years.
Although the income level of workers with higher qualification is higher
(1.3 times in 2008), in comparison with 2004 (1.8 times) this difference is
leveled. Thus, the skill factor still differentiates the worker’s income, how-
ever, its effect is weakened.
We now turn our attention to the indicator of monthly income for work-
ers in public and private enterprises. Here we notice the following trends:
(1) In absolute terms, in 2008, the monthly income of a worker in public
sector was less than the income of the worker in the private sector (the
difference amounts to 2,600 rubles per month); (2) this relationship can be
traced from 1994 without exception; (3) in the private sector, the growth
rates of incomes are higher. Thus, over the study period, monthly income
increased by 2.08 times in the public sector, and by 2.3 times in the non-
federal or private sector. Thus, it is amply evident from the monitoring
data that the employment sector differentiates workers’ income. And here,
changing the legal framework for private business, perhaps also applica-
ble to governmental organizations, may qualitatively change the profitable
status of their employees and, in general, their social status. The data
from the survey conducted in the Tyumen region in 2004–2005 confirms
this hypothesis.2 The employed population, including young skilled work-
ers in public and private enterprises, has been questioned. Respondents find
working for private enterprises attractive for its productive and economic
rewards.
They tend to refer to the better organization of work. Moreover, these
characteristics are more important to them than the social benefits, such
2 Studiesconducted by the Institute of Sociology (Headed by Z. T. Golenkova) and

Tyumen Institute of Social Problems (Headed by O. A. Barbakov). The total sample
volume is 513 units of observation.
as the possibility of obtaining housing, vouchers, etc., at the expense of the

enterprise. Young workers prefer to earn money themselves in order to get
everything they need.
The complex of social and industrial relationships, family and friend-
ship relationships is forming different kinds of relations within the social
environment, existing values, and new rules of living. The main issue here
is how the respondent assumes a new environment to his basic needs and
potential. This is exactly how the fundamental basic question (for the mon-
itoring) was formulated: “In general, are you satisfied with your life?” It
turned out that in 2008 (the latest survey) 43.3% of workers were com-
pletely satisfied, 33.5% were unsatisfied, and the rest did not give a definite
answer. Of course, the responses definitely indicate a low level of satisfac-
tion on the living conditions. At the same time, the dynamics of the relation
between satisfaction and dissatisfaction inspires some optimism, not only
for today but also in a social perspective. Since 1994, the proportion of sat-
isfied workers has increased by 3.6 times, and decreased by 2.03 times for
the dissatisfied. Thus, regardless of the general low level of satisfaction with
their lives among workers, its increase on satisfaction is the dominant trend.
As we understand the concept of “level of satisfaction with life”, it
includes a very broad and complex social context. Let us first consider
such an aspect of this term as “satisfaction with the amount of salary”. It
was discovered that in 2008, the percentage of workers satisfied with their
salaries was 30.1%, and the percentage of dissatisfied was 51.0%, the rest
did not give a definite answer (from monitoring data).
At the same time, the dynamics, as in the first case, is also posi-
tive: The proportion of workers expressing satisfaction with their salary
increased almost 1.5 times during 2002–2008, and the percentage of dissat-
isfied decreased by 1.4 times during the same period. In our opinion, the
study of the dynamics is impossible without an analysis of the motivational
characteristics of employment, by which we mean self-evaluation, struc-
ture of satisfaction/dissatisfaction with human needs, and the degree of its
implementation. Work represents a means to survive rather than a path to
self-realization, and this fact transforms the behavior and social conscious-
ness of all employees. Indeed, data collected from a study conducted in
Krasnodar (2007)3 demonstrated that the dominant trait that defines the
3 Research on “features of work behavior of employees”. 520 units (sample size), terri-
torial, multistage, with the use of affirmative action method. Questioned the employed
population. Workers represented by a group of 105 units. Headed by Z. T. Golenkova.
value of work in the lives of the workers (as well as in other status groups),
is a material resource (50.2% of workers appreciate this resource).
In addition, respondents mentioned other essential factors such as
opportunities to improve their skills and professionalism, and the possibil-
ity of promotion. In addition, respondents mentioned other essential factors
such as opportunities to improve their skills and professionalism, and the
possibility of promotion. The research data made in Novosibirsk at the end
of 2001 showed another criterion of workers’ motivation.4 Qualified workers
have shown enough interest in their work in terms of its professional con-
tent. They also treated their career development with sufficient enthusiasm
(34.0%). These characteristics are now essential aspects of a study about
working people involved in productive activities. Obviously, the modern
system of production does not always provide employees with opportuni-
ties for effective work, for example, bad working conditions, which include
low requirements for their qualifications and training, serious physical and
nervous overload, social tension, etc.
Professional qualifications can be either adequate or inadequate to fulfill
the requirements of the manufacturing process. We analyzed a group of
workers in terms of their self-training, whether such a training met the
requirements of the work. We found that skilled workers have demonstrated
a high degree of professional-level production requirements (52.9%). Thus,
the formation of the status position of a skilled worker is a process, though
complex and controversial, that shows a rather high degree of adaptability
of this group to the ongoing changes in society. Again, among workers, a
highly professional labor force is appreciated only for their hard work, but
not so much when appropriate compensation has to be paid. We attempted
to determine the degree of job stability in this studied group. Among the
representatives of the group, skilled workers are the most persistent at their
workplaces. Job stability motivates their basic attitudes, including the idea
of not wanting to change their workplace (57.0%), while among the unskilled
workers only 15.7% think this way.
In Russia today, however, labor interests and behaviors in various
situations are changing. Therefore, the answers to the question, “are you
satisfied with your life?”, include such an important “snapshot” as the
4 Investigation on “features the employment of people in the region”, 585 units (sample
size), quota-stratified, multistage. We studied the behavior of working groups from vari-
ous professions and of different social status. Workers amounted to 147 respondents. Led
by Z. T. Golenkova and N. D. Vavilina.
socio-psychological well-being of citizens. We refer to the fundamental

changes in confidence/lack of confidence in the present reality, and in partic-
ular, concerns about the future due to problems arising out of the economic
crisis. In the context of social tensions, when the main vector of national
development is not aimed at resolving actual social problems — widely
touted national projects did not actually bring a significant real proof —
the overwhelming majority of respondents do not feel comfortable in their
own country. An analysis of the monitoring data has categorized major
groups of workers in terms of social well-being: Group 1 — “uncomfort-
able”, Group 2 — “mid-comfortable”, Group 3 — “comfortable”.
In 2008, the percentages of these groups were the following: Group
1 — 33.8%, Group 2 — 39.2% and Group 3 — 27.1%. The dynamics of the
proportion of these groups, since 1994, was the following: Group “uncom-
fortable” decreased by 1.6 times, in the group “mid-comfortable” there was
a 1.3 times increase, and “comfortable” increased by 2.1 times. The trend is
clearly positive — the proportion of “comfortable” and “mid-comfortable”
groups increases, opposite to “uncomfortable” group. At the same time, the
real social consequences for the year 2008 have not yet been established,
and this might explain the contradictory and complex economic situation
in Russia. The positive trend could be due to the psychological inertia of
the respondents in the situation of economic and political stability in the
early 2000s, and the fact that many of them got hired as skilled workers and
used the word “now we are not going to be lost” to describe their position.
Nevertheless, hints of uncertainty can be heard in response to the ques-
tion: “What is your expectation of being fired in next six months?” (Accord-
ing to data collected from studies in the Nizhny Novgorod region in late
2008).5 In Russia, there are significant differences among workers of differ-
ent skill levels. Among skilled workers, the percentage of people who believe
that they will be fired soon is almost 15.0%, while it is 3.3% among the
unskilled. 48.0% and 63.3% of skilled and unskilled workers respectively
are sure that they will not be fired. In addition, it is important to notice
that people engaged in the industry (66.7%) have the most flawed feeling
in this regard (this data refers to respondents from different social groups,
not just workers). Nevertheless, this factor is certainly remarkable. Again,
extraordinary work conditions clearly have a direct influence on the status
5 Studies,
on “changes in employment in the context of the financial crisis among the
employed urban population of the region”. 520 units (sample size), a stratified multistage
area sampling of households. 108 workers were respondents.
of employees, and their socio-psychological traits, behavioral strategies in

the production and off-production life, and social and labor reproduction.
Complex processes associated with the development in the social sphere
of society and its production potential are directly dependent on the repro-
duction of the quantitative and qualitative component of the workforce.
This core issue has attracted special attention in recent times. Regarding
the formation of the main productive force — professional and qualified
employees who meet all of the requirements of modern development, staff
calculations show that within three to five years, the number of these work-
ers will decrease by nearly a third due to retirement. Every year, around two
million workers retire. The problem is to find people who can replace them.
The system of training skilled workers, which existed in the Soviet
Union, finally collapsed in the early 1990s. Of course, this system was far
from ideal, as there existed many problems, primarily related to the pro-
vision of qualitative and quantitative requirements of the economy. The
quality of education was not always in line with production needs. More-
over, many workers failed to realize their educational potential — especially
young men who, as a rule, were recruited into the army after graduating
from vocational school. During military service, professional skills acquired
in school were mostly lost, and it pushed some of the young people to change
professions or to leave the working class completely.
The system of training for skilled workers, which exists in the Russian
Federation today, is similar to the the Soviet system. Renaming vocational
schools in specialized high schools can hardly be considered a transforma-
tion, because the quality of training did not change, but rather became even
worse. An imbalance between professional training and the needs of the new
economy, and the low prestige of working professions among the young pop-
ulation increased. In addition, a network of vocational and technical edu-
cational institutions has significantly decreased in quantitative terms. The
quality of training still remains the biggest problem. According to sociolog-
ical studies, only a third of the workers who graduated from an institution
believe that they have acquired all the necessary skills during their studies.
Most workers have acquired knowledge and skills in their working environ-
ment. Newly acquired skills in the profession do not always correspond with
the ones the workers acquired in school — more than half of those who grad-
uated from vocational institution are not working in their professional field.
Of course, those workers who have received initial training at their
workplace have some advantages in terms of adaptation, requiring much
less time and effort. But this education has many deficiencies, especially
Table 6.4. Percentage of Workers at Different Educational Levels by Year (%).
Educational level
Primary professional education Special secondary or
Year or no professional education higher professional education
1998 77.9 22.0

2000 77.4 22.6
2001 76.8 23.2
2002 75.1 24.9
2003 75.4 24.5
2004 73.2 26.8
2005 74.5 25.5
2006 73.1 26.7
2007 73.5 26.6
2008 70.4 29.6
Source: Monitoring data.6
for those who are planning the professional and career development either
within the blue-collar occupations, or as part of the process of abandoning
worker status. More of these problems will be analyzed further.
According to the monitoring data, starting with the year 2000, the
educational level of workers constantly increased, though not significantly,
due to the increase of the proportion having attended special secondary
or higher education institution. By 2008, compared with 2000, the propor-
tion of such workers had increased by 7%, i.e., from 22.6% to 29.6% (see
Table 6.4).
The recent increase in the proportion of workers having secondary voca-
tional or higher professional education, in our opinion, can be explained by
the features of the labor market in Russia and the crisis in the economy.
Specializations that do not require a high level of education are currently
in high demand. In such a situation, workers with low levels of educa-
tion must take on more low-skilled jobs. In recent years, a portion of the
middle class with higher professional education migrated to the working
class. Generally, in recent years, changes in the economy have in turn led
to significant changes in the staff-related requirements of production. The
6 The Russian Longitudinal Monitoring of the Health of the Population (RLMS), 1994–
2008. The monitoring is conducted by Institute of Social Sciences, Research Center
Demoscope in a probabilistic, stratified multistage area frame, and represented at the
federal level. Higher School of Economics and University of North Carolina at Chapel
Hill (USA).
Table 6.5. Percentage of Workers at Dif-

ferent Educational Levels by Year (%).
Qualification level of workers

Year Low Medium High
1998 28.0 48.4 23.6

2000 27.2 49.5 23.2
2001 26.9 47.3 25.8
2002 27.4 50.7 21.9
2003 29.9 49.3 20.8
2004 27.5 49.6 22.9
2005 28.9 50.4 20.7
2006 29.0 50.1 20.9
2007 29.8 49.2 21.1
2008 31.5 48.0 20.5
Source: Monitoring data.
above-mentioned demand for specialization that does not require a high

level of professional education has led to a decrease in the overall level
of staff qualifications in various industries, including skilled workers (see
Table 6.5).
In comparison with the year 2000, by 2008 the percentage of unskilled
workers had increased by 4.3 percentage points, while the percentage of
highly skilled workers had decreased by 2.1%. In fact, the decrease in the
qualification levels of the workforce began much earlier: In 1994, the per-
centage of unskilled workers was 23.8%, the mid-skilled level was 53.5%,
and the highly skilled level was 22.7%. That is, from 1994 to 2008, when
there was quite a considerable increase in the percentage of low-skilled work-
ers (by 7.7 percentage points), the proportion of workers of medium and
high qualification decreased (by 2.2 percentage and 5.5 percentage points
respectively). Based on the data, the crisis in the Russian industry is charac-
terized, above all, by the lack of technological innovations and unfavorable
working conditions at the enterprises.
The data also helps us to identify the problems facing modern workers
and their professional training:
1. Workers do not apply the acquired education effectively. They often
prefer to work outside of their specialization. This is not a new problem.
For many years, sociological studies in the professional field have claimed
that the specialization acquired during education and training does not
guarantee a job for everyone. Researchers were getting these results even in
times of the planned economy, when allocation to workplaces was manda-

tory after vocational school. According to sociological studies conducted in
the cities of Novosibirsk and Tyumen, more than half of the workers do not
work within their specialization.
In the present economic situation, this reality is aggravated by changes
in the labor market (professional needs are quickly changing). The fact
that many people face unemployment throughout their life plays an impor-
tant role. At the same time, the change of profession has both positive
and negative sides. A flexible attitude toward the acquired specialization
makes people feel confident enough while searching for a job. On the other
hand, working in a new specialization does not guarantee qualification that
acquired during training complied with requirements of the job. Indeed,
according to a study in Novosibirsk, the qualification meets the require-
ments of the job for 49.6% of the workers and does not comply for 38.7%.
Moreover, the dysfunction of education is compounded by the fact that
for 29.6% of workers, their qualification is higher than what is required
for the job. Of course, the workers whose qualifications are below the
requirements of the job can improve their skills (actually, it is important
to mention that 72% of workers want to enhance their skills, regardless of
whether or not their qualifications are consistent with requirements of their
job). But in this case, the problem is that the existing system of training
is ineffective. As a rule, institutions offering vocational training to skilled
workers do not have their own manufacturing base for effective practical
training. For enterprises and workers, the most effective way to learn is
the system of training centers. Unfortunately, they are located at the large
enterprises which have the financial wherewithal to establish and maintain
these centers. In the current economic conditions, even the largest enter-
prises are starting to experience difficulties in financing and supplying such
centers with qualified personnel and modern equipment.
2. The choice of jobs is limited, which is driven by the limited choice of
sectors. Russia’s economy is currently going through changes that started in
the 1990s. First of all, this involves the formation of a multifactor economy,
which includes a wide range of forms of property, from state to private,
which affects the labor market.
Studies conducted in the cities of Novosibirsk and Tyumen reveal the
following trends in job choice: More young workers with vocational educa-
tion prefer to work for private enterprises: 45.0% of them would prefer to
work for a private enterprise and 35.7% for a state enterprise. At this stage,
educational and market factors influence the job choice. Typically, private
enterprises prefer workers with a sufficiently high level of professional edu-

cation, even for not very skilled work. Workers who have had the initial
training are not competitive enough here.
In addition, workers must have a market-oriented profession, which is
demanded in the labor market. Even in this case, their choice will be lim-
ited, since the institution of private property in Russia covers far less than
all sectors of the economy. Private relationships are the most common for
certain sectors of the economy, especially in trade and catering. Therefore,
the majority of workers (more than two-thirds), despite their desire, work
in sectors with a significant percentage of state property. These sectors are
industry, construction, transport, communications, and agriculture. All of
the above refers to a group of workers who have received training in voca-
tional schools. For workers who have received training at work, the problem
of choosing a place of work does not exist, regardless of their desires and
intentions.
3. A perfect combination should be reached between the training of
skilled workers and production’s needs. This problem concerns the work-
ers who wish to succeed in their “professional career”, so they intend to
increase the vocational education and skill level within blue-collar profes-
sions, as well as within enterprises that need the services of such workers.
According to sociological studies, these workers account for one-third of the
total number of respondents. This is a fairly young group of employees —
61.6% of them are between 30–39 years old and 24.9% are between 20–
29 years old. Of course, this is the most promising age for self-realization.
Workers in this group have a sufficiently high professional level: Only 20.1%
of them have no professional education; 25.1% have had initial training and
44% boast of secondary special education. This group of workers uses its
educational potential quite effectively, since 61.4% of them work within
the specialization obtained in an educational institution. But the main fac-
tor that makes this group the most promising for the reproduction of the
workforce is that workers, as its components, aimed at training (82.0%) and
career (51.4%) within the blue-collar profession.
The goal of enterprises, that require employees of a certain professional
qualification level, is to create all necessary conditions for the implemen-
tation of plans and expand the boundaries for this group of workers. The
company, or enterprise, must create the right conditions for the professional
development, training skills, and self-realization of workers. Otherwise this
group, which is not too numerous, threatens to blur. However, as it was
noted above, training or nurturing skills can be effectively developed by
major companies in promising industries who have the greatest capacity for
it, primarily financial. We are talking about industries and enterprises that
are developing, deploying new technologies and innovations, and therefore
are in need of highly skilled professional staff at every level, including labor.
Obviously, there is a convergence of interests between the promising
energetic workers and growing companies. But this situation applies to a
small part, mainly one-third of the workers and enterprises. The general
trend in the economy represents the greatest demand for low-skilled workers
in the labor market. Therefore, the essential part of the workforce consists
of the following groups: First, workers who are 40 years of age and older, and
who do not plan to leave their blue-collar jobs. Due to retirement, however,
this group in due course of time will be quantitatively reduced. Second, it is
the group of workers who consider their employment temporary. They are
more focused on career and increasing their educational level, but mostly
outside the blue-collar professions. Both of the above groups do not have a
future, in terms of reproducing the workforce. However, the second group,
can at least stay in the industrial sector under certain conditions, such as
interest in good working conditions, higher salaries, career perspectives, etc.
In order to formulate the optimal strategy for the reproduction of the
workforce, it is also necessary, in our opinion, to consider the following:
The unpopularity of blue-collar professions among youth, according to our
research, is exaggerated. The professional group of young workers has much
in common with other professional groups. The desire to improve their pro-
fessional and educational level, their status and career is typical for most
members of these groups. State policy, individual industries, and enter-
prises’ philosophy in this regard should be directed to ensuring that young
workers clearly understand that professional, educational, and career aspi-
rations can be achieved within blue-collar professions. To implement this
policy, in order to succeed in the reproduction of the workforce, it is neces-
sary, first of all, to realize the modernization of the entire training system for
workers, and it must become more flexible, continuous, providing a further
increase in skill level.
The foregoing can be accomplished with one condition: The economy
must go through significant changes that aims at the modernization of
production processes and implementation of innovations. Currently, most
enterprises in the real sector, which are the main consumers of the work-
force, need mostly low-skilled workers and are not interested in chang-
ing their training systems. High-tech manufacturing companies provide the
training that meets their needs. As a result, only those workers who choose
a blue-collar profession and are going to realize their professional plans

specifically within the blue-collar professions remain unsatisfied.
Today’s workers, like all other social actors, are embedded in a complex
and contradictory texture of social differentiation and integration of modern
life. Changes in the forms of property and economic system have led to
institutional changes in labor, deepening its socio-economic heterogeneity
and enabling the emergence of new types of employment, and also changed
the motivational characteristics of employment. The position of the worker
as an employee is directly connected with the modernization processes,
which occur primarily in the social sphere. It is in this social space where
the social group of the economically active population, the workers, forms
its potential. Its resource depends primarily on the implementation of major
social policies by authorities. They include the creation of opportunities for
all citizens to earn money for their needs, their demand in the labor market,
increase of professionalism and educational level. Eventually, it is important
to take into account the requirements of the transition to a socially-oriented
market economy.

7
The Urban Industrial Working Class
and the Rural Peasant Working Class
in India
K. L. Sharma
Defining the Working Class

Karl Marx considered the wage-earning people as the main component of
a working class in an industrial setting. He thought of a clash of interests
between the owners of the means of production and the wage-earning work-
ers. Marx also emphasized upon the organizing of the working class so that
its members could have their due share in the surplus, which is generated
through the productive system, in a capitalist society. The organized work-
ing class thereby becomes a power holder, an embodiment of the economic
interests of the poor and the underprivileged.
The Indian working class is not a monolith. Broadly speaking, it can be
divided into urban-industrial and rural-agrarian working classes. Moreover,
the urban-industrial working class is found in both the public and private
sectors, and the rural-agrarian working class is hardly there in the public
sector. In both sectors, the working class is differentiated in terms of its
wages and earnings, work situations, and the very nature of work itself.
Generally speaking, when we refer to the working class we mean the indus-
trial workers and workforce in the private sector in an urban setting. The
rural-agrarian workforce comprises landless laborers, marginal, middle and
rich peasants. Except the daily wage-earners, the other categories of people
engaged in agriculture or arts and crafts do not get wages on a regular
basis — daily, weekly, or monthly.
According to Arvind Das (1990: 328–342), the rural–urban duality
of the working class in India distorts its reality. The proletariat is not
129
130 K. L. Sharma
merely urban, industrial, and predominantly male. Capitalism transforms

the entire production process in both rural and urban areas and also its
relation to men and women. The working class needs to be holistic, unfrag-
mented and processed. Das mentions that there are “villagers in the city and
workers in the village”. While considering the significance of the Marxist
framework and the non-Marxist understanding of class and class forma-
tion, Das argues that the peasantry has persisted and the working class
has existed along with the peasantry. Peasants and workers are not polar
opposites, as both the sections have been affected by the capitalist mode
of production. There has been the proletarianization of certain sections of
rural people, on the one hand, and the bourgeoisification of others due to
some very basic structural changes in rural India (Sharma, 1974). Today,
because of the penetration of “capitalism” in rural India, nearly 30% non-
farm employment exists there.
A good number of scholars, mainly Marxist economists, consider labor
as a commodity and the value of labor power as the basis of understanding
the capitalist appropriation and exploitation of the surplus generated by
the proletariat (Sharma, 1997b: 99–101). Despite the consideration of labor
as commodity, all working class people are not uniformly the same form of
commodity. The nature of the work, wages, and work situation determine
the extent of labor as commodity. A comparative study of five industries in
Poona (Lambert, 1963) brings out the differentiation of the working class
in terms of wages, skills, and the nature of the work. Lambert also points
out that the working class in India is highly stratified within and in relation
to the capitalist and the middle classes. Caste, ethnicity, and gender create
inequalities within the working class structure. It is not uncommon to find
a labor aristocracy and a pauperized labor (Nathan, 1987: 805) group
in the Indian context.
Indian society is characterized, even today, by caste hierarchy. Members
of higher and lower castes may be engaged in the same economic pursuits,
but their social status would not be the same in the society and even at
the work places. In such a situation, simple economic criteria alone cannot
determine the social class of the people. As such, to some extent, the concept
of working class remains a bit vague, loose, and flexible.
G. K. Lieten (1987: 810–822) observes that a segment of the work-
ing class in multinational companies is able to command higher wages,
and this divides the class in a distinct manner. With the emergence of
multinational companies and mega bazaars in cities, today the structure
of the working class is under the process of a rapid transformation. It is,
Industrial Classes in India 131
altogether, a different kind of situation compared to what Marx thought

of the working class in the early phase of industrialization in the first few
decades of the 19th century. One can see today a construction worker on
the one hand, and a handler in a mega mart on the other hand, as differ-
entiated workers, in every possible way. It is not easy to have a common
working class consciousness and working class movement because of such a
differentiated working class structure.
Sujata Patel (1987: 1918–1939) locates the genesis of the working class
movement through her study of textile industry in Ahmedabad, in the con-
text of the economic crisis in the post-war period and the subsequent mobi-
lization of the workers by Mahatma Gandhi. However, Gandhian philoso-
phy is more concerned with the rights and needs of the workers. Gandhi’s
notion of the working class could be seen in terms of the interests of the
mill workers and the mill owners. E. P. Thompson’s (1984) monumental
work on the working class considers the making of the working class both
as an agency and as conditioning. Thompson observes: “The working class
did not rise like the sun at an appointed time. It was present at its own
making.” (ibid.: 8) As we mentioned earlier, the concept of working class
is ad-hoc and vague, and Thompson also observes that the term “working
classes” is a descriptive one “which evades as much as it defines” (ibid.: 8).
“There were tailors here and weavers there, and together they make up the
working classes.” (ibid.: 8)
Thompson follows Marxist dictum as he states that the working class
is assumed to have a real existence, numerically, as well as in a relation to
the means of production. However, the consciousness corresponding to class
position may not be there. Despite ambiguities about the notion of class,
Thompson is of the view that the working class exists and can be defined
with some accuracy as a component of the social structure (ibid.: 9).
Differentiation of the Working Class

The working class has two elements: (1) a relationship, and (2) a social
role (ibid.: 10). In our context, since the Indian society has been in
a flux for more than 200 years due to British colonialism and post-
independence developments including globalization, the working class is
not static or a thing, because it has always been reshaped due to the pre-
and post-independence factors and forces of change in the economy, polity,
and society. Differentiation in society and economy has also brought about
a diversification in the structure of the working class.
132 K. L. Sharma
The working classes can be divided into (1) the unorganized workers,
and (2) workers in the organized sectors. The unorganized portion of the
working class comprises all rural workers, except rich farmers and landlords
and middle peasants. In the organized sector, industrial workers are gen-
erally included in the working class. White collar workers, highly skilled
workers, and professionals are excluded from the working class (Basole and
Basu, 2011: 41–58). The working class then consists of the following:
1. The landless workers.

2. The marginal and poor peasants.
3. The unorganized workers in industrial and service sectors.
4. The workers in the organized private sector.
Nathan (1987: 799–809) divides the working class in India based on its
position in work situations. The four broad sections are:
1. That which gets more than a family wage, i.e., more than the value of
labor power.
2. That which gets a wage about equal to the family wage and can thus at
a reasonable standard cover the full cost of production and reproduction
of labor power.
3. That which is more or less able to cover the immediate costs of the
production of labor power, but has to depend on the non-capitalist sector
in order to reproduce itself and/or has to depress its standard of living
in order to reproduce itself.
4. The pauperized section that is not even able to meet the immediate cost
of production of labor power.
“Family wage” has been most important demand by the working class,
that is, a wage for a worker which is sufficient for survival of his or her
family. The lower sections of the working class have made demands for the
cost of labor power, regulation of working hours, ending of various forms of
constraints and bondage, and security of employment (ibid.). In India, the
composition of the working class is affected by two factors: (1) the caste,
tribal, or ethnic origins of the workers; and (2) the gender-based division of
labor between male and female workers. This may not be the case in China,
Russia, and Brazil. However, in India intra-working class differentiation or
inequalities are related to caste, ethnicity, and gender. Thus, the Indian
working class is not merely an economic entity.
A couple of years ago, Dandekar et al. (1978) observed that the ortho-
dox Marxist notion of two classes does not explain India’s economic struc-
ture. Even in rural India, one can see, for example, (1) the class of big
landlords and (2) the class of agricultural labor. In between the two are
share-croppers, marginal cultivators, middle peasants, etc. Dandekar et al.,
while examining the nature of class and class conflict in Indian society, lists
five major classes: (1) the pre-capitalist workforce (cultivators, agricultural
laborers, and household industry); (2) independent workers; (3) employees;
(4) white-collar employees; and (5) blue-collar workers. The main classes
can also be referred to as: (1) the agrarian classes; (2) the industrial classes;
(3) the professional classes; and (4) the business and mercantile classes.
Despite the differentiation in agrarian structure, wage income was the
main source of livelihood for about 60% of the rural households in 2003. The
subsidiary source was petty commodity production in both the agricultural
and non-agricultural sectors. The remaining rural people depended equally
both on wage work and cultivation. Landlessness has also increased as it was
about 44% in 1960–1961 and subsequently increased to 60% in 2002–2003.
The hold of semi-feudal landlords has declined considerably, and the rich
farmers have strengthened their standing. The rural proletariat has grown
significantly, while petty production remains constant. The industrial and
commercial proletariat as unorganized workers have become quite visible,
but do not have social, work, and employment-related security.
Based on the data from two rounds of the National Sample Survey
(NSS), it has been reported that the percentage share of the population
of three broad classes, namely, the ruling class, the middle class, and the
working class in Indian society, is as follows:
Table 7.1. Class Structure in India (%).
Class 1993–1994 2004–2005
Ruling Class 11.89 11.71

Middle Class 24.26 21.08
Working Class 63.85 67.21
The working class comprises all of the unskilled workers in manufactur-

ing and services, the small and marginal peasants, and the landless laborers.
Naturally, the ruling class consists of owners or managers and rich farmers,
while the middle class comprises professionals and skilled workers, mid-
dle peasants, rural professionals, and moneylenders. Approximately, the
134 K. L. Sharma
ruling class would be roughly 4% and their average consumption expen-

diture would be more than four times the official poverty line. The mid-
dle class would be roughly 19% with an average consumption expenditure
between two and four times the poverty line. About 77% would be the
working class, who are poor and vulnerable, and spent less than Rs. 20 per
day on consumption in 2004–2005 (ibid.).
Social Structure and the Working Class

The structural divide within the working class and social/ethnic differen-
tiation across the segments of workers hampers the development of a uni-
form class consciousness. When members of a working class that identify
as Hindus, Muslims or Christians, they cannot have a solid working class
identity. Such an inherent duality has persisted in India’s class structure.
“The working class in terms of its socio-cultural composition is constituted
of the urban poor, living in slums and hutments. They are found working
in industries, textile mills, sugar factories, plantations, railways, cottage
industry, and informal sector.” (Sharma, 1997b: 100) In essence, the Indian
working class is constituted of the urban and rural poor both in the orga-
nized and informal and tiny sectors of economy. But the question is: Can
we understand the poor as just poor? Or do we have to see the genesis
of poverty, in terms of rural/urban background, caste rank and nature of
work, to understand the structure and process of the working class?
Ramaswamy (1979: 379–376) does not see caste as a major principle
of social organization among industrial workers, but Sujata Patel (op.cit.)
finds caste relationship in the recruitment of workers. The members of the
traditional weaving castes were recruited, such as Dhadhs and Waghris
(lower castes), and Kanbis (a clean middle caste), while Muslims were
recruited as weavers. In my own study of Chanderi (Sharma, 1999), a town
in Central India, the weavers are from among the Kolis (a low caste) and
the Momins/Ansaris (a lower rank of Muslims). Upper sections of Muslims
and middle and upper castes are not engaged in weaving. Weaving is not
considered commensurate with the status of higher castes and communi-
ties. However, the upper castes, namely, Jains and Brahmins are engaged
in trade relating to manufacturing of clothes in Chanderi.
The studies of the working class in India have focused on the
labor market, labor legislation, the caste and class background of work-
ers, class consciousness, working class movements, and their leadership.
Issues such as contract labor, labor conditions, workers, social worlds, the
domineering role of owners, managers, supervisors and leaders of trade

unions, gender-based distinctions and nature and hierarchy of work (Mies,
1981: 487–500; 1982; Behal, 1985: PE-19–PE-26; Issac, 1982: PE-13–PE-
40; Prasanneswari, 1984: 956–960; Holmstron, 1984) have also been studied
comprehensively. In essence, the emphasis is on the criteria to explain the
socio-cultural and economic heterogeneity of the working class, particu-
larly in the context of class consciousness, intra- and inter-working class
relations and relations of the working class with the owners and managerial
and supervisory cadres of industry (Sharma, 1997: op.cit.).
Globalization and the Working Class

Generally speaking, the working class comprises the industrial workforce,
particularly in the organized sector. Machines have created working class
and related consciousness. But today one can say that entire workforce,
which is engaged in industry or agriculture, in the private or public sectors,
in organized or informal work situations, has sensitivity to one’s existential
conditions and the control of masters. Poverty, deprivation, and exploitation
by the owners of the industries have raised public awareness and conscious-
ness among the workers. Trade unions have emerged as a check on the
excessive dehumanization of labor. Today, labor is considered a stakeholder
of industry in both the public and private sectors. Globalization, followed
by the revolution in information technology and competitiveness, has made
trade unions much less effective instruments of bargaining and fair justice.
Downsizing labor has also occurred. Today, we have more knowledge work-
ers than members of the traditional labor force (Sheth, 2004: 164–177).
Globalization has resulted in the social reproduction of labor (Seh-
gal, 2005: 2286–2294), because the capital–labor relationship has changed
considerably. Conventional labor (pre-liberalization era) is under attack.
There is a restructuring of work, an increase in flexible work regimes and
casual jobs, a loss of hard won rights, a lack of employment in times
of jobless growth, and cheap labor, etc. Workers are being used as dis-
posable commodities, without regard to their survival. The concept and
practice of “social wage” has nearly disappeared. Sehgal (ibid.: 2287)
observes: “Social reproduction refers to all those activities and processes
by which human beings are directly and indirectly sustained materially
and psychologically. These practices are embedded in historically specific
social structures and take place through various organizations such as the
state, community and family.” After taking into consideration views of
136 K. L. Sharma
Meillassoux (1972: 93–105) and Seccombe (1986: 23–55), Sehgal writes:

“The system of social reproduction then, is historically and culturally spe-
cific, and the capitalist system of social reproduction is, therefore, only one
among many ways of organizing the social reproduction of society.” (op.cit.:
2287) The global capital is transforming “workers” into laborers by inte-
grating them into a capitalist production structure. The rule of the state is
also undergoing a concomitant transformation. Workers are at the margins.
Such a situation prevails in the Third World.
Several NGOs have taken up the task traditionally performed by the
working class’ trade unions. Self-help groups have also taken up the com-
mon cause of artisans, weavers, and other such groups. The emergence of
global capital has minimized the responsibilities of corporations towards
labor. Resistance to such a situation has also become considerably weaker.
The dominant mode of production has shifted from industrial relations to
market relations, competition, and performance or output of work. Software
professionals, managers, merchants/suppliers, technicians, and workers can
be found in the same work situation as organic parts of a system of deliv-
ery. Rendering of service to the customers/consumers is the new mantra
today. Such a situation does not leave enough scope for the formation of
a neat working class and class consciousness. Inter-relatedness and inter-
dependence, rather than antagonism, are basic to the functioning of global
capital. The loosening of national regulations in trade and commerce has
also given a way to non-antagonistic relations.
Going back to Marx and Engels on the notion of the working class (Bot-
tomore, 1985: 333–334), today, in India the working class movements have
largely subsided. The movements launched long ago by textile unions and
other unions of workers engaged in industries or movements for farmers or
agricultural workers launched by Bhartiya Kisan Union (BKU) and Shetkari
Sangathan are no longer heard from. Marx and Engels believed that work-
ing class consciousness emerged due to its struggle against the bourgeoisie.
Reforms and legislations have led to a certain process of change and devel-
opment in Indian society which, in turn, has weakened the need and zeal for
working class movements. The resurgence of capitalism as a strong force in
the last two decades in the wake of globalization has also discouraged the
tendency for the working class to launch movements. The “green revolution”
of the 1960s and “white revolution” in the ensuing decades have transformed
rural society. With the inroads of globalization, the economy has shifted
from its traditional local base to a wider service-providing agency. Migration
and mobility have become the hallmark, nationally and internationally.
The Marxist dictum — “the unity of opposites”, or the interlinking of

the bourgeoisie and the proletariat — has become more intense and less
hostile and contradictory. The working class today is associated with the
capitalist mode of production, not because of its compulsion as it used
to be earlier, but now because it is considered desirable and beneficial
by the labor aristocracy and common workforce, both in industry and
agriculture. Two points may be noted for further investigation: (1) the
differentiation of rural economy; and (2) the widening of the urban mid-
dle class. Both have reduced the scale and vitality of the working class
vis-à-vis agrarian and industrial relations. Non-agricultural avenues for
employment in rural India have lessened pressure on agriculture. A con-
siderable change in the mode of agricultural production has reduced its
dependence on labor. Wages have also gone up in the agrarian field. Today,
no more than 60% of rural people depend upon agriculture, whereas at the
dawn of India’s independence in 1947 nearly 85% people were engaged in
agriculture.
Only 7% of the people lived in towns and cities in 1951. Today, more
than 35% of the people live in urban settlements. Middle classes have
expanded because of the creation of white-collar jobs. Some of the upper
layers of the working class have joined the ranks of middle classes as a result
of migration, mobility, and education. A considerable section of the rural
poor and the landless have migrated to towns and cities, and this too has
weakened the ability of a rural working class to wage a war against the
landlords and rich farmers.
In addition to these structural transformations to India’s rural and
urban situations, we can also point out that India has been a curious mix of
philosophies and paths of development. The Indian constitution proclaims it
a democratic, socialistic, and welfare state, free of caste and creed. In reality,
capitalism has been there both in agriculture and industry in a decisive
way. The poor do not have adequate employment, healthcare, or social
security. We have both public and private spheres in healthcare, education,
and social welfare. The public-private-partnership has not so far been an
effective mechanism for India’s economic and social development.
In 2004–2005, nearly 460 million people were in the category of the
working class, and only 70 million were employed. 130 million were casual
or contract wage-workers, while the remaining 260 million were working
part-time in some tiny/small-scale industries in informal/domestic sector.
Thus, nearly 40% of our people were below the lower working class; they
are classified as people Below Poverty Line (BPL).
138 K. L. Sharma
The last question regards the formation of a “working-class conscious-

ness in India”. Such a consciousness among workers implies self-realization
regarding a just and egalitarian society. Gupta and Sharan (2004:
238–250), borrowing from Mann (1973), refer to four elements of work-
ing class consciousness, namely, (1) “class identity”; (2) “class composi-
tion”; (3) “class solidarity”; and (4) “class alternative”. Based on three
case studies, comprising Tata Iron and Steel Company (TISCO), Murphy
Radios, and Kamani Tubes Limited, Gupta and Sharan observe that vari-
ous social, economic, political, historical, and cultural factors have shaped
the development of class consciousness in India. Class consciousness among
the workers is based on self-realization, political struggle, and dialogue. At
times, caste, ethnicity, religion, region, and language prevent workers from
coming together for a common cause. Sometimes, political parties put a pre-
mium on their narrow goals and interests rather than the broader interests
of the workers. Based on the three case studies, Gupta and Sharan con-
clude that the TISCO’s Union leaders were authoritarian, whereas Muphy
Radios had democratic leadership, and thirdly, there was leader-centered
trade unionism at Kamani Tubes Limited.
Concluding Remarks
The concept of working class owes its propagation to the Marxist notion of
proletariat in the context of the relations between the owners of industry
and the wage-earners (workers). However, in India, the working class gen-
erally implies workers in both the organized and unorganized sectors. Since
India is far behind the industrialized countries of the West, the structure
of its working class is largely determined by those who are engaged in non-
industrial economic activities, including agriculture. Nearly 70% of India’s
workforce can be categorized as working class. The labor market, labor leg-
islation, social background of workers, class consciousness, and trade union
movements, etc., are the central issues in the study of working class in
India. A large number of the working class people are working as casual
or contract wage-workers. Nearly 30% of the total workforce is below the
poverty line.
8
The Status Quo and Change to the
Working Class in Contemporary China
Li Wei and Tian Feng
When looking back at contemporary Chinese history, it is not difficult to

see that the working class is the most important component of Chinese
society. Since the founding of the People’s Republic of China, the working
class has been considered to be the core of social forces and the leader-
ship class in politics. With the progress of China’s economic reform and
social transformation, the collapse of the planning system, and the intro-
duction of the market-oriented system, as well as the rapid growth of
China’s manufacturing industry, the working class has expanded rapidly.
Meanwhile, the internal structure of the class has undergone great changes,
especially in terms of differentiation within the class. This article will ana-
lyze and describe these great changes to the Chinese working class since
the beginning of reform and opening up.
In general, the Chinese working class has two different connotations.
One is the working class in political sense, that is, the Chinese working
class as a unified whole that includes workers, intellectuals, and cadres,
etc. Under this definition, the working class is theoretically regarded as the
leadership class of society and the primary force that promotes the devel-
opment of China’s advanced productivity. In accordance with the definition
of the Trade Union Law, “All of the manual and mental workers in China’s
enterprises, public institutions, government agencies who rely on the wages
as their main source of income shall have the right to participate in and
organize a trade union” (Legal Education Network, 2009).
139
140 Li Wei and Tian Feng
The other connotation refers to the working class in the sense of occu-
pational stratification. Sociologists tend to regard the working class as a
stratum or a group that refers to the grassroots wage-earners who work in
the secondary and tertiary industries. These researchers tend to differenti-
ate the working class from managers and intellectuals. The connotation of
the concept of working class used in this article is mainly the one in the
sense of occupational stratification.
Changes in the Internal Structure of the Working Class

after Reform and Opening up
After reform and opening up, with China’s focus shifting to economic con-
struction, the country witnessed enormous changes in its economic and
social structure. The internal structure of the working class also changed
accordingly. The working class’s single form of employment with public
entities gradually changed, along with the prosperity of the private sector
and the foreign-funded enterprises. As a result, non-public entities became
an important channel for the employment of workers. The adjustments
and upgrades of the industrial structure changed the pattern of the work-
ing class’s employment, which used to concentrate in the industrial sec-
tor during the times of planned economy. Instead, the tertiary industry
became a major sector of the employment of workers. With the loosen-
ing up of the stringent residence registration policy, the urban–rural dual
structure of the labor market was broken up and a large number of sur-
plus rural laborers migrated to cities and replaced the urban workers to
become the main force of the working class. All of these factors have directly
or indirectly affected the changes to the internal structure of the working
class.
Differentiation of employers: The proportion of workers

employed by non-public employers has been increasing
After the socialist transformation, the capitalist components of the econ-
omy basically disappeared, and the public units represented by state-owned
units and urban-and-township collective units became the only channel for
the employment of workers. According to the statistics of relevant depart-
ments, there were 99.49 million people on the payrolls nationwide in 1978,
74.51 million of which were employed in state-owned units, accounting for
The Status Quo and Change to the Working Class in Contemporary China 141
16000
14000
12000
10000
8000
6000
4000
2000
0
19 8
19 9
19 0
19 1
19 2
19 3
19 4
19 5
19 6
19 7
19 8
19 9
19 0
19 1
19 2
19 3
19 4
19 5
19 6
19 7
19 8
20 9
20 0
20 1
20 2
20 3
20 4
20 5
06
20 7
08
7
7
8
8
8
8
8
8
8
8
8
8
9
9
9
9
9
9
9
9
9
9
0
0
0
0
0
0
0
19
20
State-owned Urban-and-township collective Others
Fig. 8.1. Change of the number of nationwide employees by the nature of employers.
Source: China Compendium of Statistics 1949–2008.
78.4% of the total; 20.48 million were employed in urban and township
collective units, accounting for 21.6% (Department of Comprehensive
Statistics of National Bureau of Statistics, 2010). The sum of the two was
almost the national total. The single form of employment of public employ-
ment was changed by the economic reforms. In 1984, the statistics on the
nature of the employers used “others” for the first time to represent the non-
public sectors of the economy. According to the figure above, the number
of nationwide employees in state-owned units and urban-and-township col-
lective units maintained a growth trend during 1978–1984. By 1984, a total
of 118.9 million people were on the payrolls nationwide, an overwhelming
majority of them in state-owned and urban-and-township collective units;
the workers in “others” units were only 0.37 million, accounting for just
0.3% of the total. After 1984, however, the number of non-public employees
has been growing rapidly and reached 47.66 million in 2008, accounting
for 41.4% of the total and representing an increase of 128.8 times when
compared with 1984.
During the same period, the proportion of employees of state-owned
units and urban-and-township collective units had rather big changes.
Before 1995, the number of employees of state-owned units had been grow-
ing, reaching its highest level ever at 109.55 million in 1995 and representing
an increase of 35.04 million over 1978. It accounted for 73.5% of the total.
Meanwhile, the drawbacks of the rigid state-owned enterprises system —
overstaffing, and inefficiency, increased costs became even more evident.
Although the “breaking the three irons”1 and the optimization of mix of
labor that began in the mid and late 1980s caused a certain amount of
unemployment (Xing, 1992), it did not significantly reduce the number of
workers of state-owned units. With the high debt ratio, redundant work dis-
tribution, heavy social burden, heavy levies, and inactive employees, more
and more of them began to suffer losses. According to incomplete statistics,
state-owned enterprises suffering loss in the first half of 1996 reached 43.3%
of the total; there was a nationwide loss in the first quarter of 1998, and
the amount of losses of state assets increased year by year (Zou Dongtao,
2008).
In the 1990s, state-owned enterprises began to be strategically reorga-
nized. One of the most important aspects was to “downsize to improve
efficiency” through various ways, including the separation of the main
and supporting businesses, early internal retirement, employment buyouts,
retirement for health reasons, layoffs, and so on. The employees of state-
owned enterprises were laid off on a large scale, a transition from planned
economy to market economy that the researchers believed to have turned
the originally hidden unemployment into evident unemployment (Li, Peilin,
1998). According to the figures provided by the All China Federation of
Trade Unions, the annual number of workers involved in labor disputes was
about 1.26 million in 1992–1997. At the end of 1997, there were 6.344 mil-
lion workers laid off from state-owned enterprises, of which 3.095 million
did not receive any allowance to cover basic living.
In 1998, a “decisive battle” was unveiled: A large number of state-
owned enterprises went bankrupt, and a large number of workers were laid
off. During the period of 1998–2001, 22.5 million workers were laid off from
state-owned enterprises nationwide. As can be seen in Fig. 8.2, from 1995 to
2008, the number of workers in Chinese state-owned enterprises decreased
from 109.55 million to 61.26 million, a decrease of 48.29 million; the propor-
tion of nationwide workers dropped to 53.2%, less by 20% compared with
1995. Because of the large-scale layoffs of the state-owned enterprises, the
rate of registered urban unemployment increased from about 2% in the mid-
1980s to 3% in the mid-1990s and passed 4% in 2004 and has maintained
this level since then.
1 The so-called “three irons” refer to the “iron seat (position) of cadres, iron bowls
(tenured employment) of the employment system, and iron (rigid) salary of the distribu-
tion system”. The “three irons” symbolize the personnel management system, employ-
ment system, and distribution system of the state-owned economy.
5.0
4.0
3.0
2.0
1.0
20 2
20 3
20 4
05
20 6
20 7
08
19 5
19 6
19 7
19 8
19 9
19 0
19 1
19 2
19 3
19 4
19 5
96
19 7
19 8
20 9
20 0
01
0
0
0
0
0
8
8
8
8
8
9
9
9
9
9
9
9
9
9
0
19
20
20
19
Fig. 8.2. Urban unemployment rate in 1986–2008.

Source: China Compendium of Statistics 1949–2008.
Over the past 20 years, the employers gradually changed from sole
public units to various economic sectors. This is the biggest change within
the Chinese employment structure. It highlights the profound impact of the
market-oriented development of the labor issues on the working class after
China’s economic reforms.
Changes in the employment structure: Workers of the

tertiary industry become the main component of the
working class
During the times of the planned economy, when China vigorously imple-
mented a development strategy to promote industrialization and gave prior-
ity to the development of heavy industry, the development of the industrial
sectors was faster than the service sectors. The focus was on heavy accumu-
lation, while the consumption was overlooked. In terms of the inter-industry
distribution of the working class, the proportion of workers in the secondary
industry was higher than that in the tertiary industry. In 1978, the workers
employed in the secondary industry reached 69.45 million, accounting for
37.0% of the total; those in the tertiary industry were 48.9 million, account-
ing for 26.0%. The distribution of the employed population was 37:37:26 in
the primary, secondary, and tertiary industries.
After economic reforms, due to people’s ever-increasing demand for con-
sumption and services, the development of the tertiary industry significantly
accelerated, in particular, the emerging non-public economy concentrated
in light industries and service industries, which catered to people’s needs in
consumption and services. As a result, both the number and proportion of
the workers employed in the tertiary industry increased. During the same
30000 45
40
25000
35
20000 30
25
15000
20
10000 15
10
5000
5
0 0
78
79
80
81
82
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84
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86
87
88
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90
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94
95
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99
00
01
02
03
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05
06
07
08
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19
19
19
19
19
19
19
19
19
19
19
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19
19
19
19
19
19
19
19
20
20
20
20
20
20
20
20
20
Secondary Tertiary Secondary industry Tertiary industry
industry industry proportion proportion
Fig. 8.3. Numbers and proportion of urban workers in secondary and tertiary industries
in 1978–2008.
Source: China Labor Statistical Yearbook 2009.
period, although the heavy industries where the state-owned enterprises

concentrated also grew, the growth rate was slower. By the mid-1990s, the
numbers of employees in the secondary and tertiary industries were basi-
cally the same. In 1994, the secondary industry employed 153.12 million
people, accounting for 33.2% of the total; the tertiary industry employed
155.15 million people, accounting for 33.6% of the total.
Starting from the mid to late 1990s, employment in the secondary
industry became stagnant because of the bankruptcies, mergers, and reorga-
nization of state-owned enterprises; the number of the workers even declined
in 1998–2002. During the same period, the tertiary industry developed
rapidly and its position in the national economy improved greatly. The
tertiary industry refers here to new service industries, such as airlines,
communications, information, finance, insurance, and other services. In the
past, the development of the tertiary industry obviously lagged behind
manufacturing and other industrial sectors, which seriously affected the
coordinated and balanced development of the national economy. In the
tertiary industry, the priority was to change the backwardness of trans-
portation and communications, followed by the development of commercial
services. In fact, before the mid-1990s, airlines, communications, informa-
tion, finance, and other services were almost unreachable for the Chinese
people in general. Take mobile phones and computers for example, they
were still “rarities” in the mid-1990s and beyond the affordability of ordi-
nary people; however, after more than ten years of rapid development, these
goods and services have become indispensable necessities for common peo-
ple. The number of people employed in the tertiary industry is still growing
rapidly. By 2008, the people employed in the tertiary industry reached

257.17 million, accounting for 37.9% of the total employed population. The
order of the distribution of China’s employed population by industries has
completely changed from the primary-secondary-tertiary industry of 1978
to tertiary–secondary–primary industry.
Improvement of professional skills: The number

of white-collar workers and skilled workers
has been increasing rapidly
At the beginning of reforms, the Chinese working class lacked technical
sophistication. As of 1989, urban industrial workers with a junior college
degree or above accounted for just 7.5% of the total workforce. With China’s
continuous development in high-end manufacturing and the ever higher
technological content of products, workers’ educational level and technical
ability have been improving. In 2008, the industrial workers with college
degree or above accounted for 11.4% of the total workforce. These work-
ers with a junior college degree or above were mainly white-collar workers
who rarely engaged in direct production in the factories; rather, they were
mainly engaged in technical work. Although China’s working class has not
had more white-collar workers than blue-collar workers, as is the case in
Western developed countries, the increase in white-collar workers has under-
scored the higher level of China’s modernization, the great development of
productivity, and the improvement of the level of technology.
100%
80%
60%
40%
20%
0%
1989 2008
Elementary school of under Middle school High school Junior college or above
Fig. 8.4. Comparison of the educational levels of manufacturing workers in 1989 and
2008.
Source: China Labor Statistical Yearbook 1990 and China Labor Statistical Yearbook
2009.
12000000
10000000
8000000
6000000
4000000
2000000
0
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Primary level Medium level Senior level Technician Senior technician
Fig. 8.5. Number of qualification certificates of all skill levels issued in 1996–2008.
The improvement of Chinese workers’ skills is also reflected in the year-

by-year increase in the number of the people who have technical certificates.
In 1996, the number of Chinese workers with technical certificates was 2.147
million; in 2008, the number increased to 11.372 million. As seen from
the internal structure of the skilled workers, the number of workers with
medium and senior technical levels or technician qualification has also been
increasing, especially the number of senior technicians. In 1996, there were
only 2,263 senior technicians nationwide; by 2008, the number had increased
to 63,323, nearly 28 times greater.
In fact, although the skill levels of Chinese workers have improved and
the number of the workers with technical certificates has also been increas-
ing rapidly, when compared to the rapid growth of Chinese manufacturing
industry, the shortage of skilled workers is still a major problem that has
constrained the upgrading of the industrial structure. The underlying rea-
son is that the social status of workers is not high (there is a sharp contrast
before and after the reform) and it is difficult for people to choose techni-
cian as a career. According to the results of a survey done by the Institute
of Sociology, Chinese Academy of Social Sciences in 2008, the income of
the workers with higher skill levels was high when compared with workers
with lower skill levels. The urban workers engaged in technical work had an
average annual income of 20,400 yuan, comparing to 10,908 yuan for their
counterparts engaged in manual work; the rural migrant workers engaged
in technical work had an average annual income of 15,326 yuan, comparing
to 10,439 yuan for their counterparts engaged in manual work. This means
that there were significant income gaps between white-collar workers and
blue-collar workers, and between skilled workers and unskilled workers.
25000
20000
15000
10000
5000
0
Urban workers Rural migrant workers
Technical Half technical and half manual Manual
Fig. 8.6. Comparison of the 2008 incomes of the urban workers and rural migrant
workers with different skill levels.
Source: 2008 Comprehensive Survey of Chinese Society.
Expansion of the income gap: Excessive incomes

for monopoly industry workers and exorbitant profits
Before reform and opening up, due to the rigid employment system there
were not big differences in the incomes among the majority of workers,
and the inter-industry income gap was not significant either. In 1978, the
highest income industry was the “producers and suppliers of electricity, gas
and water”, with workers’ average annual income totaling 850 yuan; the
lowest income industry was social services, where workers’ average annual
income was 392 yuan — the former was a little more than two times of the
latter.
After economic reforms began, although the inter-industry income gap
enlarged, the gap remained narrow until the mid-1990s. By 1996, the
highest-income industry was financial and insurance services, with workers’
average annual income totaling 9,734 yuan. The lowest income industry
was wholesaling, retailing, and catering services, with an average annual
income of 4,845 yuan. The former was still a little more than two times of
the latter. During this period there were greater inter-industry changes in
the income of workers, but the basic income distribution established in the
planned economy still existed, and the change of the inter-industry income
gap was insignificant when compared with that before the reform.
Since the mid to late 1990s, the reform of the income distribution sys-
tem has intensified, and the inter-industry income gap has grown larger
and larger. The widening of the inter-industry income gap had two causes:
One was the emergence of monopoly industries and industries of exorbitant
70000 Mining
Manufacturing
60000
Producers and suppliers of electricity,
gas and water
50000
Construction
40000
Geological exploration and water
resources management
30000 Transportation, storage, and post
and telecommunications
20000 Wholesaling, retailing, and
catering services
10000 Financial and insurance services
0 Real estate
19 0
19 0
19 5
19 6
19 7
19 8
89
90
19 1
19 2
93
19 4
19 5
19 6
19 7
19 8
20 9
20 0
20 1
02
20 3
20 4
20 5
20 6
07
08
7
8
8
8
8
8
9
9
9
9
9
9
9
9
0
0
0
0
0
0
19
19
19
19
20
20
Social services
Fig. 8.7. Change of incomes of workers in major industries in 1978–2008.

12000 Mining
Manufacturing
10000
gas and water
8000 Construction
Geological exploration and water

6000 resources management
Transportation, storage, and post
4000
Wholesaling, retailing, and
catering services
0 Real estate
70
80
85
86
87
88
89
90
91
92
93
94
95
96
97
19
19
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19
Social services

profits. In the monopoly industries such as transportation and telecommu-

nications, and industries of exorbitant profits such as the real estate indus-
try, worker incomes were significantly higher. Another reason was that the
industries with a higher concentration of rural migrant workers had exces-
sively lower incomes. For example, in the construction and manufacturing
industries where there was high concentration of rural migrant workers,
worker incomes were significantly lower. By 2008 the industries with the
highest income were real estate industry and transportation and post and
telecommunications industry, in which the workers’ average annual incomes
Mining
70000
Manufacturing
60000
gas and water
50000
Construction
40000 Geological exploration and water
resources management
30000 Transportation, storage, and post
20000 Wholesaling, retailing, and
catering services
0 Real estate
96
97
98
99
00
01
02
03
04
05
06
07
08
19
19
19
19
20
20
20
20
20
20
20
20
20
Social services

were 61,841 yuan and 56,642 yuan, respectively. The lowest income indus-
tries were construction industry and manufacturing industry, where annual
income topped out at 21,527 yuan and 24,192 yuan, respectively. The high-
est income was 2.9 times of the lowest income.
The inter-industry change in workers’ incomes has not only highlighted
the formation of the market-oriented income distribution system, which was
established after the economic reforms, but also reflected the inadequacy
of economic reform — the workers of the monopoly industries become the
sub-group of the working class that benefited the most. Of course, this phe-
nomenon has caused great concern on the part of the government. In 2010,
Premier Wen Jiabao said that the next step in the reform of the income
distribution would focus on the monopoly industries (National Business
Daily, 2010).
The growth of the “new working class”: Rural migrant

workers become an important component of the working
class
Reform and opening up and the marketization of labor also added new
strength — in the form of rural migrant workers — to the Chinese working
class. Rural migrant workers refer to the urban workers who have rural
residence registrations. It is a special identity mark under the traditional
Chinese residence registration system, and is also a result of the seri-
ous conflict between China’s accelerated industrialization and the tradi-
tional residence registration system. The reform of the system of rural land
use and the implementation of the contract responsibility system liber-

ated a large number of rural surplus labors. In the initial stage of the
reform before 1984, the major means to transfer China’s rural labors to
non-agricultural sectors was through township enterprises. The main char-
acteristic of the transfer was “departing the land but not the hometown,
entering the plants but not the cities”, which was once known as the
“Chinese-style urbanization”.
Starting from 1984, with the loosening of China’s residence registration
system, a large number of rural migrant workers flooded into the cities
and developed coastal areas, unveiling a large-scale migration of farmers
for working or doing business in cities. In 1985, the total number of the
people moving out of rural areas was just about 3.35 million, comparing
to 22.86 million of rural labors retained by the township enterprises during
the same period of time. Until 1990, township enterprises were still the
main channel for farmers’ occupational shift of “leaving agricultural jobs
for non-agricultural jobs”.
The situation changed greatly between 1990 and 1995. According to
various large-scale national sample surveys, the floating rural migrant
workers accounted for an average of about 15% of the total rural labors,
which translated to over 66 million people in 1995. Some researchers (Yang
Congmin & Yang Liyuan, 2009) estimate that the number of rural migrant
workers reached nearly 100 million in 1987 and surged to 246 million peo-
ple by 2007. According to the monitoring report released in 2010 by the
National Bureau of Statistics, there were a total of 233 million rural migrant
workers in 2009 (Department of Rural Areas of National Bureau of Statis-
tics, 2010). In some industries, the rural migrant workers have become
18000
16000
14000
12000
10000
8000
6000
4000
2000
0
19 8
19 9
19 0
19 1
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0
0
19
19
19
20
Employment in Township
Enterprises
Fig. 8.10. Change of employment in township enterprises in 1978–2008.

the majority of the workforce. In 2006, rural migrant workers accounted

for 57.6% of workers in the secondary industry, in which rural workers
accounted for 68% of the processing and manufacturing industry and 80%
of the construction industry. In China’s tertiary industry, rural migrant
workers accounted for 52% of the worker body, and they accounted for 90%
of the employment in urban construction, environmental cleaning, house-
hold services, and catering services (Liu & Chen Lan, 2005).
The Chinese Communist Party Central Committee’s Document No. 1
in 2004 clearly stated that “rural migrant workers working in cities are
already an important component of the industrial workers”; however, rural
migrant workers were used as “cheap labors” who had low wages that were
frequently delayed or in arrears, as “over-time labors” who had extremely
long working hours and an overloaded work, and as “labors for high-risk
jobs” who lacked social security and frequently had safety-related accidents
(Xinhua Net, 2006). Their economic and social status were deemed lower
than that of the urban workers, even when comparing with the lowered
political and economic status of the urban workers after reform and opening
up; however, their social attitudes were more positive (Li Peilin and Li Wei,
2007).
The long-standing urban–rural dual system makes it inherently difficult
for the rural migrant workers to integrate into urban society and the indus-
trial worker groups, and they are excluded by the systems offered to the
urban residents (including the social security system, etc.). Therefore, the
rural migrant workers as a whole are in fact a disadvantaged group in soci-
ety. The 2008 Comprehensive Survey of Chinese Society found that, when
the education level was the same, the income of the rural migrant workers
30000
25000
20000
15000
10000
5000
0
87
88
89
90
91
92
93
94
95
96
97
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01
02
03
04
05
06
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08
19
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19
19
19
19
19
19
19
19
19
19
20
20
20
20
20
20
20
20
20
Fig. 8.11. Change of the scale of rural migrant workers in 1987–2007 (Unit: 10,000
people).
Source: Yang Congmin and Yang Liyuan (2009).
25000 100
90
20000 80
70
15000 60
50
10000 40
30
5000 20
10
0 0
No fo Elemen Middle High sc Junior
rmal ed tary sc schoo colleg
ucatio
n hool l high sc hool/Vocati e or ab
hool/O onal sc ove
ccupat hool/V
ional h ocatio
igh sc nal
Rural migrant Relative h o ol
Urban workers
wockers percentage
Fig. 8.12. 2008 Comparison of the incomes of urban workers and rural migrant workers
by education level.
Source: 2008 Comprehensive Survey of Chinese Society.
was significantly lower than that of the urban workers; the income gap was
even more apparent for those with junior college education or above.
Three Major Changes to the Working Class

after Reform and Opening Up
In the historical background of economic transition and social transforma-
tion after reform and opening up, the Chinese working class went through a
series of dramatic events such as enterprise reform, layoffs, unemployment,
and so on. Therefore, in a strict sense, the present-day working class is sig-
nificantly different from the working class 30 years ago. A retrospective view
of the process of the development of the working class can uncover three
aspects of the major changes of China’s working class over the past 30 years:
changing from “political identity” to “occupational identity”, changing from
“attachment relationship” to “contractual relationship”, and changing from
a “homogeneous group” to a “heterogeneous group”.
Changing from “political identity” to “occupational

identity”
In the early stage after the founding of New China, with the completion of
the socialist transformation and the elimination of the capitalist class, the
meaning of the working class had fundamental changed. “The main reasons
for the change can be attributed not only to the fact that the class hostility
between the working class and the capitalist class no longer exists, but also
to the fact that there are fundamental changes in the relationship between
the working class and the means of production and in their position in
the economic structure of the socialist society. On the one hand, China’s
working class changed from ‘having no production assets’ to ‘having pro-
duction assets’ — they became the owner of the means of production; on
the other hand, China’s working class was in a leadership position in the
socio-economic structure.” (Gu, 2002)
In this sense, the coverage of the working class was very broad and
included all those workers who had non-agricultural residence registration
and access to wage income through working. It at least includes those we
now dub as employees of state organs and public institutions, corporate
managers, intellectuals, and urban workers. The working class actually rep-
resented an individual’s identity, rather than the occupation. It referred to
the class formed by the workers who are in the leadership class. The crite-
ria of classification by identity were used until reform and opening up. In
other words, the political identity was the most important basis for social
stratification during the time between the socialist transformation and the
reform. Chinese society basically formed a relatively simple social stratifi-
cation structure that was composed of the working class, the farmer class,
and the intelligentsia (the intellectuals were generally considered to be part
of the working class — Lu, 2009).
After reform and opening up, the modernization of Chinese society has
been deepening. In a modernized society, occupational stratification is the
basis of social stratification. It reflects not only people’s position in terms
of economic status, property, and income, but also people’s position in the
power structure and the prestige stratification. The working class’s transi-
tion from political identity to occupational identity is mainly reflected in
the structural changes of the working class. The managers and intellectuals
gradually spun off the working class to form the manager stratum and the
middle class. The rural migrant workers, who had been liberated in large
number by the rural reform and merged into the urban industrialization,
have greatly expanded the ranks of the working class and even become the
main force in certain industries.
Before reform and opening up, the working class was differentiated
into three strata (upper, middle and lower) and six occupational groups:
The upper stratum was composed of managers (including state and social
administrators and corporate managers); the middle stratum was the
middle class or white-collar workers (including professionals, technicians,
and general clerical staff); the lower stratum was the workers (including
urban workers, rural migrant workers, and the unemployed and laid-off
workers). This structure was somewhat open with inter-stratum move-

ment. The structure of the working class was complex, involving frequent
cross-ownership, cross-industry and cross-region movement, causing fre-
quent changes in occupational identity.
The working class’s change from political identity to occupational iden-
tity has in fact revealed the structural change of Chinese society, which has
gone through a transition from fixed identity to more dynamic modern
social systems.
Changing from “attachment relationship”

to “contractual relationship”
Before the reform, the interest relationship of Chinese society was char-
acterized by the state monopoly of social resources. The state played a
versatile role in taking care of everything. The degree of interest differenti-
ation among the social groups was low, and society was a highly “homoge-
neous society”. The formation of the “homogeneous society” was achieved
through an organizational intermediary of “unit system” (Li Peilin et al.,
1992; Li Lulu and Li Hanlin, 2000). Under the “unit system”, the working
class became the “owners” who attached to the state and the enterprises.
There was a “trinity” of the interests between the state, the enterprises,
and the workers. The workers had a family-like affection to the units they
worked with. For the working class, the transition from a planned economy
to a market economy along with the economic and social transformation
meant a change from the “owner” attached to the state to an independent
wage-earner (Xie, 2009). The workers’ relationship with the enterprises thus
changed from “attachment relationship” to “contractual relationship”.
Since the government has gradually loosered the control on the enter-
prises, and the enterprises gained independence in management, the impor-
tance of the workers’ organizations, such as unions and worker representa-
tives’ conference, has declined. Many corporate managers attempt to change
the incomplete ownership under their control into legal and full ownership
(Wu, 2008). As a result, the power of managers is strengthened and ordinary
workers basically cannot vote for or change the leaders of their enterprises.
Nor can they participate in the major decisions, including those that impact
their own interest (Zhang et al., 2003). The workers cannot use the polit-
ical status given by the government to defend their own interests; there-
fore, the system of the “trinity” has changed into a system with competing
interests. The employment relationship, which used to be a unified interest
800000
700000
600000
500000
400000
300000
200000
100000
0
96
97
98
99
00
01
02
03
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20
20
20
20
20
Number of labor dispute cases
Fig. 8.13. Number of labor dispute cases in 1996–2008.

body of the whole society represented by the state, has changed into an
employment relationship with the employer and the employee each having
their own independent interests. The workers’ conflicts with the government
because of layoffs and spinoffs have gradually changed into labor conflicts
between the workers and the enterprises, especially after the large-scale
bankruptcies of state-owned enterprises. The mass events caused by labor
conflicts have gradually increased since mid-1990s. The labor dispute cases
in 1996 amounted to 41,697 and have maintained an upward trend ever
since. The cases exceeded 100,000 in 1999 and further exceeded 200,000 in
2003. By 2008 around the time when the new “labor law” was implemented,
labor dispute cases had an explosive growth, reaching a staggering number
of 650,077 — 15.6 times of those in 1996. Labor conflicts have become a
major issue in Chinese society (Qiao, 2009).
With the change of the attachment relationship between workers and
enterprises into a contractual relationship, the transition to a market-
oriented labor relationship is close to completion. Accordingly, the oper-
ating mechanism of the labor relationship gradually changed into the
employer’s adjustment by using market mechanism versus administrative
control by the government. Under the market environment, the differences
between the interests of the employer and the employee, the division and
even the conflict of interest will continue to expand and intensify. The
flexibility in employment leads to a significant increase in informal labor
relations, thus presenting new challenges to labor rights protection.
Changing from a “homogeneous group”

to a “heterogeneous group”
At the beginning of reform and opening up, China had a total of 124 million
workers on the payrolls, accounting for 30.7% of the total working popula-
tion. A majority of these workers were employed by the public sector. With
the development of the socialist market economy and restructuring of own-
ership, China’s working class rapidly expanded after reform and opening
up and the internal structural also underwent changes, which resulted in a
diversified internal composition of the working class.
The first is the differentiation between white-collar workers and blue-
collar workers. Intellectuals and skilled workers account for a large pro-
portion of white-collar workers. Prior to the reform, they were one of the
strata of the working class and there was no essential difference in wages,
benefits, and social security, etc., between this stratum and the other com-
ponents of the working class. After the reform, because of human capital
advantages, intellectuals and skilled workers obtained better socio-economic
status, income, and social security than the average worker. The differ-
ences between white-collar workers and blue-collar workers reflect their
different status and function in the wealth creation process; they also
reflect increased differences within the working class in the context of
modernization.
The second is the difference between urban workers and rural migrant
workers, which can be traced back to the “dual track” labor system of the
planned economy era. As new comers to the labor market, rural migrant
workers have not only taken over the “hard, dirty, tiring, poor, dangerous,
and heavy” work originally done by urban workers, but also face double
discrimination in the urban labor market, that is, the “entry” discrimination
in the access of positions and the wage discrimination — unequal pay for
same work (Cai, 2005). The unfair social treatment of rural migrant workers
is due to the imperfect development of the labor market, as well as the
irrational arrangement of the social system. Fundamentally speaking, the
current rural migrant workers form the main body of the working class and
the difference between them and the urban workers is one of the biggest
differences within the working class.
The third is the difference between workers in different enterprises
and industries. In the 1990s, the reform of state-owned enterprises pushed
state-owned small and medium enterprises, which formed the majority of
state-owned enterprises, to the market, but some industries and enterprises
that were essential to the national economy maintained as state monopoly.

These enterprises and industries earned excessive profits from the market
by taking advantage of their monopoly, and their workers received higher
incomes and better benefits than those in the average enterprises, which
led to a differentiation within the working class. In addition, differences in
gender and age are also part of the differences within the working class.
However, compared to other differences, the underlying reasons for these
differences are more indefinite and therefore cannot be easily discovered.
For the professional skilled workers and the management personnel split
off from the working class, as well as the rural migrant workers split off from
the farmer class, it is difficult to achieve the equal economic and social status
or have the same ideology that the working class had before the reform.
The differentiation of the working class is reflected not only in changes in
occupation and income, but more importantly in the fact that the working
class is no longer considered a completely unified and homogeneous social
group.
The Future of the Chinese Working Class

In 2009, amid the financial crisis, Chinese workers and the Governor of the
People’s Bank of China were both selected to be on the list of Person of
the Year in the US magazine Time. The real story is that the hard work of
the Chinese working class — the creator of wealth — leads to China’s long-
term rapid economic growth. Although they also the benefit from China’s
economic reform and economic growth, they only get a meager share of the
cake. When compared to the pre-reform era, the workers are often in the
“being ignored” state. Before the reform, the working class enjoyed a higher
political and economic status and gained relatively more benefits than other
groups. After the reform, the internal composition of the working class has
become more complicated. Generally speaking, the vast majority of them
are “net gainers of interest”; however, some of them are “relative losers of
interest”, and some are even “severe losers of interest” (e.g., the so-called
40 to 50-year-old laid-off workers). According to the analysis of two large-
scale surveys conducted by the Institute of Sociology, Chinese Academy of
Social Sciences, in 2006 and 2008, these workers are considered to be one
of the groups that have gained the least in the most recent ten years.
Even though in a political sense the working class is still the leadership
class, in reality the social, political, and economic status of the working
class has declined. The Research Report of Contemporary China’s Social
Stratification indicates that “the social basis of the strata of industrial

workers and agricultural labors, which account for a large portion of the
population, has been weakened”. The research of Xu Yeping and Shi Xiuyin
suggests that the direction of development of workers depends on whether
the social system will have a reasonable response to the workers’ demands
and whether, in order to achieve the desired social justice that the workers
expect, modification of the existing system will be made at times when it
is difficult to respond to their demands (Xu and Shi, 2006).
China’s economic reform and rapid growth have left a deep imprint on
the working class. Great changes have occurred in the internal structure of
the working class. Amid the modernization, market-driven economy, and
industrialization, the working class is no longer a political concept, but a
professional stratum. Driven by the market economy, the labor market is
increasingly influenced by the market, and long gone is the attachment
relationship between workers and their enterprises. The proportion of
workers employed in the non-public economy and the tertiary industry
has become a major component of the working class. The differentiation
between white-collar workers and blue-collar workers and between skilled
workers and non-skilled workers has divided them into different social
strata. Industrialization attracts hundreds of millions of rural labors to
cities and towns. They engage in the same industrial work, but their income
and social security are far less than their urban peers. All of this indicates
that in terms of the interest and value of the working class, there is no
longer the homogeny that existed in the planned economy era.
The status of the industrial workers in China warrants some thoughts
on the Chinese development model. The rapid and sustainable growth of
China’s economy cannot be built upon the low compensation to the rural
migrant workers, the poor working conditions, and the inadequate social
security. How to alleviate the pains of the economic reform? How to equally
distribute the gains from the economic reform and growth among all the
social groups in China? How to achieve common prosperity? These are
the issues of primary urgency that need to be resolved by the “affluent”
China.
If the essence of China’s reform and opening up is adjusting the sta-
tus of possession of social resources by reallocation of benefits, one salient
feature is that while the general public has benefited from the reform, seri-
ous inequality in the allocation of the gains has appeared. If this situation
continues, the system of benefit distribution is bound to gradually lose
balance, resulting in widening gaps in the allocation of interests between

the urban and the rural, among regions, industries, classes, and groups,
thus accelerating the risk accumulation that may lead to social crisis. This
has become the deep root of China’s current social problems and conflicts
(Zheng, 2010). The adjustment of the system of China’s benefit distribution
will also determine the direction of the development of the working class.

Part Three
Peasants
161
162
9
The Brazilian Peasantry:
A History of Resistance
M. de Nazareth Baudel Wanderley
Introduction
Often, social representation within Brazilian agriculture is associated with
large estates oriented towards monocultures producing for international
markets based on modern and sophisticated technological standards. Fre-
quently mentioned in the media, the most emblematic example these days
are the large soybean plantations located in the regions formerly considered
as the agricultural frontiers of the country. In the monotone scenery of the
plains, powerful machines dominate the space, diluting the image of human
presence.
In truth, this representation is the result of a “social amnesia” (Motta and
Zarth, 2008) that has marked, since its beginning, the history of peasantry in
Brazil, denying the recognition due for its contribution to society. This chapter
associates itself with another concept, according to which the peasantry, the
political and academic label for family farmers, has always been constructed,
under distinct modes and intensities, as a social participant in the history of
Brazil. In all expressions of its social struggles, whether in relation to con-
quest of space and recognition, or in its resistance to threats of destruction
through time and in different places, they remain protagonists of social pro-
cesses (História social do campesinato, 2008/2009).1
1 TheCollected Social History of Peasantry, formed up to now by nine books published

between 2008 and 2010, is dedicated to the study of the various dimensions of Brazilian
peasantry. The passages cited are from the General Presentation, signed by members of
the Editorial Council of the Collection, and found within all of the volumes.
163
164 M. de Nazareth Baudel Wanderley
Before entering into this discussion, it will be necessary to explicitly

detail exactly what is meant by the peasantry in Brazil. From a general
perspective, it can be considered as a social form of production that is fam-
ily based, with the objectives of the production activity directed towards
the needs of the family, and the organization of the work methods assum-
ing cooperation among its members. It corresponds to a way of living and
working that, more than a simple manner of production, corresponds to a
specific culture and lifestyle. If their relation with the market is a distinc-
tive characteristic of the producers, the conditions of this production harbor
specifications that are based on allocation, or in the recruitment of manual
labor from the family labor. It can be considered as an organized investment
and condition for the existence of these laborers and their patrimonial mate-
rial, both productive and social-cultural, according to production capacity
(composition and size of the family, lifecycle of the domestic group, and
relations between composition of the production and consuming units). By
these standards, allocation of the laborers also incorporates references for
production management, according to social values recognized as guiding
the alternatives for family reproduction, a condition producing methods
of generating inheritance, succession, socialization of the children, and the
construction of special projects involving the generations (História social
do campesinato, 2008/2009).
Naturally, this description is generic enough, and represented in this
manner, could be appropriate for understanding real world situations and
the reproduction of many peasants and their families. It is important to
understand the specifics of these particular situations each providing a par-
ticular social content.
To understand the case of the peasantry in Brazil, it is necessary to
consider that Brazilian agriculture, into which it is historically inserted, has
maintained its structural traits even after the end of the colonial period,
which was largely represented by monocultures in large estates and slave
labor.2
Meanwhile, this indisputable fact has not impeded interests within and
around the great estates, and the spaces that escaped, by law or fact, occu-
pation by the lords of the land, or were, under distinct form, used produc-
tively by small families that farmed. Thus, it can be confirmed that the
particularities referred to above resulted from peasant resistance strategies
2 Slavery was not abolished in Brazil until 1888.

The Brazilian Peasantry: A History of Resistance 165
and on its capacity to create space for another style of agriculture based on
families and the community.
Far from denying the existence of a peasantry in Brazil, each case must
be considered, along with the strategies — agrarian, productive, and fam-
ily – and the amplitude of this capacity for initiative that, depending on the
concrete circumstances, can vary from the possibility of negotiating, in a
subordinate and asymmetrical manner, to the occupation of unsecured and
provisory spaces and the effective creation of deeper roots able to estab-
lish, through time, rural farming and herding communities with greater
permanence.
Forms of precarious access to land: Precarious land

possession and the way of life
Originating with the Portuguese, legislation regarding colonial settlements
lost legitimacy with Brazil’s declaration of national independence in 1822.
It was not substituted until 1850, which created a space of time when only
the possession of land was recognized. This judicial “void” favored the pre-
carious and unsecured occupation of the land, without legally documented
ownership, by small-scale farmers who produced not only for themselves,
but also for the market.
The “system of occupation” did not end with the Law of Landownership
of 1850. This was due to the fact that the owners of large estates primarily
chose regions near the coast at the beginning of colonization. Large tracts
of land that were more distant were not judicially appropriated, leaving
them open for rural “settlers”.
Another unsecured system of access to land involved sharecropping, the
installation of families of workers on small parcels within larger farms, as
sugar and coffee plantations and the like, were authorized by the owners
to cultivate some food products around the houses where they lived. The
laborer was obligated to work on the larger property, sometimes receiving
monetary compensation in the form of wages. Naturally, the use of the
land was conditional, connected to work for the owner, and without any
guarantee of permanency (Andrade, 1964).
The ambivalence of this situation involving residents and settlers gen-
erated a great debate throughout the country: workers or peasants? What
clouded this type of relation? For the landowner, without a doubt, this
system was merely a form of recruitment for low cost manual labor that
transferred the responsibility for subsistence to the worker. For the settlers
(“moradores”) of the Northeast (especially the cane fields of Pernambuco),
and farmhands (“colonos”) of the coffee cultivation zones of Sao Paulo, this
was often the only means of accessing land and organizing a productive
base for the family unit. Although unsecured and precarious, it provided
the opportunity for cultivation of subsistence products, the excess of which
could eventually be offered to the market. (Palmeira, 1977).
It is important to note that there are a large number of modes of pre-
carious access to land, from subordination by the worker to labor on the
great estates, to other modes that provided a level of autonomy assuring
greater dedication to the family farm. Resident of Brazil’s Northeast used
the terms sujeitos (subjects, dependents) and libertos (freed men) to indi-
cate the distinctions, as revealed by Afrânio Raul Garcia Jr. (Garcia Jr.,
1983; 1990).
In addition to these principal manners of acquiring precarious access
to land, the concept of small-scale land ownership has also existed in rural
Brazil. Particularly important in the Southern region of the country, its
origin comes from the policy of conceding small tracts of land to foreign
immigrants, especially Germans, Italians, and Poles, who installed them-
selves in the region during the 19th century. Nonetheless, it always existed
to some extent throughout the country, based on distinct social relations
(Queiroz, 1963; 1973; Candido, 1964). In Sao Paulo, with the coffee cri-
sis of the 1930s, coffee cultivators under debt loads sold off part of their
estates as small lots, often to producers who were not landowners. More
recently, equal and special reference deserves to be given to the so-called
integrated producers who became suppliers of agricultural and livestock
products for agro-industries predominant in the Southern region of Brazil
(Ferreira, 1995; Paulilo, 1990).
In all of these instances, formal recognition of land ownership favored
the consolidation of a rural farming economy that was more liberated and
less dependent on large estate owners when referring to land access. The
tension between subordination and autonomy was repositioned to the ambit
of commercialization of products, where family farmers suffered the conse-
quences of relations that were also subordinated and asymmetrical.
The modernization of agriculture in Brazil

In 1960s, profound transformations in the agricultural and rural sectors of
Brazil began to occur. In the groundswell of these changes can be found
the modernization process within agriculture, where it has assumed two

central and complementary dimensions. The first is the subordination of
agricultural activity to the demands of the dominant industrial sectors,
and of the capital that carries out the financing for machinery, equipment,
and the inputs of industrial origin used in the processes of agricultural
production (Silva, 1981; 1982; Kageyama, 1996; Delgado, 1985). Second is
the occupation of agricultural frontiers by large firms that benefit from
public policies that give incentive to this expansion.
In both the cases, the consequences for the reproduction space of small
peasants are direct and immediate. The large firms expelled the resident
workers in mass, hiring them again only when in dire need of labor. This was
possible because the modernization of agricultural production has affected
different stages of agricultural production in various respects (Silva, 1981).
While preparation of the land and care for cultivation were mechanized and
encouraged by the use of modern inputs, for the large majority of crops
harvesting remains primarily an activity based on manual labor. Therefore,
there is little or no reason for the landowner to retain manual labor all
year long.
This process of expulsion will likely become even more intense once
the owners and bosses apprehend the consequences of the extension of the
Rural Worker Statute (Federal Law #4214, from 2 March 1963), the first
legal text that recognized the laborers as subject to labor rights laws, and
therefore subject to court rulings in favor of the union movements that were
born and earned strength at the same time.
Without the resource of subsistence, rural workers who were expelled
from the land and lost their peasant condition, were relegated to living in
the degraded outskirts of the cities where they search for work without any
connection to the successive harvest throughout the year.
The peasants do not passively endure the effects of this process. In
addition to the union movements already referred to, it is exactly dur-
ing this period that “Peasant Leagues” began to appear in Pernambuco,
spreading throughout various regions of the country and expressing their
demands in terms of anagrarian reform that would signify a real and
effective distribution of land (Julião, 1962). This is clearly a peasant
demand.
Economic integration of the agricultural frontiers into the dominant
economic model resulted in deflagration of landownership conflicts, and in
the massive disarticulation of the traditional ownership relations predom-
inant in these regions. Weakened by the absence of legal title of the land
they worked, the peasants suffered the consequences of large-scale agrarian

concentration, the most conspicuous result of the financing capital funneled
by large agro-industrial concerns (Esterci, 1987). It is for this reason
that modernization within Brazilian agriculture is considered conservative
(Silva, 1982). It provokes, in a certain paradoxical form, a struggle for
land that extends throughout all parts of the country, principally in the
North and mid-West regions (Martins, 1981). In 1980, a document from the
National Conference of Bishops in Brazil (CNBB) entitled “The Church
and problems related to land”, vehemently denounced the “extreme vio-
lence in the struggle for land in our country, characterized by a war
of extermination, the most serious victims being the poor field workers”
(CNBB, 1980).
It is worth remembering that a significant parcel of these large estates
were appropriated in an illegal manner through what is customarily referred
to as grilagem (land grabbing), through fraud and falsification of land titles.
According to the Whitepaper on Land Grabbing in Brazil, published by the
National Institute of Colonization and Agrarian Reform (INCRA), land
grabbing is one of the most powerful instruments for domination and con-
centration of large estates in rural Brazil. In all of the country, the total of
lands suspected of having been grabbed illegally amounts to approximately
100 million hectares (247 million acre). (BRAZIL. INCRA)
José de Souza Martins, writing at the beginning of the 1980s, affirms
that today in Brazil, “the political concern in the rural agricultural regions
is mainly a concern regarding land ownership” (Martins, 1982: 11). In the
same manner, Leonilde Sérvolo de Medeiros identifies a trait common to
all rural social movements in this period, i.e., “the resistance of rural farm
workers (. . . ) in being expulsed from the land where they live and work”
(Medeiros, 1989: 34). For this reason, the struggle for land disseminated to
the point where, as the author affirms, “there was not a single state in the
Federation during the 70s where the struggle for land was not present in
one form or another” (Medeiros, 1989: 110).
The moment of re-democratization was initiated in 1985 with the end
of the military government, and the subsequent ratification of the Federal
Constitution of 1988. It signified the (re)emergence of social movements able
to publicly construct an analysis of Brazilian reality free of the visions then
dominant and imposed. It was now possible to formulate political demands
and battle strategies. In the same manner, and with new constitutional
concepts, the government initiated a democratization process making it

more capable of listening to demands from society.3
During 1984, the Landless Rural Workers Movement “Movimento dos
Trabalhadores Rurais sem Terra” (MST) was founded. In addition, the
Rural Union Movement “Movimento Sindical Rural ”, that existed since
the beginning of the 1960s gained strength, then under the leadership
of the National Confederation of Agricultural Workers, or “Confederação
Nacional dos Trabalhadores na Agricultura” (CONTAG). It is these move-
ments, each in its own manner, which reopened the debate in society
regarding land structure and their pertinence in the struggle for land by
expropriated farm workers, or those with only small parcels.
One new Land Statute was adopted (Federal Law #4,504, from 30
November 1964) during the first military government, and afterwards the
first democratic government established the first National Plan for Agrar-
ian Reform (1985). Progressively, the number of rural settlements (assen-
tamentos rurais) multiplied in a program consisting of the distribution of
land to farm workers who had none. The lots were small, located within
areas of large estates that were “expropriated” as a result of being con-
sidered unproductive. The greatest number of settlements was implanted
in the 1990s, during the Fernando Henrique Cardoso government under
pressure from the movements struggling for land (Medeiros, 1989; 1994;
1999; Bergamasco and Norder, 1996; Schmidt et al., 1998; Martins, 2003;
Leite, 2004).
There is no doubt that the conservative ideology of the military
rulers, as well as their authoritative and repressive practices, helped to
consolidate the model of conservative modernization in Brazil. With re-
democratization, new ideas and proposals for new agricultural models could
now be debated within society. The starting point for this eminently politi-
cal discussion is recognition that family production units are not incompat-
ible with agricultural development, that is to say, they are in fact capable
of transforming their production processes in order to attain new techno-
logical levels which would bring greater offer of products, greater profit
3 Duringthe 1990s, the Ministry for Agricultural Development “Ministério do Desen-

volvimento Agrário” (MDA) was created, distinct from the Agriculture Ministry that
had been dedicating itself specifically to rural development policies, family agriculture,
and agrarian reform.
from the resources applied, and full appreciation of the work involved. This
affirmation affects the central argument that justifies the unrestricted and
exclusive support given by Brazil to large estates, considered as the only
way to update the agricultural sector, and conform to the strategy for mod-
ern production supported by the government.
The concept of a peasantry: A political dispute

for recognition
The comprehension of what peasantry means in Brazil continues to be at
the center of a broad debate and heated political disputes that involve,
among others, researchers, academic personnel, policy directors, and social
movements. The social position of farmers is in question, expressing itself
through the significance of categories such as “peasantry”, “family agricul-
ture”, and “agribusiness”.
The reference to peasantry assumed a double connotation. On the one
hand, the peasantry would for many people correspond to the more tradi-
tional forms of agriculture, carried out in small scale, with little resources
for production, poorly integrated into the market and urban life, and fre-
quently identified by lack of civility along with social and economic back-
wardness. In this sense, it distinguishes itself from family agriculture, which
in spite of also having production restrictions, is more integrated into
the cities and their markets. On the other hand, the word peasant car-
ries strong political content for being associated with the peasant move-
ment that was strongly persecuted for being considered subversive by the
military governments that ruled Brazil from 1964 to 1985. The search
for a more neutral political identity led to official adoption of denomi-
nations such as “small scale producers”, “subsistence farmers”, and “low-
income producers”. Along with being imprecise, the terms carried a negative
implication.
In the 1990s, the “family agriculture” category was adopted by the gov-
ernment while formulating a vast support program for farmers whose activ-
ities were organized by and for the family (Abramovay, 1998; Abramovay
and Veiga, 1999; Mattei, 2005). With this, the historical-political aspect
that the word peasant inspired was diluted. This affirmative action, for
the first time, gave recognition to the position of family farmer, along
with a positive connotation. Currently the position is consecrated not
only by government institutions, but also by the individuals involved, the
beneficiaries.
In regard to PRONAF, Maria José Carneiro has stated that:
. . . the proposal of a program to strengthen family agriculture

directed towards farm worker demands — sustained in a model
of social management in partnership with the family farmers and
their organizations — represents a considerable advance in rela-
tion to previous policies. Such an attempt at rupture is intentional
and explicit in the text from PRONAF, when he called out for the
challenge of constructing “a new rural development paradigm for
Brazil that avoids the vices from the past”.
(Carneiro, 1997: 70)
In the same vein, Flávio Sacco dos Anjos has affirmed:
PRONAF was conceived as a program destined to empower rural

development, with family agriculture as the reference and central
axis for sustentation, oriented fundamentally towards generation
of jobs and earnings in the rural environment. The dynamics of
PRONAF determine criteria for “social management”, to be under-
stood as majority participation from the distinct social groups
implicated, both in the phase of formulation as well as in effective
implementation. Following along with the tonic of decentralization,
we see its execution necessitates appearance of a new partnership
formed by municipal, state, and federal governments, and consoli-
dated with counterparts in each of these spheres.
(Anjos, 2003: 272)
Family farmers are still perceived by some as integrants of the main

agriculture and livestock cultures of the country, including by large-scale
globalized production networks. In this case, they are included in the generic
category of “agribusiness” together with the large-scale landowners and
businessmen from the country’s agriculture sector. This current, ideolog-
ically more connected to this sector, considers agribusiness strictly in its
economic dimension, capable of generating interests common to those who
in some form or another are involved in farming. Identities that nourish
the peasant and family farm categories are denied, removing from them
all reference to the constitution of political subjects, and frequently, not
knowing the subordinate character of its particular sector — participation
that excludes any possibility of economic and political adhesion to the large
estate, and large scale production.
Recently there has been an ongoing re-evaluation of the “peasant”

and “peasantry” categories. This occurs, above all, within the social move-
ments themselves, which are associated with profound criticism of conserva-
tive modernization processes, and a growing appreciation of agro-ecological
processes.
“The new proposals, and collective actions for a different

style of agriculture are supported in the criticism of notions
of modernization, outlining the contours of a new approach
to modernization oriented by the notions and significances of
‘‘collective” and of “community/location”.
(Almeida, 1999: 33)
In fact, ever more numerous groups of peasants organize themselves

throughout all regions with the objective of affirming the autonomy of fam-
ily farming, considering themselves carriers of a peasant experience that
enables them to assume in other forms agricultural progress in the rural
Brazilian style.
“All of the criticism carries a dominant central idea of preserving a
certain social and productive category in agriculture: The peasant,
the small agricultural producer, or family farmer, with consequent
necessity of reorienting production systems and the technologies
employed in the direction of reinforcing the economic capacity and
autonomy of this category”.
(Almeida, 1999: 58)
Meanwhile, it seems evident to us that rather than repartitioning dis-
tinct areas by giving them particular names that attribute each with char-
acteristics that amount to separation, and are even antagonistic to one
another, should attempt to build from this vast group of self employed
farmers that, as stated above, have their own way of living and working
in the rural environment. This group is characterized by a great diversity
of real world situations generating multiple identities having distinct rela-
tions with the cities, market, and country (História social do campesinato,
2008/2010).
Thus, it is very important to perceive that in spite of the heterogenity
refered to above, all of these real situations in the rural environment point
towards farmers connected to families and social groups related in function
of family patrimony, with their lifestyle and work discipline based on ties
to family and neighbors. It is the presence of this characteristic that leads

us to consider them as peasants, since beyond the characteristics of each
situation, and of the connection or superimposition of multiple reference
identities, it is assumed that the concepts involved in peasantry and family
agriculture may be understood as being equivalent.
The current profile of family agriculture in Brazil

Beyond these conceptual distinctions, another great problem consists in
quantifying this universe of family farmers. Official statistics do not supply
criteria that allow one to distinguish family units within the overall group
of agricultural establishments. To overcome the imprecision of categories
adopted, researchers have formulated more or less accurate approximation
exercises with varying theoretical conceptions and restrictions brought on
by the available information. Thus, still during the 1970s, research car-
ried out under the coordination of José Graziano da Silva adopted the
presupposition that family farming production should be concentrated in
lots of up to 50 hectares (124 acres). More objective information may be
found in the Agriculture and Livestock Census of 1970. From this, the
referred to authors could perceive the
. . . importance of small-scale forms of production within the areas

of agriculture and livestock production. The importance was
revealed in three planes: In the number of persons involved, as
much as for their absolute value as well as in comparison with what
should represent the dominant form of work under the development
of capital, in other words, salary and wages; in geographic terms,
that is to say, regarding the generalized occurrence of these forms
in practically all of the regions studied; and finally, in contribution
to the generated product.
(Silva, 1978: 240)
Afterwards, Sonia Bergamasco and Angela Kageyama analyzed all data

from the Agriculture and Livestock Census of 1980, constructing a typol-
ogy for family farmers, understood as those using family labor in their
production activity. According to these authors, family establishments cor-
responded to 71.6% of the total, and differed internally as: Family farmers
that contracted some permanent workers; family establishments comple-
mented by temporary employees; and those considered to be purely family
activities without any employees outside of the family (1989/1990).
Based on a study from the 1996 Agriculture and Livestock Census,

a study carried out by the FAO, in cooperation with the Ministry for
Agrarian Development and coordinated by Carlos Guanzirolli, formulated
a new methodology to attend to the profile of family agriculture in Brazil
(Guanzirolli et al., 2001). According to this approach, from a total of
4,859,732 agricultural enterprises, 4,139,369 were family operated, corre-
sponding to 85.2% of the total.
This research confirmed the marked contribution of family agriculture.
In spite of not possessing productive resources comparable to those allo-
cated to the ruling sectors, this form of agricultural reveals an immense
capacity for production. Of the group of family farmers occupying 30.5%
of the total area, 75% are owners of areas that do not exceed five hectares
(12 acres). It is with these meager areas that family agriculture manages
to account for 76.9% of those who are occupied in agricultural production
throughout the country, producing what amounts to 37.9% of the gross
national agriculture and livestock production, while benefiting from only
25.3% of the financing dedicated to agriculture.
Only recently, the Brazilian Institute for Geographics and Statistics
(IBGE), in cooperation with the MDA, elaborated, for the last Agriculture
and Livestock Census in 2006, a set of variables that for the first time
permit the introduction of a category of family farms in their finding (IBGE,
2006; França et al.). The definition of this category is also conditioned to
theoretical and operational presuppositions: It is based on concepts adopted
by the Family Agriculture Law that take into account demands that the
producers:
I — Do not detain any title to areas larger than four physical modules.
II — Utilize predominantly manual labor from the family itself in economic
activities of its business or undertaking.
III — Have a family income predominantly originating from economic
activities connected to their farms.
IV — Direct the business or undertaking together with the family. (Law
#11.326/2006, Article 3)
Though these successive estimates cannot be directly compared with

each other, precisely because of their conceptual differences and method-
ological procedures, there is no doubt that the official definition of a specific
field of family agriculture represents a significant mark for political recog-
nition of this social agent in the rural world and opens new perspectives for
its empirical recognition.
In this respect, the IBGE has already divulged the first results from
the Agricultural and Livestock Census of 2006 (IBGE, 2006). According
to the data, there were then a total of 4,367,902 family farms throughout
the country, defined according to fixed and legally established criteria in the
terms indicated above, corresponding to 84.4% of the total of all agriculture
and livestock farms. These family production units accounted for 80.25
million hectares (198 million acres), or 24.3% of the total area.
The 2006 Census thus confirms once again, the weight of this form of
production, at the same time that it reveals the limits of its reproduction,
subordinated as it is to the concentration of large estates, a historic reality
in the Brazilian rural world. Around half of the family undertakings are
located in the Northeast of Brazil.
In reference to relations of the producers with their land, the great
majority — 3.2 million, amounting to 74.7% — are landowners. A total
of 691,000 farmers were registered as having temporary or precarious
assurance of access to land at that time.
As has already been indicated by the conclusions from previous studies,
the new data indicates that family agriculture continues to be primarily
responsible for food production in Brazil. Among other products, this sector
provides: 87% of the manioc production; 70% of the beans, 58% of the milk,
46% of the corn, 38% of the coffee, and 34% of the rice. It also accounts for
59% of the swine herd, 50% of the poultry, and 30% of the cattle.
In order to carry out this intense and diversified activity, family under-
takings involve a large number of workers: 12.3 million persons, correspond-
ing to 74.4% of the total number of people in Brazilian agriculture. Of these,
90% make up the family work force.
Meanwhile, this data must not obfuscate the strong persistence of
poverty, including the extreme poverty found in rural Brazil. It can be
considered as fundamentally composed of poverty generated as a conse-
quence of the rural development policy prevalent in Brazilian society, along
with the manner modern agriculture has been implanted in the country.
For José Graziano da Silva,
Much has been said and written about “notable” performance from
the point of view of production in our agriculture and livestock
industries during these past decades, especially in the 80s. But lit-
tle is said about the results from a social point of view concerning
this agro-industrial growth model, excluding that it has increased
concentration of earnings even more, and the proportion of the
rural poor. And nearly nothing is written about what to do con-

cerning the excluded masses “banned from the party”, the disen-
franchised, the rural poor, or whatever other name is given to this
excess population, marginalized from the point of view of internal
human necessities accumulating within the system.
(Silva, 1995: 127)
The Zero Hunger Program implanted during the first term of the Luis
Inácio Lula da Silva government was built on a methodology that sought to
define the “public vulnerable to hunger”. Using as a base the value of one
dollar a day per person, the poverty level line as defined by the World Bank,
the authors defined the public benefited by the program as “that part of the
population not possessing sufficient earnings to provide for food, therefore,
vulnerable to hunger” (Silva et al., 2001: 70).
The conclusions from this study point to
. . . a potential of 44,043,000 people benefiting from the program,

pertaining to 9,324,000 families. This population of poor represents
21.9% of the families, and an overall 27.8% of the country’s total
population, making up 19.1% of the population in metropolitan
regions, 25.5% in the urban non-metropolitan areas, and 46.1% of
the rural population. In overall terms, they represent respectively:
9.003 million, 20.027 million, and 15.012 million for each of the
areas of residency.
(:74)
This data clearly reveals that although not corresponding to the great-
est number of poor in the country, rural poverty is the most relatively
expressive since it affects nearly half of the rural population. Recent stud-
ies elaborated attest that the transferred earnings programs adopted during
recent governments on behalf of the poorest members of the population have
managed to alter this reality, provoking significant increases in earnings and
a reduction of the social inequality.
Capacity for adaptation and the multifunctional

operation of peasant agriculture
As already indicated throughout this text, the principal strategy of these
Brazilians in confronting this “blockade” imposed by the practices fostered
by the large estates, consists of multiple and varied forces to gain access
to the land. It is very interesting for a researcher of the rural Brazilian

world to get to know up close the occasionally quite punishing initiatives
of these farmers for example: Working temporarily as a salaried laborer
to obtain resources to buy a small lot; migrating to distant and unknown
regions where the possibility of buying land seems more of a possibility; and
submitting to prolonged periods in very precarious settlements organized by
social movements, as a condition for receiving a lot from the rural settlement
programs.
But, other strategies are equally fundamental to realize the reproduc-
tion of the family unit (Lamarche, 1993; 1998; Cohaen and Duque, 2001).
Special mention should be given to family arrangements that orient pro-
ductive practices, including diversification. In a general manner, peasants
have already diversified their production to a large extent through multiple
cultures and creations, the objective being to avoid unexpected risks from
natural as well as market conditions. This diversification also takes into
account the equilibrium necessary between the production of food, under
the form of auto consumption, and the receipt of earnings guaranteed by the
sale of products (Garcia Jr., 1990). In addition, family composition and the
internal division of labor constitute a factor that favors, to a greater or
lesser degree, the capacity of multiplication of cultures, simultaneously or
successively throughout the year.
Eric Sabourin formulates an explicative principal concerning peasant
reproduction in Brazil in terms of an interface, a dialectic articulation
between the implications of merchandise exchange and the practices of
reciprocity (Sabourin, 2009). For Sabourin, with this objective, the results
of production follow various distinct though complementary destinies: “auto
consumption, interfamilial redistribution, reciprocal loaning of seeds, food,
and small animals” and as is clear, involve “sales to various types of
markets”.
For its part, pluri-activity consists of the combination of labor carried
out by family members in their owner farms, with the development of activ-
ities outside of the familiar unit. If, in some cases, this practice is the result
of the economic fragility of the farm family unit, incapable of guaranteeing
occupancy for its integrants in the context of reduced economic complex-
ity, in the majority of instances it can reveal family force in the sense of
guaranteeing a complement to the family income through means of diversi-
fication of its distinct members, which does not necessarily signify the loss
of importance of internal production, and even less the centralization of
family ties.
This last case is certainly true, in the sense of the reflections of John
Wilkinson, according to which,
The studies concerning pluri-activities focused precisely on the

agriculture fragility of the rural family, as much in the traditional
markets as in the new, along with the strategic role of diversifica-
tion of the labor markets in the rural world. This current, however,
tends to underestimate the agricultural opportunities for the rural
family, as well as maintenance of the current markets in lieu of
conquering space in the new markets, and the potential for reval-
orization of family agriculture resulting from the growing crises
affecting the dominant production model.
(Wilkinson, 2008: 81)
By means of these strategies, what results is the survival of the family

through the construction and reproduction of possible family patrimony,
both in the present and future of the rural farming family community.
But the presence of rural farming families in Brazil has consequences
going beyond the strictly economic dimension. Studies refer to their multi-
functional nature. For Maria José Carneiro and Renato Maluf,
The notion of ‘multifunctional’ breaks with sector focus, and ampli-

fies the field of social functions attributed to agriculture going
beyond the mere production of agricultural goods. It involves
responsibility for conservation of various natural resources (water,
soil, and biodiversity, among others) of our natural patrimony
(country environment) and quality of food products.
(Carneiro and Maluf, 2003: 19)
This concept involving the multiple functions of resources expresses

itself most basically in the fact that peasants populate the rural world
these days. It is known that the owners of large estates have for a long time
abandoned life in the countryside, where they maintain only their financial
and business investments. The individuals and families that live and work
on the farms animate local social life, and transform the rural environment
into their living space.
According to Eric Sabourin, the base for this animation consists of an
affirmation of the values of solidarity among the family members as well as
within the local community (Sabourin, 2009). This solidarity manifests itself
at the real level not only in the production and sharing of goods, but also on
the symbolic level, which gives meaning to the construction of a collective

identity expressed through a feeling of belonging, in the transmission and
sharing of knowledge, and by way of adhesion to shared human values.
Conclusion
The future of these Brazilian peasants is registered in a rather complex con-
text, marked by choices made by Brazilian society regarding the manner
in which to confront some of its principal concerns regarding, among other
themes, the preservation of natural resources, the technological challenges
in the face of bioethical, social, and environmental concerns, the dispute
concerning productive spaces involving food production and raw materials,
energy production, consumption-production relations, associations to guar-
antees regarding product quality and manners of production, elimination
of extreme poverty, and consolidation of democracy through recognition of
those with rights that live in the rural areas.
It is up to the social movements to demonstrate the right sensibility
and firmness in assuming the struggle to preserve a form of agriculture that
is in fact environmentally, socially, and economically sustainable.

10
The Transformation of the Social Structure
in Modern Rural Russia
A. A. Hagurov
Introduction
In the past, agriculture represented the leading sector of the national econ-
omy. Currently, in developed countries, it accounts for only 1–2% of GDP.
Nevertheless, agriculture is still emphasized in these countries.
For example, the US program that provides farmers with support claims
to consider more fundamental questions: How to help in preserving the
national agricultural tradition, and create more rural economic opportu-
nities (whether or not they are in agriculture) in retail trade, tourism or
new Internet companies? In a recent speech, President Sarkozy of France
announced his government’s decision to donate nearly half a billion euros to
French farmers. Moreover, he noted that it was an “exceptional” measure.
This note was not random: France gets about ten billion euros per year from
European Union (EU) funds, according to the united agricultural policy,
to support farmers. The motivation of the French leader is interesting. He
said he would not tolerate the destruction of agriculture, which is part of
the French identity.
The problem in preserving the national agricultural tradition is consid-
ered fundamental not only in the US and France, this requirement, in one
form or another, is also represented in the agricultural programs of almost
all countries in the world, and nowhere this is considered as a manifestation
of inertia and conservatism.
This requirement reflects an understanding that the rural area is the
most important subsystem of a society’s social life, and taking care of it is
equivalent to preserving the socio-cultural foundations of the society. To pay
181
182 A. A. Hagurov
Table 10.1. Costs of Agricultural Production by Country.
Dollars/1 ha in average, % of maximum amount/1 ha

Country 2000–2003 (Japan = 100)
Japan 473 100

USA 324 68.5
EU 298 63
Russia 10 2.1
Source: Khagurov A., Structure of rural stratification. Tendencies and

problems of development. 2011.
tribute to the village (rural), it is necessary to comply with the parity of

interests of the villagers and the rest of society. Its violation leads to social
disharmony. If society does not help the rural area to produce and preserve
its human capital, it would consequentially threaten the entire national
agricultural production.
In most developed countries, such as the USA, agriculture is largely a
budgetary sector rather than a market. In Russia, given its climate, agri-
culture and rural areas require even more state support (Table 10.1).
Since 2008, Russia has significantly increased subsidies to agriculture.
For this period of time, it is expected to spend 560 billion rubles to support
rural households, roughly three times more than that over the previous five
years.
New Agricultural Policy of Russia (NEA) is presented in the state pro-
gram “Development of Agriculture and Regulation of Markets for Agricul-
tural Products, Raw Materials and Food for 2008–2012”, and is primarily
oriented toward providing sustainable rural development, in other words, a
solution to the social problems of rural areas. In this regard, rural sociology
gets an opportunity not only to study the systemic crisis (as it was forced
to deal with throughout the 1990s), but also to monitor the way out of this
crisis.
During the reform period (from 1991 to the present), many projects
and normative acts were proposed and adopted, aiming at the development
of agriculture, the rural economy, and the village. However, there has been
no effect yet. Obviously, it is time to move on from narrow questions of
the development of the agrarian economy to more general and fundamental
issues, and to find solutions to concerns that will improve the quality of
human headband in the rural area.
The Transformation of the Social Structure in Modern Rural Russia 183
Rural people and their activities: Social functions

of a village
In our country, the difference between the number of people of work-
ing age (89,266,000) and the number of people that form the “econom-
ically active population” who are working and officially looking for jobs
(75,524,000) is 13,742,000 (Federal State Statistics Service, 2010: 82, 152).
Statistical handbooks give little information about this category of peo-
ple. It is logical to assume that a significant portion lives in rural areas,
where it is more difficult to register in the employment offices than that in
the city.
In 2009, 73% of the population (103.7 million) lived in urban areas,
while only 27% (38.2 million) lived in rural areas. The rural population is
constantly declining (Table 10.2).
The natural decline of the population has a major role in reducing the
rural population. In 2007, it accounted for 70.4% of the total casualties
in the rural areas. Migration decline is not significant — it is 4.4%. The
fourth part of the decline of the rural population is caused by territorial
transformation (the inclusion of villages in the city, the transformation of
large villages into cities).
In general, during the period between censuses, Russia lost 10,700 vil-
lages (7.5%). It can be said that every day two villages were merging into
Table 10.2. Change of Number of Rural Population in the Russian Federation.
Number of
population Number of
at the Territorial and population
beginning Total Natural Migration administrative at the end
Year of the year increase growth growth changes of the year
2000 39470.6 −238.7 −274.2 −2.6 38.1 39231.9

2001 39231.9 −307.9 −271.7 −51.9 15.7 38924.0
2002 38924.0 −281.6 −281.9 −26.7 27.0 38642.4
2003 38642.4 −292.6 −281.6 −34.7 23.7 38349.8
2004 38349.8 405.1 −260.3 −28.6 639.9 38754.9
2005 38754.9 −106.1 −287.7 −22.5 204.1 38648.7
2006 38648.7 −206.2 −230.4 −28.1 52.3 38442.5
2007 38442.5 −206.7 −145.6 −9.1 52.0 38235.8
Source: Russia in numbers 2010, p. 82, 152.

184 A. A. Hagurov
Table 10.3. Structure of Rural Population (Gender and Age Classification).
2000 2007 2008
Total population 100.0 100.0 100.0

Including the age of:
Younger than working age 22.9 18.6 18.4
Working age 54.1 60.0 60.2
Older than working age 23.0 21.4 21.4
The number of women (calculated per 1,000 persons) 1098 1102 1101
Including the age of:
Younger than working age 954 957 956
Working age 889 889 885
Older than working age 2156 2401 2423
Source: Russia in numbers 2010, p. 47–48.
urban areas. The knock-on effect of this transformation is that there has
been a substantial increase in the number of people without permanent
residences (increase by 40%).
By age the rural population (38.2 million) is distributed as follows
(Table 10.3):
1. Younger working age population — 10,288,000.

2. Working age — 22,996,000.
3. Older than working age — 8,174,000.
Based on the fact that in all sectors of the rural economy only 16,270,000
people are employed, it is logical to conclude that 6,726,000 people of work-
ing age are not employed in agricultural production.
The activities of the rural villagers are very diverse. In 2007, for the
first time during the reform period, the average number of employees in
agricultural organizations has increased (by nearly 5,000). However, certain
categories of workers (managers, specialists, machine operators) continued
to decline, even the rate of decline as compared with the previous period
decreased (Russia in numbers, 2010: 47–48).
Table 10.4 shows that almost all activities that exist in the city also
exist in rural areas. This proves that rural, as one of the subsystems of
society, is poly-functional.
Russia has the biggest territory in the world. However, due to domes-
tic and economic, political and historical reasons, the vast territory of the
country has always been irregularly inhabited. The vast majority of the
Table 10.4. Size and Structure of the Rural Population by Economic Activity
(February–November).
2006 2007
Thousands Thousands 2007/
of people % of people % 2006 %
Employed in the sectors of rural 16,270 100 16,712 100 102.8

economy
Total including:
Agriculture, forestry 5,774 35.5 5,335 31.9 92.4
and fisheries
Mining 173 1.1 253 1.5 146.2
Manufacturing 1,454 9.0 1,425 8.5 98.0
Production and distribution 422 2.6 427 2.6 101.2
Electricity, gas and water
Construction 705 4.3 877 5.2 124.4
Trade, repair of motor vehicles, 1,844 11.3 2,001 12.0 108.5
personal items,
Hotels, restaurants
Transport and Communications 1,010 6.2 1,164 7.0 115.2
Finance, real estate 510 3.1 583 3.5 114.3
Governance, military security 1,155 7.1 1,203 7.2 104.2
and social security
Education 1,727 10.6 1,788 10.7 103.5
Health and social services 1,032 6.3 1,160 6.9 112.4
Other economic activity 464 2.8 496 3.0 110.7
Source: Russia in numbers 2006, Russia in numbers 2007.
population, accounting for 70%, occupies 10% of the territory (the South-
ern, central, and North-Western districts). 30% of the population occupies
90% of the rest of the territory (Gorbanev, 2008: 294). Therefore, the aver-
age density of the rural population in Russia is three people to one km2 ;
in the central area it is 18 people to one km2 ; and in the Eastern regions
reaches up to one person per one km2 and sometimes less.
Large territories and various natural conditions determined the vari-
ety of rural settlements and their ways of integrating with the surround-
ing societies. That is how rural settlements without an agricultural profile
appeared. The formation of large areas of rural settlements in the Urals,
in the Eastern and Northern Russia has been associated with the devel-
opment of its natural resources. T. Nefedova emphasizes semi-rural and
semi-urban settlements, and according to her data, 16.5 million live there
(Nefedova, 2003).
186 A. A. Hagurov
More recent statistics suggest that there are 3,000 towns and 150,000
villages in Russia. The number of rural settlements is 50 times the number
of urban settlements in Russia, and this is not a random fact, rather it is an
objective reality that reflects Russian history and geography. Not only the
historical and geographical backgrounds identified a variety of functions of
Russian rural area in the society.
The poly-functional type of rural area is due to the current state of
the economy and society as a whole. Analysis of all factors can provide the
following functions of the rural area in the society:
1. The village along with the city determines strategic patterns of the reset-
tlement of Russian citizens in its vast territory. Under the conditions of
industrial civilization, concentrating people in towns would be a huge
risk. The village is a reliable location for citizens, always and every-
where.
2. The village provides social control over the territories, thereby solving
geopolitical problems. For the vast Eastern territories of Russia, this
function is especially important.
3. The village preserves historically developed agricultural land. Authori-
ties’ dismissive attitudes toward the rural areas in the 1990s led to more
than 40 million hectares of productive land being withdrawn from usage.
In order to imagine the economic aspect of this phenomenon, we should
recall that all the EU countries inoculated just 37.5 million hectares with
grain and leguminous crops.
4. Rural areas have a crucial role in ensuring food security. The country’s
food security is threatened because of the poor state of the rural areas
today. It would be enough to say that the food market in Moscow and
St. Petersburg depends on imports to the tune of 70–90%.
5. The rural areas preserve the ethnic and cultural diversity of Russian soci-
ety. Ethnic culture (more than a hundred ethnic groups) is traditionally
associated with rural areas in Russia.
6. Rural areas play a vital role in ensuring the environmental well-being of
the country.
7. The rural is an important link in solving the issues of quality of life in
Russia.
8. Rural areas reproduce and retain its human capital, without which the
development of national agriculture would be impossible.
9. Rural lifestyle is the national lifestyle. It has created its peasant culture,
which mostly determined the cultural mentality of the Russians.
We can conclude that rural areas supply many goods that are beyond
valuation. Therefore, the only socially acceptable kind of mutual relations
between the Russian society and the rural factor may be the principle of
parity. The practical implementation of this principle will lead to revolu-
tionary changes in the economic and social spheres of the rural areas. The
sooner this happens, the greater the benefits would accrue to the Russian
society.
Analysis of the functions of the rural areas leads to a conclusion about
the necessity of public policy for sustainable rural development. The basis
of this policy should be the principle that rural development is a unified
socio-economic, territorial, natural, cultural and historical complex, per-
forming multiple functions. The first step is to calculate all the benefits,
allocate a settlement system, and support the settlements that can serve
as service centers of rural settlements. This work should take into account
the experience of Belarus (establishment of agro-towns).
The Main Social Functions of Agriculture

In the literature, the functions of the village are often identified. In the text
above, we have identified the social functions of the rural areas (village)
while agriculture has two main social functions.
The first function is to provide the rural and urban population with
jobs. Agriculture provides raw materials for food, textile and chemical
industries. Agricultural engineering is not possible without the consumer
of its products?
This is not an exhaustive list of industries that are economically and
technologically dependent on agriculture. Experts note that one job in agri-
culture provides about a dozen jobs in related industries. Six million workers
in agriculture can provide jobs to at least 36 million workers in other indus-
tries, or 53% of the working-age population in Russia (Peasant Gazette,
No. 31–32, 2009: 5; No. 13–14, 2009).
On the one hand, uncontrolled imports of food stifle domestic agricul-
tural producers, but on the other hand, it inhibits the chain of job growth.
As a result, unemployment is rising not only in agriculture but also in
related industries.
The structure of Russia’s foreign trade maintains foreign farmers and
stifles local farmers. It provides other countries with energy and buys their
products. This brings us to the second function of agriculture — food secu-
rity — although this topic would require a separate discussion.
188 A. A. Hagurov
Three Major Economic Entities in the Agricultural

Sector
In the course of reforms, Russian agriculture has developed three categories
of agricultural enterprises. In the official (and in particular, statistical)
documents, they are named as follows:
1. Agricultural organizations.
2. Peasant (farmer) household.
3. Private households.
Table 10.5 gives an idea of how the agricultural land in Russia is allo-
cated among landlords.
We can see that the vast majority of land for agricultural purposes is
concentrated within farm organizations, taking up 76.1%. Then, with a wide
margin, it is followed by peasant (farmer) households, which account for
9.2% of the agricultural land. Private households have 3.3% + 0.8% = 4.1%
at their disposal. It is important to pay attention to differences in the use of
labor and land resources in these three types of management in agro sphere
(Figure 10.1).
In the agricultural organizations with minimal use of labor resources,
they cultivate huge areas. The reason is that the production of cereals,
legumes, and commercial crops, in which mainly all kinds of joint stock
companies specialize, is generally mechanized. Farmers do not have modern
farming techniques, as opposed to agricultural organizations. This is why,
their ratio of technical and human resources does not keep the technical
aspect in favorable position.
Table 10.5. Distribution of Agricultural Land Among the Land Users (Agriculture,
Hunting and Forestry, 2004).
Categories of households Land (mln ha) %
All land users are engaged in 193.8 100

agricultural production including:
Agricultural organization 147.5 76.1
Peasant (farmer’s) households 17.2 9.2
Citizens 12.7 6.6
of which:
With subsistence farming 6.5 3.3
Collective and individual gardens and orchards 1.5 0.8
Other land users — 8.1
workers (million people) land (million ha)

200
180
160 147.5
140
120
100
80 60
60
40 17.8
20 2.063 1.3 4
0
city million million
inhabitants families villagers
villagers
Fig. 10.1. The distribution of land and workers in the three main types of agricultural
enterprises (million ha, million people).
Source: Russia in numbers 2006.
In private households the situation is different. Around 16 million rural

families and urban citizens work in private farms on relatively small areas,
and 14.5 million rural and urban families work in collective and individual
gardens. However, it is more than 30 million families, not counting nearly
four million families in the collective and individual gardens. But not only
one family member works on these lands. If we take a modest number of
half of the annual average employee, it turns out that more than 45 million
urban and rural citizens are employed in households. This explains their
social (and not just economic) importance.
The Socio-economic Status of Households with Different

Forms of Ownership — Problems for the Rural
Middle Class
Households referred to, in a statistical study, agriculture organizations, have
emerged on the basis of former collective and state farms, becoming joint
liability companies. However, already in 2003, according to the consolidated
annual report of agricultural enterprises in Russia, individuals had only
26.5% of the share capital of agricultural organizations; the rest of the cap-
ital was owned by legal entities. This meant that peasants had lost control
of the capital and given it to the new owners. Mostly they were former
heads of households and their family members, as well as new investors.
190 A. A. Hagurov
Table 10.6. The Structure of the Main Types of Agricultural Production in Russia by
Farm in 2009 (% of total production in the farms of all categories).
Agricultural Private Peasant (farmer)

organizations households households
Grain 78.2 0.9 20.9

Sugar beet 89.3 0.9 9.8
Sunflower seeds 70.7 0.4 28.9
Potatoes 13.1 81.1 5.8
Vegetables 18.4 71.3 10.3
Livestock and poultry 57.2 39.8 3.0
in slaughter.
Milk 44.4 51.2 4.4
Eggs 75.8 23.4 0.8
Wool 18.41 55.4 —
Source: Federal State Statistics Service, 2010: 246.
Table 10.6 demonstrates the proportion of these farms. This table traces
the existing division of labor in agricultural production among the three
categories of farms. Agricultural organizations specialize in the production
of cereals, legumes, and industrial crops (from 70% to 90%). In the pro-
duction of these crops, farms are at the second place, trailing far behind
agricultural organizations (ranging from 10% to 29%). Private households
are leading (in the production of potatoes and vegetables) (70–80%). They
successfully compete with agricultural organizations in the production of
milk and meat (from 40% to 50%).
In 2003, there were 22,135 agricultural organizations in Russia. Basi-
cally, they were production cooperatives (10,960), limited liability companies
(2,844) and joint stock companies (2,526). On the basis of these organizations
in Russia, there formed a layer of large landowners, who were playing a key
role in the production of grain and industrial crops. They hold the strongest
position in Southern Russia, in particular, in the Krasnodar region. Agricul-
tural organizations of the Krasnodar Territory in 2009 were differentiated
by type of ownership. There are all together 3,408 organizations, including
62 state owned, 19 municipalities managed, 3,201 private owned, 78 mixed
ownership with the participation of foreign companies and five public ones.
According to the data, 93.9% of all types of rural organizations in the
Krasnodar region are agricultural organizations with private form of own-
ership. Private agricultural organizations are the leaders in the crop area
(Table 10.7). The vast majority of the territories for grain and legumi-
nous plants, vegetables and melons, fodder crops, potatoes, orchards and
Table 10.7. Distribution of Acreage of Agricultural Structures by Types of Ownership

in Households Krasnodar Region in 2009 (hectare).
Households
with all
kinds of Joint with
ownership foreign
(property) Private State Mixed Municipal companies
Total sown area 3657.5 3302.5 131.9 174.5 9.0 31.2

Cereals and legumes 2195.8 1995.6 71.6 99.3 6.3 20.9
Industrial crops 809.1 723.6 27.4 47.5 2.2 7.8
Potatoes and 132.3 124.2 1.1 7.0 0.0 0.0
melon legumes
Fodder crops 520.3 459.1 31.8 20.7 0.6 2.5
Orchards and 45.8 40.0 1.5 4.1 0.0 0.2
berry fields
Vineyards 25.0 22.4 0.7 1.6 — —
Source: Krasnodar: Kraystat, 2010: 34.
Table 10.8. The Number of Peasant (farmer) Households.
1998 1999 2000 2001 2002 2003 2004
Registered farms 274,3 270,2 261,1 261,7 265,5 264,0 263

(thousands)
Area of given territory 13,045 13,845 14,384 15,292 16,525 17,662 18,320
(thousands of ha)
Average area of a 48 51 55 58 62 67 69
farm land (ha)
Source: Krasnodar: Kraystat, 2010: 34.
vineyards are located at the companies of private ownership. Accordingly,

the gross harvest of agricultural crops was distributed at the sowing area
among households of all forms of ownership (Table 10.8).
The achievements of the large enterprises of agro-business, called “agri-
cultural enterprises” in the statistics, are demonstrated in ratings com-
piled by VIAPI by A. A. Nikonov since 1998. Economy-wide rating (club
AGRO ZOO) is made for 300 enterprises that are successful according to
two indicators: (1) The revenue from the sale of agricultural products. (2)
Profits from the sale of agricultural products.
In 2007, 300 households got into rating, accounting for less than 2%
of the total number of agricultural enterprises, producing 28.8% of all
commercial products and forming more than two thirds of the profits of
192 A. A. Hagurov
all 17,000 companies analyzed. In addition, 100 enterprises are prepared

for industry ratings for ten major types of products.
In 2010, Peasant Gazette (No. 3–4, 2010) published a list of 100 largest
and most efficient plants for the production of grain in Russia from 2006
to 2008. More than half of these farms were located in the Stavropol (34
farms) and Krasnodar (23 farms) regions. The greatest profits from the sale
of grain were:
1. Enterprise in Rakityanskij district of Belgorod region — 203,697,000

rubles.
2. ZAO “Agro-complex” in Vyselkovskiy district of Krasnodar region —
196,226,000 rubles.
The smallest gain was in Novosibirsk region “Krasnozerskogo” —

64,442,000 rubles. Farms, as well as the rural population (household plots),
are influenced by various soil-climatic and socio-economic conditions typi-
cal of the vast spaces of Russia. Therefore, there is a wide range of farms —
from barely supporting a miserable existence to a successful, comfortable
life, even by European standards.
Those farmers who were able to maximize the potential of this form
of management should be mentioned separately. They are represented by a
club called “Farmer-300”. The club Farmer-300 includes 300 of the largest
farms in Russia, which include the word “farmer” in the title. They repre-
sent 37 Russian regions. The largest number of farms in the club are from
Volgograd (68) and Saratov (41) and Altai and Stavropol (32). Translating
these data into the language of the conclusion, we must recognize that in
these regions the reform of agriculture was taken more seriously than in the
rest of Russia.
A certain level of concentration of large farms is present not only in the
subject of the Russian Federation, but even in the individual administrative
areas. Accordingly, at least 12 farms included in the ratings are located
in the Mikhailovsky district of the Volgograd region and Krasnokutskyi
district of Saratov region.
The households from the rating published in 2010 (Peasant Gazette,
No. 3–4, 2010) are mostly fairly large farm enterprises. Average revenue for
2006–2007 per farm was 10,813 rubles, a profit of 2,828 rubles and fixed
assets worthing 9,755 rubles.
Data on the average number employed in enterprises that are included
in the club Farmer-300 suggests that these are far from small family farms.
On average, each farm had an average of 56 workers in 2007. It is clear
that such a number of employees could not be provided by members of

the farm family. Family members form less than 50% of people employed
in agriculture. According to this index, the farm club fits the definition of
“small business” better than “family farm”. They are family farms in the
sense that the essential capital belongs to one family or relatives, but they
hire people to work for them.
Large farms play an important role in terms of volumes of production in
the farm sector. Occupying about 0.2% of total agricultural production of
leading farmers, members of the club have produced an average of 4.3% of
the commercial farm production in 2006–2007. They employed, on average,
3% of workers.
(F) X “Orbit” from the Odessa region and Omsk region (Director
Vadim Schneider) is head of the club. The company was created in 1992
and at the time owned 30 hectares of farmland. Over the years, thanks to
the talent of its leader, the household has grown into a major commercial
company with average earnings in 2006–2007 of 476 million rubles (a profit
of 49 million rubles with fixed assets worthing 482 million rubles). With
such parameters K (r) X “Orbit” would take place 203 even among the
largest agricultural organizations.
Second row in the rating (Peasant Gazette, No. 3–4, 2010) is taken
by R (F) X “LUFT”, also from the Omsk region, with revenues of about
129 million rubles, profits of 41 million rubles, and 129 million rubles worthy
of fixed assets.
Third place goes to (F) X Shebarshinova A. A. of the Novoaleksan-
drovsk district, Stavropol. In 2006–2007, its average annual revenue was
84 million rubles, with profits of 21 million and fixed assets worth 88 mil-
lion rubles (Peasant Gazette, No. 1–2, 2010: 6).
All of the above leads us to discuss the socio-economic structure of the
village.
A reference system for the construction of this model is the “subsis-
tence minimum”. According to the federal law of 24 October 1997, “On
Subsistence Minimum in Russian Federation”, the cost of living represents
valuation of the consumer basket as well as mandatory fees and charges
(Federal State Statistics Service, 2010: 109).
Since 2000, the subsistence minimum has been determined quarterly on
the basis of the consumer basket, as set by federal law, and the Federal State
Statistics Service data on consumer prices for food and non-food goods and
services. The average subsistence minimum in the Russian Federation is
established by the Government of the Russian Federation.
194 A. A. Hagurov
In 2009, the average total value of the subsistence minimum was 5,153
rubles. The subsistence minimum, established by the government, is sys-
tematically reduced by two factors: inflation and the growth of payment of
utility bills.
This is the largest area of rural poverty. According to economists, this
area has at least 50% of the rural population. These include more than six
million rural citizens of working age who are not engaged in any sectors of
the economy, and also some employees of public sector, education, health,
culture, and some workers of the agricultural organizations, the owners of
weak private households and the retired, who are not working in private
households.
The second level is a zone of relative economic viability. Level two of
the public sector is represented by workers and rural officials who differ on
wages and income (including unofficial), and include the owners of strong
private households, farmers with small and middle income, and well-paid
workers of the agricultural organizations.
The third level represents the villagers that stay engaged in non-
agricultural areas: finance and real estate, trade, restaurants, hotels, man-
ufacturing factories and the distribution of electricity, gas, public admin-
istration, security, etc. In 2009, in 45 economic activities in the country
the average monthly salary was 19,215 rubles. Obviously, this amount
corresponds to the average wage for these activities in the countryside.
The maximum average salary is fixed in financial activities — 41,845
rubles. In agriculture and forestry, it was minimal (though slightly higher
than that in the textile and clothing manufacture) and amounted to
9,593 rubles.
The average income among villagers increased, primarily due to people
working in non-agricultural industries. Here we can trace the emergence of
the middle class in the countryside.
The fourth level is a level of affluent and wealthy agricultural
entrepreneurs. Among them the owners of agricultural organizations dom-
inate. Wealthy farmers and prosperous households that are not superior to
real farmers, but do not want to be called farmers because of the taxes, are
in second place. Member of clubs “Agro-300” and “Farmer-300” occupy this
level. Considering the socio-economic reality of entrepreneurs of the fourth
level, we must remember that the ongoing economic processes in rural areas
still account for the enclaves. Large landowners, while getting huge profits,
pay their employees pitiful salaries. Rural problems are their far from them
in minds, while problems of profit are close and important.
The second reason for why people who became rich through agro sphere
do not match the definition of middle class is their small number. If you
add all types of agricultural organizations and farmers, and assume all of
their respective owners and managers are successful people, their number
reaches only 300,000, or less than 1% of the total number of rural citizens.
“Poor” is the most common socio-economic type in the countryside. All
researchers involved in the agrarian economy, noted that a special feature
of rural poverty is the poverty of working people. Villagers do not pretend
to want much. During 2007, VNIIESH nation wide survey of the Russian
social and labor sphere, rural villagers were asked: “What income is needed
to ensure the material well-being (in the presence of products from private
households)?”
These wishes are more than modest, since according to the accounting
of agriculture in 2006, the average monthly salary of villagers (in the prices
of that year) was 4,229 rubles (Vniiesh, 2008: 68). All studies emphasize
four interrelated problems of the village: low wages, unemployment, poverty,
and alcoholism.
Conclusion
From crawling empiricism to ideas that broaden horizons
Low wages, unemployment, poverty, aging population, alcoholism — all
these are evident in the rural outback. It produces an impression of hope-
lessness and doom. But is it really that bad? Harvard Professor Richard
Pipes, who recently published a paper on the history of serfdom in Russia,
repeated the thought of O. de Balzac that the village is an area about which
it is better to know nothing than to know little and talk. The function of
the village as a socio-cultural subsystem of society is latent. The impact of
the city on the rural is apparent in many ways, but the reverse impact
of the village to the city is almost unnoticeable, although it is significant.
The model socio-economic structure of the rural area resembles an ice-
berg, with only the spire and part of the mass above the water, while the
rest is hidden. This metaphor conveys the status and role of the village
and the agricultural sphere of society. On the surface of the socio-economic
sphere there is no evidence of the dependence of jobs in many sectors of
the economy on the number of jobs in agriculture, but economists showed
this dependence in their calculations.
The latent nature of the impact of the rural on society’s broader polit-
ical processes is deeply analyzed by O. de Balzac’s novel Scenes of Rural
196 A. A. Hagurov
Life. This novel is still relevant today, as a convincing evidence of “a tire-

less shrew” (as the writer vividly unveils the hidden nature of the social
processes of the village), and it ultimately has bearing on its history.
The events in 1991 are worth mentioning. For a long time, scientists
tried to understand the causes of the collapse of the superpower, the Soviet
Union. In his study, the historian Igor Shumeyko observed how the sphere
of consumption has become a sphere of ideology, how the fashion for jeans
has almost destroyed local light industry and the economy of the USSR
(Shumeyko, 2010: 261–268). But there was another important reason — a
retardation in the agricultural sphere, prolonged for many years, and the
growing inadequacy of many important foods. Soviet leaders, accustomed
to take from the peasants more than they wanted to give back to them, “cut
the branch on which they were sitting”. The idea of a parity relationship
between society and the peasantry never occurred to them.
Here is another example of how rural areas played a key role in the
history of this big country. In 1978, 18 of rural villagers in Xiaogang (China’s
Anhui province) signed a contract and affixed it with their fingerprints. The
document said that if one of the signatories was arrested, the rest would
take care of his family. They could have been arrested, because these 18
peasants decided to manage the household in new ways. This document is
now stored in the Museum of the Revolution in Beijing. This paper earned
such a status for the following reasons. Farmers decided to divide between
them the land that they were working on the farm together, and to work on
it individually. Further they had to pool their savings from harvest to pay
state taxes, and the remaining products could be used to sell or trade on a
barter basis, which would constitute a share for each of them. For a short
time these farmers’ incomes increased several times over. Rumors reached
Deng Xiaoping, who was already the leader of China, and he thereupon
approved this innovation and proposed to extend it to the entire province
of Anhui, a province of 50 million people. This started the reform of the
agrarian sector in China, which later spread to other sectors of the economy
(Fishman, 2007: 77–78).
It is important to note that reforms in China began (1) In the real sector
of economy. (2) In the most massive sector of the economy. (3) They started
from the below rather than imposed from the above. Therefore, China’s
reforms in agriculture initiated the transformation within other spheres of
the economy. In Russia, initially, reforms blocked the entrepreneurial poten-
tial of most of the villagers, essentially removing them from the reforms.
This fact led to waning character of reforms in all other areas.
The crisis of urbanism and prerequisites of a rural

renaissance
The current world crisis, which threatens to be permanent, not only cre-
ates problems, but also implicates global and local issues a new way and
provides a chance for a fundamental change in the economy. It provides an
opportunity to respond to the challenges of the crisis with extraordinary
social, economic, and technological rural development programs. Without
idealizing the modern village, we must ask the question of how, given the
challenges of our time, it is possible to use the values and traditions that
have been developed within the peasantry over the course of thousands of
years.
The globalization of the world economy has become a colossus with
feet of clay. Sustainable development can only occur on a solid rural foun-
dation. It is important to emphasize that this is not about one sector of
the economy, but about a foundation on which the whole economy and
society depend. It is here that the problems of rural Russia and the world
converge. Agro-economic problems that cannot be divided on a global scale
and generate not only economic and political, but also social consequences.
The World Health Organization recently presented the results of
research on the role of various factors that affect the premature mortal-
ity of the population (Table 10.9). According to scientists, one of the main
reasons for the distribution of factors of premature mortality is the techno-
genic overload of the environment. This is particularly noticeable in the
big cities. For example, in Moscow every year about two million tons of
pollutants are pumped into the atmosphere. Every inhabitant of Moscow
receives up to 200 kg of emissions, 160 kg of which are from automobiles
(Kondrashov, 2009: 166). The Moscow atmosphere is contaminated with
oxides of nitrogen and carbon, phenol, ammonia, formaldehyde, xylene,
and toluene.
Table 10.9. Causes of Premature Mortality (%).
Cause of death Ecology Genetics Lifestyle Healthcare
Tumors 34 29 27 10
Cerebrovascular disease 22 21 50 7
Road traffic injuries 18 0.6 69.4 12
Accidents 31 4 51 14
Cirrhosis of liver 9 18 70 3
Source: Economy of Nature Management. Moscow State University, 2006: 258.

198 A. A. Hagurov
Therefore, the Moscow rate of respiratory system diseases is 25–40%

higher than the average rate in Russia. Technogenic environmental factors
are acoustic, electromagnetic, vibration, heat, light, radiation factors. The
total number of objects that are the source of these factors and are placed
under sanitary supervision is more than 1.5 million, and the number of
these sources is increasing by 15% annually. Industrial centers that pollute
the environment have caused an environmental migration of the working
age population from regions of the Urals, Western and Eastern Siberia, and
Far East (M.: MSU, 2006: 258–260, 264). Environmental problems and an
increasing number of technogenic disasters will continue to squeeze more
and more people out of the cities. For them, rural life may be an alternative
to urban life.
The second type of migration from cities to rural areas is social and
cultural migration. In Russia, the search for a meaningful life and non-
urban lifestyle often led intellectuals to the rural areas, as was clearly on
display in the classical literature of the 19th century. The significance of this
motive of migration in the village has never been obvious, although during
the Soviet times it sometimes was reduced. Today this kind of migration
plays a big role. A lot of young people who do not accept the city lifestyle
migrate, especially in the mountainous areas of Kuban. Among them there
are writers, artists, musicians, etc. For example, in the village of Absheron
(Mezmay district) almost half of the population consists of young migrants.
Migration for religious reasons is also an important socio-cultural type of
migration. Many religious people find the rural lifestyle more suitable than
the city life. The Russian countryside has already lost its indigenous popu-
lation: half left and half passed away. But now it has been revived, thanks
to the religious people who went here. There are seven families, five of which
have many children. This Christian community is building homes here and
getting engaged in agriculture.
The third type of migration to the rural areas is associated with the
search for a better quality of life and manifests itself in the construction, by
wealthy citizens of rich rural houses. The Temnolesskaya village of Absheron
district of Krasnodar region is half built up with high-class cottages, whose
owners work in the city of Maikop, Krasnodar, Rostov-na-Donu, Moscow
and other cities.
The fourth type of migration to rural areas is swinging. In the spring
and summer time, the huge mass of citizens across Russia rushes to the vil-
lages and hamlets. In the purchased or rented houses they feel better, get
healthier, harvest fruit, berries, and mushrooms, and seek to improve the
quality of food in the city. The newspaper Izvestia (3, April 2009) in the arti-
cle “Who Will Live Well in the Future?”, described how when it gets closer
to the summer, vacationers arrive in a village called “The Future”. The
village is situated approximately 350 km from both of the capitals, so vaca-
tioners are traveling from Moscow and St. Petersburg to there. The village
successfully solves the problems of recreation and improves the quality of
residents’ food. As the author A. Beluza wrote: “The crisis has prompted
many people to think that it is possible to survive the crisis if returning to
rural areas. And it will push many people to find a safe harbor — to leave,
for example, the apartment in Moscow for rent and come to the village not
only for the summer, but for permanent residence.”
This observation suggests that the population in some depressed areas
of the central zone of the country is capable of growing by four times in
a period of three summer months. This phenomenon is observed in both
Europe and America as well as China. As the author of the article describes,
“So urbanization goes back in reverse.”
In all rural areas of the Krasnodar region, for ten years (1990–2000)
the mortality did not cease to exceed the birth rate. In spite of this, in
all parts of the rural areas the population grew or did not decline. Of
course, plenty of refugees (mostly Russian) from the former Commonwealth
of Independent States (CIS) countries came to this land of fertility. They
increased the number of the rural population of the province by 1995. But
in subsequent years the number of villagers in the Krasnodar region was
not decreasing, not only because of refugees, but also because of migrants,
which we discussed above.
Many technical factors also contributed to the revival of the rural area.
Mobile phones and the internet were already in use by the rural youth.
These technical novelties provide new opportunities for rural development.
And the whole system of management and business is already less depen-
dent on the bad roads of the countryside.
A rural renaissance can help to discover a new way of life on Earth. It
underscores the fact that there is a crisis of urbanism as a social practice
and ideology. There are more and more supporters of the idea that the
village and agriculture are equal spheres to national culture, education,
and health.
The well-known French anthropologist Levi Strauss said that the 21st
century will be humanitarian or it will never happen. Contributing to this
idea, we may logically conclude that in order to make the 21st century
happen, we must make it rural.

11
The Differentiation of the Peasantry
in India since Independence
K. L. Sharma
T. B. Bottomore (1983: 363) writes: “The term peasantry generally refers

to those who labor on the land and possess their means of production:
tools and the land itself.” Peasants are direct producers. They are distin-
guishable from farmers, who are either the owners or tenants of the land,
and in India and China the peasantry emerged from other (non-feudal)
modes of production, unlike in Europe. The Marxist notion of peasantry is
as follows:
A defining characteristic of the peasantry is that it must pay a

rent or a tribute for maintaining its possession of the land. This
may take the form of a payment in labor (such as working for a
specific period of time in the fields of the landlord), a payment
in kind, or a monetary tribute. The particular social relationships
which determine a peasant’s access to the land and insertion into
the economic and social life of society depend upon the specific
features of the SOCIAL FORMATION, and of the status of class
struggle within the social formation (ibid.: 363).
The Marxist notion emanates the transition from feudalism to capital-

ism in Europe in the early 19th century. In India, feudalism partly survived
and partly got transformed into colonialism with the advent of British rule
in India. Nearly one-fourth of India was under the rule of princely states,
while the remaining three-fourth was under the direct control of the British.
The two formations created differentiation among the peasants of princely
201
202 K. L. Sharma
India and British India. Differentiation also existed in India because of

a plethora of land-tenure systems and the hierarchy of peasants (Sharma,
1998: 76–93). Thus, colonialism and feudalism coexisted in India in different
permutations and combinations. Even the colonial rulers behaved as feudal
lords. Capitalism has made real inroads only after India’s independence in
1947. Moreover, the form and nature of capitalism in India in general and
in agriculture or industry in particular is very different when compared to
the advanced countries of Western Europe, America, and Canada.
The Dynamics of Land Reforms

The British interjected land-tenure systems right from the beginning of
its rule in India. Under the agreement “permanent settlement of Bengal”,
which was introduced in 1793, the intermediary zamindars were granted
ownership rights over lands from which they previously had the right to
collect revenues. The British did this to create a base of support in the
countryside. The initiatives also had the effect of weakening the traditional
structure of patron–client relations between the zamindars and local tal-
ents, which has been described as a disintegration of “the moral economy
of the peasantry”. Moore (1966: 346) calls such a situation as “parasitic
landlordism”. Exploitation of the peasantry was intensified due to such
colonial interventions.
A recent study of agrarian relations and socio-economic change in Bihar
by Alakh N. Sharma (2005: 960–972) highlights the mobilization of poor
peasants and increased migration today as the most striking agents of
change. However, these changes have mostly favored the middle landlord
class. Sharma (ibid.: 960) observes that increasing poverty, poor returns
from the land, and rising rent demands have widened the ranks of the
poor peasantry, which now consists of a mix of several castes. The migra-
tion of the poor classes has increased considerably. The upper backward
castes largely make up the landlord class. These castes perpetuate their
dominance and also align with the dominant political classes. Peasant class
consciousness has not risen to a considerable extent.
Bihar ranks among the slowest-growing regions of India, with a GDP
growth rate during the 1990s of only about 2.69% per annum as compared
to 6% for all the major states. Its population growth and density of popula-
tion have also been quite high. It is the least urbanized state of India, having
nearly 10% of urban population. In the pre-independence period, the agrar-
ian structure was an intricately stratified system of relations between the
The Differentiation of the Peasantry in India since Independence 203
people and the land (Jannuzi, 1974: 11). The following agrarian hierarchy
was present:
1. The state (the “super landlord”).

2. The Zamindar and tenure-holder (an intermediary of the state for the
collection of rents).
3. The occupancy raiyat (a rent paying holder of land having the occupancy
on the land held by him).
4. The non-occupancy raiyat (a rent paying of land not having the right of
occupancy on land temporarily in his possession).
5. The under-raiyat (a rent paying holder of land having temporary pos-
session of a holding under a raiyat).
6. Mazdoor (a wage laborer) having no rights in land.
Alakh N. Sharma (op.cit.) explains that the above agrarian struc-

ture was inherently exploitative and detrimental to agricultural growth.
In Bihar, due to a situation in which the agrarian capitalist did not emerge
in the form of a rich peasantry independent of landlords, there was a pau-
perization of the peasantry on a large scale. After independence, a moder-
ate, landlord-oriented path of agrarian transition discouraged radical land
distribution. The agrarian structure in Bihar continues to be exploitative
and detrimental to growth. It has been characterized as a “semi-feudal”
mode of production in agriculture. Today, we find the emergence of surplus-
hungry rich peasants and landlords, on the one hand, and the large number
of wage laborers in each caste on the other. Political mobilization by the
rich has taken the form of caste mobilization. Besides economic stagnation,
criminalization has also occurred. The presence of “caste armies” is the
glaring example of criminality in Bihar. A sort of warfare between “caste
armies” and Naxalism has engulfed Bihar in disharmony and disorder. An
anti-development nexus among bureaucrats, contractors, landowners and
politicians needs a severe blow to effect a place of honor and dignity for the
workers and peasants.
According to Habib (1974: 264–316), the “commercialization of agricul-
ture” existed even in the medieval period. It was further channelized due to
the industrial revolution in England. The traditional system of agriculture
and food security then disintegrated due to the forced marketization of agri-
culture and the peasantry. Commodification and land alienation emerged as
new phenomena. Indebtedness of the peasantry also became a marked real-
ity. Guha (1983: 8) considers the peasantry to be under the subjugation of
204 K. L. Sharma
the institutions of sarkari (state), sahukari (moneylending), and zamin-

dari (landlordism).
After India’s independence in 1947, despite limitations, land reforms
have changed the patterns of landholdings. The green revolution has further
transformed the peasantry, even though in some quarters inequalities have
come about due to its differential impact. Daniel Thorner (1956), based on
the nature and quality of landholdings, has suggested that there are three
main categories of peasants: (1) maliks (the landlords or proprietors),
(2) kisans (the working peasants), and (3) mazdoors (the laborers).
Today, as Jodhka (2003: 1213–1242) observes, the Indian farmer is becom-
ing outward looking and getting oriented to the demands of the market.
Let us admit here that several Indian economists and historians have
been influenced by the Marxist frame of reference while analyzing the capi-
talist mode of production in agriculture and the differentiation of the peas-
antry (Patnaik, 1972: A145–A151; 1976: A82–101; Rudra, 1978: 916–923;
Sau, 1973: A27–A30; Gough, 1980: 337–364). Capitalism has penetrated
into agriculture in an eclectic and discrete manner. The use of electric-
ity, chemical manures and fertilizers, hybrid crops, tractors, thrashers,
sprinklers, etc., does not justify the presence of the capitalist mode of
production in agriculture. Rich and well-off farmers make use of the new
mechanical devices with a view to making more profits, but all this is not
sufficient to make agriculture a capitalistic phenomenon. Capitalism is a
system of relations between the owners of the means of production and
workers. A clear system of rules and regulations is applicable in indus-
trial production, which does not exist in agriculture. A range of agrarian
relations, hired workers, share-cropping, contract, engagement of family
members, etc., characterize agricultural production and relations.
Shanin (1975: 11–19) observes that the existence of the peasantry is a
realistic concept. A large number of peasant studies in India and elsewhere
provide testimony to this view. Those who are engaged in agriculture have
some generic attributes of their own. However, peasants are not a homoge-
neous entity. All human societies have peasants of one sort or the other, and
each one has some of its own attributes. Shanin identifies four characteristic
features of the peasantry:
1. The peasant family farm as the basic unit of a multi-dimensional social

composition.
2. Land husbandry as the main means of livelihood directly providing the
major part of the consumption needs.
3. A specific traditional culture related to the way of life of small commu-

nities.
4. The underdog position — the domination of the peasantry by
outsiders.
Some analytical subtleties may remain unexamined within such a gen-

eral frame of reference. It is fair to say that there may be peasants who have
quite specific histories and practices of their own which remain uncovered
by such a generalized typification.
Differentiation of the Peasantry: Peasants and Farmers

As such, nowhere do peasants form a homogenous stratum of society. They
have high and low positions among their ranks as well as in the overall
scheme of gradations in a given society. Before India’s independence in
1947, the village hierarchy consisted of rulers, intermediaries (landlords),
the peasantry, landless laborers, village servants, recipients of charity, etc.
The peasantry consisted of occupancy tenants, tenants-at-will, sharecrop-
pers and sub-cultivators. Occupancy tenants had rights over the land cul-
tivated by them as they had acquired such a right by paying a definite
amount of compensation to the landlords or rulers. Tenants-at-will could
be evicted from the land at any time, and they were in a large number
and were generally oppressed by the landlords. Sharecroppers cultivated
land on behalf of their masters on fixed terms, having a certain share in
the yield. Sub-cultivators were those who cultivated the lands of others,
namely, occupancy tenants or tenants-at-will.
Such an agrarian hierarchy has ceased to exist due to the abolition
of feudalism, land reforms, the green revolution, improved means of trans-
port and communication and planned development, including panchayati
raj institutions, cooperatives, and rural development schemes (Sharma,
op.cit.: 76–93). Today, there is an increased differentiation of peasantry
which explains economic distinctions in the peasantry, on the one hand, and
exploitation, modes of livelihood, the spread of capitalism, the persisting
role of indigenous capital in a transformed way, peasant movements, polit-
ical strategies, and class alliances on the other. Some of the rich peasants
are transforming themselves into “capitalist farmers” by having hired labor,
producing for the market, and using modern technological devices. Today,
the “peasant question” concerns with the nature of tenancy and reliance
on cultivation as the main source and the social background of peasantry.
206 K. L. Sharma
The question of the peasantry is complex and varies from region to region.
Even share-cropping is quite complex, due to its varying forms such as
concealed tenancy, commercial tenancy, crop-sharing, fixed-rent tenancy,
and fixed-product or fixed rent-in-kind tenancy (ibid.: 37).
However, using the Labor Exploitation Index (E-Criterion), Patnaik
(1972; 1976) classifies peasant households into six economic classes. The
E-criterion has been used for each household considering both direct
labor exploitation through hiring-in and hiring-out as well as the indirect
exploitation of labor through the leasing-out and leasing-in of land. The
six-fold classification is as follows:
1. Rural labor.
2. Poor peasant.
3. Small peasant.
4. Middle peasant.
5. Rich peasant.
6. Landlord.
Each class is determined by the range in which the value of E lies. The
poor and small peasants are the labor hiring-out classes (lower peasantry).
The middle and rich peasants are the labor exploiting classes (the upper
strata of the peasantry). At the bottom and at the top are the rural labor
and the landlord classes, respectively (Banerjee, 2009: 49–57). Based on a
comparative study of Andhra Pradesh and West Bengal, Arindam Banerjee
finds a tragic, unprecedented phenomenon caused by increasing indebted-
ness resulting in the decline of real product prices. In such a situation, the
private players have occupied the center-stage in the credit market because
of the shrinking of subsidies by the government and withdrawal of debt-
relief measures. We have reported in this chapter that the rich farmers
have been more adversely affected in recent years, particularly during the
post-globalization/liberalization period. Banerjee (ibid.: 57) also concludes:
“The class analysis of the agricultural situation reveals the differential pat-
tern of impact of the neoliberal economic policies on the Indian peasantry.”
The lower peasants face a depression of their incomes drastically, resulting
into consumption levels far below the required subsistence norms. In Andhra
Pradesh, the peasantry belonging to upper classes suffer income depression.
Due to such a depressive situation, it has been suggested (Mathur et al.,
2006: 5327–5336) that the role of public investment/government expen-
diture on agriculture is the crucial determinant in stepping up the rate of
growth of agricultural production. Increase of investment to 15% per annum

could lead to agricultural growth by 4%.
The relations of production and modes of surplus extraction in agri-
culture remain central foci for our understanding and analysis of change
in rural India. Based on aggregate-level data and case studies, Basole and
Basu (2011: 41–58, 63–79) have analyzed the spatial and temporal patterns
of rural class structure. According to the National Commission for Enter-
prises in the Organized Sector (NCEUS) (2007), as of January 2005, the
total employment (principal plus subsidiary) in the Indian economy was
458 million, of which the informal sector accounted for 395 million (86%).
Of the 395 million unorganized sector workers, agriculture accounted for
253 million (64%) and the remaining 142 million were employed in the non-
agriculture sector. The GDP in agriculture was around 39% in 1980, which
declined to 17% in 2007. However, the total labor force emerged in agricul-
ture has declined somewhat slowly, that is, from 68% to 57% during this
period (Basole and Basu, op.cit.). A size-class classification of the peasantry
by Basole and Basu is as follows:
Table 11.1. Size-Class Definition.
Size-class Area-owned
Effectively landless =< 1 acre

Marginal 1.01–2.5 acres
Small 2.51–5 acres
Middle 5.01–10 acres
Large > 10.01 acres
Table 11.2. Landownership Structure in Rural India by Ownership Size-Class.
Marginal Small Semi-medium Medium Large
1961 % of households 66.06 9.15 12.86 9.07 2.85

% of area owned 7.59 12.39 20.54 31.23 28.25
1971 % of households 62.62 15.49 11.94 7.83 2.12
% of area owned 9.76 14.68 21.92 30.73 22.91
1982 % of households 66.64 14.70 10.78 6.45 1.42
% of area owned 12.22 16.49 23.58 29.83 18.07
1992 % of households 71.88 13.42 9.28 4.54 0.88
% of area owned 16.93 18.59 24.58 26.07 13.83
2003 % of households 79.60 10.80 6.00 3.00 0.60
% of area owned 23.05 20.38 21.98 23.08 11.55
Source: Report No. 491, NSS 59th Round, January–December 2003.

208 K. L. Sharma
Basole and Basu find the following factors behind the declining average
size of ownership holdings:
1. Land reforms.
2. Transfer of land through sale.
3. Growing demographic pressures.
4. Acreage which is a rough indicator of class status.
The other important variables are:
1. Geographical variation of landownership across Indian states.

2. The extent of tenancy, both over time and space.
3. The evolution of patterns of tenancy relations.
4. The extent and growth of landlessness.
5. The major sources of income of rural households.
6. The pattern of capital accumulation in the agricultural sector.
7. Sources of credit.
Based on these factors, Table 11.3 shows the composition of agricultural

labor and farmer households in terms of size-classes.
Basole and Basu have used the latest data relating to landownership
structure, state-wise cultivators and agricultural workers, large and small
landholding states, and the share of debt from various sources for cultiva-
tor households (see Table 11.4). Except the large cultivators, all other cat-
egories of cultivators, including the landless, the marginal, the small and
the middle have more consumption expenditure than their total income.
The landless, marginal and small ones have a lot of deficit, whereas the
Table 11.3. Composition of Agricultural Labor and Farmer Households

in Terms of Size-Classes.
Agricultural labor Farmer All rural

Size-class households household households
Landless 19.7 0.6 13.1

Sub-marginal 62.3 14.6 44.8
Marginal 12.9 30.7 18.7
Small 4.1 26.5 12.2
Medium-large 1.0 27.5 11.2
All 100.00 100.0 100.0
Note: Landless (<0.01), Sub-marginal (0.01–0.40), Marginal (0.41–1.00), Small

(1.01–2.00), Medium-large (>2.00) hectares.
Source: NCEUS (2007) (based on NSS 61st Round 2004–2005, Employment–
unemployment Survey (quoted from Basole and Basu, op.cit.).
Table 11.4. Share of Debt from Various Sources for Cultivator Households (%).
Sources of Credit 1951 1961 1971 1981 1991 2002
Institutional 7.3 18.7 31.7 63.2 66.3 61.1

Cooperative societies 3.3 2.6 2.2 29.8 30 30.2
Commercial banks 0.9 0.6 2.4 28.8 35.2 26.3
Non-institutional 92.7 81.3 66.3 36.8 30.6 38.9
Moneylenders 69.7 49.2 36.1 16.1 17.5 26.8
Unspecified — — — — 3.1 —
Source: Government of India (2007).
middle ones balance their income and expenditure, and the large ones have
more income and less expenditures (Basole and Basu, ibid.: 49–51).
The following questions may be considered relevant to study the peas-
antry in India (ibid.: 38):
1. Can we treat the peasantry as a class, a constructed stratum in the
village community?
2. Can we consider the peasantry synonymous with a particular caste/
community?
3. What is the nature of social differentiation within the peasantry?
4. What factors could be attributed to such a system of stratification?
5. Are peasants merely an economic category?
6. Is the peasant an isolated entity confined to his farm and family?
Before we respond to these questions in the Indian context, let us see
what Redfield (1941; 1956) has observed about peasantry. Redfield places
“peasant society” in between the “primitive society” and the “urban” or
“modern” society. It is a society, intermediate between the two, and it is also
connected with both of them in several ways. Thus, peasants are parts of
cultures, rather than the whole of cultures. The peasantry is a small society,
but not an isolated one, not complete in itself. Peasanthood is a culture, but
also part of national life. However, Redfield distinguishes between peasants
and farmers. For peasants, agriculture is a livelihood and a way of life, not
a business for profit. Those who look on the land as capital and commodity
are not peasants but farmers. Similarly, Wolf (1955: 452–471) too considers
peasants different from farmers. For Firth (1951) peasantry is an “inclusive
category”.
The peasantry exists as a “structure in process”, having regional, con-
textual, and historical differences in India, partly due to colonial and feudal
past, caste hierarchy and regional variations in terms of rainfall, cropping
210 K. L. Sharma
patterns and the size of landholdings. The “differentiation of peasantry” has

occurred due to these factors, and due to capitalism’s inroads into agricul-
ture. Differentiation has further taken a new shape. Both Lenin (1969) and
Mao (1969) have acknowledged high, middle, and low categories of peasants
due to capitalist mode of production in agriculture. Such a differentiation
of the peasantry is based on a concentration of the means of production.
Following such a thesis, Patnaik (op.cit.) forcefully argues that the peas-
antry is highly differentiated economically into more or less distinct classes.
Besides landholding, factors such as size and composition of the family, the
cropping pattern, the intensity of cultivation, and the level of labor-use are
equally significant.
Based on landholdings, there are three classes of the peasantry: (1)
top, (2) middle, and (3) lowest peasants. Both the exploiting classes and
the exploited classes are internally stratified. These include big landlords
and capitalists, self-employed peasants, and poor peasants, respectively.
However, such a differentiation is unacceptable to Rudra (op. cit.: 916–923),
as he believes that there are only two classes in Indian agriculture, namely,
(1) the class of big landlords, and (2) the class of agriculture laborers.
These two classes are opposed to each other, and this contradiction is basic
to rural social structure. Rudra’s perception of two-tier peasantry seems
to be an over-simplification of the Marxist–Leninist approach to peasantry.
Classification of the peasantry has also been made based on landholdings
and other sources, in terms of the poor peasants, the small peasants and the
well-to-do peasants (Swamy, 1976: 1933–1939). The capacity to hire labor,
to seek capital, and to have ability to deal with indebtedness have also
been used to stratify peasantry. A big peasantry and a small peasantry (an
independent middle peasantry, a depressed and dependent middle peasantry
and a semi-wage labor peasantry) have also been suggested (Banaji, 1977:
1375–1404). The Census of India (2001) provides the classifications as shown
in Table 11.5.
Shanin (1977: 1339–1348), while commenting on Utsa Patnaik’s view
observes that her thesis refers to the process of the spread of capitalism in
agriculture in particular. Patnaik’s thesis attains a “high ideological rel-
evance”. Shanin also apprehends the problem in operationalization and
quantification of peasantry in the Patnaik’s thesis. The structure of the
Indian peasantry is not so simplistic and easily amenable to neat cat-
egories, such as top, middle, and low or rich, middle, and poor. Nearly
half of the peasants are poor or middle peasants who generally use family
labor. About 35% are landless households who are neither proletariat nor
Table 11.5. Cultivators and Agricultural Workers in Rural India (2001).
Cultivators Ag Workers Ag wrkr/Cultiv
Andhra Pradesh 77,57,337 1,33,84,671 1.73

Arunachal Pradesh 2,75,403 17,634 0.06
Assam 37,12,769 12,53,451 0.34
Bihar 80,75,104 1,31,45,639 1.63
Goa 45,885 31,076 0.68
Gujarat 56,97,434 49,83,209 0.87
Haryana 29,58,215 12,24,403 0.41
Himachal Pradesh 19,46,890 92,598 0.05
Jammu and Kashmir 15,59,633 2,27,325 0.15
Jharkhand 38,58,788 28,10,671 0.73
Karnataka 66,84,521 59,01,934 0.88
Kerala 6,933,986 15,07,081 2.17
Madhya Pradesh 1,07,33,516 71,36,391 0.66
Maharashtra 1,15,69,293 1,03,14,720 0.89
Orissa 41,97,912 49,21,925 1.17
Punjab 19,98,640 13,94,035 0.70
Rajasthan 1,29,21,374 24,36,566 0.19
Sikkim 13,1,201 16,952 0.13
Tamil Nadu 47,73,028 75,33,766 1.58
Tripura 3,10,871 2,72,712 0.88
Uttar Pradesh 2,17,54,799 1,29,31,317 0.59
Uttarakhand 15,56,202 2,44,520 0.16
West Bengal 55,85,848 72,40,517 1.30
Total 11,87,98,649 9,90,23,113 0.83
semi-proletariat. Sharat G. Lin (1980) calls it a “dual mode” of production

in agriculture.
Based on a study of Uttar Pradesh village (North India), Saith and
Tanakha (1972: 712–723) observe: “The essence of the process of differ-
entiation lies in the historical conversion of the peasantry, which is not a
class as such, into two differentiable classes which are ranged at the oppo-
site ends of capitalist social relation.” In Rajasthan, after the abolition
of Jagirdari system (feudalism) in 1954, 90% of the tenants, who were
“tenants-at-will”, were granted Khatedari rights (right to own and control
land), and this was a radical transformation of the tenants into landown-
ing self-cultivators (Sharma, 1997a). Saith and Tankha, while observing
the consequences of green revolution, have suggested that there are cer-
tainly rich, middle and poor peasants, but the fact is that rich peasants are
transforming into capitalist farming households. The capitalist farmers (in-
making) use hired laborers, produce for the market, and modern technology.
212 K. L. Sharma
The main criteria for stratifying the peasantry as used by Saith and
Tankha are:
1. Utilization of loans.
2. Repayment capacity.
3. Tenancy.
4. Ownership of assets.
5. Credit from bank to find out the transition.
Based on these criteria, Saith and Tankha refer to five types of peasant
groups as:
1. Owner-cultivators.
2. Largely owner-cultivators.
3. Largely tenant-cultivators.
4. Tenant-cultivators.
5. Very poor peasants.
Jodhka (2003: 1243) works out the following classification of the

peasantry:
Table 11.6. Changing Structure of Landholdings during the Post-Independence Period.
1960–1961 1976–1977 1990–1991

Number of Are Number of Are Number of Are
holdings operated holdings operated holdings operated
Size (%) (%) (%) (%) (%) (%)
Marginal 40.70 6.70 54.60 10.70 59.00 14.90

Small 22.30 12.20 18.00 12.80 19.00 17.30
Semi-medium 18.90 20.00 14.30 19.90 13.20 23.20
Medium 13.40 30.40 10.10 30.40 7.20 27.20
Large 4.70 30.70 3.00 26.20 1.60 17.40
Total 100.00 100.00 100.00 100.00 100.00 100.00
Source: Indian Agriculture Sector A, Compendium of Statistics. September 1995.
Agrarian Distress
Agrarian distress has been reported from several parts of India, culminating
in suicides by farmers. Suri (2006: 1546–1552) explains that “the reasons
for agrarian distress in India lie in the conjunction of the changing nature
of agriculture and democratic politics. The reasons are: Cultivation as an
unrewarding occupation, the growing disparities of wealth between the rural
and the urban areas, the lack of unity among farmers to bring pressure
on the state governments, and a disjunction between the interests of the
farmers and those of the political representatives.
Since 1997–1998, suicides by farmers have become a grave national
tragedy and concern for a total brake on it. Between 2001 and 2006, in four
states of Andhra Pradesh, Karnataka, Kerala and Maharashtra, there were
8,900 suicides by farmers. The main reasons as stated above are structural
and social. The changed pattern of landholdings, changed cropping pattern
towards cash crops, liberalization policies implementation without a level-
playing field, heavy dependence on high-cost paid out inputs, the growing
costs of cultivation, the volatility of crop output, market vagaries, lack of
remunerative prices, indebtedness, neglect of agriculture by the government,
decline of public investment, break up of joint families, individualization of
agricultural options, etc., are the reasons for distress among the farmers
(ibid.: 1523).
A large number of suicides have been reported from the states, (1)
which are relatively agriculturally developed, (2) have seen strong peasant
movements, and (3) where the leadership of political parties has come pre-
dominantly from farming communities. Karnataka, Kerala, Tamil Nadu,
Andhra Pradesh, Maharashtra, Gujarat, and Punjab are the worst affected
states, and all of them, more or less share the above features (ibid.: 1524).
The following articles were published on farmers’ suicides in Economic and
Political Weekly (Vol. XLI, No. 6, 2006):
1. “Beyond Crises: Rethinking Contemporary Punjab Agriculture”,

pp. 1530–1537, by Surinder Jodhka.
2. “Farmers’ Suicides in Maharashtra”, pp. 1538–1545, by Srijit Mishra.
3. “Dimensions of Agrarian Distress in Andhra Pradesh”, pp. 1546–1552,
by P. Narasimha Rao and K.C. Suri.
4. “Analysis of Farmer Suicides in Kera”, pp. 1553–1558, by S. Mohan
Kumar and R. K. Sharma.
5. “Why Do Farmers Commit Suicide? The Case of Andhra Pradesh”,
pp. 1559–1565, by V. Sridhar.
6. “Suicide Mortality Rates across States of India, 1975–2001: A Statistical
Note”, pp. 1566–1569, by Srijit Mishra.
Under neoliberalism, the peasants shifted to commodity production,

and for this they mobilized resources, including bank loans. Returns from
commercial crops were no doubt encouraging, but the sustained facility
214 K. L. Sharma
for bank loans shrank over a period of time. Due to such a situation, pri-
vate players made inroads in the credit market, putting the peasants in a
vulnerable situation. Arindam Banerjee (2009: 49–57) reveals, based on a
class analysis of household farm production data from two states, a pattern
of income depression and rising indebtedness in rural areas. An effective
price stabilization operation and comprehensive debt-relief policy in the
short-run might provide hope for further agrarian development. Banerjee
finds that in West Bengal the lower peasants face a drastic depression of
their incomes, not even sufficient to satisfy consumption levels even to bare
subsistence.
In Andhra Pradesh, the upper peasants have also been affected
adversely by income depression. With great hardship, they are not even able
to manage payment of debts. A small number of upper class peasants are
able to satisfy their basic consumption levels. The government is also not
giving due attention to the inputs and infrastructure required for agricul-
ture. There is stagnation due to stabilization of output prices for basic crops.
Some states have large landholdings, while others have small landholdings.
Tables 11.7 and 11.8 summarize the differences.
Industrialization-urbanization and peasantry

An interesting study of agrarian change and social mobility in Tamil Nadu
shows that local industrialization and social policies have brought about
a centripetal tendency in the agrarian structure. Family farming has been
strengthened, on the one hand, and the underdogs are leaving agriculture
for improved life-chances in the non-agrarian sector, both inside the villages
and in the wider economy, on the other (Djurfeldt et al., 2008: 50–61). While
defining social mobility as mobility of households between different posi-
tions in social structures, the study shows mobility out of and into farming,
mobility inside the farming sector, and changes in real household income.
All this has happened in six villages in the former Tiruchirapalli district of
Tamil Nadu over a period of 25 years. A growing non-agricultural sector in
rural areas, seasonal migration, and pluri-activity are recent developments
in the selected villages. Such a trend could be witnessed in other parts of
rural India as well. Multiple sources of income for a family have become a
common feature. This has also eased pressure on agricultural land.
Non-farm income accounts for about one-third of household income, on
an average. A three-way classification of non-farm activities has been sug-
gested by Lanjouw and Shariff (2004: 4429–4446). This includes: (1) casual
Table 11.7. Large Landholding States: Share of Area Owned by Ownership Size–
Class (%).
Semi-
Marginal Small Medium Medium Large
Andhra Pradesh 2003 21.87 19.95 21.16 22.91 14.05

1992 21.30 22.44 24.15 24.06 8.06
1982 11.26 15.29 20.70 29.83 22.92
1971–1972 9.92 13.16 21.19 30.15 25.58
Gujarat 2003 13.60 16.05 18.96 39.12 12.28
1992 9.55 15.44 24.78 31.99 18.24
1982 6.66 15.44 24.78 31.99 18.24
1971–1972 4.53 9.94 16.73 36.15 32.65
Haryana 2003 13.15 15.83 24.62 34.14 12.26
1992 7.96 13.43 33.54 37.17 7.91
1982 5.04 13.44 21.58 44.90 15.05
1971–1972 4.63 7.43 18.95 46.93 22.06
Karnataka 2003 16.65 19.45 23.18 29.52 11.20
1992 11.05 18.35 27.82 26.62 16.16
1982 6.21 13.56 25.40 31.45 23.38
1971–1972 5.74 11.81 24.84 35.19 22.42
Madhya Pradesh 2003 11.61 19.07 25.80 31.25 12.29
1992 7.61 15.49 24.97 35.38 16.57
1982 4.99 11.08 24.30 37.93 21.72
1971–1972 3.34 9.16 21.36 37.80 28.34
Maharashtra 2003 12.38 17.57 30.88 27.35 11.78
1992 7.02 12.61 25.54 33.43 21.41
1982 4.65 10.90 20.82 36.23 27.40
1971–1972 3.48 8.59 18.34 35.45 34.14
Punjab 2003 9.16 15.63 25.30 34.50 15.31
1992 7.18 12.35 30.21 38.04 12.22
1982 5.59 10.76 22.87 42.23 18.56
1971–1972 4.47 8.87 25.06 37.96 23.64
Rajasthan 2003 9.26 11.19 18.61 28.40 32.52
1992 5.42 10.04 18.90 31.55 34.10
1982 3.63 7.29 17.29 35.19 36.59
1971–1972 2.03 6.78 13.15 32.89 45.15
Source: Statement 5, Report No. 491, NSS 59th Round, January–December 2003.
non-farm wage labor; (2) owner-enterprise activities, and (3) regular,

salaried non-farm employment. These are sources of income outside the
agrarian sector. Total non-farm incomes are more beneficial to the poor
than rich rural people. The rich benefit more from salaried employment.
The people engaged in owner-enterprise activities benefit most, as they
have a bigger spectrum of autonomous activities. Regional factors such as
216 K. L. Sharma
Table 11.8. Small Landholding States: Share of the Area Owned by Ownership Size–
Class (%).
Semi-
Marginal Small Medium Medium Large
Assam 2003 44.42 34.87 16.36 4.32 0.00

1992 38.05 29.07 23.06 8.53 1.29
1982 24.53 34.81 27.67 11.50 1.48
1971–1972 22.15 30.22 30.79 15.20 1.64
Bihar 2003 42.07 25.29 18.53 9.56 4.63
1992 28.58 23.84 24.45 18.68 4.44
1982 23.96 22.91 27.02 20.22 5.90
1971–1972 18.20 23.43 28.07 23.63 6.67
Himachal Pradesh 2003 43.80 28.02 19.77 6.45 2.03
1992 34.99 20.35 21.57 18.50 4.60
1982 20.94 23.09 26.04 27.82 2.11
1971–1972 21.22 23.43 25.92 23.12 6.31
J&K 2003 36.26 25.49 19.54 11.12 7.58
1992 25.52 33.40 25.84 15.23 0.00
1982 28.13 30.29 28.70 12.56 0.32
1971–1972 27.41 39.33 25.20 8.06 0.00
Kerala 2003 60.72 21.13 10.78 7.16 0.00
1992 54.51 24.19 14.32 6.33 0.66
1982 45.74 23.51 19.11 10.06 1.59
1971–1972 40.88 24.32 19.95 11.89 2.96
Orissa 2003 41.52 27.06 19.72 9.98 1.78
1992 26.37 27.16 25.99 18.08 2.40
1982 19.88 29.73 25.04 19.50 5.84
1971–1972 20.45 26.95 25.88 20.72 6.00
Tamil Nadu 2003 33.21 23.10 22.09 20.57 1.23
1992 33.28 26.24 24.15 12.15 4.18
1982 23.57 27.24 23.53 20.94 4.71
1971–1972 20.23 21.84 25.21 22.97 9.75
Uttar Pradesh 2003 34.89 27.38 20.74 14.65 2.34
1992 27.42 24.88 25.82 18.14 3.73
1982 20.36 24.08 28.11 22.25 5.18
1971–1972 17.49 24.65 27.94 23.85 6.07
West Bengal 2003 58.23 25.71 11.88 4.02 0.00
1992 41.29 28.11 22.98 7.62 0.00
1982 30.33 28.77 27.23 12.12 1.54
1971–1972 27.28 25.69 27.72 18.61 0.70
education, wealth, caste, village-level agricultural conditions, population

densities etc., as observed by Lanjouw and Shariff, influence access to
non-farm occupations. The wage rates in certain non-farm sub-sectors have
gone up, and as such the poor have been considerably benefited.
Based on a study of social mobility over 25 years (from 1979 to 2004)

in six villages in Tamil Nadu, Djurfeldt, Athreya, Jayakumar, Lindberg,
Rajagopal and Djurfeldt et al. (2008: 50–61), local industrialization and
social policy are found to be the most important external forces. Due to
these two factors, family farming has been strengthened, and the under-
dogs have improved life chances in the non-agrarian economy, both inside
the villages and in the wide economy. The study shows three patterns in
rural economy: (1) a growing non-agricultural sector in rural areas, (2) sea-
sonal migration, and (3) pluri-activity. Social mobility is driven by these
economic forces and also by political ones. A quite interesting development
is that both large landowners and the landless have exited agriculture to
a noticeable extent, and this has affected the distribution of operational
landholdings and household incomes. Besides this, the old underdogs bene-
fit from new opportunities in the non-farm sectors and by affirmative action.
This has weakened the old hierarchy and given a way to new consideration
of status hierarchies.
The old “topdogs” are giving a way to the “middle dogs”, and the latter
have improved their economic and socio-political position in village India.
The study focuses on:
1. The structural transformation of the agrarian and rural economy.

2. Emigration.
3. Housing standards.
4. The growing role of non-agricultural sector.
5. Generation transfer.
6. Proletarianization.
7. Labor income.
8. Inequality.
Djurfeldt et al. conclude that non-farm income dampers economic

inequality. “The observed decrease in inequality is in part a consequence
of the greater rate of exit from agriculture especially of poor peasants and
agricultural laborers than that of the other classes. Thus the measured
inequality levels within the agrarian population come down automatically.”
(ibid.: 56)
Badgaiyan (1992) reports that in Chhatisgarh, the Bhillai Steel Plant
(BSP) has disturbed the peasant mode of production. Bilaspur, a major
town in the present Chhattisgarh state, was under the influence of three
modes of production, namely, (1) the peasant mode of production, oper-
ating in the village; (2) the industrial mode of production, present in the
218 K. L. Sharma
immediate vicinity at the BSP; and (3) the malguzari mode of production,
present in the consciousness of the peasants of the village. The three
modes together created a social formation, along with requisite institu-
tional structures and ideologies. The coming together of the peasant and the
industrial modes weakened the malguzari mode, as this granted strength
to those peasants who benefited from the advancement of agriculture and
industrialization in the region. In fact, the institution of malguzari had
become redundant after the land reforms were effected in the 1950s and
1960s. Industrial workers are also partly peasants. The differentiation of
the peasantry has emerged due to industrialization of the village, and the
presence of the peasants as industrial workers has also created a new dimen-
sion in the urban-industrial social structure.
In a study of the agrarian structure and ideology in Northern Tamil
Nadu, Harriss (1982: 282–301) observes: “The whole notion of a peasantry
in so far as it implies an homogeneity among rural producers, is misleading
so far as North Arcot is concerned.” (ibid.: 284) A small class of landowners
has extensive interests in trading and transport activities, money lending
and urban property. On the other hand, a large number of people are land-
less agricultural workers, marginal peasants and sharecroppers. Our obser-
vation of the northwest Rajasthan is not different from that of Tamil Nadu.
The substantial peasants have taken up non-farm activities in the village
or in its vicinity, such as shopkeeping, moneylending, petty contractorship,
repairing of automobiles, hiring out of tractors, jeeps, and plying of buses
on local routes. Some of them have moved to towns, particularly at tehsil,
district and state capital towns for taking up entrepreneurship, business and
other economically gainful activities. A majority of the peasants who ben-
efited from land reforms and the green revolution in the 1960s and 1970s,
benefited later in 1980s and 1900s as a result of urbanization and means
of transport and communication. The beneficiaries have transformed their
economic gains into political capital through elections for panchayati raj
institutions and cooperative societies and cooperative banks.
Concluding Remarks
Agriculture no longer has a stranglehold on rural India. A lot of people,
due to agricultural stagnation and population pressure on agriculture, have
been moving to urban areas to seek employment. The landless and poor
have moved out of the village for survival, whereas the better off peas-
ants have left the village for greener pastures. Sharma and Gupta (1991)
and Gupta (2005: 751–758) explain the role of the country-town nexus,
occupational social differentiation in the village, the weakening of values
and norms relating to the caste system, non-farm employment, etc., in
reducing big peasants’ dependence on agriculture for their livelihood. Even
big peasants are inclined to take up non-farm activities, such as petty con-
tracts, shop keeping, etc. Some are inclined to settle down in cities. Thus,
the peasantry is in the process of a new transition, particularly in the neo-
liberalism period. Education and urban jobs have lured them considerably.
Since the Indian peasants do not constitute a broad homogenous stra-
tum, they do not have uniformly common interests, and they therefore
lack the spirit necessary to fight against the oppression of the marginal
peasants, sharecroppers, and landless agricultural workers. In most parts
of India, the upper stratum of peasants belong to upper middle castes,
such as Jats, Ahirs, Kurmis, Marathas, Patels, Reddys, Kammas, etc., and
they have moved up over the years in different economic arenas within
their respective villages, and in nearby towns and bigger cities. The mid-
dle and lower peasants even from among the castes of the rich peasants
are generally neglected by the upwardly mobile and politically powerful
peasants. Peasants from lower castes are simply ignored and left to their
fate for bare survival. However, as we stated earlier, the peasants who were
most benefited by land reforms and the green revolution have not been
so lucky in terms of extracting benefits from globalization. The peasants
who shifted to non-farming sectors have performed far better as a result
of industrialization–urbanization. Middle level peasants improved to some
degree, but the poor remain stagnant.

12
Rural Society and Peasants in China
Fan Ping
At present, a rudimentary market-based economic system has been

established in modern China, which is now undergoing the biggest struc-
tural shift that the world has ever seen, from an agricultural society to
an industrial society and from a rural society to an urban society. Due
to the forceful progression of industrialization, urbanization, and marke-
tization, peasants in China have also been going through differentiations,
with the peasantry steadily shrinking. As a result of agricultural modern-
ization, the stratum of professional peasants has been split into traditional
peasants and modern “farmers”. A “coordinated development between the
urban and rural areas” helps to promote the development of China’s rural
areas, and is also changing and refashioning the social relations of peasants
within rural society.
Urbanization and Development of Rural Population in China

Modern China has basically completed its shift from a planned economy to
a market-based economic system, entering the intermediate stage of indus-
trialization; urbanization is steadily progressing at a fast pace with the
large-scale exodus of rural population to cities in a continuous manner;
agricultural modernization is accelerating, with its internal industries gra-
dually being upgraded. Judging from the composite index of the four indi-
cators — urbanization rate, proportion of non-rural population, proportion
of population employed in the tertiary industry, and per capita output — it
221
222 Fan Ping
is the urban and rural population structure that has undergone the biggest
change since reform and opening up.
Rural population migration and urbanization

in modern China
After 30 years of reform and opening up, urbanization in China has been
rapidly progressing, with its urbanization level rising from 20% prior to 1978
to 47.5% in 2010. From 2000 to 2009, a peak period for China’s urbaniza-
tion, China’s population urbanization rate had increased at an annual rate
of 1.2%, with the urban population rising from 460 million to 620 million;
the size of China’s urban areas has expanded from 22,400 square kilometers
in 2000 to 38,100 square kilometers in 2009, achieving a 70% growth within
a nine-year span, making China the only country in the world to achieve
such a rapid urbanization. It is expected that by 2015, the total population
of China will reach 1.39 billion, with its urban population amounting to 0.7
billion — the moment at which China’s urban population first exceeds its
rural population.
Rapid urbanization means that a large portion of the rural popula-
tion, especially the rural labor force, is migrating into cities and towns
(see Table 12.1). The massive wave of China’s rural laborers migrating
en masse into urban areas started as early as the mid-1990s. By 2004, the
total rural population migrating into cities in China had exceeded 140 mil-
lion; and by 2009, the figure had swelled to 211 million. A rural–urban
migration of such a scale is extremely unusual, and has therefore attracted
widespread attention from both home and abroad. Unprecedented move-
ment of rural labor force has emerged as the leading factor promoting the
growth of urban population.
Due to the rapid progression of China’s industrialization and marketiza-
tion, China’s population flow model has also undergone significant changes.
Cross-provincial population flow is gradually changing the regional distri-
bution of China’s population, with the resident population at the migra-
tion destinations gradually becoming the bulk of the floating population.
The proportion of those who migrate with families has steadily risen, now
constituting 43% of the rural floating population, who demonstrate an
obvious inclination to settle down on a long-term basis at the migration
destinations. Judging from the results of the nationwide 1% population
sampling survey conducted in 2005, those who migrate for reasons associ-
ated with employment and business under market conditions have made
March 5, 2013
16:48
9in x 6in
Table 12.1. Types of Population Flow and Changes in Population Flow Scale (Unit: 10,000 People, %).

Population 1982–1987 1985–1990 1990–1995 1995–2000 2000–2005
flow type Number Proportion Number Proportion Number Proportion Number Proportion Number Proportion
From rural 1,540 50.4 16,423 48.5 1,196 36.0 8,000 80.0 12,000 85.7
to urban
From urban 788 25.8 112 33.3 1,180 35.5
to urban
From urban 194 6.4 140 4.2 155 4.7
to rural
From rural 531 17.4 476 14.0 792 23.8
to rural
Total 3,053 100.0 3,384 100.0 3,323 100.0 10,000 100.0 14,000 100.0
Sources: China Statistical Yearbook (of all previous years); Yan Shanping (1998); National Bureau of Statistics of China (2006).
223
b1344-ch12
224 Fan Ping
up an absolute majority (nearly 45%) of the total floating population, fol-

lowed by those who migrate along with their family members, those who
relocate due to demolition campaigns, and those who relocate because of
job transfers, the proportion of which is still lower than 15%. The bulk
of the floating population is young, working-age population, with those in
the 15–50 years old constituting 73% and those who ages 15–35 making up
52%.
Rural population flow and economic and social

development in rural China
The large-scale flow of China’s rural population has had a largely positive
effect on China’s industrialization and urbanization. Its effects on rural
society are even more complex: On the one hand, it must be admitted
that a large portion of the rural population, especially the rural labor force
migrating into cities to work and working in non-agricultural sectors, exert
a significant positive influence on improving employment in rural areas and
boosting the income of rural households (see Table 12.2). From Table 12.2,
it can be seen that, since 1985 among the per capita net household income
of peasants, the proportion of salary income has been steadily rising, and
by 2009 reached 40%. Of course, the salaries of rural households do not all
necessarily come from the income of migrant peasant workers, but relevant
surveys show that the salaries of migrant peasant workers do constitute the
bulk of the per capita salary of rural households. For instance, according to
surveys conducted by relevant scholars in Zizhong county, Sichuan province,
Table 12.2. Composition of Per Capita Net Income of Chinese Peasants: 1985–2009.
Composition (%)
Per capita Net income Property income
net income Salary from household and transfer
(yuan) income operations income Total
1985 397.6 18.1 74.4 7.4 100.0

1990 686.3 20.2 75.6 4.2 100.0
1995 1,577.7 22.4 71.4 6.2 100.0
2000 2,253.4 31.2 63.3 5.5 100.0
2005 3,254.9 36.1 56.7 7.2 100.0
2009 5,153.2 40.0 49.0 11.0 100.0
Source: China Statistical Yearbook (of all previous years).

Rural Society and Peasants in China 225
in recent years the proportion of income held by migrant peasant workers

among the per capita income of rural households reached 76%–95% (Cui
et al., 2010b).
The flow of the rural population also changes many traditional notions
of the peasantry, in particular, their outlook on marriage and childbirth.
Peasants, especially young peasant workers in modern China, are demon-
strating an increasingly individualized outlook on the male–female rela-
tionship, marriage choices, and childbirth intentions, with more and more
rational factors taken into account. Studies show that although the fertility
rate of peasant workers in cities is still higher than that of urban residents,
it is now significantly lower than that of rural residents. In addition, their
lifestyles have gone through major changes, with more and more elements
of modern lifestyle seeping into their daily lives.
However, the large-scale outflow of the rural population, especially
the long-term absence of young, working-age laborers from the country-
side, has also exerted some significant negative effects on the economic
and social development of the rural areas. In economic terms, the massive
outflow of young, working-age laborers have influenced the composition of
labor resources of agricultural production. Studies show that among the
rural labor force under 30, those migrating for employment constitute 43%.
If we take into account those peasant workers who are locally employed
in non-agricultural sectors, supposing their age composition is similar to
that of migrant peasant workers, it may be concluded that nearly 80% of
the rural labor force under 30 have been transferred to non-agricultural
sectors.
In addition, the quality of migrant peasant workers is found to be gen-
erally higher than that of the rural labor force as a whole (Research on
the Outline of the Twelfth Five-Year Plan for Chinese Migrant Workers,
2010). This leads to such pressing problems as arable land falling into a
state of desolation and idle resources. In social terms, the large-scale out-
flow of young, working-age laborers from rural areas leads to the emergence
of a so-called “shell village” phenomenon in China’s vast countryside, espe-
cially in mid-Western China: Those who stay behind comprises the elderly,
the children and women, causing China’s rural social structure to fall into
imbalance, with new risks to social development.
The problems of an aging rural population are most pressing. The 2000
China census showed that the degree of population aging in rural areas is
higher than that of cities, with those aged 65 and over accounting for 7.35%
of the total rural population, higher than the 6.30% figure in cities. By 2005,
226 Fan Ping
according to the nationwide 1% population sampling survey conducted

that year, the proportion of those aged 65 and over among the total
rural population had reached 9.55%, with the figure for cities being 8.49%.
Given that more and more young laborers among the rural population are
migrating into cities, the aging degree of China’s rural population will only
become higher and higher. In the meantime, as the construction of the
rural elderly support system fails to catch up with the pace of rural popu-
lation aging, the elderly support in rural China will increasingly become
one of the most urgent social issues in China.
Development gaps between China’s urban and rural

populations
The development gap between the urban and rural populations is an impor-
tant feature or problem of China’s population development. Table 12.3
shows the results in terms of unbalanced development between the urban
and rural populations as revealed by a 2005 nationwide 1% population sam-
pling survey. It can be readily observed that in the three respects height,
weight and education level, the gap between urban and rural population is
rather dramatic.
Table 12.3. Comparison of a Selection of Indicators between Urban and Rural

Population Development, 2005.
Rural: urban
Indicators Urban Rural (urban = 1)
Height (cm) of 6–7 year-old boy 120.0 117.4 0.98:1

Height (cm) of 6–7 year-old girl 118.9 116.5 0.98:1
Weight (kg) of 6–7 year-old boy 22.5 20.78 0.92:1
Weight (kg) of 6–7 year-old girl 21.6 20.16 0.93:1
Proportion of holders of junior high school 31.13 50.87 1.63:1
diploma and lower among those aged 6 and
above (%)
Proportion of holders of high school diploma 8.99 3.45 0.38:1
among those aged 6 and above (%)
Proportion of holders of associate degree and 6.34 0.42 0.07:1
higher among those aged 6 and above (%)
Proportion of the illiterate among those 2.92 8.12 2.78:1
aged 15 and above (%)
Source: Calculations based on the 2005 nationwide 1% population sampling survey

and relevant data from China Statistical Yearbook 2005.
In addition to the differences highlighted in Table 12.3, the development

gap between urban and rural areas is rather drastic in other respects as
well. For instance, according to a 2002 survey, the growth stunting rate of
children aged less than five in cities was 4.9%, with the rural rate being
17.3%; the low weight rate of children aged younger than five in cities
was 3.1%, with the rural rate being 9.3%. And according to a 2003 survey,
the mortality rate of children aged less than five in cities was 11.8, with
the rural rate being 33.4. Finally, according to a 2004 survey the average
schooling year of urban residents was 9.43 years, with the rural figure being
seven. These gaps have remained to this day.
Income Growth and the Changing Composition

of the Chinese Peasantry
Since reform and opening up, as China’s rural economy and society grows at
a fast pace, the income level of Chinese peasants has also steadily risen, with
the income structure also undergoing massive changes. Of course, income
inequality is also expanding; but as Part 6 of this book presents a relatively
comprehensive analysis of the income inequality of peasants, in this chapter,
we only intend to discuss the growth process of the income of Chinese
peasants and the characteristics of the changes in the income structure, as
well as the progress of anti-poverty efforts in rural China and associated
problems.
The income growth process of rural households in China

Since reform and opening up, the income of Chinese peasants has gener-
ally risen, but after taking into account the factor of commodity prices,
the average annual growth rate has exhibited large fluctuations. During
the first 20 years, this fluctuation was most obvious (see Fig. 12.1). From
Fig. 12.1, it can be observed that during these 30 years, the per capita
net household income of Chinese peasants on the surface had increased
37.6 times, but after factoring in the commodity prices in 1978, the actual
number was only 7.5, thus achieving an actual average annual growth of
7.3%. And within these 32 years, the changes in the income of rural house-
holds in China roughly fell into four stages: The period 1978–1985 is the
first stage, during which the per capita net household income of rural resi-
dents increased rapidly. Although the annual growth pace showed a decreas-
ing trend, a rather impressive growth rate was achieved, with the average
228 Fan Ping
Fig. 12.1. Growth trend of per capita net income of rural households in China, 1978–
2009.
Source: Obtained from China Statistical Yearbook (of previous years).
annual growth rate during the period reaching as high as 15.2%, which cor-
responded to the rural economic system reform and the ever-rising prices
of agricultural and sideline products during this period of time.
However, as this “golden” period ended, 1985 saw a dramatic decrease
in the growth of the income of Chinese peasants (only 7.8%, but still higher
than the average annual growth rate achieved during the 1978–2009 period),
thus ushering in the second stage. The agriculture industry, after six years
of rapid development as promoted by the great force unleashed by the rural
economic system reform, found itself in a predicament in 1985: The struc-
tural excess of agricultural products, with an extremely bleak market for
grain being the problem that plagued the peasants the most, was a major
reason why the growth of peasants’ income took a dive that same year. The
120-year span from 1986 to 1996 counted as the second stage of the income
growth of Chinese peasants. Township enterprises started to emerge in 1984,
with China’s rural industrialization initiated and jump-started. However,
given that during this period the agriculture sector itself was stagnant, and
the government imposed erratic (by turns stringent and lax) limits on the
township enterprises and peasants migrating into cities to seek employment
and do business, the burdens on the peasants were getting increasingly heav-
ier, which explained why the growth of peasants’ income had shown such
a dramatic fluctuation, with the year 1986 and 1989 even seeing a minus
growth in real incomes. The average annual growth rate during this period
was only 4.1%.
The period 1997–2003 is the third stage. As in the previous stage,
the average annual growth rate of the per capita net household income of
peasants during this period was only slightly over 4.0%. What differed from
the second stage is that during this stage the income of peasants remained
rather stable, without very sharp fluctuations. It also witnessed the burdens
on peasants getting heavier.
The year 2004 marked the advent of the fourth stage, during which the
actual per capita net income of rural households grew relatively stable, with
the average annual growth rate reaching 7.7%. During this stage, the bur-
dens on peasants lessened precipitously; in 2005 the government abolished
the agricultural taxes and fees, and thereafter continued enforcing transfer
payment; in the meantime, the number of peasants migrating out to seek
employment and do business was also steadily rising, with over 300 million
people now counted among the “peasant workers”. These factors all serve
as the major reasons why the actual per capita income of rural households
has been growing steadily, which can be corroborated by the changes in the
structure of peasants’ income.
The changing structure of income for Chinese peasants

Among the per capita net household income of peasants, the proportion
of income attributable to family operations has undergone three phases
(see Fig. 12.2) during the 30 years since 1978. The period 1978–1981 is
the first stage, during which the proportion exhibited a rising trend, from
26.8% in 1978 to 37.8% in 1981, recording a relatively small increase.
Fig. 12.2. Composition (%) of the per capita net household income of Chinese peasants,
1985–2009.
Source: Obtained from China Statistical Yearbook (of all previous years).
230 Fan Ping
The period 1982–1992 is the second stage, during which the proportion
rose sharply, reaching 69.4% in 1982 and 83.2% in 1988, and then declined
slightly during the following two years but bounced back to 83.1% in 1991,
before falling slightly to 82.1% in 1992. On the whole, the bulk of peasants’
income during this stage was attributable to family operations, which well
reflected the massive impact exerted by the rural economic system reform
on the rural production and operation model reform during this period.
The year 1993 marked the start of the third stage, during which the pro-
portion of income attributable to family operations had steadily decreased,
falling below 70% in 1998, below 60% in 2003 and below 50% in 2009. This
decreasing trend reflects the new phenomenon that since the mid-1990s, the
growth momentum of the rural economy given by rural economic system
reform had gradually subsided, and the number of peasants migrating to
seek employment and business greatly swelled, especially once the “wave of
peasant workers” had begun to surge.
In the meantime, the proportion of income of laborers of rural house-
holds (i.e., salary income listed in Fig. 12.2) had undergone the opposite
trend, meaning that during the 30 years under survey it first exhibited a
decreasing trend before starting to rise steadily. Due to the incompleteness
of official statistical data, we are unable to determine accurately the exact
time the turning point occurred. Judging from the data currently avail-
able, the proportion dropped to 18% in 1985, and the figure in 1978 was as
high as 66.1%. During the few years after 1985, the proportion might have
declined further, because the proportion of income attributable to family
operations kept climbing.
Since 1990, the proportion had again begun to rise, and reached 40%
by 2009. What’s worth noting is that the income of laborers of rural house-
holds after 1985 is substantially different from the notion previous to 1985,
for the former is increasingly embodied by the salary income earned by
peasants as employed laborers, while the latter mainly refers to the pay-
ment peasants received for their work as members of the collective commune
organizations.
The change in the composition of per capita net household income
of Chinese peasants has also shown an important trend, i.e., a rising
proportion of their income is attributable to non-agricultural employ-
ment, and a decreasing proportion is attributable to agricultural employ-
ment (see Fig. 12.3). From Fig. 12.3, it can be readily observed that
except for the years 1985, 1990 and 2004, the proportion of agriculture-
generated income has been steadily declining over the years, and that
Fig. 12.3. The change in proportion of agriculture-generated income and non-agri-

culture-generated income among per capita net household income of peasants (%), 1978–
2009.
of non-agriculture-generated income has been steadily rising. By 2009,

the former had dropped to 39.6%, and the latter had climbed to 49.5%.
In addition, since 2005 the latter has begun to steadily surpass the for-
mer. In other words, at the current stage, as far as peasants’ income is
concerned, non-agriculture-generated income is becoming more important
than agriculture-generated income.
Finally, what is also worth noting is the change in the proportion
of transfer income among the per capita income of rural households
(see Fig. 12.4). From Fig. 12.4, it can be observed that property income
used to account for a fraction, but since 1997 its proportion has begun
to rise steadily, and by 2007 exceeded 3%. As the property income of
rural households increases, given the fact that the government currently
encourages the growth of property income of urban and rural residents, this
increasing momentum will continue unabated. The transfer income reflects
the income received by rural households from the secondary distribution,
whose proportion is always higher than that of property income, and
since 2004 it has been growing continuously for six years, with the 2008–
2009 period seeing the most significant growth. During this period, the
government issued a series of preferential policies such as “direct subsidies to
grain producers”, “subsidies for growing superior grain cultivators”, “sub-
sidies for the purchase of agricultural machinery and tools”, and “general
232 Fan Ping
Fig. 12.4. The change in proportion of property income and transfer income among
per capita net household income of peasants (%), 1990–2011.
subsidies for agricultural supplies”. In the meantime, the guaranteed mini-

mum income system in rural areas has basically covered all of the manda-
tory items, and the construction of the new rural cooperative medical care
system has also made great progress. All these policies have helped boost
the transfer income of peasants. In a sense, the transfer income received by
peasants is increasingly becoming a new area of income growth for peasants.
The achievements of and challenged faced

by anti-poverty efforts in rural China
Before reform and opening up, since the development level of rural
China was rather low, the poverty was quite widespread. According to rel-
evant statistics, by 1978 there had been a total of 250 million people living
in poverty in rural areas, accounting for nearly 30% of the total rural popu-
lation. The reform initiated in 1978, especially the rural household contract
responsibility system reform started in the early 1980s, not only promoted
the development of rural economy, but also advanced the progression of
the anti-poverty campaign in the rural areas. During the past 30 years, the
impoverished population in rural China has sharply declined (see Fig. 12.5).
According to statistics based on the old official poverty standard, by
2007 the absolutely impoverished population in rural China had decreased
to less than 15 million, compared with 250 million prior to 1978, indicating
that China’s anti-poverty campaign in rural areas has made considerable
gains. However, in addition to the absolutely impoverished whose income is
Fig. 12.5. The decreasing trend of impoverished rural population in China: 1978–2007.
Source: Poverty Monitoring Report of Rural China (2008).
below the national poverty line, there are also a large number of so-called
“low-income earners” in rural China, even though their numbers are also
steadily decreasing. According to official statistics, as of 2000, there were
a total of 62.13 million low-income earners in China; the figure shrank to
28.41 million in 2007, which still constituted roughly 3% of the total rural
population.
In other words, if we regard the low-income earners as belonging to
the “relatively impoverished population”, then by 2007, the absolutely
impoverished population together with the relatively impoverished popula-
tion should have accounted for 4% of the total rural population. It is also
worth noting that the national poverty line set by the Chinese government
has always been on the low side. Therefore, the government revised the
original rural poverty standard in 2009 and according to the new standard
calculated that there would be nearly 36 million people living in absolute
poverty in 2009. In 2011, China will continue to raise the rural poverty line
to 1,500 yuan for per capita annual net income, which, it must be acknowl-
edged, is still far lower than the international poverty line standard.
The biggest challenge to China’s anti-poverty campaign in rural areas
is that the rural poverty at the current stage is a severe case of poverty,
which mainly occurs in those regions that suffer a poor ecological environ-
ment and where social and economic development is greatly hindered, and
mainly happens to the special group of people who have difficulty lifting
themselves out of poverty on their own volition. The anti-poverty campaign
in modern rural China, therefore, needs a shift in strategy. If we say in the
early-to-mid-1980s, the anti-poverty efforts in rural China mainly relied on
the general development of rural economy, then it can be equally claimed
234 Fan Ping
that in the mid-to-late 1980s and early-to-mid-1990s, the anti-poverty strat-

egy had undergone an adjustment, which was that the government encour-
aged the impoverished regions to open up, and through the development of
impoverished regions to promote the anti-poverty campaign.
After the mid-1990s, China’s anti-poverty strategy in rural areas under-
went a second adjustment, the core of which was to shift the focus
of anti-poverty efforts from supporting the development of impoverished
regions to helping those impoverished households develop. The anti-poverty
experiences accumulated so far show that this is a most demanding task,
which requires not only that anti-poverty work shall be carried out with
a view to development, however, efforts should also be made to uplift the
severely impoverished population out of poverty. Since the beginning of the
21st century the government has instituted a subsistence security system in
rural areas, as a valid attempt to adjust its anti-poverty strategy from this
angle. According to official statistics, the minimum living standard security
system in rural China has basically covered all mandatory items, with the
outstanding problem of how to enhance the support level in a reasonable
manner.
Consumption Growth and Inequality of Rural

Households in China
Generally, the living and consumption level of residents is closely related to
their income level, and Chinese peasants are no exception. For instance, if
we conduct regression analysis adopting the per capita income of Chinese
rural households since reform and opening up as the independent vari-
able and their per capita living consumption as the dependent variable,
the results show that the regression coefficient reaches 0.760 (significance
being far smaller than 0.001), with the explanatory power of the regression
model reaching 99.7%. As a whole, the Chinese peasants quite prominently
demonstrate the feature “living within one’s means” when it comes to living
consumption.
Growth of living consumption of rural households

in China
Owing to the increase in household income, the living consumption level of
China’s rural households has also been steadily rising (see Fig. 12.6). From
Fig. 12.6, it can be observed that except for the year 1998 and 1999, the
Fig. 12.6. Growth of per capita living consumption of rural households, 1985–2009.
nominal living consumption of rural households has exhibited an increasing

trend over the years; compared with 1978, the nominal consumption in 2009
increased 33.4 times. However, due to the fact that the commodity prices
in rural areas have been rising by the year, the actual growth in living
consumption is not as high as indicated.
If we calculate the actual growth in living consumption of peasants
after factoring in the 1985 commodity prices, then from Fig. 12.6 we can
observe that compared with 1985, the actual living consumption in 2009
only increased by a little over 2.2 times, achieving an average annual growth
rate of 5.1%. What is worth noting is that the actual growth in living
consumption of rural households fluctuated greatly, with two years even
seeing negative growth, indicating that the change in commodity prices
exerts a very significant impact on the actual consumption of Chinese
peasants.
Improvement to the living consumption structure

of Chinese peasants
The improvement of the living consumption structure of rural house-
holds can first of all be illustrated by the changes to the Engle coeffi-
cient (see Fig. 12.7). From Fig. 12.7, it is easy to see that within the 30
years, the changes to the Engle coefficient of living consumption of rural
households in China has basically fallen into two stages: The years prior
to 1978 constitute the first stage, during which the Engle coefficient had
236 Fan Ping
Fig. 12.7. Changes on Engle coefficient of per capita living consumption of rural house-
holds: 1978–2009.
been steadily declining; the years after 1989 serve as the second stage, dur-
ing which the Engle coefficient uncharacteristically rose in 1989, reached a
peak in 1990, and then dropped again, above the level of 1989 until 1997,
and finally falling below the 1989 level in 1998. By 2009, it had dropped to
41%. According to a standard widely held in China, when the Engle coeffi-
cient is below 50% but above 40%, people’s living standard has presumably
reached the so-called “moderately prosperous” (xiaokang) stage. In other
words, since the year 2000, the life of Chinese peasants has reached the
stage of xiaokang as far as living consumption is concerned. Of course, it
does not mean that there are no longer those on the subsistence line or still
living in poverty among the current rural population.
The decrease of the Engle coefficient means the growth of other
consumption items among the living consumption of peasants, with the
three biggest items of consumption after food consumption being hous-
ing, transportation and communication, entertainment, education prod-
ucts and services. In 2009, these three items of consumption accounted
for 20.2%, 10.1% and 8.5% of the living consumption of rural households
respectively. Accordingly, the housing conditions of rural households have
also been significantly improved. In 1978, the per capita housing area of
rural households only amounted to 8.1 square meters, which increased to
33.6 square meters in 2009. In addition, the ownership of modern con-
sumer durables is also getting increasingly prevalent among rural house-
holds. Washing machines started to enter rural households as early as 1983,
with its ownership per hundred households being only 0.36, and by 2009
the figure had swelled to 53.14. Refrigerators first came to the country-
side in 1984, with its ownership per hundred households being 0.03, which
had swelled to 37.11 in 2009. TV sets were first introduced to the rural
areas in 1980, with its ownership per hundred households being 0.39, which
had increased to 116.59 (7.65 black-and-white TV sets and 108.94 color
TV sets) in 2009. Motorbikes started to enter rural households in the late
1980s and early 1990s, with its ownership per hundred people in 1990 being
0.89, which had increased to 56.64 in 2009. Such durable goods as mobile
phones, personal computers and private cars have all started to enter the
rural households in the 21st century, with the ownership of mobile phones
already reaching saturation point (115.24 per hundred households) and that
of PCs per hundred households reaching 7.46. It can be concluded that a
whole new consumption market of tremendous potential is gradually taking
shape in rural China (Chen, 2009), which is increasingly becoming the new
engine to drive China’s economic development. The Chinese government
has also intensified its efforts to tap the rural consumption market, having
taken measures such as subsidizing the purchases of home appliances and
cars in rural areas to boost the sales of consumer durables.
The inequality of Chinese peasants’ levels of living

consumption
Generally, consumption inequality is a manifestation of income inequal-
ity. The living consumption inequality of Chinese peasants is as serious as
income inequality. On the issue of consumption inequality of peasants, the
aspect that attracts the most attention is the consumption gap between
rural and urban residents. Just as the income gap between rural and urban
residents (see Part 6) is rather wide, the consumption gap between rural
and urban residents is also quite dramatic (see Fig. 12.8). From Fig. 12.8, it
can be observed that the change of the disparity between urban and rural
residents in per capita living consumption roughly corresponds to that of
the disparity in per capita income, but they also differ in some respects. On
the whole, the ratio of the living consumption of urban residents to that
of rural residents is in most of the years larger than the ratio of the per
capita income of urban residents to that of rural residents — of the 32 years
from 1978 to 2009, 30 years has witnessed such a pattern. In addition, it is
worth noting that the former climbed to 3:1 earlier in 1991, while the latter
did not exceed 3:1 until 11 years later in 2002. The reason why the con-
sumption gap between urban and rural residents is larger than the income
gap is due to the fact that part of the peasants’ income will have to be
invested into agricultural production. However, in 2008 and 2009, the per
238 Fan Ping
Fig. 12.8. Living consumption gap between urban and rural residents in China: 1978–
2009.
capita consumption gap between urban and rural residents shrank some-
what, which was also smaller than the per capita income gap between urban
and rural residents, which we believe can be attributed to the implementa-
tion of the new policies aimed at boosting rural consumption by means of
subsidizing purchases of home appliances and cars in rural areas. In terms of
rural society itself, the consumption inequality of peasants is also reflected
in many respects. First of all, it is the regional differences. For instance,
in 2009, the largest ratio of living consumption of rural residents of each
province reached as high as 4.09:1 (see Table 12.4).
From Table 12.4, it can be observed that among the 31 provinces, the
per capita consumption of rural residents in two provinces is two times that
of the national average, that in four provinces is 11%–94% higher than the
national average, and that in six provinces it is 1%–7% higher than the
national average, with the 19 other provinces failing to meet the national
average. Most of the Western provinces fail to meet the national average,
especially the Gansu province, Guizhou province and Tibet autonomous
region, whose level is even less than 70% of the national average.
This reminds us that the gap between provinces in consumption of
rural households can be generalized as larger regional differences. Gener-
ally speaking, in the early 1980s, the regional gap in consumption of rural
households was relatively small, but it began to widen after the 1990s.
Since the beginning of the 21st century, the overall gap has been constantly
changing quite fast. However, compared with the regional inequality of
peasants’ income, the degree of regional inequality of consumption is lower
(see Part 6).
March 5, 2013
16:48
9in x 6in
Table 12.4. Comparison among Provinces in China on Per Capita Living Consumption of Rural Households in 2009 (Unit: yuan).

Per capita Ratio to Per capita Ratio to Per capita Ratio to
consumption on national consumption national consumption national
Province expenditure average Province expenditure average Province expenditure average
Shanghai 9,804.4 2.46:1 Hunan 4,020.9 1.01:1 Shanxi 3,304.8 0.83:1

Beijing 8,897.6 2.23:1 Inner Mongolia 3,968.4 0.99:1 Guangxi 3,231.1 0.81:1
Zhejiang 7,731.7 1.94:1 Jilin 3,902.9 0.98:1 Qinghai 3,209.4 0.80:1
Jiangsu 5,804.5 1.45:1 Hubei 3,725.2 0.93:1 Chongqing 3,142.1 0.79:1
Guangdong 5,019.8 1.26:1 Anhui 3,655.0 0.92:1 Hainan 3,088.6 0.77:1
Fujian 5,015.7 1.26:1 Jiangxi 3,532.7 0.88:1 Xinjiang 2,950.6 0.74:1
Shandong 4,417.2 1.11:1 Henan 3,388.5 0.85:1 Yunnan 2,924.9 0.73:1
Tianjin 4,273.2 1.07:1 Hebei 3,349.7 0.84:1 Gansu 2,766.5 0.69:1
Liaoning 4,254.0 1.07:1 Shaanxi 3,349.2 0.84:1 Guizhou 2,421.9 0.61:1
Heilongjiang 4,241.3 1.06:1 Ningxia 3,347.9 0.84:1 Tibet 2,399.5 0.60:1
Sichuan 4,141.4 1.04:1
Source: China Statistical Yearbook 2009.
239
b1344-ch12
240 Fan Ping
Table 12.5. Comparison of Average Living Consumption of Rural Residents in the

Three Areas of China (Unit: yuan).
Eastern areas:
Central areas:
Western areas
Eastern areas Central areas Western areas (Western areas = 1)
1981 232.12 183.01 165.94 1.40:1.10:1

2000 2,326.17 1,477.89 1,134.25 2.05:1.30:1
2005 3,539.81 2,252.8 2,033.68 1.74:1.11:1
2006 3,943.15 2,535.13 2,197.32 1.79:1.15:1
2007 4,066.2 2,472.12 1,975.32 2.06:1.25:1
2008 5,008.37 3,343.25 2,875.87 1.74:1.16:1
2009 5,359.6 3,614.25 3,280.94 1.63:1.10:1
Source: Calculations based on data furnished by China Statistical Yearbook (of all
previous years), as weighted by the rural population of each province.
Table 12.6. Comparison of Per Capita Consumption of Rural Households as Grouped

by Income Level (Unit: yuan).
Rural Rural Rural

Rural house- Rural house- house-
households with households with holds The
holds with medium- holds with medium- with the highest:
the lowest to-low medium to-high highest The
income income income income income lowest
2003 1,064.8 1,377.6 1,732.7 2,189.3 3,755.6 3.53:1

2004 1,248.3 1,581.0 1,951.5 2,459.6 4,129.1 3.31:1
2005 1,548.3 1,913.1 2,327.7 2,879.1 4,593.0 2.97:1
2006 1,624.7 2,039.1 2,567.9 3,230.4 5,276.7 3.25:1
2007 1,850.6 2,357.9 2,938.5 3,682.7 5,994.4 3.24:1
2008 2,144.8 2,652.8 3,286.4 4,191.3 6,853.7 3.20:1
2009 2,354.9 2,871.0 3,546.0 4,591.8 7,485.7 3.18:1
In addition to the gaps between urban and rural areas and different
regions in terms of rural consumption, the gaps between different consumer
groups with different income levels are also rather dramatic (see Table 12.6).
Table 12.6 shows the per capita consumption of rural households with dif-
ferent income levels during the recent seven years. Generally speaking, the
gap between the average consumption of the rural household with the high-
est income and that of the rural household with the lowest income is wider
than the gaps between urban and rural areas and different regions, but on
the whole the gap has narrowed. It can be said that the minimum living
security system implemented by the Chinese government in the rural areas
in recent years has been instrumental in narrowing the gap. According to
relevant statistics, the number of people of rural low-income households
who receive the minimum living allowance has increased from 8.25 million
in 2005 to 47.6 million in 2009 and the first three quarters of 2010 witnessed
a total of 50.87 million people receiving the minimum living allowance, with
the average allowance standard being 110 yuan per person per month and
the monthly per capita subsidy being 62 yuan.
Changes to the Stratification of China’s Peasants

In academic circles, peasants are normally defined by occupation and iden-
tity. The implications of this kind of definition are threefold: First, being
defined by identity means the rural population is identified in national
statistics that emphasize the household registrations of peasants and their
relations to land; second, peasants by occupation means those rural labor-
ers who are engaged directly in agricultural production. Agricultural labor
is their way of work, and agricultural output is their main source of income.
They can further be divided into traditional “peasants” and modern “farm-
ers” according to their way of carrying out agricultural production. The
former is based on the model of household economy, and pursues self-
reliance, while the latter attaches importance to the market orientation
of production, featuring a high degree of technical and capital intensity.
Third, Chinese peasants refer to the resident population dwelling in rural
areas, as opposed to the peasant workers who migrate out to seek employ-
ment all year around. It is worth noting that in the study of social strata
structure during social transformation this kind of definition is indeed risk-
prone in that it assumes all the other strata progress with time while the
peasant stratum remains as a remnant of the social structure of the natural
economy or planned economy prior to social transformation, and we are
likely to overlook the differentiations that take place within the peasant
stratum.
The new situation of social stratum differentiation

of China’s peasants since reform and opening up
Since 1949, the shift in social structure in rural China has fallen into four
stages, i.e., the rural land reform, the era of planned economy, the early
242 Fan Ping
days of the reform and opening up campaign (1978–mid-1990s), and the

late period of reform and opening up campaign (mid-1990s to present),
with unique social stratum structures formed in each stage (Cui, 2010).
The most representative studies on stratification of China’s peasants
during the early stage of reform and opening up were carried out by Mr.
Lu Xueyi. He divided China’s peasants into eight strata by three indicators
i.e., occupation, capital and level of education (Lu, 1989). During the later
stage of the reform and opening up campaign, a market-based economic
system was established in China, with its industrialization entering the
intermediate stage and its urbanization accelerating. The environment in
which the peasant stratum undergoes differentiations has changed, mainly
in the following respects: Some peasants (according to identity) flock to
cities and towns, and under the social administration of cities, such as peas-
ant workers; the township enterprises have undergone transformation, now
falling under the jurisdiction of all kinds of industrial parks, which hinders
the development model of “peasants leaving the farmland but never the
hometown”; the infrastructure and public service in rural areas have been
improving, with supply levels steadily enhanced; with the proposition of
“coordinated planning of urban and rural areas” at the Third Plenary Ses-
sion of the 16th CPC in 2003 serving as a watershed event, the resources
allocation during rural development and the content of rural construction
have undergone significant changes, signaling that China now shifts from
the stage of centering everything on economic development to the stage
of coordinated development of economy and society; the government abol-
ished the agricultural tax, improved the rural infrastructure and increased
investment in rural public service, thus effectively invigorating rural
development.
Due to the influence of these factors, the social stratum differentiations
of China’s peasants currently exhibit five trends:
(1) Chinese peasants have begun to shift from the traditionally self-reliant
peasants of the era of a small peasant economy to modern farmers
who produce to market needs, employ technologies to carry out agri-
cultural production, and pursue production efficiency, i.e., to shift from
rural household operation to scale operation; from self-reliance to order-
driven agriculture; from extensive farming to standardized production.
Of course, it must be acknowledged that this kind of shift is still in an
early stage.
(2) Modern farming is increasingly breaking through the boundaries of
traditional rural household operations, with the farmers who engage
themselves in professionalized, standardized, and green agricultural

production exploring new forms and mechanisms of collaboration and
organization. The farming scale achieved through the circulation and
accumulation of agricultural land, the market orientation of prices of
green food, such requirements of environmental protection as recycling
production and emission reduction, the organizational efficiency of col-
laborations, and precise and standard field management techniques
have all been instrumental in encouraging some professional farmers
to get organized throughout the links of agricultural production. The
most typical scenario is that a professional cooperative of agricultural
production is established, centering around those large rural households
who operate thousands of acres of land through circulation contracting,
so as to resolve many difficult problems in production and operation
which individual rural households simply cannot resolve on their own.
(3) In the meantime, intensive farming also fosters employment competi-
tion according to a comparative benefit mechanism, with the traditional
rural employment model of “son following father’s footstep” severely
challenged.
(4) The circulation of agricultural land has become a major breakthrough
to boost the property income of peasants, with the land benefit distri-
bution and the shifting purpose of land becoming a major event that
has given rise to new rural social issues.
(5) The government has been forcefully promoting the allocation
of resource elements in rural areas, which is increasingly becoming
the key guideline for the government to coordinate the development
of urban and rural areas. Such a coordinated development program
of urban and rural areas requires the public administration and vil-
lager autonomy in rural areas to adapt to and serve this major change,
and the public service and social construction in rural areas also serve
this goal.
Changes to employment structure, occupational structure

and social stratum structure of China’s peasantry
With the development of the rural economy and the continuously changing
industrial structure, the employment and occupational structure of peasants
have also undergone significant changes, which provide a new foundation
for the social stratum differentiations of peasants.
What lies at the heart of the change in the employment structure is the
change in the proportion of those working in agriculture and those working
244 Fan Ping
Fig. 12.9. Change in employment structure of rural labor force (%): 1978–2009.
Source: Calculations based on data furnished by China Statistical Yearbook (of all
previous years).
in non-agricultural sectors. Figure 12.9 roughly shows the major changes

experienced by China’s rural labor force over the past 30 years, which
can be characterized as “a steady decline in the proportion of agricultural
employment and a steady increase in the proportion of non-agricultural
employment”. What is worth noting here is that not that all of the labor
forces employed in non-agricultural sectors in rural areas are holders of
rural household registrations, but that they only account for a fraction.
Therefore, Fig. 12.9 can still roughly reflect the changes in the employment
structure of China’s peasants over the past 30 years.
For social stratum differentiations, the most significant change in the
employment structure of the rural labor force lies in the fact that more and
more laborers who hold rural household registrations and are identified
as peasants by relevant systems of the state start to separate themselves
from agriculture and enter non-agricultural sectors to become workers or
small-to-medium business owners. For this, the change in the occupational
structure of peasants (by identity) provides further evidence; the 1994
nationwide fixed rural observation points survey and the 2006 nationwide
rural survey provide the empirical materials for us to gain insight into the
occupational structure of peasants and changes thereof.
In 1994, the Central Policy Research Office and the Ministry of Agri-
culture conducted a special survey of the 312 fixed rural observation points.
The survey shows that among the 44,256 rural laborers surveyed across the
country: Agricultural workers constituted 63.4%, peasant workers 12.2%,
managerial personnel of rural collective enterprises 0.9%, individual or
collaborative industrial/commercial laborers/operators 6.5%, workers in
private business owners 0.8%, employed laborers 3.0%, village cadres 0.6%;
teachers, technical, medical, cultural and artistic workers 1.1%, housekeep-

ers 8.1%, and other laborers 3.3%.
Within agricultural workers, there also existed different categories of
employment. According to data released by the Department of Population
and Employment of State Statistics Bureau in 1994, in that year there
were a total of 797 million rural household registration holders living in
rural areas nationwide, constituting 88.4% of the total rural population.
Among these individuals, those who truly engaged in the production of
farming, forestry, animal husbandry, and fishery totaled over 460 million,
with the remaining 60 million engaged in non-agricultural work. And among
the 460 million agricultural workers, there were 420 million grain growers,
accounting for 64.98% of the total employed in rural areas. Others included
cotton growers (14.69 million), vegetable growers (6.7 million), tea, fruit and
mulberry growers (3.16 million), and other agricultural laborers (1.83 mil-
lion). This is a general picture of the employment pattern of the rural labor
force in that year.
A second nationwide rural survey conducted in 2006 presented us with
the new changes in the industrial and occupational distribution of China’s
peasants, and their impacts on the social stratum differentiations of peas-
ants are rather evident. First, according to this survey there were a total of
200.16 million rural operational households in China in 2006, an increase of
3.7% compared with the 1996 survey. And among these rural operational
households, those who mainly relied on agricultural income accounted for
58.4%, a decrease of 7.2% compared with ten years ago. Those employed
in rural areas totaled 478.52 million, accounting for 90.1% of total rural
labor resources, among whom those who worked in the primary industry
made up 70.8%, i.e., 338.7922 million. Those who worked in the secondary
industry constituted 15.6%, and those who worked in the tertiary industry
accounted for 13.6%.
Second, after township enterprises underwent transformations, the
managerial personnel with village-run enterprises separated themselves
from the stratum of workers of village-run collective enterprises. Some
managerial personnel who acquired the ownership of village-run enterprises
became private business owners, and worker originally working for village-
run collective enterprises became salary earners, now belonging to the so-
called “peasant workers” stratum. As the market matures and operational
scale expands, the business operations of private business owners gradu-
ally broke through the confines of the village, with their enterprises no
longer employing local villagers but migrant labor force, so as to cut cost
246 Fan Ping
and facilitate management. According to official statistics, in 2008, those

working in private enterprises in rural areas totaled 27.803 million, among
whom there were 4.407 million private business owners and 21.67 million
individual rural employees.
Third, differentiations are taking place within agricultural workers, who
are now shifting from peasants to farmers. Peasants are based on house-
hold operations, relying on family labor and the accumulation of tradi-
tional experiences to carry out agricultural production, which is mainly
self-reliant. Farmers, however, engage themselves in agricultural operations
according to methods of scale operation and adjust the farming structure to
market needs, employing agricultural workers to carry out market-oriented
agricultural production. In addition, after abolishing the agricultural tax
in 2006, the government also offered peasants farming subsidies. As a conse-
quence, scaled operations can yield greater benefits, which serves as great
incentives for peasants to pay more attention to land output and attach
more importance to raising the efficiency and benefit of agricultural pro-
duction, which has led to the emergence of a great many agricultural oper-
ational households which contract land. In the meantime, new divisions of
labor have also emerged between the production and sale of agricultural
products, with some peasants themselves engaging in the sale of agricul-
tural products and becoming so-called “peasant brokers”. All in all, in the
new situation of the development of rural economy and society, the occu-
pational structure of rural society has been undergoing multi-dimensional
and multi-level differentiations, which are bound to play a positive role in
changing the structure of the peasant stratum.
Fourth, the number of cultural and medical workers in rural areas has
decreased. On the one hand, the government has extended its administra-
tive arms into rural society in terms of public service and cultural ser-
vice, replacing the partial functions of the original rural intellectuals; on
the other hand, the cultural service function in rural areas has gradually
shifted from the traditional social functions of rural areas to more special-
ized functions, which has also reduced the space of rural cultural service
originally undertaken by rural intellectuals. The system of citizen-managed
teachers in rural primary schools has been scrapped during the rural edu-
cational system reform. Village-run clinics are basically household medi-
cal care business owners duly qualified and registered. In 2008, there were
938,313 rural doctors and medical workers in China, with medical care
and medical bill settlement networks connected to township clinics and
county-level hospitals put in place. There were a total of 640,975 cultural
operators in rural China, with rural opera troupes all based on partnerships
and the weddings and funerals in rural areas all undertaken by professional
performers on the township and county level. Market-oriented services have
seeped into rural folk life and cultural consumption, limiting the role that
used to be played by rural intellectuals and changing the cultural consump-
tion habits and consumption patterns of the villagers. Cultural workers in
rural areas have gradually grown into a stratum of individual rural laborers
and individual industrial and commercial households.
Fifth, compared with the past, the strata of individual rural laborers
and individual industrial and commercial households have been growing
rapidly. On the one hand, the agricultural machinery operators and “peas-
ant brokers” are growing fast, who have facilitated and promoted the scale
operation of agriculture; on the other hand, the large farming households
are also growing rapidly, expanding their contracted land on the basis of
rural households and employing a labor force to conduct agricultural pro-
duction according to standard procedures. The nature of their operation
is similar to that of the individual industrial and commercial households,
but there are also some large farming households whose way of operation
is similar to that of private business owners.
Sixth, the job of such rural administrators as members of village
Communist Party branches and villagers’ committees has also undergone
considerable changes. According to relevant statistics released by the
Ministry of Civil Affairs, as of the end of 2009 there were a total of
599,000 village committees in China, with the members of village commit-
tees exceeding 2.339 million. In contrast, there were 906,000 village com-
mittees nationwide in 1997, with members of village committees totaling
3.788 million. As can be observed, the number of people belonging to this
occupational stratum has decreased by 1.449 million, a whopping 38.3%
drop. This kind of change is attributable to the abolishing of agricultural
taxes and the implementation of the policy of “consolidating administrative
villages”. In other words, the scale of the occupational group or stratum
of rural administrators is subject to the changes of national policies and
institutional arrangements.
The main characteristics of social stratum differentiations

of today’s Chinese peasants
After analyzing the composition of rural strata and the process of their
differentiation since the dawn of the century, we can draw the conclusion
248 Fan Ping
that the differentiation of the stratum of Chinese peasants has taken on

new characteristics:
First, the organizational mechanisms of agricultural production in rural
areas are undergoing significant changes. The traditional model of employ-
ment as characterized by “son following father’s footsteps” to conduct
agricultural production simply cannot be sustained anymore, which will
have a profound effect on rural employment and the structure of rural
social strata. Household-based agricultural operations are now shifting
toward the direction of adopting advanced technologies and production
techniques, with the level of intensity continuously enhanced, leading to
the emergence of modern agriculture and modern farmers in terms of
the mode of production, condition of production, and environment of
production.
Second, the transfer of the rural labor force from being primarily driven
by a force of “pull” to a force of “push”. Chinese peasants are shifting from
traditional peasant status to modern farmers, with latent unemployment
within agriculture now starting to get more and more pressing, a change
that is prompting the rural labor force to move into non-agricultural sectors
and hence flow to such strata as workers and small-to-medium business
owners in terms of occupation and stratum status. This shift began in
2006, with the mechanism that drives rural labor force transfer shifting
from a force of “pull” as exerted by urbanization and industrialization to
a force of “push” brought about by the emergence of latent unemployment
within agriculture. When the pulling force is dominant, the occupational
flow of peasants is basically out of voluntary choices — but if the pushing
force prevails, the social mobility of peasants might very well be a forced
flow, which is exposed to the risk of being marginalized by both agricultural
production and rural life.
Third, peasant unemployment has become a serious social problem in
modern rural China. The peasant unemployment mentioned here does not
refer to the unemployment resulting from the surfacing of the latent unem-
ployment within agriculture, but rather the phenomenon of some peasants
losing both their jobs and their land as a result of the massive land req-
uisitions during the process of industrialization and urbanization and the
government’s failure to offer adequate re-employment assistance to those
deprived of land. Currently, there is no authoritative statistics in China con-
cerning the size of farmers deprived of land. Some scholars put the number
at 40 million to 60 million. Some of them have merged into the urban life,
and shed their rural status, while others are stuck in a predicament: they
cannot get re-employed, but they are also not effectively covered by urban
social security system. Such people have been at the center of social con-
flicts in urban and rural areas in recent years. In present-day China, social
conflicts arising out of land requisitions are getting more and more intense,
the real reason for which does not lie in the rapid progression of urbaniza-
tion, but that there still exists some serious problems with the land policies
and the practice of land requisitions, as characterized by the unequal dis-
tribution of profits when land is converted into non-farming land, which
violates the interests of peasants as land contracting rights owners.
Fourth, collective resources and collective assets management in rural
areas is faced with new patterns, with interest relations among all social strata
in rural society prone to social conflicts. At the current stage, the income right
and distribution right of collective assets in rural China are yet to be improved.
The collective assets managed by village committees are mostly land, with the
interests-and-rights correlation between the villager status and land contract-
ing becoming a prominent problem in rural social administration. Given that a
land right is difficult to define, a large number of conflicts arise between village
administration and villagers’ interest and right. It can be said that the prob-
lem of land highlights the new characteristics of the stratum relations in rural
areas: simplified stratum relations, strengthened awareness of resource pro-
tection, and interested parties’ strong disapproval of and fighting against such
practices as villages exploiting resources and cities exploiting rural resources,
which have all exerted a significant direct impact on social integration and
social order in rural China.
The issue of China’s rural areas and agriculture ultimately comes down
to the issue of China’s peasants. How small rural households with decen-
tralized operations and extra-large scale become modernized, and how they
get to share the fruits of social development with other social strata, are
the fundamental questions that will determine the future development of
Chinese society. On a positive note, with the establishment of the system
of agricultural land circulation and the concentration of farmland, agri-
cultural workers will gradually grow into independent operators of modern
agriculture, instead of the traditional small peasants, and they might merge
with the small-to-medium business owners and other individual operators
in the non-agricultural sectors to form the intermediate stratum of soci-
ety. The key challenge is that if addressed improperly, these problems may
hinder the development of rural China and Chinese peasants, and will in
turn affect the continuous development of Chinese economy, the effective
integration of Chinese society, and China’s long-term peace and stability.

Part Four
Enterprises and Entrepreneurship
251
252
13
Innovative Entrepreneurship in Brazil
S. K. Guimarães
Introduction
Unlike in China, in Brazil one cannot properly refer to the emergence of pri-
vate entrepreneurs, for the country has been, since its discovery (in the year
1500), part of the capitalist world. There is, however, a significant changing
feature in the emerging capitalist economies. As many have pointed out, one
of the most striking features of contemporary capitalism is the emergence
of innovative entrepreneurship (innovative products and/or service gener-
ating the firms’ main net revenues) in countries that were until not long
ago, either small peripheral agricultural economies, like Israel and Taiwan,
or lacking technological innovative capability, like India (Saxenian, 2008:
379–394).
As it is well known, Information and Communication Technologies
(ICTs) and Biotechnology are the key industries of the so-called third
technological revolution (production growth is based on knowledge instead
of on energy and material resources; see Castells, 1996) which emerged
after the World War II through the consolidation of the science-based
industries.
These two areas of knowledge (ICTs and Biotechnology) favor a closer
interaction between science and technology/innovation, as they have imme-
diate economic and commercial potential. This potential leads to the emer-
gence of a new paradigm concerning the relationship between the generation
of knowledge and its application. This is especially true for genetic engi-
neering, the economic and social power of which become evident through
the production of drugs resulting from the direct intervention on genes of
living organisms aiming at their modification. The new environment brings
253
254 S. K. Guimarães
greater proximity of science to innovation and, as a consequence, to busi-

ness. Innovation, however, depends on an interactive learning process that
requires knowledge exchange, interaction and cooperation among various
actors in a production network. Under these conditions, entrepreneurship
has an important role as a connection between the intangible (production
of knowledge) and tradable innovation in the market.
In the mid 1970s, mainly in the USA, a new activity emerged and
started to grow — the “scientist-entrepreneur” — as start-up firms in
biotech were established. In this case, science/research is the business and
becomes the major source of future success for the firm. At the same time,
greater complexity and bigger risks are involved, considering the way a field
like life sciences operates.
The phenomenon of innovative entrepreneurship has been considered
by some analysts as a true novelty in the new capitalist economy, that is,
the emergence of a new kind of professional, willing to be an entrepreneur,
accepting risks, as well as greater work and career flexibility, contrary to
the expectations of the working force in the past manufacturing world
(Neff et al., 2005: 307–334).
Indeed, during much of the 20th century, the idea that the large firms
were the key drive force of capitalism was dominant. In the last decades
of the century, however, innovative, high-tech entrepreneurial small and
medium-sized firms have taken on new importance in being recognized as
key drivers of innovative activity and technological change, a consequence
of the so-called knowledge economy (Whittaker, 2009). Entrepreneurship
thus assumed a renewed interest and, if in the past the small firms were
seen as victims, they are now seen as players (Ruzzier et al., 2006: 476–497).
Brazil should be added to the above-mentioned list of new emerging
entrepreneurship since the country is witnessing an increase in high-tech
entrepreneurship and “scientist-entrepreneurs”.
Brazil is, in many ways, an equally striking case. Its industrialization,
which took off in the 1940s, was based on the import-substitution model,
strongly dependent on state protectionism, which did not favor the develop-
ment of innovative entrepreneurship. In certain areas like telecom, the mar-
ket had monopsonist characteristics (just one client — the state monopoly).
In these circumstances, skilled professionals lacked incentives to become
entrepreneurs (in total opposition to what existed in Silicon Valley, Cali-
fornia, USA). The Brazilian high-tech professionals would choose, instead,
Innovative Entrepreneurship in Brazil 255
occupational trajectories associated with long-term employment, in large,

bureaucratic (and usually state-owned) enterprises.
The growth of high-tech entrepreneurship in emerging economies may
be associated with the world decentralization of Research and Development
(R&D), made possible to a great extent by ICTs.1 Data from the Science
and Engineering Indicators (2010) of the National Science Board (NSB),
USA, show the new map of R&D: In 2007, North America and European
Union were responsible for 63% of the US$1.1 trillion in world investments
in the area, compared to 71% in 1996. Pacific Asia (mainly China, Japan,
and Korea) grew from 24% to 31%. Latin America was a minor player
with just 2.6%. Despite Latin America’s low performance in the area of
R&D, Brazil is the leader in the region showing visible improvements with
repercussions in innovation and high-tech entrepreneurship.
Despite the increasing importance of innovative and high-tech entrepre-
neurship in emerging societies, research on the phenomenon has been
focused almost exclusively on North America and Europe. Little is known
about innovative entrepreneurship in emerging economies (Bruton et al.,
2008: 1–14).
Regarding the phenomenon in Brazil, some questions seem relevant:
What are the particularities of innovative entrepreneurship where the socio-
economic culture is not favorable and where innovation is not a truly
acknowledged social value? Which factors would better explain the changing
values regarding entrepreneurship? Assuming that the Brazilian high-tech
entrepreneurs have to incorporate new values and a new mindset to break
with the idea of having “a good job”, how do they take this path? These
are some of the issues to be dealt with in this article.
The article tries to approach the questions from three levels of analysis:
1. At the micro level, it examines the entrepreneurs’ motivations to build
their firms in a non-friendly environment, that is, why, when, and how
did the idea that starting a high-tech firm become a reasonable choice?
What is unique about the high-tech entrepreneurs in order to be suc-
cessful in an emerging society?
1 This transformation, which is made easier by the ICTs, contributes for questioning the
thesis that developing countries would remain in a peripheral position in the new inter-
national division of labor, as exporters of commodities and supporters of a technological
dependent industrialization (Arora and Gambardella, 2004; Ariffin and Figueredo, 2006:
191–227).
2. Assuming that innovation, although predominantly achieved within

the enterprise, tends to be the result of collective action, this arti-
cle also asks: (1) How do innovators with little experience in the
world market, as in Brazil, compete with Chinese enterprises or with
other, often multinational, experts in the world market who may
have more favorable labor market conditions? What are the strate-
gies they use to solve the problems of competition and exchange?
(2) What sort of social networks do the entrepreneurs depend on?
What are the articulations between entrepreneurship, scientific institu-
tions, financing, government, other enterprises and the business world
in general? (3) What are their sources of information and the obsta-
cles they perceive regarding the development of innovation? (4) How
do the entrepreneurs capitalize on knowledge acquired from previous
experiences?
3. At the macro level, (1) how do the prevailing features of the wider system
of market and non-market, economic, legal institutions, in sum, the insti-
tutional quality, tend to influence the firm’s performance? (2) which new
organizations are contributing to change the path dependency and the
competitive capability, especially, in Brazil, where the economy, despite
some degree of liberalization, is considered close to the world market
and, as mentioned above, where an innovative culture is not a value and
legal institutions are dominated by unprepared bureaucracies? (3) the
role of the state concerning innovation.
The article is based on data collected from research among small inno-
vative firms (up to 49 employees) in the state of Rio Grande do Sul,
South of Brazil. The research was based on qualitative methodology and
the data were drawn from semi-structured interviews with founders and
chief executives, from October 2010 to February 2011. Companies were con-
centrating on producing and developing computer software, biotechnology,
telecommunications and networking, and computer-related manufacturing.
Data were also obtained from a survey carried out by our team among 81
micro and small firms, located in incubators and technological parks in five
university campuses in the South of Brazil (states of Rio Grande do Sul
and Santa Catarina). Data from other secondary sources (databases; other
researches in the area) were also utilized.
The article is divided into three section: The first section briefly reviews
the concepts of entrepreneurship and innovation; the second section presents
the research’s empirical findings and the final section draws conclusions
that may hopefully contribute to a better understanding of the process of

innovative entrepreneurship in Brazil.2
Conceptual Considerations
Two concepts are crucial in this study: entrepreneurship and innovation.
Entrepreneurship is a concept that is ignored in mainstream economic
theory and when considered in neoclassic models, the entrepreneur is
identified with the function of capital and is conceptualized as a profit
maximizing machine (Metcalfe, 2003). Economic Sociology has brought
back the theme of entrepreneurship for its relevance in the new economy,
as the paradigmatic case of Silicon Valley illustrates so well.
The academic literature on entrepreneurs is vast and controversial. In
a broad overview, two main approaches could be considered: the supply-
side and the demand-side perspectives. The former, identified with Joseph
Schumpeter (1949), underlies the individual’s innovative nature and the
capacity to “acknowledge opportunities” (risk-taking and problem-solving
propensities; innovativeness, leadership, and the need for achievement). The
demand-side perspective focuses on the social context (Thornton, 1999: 19–
46).
To adopt one of these perspectives in isolation would be too simplis-
tic; as Thornton asserts, entrepreneurship is a dynamic phenomenon that
changes according to socio-economic and technological transformations.
Individual or socio-economic or cultural factors can be responsible for the
emergence of the phenomenon in one period but not in the other since
the nature of entrepreneurship and the requirements to begin a business
also change. The author proposes a multilevel approach which would inte-
grate analyses of “the effects of individual-level traits, organizational and
market-level variables, and population-level characteristics . . . ” (Thornton,
1999: 36).
This perspective seems consistent with the views of Deutschmann, who
asserts that uncertainty is the scenario which surrounds the entrepreneur;
the future outcome of the innovative action depends on contingent
2 It is known that high-tech sectors have different characteristics and some are more
complex and, therefore, more difficult than others to work with. This is the case of
biotechnology — one of the key sectors in the “new economy”, attracting billions of
dollars in capital, but having to cope with great risk and uncertainty. That is why
failure is more common than success in this industry.
conditions that are undetermined. Profits and gains are included in the
project but not as an immediate target. In that sense, it is important to
note that the entrepreneur cannot be identified with the bourgeois culture
(Deutschmann, 2009).
Aside from these remarks, one should also consider the OECD con-
cept of entrepreneurship, centered on the owner of a business who seeks to
add value to new products, optimizes processes or explores new markets,
contributing to the creation or expansion of economic activity.
A substantive distinction should be made between: (1) someone who
chooses to be an entrepreneur for implementing innovative ideas and
showing preference for a type of reward — self-achievement, innovation,
prestige, and (2) the one who chooses the activity for lack of alternative,
out of necessity. Entrepreneurship is supposed to make a difference in the
market. It is associated with innovation.
The other relevant concept in this article is innovation. Paul Romer,
the American economist who revolutionized economic theory, argues that
economic growth does not arise just from adding more labor to more
capital, but from new and better ideas which are expressed as tech-
nological progress; knowledge is seen as the main source of economic
growth and the latter occurs whenever people rearrange resources in
a more valuable way (Romer, 1986). Innovation is thus the base for
today’s economic growth and it expresses the proximity of science to
business.
Transferring knowledge from the lab to the market not only involves
great complexity, but also great risks. The increasing complexity, diversity
and risk involved with innovation leads to a new pattern of scientific and
technological practices. It is necessary to rely on different kinds of networks,
from the scientific and academic type (formed by members holding multidis-
ciplinary competencies), to networks that help to promote the interaction of
scientists with external actors such as entrepreneurs, managers, politicians,
and financiers. As mentioned above, innovation presupposes an interactive
learning process in which cooperation between the academic world and
firms, as well as cooperation among the latter, is considered as a crucial
factor for the success of the process. Following Romer, the Oslo Manual
(OECD, 2004: 9) defines technological innovation as “the implementation/
adoption of new or significantly improved production or delivery methods.
It may involve changes in equipment, human resources, working methods or
a combination of these”.
The Findings
The entrepreneurs and their firms
The purpose of the study was to understand how the investigated firms were
able to achieve successful growth in an “unfriendly” context, considering
that risk and uncertainty are part of the business (Aldrich, 2005) and that
the labor market in Brazil was, and is still, favorable and more amenable
to skilled professionals.
Some analysts emphasize the ability of certain individuals to perceive
valuable opportunities which they call “opportunity recognition”. This abil-
ity considered to be a central characteristic of entrepreneurship, underlying
the subjective aspects of the phenomenon (Aldrich, 2005).
Indeed, the interviewees’ answers to the question “when and how the
opportunity to open a high-tech firm was perceived as a choice”, indicate the
importance of subjective drive, considering that all the interviewees were
qualified professionals who would more easily have had a successful career
in the labor market, compared to the difficulties faced by an entrepreneur,
especially in a country like Brazil.3 The findings reveal a great number of
difficulties (among others, bureaucracy, financing, and human resources) the
entrepreneurs had to overcome all of them in order to create and maintain a
small high-tech firm in Brazil, even when the firm was already consolidated
in the market. Some of them had quited good jobs to start their own firms.
Those difficulties are confirmed by the Doing Business Report (2010), in
which Brazil is ranked 127 out of 183 economies, while China is ranked 79.4
For the variable “starting a business” (one of the indicators is time taken,
which in Brazil is 120 days versus 38 in China, although China ranked
151th for that variable); for the variable “getting credit”, Brazil is ranked
89th, compared to 65th for China and 32nd for India; for “trading across
3 Economic studies have shown that self-employment and business ownership could pro-
duce poor economic returns vis-à-vis an employment, based on which people would char-
acterize entrepreneurship as a kind of “irrational action”. Concerning the high-tech firms
we investigated, this was true particularly in the initial years. Even though, the gains
may increase in the coming years, this seems not to be the main driving factor to explain
entrepreneurship (Aldrich, 2005).
4 The Doing Business Report considers a list of 183 good practices for world economies,
ranking them according to variables that affect the feasibility of doing business, to build
the index of ease business. The main variables taken into account, among others, are:
“starting a business”, “getting credit”, “protecting investors”, “paying taxes”, “trading
across borders”, “closing a business”.
borders” Brazil is ranked 114th, compared to 24th for Japan, and 50th for
China; for “closing a business” Brazil is ranked 132nd compared to first for
Japan and 68th for China.
Despite the obstacles, the motivation for creating a venture came,
according to the interviewees, from the deep feeling of frustration at
not having their own innovative ideas well received by their employ-
ers (either at private or public companies). They also refer to the
desire for self-achievement, which includes carrying out research. In those
cases, subjective (the desire to experiment with innovative ideas and the
knowledge to do this) and objective factors (the introduction of new tech-
nologies and the opening of new markets) have operated as a trigger to
create a start-up. There was a general belief among them that starting
one’s own business would contribute to personal satisfaction and better-
ment, greater independence, financial gains, job satisfaction, and intellec-
tual challenge.
The assertion above seems true for those who successfully sold a pre-
vious venture and started all over again, creating a new firm, coping again
with all uncertainties and risks until the new firm got consolidated in the
market.
It is interesting to observe that the interviewees’ family background
showed no correspondence with their drive and perceptions regarding the
creation of a business. There were no entrepreneurs among the respondents’
parents who, in general, were public servants. The large majority of entre-
preneurs interviewed see themselves as middle class and when involved with
R&D activities, they also see themselves as researchers. In the biotech firms,
the founders are, in general, also researchers and their motivations and
interests tend to be related both to the academic world and to the market.
To a certain extent, this is the result of a particular situation in Brazil,
where academic rewards, in the state/public universities, are more eas-
ily accessible than those in the business world. The consequence of being
identified with the research environment is that the employment and work
relations tend to be closer to a horizontal and cooperative kind of relation-
ship. The effort to retain skilled people (because of scarcities in the labor
market) may also contribute to more friendly working relations.
The interviewees would fit the picture sketched by Schumpeter on the
definition of an entrepreneur, as a creator of new opportunities who pulls
together previously unconnected resources for a new economic purpose,
breaking away from established routines.
Some analysts challenge the subjective perspective to explain entrepre-

neurship by asserting that the opportunities can only be recognized by
individuals with certain social capabilities (Shane and Venkataraman, 2000:
217–228; Aldrich, 2005). The perception of opportunities requires, indeed, a
diversity of information and cannot be adequately understood without con-
sidering the importance of the network ties, its diversification, and learn-
ing from earlier jobs or other professional experiences as well. The find-
ings have underlined the relevance of these factors. However, if that may
be a necessary condition, it is not sufficient, since among many people
in similar social and cultural situations only a few choose to found a
firm.
As mentioned above, the relevance of previous experience either in the
academic world or from other employment involving technical procedures
and new market opportunities was clear. This fact highlights the importance
of what some analysts call social capital 5 — the access to privileged infor-
mation through connections (networks) established prior to any economic
transaction. According to one of the founders interviewed, the experience he
had as a graduate student and researcher in a Canadian University made
a great difference in the conception and development of his venture. At
university, contrary to what occurs in Brazil, the generation of knowledge
was conceived as a possible tradable commercial commodity. In this case,
the values involved were foreign instead of local. Other founders’ previous
experiences highlight the relevance of cross-organizational networks as well
as the internationalization of firms.
However, when examining the growth of the small and medium-sized
innovative firms in Brazil, one cannot ignore the relevance of the state.
Faced with new economic dynamics dominated by knowledge-intensive
industries, the Brazilian government has been active in trying to change the
traditional paradigm (import-substitution model), and improve the coun-
try’s capacity to innovate.
Since the beginning of the 1950s, a segment of the Brazilian intellectual
elite envisaged the need to strengthen the basis of the country’s scientific
research, an effort that would be intensified in the 1970s during the mil-
itary government, when a national system of post-graduate courses was
implemented.
5 “Social
capital” is a metaphor to indicate a set of social resources available to individuals
who are part of a network which involves connections and interactions.
During the 1980s, the country struggled with economic stresses such
as hyperinflation and low economic growth; on the political side, it faced
the change of regimes (from dictatorship to democracy) and the issue of a
new constitution. Despite these economic obstacles and political changes,
the support for the scientific research program continued. But only in 1999
was the system of Support to Science, Technology and Innovation (Fundos
Setoriais de Ciência e Tecnologia) established, based on the contemporary
theories of innovation (Sobral, 2010), which guaranteed financial resources
for Research, Development and Innovation (R,D&I) with the objective of
developing research and innovation also in the private sector — something
almost nonexistent until then.
Brazilian government investments (including local levels) in R,D&I,
despite being well below the so-called developed countries, have been grow-
ing from US$6,64 billion (1.3% of GNP) in 2000, to US$20 billion (1.43%
of the GNP) in 2008, and US$30 billion (1.60% of the GNP) in 2009, which
is similar to the percentage invested by the emerging countries like China,
Russia, and India. Considering direct and indirect incentives as mechanisms
of credit, economic subventions and fiscal exemption, government support
to R,D&I in Brazil is reasonable.
The Brazilian Development Bank (BNDES), which is the fourth largest
development bank in the world (it has increased threefold its financing out-
put since 2007), declares its strategic priority to finance innovation. To
accomplish that, the bank maintains different funds to finance innovation
in the knowledge-intensive sector, including micro and small firms. The pro-
grams include: FUNTEC, destined to finance and stimulate technological
development and innovation in strategic areas such as bio-energy, the envi-
ronment, health, oil and transportation, among others; CRIATEC, a seed
capital fund to support innovation particularly in the micro and small firms;
PROFARMA, to support innovation in the health industry; PROSOFT, to
support the development of the national industry of software and services
of information technology (IT).
The life science industry in Brazil is a typical illustration of high-
tech entrepreneurship, significantly represented by micro and small-sized
companies, most of them less than ten years old (BIOMINAS, 2009: 9).
Considering employment and revenue, almost half of the firms had up
to ten employees and 72.7% had less than 20 (in 2008, the total num-
ber of employees was estimated to be 6,000). In 2008, Brazilian life science
industry generated an estimated amount of US$400 million in revenues and
U$55.5 million in profits. The country is currently one of the leading world
producers of gene sequencing data and the most successful industrial-scale

producer of renewable fuels (BIOMINAS, 2009). As mentioned above, the
government played an important role supporting R,D&I in the life science
sector in Brazil, being responsible for 64.1% of the total amount of US$95.8
million invested in 2008 (BIOMINAS, 2009).
Facing a significant state role in supporting the knowledge intensive sec-
tor, the private sector in Brazil, as opposed to what happens in the OECD
countries, has a small role in investments in R,D&I. “Private” entrepreneurs
are still greatly dependent on the government to launch their businesses and
therefore “less private” than would be expected and desirable. In that sense,
the change of paradigm (less state, more private entrepreneurs) appar-
ently has not been complete. Several factors may be influencing it, besides
the historical relationship between entrepreneurship and the state. Some
characteristics of the Brazilian economy may aggravate the entrepreneurs’
dependency on the state. High interest rates which make credit an unrea-
sonable resource, the near unavailability of venture capital in the country,
and the companies’ immaturity for a public offering in the capital market
are among them.
Even though the relatively strong state financial support for high-tech
entrepreneurship, as illustrated by the case of the health industry (in great
part due to the sector’s characteristics — great complexity, diversity, big risk
and the trial and error research lengthy process), there seems to be a mis-
match between entrepreneurs’ demand and the financing government agen-
cies. In the survey carried out by our team in 2010, interviewees isolated lack
of financing as one of the major obstacles to innovation. Findings showed
that among 78 respondents, 42 declared (54%) relying fully on their own
resources to finance innovation activities; 64 respondents (82%) said they
relied predominantly (more than half) on their own resources. Concerning
public/government financing resources, 25 respondents (32%) declared that
they relied a certain amount from the government (something different from
zero), while only five respondents claimed that they relied predominantly
(more than half) on government resources. Regarding private financing, only
four respondents said they relied predominantly (more than half) on cap-
ital from private sources. In the specific case of that survey, data show a
great number of companies relying on their own sources and dispensing with
third-party financing, either government or private. Small innovative high-
tech entrepreneurs, tending to draw upon family or personal assets, can create
a kind of confusion between private and professional resources that might add
much stress to themselves and to their domestic lives.
At the same time, government financing agencies complain that they

lack sufficient qualified demand from entrepreneurs.6 Apparently, neither
side has found the right way: Projects evaluation in the agencies suffers
from academic bias, while entrepreneurs still have difficulties submitting a
proposal.
Despite these obstacles, the historical conjuncture has been propitious
to set up a firm: According to the interviewees, the opportunity to found
a firm in Brazil clearly existed, since the market lacked cheaper or better
quality products that they were able to produce. The easier way to recognize
this opportunity — “the market emptiness” — might be a limitation, while
obscuring the real possibilities for radical innovations.
The findings have shown differences regarding the founders’ trajecto-
ries: (1) Those who come from the academic world, where they obtained a
higher education degree (and a graduate degree as master’s and/or PhD)
before being an entrepreneur, and (2) those who come from a techni-
cal school (they would have received their higher education degree only
after entering the labor market). The different trajectories correspond to
the entrepreneurs’ distinct socio-economic backgrounds, at the beginning
of their careers. The initial distinction in social status did not make a
significant difference regarding the achievements of their enterprises taking
into account the business consolidation, the access to the global market,
and the relationship to R&D. Although all the entrepreneurs interviewed
ended up obtaining a higher education degree in their area of work before
consolidating the positions of their enterprises, not all of them attended a
graduate course.
Apparently, the difference of social background does not make a sig-
nificant difference concerning business achievements per se, although it can
make a difference regarding the influence of the network and the nature of
the innovation.
As for the nature of innovation — radical (technologically new to the
world market) or incremental (improvements in already existing products;
new to the firm or to the domestic market, resulting from imported ideas
or information) — taking into account the innovative firms as a whole
6 Luı̀s
Manuel Rebelo Fernandes, president of Finep (the agency for the Financing of
Studies and Projects, linked to the Ministry of Science and Technology) declared that
there was US$25 billion to finance micro and small high-tech firms, but a good part of
that amount was not used (interview in the newspaper Folha de São Paulo, 12 Septem-
ber 2009).
(including the large ones), studies have shown that the innovations gener-
ated by the firms in Brazil tend to be predominantly incremental to the
firm or to the domestic market7 (IBGE, 2005; Guimarães et al. 2010). As a
consequence, the Brazilian firms in general and the small high-tech firms,
in particular, find themselves restricted to the local and domestic market,
failing to trade across border, frustrating government efforts to stimulate
small high-tech firms’ exports (more detailed comments below).
Our study suggests that post-graduate education might make a
difference regarding the nature of innovation. The few attempts at radical
innovation occurred in firms owned by PhD holders with research experi-
ence abroad. In these firms, some employees also had PhD degrees. Other
studies also suggest that there is a positive relationship between the num-
ber of PhDs involved in R&D in a company and the technological output
(Velho, 2007).
The above mentioned fact is another constraint in Brazil’s attempt to
improve its innovation achievement. Despite a reasonable annual graduation
of PhDs (10,000 per year), 80% of them take academic jobs (CGEE, 2010).
The entrepreneurs interviewed were in their 20s and early 30s when
they first founded a firm (some of them founded more than one), but
despite their youth, they had accumulated technological expertise (espe-
cially from previous experience either in the university or in a job), although
the past experiences had not necessarily contributed to the development
of their managerial abilities, or to their knowledge of marketing and
financing.
One of the main characteristics of the firms investigated is the high
percentage of employees holding degrees in higher education (some of them
holding a PhD or a master’s degree), despite the reduced number of employ-
ees. The R&D is crucial for the growth and survival of such firms.
Some of the firms were created in the 1980s and 1990s — the so-called
“lost decades” in Brazil, since economic growth was very low or null in that
period and inflation was exceptionally high until the mid 1990s, creating
serious problems for any economic planning. At the same time, the ICTs
and biotech revolutions were under way and constituted a positive impact
7 The findings of a study carried on by our team among 81 small and medium-sized
enterprises located in university incubators and technological parks, in the states of Rio
Grande do Sul e Santa Catarina, showed that 74 of the firms had developed activities of
R&D, between 2006 and 2008, and among those, 60 informed having developed products
“new to the domestic market” relying on improvements in products already existent
(Guimarães et al., 2010).
on the young students and professionals of the sectors. The Ministry of

Science and Technology was created in 1985, to prepare the country’s tran-
sition to the knowledge economy. In the 1980s, the country’s technological
policy, especially concerning the computer industry, was widely debated as
an issue. The market protectionism for the computer industry — a contro-
versial decision since, according to the critics, it has entailed the country’s
delay to get into the information era — might have contributed to the
creation of new high-tech firms in the 1980s.
Respondents reported many interesting and different experiences, but
there is a certain convergence concerning the influence and importance of
the wide socio-economic and technological historical period — the digi-
tal and biotech revolutions that were under way. It is also interesting to
observe that despite the unfavorable economic conditions in Brazil, the
new era of digital revolution was feeding the young people’s (basically male)
imaginary. The symbolic aspect was present since the information revolu-
tion had its “heroes”: Some interviewees referred to Bill Gates as a figure
of identification and inspiration.
Strategies for Survival and Growth

Competition was seen as one of the main problems, especially, consider-
ing the low level of innovation common in Brazilian firms. The competi-
tors are large worldwide well-known producers (Panasonic, Samsung, LG,
Siemens and Intel). Even if the small firms detained the technology, they
lack marketing, a brand name, and especially the bargaining power to place
their products in a market dominated by large companies. In addition, the
latter are aggressive in lobbying; they use various tools to resist the new
entrants: They first try to co-opt them and, if they are not successful, then
they try to buy them out.
How then can the entrepreneurs not only survive, but also grow?
Competition forces the high-tech entrepreneur to develop different
strategies: They said they have to target the world market; they have to
try to produce in different places in the world according to the comparative
advantages at the moment (China, Canada), as well as to discover the right
market niche.
The small high-tech firms’ competitive advantage over larger firms relies
on their ability to offer skilled and flexible services, for instance, to fill
the gap that is not supplied by the large multinationals by creating or
improving a product on demand; to do this, it is crucial to have an internal
R&D, and/or maintain a partnership with a university or research institute

or center. These firms rely on research, development, and innovation for
staying in the market. The findings from the survey carried out by our team,
during 2010, found that, among 81 high-tech firms, 74 responded (92%)
that they had developed R&D activities. R,D&I activities were not, until
recently, a common practice among Brazilian entrepreneurs, even though
the majority of innovative firms in Brazil still do not target major scientific
R&D, preferring to remain close to the imitation.
Export is a good indicator of competitiveness. The Brazilian innovative
companies, as mentioned above, present low performance in export activi-
ties, particularly in the leading sectors of the “new economy” — ICTs and
the biotech sector. Some of the small firms interviewed export occasionally,
on demand. In the research carried out by BiOMINAS (2009), the findings
showed that only 11.2% of respondents declared a recurrent export activity,
while 22.4% export occasionally. The main destination of Brazilian biotech
exports is Latin America (33.3%). In the survey carried out by our team,
out of 81 firms who responded, just 19 declared to be involved in export
activities, mostly once in a while and in the past.
Several factors — the depreciating exchange rate of the US dollar vis-
à-vis the Brazilian currency in the past years, the highly restrictive demand
for product certification in the case of biotech industries, the lack of consul-
tancy services, as well as the economic crises in the USA and Europe — have
made exporting more difficult. For some industries, the country’s economic
growth and favorable market conditions created by the emerging new mid-
dle class guarantee the expansion of the market domestically, without the
bureaucratic difficulties of trading across borders.
Market prospection was considered as a crucial strategy: The entrepre-
neurs and other employees, as managers and engineers, have to travel
abroad frequently to attend exhibitions and fairs in order to be aware of
novelties, trying to identify the way large firms are behaving, and searching
for international partnerships as well.
Another strategy is based on cultural factors: A respondent reported
that Latin American buyers prefer to deal with people who have the same
cultural background than with people they are not familiar with, especially
regarding the way of doing business.
The relationship between buyers and suppliers can also be constructed
as an important business strategy (Sabel and Zeitlin, 2004: 388–403). The
firm’s tacit knowledge is also a relevant factor to guarantee a constant
process of innovation. The situation characterized by Dosi (1982: 147–162)
as “learning by doing” is also used as a competitive strategy: Innovation

resulting from the attempt to solve a client’s need based on informal or
tacit knowledge. This kind of transaction can lead to cooperative behavior
and can be seen as a strategic partnership that contributes to improving the
performance of both sides: The buyer knows he can count on the supplier;
the latter is glad to improve his own rate of innovation as well as sales
growth. A large enterprise does not enjoy this kind of flexibility. This kind
of relationship highlights the importance of social factors in the economic
sphere.
The above mentioned survey carried out by our team found that most
firms investigated (60 out of 81), were involved in cooperative arrangements
regarding R&D joint projects for the development of innovation activi-
ties. Clients and consumers were considered partners of great importance
(41 respondents out of 60), as were the universities and research centers
(33 respondents out of 60).
Literature on innovative high-tech entrepreneurship often refers to the
Silicon Valley experience, highlighting the contribution of (1) the spatial
clustering of specialized activities, since actors tend to benefit from the
proximity to technical experts and (2) a complex social network, particu-
larly the connections between entrepreneurs and universities, as well as the
important role of private investors, venture capitalists, lawyers, state and
local development officials, besides the major inflow of management tal-
ents, and supporting services from other regions. The context of this study
has little in common with the Silicon Valley model. However, as mentioned
above, the model, in different ways, was an inspiration for the founders; the
Silicon Valley achievements became a target to be reached. There are, how-
ever, some convergences as the relationship with the universities the firms
try to maintain, in different degrees and through different ties: Being located
within or close to an university campus (technological park); by employing
people from the university (students and/or researchers); by maintaining a
partnership with researchers for the development of scientific or technical
solution, or even sharing a R&D space within the university lab.
Final Considerations
Several factors may help to understand the phenomenon of innovative high-
tech entrepreneurship in Brazil. At the micro level:
1. The entrepreneurs’ particular view of the potentialities of some mar-

ket conditions contributes to the pursuit of that belief with sufficient
strength of mind, even against the predominant socio-cultural belief. In

that sense, the individual perspective seems to have a role. The empir-
ical data suggest that individual differences in social status did not
correspond to differences in “opportunity recognition” (risk taking and
problem-solving propensity; innovativeness, leadership and need for
achievement) — an ability that greatly depends on information but also
on the capacity to make good use of information in order to generate
knowledge. As Fligsteisn asserts, paraphrasing Giddens, entrepreneurs
are knowledgeable actors. However, the entrepreneur cannot be seen
as an autonomous or auto-sufficient individual. An examination of the
entrepreneurs’ trajectories highlights the importance of their relational
ties with other social actors. In that sense, the entrepreneur could be
seen as a network creator.
2. Not just economic factors, but also cultural and social factors and values
like “personal achievement” or “work satisfaction” greatly influenced
the development of entrepreneurship and were a common justification
for being in business. The desire for self-achievement, through contin-
uing to do research or materializing innovative ideas, was referred to
as a key motivation for the creation of the venture. It was observed
among the entrepreneurs interviewed that what they want most from
their business is not to make large amounts of money, but to expand the
business, maintain the conditions for continuing to carry out research
and undergo innovative transformation.
Cultural values may either favor or impose limits to the expansion
of innovation. “New heroes” and new scenarios from the knowledge
society are positive cultural influences; incompatible demands from the
bureaucratic culture and the focus on academic issues instead of techno-
logical demands preferred by the financing institutions, can be negative
influences.
3. Individual exposure to multiple social and cultural influences (either in
the job, or in the school, or through other means of information, locally
or abroad) is vital to support the decision to become an entrepreneur,
particularly when it does not seem to be a rational action.
At the meso-level:
4. A successful entrepreneurship tends to be connected to a network of

social actors for systematic exchanges, delivery of information, advice
and role models. In addition, network diversification (beyond the closed
circle) is important since it allows firms to identify and access novel
information and the resources needed for their sustained development

and improved performance. In the case under study, a sound articula-
tion was observed between firms and educational and scientific insti-
tutions, either through the involvement of students or scholars; the
entrepreneurs tended also to be linked to other entrepreneurs and enter-
prises, either through associations or conventions and fairs, among other
social actors. Many of these relationships are not properly embedded
in the social context but rather learned from ad hoc situations. In
that sense, it may be asserted that entrepreneurship is a collective pro-
cess: New firms are founded through the cooperation of many actors,
although individual drive cannot be ignored.
5. Some small Brazilian innovative high-tech firms have been able to build
strategies exploring local tools that allow them to face competition from
economically and technologically better positioned competitors.
6. The “private” culture is not yet totally free from government financial
support. However, financial dependence on the government seems to
be related to the nature of industry. The biotech industry seems even
more dependent on government support than the information industry.
7. The investigated firms have different trajectories, performance out-
comes and path dependence, demonstrating the risks of generalizations
about innovative high-tech entrepreneurship. Their common points con-
cerning the nature of innovation: The innovations are, generally, of an
incremental sort.
8. For innovation, the firms rely on their own R,D&I departments, which
do research to increase knowledge for the development of goods and/or
services. This feature indicates a new trend in Brazil, since in general —
as a consequence of the import substitution model — Brazilian enter-
prises have shown little interest in having their own R&D.
9. The innovative high-tech sector is formed by numerous small firms oper-
ating with low profits and high risks where work relations tend to be
more cooperative; the supervision of employees tends to be carried out
indirectly by the market, instead of directly, as in large firms.
At the macro-level:
10. Changes in the economic paradigm in the last decades, advanced to

a great extent by the revolutions of information and biotechnology
and the increasing demand for knowledge intensive business, were
recognized by some Brazilian skilled young people as an opportunity
for self-achievement.
11. The diffusion of ICTs throughout the world, as well as improved

transportation and logistics, facilitated access to information8 and was
crucial for the process of globalization which ended up favoring eco-
nomic decentralization of production and R&D. In the process, promis-
ing market niches and opportunities were discovered at different points
along the supply chains.
12. The new institutional framework backed by strong government support
for innovation and entrepreneurship; the financing of technological incu-
bators; and stimulus for a closer relationship between university and
firms; the existence of a national/regional system of innovation, the
presence of qualified academic and research institutions, strong gov-
ernment support to innovation and entrepreneurship, as well as the
country’s economic stability, seem to have contributed to the develop-
ment of innovative high-tech entrepreneurship in Brazil, compensating
the country’s unfavorable cultural and institutional features.
8 “. . .
a three-minute telephone call from New York City to London cost $717.70 in 1927
and 84 cents in 1999 (all in 1999 U.S. dollars). Shipping a 150-pound parcel by air
from New York City to Hong Kong cost $2,188 in 1960 and $389 in 1999 (in 1999 U.S.
dollars).” (Kuemmerle, 2005).

14
The Development of Entrepreneurship
in Russia: Main Trends
and the Status Quo
A. Chepurenko
The Russian transition path seems to actualize William Baumol’s thesis

concerning the differences between various types of entrepreneurship — pro-
ductive, unproductive and even destructive (Baumol, 1990: 893–921) — and
their different impact on socio-economic development. In Russia and some
other former Soviet republics, unproductive (redistribution oriented) and
destructive (political rent-seeking, or even criminal forms of “entrepreneur-
ship”) have become dominant — partly as a result of “path dependency”
(Nureev and Runov, 2003: 29–47), and partly as a response to specific socio-
economic conditions. Therefore, a deep and long-lasting economic slowdown
occurred in the 1990s, which led to a dramatic redistribution of GDP in
favor of a very small group of largest business-groups instead of a free
bottom-up rise of private entrepreneurship.
As the main aspects of entrepreneurship and small and medium-sized
enterprises (SME) development in Russia in the 1990s have already been
discussed in a number of papers in international journals and monographs
(Center for Cooperation with the Economies in Transition, 1998; Murrell,
2005; Welter and Smallbone, 2003: 95–114; etc), we will summarize only
the key stages that it has passed through in this relatively short period
of time, undergoing a great number of changes in regards to its prevalent
273
274 A. Chepurenko
forms, practices, and types of entrepreneurship:
1. Emergence: Appearance of alternative economic agents (late 1980s)

— Formation of cooperatives and other forerunners of “opportunity-
based entrepreneurship”.
— Primitive accumulation: Creeping privatization of the state-owned
sector.
— Transformation of socialist “economy of shortage” into a mixed
economy (state-owned sector with fixed prices and market sector with
free prices).
2. Legalization of the private sector in an environment of structural crisis
and economic recession (1992–1995)
— Legalization of “private entrepreneurship”.
— Booming of universal exchanges as a reaction to the destruction of
business ties.
— Formation of unproductive and “destructive” entrepreneurship in
the course, and as a result, of privatization (domination of systems
of corporate governance after privatization with high entry barri-
ers for external investors and controlled by opportunistically-minded
management, asset stripping as the principal source of unearned
income) (Black et al., 2000: 1731–1808; Gaddy and Ickes, 1998;
Moers, 2000: 307–332).
— Barter trade and establishment of a “payment-refusal”-based
economy as the reaction of adaptation to new conditions by priva-
tized firms (Yakovlev, 2001: 33–55).
— Huge market niches with low barriers to entry — an incentive for
“opportunity entrepreneurship”, first of all, for micro and small
business.
— Growing unemployment in traditional sectors and the spread of the
“street entrepreneurship” (Earle and Sakova, 2000: 575–601).
— Limited options for external financing from legal sources, consolida-
tion of economic power and political clout of major private financial
institutions (Sugiura, 2005: 27–41; The World Bank, 2002; Tompson,
1988: 133–155).
— Weak legal environment for entrepreneurship (both legislation and
enforcement).
— Extortion racket and corruption (Shleifer and Vishny, 1993: 599–617).
3. Dysfunctional development of entrepreneurship in a stagnating economic
environment (1996–1998)
The Development of Entrepreneurship in Russia 275
— Slight diminishment of barter as a result of rising monetization of the

economy, stronger turnover of money, parallel currencies (ruble and
dollar) in the private sector begin to support different types of
transactions.
— Less intensive stripping of assets from privatized businesses,
establishment of specific models of corporate control in most
post-privatized “private” firms being purely institutional traps (Frye,
2004: 453–466; Iwasaki, 2003: 503–501).
— Growing competition in retailing, forcing small business out of the
more profitable niches in the consumer market by retail chains.
— Large-scale tax evasion by entrepreneurs (Yakovlev, 2001).
— Representatives of widespread types of necessity entrepreneurs (indi-
vidual “shuttle traders”) become employees of bigger retail chains.
— Completion of the establishment of integrated business groups and
“oligarchy” on this platform (Guriev and Rachinsky, 2005: 131–154;
Hoffman, 2002; Johnson, 1997: 333–365; Perotti and Gelfer, 2003:
1601–1617).
— Loans-for-shares auctions and capture of public institutions (Hell-
man et al., 2000).
Here, we will give some more explanation of the specifics of the next period,
i.e., the fourth period in the evolution of small business in Russia (1999–
2008), as well as of the post-crisis situation of the SME in Russia (2009–
2010), because they have not yet been explored sufficiently in the foreign
literature.
Trends in Entrepreneurship Under High

Growth (1999–2008)
In 1998, the economic crisis opened new opportunities for the development
of “free entrepreneurship”, that is, entrepreneurship based on the recogni-
tion and use of opportunities rather than on ways to secure rent income
after the departure of bigger players from the market. This is particularly
true for those small and medium-sized enterprises whose businesses relied
on local resources and recovering demand by the middle class. Many of the
current Russian gazelles, which represent the second or third tier of Russian
business emerged during this time. Such businesses include industries in
food processing, clothes and footwear manufacturing, business services, IT,
and consulting. In the mid 2000s, the percentage of gazelles was estimated
to be 12% to 15% of the total number of acting ventures, compared to 4%
to 8% in developed countries (Yudanov, 2008).
276 A. Chepurenko
First, a radical increase of salaries (10–20% p.a.) led to a boom in con-

sumer markets — trade, services and hotellerie, new formats of trade
occur — retail chains of super- and hypermarkets, both national and
international became the main demanders of small and medium-sized
domestic producers of Fast-Moving Consumer Goods (FMCG).
Second, some branches of Russian economy became more attractive
for big international holdings and firms which bring not only capital, but
norms, values, and techniques of doing business.
Third, in the mid of the 2000s, a decision was made on the political level
in favor of an authoritarian modernization model like South Korea in the
1970s–1980s, a “chebolization” of the Russian economy. State corporations
then grew and became more and more dominant in different sectors of
national economy.
Fourth, growing redistribution of GDP and fostering of the state as
the ultimate consumer and client led to a growing importance of state
procurement for even medium-sized firms. Moreover, for many of them,
state bodies became the ultimate or most important client. It led to growing
possibilities for state bureaucracy representatives to influence private firms’
decisions or even their lifecycle.
In this context, there is an increasing tendency towards “business cap-
ture” by the state (Yakovlev, 2006). The weakness of civil society and the
absence of real political competition and formal regulations for the recruit-
ment of civil servants lead to government agencies and civil servants becom-
ing ever more noticeable in their drive to use their office of regulators and
overseers to secure rent incomes. This results in corruption acquiring a new
dimension: isolated bribes and gifts develop into a system of contractual
relationships between business and bureaucrats. The problem has become
so urgent that it is targeted by a special plan orchestrated by the new
president Dmitri Medvedev himself.
But the dynamics of small business growth in Russia are on the whole
positive, and more significant on the eve of the economic slowdown of 2008
(see Table 14.1).
Alternative data such as the early entrepreneurship index (TEA) by
“Global Entrepreneurship Monitor (GEM)” (Reynolds et al., 2005; Bosma
and Levie, 2010) showed, however, a different picture for Russia.1
1 Russian team consisting of representatives of two universities, the Higher School of

Economics Moscow and the Higher School of Management of the St. Petersburg State
University, has participated in the GEM since 2006. The field surveys are organized
by the High School of Economics (HSE), Moscow. The representative sample of adult
population consists usually of 1,850–1,900 persons.
Table 14.1. Main Economic Indicators of SME Sector in Russian Federation in 2008.
Medium-sized Small Micro

enterprises enterprises(1) enterprises
Number (at the end of the year) 14,170 1,347,667 1,065,016

Average number of employees 2,176,4 10,436,9 4,219,8
(without part-timers),
thousand of pers.
Average number of part-time 41,3 690,5(2) 387,5(2)
employees, thousand of pers.
Average number of employees, 52,1 284,7(2) 68,3(2)
working on civil contracts base,
thousand of pers.
Turnover, bln. roubles 3,105,2 18,727,6 8,634,1
Investment in fixed capital, bln. 503,9 472,3(2) 154,9(2)
roubles
Percentage of main economic indicators
Average number of employees 4.4 21.1 8.5
(without part-timers)
Average number of part-time 2.5 42.0(2) 23.6(2)
employees
Average number of employees, 4.2 22.7(2) 5.4(2)
working on civil contracts base
Turnover 4.3 25.8 11.9
Investment in fixed capital(3) 5.7 5.4(2) 1.8(2)
Notes: (1) With micro firms.

(2) Without micro firms in agriculture.
(3) Of the total investment in fixed capital, including individual developers, and informal
activity.
Source: Russian Statistical Agency, 2009.
In 2008, the share of adult population, who were expected to start

a new business in the next three years was 5.27% (the lowest percentage
among GEM countries). The TEA in 2008 was 3.49% and has increased
by 30.7% compared with 2007. Nevertheless, Russia’s TEA still remained
one of the lowest among GEM countries. This position was composed of
Russia’s sixth position by share of new business owners (1.99%) and of the
lowest level of nascent Entrepreneur’s Activity in GEM (1.73%).
GEM Adult Population Survey (APS) 2008 has shown that the level
of entrepreneurial activity for nascent entrepreneurs had increased by 30%
for the year. The level of entrepreneurial activity for new businesses owners
increased more significantly (+48% of relative growth), in spite of the eco-
nomically active population in Russia decreasing from 2007 to 2008. The
level of established business owners in Russia has decreased almost one
third in 2008, from 1.68% to 1.11% — and has become the lowest among
278 A. Chepurenko
GEM countries. The share of entrepreneurs who discontinued a business

was equal to 1% in 2008.
The share of opportunity-based entrepreneurship has slightly
decreased: In 2008 it was equal 30% (among them those at the stage of
nascent entrepreneurship reached near 24%, one of the lowest levels among
GEM countries).
The results of the 2008 wave of the GEM APS were twofold, showing
both the positive and negative dynamics of entrepreneurial activity in Rus-
sia. On the one hand, the level of the TEA has increased. On the other
hand, both TEA and EBO (established business owners rate) were still the
lowest in GEM.
It is obvious that, given the faster growth of wages in the non-
market sector and the ever-higher economic and administrative barriers
(especially the corruption of several inspections monitoring small firms),
private enterprise was no longer an attractive alternative for potential
entrepreneurs. This fact can only be interpreted as evidence of business
Table 14.2. Dynamics of Main Indicators of Early Entrepreneurial Activity

According to GEM (2006–2010), %.
Index 2006 2007 2008 2009 2010
TEA 4.9 2.7 3.5 3.9 3.9

NasEnt 3.5 1.3 1.7 1.8 2.2
BB 1.4 1.3 1.8 2.1 1.7
EB 1.2 1.4 1 2.1 2.7
TEA OPP 3.4 1.9 2.5 2.6 2.5
TEA NEC 1.4 0.5 0.7 1.1 1.3
TEAf 2.5 1.6 2.5 3.2 3.5
TEAm 7.3 3.8 4.5 4.6 4.5
EB G 1.2 1.7 1.1 2.3 3
Nas nec 0.7 0.4 0.2 0.6 0.7
BB nec 0.9 0.2 0.7 0.5 0.6
EB nec 0.1 0.2 0.2 0.6 1.2
Source: GEM Russia 2010 Report (in print).

Indexes: TEA — Total entrepreneurial activity index, NasEnt — Nascent
entrepreneurship index, BB — Baby business owners index, EB — Established
business owners index, TEA OPP — Total entrepreneurial activity index for
opportunity based entrepreneurs, TEA NEC — Total entrepreneurial activity
index for necessity based entrepreneurs, TEAf — Total entrepreneurial activity
index (female). TEAm — Total entrepreneurial activity index (male), EB G —
Established high growth potential business owners index, Nas nec — Nascent
entrepreneurship index for necessity based entrepreneurs, BB nec — Baby busi-
ness owners index for necessity based entrepreneurs, EB nec — Established busi-
ness owners index for necessity based entrepreneurs.
development in Russia being unfavorable for start-ups and for already

established small firms. According to the “Doing Business 2010” survey
of the World Bank, Russia took the 120th place among 183 participating
countries (http://www.doingbusiness.org/EconomyRankings/).
Concerning the most important problems for SME, OPORA’s (the
biggest business association of SME) data (2008) show that the most impor-
tant problems before crisis were a shortage of skilled employees and exter-
nal finance resources, pressure from big business, administrative burdens
(inspections), and access to real estate.
Perceived Opportunities to Start a New

Venture in Russia2
The results of the adult population survey in Russia (Table 14.3) confirm
that by the spring of 2009 there was — in the view of entrepreneurs — a con-
siderable deterioration in the conditions for starting new ventures as com-
pared with 2008. The older a business the more critical are entrepreneurs’
assessments. Meanwhile, the assessment of new businesses owners seems to
be the most reliable, as they can compare. Their personal experience of
entrepreneurial start-ups was gained during 2006–2008, which was a period
with positive macroeconomic indicators. Other respondents may hardly
Table 14.3. Compared to One Year Ago, Starting Your Business Now is . . . (% of
population, 18–64 age).
Nascent Baby business Established

entrepreneurs owners-managers business owners
More difficult 30.9 37.9 58.6

Somewhat more difficult 29.0 27.1 19.8
About the same 23.1 32.0 17.2
Somewhat less difficult 7.1 — —
Less difficult 3.0 3.0 —
Do not know 3.7 — 4.4
Refused 3.2 — —
Total 100.0 100.0 100.0
Source: T. A. Alimova, A. V. Cherina and A. YuChepurenko (2011). “Economic Crisis

and Entrepreneurial Activity of Russian Population: To Start-upon to Discontinue a
Business?” Russian World, No. 2, pp. 142–160.
2 The co-authors of the description and analysis of the GEM Russia results for 2009 are
Dr. Tatiana Alimova and Anastasia Cherina.

280 A. Chepurenko
do a real comparison based on their own experience when answering this

question.
The respondents, too, were asked to answer a more specific question —
whether it was the impact of the crisis which affected start-up business
opportunities. Most representatives of different strata of entrepreneurs
chose the answer that the crisis provided limited opportunities to start-up
new businesses (Table 14.2). The older the businesses, the more negative
were their assessment of the role of the crisis: At least 80% of the neg-
ative evaluations for established business owners, similar data (76%) for
baby business owners or managers, but (only) half as many nascent
entrepreneurs.
So the impact of the crisis seems to be less acute than the overall
difficulties of starting up in view of nascent entrepreneurs (ca. 50% on
Table 14.4 compared with ca. 60%, on Table 14.3), but more acute — in
view of baby business owners (ca. 76% compared with 65%) and more or
less equal in view of established business owners (78% compared with 81%).
In 2009, the situation changed — in views of respondents, predom-
inantly for the worse — as regards not only opportunities for starting
up a new venture, but also the prospects of running an already existing
business (Table 14.5). And the older the age of a business, the less opti-
mistic is the statement of its owner/manager. In our view, there is no sin-
gle explanation for this fact — a set of factors, for instance the so-called
“entrepreneurial euphoria” which had a strong effect on those still starting
up, or the strong impact of financial and macroeconomic factors as well
Table 14.4. What Impact Has the Global Economic Slowdown Had on the Business
Opportunities for Any New Start Up (% of Population, 18–64 age).
Established
Nascent Baby business business
entrepreneurs owners-managers owners
More business opportunities 6.3 3.9 —

Somewhat more business 6.8 — —
opportunities
No impact 33.2 16.3 18.9
Somewhat fewer business 16.9 39.7 35.4
opportunities
Fewer business opportunities 29.8 36.1 45.7
Do not know 7.1 4.0 —
Total 100.0 100.0 100.0

Table 14.5. Compared to One Year Ago, Now Your Expectations for Growth are . . . ,
(% of Population, 18–64 age).
Established
Nascent Baby business business
entrepreneurs owners-managers owners
Lower 9.4 32.8 38.1

Somewhat lower 20.0 25.4 37.7
About the same 40.8 34.1 20.1
Somewhat higher 3.5 3.7 —
Higher 6.2 — —
Does not apply 12.7 — 4.0
Do not know 7.5 4.0 —
Total 100.0 100.0 100.0
as a better understanding of current and future economic constraints on

already established businesses on older stages of a business cycle, may be
the explanatory arguments. However, the differences are statistically not
significant.
The more advanced the stage of the venture, the more negative was the
evaluation of respondents. But, comparing general level of negativity with
estimations of the special impact of the economic slowdown, one might con-
clude that the latter is, indeed, viewed most dramatically by baby business
owners.
The influence of crisis on entrepreneurial activity has many facets and
affects different groups. For different reasons, it may both strengthen as well
as weaken the willingness of both entrepreneurial and non-entrepreneurial
groups to start a new or to quit an already started venture. As has been
shown (Arenius and Minniti, 2005: 233–247), the entrepreneurial environ-
ment is far from being the only factor for determining whether or not one
should conduct one’s own business — but much dependents on the indi-
vidual’s knowledge, experience, and participation in relevant network com-
munities. Did the economic crisis significantly influence the entrepreneurial
potential of adult population? (see Table 14.6)
Among the non-entrepreneurial majority of the Russian population,
3.5% are latent entrepreneurs, another 2.4% would continue to do business
(“silent entrepreneurs”, doing business without having mentioned it before),
whilst 2.4% refused to start up, and 0.9 % would discontinue (another part
of “silent entrepreneurs”). In sum, the share of those who are “pushed”
or “pulled” to become entrepreneurial is bigger (3.5%) than the share of
282 A. Chepurenko
Table 14.6. Which of the Following Sentences Best Describes the Impact of the
Global Economic Slowdown on Your Willingness to Start up? (% of Population,
18–64 Age).
Non-entrepreneurs
Pushed to think about starting a business 1.9

Desire to start up became even stronger 1.6
Refused to start business 2.4
The crisis did not influence to start a business 4.5
Neither before nor now, I do not intend to start a business 74.6
Intend to continue business regardless of the crisis 2.4
Intend to quit a business 0.9
Do not know 3.3
No answer 8.3
Total 100.0
adults who refused to think about a start up under the crisis (2.4%). But
among these potential entrepreneurs 1.9% are necessity driven, whilst 1.6%
who recognized new venture opportunities might be considered as oppor-
tunity driven.
Business Discontinuation Under the Crisis: Reasons

to Quit and Follow-up Activity
The most evident expected reaction of entrepreneurial cohorts to the eco-
nomic crisis was a growing share of quitting businesses. In 2009, the share
of respondents in the sample who discontinued a business during previous
12 months was ca. 2% of the APS sample or 34 persons, doubled from the
previous year (+17 persons). This is in stark contrast to the situation of
2006–2008 period, when this share remained stable.
Meanwhile, the intention to discontinue among different groups of
entrepreneurs was strong, but among no one of them was it significant:
Starting with only 3.1% among nascent, 8.8% among baby business own-
ers and 14.4% among established business owners. In total, the share of
those early entrepreneurs who decided to exit was much less than the
share of those who believed to run the business or even to establish a new
venture (from ca. 80% to 70% of representatives of each respective group
of entrepreneurs).
It is, however, to mention that only 27.5% (nine persons) realized a
total business exit, whilst 72.5% (25 persons) after the business closure
established a new venture or owned/managed another running business
(serial versus portfolio or parallel entrepreneurship).
Table 14.7. Top 3 Most Important Reasons for Selling, Closing,

Quitting or Discontinuing a Business During the Last 12 Months
(2006–2009).
Number %
2006
1 Problems on getting finance 5 26.3
2 An opportunity to sell the business 5 26.3
3 Another job or business opportunity 3 15.8
2007
1 The business was not profitable 3 25.0
3 An incident 2 16.7
2008
2009
3 Personal reasons 4 11.7
Despite the fact that the set of standard answers slightly differed in
questionnaires for 2006–2009, one might see that the top three reasons
changed from one year to another. However, financing and the profitability
of a business occur more or less stable among the most important reasons
long before the economic slowdown came in 2007 and 2008 (Table 14.7).
Under the economic crisis the significance of purely economic reasons —
especially, of the low profitability of business — grew more than twice
(from 16.3% in 2008 to 37.6% in 2009).
Thus, the structure of reasons of business discontinuation was slightly
different between entrepreneurs, who quit a venture aiming to start a
new one, and respondents, who definitely exited any business activity
(Table 14.8). Although no statistical significance of these differences could
be found — it may be caused by a small number of observations (25 persons
in total) — it seems to be evident that people escaping business activ-
ity, do it mostly for financial reasons, whilst people who do not leave an
entrepreneurial career more often do it when another more reliable job or
business opportunity arises.
This is to point out that there is a statistically significant difference
in how to evaluate the role of crisis in quitting a business between the
two groups (Table 14.9). Most of those who definitely exited fingered the
284 A. Chepurenko
Table 14.8. What was the Most Important Reason for Selling, Closing, Quitting or
Discontinuing a Business During the Last 12 Months?
Entrepreneurs who Respondents who

discontinued exited of
a business a business
Reasons temporary (%) definitely (%)
The business was not profitable 32.2 54.3

Problems on getting finance 9.2 10.9
Another job or business opportunity 36.8 10.9
The exit was planned in advance 4.6 10.9
An incident 3.0 13.0
Retirement 0.7 —
Personal reasons 13.5 —
Total 100.0
Table 14.9. Did the Global Economic Crisis Have No Impact,

Some Impact or a Large Impact on Your Decision to Sell, Close,
Quit or Discontinue a Business During the Last 12 Months?
Entrepreneurs who Respondents who

discontinued exited of
Reasons temporary (%) definitely (%)
No impact 52.7 9.8

Some impact 31.5 5.4
Large impact 15.8 84.8
crisis to be the major factor pushing them to escape, whilst entrepreneurs

who discontinued only temporally tended not to do this.
The crisis is a very selective factor strengthening one’s willing-
ness to quit a business: It had less strong impact on respondents who
were confident that they would remain active as serial entrepreneurs.
Those who decided to close and exit all businesses were definitely more
strongly affected by the economic slowdown and worsening macroeconomic
situation.
The decision to quit temporarily or to escape indefinitely influences
the follow-up activity of former entrepreneurs: 62.5% of the former
entrepreneurs who discontinued a business are employed, but only 16.4% are
already owing/managing another business (parallel entrepreneurs). On the
Table 14.10. You Mentioned that You Have Sold, Closed, Quit or Dis-
continued a Business You Owned and Managed. Did the Business Con-
tinue Its Business Activities after You Quit?
Respondents Entrepreneurs who

who exited discontinued
definitely temporary
Business prospect Number % Number %
Yes 2 25.0 5 25.0

No 6 75.0 12 60.0
Business continued but 0 0.0 3 15.0
activities changed
Total 8 100.0 20 100.0
contrary, respondents who definitely escaped business activity are employed

more often (89%) and there are only a few cases of starting up anew.
In most cases of business discontinuation (temporary or definitely), the
business left by former owners/managers disappeared (Table 14.10). But
after a temporary discontinuation 15% of cases did not disappear forever,
but were transformed and continued. Thus, in 40% of cases a temporary
discontinuation of the business led to its return, whilst after a definite exit
this was the case only 25% of the time.
Then, the fact that business discontinuation increased under the crisis
more significantly than the start up activity becomes evident if we compare
the dynamic of the entrepreneurial potential turnover index (EPT) during
the last few years (Fig. 14.1).
This index reflects the comparison of entries and exits for the same
periods last year; it consists of a ratio
Nascent: Discontinued = IEntTurn,
where Nascent is the share of respondents of the APS, who during the
last 12 months were actively involved in starting a new business, whilst
Discontinued is the share of respondents of the APS, who during the last
12 months sold, closed, quit or discontinued a business.
The dynamic of both indicators in 2006–2009 is shown in Fig. 14.1.
In 2006, the IEntTurn was 2.64 and in 2007, it decreased more than
twice to 1.19. In 2008, shortly before the outbreak of the crisis, it increased
slightly to 1.51.
286 A. Chepurenko
2.90%
3.0%
2.5%
2.0%
2.0% 1.77%
1.51%
1.5%
1.1% 1.19%
1.0% 1.0%
1.0%
0.5%
0.0%
2006 2007 2008 2009
Discontinued Nascent
Fig. 14.1. Nascent entrepreneurs and those who discontinued a business (any reason)
in Russia in 2006–2009, % of APS samples.
In 2009, which is considered as the most critical stage of the economic

slowdown, the IEntTurn fell by 0.63 compared to the previous year, the
first time during the observation period of the GEM Russia that it became
less than 1, namely 0.89.
So, under the crisis the amount of those who escaped of any business, at
least timely, grew more dramatically than the amount of adults starting a
new venture. The entrepreneurial activity of the population decreased with
some consequences for the state on the labor market, purchasing power of
the population and the possibility of incremental economic growth.
Past Entrepreneurial Experience and Its Impact

on Current Entrepreneurial Activity
The role of past entrepreneurial experience in willingness to establish a new
venture is still under-studied (Pe’er and Vertinsky, 2008: 280–306; Presutti
et al., 2008). Meanwhile, it is a rather big group of the population even
in an emerging market economy like Russia — 21 % of adults, according
to the GEM APS Russia 2009, do have past entrepreneurial experience.
This is a relatively strong embeddedness of entrepreneurship, and its norms
and values, among the population, especially taking into account the short
history of the legal market economy in the country. Among them, 32% are
potential or actual entrepreneurs (111 persons), but 68% are persons who
definitely escaped from any form of entrepreneurial activity (236 persons).

Who among them will escape forever and who is more open to try a new
start up?
As regards the age and gender (Table 14.11), there is an evident
difference between active entrepreneurs with entrepreneurial background
and non-entrepreneurs with entrepreneurial experience in the past: Previ-
ous female entrepreneurs seem to tend more often not to start a new venture
anymore. The association coefficient shows a weak negative correlation
(ra = −0.12) between gender and the decision about future entrepreneurial
engagement.
Contrary to gender, age and actual or future possible engagement in
entrepreneurial activity of persons with entrepreneurial experience in the
past did not show any correlation (T -test: Sig = 0.251).
As Table 14.12 shows, a correlation is found between education and
current status of persons with entrepreneurial experience in the past: The
higher the education status, the more often respondents do not escape from
entrepreneurial activity forever. The statistical significance is high (χ2 =
13.887, df = 3, Sig = 0.003).
One might see that there are spectacular differences between two groups
of respondents with entrepreneurial experience regarding the reason to sell,
close or quit a business in the past (see Table 14.13).
Among the top five reasons, non-entrepreneurs with an entrepreneurial
past mentioned pessimistic estimations of future business prospects (36.7%)
as well as lack of self-efficacy: “Entrepreneurship is not for me” (25.3%).
The financial reasons were only ranked third (21.4%).
Concerning entrepreneurs with entrepreneurial experience in the past,
it is a completely different structure than the important reasons for past
discontinuation — the lack of finance to develop a business (42.1%), pes-
simistic estimations of future business prospects (20.6%), a bad business-
plan (12.4%) and “entrepreneurship is not for me” (12.4%).
The aforementioned differences are statistically significant and clearly
indicate the role of mental factors, as well as the different resistance levels
against macroeconomic limitations between respondents who resigned and
those who tried to start up again.
Summing up, it seems that the crisis in Russia led to an increase in
the role of economic reasons for business discontinuation and exits. Most
of the respondents who quit business forever were heavily affected by the
crisis, while temporary discontinued businesses would, with medium-term
perspective, (re)start anew (serial entrepreneurs). From this point of view,
March 5, 2013
16:48
288
9in x 6in
Table 14.11. Age and Gender Structure of Adults with Past Entrepreneurial Experience, 2009.
Age

Respondents Gender 18–24 25–34 35–44 45–54 55–64 Total
Entrepreneurs with Male Number 5 21 19 19 5 69

entrepreneurial % 7.2 30.4 27.5 27.5 7.2 100.0
experience Female Number 3 12 17 8 3 43
% 7.0 27.9 39.5 18.6 7.0 100.0
A. Chepurenko
Total Number 8 33 36 27 8 112
% 7.1 29.5 32.1 24.1 7.1 100.0
Representatives of Male Number 19 30 32 27 7 115

non-entrepreneurial % 16.5 26.1 27.8 23.5 6.1 100.0
majority of population Female Number 9 21 36 28 27 121
with entrepreneurial % 7.4 17.4 29.8 23.1 22.3 100.0
experience
Total Number 28 51 68 55 34 236
% 11.9 21.6 28.8 23.3 14.4 100.0
Notes: Entrepreneurs with entrepreneurial experience: χ2 = 2.126, df = 4, Sig = 0.713.

Representatives of non-entrepreneurial majority of population with entrepreneurial experience: χ2 = 17.036,
df = 4, Sig = 0.002.
b1344-ch14
March 5, 2013
16:48
9in x 6in
Table 14.12. Educational Structure of Adults with Past Entrepreneurial Experience, 2009.
Education
The Development of Entrepreneurship in Russia

Below Higher

Respondents Gender secondary Secondary Professional school Total
Entrepreneurs with Male Number 2 12 40 15 69

entrepreneurial % 2.9 17.4 58.0 21.7 100.0
experience Female Number 2 1 19 20 42
% 4.8 2.4 45.2 47.6 100.0
Total Number 4 13 59 35 111
% 3.6 11.7 53.2 31.5 100.0
Representatives of Male Number 8 8 81 18 115

non-entrepreneurial % 7.0 7.0 70.4 15.7 100.0
majority of population Female Number 6 6 85 24 121
with entrepreneurial % 5.0 5.0 70.2 19.8 100.0
experience
Total Number 14 14 166 42 236
% 5.9 5.9 70.3 17.8 100.0
Notes: Entrepreneurs with entrepreneurial experience: χ2 = 11.616, df = 3, Sig = 0.009.

Representatives of non-entrepreneurial majority of population with entrepreneurial experience: χ2 = 1.373, df = 3,
Sig = 0.712.
289
b1344-ch14
290 A. Chepurenko
Table 14.13. Do You Have Any Experience of an Unsuccessful Attempt to Start Up

a Business in the Past, and if Yes, which were the Most Important Reasons of it? (2009).
Representatives of
non-entrepreneurial
Entrepreneurs with majority of population
entrepreneurial with entrepreneurial
Reasons experience experience
Lack of finance to develop 42.1 21.4

business
Pessimistic estimations 20.6 36.7
of future business prospects
Bad business plan 12.4 8.3
“Entrepreneurship is not 12.4 25.3
for me”
Lack of useful connections in 12.5 8.3
state and municipal bodies
Note: The total percentage is more than 100%, because the reason is multiple for the
respondents.
the crisis (1) influenced the entrepreneurial potential only temporarily and
(2) enforced “weak” entrepreneurs to make a decision to escape. In this
sense, it even improved the quality of persistent entrepreneurial stratum.
Meanwhile, the intensity of business discontinuation (any reason) under
the crisis grew compared with previous years, and the difference between
entries and exits became negative. This is an urgent, but temporary effect
of the economic slowdown on the population’s entrepreneurial activity.
Among the non-entrepreneurial population with an “entrepreneurial
past”, the factors that influenced a decision whether to start again or not
were gender and education: Men and persons with higher education were
more often considering a possible entrepreneurial comeback, while women
and respondents with lower level of education tended more often to escape
from business definitively.
Besides the objective socio-demographic factors, there are subjective
factors — negative perceptions of opportunities to do a business and low
self-efficacy — which prevent a significant portion of former entrepreneurs
to start up anew.
There is no reliable data to show that the economic slowdown’s impact
on early and established business is most negative by baby business owners.
The crisis has had a negative impact on the motivation to start-up
among the non-entrepreneurial part of population; however, the share of
necessity-driven did not grow more than the share of opportunity-driven
potential entrepreneurs — maybe because of a relatively moderate impact

the crisis had on the labor market.
State Policy and Entrepreneurship

Starting from “zero”, the formation of state policy towards entrepreneur-
ship in early 1990s was characterized by its reactive, not pro-active
nature — the first radical reformist government had to deal with the over-
whelming damage of a total economic collapse.
In sum, the government policies towards SMEs and entrepreneurship
in Russia have passed through a number of periods:
• In the early 1990s, the government followed the concept of the

macroeconomic policy to establish main institutions inevitable for a
market-driven economy as more important than SME focused poli-
cies — in this context, the policy of financial stabilization and pri-
vatization aimed at supporting preconditions for any kind of private
entrepreneurship in general rather than targeting some specific groups
of entrepreneurs and firms (like start-ups and SMEs).
• From the mid-1990s, preference was given to the concept of supporting
small firms by measures of a “traditional” SME policy (which are effi-
cient under conditions of a balanced macro-, mezzo- and microeconomic
policy in established market economies with a transparent system of effi-
cient state regulating authorities), but in the absence of well-functioning
and recognized institutions, especially at the bottom level and being
steadily underfinanced, it had no impact on the state of things in the
small business sector itself.
• During the crisis of 1998, this system of state support for small busi-
ness began by and large to collapse, and circles close to the government
become ever more convinced not only of its inefficiency, but “radicals”
complained about the total irrelevance of the small business support
concept; finally, the pendulum swung back to the idea of entrepreneur-
ship rather than SME policy.
• By the mid 2000s, there reemerged the realization of the need to imple-
ment, along with improved general conditions for business development,
a better targeted entrepreneurship policy, to provide specific assistance
to some key groups of SMEs.
• With the crisis in progress, starting in late 2008 a large-scale support
for start-up groups is abandoned in favor of fast-response measures.
292 A. Chepurenko
One should include in the category of recurring mistakes in the

development and implementation of government policies towards SME
and entrepreneurship: First of all, the limited involvement of civil soci-
ety stakeholders in the process of policy development and implementation;
the absence of comprehensive analysis of policy background, progress and
results; the failure to grasp not only the common features, but also the dif-
ferences between policies to support small businesses (i.e., firms) and those
to boost the entrepreneurial potential of the society (i.e., of persons), the
latter being obviously underrated; finally, the absence of policy coordination
at the federal and territorial levels.
Regions: Differences in Entrepreneurship Development

and Supporting Policies
A major roadblock to the development of SME and entrepreneurship
in Russia has been, and remains, its widely uneven spread across the coun-
try, as well as differing degree of territorial authorities’ readiness to facilitate
the conditions for the development of effective private enterprise.
As for big businesses, they are based in the two capitals, Moscow
and St. Petersburg, as well as at extracting locations in the Urals and in
West Siberia, in a few other major logistic and industrial centers (million-
strong cities of the Volga–Don basin etc.). Elsewhere medium-to-large
business of the “second” and “third” tier is normally represented by con-
struction and trading companies of territorial scale.
There can be no development of large and medium-sized businesses in
the territories unless a sound strategy is put in place for a relationship
with territorial authorities. Note that the position of territorial administra-
tions towards large and medium-sized businesses becomes in recent period
more complex and not as straightforward as in the 1990s, when one could
talk with confidence about the “grabbing-hand” model (Frye and Shleifer,
1997: 354–358), i.e., the strategy of territorial authorities to gain control
over businesses — in exchange for benefits and privileges or by selective
application of formal and informal sanctions. This strategy is being aban-
doned to a certain extent, helped by a number of factors, such as changes in
the macroeconomic environment (the economies of territories are becoming
increasingly more open to global competition, forcing the realization of the
need to support local enterprise and facilitate consolidation of its compet-
itive position rather than looking for unearned income alone), the gradual
shift in the structure of corporate governance of large and medium-sized
businesses towards more openness, fewer options for territorial authorities

(because of major changes in the centre-versus-territory fiscal relations,
with no beneficial effect for the territories) to redistribute federal alloca-
tions in favor of more “loyal” firms, to name but a few.
The above resulted, as suggested by data from the project “Corporate
governance and integration processes in the Russian economy”, in three
groups of large and medium-sized businesses emerging in Russian territo-
ries at the beginning and first half of the 2000s — and three strategies
formulated for dealing with authorities: The most popular strategy, the
strategy of “exchange” (participation in major territorial welfare and infras-
tructure projects in exchange for benefits and indirect assistance to busi-
ness), the strategy of distancing from authorities (assistance to authorities
in handling certain tasks in exchange for “non-intervention” by authorities),
and, finally, the least popular (about 5% of the businesses surveyed) strat-
egy — the sponging model (government support received by firms without
any abusing of financial and/or political support of the policies of regional
authorities) (Dolgopyatova et al., 2007: 369). The conclusions are based on
the responses by the 2005 polled CEOs of 822 large and medium-sized firms
from eight territories in Russia).
It is also interesting to note another conclusion of the survey: In contra-
diction with the premise that support is provided by territorial authorities
based mostly on the degree of affiliation to them (which, indeed, usually
takes place between “strong” authorities and “weak” firms) rather than on
economic performance, it turned out that “a majority of the businesses that
have received support at the territorial level in 2001–2004 are fast-growing
firms, which make investments, introduce organizational and managerial
innovations, and export their products and services”.
The main tools of support for big business interests by territorial
authorities in the 2000s were organizational support, investment tax credits,
government orders, as well as practices of unofficial assistance (lobbying
before federal authorities, facilitation of foreign investor involvement) and
protection of property (prevention of corporate raiding, etc.).
As for small business, they are spread across Russia in a very uneven
pattern, with several groups of territories identifiable in terms of the level
of development.
This is suggested, e.g., by the findings of the survey of the development
of private enterprise in Russian territories, which was conducted in 2005
by the NISSE (National Institute for System Studies of Entrepreneurship)
294 A. Chepurenko
Table 14.14. Group-average Values of Indicators Describing the Level of Small

Entrepreneurship Development in the Constituent Territories of the Russian Federation.
Cluster Indicator 1 2 3 4 5 6 7 8
Number of SE per 37.56 12.72 10.41 14.41 8.54 6.07 5.52 6.14
thou. workforce
Average SE staff on 268.62 99.66 99.63 107.79 79.93 55.69 45.16 42.92
payroll per thou.
workforce
Labour productivity 201.27 372.32 329.21 271.48 251.10 228.64 258.86 648.74
per SE (per
employee)∗ ,
RUR000’s
Average number of 28.13 141.70 255.28 70.62 97.42 267.42 45.27 96.52
investments into
equity per SE*,
RUR000’s
Receipts of STSTS 2,771.42 2,644.11 1,060.91 783.44 478.42 284.46 277.31 272.03
(single tax under
simplified taxation
scheme) and STII
(single tax on
imputed income)*,
RUR000000’s
Note: ∗ With the consumer basket cost factored in for inter-territorial comparison of
purchasing power.
Source: Migin (2006).
think tank using a desk research based on a few quantitative criteria of

measuring (Migin, 2006).
This resulted in the identification of eight clusters of territories
with significant differences in terms of small business development (see
Table 14.14).
But for the 2000s, a new trend should be identified, which in the long
term can lead to changes in the territorial distribution of SMEs. More
concretely, whereas the level of small business development was a mirror
image of the preconditions (economic, political, and infrastructural) for
small business growth in the territory in the 1990s, and vice versa, by the
mid-2000s this was no longer the case. Some territories with very low impact
of SMEs on regional development started to launch programs to encourage
entrepreneurial activity and promote SMEs.
This can be seen, in particular, by comparing the above clusteriza-
tion of territories in terms of small business development and the ratings
of the perceived business environment in the territories. The ratings were

provided by small businesses, having been gathered in the course of the
above OPORA project, implemented in 2005, i.e., concurrently with the
NISSE project.
With territories grouped into three categories, viz., best, fair-to-
middling and poor performers in terms of the small business environment,
comparison of the data obtained with the overall rating of the small busi-
ness development level makes it possible to note the following. First, the top
five territories in terms of small business environment, based on data from
the OPORA project are Yamalo–Nenets Autonomous District, Bashkor-
tostan, Stavropol Territory, Tula Region, and Smolensk Region — and of
the above, only Bashkortostan can be classified as a territory with a high
level of small business development (NISSE’s groups 1–3).
Second, the bottom five territories in terms of business environment are
Saratov Region, Lipetsk Region, Moscow, Voronezh Region and Krasnodar
Territory. That said, in terms of the level of small business development,
Moscow (absolute leader) and Krasnodar Territory fall into groups 1 and 2,
respectively, i.e., among the most developed territories, with the rest falling
into groups 4 and 5, i.e., into groups with a fair-to-middling level of small
business development, but in no way among the worst performers (group 6
comprises Lipetsk Region only).
Comparison of the two findings may lead to the following conclu-
sions. On the one hand, the territories with relatively poor environmental
conditions for small business and a low level of development due to external
factors also have lower economic barriers to entry and levels of competition
than do territories with a strong competitive market. On the other hand, the
authorities seem to have changed their attitude towards small entrepreneur-
ship in many territories and are doing their best to boost (or at least not to
stunt) its growth. In the long term, given the gap that has grown between
the best and worst performers, this may result in a more even pattern of
small business development.
Be that as it may, for the time being, the values of basic indicators
of small entrepreneurship development can differ by several dozen times
between individual territories in Russia — as can the gross territorial
product. There can be no doubt that these widely different territories need
different ways and means to be developed for small business support poli-
cies — based on objectives that differ in terms of complexity, different levels
of fiscal capacity, as well as differences in the level of relevant infrastructure
development.
296 A. Chepurenko
This, however, is hindered by external circumstances: First, the funda-

mental changes that took place in the 2000s in the budgetary federalism (the
federal and budgetary reform of the early 2000s led to a situation where the
territories still had to honor most of their financial commitments, but with
their funding sources significantly limited) significantly decreased the bud-
getary base of most regions of Russia. The importance of federal co-funding
is highlighted by the fact that in only seven Russian territories federal trans-
ferts are making less than 5% of the revenues in the consolidated budget,
whilst the rest of the more than 70 territories being subsidized from the
centre to a much greater extent.
Evidence
The emergence of entrepreneurship in Russia under transition led to a
significant shift in the social structure of population. However, the dom-
inance of “unproductive” and “destructive” entrepreneurship, especially
among big and medium-sized entrepreneurship which is closely affiliated —
both formally and informally — with respective parts of political elites,
prevented a development towards free, competitive market.
Its alternative is the productive entrepreneurship based merely in the
niche of SME, which represents a bottom-up raised entrepreneurial poten-
tial of nation and is forced to function under a strong informal control of
state bureaucracy which enforces opportunistic behavior of entrepreneurs.
Under such circumstances, traditional SME policies providing sup-
port for any kind of private enterprise do not undermine the positions of
unproductive and “destructive” entrepreneurship. However, entrepreneur-
ship policy focused on providing advice and help for starting “productive”
businesses can foster the consolidation of the latter.
It is clear, furthermore, why SME policies in Russia have never been
consistent, penetrating or comprehensive in their nature, as this would
contradict the interests of principal beneficiaries of abortive reforms in
Russia. Hence, to outline and conduct a balanced entrepreneurship pol-
icy, a sufficiently strong coalition to support such policies is needed. The
groundwork for such a coalition to be put together needs the involvement of
“productive entrepreneurship”, new professionals (since the value of knowl-
edge will inevitably depreciate if dominated by unproductive and destruc-
tive entrepreneurship), new regional leaders (because they have no potential
allies or sources, other than SME, for fuelling the social and economic devel-
opment of the territories under their jurisdiction), and the at least tacit
consent of the nation’s leadership (because the ambitious goals set by it for
the innovation-oriented economy under development cannot be achieved as
long as Russia is dominated by unproductive entrepreneurship).
If the impact of the economic crisis of 2008–2009 on the private
entrepreneurship persists and the state policy against entrepreneurship
undergoes a qualitative change to enable start-up activity from below for
citizens with low financial capital but creative ideas, entrepreneurship may
become active part of a broad protest coalition, pledging for and insisting
on change of the socioeconomic model towards a more friendly one that
favors productive entrepreneurship in Russia.
The political implications of the rising dissatisfaction of the ‘creative
class’ with the results of the first ‘Putin decade’ (among them, the domi-
nation of semi-state corporations and interference of the state bureaucrats
into the business) during the elections 2011–2012 may play a critical role
in triggering the establishment of such a coalition.

15
Tradition and Entrepreneurship
of Indian Private Entrepreneurs
K. L. Sharma
Private Enterprise as a Desired Pursuit

Private enterprise is an age-old phenomenon in Indian society. Both state
and society granted due significance and recognition to arts and crafts,
trade and commerce by individuals, families and communities. Kramrisch
(1975: 18–24) discusses the “tradition of the Indian craftsman”. He writes,
“The traditions of the Indian craftsman are the means and ways by which
his professional activity puts into form and practice his knowledge of the
principle. His particular craft is the sphere in which he is competent to
apply his knowledge.” (ibid.: 18) Through tradition, knowledge is trans-
mitted. The principle of the calling is known by Brahman or Viswakarma,
the sum total of creative consciousness. The name for any art or craft is
silpa, that is, art, skill, craft, labor, ingenuity, rite and ritual, form, and
creation.
Crafts were hereditary, through apprenticeship and adoption. It was
related to caste, but only to the extent that one learned the “skill”. Excel-
lence in arts and crafts raised the social status of the craftsmen within
their communities and in the society in general. The craftsmen, not the
village craftsmen, were organized in guilds (sreni) in the great cities. The
king was the foremost patron of the arts. There were architects patronized
by the kings. Thus, economy, culture and state were interlinked in ancient
India.
Another example of privatization is “the merchant tradition” (Lamb,
1975: 25–34). It is believed that the status of Indian business has been
299
300 K.L. Sharma
relegated to a subordinate position by the Brahman tradition. But even

then Indian business has thrived through the ages, even across the Indian
shores. Despite superiority of the Brahma and the Kshatriya traditions,
the merchant tradition has made a mark in different parts of India. Lamb
(ibid.: 26) asks the following questions:
1. Why are some business families and some business communities
more highly regarded than others?
2. What underlying factors make for an improved status for the
trader?
Lamb observes that the importance of the trader’s function is an over-
riding consideration in the determination of the position of Indian business.
The rise of new religions, the development of banking, the emergence of the
guild form of organization and control by Indians of the state apparatus
as opposed to foreign rule are the most important factors. Thus, the tra-
dition of “privatization” was an offshoot of social and political forces, and
at the same time economic activities were in private hands. The Moughals
and the British weakened the interlinking of culture and business. Even
then the Banias and Jains in Gujarat and Rajputana, and the Nattukotai
Chettiars in South India enjoyed prestige and power because of their deep
roots in business and trade. British rule, however, alienated the Indian mer-
chant bankers from state patronage, but left them free in moneylending and
banking, particularly in the rural areas. Some big merchant bankers, such
as Tatas and Jains also thrived during the British period.
Claude Markovits (2008) in his study of merchants, traders, and
entrepreneurs in the colonial era focuses on the links between business
interests and political nationalism, entrepreneurship of some prominent
merchant communities and networks of Indian merchants within India
and abroad. Markovits stresses the nexus between business and politics
because of the ethos of freedom struggle and the role played by Mahatma
Gandhi in advocating businessmen as trustees rather than owners of busi-
ness. Even today, though in a different form, there is a “commercial-
ization of power”. Institutionalized corruption, the financing of political
parties by business houses, and state sponsorship of private monopolies
characterize the nexus between business and political power. The other
important point in Markovits’ study is related to the class of merchants,
traders, and middle and small industrial entrepreneurs. They all belong
to the broadly defined middle class of India. Some of them have their
roots deep in the history of trade and business, and some have emerged
Tradition and Entrepreneurship of Indian Private Entrepreneurs 301
in the post-independence period. The latter favor the liberalization of

market. The first one could be called as having “family business”, and
the second one would be “business families”. Being an economic histo-
rian, Markovits also discusses the business networks in different parts of
India with regional regimes, including medieval rulers and princes. He
also mentions about the Tatas and the Birlas, that the former were less
favored by the ruling party, namely, the Indian National Congress, than the
Birlas.
Economic Reforms and Entrepreneurship

Today, free enterprise has come because of flexibility in the economic field by
the Indian government. In 1991, the private players were allowed to enter
into insurance, banking, telecommunications and air travel (Guha, 2008:
695). The “Hindu rate of growth” as mentioned by one leading Economist-
Raj Krishna, was belied by such pro-market reforms. The growth of GDP
from 3.5% during 1972–1982, increased to 6.0% during 1992–2002, and so
was the increase in per capita income from 1.2% to 3.9%, respectively (ibid.:
696). Today, software firms such as Wipro, TCS and Infosys are common
names. Cities like Delhi, Noida, Gurgaon, Chennai, Hyderabad, Pune and
Bangalore, are India’s “Silicon Valley”. Cars by Honda and Ford, TVs by
Samsung, phones by Nokia and drinks by Pepsi and Coca-Cola are available
everywhere in India (Das, 2007: 244–260).
After the British left India in 1947, hopes and expectations in the inde-
pendent Indian state were enormous, not only to undo the harm caused by
the British rule, but also to recreate a new and modern India. The consti-
tution of India made provisions for a democratic state in which equality,
freedom, and uplift of the poor and depressed sections of society would have
priority. Besides the provisions of the fundamental rights to the citizens,
parameters were also laid out for the good of the people. In such a situation,
the state had to formulate stringent laws and ways of their implementa-
tion. Despite such well-meaning provisions, the problems of unemployment,
poverty, and backwardness in the fields of education and healthcare persist
till date. Adult franchise, migration, and mobility, land reforms, green rev-
olution, and the post-1990s liberalization have brought about some positive
perceptible results. In 1969, 14 banks of India were nationalized, as they
were not reaching to the poor and downtrodden sections of the society. Up to
1990–1991, the Indian state was characterized on the one hand as a prisoner
of “inspector raj”, that is, adherence to rules and regulations formulated
302 K.L. Sharma
by the ruling parties, and at the same time, Indian state was considered
as a “soft state” (Myrdal, 1968) on the other, because it could not check
unemployment, poverty, corruption, etc. Such a contradiction persists even
today.
Until 1990–1991, the word “private” or “privatization” in the realms
relating to public welfare was abhorred and disliked. “Private” was
associated with self-interest, the appropriation of surplus, monopoly of
trade and commerce, and with the exploiters of the poor in India. However,
Pawan K. Varma (2005: 70) observes: “Entrepreneurship in the service
of material gain is an irrepressible Indian trait”. Indians do not hesitate
in money-making. There is a veritable army of “footpath businessmen”,
small shopkeepers, tea stall owners, dhabawallahs, artisans, kabadiwal-
lahs and rickshaw pullers (ibid.: 74). Ten million men and women work
as street hawkers and vendors, and more than 60 million people are depen-
dent on this trade. In Delhi alone, there are half a million street vendors.
Varma states that the organized sector of the economy — private, pub-
lic and corporate — employs only 3% of the workforce (ibid.: 75). Nine
out of ten people are self-employed in India. “Business is, indeed, the
livelihood of a great many of the poor” (ibid.:75). Small Scale Industries
(SSI) have witnessed a phenomenal growth, largely with the support of the
government.
In Mumbai, 5,000 entrepreneurs wake up at the crack of dawn for
their business activities. A total of 150,000 lunch boxes are delivered
to offices in Mumbai everyday. There are 173 milk producers’ coopera-
tives, which supply milk through 22 federations in India. Lijjat Papad,
Bikanerwala, Haldi Ram, etc., are roaring enterprises. For example, Lij-
jat Papad engages more than 40,000 women workers, having a turnover
of US$ 60 million a year, having 60 branches all over India. The Self-
Employed Women’s Association (SEWA) has 71 cooperatives with 70,000
members.
Today, culture and arts and crafts, business and agriculture are not
linked. Even before “liberalization” in 1990–1991, the private sector in
India dominated economy, in both rural and urban areas. Traders, shop-
keepers, hawkers, businessmen, entrepreneurs, workers in tiny, small-scale
and large industries, in hotels and restaurants, construction of houses and
buildings and in several innumerable fields, privatization was in existence
before 1990–1991, and it persists today as well, but it has a bit expanded
and has also acquired a somewhat different form and functioning.
Entrepreneurship is connected with urbanization to a considerable

extent. However, urbanization itself may be an offshoot of the means
of transport and communications and other factors such as education,
healthcare facilities, etc. In general, urbanization in India is at a low
level compared to the countries of Western Europe, Canada, America, and
even other developing countries. If there is a greater diffusion of mod-
ern commercial devices in traditional agriculture, small enterprises can
emerge in villages and small towns (Chapman and Wanmali, 1981: 19–
43). For example, in West Bengal (Dutta, 2002: 3181–3189) there is a clear
urban concentration of small enterprises in a small region in Kolkata and
its immediate satellites. Kolkata is seen to be the center of introverted
economic systems. Small towns could have small-scale units (industries),
ancillary industrial undertakings and tiny enterprises. Mahatma Gandhi
advocated the concept of “village industry”. But this could not be real-
ized independent of urbanization. Entrepreneurship and urbanization are
coterminous.
Becoming an Economic Elite and Privatization

What is privatization? In the present Indian context, some service sec-
tors, which were managed and controlled by the government machinery
and public sector undertakings and enterprises, have been shifted or opened
up in the private sector in the post-globalization-liberalization period. The
enthusiasts of privatization believe that a shift from public to private own-
ership will automatically make for improved performance (Mohan, 2002:
4865–4871). However, such a view is quite simplistic. In India, law enforce-
ment and corporate governance are not strong enough to ensure better
performance as a result of privatization.
Why privatization? Mohan (ibid.: 4865) outlines the following
objectives:
1. To promote increased efficiency.
2. To raise revenues for the state (and thereby to bridge fiscal
deficits).
3. To reduce government interference in the economy and promote
greater private initiative.
4. To promote wider share ownership and the development of the
capital market.
304 K.L. Sharma
In India, it has generally been perceived that the public ownership

has resulted in low efficiency. Several government departments and public
sector undertakings have run into heavy losses and corruption. In India,
privatization and liberalization have been encouraged due to the rigid and
long-drawn process of the licensing system. Bureaucratic delays, interfer-
ence of the political bosses, red-tapism and corruption are the reasons
often put forward in favor of privatization. It is believed that the objec-
tives of efficiency enhancement, resource mobilization, and incremental cap-
ital outlays can be achieved by an effective system of privatization (Bai-
jal, 2002: 4189–4195). The government of India has de-invested in several
areas, including Public Sector Undertakings and Enterprises, such as banks,
hotels, electricity, telecommunication, civil aviation, tourism, transport, etc.
Privatization in India has mainly emanated from the poor performance of
public sector undertakings (PSUs). It is argued that privatization would
ensure transparency and effective apparatus in PSUs (Makhija, 2006: 1947–
1951). In education and health services, private investors have been allowed.
Several private universities (nearly 200) have come up in last ten years.
Many new hospitals and nursing homes, though far more expensive, have
sprung up.
In the large-scale enterprises, those who are engaged in manufactur-
ing and the selling of televisions include Videocon, among the top three
companies, with a turnover of over US$6 million. There are more than 200
television channels today. In 1995, Master Card grew by 106% in India, Visa
by 94% and American Express by 135%. This clearly indicates enhanced
and transformed nature of entrepreneurship. Consumerism has become a
symbol of a new lifestyle. Chocolates, like Toblerone, and toys such as Bar-
bie and Baskin Robbins can be seen at common places, including at the
restaurants and shops on highways. Even the lottery business is more than
2% of India’s GDP.
In addition to the old names, like the Birlas and the Tatas, several new
big enterprises have come up. The Ambanis, the Mittals, the Goyals, the
Narayan Murthys, etc., are the names known all over the world. In the post-
1991 period, Zee TV, Bharati Enterprises, Hindustan Lever, Jet Airways,
Kingfisher Airlines, Sahara Airlines, Spicejet, and drug companies such as
Cipla, Dr. Reddy’s Labs, Wockhardt & Ranbaxy, etc., are the big names as
new enterprises. However, in most cases, the business enterprises are still
in the hands of the upper castes, who were socially entrenched for centuries
in the hierarchical system of Indian society. The following table indicates
the situation in 1995–1996:
Table 15.1. Economic Power by Religion and Community, 1995–1996.
Turnover
Religion/Caste Business Houses Group Rank Rs. Crores Rank
Marwari(H/J) 19 1 51,399 1
Punjabi (H) 7–8 2 18,161 3
Gujarati (H) 5–6 3 16,915 4
Parsi 3 4 35,463 2
Chettiar (H) 2 5 6,367 5
Brahmin (H) 2–3 6 6,172 6
Sindhi (H) 2 7 4,523 7
Christian (Syrian) 1 8 2,011 9
Nair (H) 1 8 2,148 8
Raju (H) 1 8 1,341 10
Muslim 1 8 1,287 11
Others 3 5,106 —
Total 47–50 150,893
Note: H = Hindu; J = Jain

Source: Data in Business Today, August–September 1997 in Dorin et al., 2000: 25.
Cited from Harriss-White (2004).
Today, the term “privatization” has become a buzzword in India. The

resourceful people, and even the not-so-resourceful, try to reach to the pri-
vate hospitals and other agencies for quick relief. From village to metropolis,
private enterprise has been entrenching with a fast speed into two social
sectors, namely, health and education. Private English-medium schools, col-
leges and universities have come up as means of new enterprises. So is the
case of private hospitals, nursing homes, and medical practitioners. One
can see competition among the entrepreneurs in these two sectors. Several
reports of malpractices and unethical and unprofessional activities have also
come up. Generally, these enterprises are perceived as fast money-making
agencies.
In the past, the property-owning, entrepreneurial, capitalist-employer
emerged from the decline of the feudal and the colonial systems. Today,
it has emerged from the processes of liberalization and globalization. The
new entrepreneurs are the intermediate strata, situated between the work-
ers and the industrial capitalists. The role of the managerial and minis-
terial classes has increased. Entrepreneurs are intermediate classes. They
are more in urban areas compared to the rural areas. Entrepreneurs
were mainly tradesmen, small industrialists, and craftsmen, employing
some wage-earners in the 1950s and 1960s. Today, the structure of the
306 K.L. Sharma
entrepreneurs (middle classes) in the private sector has changed consid-

erably. Besides the conventional arenas of entrepreneurship, today profes-
sionals have turned into entrepreneurs. Management, education, health,
social work, telecommunications, transport, travel, consultancy, software,
hotel management and catering, coaching for competitions, marketization
of services, publicity, mega-marts, law firms, etc., are the areas of private
entrepreneurship.
The Dynamics of Entrepreneurship

Tripathi (1985: M-163–M-168) analyzes the entrepreneurial process by
accounting for (1) the constellation of forces, (2) the entrepreneurial ini-
tiative, and (3) changes in the constellation of forces. Sharma (1997a: 93)
writes: “An entrepreneur is a person who finds a constellation of socio-
cultural and economic forces favorable for venturing into one or other
enterprise, and if he succeeds, he becomes socially and economically dis-
tinct from those who prove to be a failure.” An entrepreneur is then an
innovator, at least in principle. In practice, an entrepreneur may sim-
ply be an imitator (Singh, 2010: 427–447). Singh, however, says that an
entrepreneur is essentially concerned with small and medium-sized indus-
trial units. Thus, as such, really big business is excluded from the category
of entrepreneurship. According to Singh, small-scale industries are the real
mirror of entrepreneurship. Presently, there are about 3.6 million small-scale
industries in the country. Entrepreneurship in India is male-dominated, and
in particular it is owned and controlled by the upper and the upper middle
castes. Women are still far behind in entrepreneurship. Communities, such
as Muslims, Christians and Sindhis are nominally present in entrepreneur-
ship, that too are in some parts of India only.
Earlier moneylending and trading were taken up by the well-off land-
lords and cultivating families, but today finance companies have come up to
extend loans for almost everything, including education, agriculture, indus-
try, consumer goods, vehicles, houses, etc. The entrepreneurial arena is
wide open for different sections of society. It is also not confined to agricul-
ture, business and industry. It has spread out to the domains of healthcare,
medicine, science, technology, manufacturing, education, telecommunica-
tions, transport, food, clothing, cosmetics, etc. Hindus, Muslims, Sikhs,
Jains and tribal’s have made inroads into entrepreneurship. Caste, religion
and entrepreneurship are interrelated (Sharma, 1997a: 93–94). Several stud-
ies indicate that Upper Castes, namely, Banias, Khatris and Jains dominate
industries in many parts of India. In some parts, Muslims and Sikhs are
also engaged as entrepreneurs.
In the 1970s and 1980s, about 23% of India’s economy was charac-
terized by small-scale and cottage industries and trade. Only 10% of the
workforce was in the organized sector, the remaining 90% was in the unorga-
nized economy, and 67% of the total workforce was in agriculture (Rudolph
and Rudolph, 1987: 22). Due to preeminence of agriculture, unorganized
workforce and the role of the state, “class politics” has remained dormant
in India. However, after the liberalization–globalization from 1990–1991,
private capital has been constantly gaining ground in Indian economy.
The Indian economy is a complex phenomenon. It is characterized in
terms of “informal” and “formal”, “unorganized” and “organized”, “public
sector” and “private sector”, and the black money economy (Harriss–White,
2004: 1–16). The informal economy escapes state regulation. It also includes
fraud and theft from the state, the corrupt abuse of public office, the illegal
privatization of public property rights, and the theft or privatization of
public time. Entrepreneurs have also sprung up to a great extent from such
a situation of economy and the soft Indian state.
Entrepreneurs are people in transition to reach to the peak of capi-
talism. Kalecki (1972) argues, without using the term entrepreneurs, that
a grouping of the self-employed and small farmers forms a distinct “class
force”. “They are intermediate classes (IC), and their predominance gives
rise to an intermediate regime (IR). The defining characteristic of the classes
composing an intermediate regime is that there is no contradiction between
labor and capital or between labor and management.” (Harriss–White,
op.cit.: 44) The following features of the intermediate classes may be noted
(Harris–White, op.cit.: 44–45):
1. Earnings are an amalgam of both reward and profit.
2. The self-employed classes lie between the large-scale, profession-
ally managed capitalist enterprise of the private sector and the
working classes.
3. Production rather than profit is maximized.
4. “Intermediate classes” do not correspond to the Marxian defini-
tion of class.
5. “Intermediate classes” are not necessarily rich, but they consti-
tute a very large crowd.
The “intermediate classes” or entrepreneurs are extremely dispersed
compared with big business and the public sector. They are like “masters
308 K.L. Sharma
of the countryside”. According to Jha (1980: 95) in 1980, there were 30

million “intermediate” income earners with eight to ten times as many
dependents — some 250 million. Intermediate classes have an interest in
keeping essential goods scarce and their high prices to profit of that scarcity.
According to Jha, the Indian economy was stagnant between 1965 and 1980.
The small entrepreneur could not gain from such a situation. The licens-
ing policy was anti-monopoly, and classes suffered by the public sector
helped the small-scale industry and trade, which enhanced the value of the
entrepreneurial classes. The nationalization of banks in 1969 helped the
intermediate classes as it was directed to “priority areas”. By 1974, 33%
of bank advances were directed to agriculture, small-scale industry, small
transport operators, small business and professional and self-employed per-
sons (Joshi and Little, 1994: 134). By 1985, the proportion had gone up
to 40%, and by 1994, three-quarters of regional banks had negative net
working due to such a policy (Harriss–White, op.cit.: 49).
A change in the state’s policy towards the “intermediate classes” or
entrepreneurs has given a setback to the situation which existed prior
to 1991–1992. The liberalization–globalization process denied the state
patronage by way of the withdrawal of easy loans and subsidies. Big business
received a boost in the 1990s, and it continues apace. Family business and
business families, as Harriss–White (op.cit.: 103–131) observes, continue as
examples of family-centered entrepreneurship. This form of entrepreneur-
ship is mainly in the domains such as textiles, handlooms, rice mills, hotels,
cinemas, marriage halls/gardens, a chain of shops, transport, etc. Gener-
ally, male members, relatives and some hired people are engaged in such
entrepreneurial activities. Women are often excluded.
However, an interesting analysis of “a new transnational capitalist
class” by way of “capital flows, business networks, and entrepreneurs in
the Indian software industry”, is provided by Upadhya (2004: 5141–5151).
She writes: “The software industry has produced a new kind of transna-
tional capitalist class in India. Most of the founders of software firms have
come from the “middle class”, building on their cultural capital of higher
education and social capital acquired through professional careers.” (ibid.:
5141) This new class and the IT industry have their global integration
and relative autonomy from the “old” Indian economy dominated by the
public sector and a nationalist capitalist class. The multi-nationals have
synergized this class for quick growth and have made it the most outspo-
ken votaries of globalization. In 2002, India accounted for 24% of global
offshored IT/ITES services. The industry had nearly 50% annual growth
rate during the 1990s, and in 2003–2004 earned revenues worth US$15.9
billion and exports of $12.5 billion (IT and ITES combined). After the
IBM left India, HCL and Infosys emerged as the major Indian software
service companies. STPI, Wipro, TDICI, ICICI and UTI emerged in the
software sector. In 2002, there were about 60 foreign VC (Venture Capital)
firms in India. Indians started dominating silicon valley. By 2000, there
were about 500,000 Indian professionals in the US and half of them were in
California. In India, Bangalore is India’s silicon valley. Besides Bangalore,
Pune, Hyderabad, Gurgaon, Noida, etc., are other hubs of multinational
software companies.
The Social Matrix of Entrepreneurship

Entrepreneurship has emerged in two ways: (1) small producers, craftsmen,
weavers, etc., become entrepreneurs or master-weavers as I have found in a
weavers’ town in Central India (Sharma, 1999); and (2) the merchants or
master-weavers get involved in production process, as they have taken over
sponsorship and control of handlooms by extending credit, raw materials,
and marketing of the finished goods (sarees). Rutten (2003: 1319–1341) in
a comprehensive review of entrepreneurship in India suggests that instead
of either a cultural or structural perspective, there is a need to study
entrepreneurship from a comparative perspective. The cultural perspective
is rooted in Max Weber’s thinking, namely, that the “spirit of capitalism”
lies in the protestant work ethic, and the structural perspective has its gen-
esis in Karl Marx’s idea of the “mode of production”. Entrepreneurship in
India is neither like the one in Europe, nor is it unique. It has an amalgam
of both structural (general) and cultural (specific) aspects. Rutten argues
that the two approaches are not mutually exclusive. Rutten writes: “Here
I am not advocating either a structural or a culture-centered analysis, but
argue instead for the development of a fresh approach that combines both
by looking at how political, economic, and cultural processes interact within
the historical process of capitalist development.” (ibid.: 1332–1333)
Entrepreneurship is greatly differentiated and stratified. Richard D.
Lambert (1963) has studied five factories in Poona, ranging from tiny and
informal level to large, formal and organized level. Size, the nature of work,
the workforce, relations within, etc., all differ in the five establishments.
Both structural imperatives and cultural specificities need to be synthe-
sized even at the present juncture of globalization, liberalization, and pri-
vatization. At times, several local/indigenous, regional and national aspects
310 K.L. Sharma
become significant, and in some other situations, global structural dimen-

sions need to be given due consideration.
Entrepreneurship in India is greatly differentiated as such, and it is also
shaped to some extent even today by religion, region, caste and gender.
Harriss–White has discussed some of these aspects at considerable length.
Varma (op.cit.: 70) observes: “A scarcity economy and shortage of capital
have made Indians inventive about improving on inputs and reducing costs.
In the Indian economic lexicon, nothing is entirely valueless, and everything
is potentially of value. About 60% of India’s plastic waste is recycled, com-
pared to 10% in China and 12% in Japan.” In Europe, 90% of the people
work in the formal sector. The working conditions of the two are polar
opposites, harsh in India, and most congenial in Europe. Today, the small-
scale industry employs 80% of factory workers and accounts for 50% of the
value added by the manufacturing sector and about one-third of all exports.
Certain important areas of export such as garments and jewelry are almost
entirely its monopoly (Varma, op.cit.: 75–76). There are roughly 2.5 million
small-scale units in India.
The new entrepreneurs of the post-1991 era have shown that Indians
can do wonders with making money. Many of them were first-generation
entrepreneurs. They were risk-takers, nurtured a vision, believed in them-
selves, and were exceptionally nimble in seizing the right business oppor-
tunities (Varma, op.cit.: 91). Varma mentions several names of the
entrepreneurs, namely that of the Zee TV, Bombay Dyeing, Times TV,
Bharti Enterprises, Hindustan Lever, Jet Airways, Morepen Laboratories,
Cipla, Dr. Reddy’s Labs, Wockhardt and Ranbaxy, Uday Kotak, etc. Some
of these had no hereditary business background. However, some who had
realized that they needed to have their enterprises regenerated in the
changed financial situation included the Birlas, the Dalmias, the Reddys,
the Ranbaxy, the Modis, the Ambanis, and many more.
Another trend emanating from neoliberalism is a new way of think-
ing, enterprise culture and new work places, reflected by organized retail
and shopping malls in India. Not only metropolises, state capitals, big divi-
sional towns, even towns having district headquarters are in the shopping
mall mode. The traditional pattern of shopping is loosing its grip over the
people. Gupta (2009: 45–54), based on her case study of young workers in
organized retail in shopping malls in Kolkata, discusses that emerging labor
processes as well as the orgnization and culture of new workplaces in India
have far-reaching consequences beyond the economy and are transforming
Indian society and politics in profound ways. Shopping malls are playing
a decisive part in crafting suitable workers and citizens, and in reshaping

individual subjectivity, constant with the needs of the market. The gov-
ernment’s policy in this regard has promoted emergence of self-governing
citizens and self-driven, pliant workers. A new enterprising individual, away
from formal party-politics and political engagement, is the net outcome of
the present-day public policy. Harvey (2005: 2), a champion of liberalization
as a policy and practice observes that neoliberalism is a theory of political
economic practices, based on the idea of individual entrepreneurial free-
doms and skills, with strong private property rights, free markets, and free
trade. Such an entrepreneurialism is fast emerging in India since 1991–1992.
An “entrepreneurial-self” (Burchell, 1993: 275; Rose and Miller, 2008: 195)
is goal-oriented, self-directed with skills and competences, and who is opti-
mistic, creative, innovative, having a sense of autonomy of self-fulfillment.
Gupta (2007: 87–104) observes that globalization has brought a new
ideological shift in Indian business. Trade Unions have become weak and
dormant. The emphasis on production and producers has become the main
point of economic thought and policy-making. The consumer has occupied
the centre-stage. Restrictions on trade and commerce are not liked any
more. “Globalization is about mobile people and about generalized con-
sumption standards” (ibid.: 89). Gupta also observes that globalization has
put pressure on Indian native capitalists, because kinship ties in business
along with the process of globalization do not match suitably with the
demands of the consumer today. Family enterprises operate in a protected
market, and globalization does not ensure such a safeguard. Professional
management is largely found in public sector undertakings. It has yet to
be there in the private enterprises. The Indian Corporates are generally
family-based. Harriss–White also refers to this fact of “family business”
and “business families”.
We do not have exact data on entrepreneurs in India. Some approxi-
mations are certainly there for making tentative analyses. Even before the
globalization–liberalization of Indian economy in 1991, the private sector
dominated. Nationalization of the banks in 1969 was more of a step to
reach to the deprived and needy sections on the part of the Indian state,
rather than to expand the organized public sector. Thus, entrepreneurship
has persisted in the private sector, but with a change in its form and func-
tioning. Family and caste continue to play a role worth noticing, even in
the midst of today’s corporate wave.
Healthcare and education are rapidly transforming from the public to
the private domain. In good old days, both healthcare and education were
312 K.L. Sharma
non-profit-making activities, taken up by communities, families and indi-

viduals. Rather, the two were a matter of welfare or charity extended to the
needy people by rich and resourceful persons. Today, increasingly, educa-
tional institutions and private hospitals and nursing homes are considered as
enterprises. Education and healthcare delivery are referred as commodities.
A lot of people have invested millions of rupees in the opening of engineer-
ing colleges, medical institutes, universities, hospitals and nursing homes
with the sole objective of earning money and making profits. The language
of trade and commerce (market) is being used unflinchingly for transacting
educational and healthcare-related activities. A student is considered as a
product, and the education imparted to him/her is valued as a commodity.
In the last five years, more than 200 private universities and thousands of
colleges have been established in the private sector. Educational hubs have
become a new feature of medium and large cities. This has also been the
case for hospitals/nursing homes in private sector.
The market in these two social sectors is hierarchical, and the star insti-
tutions are beyond the reach of the common people. Capitalism can be seen
acting in full swing in education and healthcare. Consumerism has become
the buzzword for those who can afford the high cost of private education
and healthcare. Since it is considered a market phenomenon, consumers
may feel that they are free to choose a university or college and hospital of
their choice for treatment, a discipline (a branch, say in engineering), and
have a right to know about the quality of education, placements for jobs,
and the use of available infrastructure (laboratories, libraries, etc.).
Concluding Remarks
In India, less than 10% people (of the total employed people) are working
in the public and organized sectors. With the shrinking of jobs in public
sector, more and more people are seeking employment in the private sector.
A variety of small, middle, and large enterprises exist in cities, in particular.
The non-farm jobs in villages also mark a tendency towards entrepreneur-
ship. In the cities, a new arena of entrepreneurship is the construction of
housing complexes, shopping malls, fast food joints, and restaurants. Busi-
ness in the sale and purchase of properties has picked up in a big way due to
urbanization. Millions of people are hired by entrepreneurs for these activ-
ities. Agencies supplying manpower, including security guards, are also a
new phenomenon. Certainly some of these activities have expanded consid-
erably in the liberalization era.
A number of families and individuals have taken up entrepreneurship

from the middle and peasant castes and these communities have taken
up non-farm activities in the countryside. Some of them have migrated
to towns and cities with a view to having their own businesses. A couple
of families have sold out their agricultural lands with a view to having a
house in the city to get their children educated. In some cases, land has
been acquired by the government, and the compensation received in lieu
of the acquisition has been invested in the purchase of urban property or
in taking up particular entrepreneurial activities. We do not have reliable
data on such recent trends in entrepreneurship, but it is a fact that not
only entrepreneurship has transformed considerably, but its social matrix
has also diversified. Its traditional base has eroded. People now enter into
entrepreneurship, which has affected the traditional structure of enterprises
and class structure.
Despite the erosion of the traditional bases of entrepreneurship,
ownership of private enterprises revolves around caste. Scheduled castes
and scheduled tribes have a minimal share in entrepreneurship in both
rural and urban India. They are mainly engaged in family labor with much
lower wages, compared to non-disadvantaged castes (Thorat and Sadana,
2009: 13–16). According to Thorat and Sadana, based on the NSS data for
2004–2005, 34.3% of the SCs, 45.7% of the STs, 56.2% of the OBCs and
61.4% from among the general population were engaged in self-employed
enterprises in rural areas. In urban India, the self-employed households were
29.4%, 26.3%, 40.3% and 38.6%, respectively. This pattern clearly shows
a lower share of the SCs and STs in ownership of private capital. The
two conclusions drawn by Thorat and Sadana are: (1) there are continuing
inter-caste disparities in the ownership of private enterprise; and (2) the
character of enterprises owned by the SC and ST groups vis-à-vis others
has linkages with poverty.

16
China’s Fledgling Private Entrepreneurs
in a Transitional Economy
Chen Guangjin
After over 30 years of development, China’s private entrepreneurs have

grown into a highly influential social stratum on China’s economic, social
and political scene. Drawing on official statistics and relevant data from
eight sample surveys of domestic private enterprises by such organizations
as the All-China Federation of Industry and Commerce and State Adminis-
tration for Industry and Commerce (SAIC) from 1993 to 2008, this chapter
aims to briefly outline and analyze the scaled growth, formation mecha-
nisms, status identification, and political participation of this class.
A New Social Stratum Emerging in the Process of

China’s Reform and Opening Up
The “private enterprises” we deal with in this chapter are defined on the
basis of the nature of their corporate registrations, and the so-called “pri-
vate entrepreneurs” refers to the natural-person investors in all types of
private enterprises (including sole proprietorship enterprises, partnership
enterprises, limited liability companies, joint stock companies and other
mixed-ownership enterprises) as variously recognized by SAIC and the nat-
ural persons who own stakes in legal-person investors, who mainly play
the roles of management in the enterprises they invest in and enjoy all
the rights and interests investors are entitled to. Of course, there are also
some investors who do not directly involve themselves in the operation and
315
316 Chen Guangjin
management of their enterprises, and only enjoy relevant rights and inter-
ests or exercise certain decision-making power as capital owners.
The course of the development of “private business

owners” in China
Shortly after the founding of P.R.C., China carried out the three “Socialist
Transformation” campaigns in the 1950s, which converted almost all pri-
vate businesses into state-owned enterprises. It was not until the initiation
of China’s reform and opening up in 1978 that the country’s nascent private
sector started to grow again. In the early 1980s, most private business own-
ers either operated out of “Getiku” (Individuals and households engaging in
industrial and commercial activities), or “lurked” in collective enterprises.
The very first private enterprise in China was not registered until 1984.
Before formally approving the existence of private enterprises in 1988,
the Chinese government basically adopted a wait-and-see attitude, neither
encouraging nor clamping them down. In early 1987, the Central Committee
of the Communist Party of China (CPC) pointed out in the “Decision on
Deepening Rural Reform” that: “In the primary stage of socialism, during
the development of commodity economy, the existence of the individual
economy and a small number of private enterprises are unavoidable for a
relatively long period of time.” It was proposed that in treating private
enterprises, the principle of “permit their existence, strengthen regulation
on them, take advantage of their benefits and curb their possible harms,
guide their development step by step” shall be observed, which remains
the government’s basic principle in guiding the development of its private
economy.
In November 1987, the 13th National Congress of the CPC explicitly
expounded the basic line of the Party in the primary stage of socialism and
the principle of “encouraging the development of individual and private
economy”, acknowledging that allowing the private sector of the economy to
exist and developing within certain limits would help promote production,
activate the market, increase employment and better satisfy the increasingly
diverse needs of people, with the private economy constituting a necessary
and beneficial complement to the socialist public economy. In doing so,
the congress actually established a new economic system for China at the
time, namely the ownership structure in the primary stage of socialism with
public ownership as the dominant position and complemented by other
forms of ownership.
China’s Fledgling Private Entrepreneurs in a Transitional Economy 317
In April 1988, the Seventh National People’s Congress (NPC) approved

amendments to Article 11 of the constitution, with the following provisions
added: “The state permits the private sector of the economy to exist and
develop within the limits prescribed by law. The private sector of the econ-
omy is a complement to the socialist public economy. The state protects the
lawful rights and interest of the private sector of the economy, and exercises
guidance, supervision and control over the private sector of the economy.”
On 15 June 1988, the State Council promulgated the “Provisional Regula-
tions of the People’s Republic of China on Private Enterprises” and relevant
tax codes. All these legislative and administrative acts had served to con-
stitutionally and legally establish the historical status of private enterprises
on China’s economic, social, and political scene. Consequently, after spend-
ing nearly six years’ gaining momentum, a new social stratum had finally
shed its “underground” status and gone legitimate.
Since 1996, the number of private enterprises and investors in China
has increased rapidly and stably. In 2001, the central committee of the CPC
acknowledged that the new social classes including private business owners
were part of the forces which are working to build socialism with Chinese
characteristics and officially allowed the advanced elements among them to
join the CPC. In 2004, the National People’s Congress amended the consti-
tution for the third time, pledging that the country protects lawful private
properties. In the same year, the government unveiled the “36 policies to
promote non-state-owned economy”. The promulgation of “Real Right Law
of the People’s Republic of China” in 2007 makes available legal protection
for private property in the country.
The expansion of the stratum of “private business

owners”
For various reasons, before the year of 1988, it was impossible for us to
find relevant information concerning the development of the stratum of
“private business owners” in official statistics. It was not until 1989 that
official statistics began to offer data regarding the number of China’s private
enterprises and investors therein.
Table 16.1 reflects the development dynamics of the number of private
enterprises and investors in China during the period 1989–2008. As can be
observed, within 20 years the stratum of private business owners in China
had undergone tremendous development. During this 20-year period, the
total number of private enterprises in China had grown from 90,600 to
6.5742 million, recording a whopping 71.6-fold expansion, which translated
March 5, 2013
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318
Table 16.1. The Development of China’s Private Enterprises Since 1989.
9in x 6in
Number of private enterprises Number of investors
Percentage of
total number of Percentage of National
Number Growth Growth domestic Number Growth Growth total domestic GDP
Year (10,000) (10,000) rate (%) enterprises (10,000) (10,000) rate (%) employment growth (%)

1989 9.06 — — 1.8 21.0 — — 0.038 4.1
1990 9.81 0.75 8.3 2.1 22.4 1.4 6.7 0.035 3.8
1991 10.78 0.97 9.9 2.2 24.1 1.7 7.6 0.037 9.2
1992 13.96 3.18 29.5 2.4 30.3 6.2 25.7 0.046 14.2
1993 23.79 9.83 70.4 3.2 51.4 21.1 69.6 0.077 14.0
Chen Guangjin
1994 43.22 19.43 81.7 5.2 88.9 37.5 73.0 0.132 13.1
1995 65.45 22.23 51.4 7.8 134.0 45.1 50.7 0.197 10.9
1996 81.93 16.48 25.2 9.9 170.5 36.5 27.2 0.247 10.0
1997 96.07 14.14 17.3 12.4 204.2 33.7 19.8 0.292 9.3
1998 120.09 24.02 25.0 17.7 263.8 59.6 29.2 0.373 7.8
1999 150.89 30.80 25.6 23.1 322.4 58.6 22.2 0.452 7.6
2000 176.18 25.29 16.8 29.0 395.3 72.9 22.6 0.548 8.4
2001 202.85 26.67 15.1 26.8 460.8 65.5 16.6 0.631 8.3
2002 263.83 60.98 20.1 35.9 622.8 162.0 35.2 0.845 9.1
2003 328.72 64.89 23.6 42.7 727.8 105.0 16.9 0.978 10.0
2004 402.41 73.69 21.3 49.4 948.6 220.8 30.3 1.261 10.1
2005 471.95 69.54 29.3 55.1 1,109.9 161.3 17.0 1.464 10.4
2006 544.14 72.19 15.3 59.2 1,271.7 161.8 14.6 1.665 11.6
2007 603.05 58.91 10.8 62.6 1,396.5 124.8 9.8 1.814 13.0
2008 657.42 54.37 9.0 67.7 1,507.4 110.9 7.9 1.946 9.0
Sources: China Statistical Yearbook and Compilation of Statistics on Industry and Commerce Administration of the previous years.
b1344-ch16
to an average annual increase of 341,200, or an annual growth rate of 25.3%.

The proportion of private enterprises in domestic industrial and commercial
enterprises had been steadily and continuously rising over the years, and
since the year 2005, solely by number, private enterprises had made up
more than half of the total industrial and commercial enterprises in the
country; by the end of 2008 the percentage exceeded two-third of total
industrial enterprises. Accordingly, the investors in private enterprises had
also been growing at an impressive rate, with its number shooting up to
15.074 million in 2008 from 210,000 in 1989, registering an impressive 70.8-
fold growth, which translated to an average annual increase of 782,000,
or 25.2%.
The Macro Conditions for the Development of China’s

Private Enterpreneurs: Policy Changes and Public
Support
The reason that China’s private business owners can achieve such rapid
growth within a relatively short period of time is worth delving into. The
labor capital, economic capital, social capital, and even political capital
owned by private business owners themselves have become a subject of
increasing interest to researchers (Jia and Qiu, 1993; Zhang and Liu, 1995;
Li Lulu, 1995, 1996; Liu Linping, 2001; Chen Guangjin, 2004; 2005).
The policy space for the developing non-state-owned

economy has been continuously expanding
Since 1993, the All-China Federation of Industry and Commerce and
the Chinese Private Economy Research Institute on Non-State-Owned
have been jointly compiling the China Private Industry Yearbook, which
has recorded the important keynote speeches regarding the develop-
ment of the non-public economy by various leaders of the CPC and
the government since the initiation of reform and opening up and
collected relevant documents issued by the central committee of the
CPC, relevant legislations, and relevant policies and rules (including
all kinds of regulations, provisions, decisions, circulars and opinions)
issued by the State Council and its departments. We have sorted
through them and arrived at the results as indicated in Table 16.2. On
the national level, during the four periods listed in Table 16.2, new
policies and new institutions aimed at boosting the development of the
March 5, 2013
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320
9in x 6in
Table 16.2. State Policies and Institutions Concerning Developing Non-state-owned Economy Issued During the Period 1979–2008.

1979–1988 1989–1991 1992–2000 2001–2008 Total
Relevant speeches of significance by leaders of the CPC and the 12 3 15 10 40

government(number)
Labor, personnel, employment 11 3 11 8 33
Taxation, fiscal issues 26 3 45 21 95
Land 5 0 3 5 13
Chen Guangjin
Finance 15 0 10 22 47
Talent, technology 2 0 9 6 17
CPC central committee Combination of the above 52 13 66 101 232
documents, state laws Total 112 19 144 161 435
and regulations Annual average 11.2 6.3 16.0 20.1 14.5
CPC central committee documents, 54 11 63 57 185
state laws and regulations
Polices relating to foreign 33 1 9 2 45
capital(number)
Sources: China Private Industry Yearbook of previous years Huang (2009).
b1344-ch16
non-public economy have been generally on the rise, indicating that Chinese
government has been attaching increasing importance to developing this
portion of the economy.
In addition to institutional and policy innovations on the national level,
those on the local level have also achieved impressive results. The “local
level” can further be divided roughly into two sub-levels — the provincial
level and the prefecture-and-city level. Let us first examine the relevant
institutional and policy innovations on the provincial level. Adopting the
same approach used earlier, we have collected and sorted through major
policies and rules regarding the development of the non-state-owned econ-
omy issued by provincial governments across the country during the period
1992–2005 and discovered that during the 14-year period, China’s 31 provin-
cial governments had issued a total of 192 regulations, procedures, decisions,
circulars, opinions and measures, averaging out 6.2 per province, with the
aim of boosting the development of the non-public economy, especially the
individual and private economies, and safeguarding their legitimate rights
and interests. A total of ten provinces even issued regulations specifically
aiming at protecting the rights and interests of individuals and the private
economy.
Relevant policies issued by the prefectural and city governments, espe-
cially the county and city governments, can be rightly called as “richly
diverse”, which all revolve around the central theme of attracting invest-
ment and retaining businesses and aiming to reach their goals in ingenious
ways. A large body of relevant research shows that as the financial relation-
ship between the central government and the local governments undergoes
further reforms, especially after the introduction of Fiscal Federalism and
Tax Assignment System in 1994, it has become a rather common behavior
pattern of the government on this level to closely collaborate with the enter-
prises operating within its jurisdiction in order to secure revenue, streams
and accumulate political achievements.
Public enterprise restructuring provides ever-growing

economic space for the development
of private enterprises
“Public enterprises restructuring” here includes the restructuring of urban
and rural collective enterprises and small-to-medium-sized State-owned
enterprises (SOEs). The restructuring of urban and rural collective enter-
prises was initiated in 1995 or thereabouts. Although the restructuring
322 Chen Guangjin
methods adopted were rather varied, it was essentially privatization that

lied at the heart of the program. The restructuring of small-to-medium-
sized SOEs was commenced in roughly 1996. The government adopted the
strategy of “Keeping the Large and Letting Go of the Small”, allowing some
small-to-medium-sized SOEs to shut down or go bankrupt and converting
the better part of small-to-medium-sized SOEs into private enterprises. As
a consequence, since 1995 the number of state-owned enterprises in China
has been rapidly dwindling year by year. Conversely, the number of pri-
vate enterprises has been rising at an even faster pace. Of course, not all
restructured state-owned enterprises become private enterprises. Accord-
ing to the statistics by China’s national administration for industry and
commerce, during the period 1996–2005 China’s state-owned enterprises
decreased by 5.621 million, which we believe well reflects the intensity of
the restructuring efforts. Private enterprises increased by 4.287 million. In
addition, according to the results of the sample survey of domestic pri-
vate enterprises in 2004, among all surveyed private enterprises only 18.5%
were restructured from state-owned enterprises. On the basis of this fig-
ure, we can calculate that there will be over one million private enterprises
restructured from state-owned enterprises in the whole country. According
to Table 16.1, China’s private enterprises involve, on average, 2.23 investors
each. Based on this figure, we can easily estimate that there may be no less
than two million people among all private business owners who owe their
businesses to state-owned enterprise restructuring.
Public resources provide massive financial and material

support for the development of private enterprises
The transfer of public finance resources to private enterprises and private
entrepreneurs is mainly represented by the export tax rebate, tax break,
and preferential land supply offered by the government and other forms of
tax revenue loss.
China introduced the export tax rebate policy in 1985, and as of
2008, at the current rate China’s aggregate export tax rebates had reached
3,337.353 billion RMB. According to relevant data provided by the official
website of the Ministry of Commerce, in 2003 exports by China’s private
enterprises accounted for only 0.3% of the country’s total exports, and the
percentage swelled to 11.7% in 2004 and a whopping 22.2% in 2008. On the
basis of the figures of export tax rebates and exports by private enterprises
as provided in the China Statistical Yearbook of the previous years, we
estimate that during the period 2004–2008 private enterprises engaged
in export business were entitled to receive upwards of 400 billion RMB

in tax rebates. In addition, some “foreign-funded enterprises” and “other
enterprises” as covered in the Ministry of Commerce statistics are actu-
ally domestically-funded private enterprises. For instance, some research
has shown that among all presumed “foreign-funded enterprises” in China
nearly 1/3 are actually domestically-funded private enterprises disguised as
“foreign-funded” ones (Tian, 2008). According to this theory, during the
period 2001–2008 another 500 billion in export tax rebates should have to
be added to that already enjoyed by private enterprises. Thus, since the
advent of the 21st century, the total export tax rebates received by private
enterprises shall have already exceeded 900 billion RMB.
Currently, there are over 400 provisions relating to tax abatements in
China, covering over a dozen of tax categories such as value-added tax and
income tax. Many policies of tax abatements are targeted at those new
enterprises. Since the number of public enterprises is decreasing year by
year, new enterprises would be either domestic private enterprises or enter-
prises based on the foreign direct investment (FDI); and private enterprises
without doubt will be the primary beneficiaries of these favorable policies.
According to a conservative estimate, since the 1990s annual tax breaks
have averaged over 100 billion RMB nationwide (Xiao, 2006). Given that
China’s private enterprises have not begun to enjoy a decent growth until
the mid-1990s, we shall only focus on the recent 15 years here, and according
to the most conservative estimate by relevant financial authorities, calcu-
lated at the current rate, the aggregate tax breaks offered over the 15-year
period shall exceed 1,500 billion RMB nationwide. The percentage of the
private economy in the national economy has grown from 1/3 in the mid-
1990s to 2/3 today. Even the calculated by adopting the previous percentage
of when 1/3, the benefits private enterprises stand to gain from tax breaks
offered by the government shall be worth no less than 500 billion RMB.
As for the benefits private enterprises gain from preferential land supply
offered by the local governments and loss of the tax revenue (which means
that some of the tax revenue are grabbed by taxpayers illegally), we cannot
make even rough estimation because of the shortage of relevant data; but
undoubtedly, the amount would be astonishingly large.
The Social Sources of China’s Private Business Owners’

Stratum and Its Changes
This section will analyze the social origins of the private entrepreneurs and
the changes of their social origins from four perspectives, which can be
324 Chen Guangjin
considered as a part of the micro-mechanism of the development of this

class.
Level of education: The proportion of those with

secondary-level and high-level diplomas has steadily
increased
By comparing the results of sample surveys of domestic private enterprises
conducted over the years, it can be readily observed that the education level
of China’s private business owners’ stratum has been steadily rising (see
Table 16.3). During the 22-year period, the percentage of private business
owners with junior high school diplomas had dropped from 60.5% to 18.5%,
recording a remarkable 69.4% decline. The proportion of private business
owners with the high school and secondary vocational school diploma had
Table 16.3. The Educational Degrees of Private Entrepreneurs Based on Sample Surveys.
No Primary Secondary High Post- Educational

schooling school school school University graduate years per
Year (%) (%) (%) (%) (%) (%) Total capita
1980 2.6 7.9 50.0 29.0 10.6 0 100.0 10.1

1981 0 11.5 53.8 30.8 3.8 0 100.0 11.5
1982 3.7 3.7 51.9 25.9 14.8 0 100.0 10.3
1983 0 10.3 41.2 39.7 8.8 0 100.0 10.4
1984 2.2 11.6 37.7 39.1 9.4 0 100.0 10.2
1985 0.8 18.9 32.6 32.6 15.1 0 100.0 10.3
1986 1.1 7.8 45.6 35.5 10.0 0 100.0 10.4
1987 1.6 12.1 34.7 35.5 15.3 0.8 100.0 10.5
1988 0 7.6 33.5 38.9 18.9 1.2 100.0 11.3
1989 0.6 6.9 38.4 36.4 17.0 0.6 100.0 11.0
1990 0 10.1 26.6 34.8 27.5 0.9 100.0 11.6
1991 1.0 5.0 32.7 39.7 20.8 1.0 100.0 11.3
1992 0.8 6.3 34.6 37.6 18.1 1.6 100.0 11.2
1993 0.0 10.7 31.0 26.2 31.0 1.2 100.0 11.5
1994 0.3 7.4 32.8 40.2 19.3 0.3 100.0 11.2
1995 0.0 3.7 31.7 45.5 18.7 0.4 100.0 11.0
1996 0.4 6.1 26.8 41.7 25.0 0 100.0 11.5
1997 0.4 0.8 19.4 33.8 43.0 2.5 100.0 12.4
1998 0 2.0 21.5 37.8 37.7 3.0 100.0 12.7
1999 0 2.4 23.4 43.2 30.0 1.2 100.0 12.3
2000 0 1.6 13.4 41.9 37.8 5.3 100.0 13.4
2001 0 1.8 16.7 41.7 33.9 6.0 100.0 13.2
2002 0 0.3 11.2 39.3 44.9 4.3 100.0 13.5
2003 0 0.8 12.7 39.4 44.9 2.1 100.0 13.3
2004 0 1.3 11.7 38.9 46.5 1.6 100.0 13.2
2005 0 0.5 13.0 35.2 48.6 2.8 100.0 13.4
2006 0 0.3 7.3 31.4 49.7 11.3 100.0 14.3
Sources: Sample surveys of domestic private enterprises conducted over the years.
grown from 29.0% to 41.7%, achieving a remarkable growth of 43.8%. The

percentage of those with the junior college diploma and above had also
increased from 10.6% to 39.9%, registering a whopping 2.8-fold growth.
This means that it has become increasingly difficult for those with low
educational backgrounds to enter the private business owners stratum, and
long gone are the days that “those who knew how to count knew how to
do business”, a widely prevalent phenomenon in the 1980s.
Career background: Those with professional/technical

and managerial backgrounds are gradually becoming
prevalent
The empirical analysis of the jobs undertaken by private enterprise own-
ers prior to their embarking on their entrepreneurial endeavors shows that,
albeit valid to some extent in the past, the traditional views regarding the
social sources of private business owners stratum such as that “it is peas-
ants, workers, the unemployed and semi-unemployed and even such socially
marginalized groups as the ‘ex-cons’ that constitute the major sources of
private business owners” are rather obviously contrary to the present real-
ity. Table 16.4 shows the last job situation that private business owners held
before starting their private businesses during different periods. Although
the job categories as covered in questionnaires vary from survey to survey,
we can still detect a certain trend in terms of the general dynamics of career
changes.
First of all, prior to 1993, private business owners who used to be
general workers, business and service workers, peasants and craftsmen
accounted for 59% of the total, which shows that at least in the 1980s and
early 1990s, those social members on the grassroots level indeed enjoyed
bountiful opportunities to move up in the economic food chain and become
the economic elite in the new age. But since 1993, the percentage had sig-
nificantly dwindled, and by 2000–2001 it had dropped sharply to 12.9%
(exclusive of clerical employees).
Due to the fact that the 2004 questionnaire was designed in a manner
different from the previous ones, we cannot perform a parallel comparison
between the 2002–2003 data and the 2004 data. As indicated in the 2002–
2003 survey, exclusive of the “peasants” (which were included in “others”),
clerical employees, general workers and service workers accounted for 14.4%
of the total; and the proportion of private business owners with backgrounds
in corporate sales and above still reached as high as 67%. Generally, since
March 5, 2013
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326
Table 16.4. Last Jobs Held by Private Business Owners Before Starting Businesses. (Unit: % Number: person)
9in x 6in
Last job held Before 1992 1993–1996 1997–1999 2000–2001 2002–2003 2004–2005 2006
Professional/technical personnel 11.1 3.9 10.4 3.7 15.0 13.5 17.7

Responsible persons of governmental 5.9 3.0 3.8 2.7 14.0 — —

departments and public service units
Persons in charge of enterprises 15.4 24.6 41.1 63.0 14.4 18.3 27.2
Cadres of section level and below — — — — 11.1 6.1 8.1
Cadres of county level and above — — — — 1.2 1.5 2.1
Village cadres — — — — 2.1 2.3 0.9
Corporate salesman and saleswomen — — — — 9.2 8.3 7.5
Chen Guangjin
Individual household business owners 8.6 27.4 14.9 11.9 — 21.6 5.7
Subtotal 41.0 58.9 70.2 81.3 67.0 71.6 69.2
Clerical employees — 1.7 5.3 5.9 14.4 — —
Common industrial workers 24.3 2.9 7.9 3.5 19.2 19.5
Common employees of service sectors 7.2 4.0 4.4 2.7
Peasants 12.4 4.4 5.0 1.5 — 3.3 7.8
Specialized rural households — 10.8 2.2 — — — —
Servicemen 1.0 0.1 0.3 0 0.6 — —
Others 5.0 16.5 4.2 4.7 10.7 2.8 0.3
Craftsmen 9.1 — — — — — —
Unemployed — 0.6 0.4 0.5 7.4 3.2 3.3
Total 100.0 100.0 100.0 100.0 100.0 — 100.0
N 1,356 946 683 405 487 429 334
Sources: Sample surveys of domestic private enterprises conducted over the years.
b1344-ch16
the mid-1990s, the micro-social mechanism for the formation of private

business owners has undergone a dramatic change, with the opportunities
for members at the bottom of society to move up on the economic ladder
drastically diminished.
Second, before 1992, the owners of newly started private businesses who
used to hold jobs of relatively high social and economic status such as pro-
fessional/technical personnel, responsible persons of governmental depart-
ments and public service units (or other cadres), responsible persons of
enterprises and individual household business owners accounted for 41%
of the total, which means that although the reproduction mechanism of
the social elite in other fields was not yet predominant in the economic
field during this period, its role shall not be underestimated. During the
period 1993–1996, if we include the clerical employees as a new constituent
of the group of private business owners, their proportion could reach as
high as 60.6%, indicating that the social elite reproduction mechanism has
taken over, with the 2000–2001 period being the peak period: Exclusive of
the clerical employees, the proportion hit a high of 81.3%, which declined
slightly thereafter but remained stable at about 70%. Therefore, we can
conclude that, since the mid-1990s, the role of the so-called “elite repro-
duction mechanism” has become dominant in the micro-social mechanism
for the formation of China’s private business owners stratum.
Initial economic capital: The entry threshold has been

steadily raised
The so-called “initial economic capital” refers to the self-owned capital rel-
evant investors or surveyed private business owners actually invest at the
time of incorporation with any form of indebtedness deducted, which is
the mark of the economic strength of relevant investors or surveyed pri-
vate business owners at the time of incorporation and an indicator of their
capability to secure economic resources, and also serves as a threshold for
entering the private business owners stratum.
Judging from relevant survey results (see Table 16.5), the economic cap-
ital owned by private entrepreneurs at the initial phase of their businesses
is obviously several or even dozens of times of what common people could
scrape up in short time during the same period. In addition the capital
that those new comers of the private entrepreneur class will have to invest
in actuality also shows a significant rising trend over time. In non-inflation
adjusted terms, during the 2000–2001 period, the mean amount of capital
328 Chen Guangjin
Table 16.5. Statistical Analysis of Initial Capital Invested by Surveyed Private

Entrepreneurs (Unit: 10 thousand RMB, Number: person).
Registration year of enterprises Mean Median Standard deviation N
1992 before 19.1 5.0 53.8 999

1993–1996 53.1 15.0 274.5 949
1997–1999 130.3 38.0 379.8 669
2000–2001 236.6 50.4 670.9 361
2002–2003 178.1 40.0 691.6 431
2004–2005 180.3 35.0 528.0 364
2006 154.7 33.0 373.0 204
Source: Sample source of domestic private enterprises conducted over the years.
that each private entrepreneur actually invested increased 8.3 times, with
the median growing by seven times. Thereafter, the average initial invest-
ment made by new comers has declined somewhat, but its actual scale
remains considerable. Of course, from the perspective of standard deviation,
the initial capital also varies greatly among different private entrepreneur,
with the gap steadily growing over time. This trend reflects the fact that
more and more economically powerful people enter the private entrepreneur
class from other social classes, which to some extent has also reflected the
trend of resource recentralization that has appeared in China since the
mid-1990s (Sun, 2003).
Status Identification and the Political Participation

of China’s Private Business Owners
For over a decade, China’s private business owners as a new social class
have seen its status in social life steadily improving, which is also reflected
in private entrepreneurs’ perception of their own status. In the meantime,
as their economic and social status improves, the political awareness and
political participation of the stratum has also been continuously growing.
Self-evaluation of economic status

Questionnaires used over the years organized the evaluations of relative
economic status (income), social status (reputation) and political status
(participation) into ten levels respectively, and asked those surveyed to
choose the ones that fit them best. In order to simplify the analysis and
correspond with common classification methods, we combine the first level
and second level into the upper level, the third and fourth levels into the
Table 16.6. Trends of Changes of Chinese Private Entrepreneurs’ Identification with

Their Economic Status (Unit: %).
1993 1995 1997 2000 2002 2004 2006 2008
Upper level 13.4 8.4 9.6 9.7 9.0 6.7 5.6 5.1
Upper-middle level 34.5 35.5 33.7 31.8 35.9 26.2 24.7 23.3
Middle level 40.5 42.7 43.8 44.7 41.2 47.8 46.7 46.7
Lower-middle level 10.1 11.0 11.2 11.7 11.4 15.7 19.7 20.2
Lower level 1.6 2.4 1.7 2.1 2.6 3.6 3.3 4.7
Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Samples 1,416 2,853 1,947 2,970 3,256 2,951 3,711 3,901
Sources: Sample survey of domestic private enterprises conducted over the years.
upper-middle level, the fifth and sixth levels into the middle level, the sev-
enth and eighth into the lower-middle level, and the ninth and tenth levels
into the lower level, and then conduct a simple statistical analysis.
The analysis shows that the private entrepreneur class’s self-evaluation
of its economic status has significantly risen over the years. During a 15-
year period, the proportion of private entrepreneurs surveyed who con-
sider themselves as belonging to the lower-middle level and lower level has
decreased by 40% while those who consider themselves as belonging to the
upper-middle level and upper level has increased by a massive 112.8%. And
the trend of such rises and declines is a rather stable one (see Table 16.6).
Of course, the proportion of those who consider themselves as belonging to
the middle level and lower levels is still very big, which means this class is
inclined to underestimate their economic status.
Self-evaluation of social status

Private business owners’ self-evaluation of their social status (reputation)
has risen roughly similar to that of their self-evaluation of economic status.
It can be seen from Table 16.7, the proportion of those private entrepreneurs
considering themselves belong to the lower level of social status decreased
by 76.2% during the 15-year period, and meanwhile, the proportion of those
entrepreneurs considering themselves as the upper-middle and upper classes
increased by 124.3%, the proportion of those thinking themselves at the
middle level of the social status also increased by 47.6%. It is clear that the
self-evaluations of their social status by the private entrepreneurs increased
at a higher rate than that of their economic status. It should be said that
their evaluations of their own social status is rather consistent with the
objective situation of their social reputation.
330 Chen Guangjin

Their Social Status (Unit: %).
1993 1995 1997 2000 2002 2004 2006 2008
Upper level 24.4 18.1 16.1 19.5 21.9 8.0 6.9 5.8
Middle level 30.7 34.5 36.4 35.8 30.4 44.7 45.5 45.3
Lower level 2.4 3.7 2.3 2.6 3.1 4.6 4.0 5.9
Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Samples 1,416 2,855 1,896 2,972 3,222 2,947 3,702 3,878

Their Political Status (Unit: %).
1993 1995 1997 2000 2002 2004 2006 2008
Upper level 18.9 12.9 12.4 14.3 15.1 7.4 5.7 4.8
Middle level 28.5 31.4 31 30.5 32.7 36.9 38.4 37.7
Lower level 7.4 12.3 12.7 9.4 9.0 14.0 13.9 14.9
Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Samples 1,413 2,855 1,886 2,956 3,216 2,917 3,673 3,826
Self-evaluation of political status (participation)

The self-evaluation of their political status by private entrepreneurs of
China has been rising at a significantly high rate during the 15-year period
from 1993 to 2008 (see Table 16.8). In 1993 survey, 51% of surveyed
entrepreneurs considered their political status at lower-middle and lower
levels; however, in 2008 survey, this proportion decreased to 24.3%, and the
decreasing rate reached 52.4%. Accordingly, the proportion of those think-
ing their political status at upper-middle and upper levels increased from
20.6% in 1993 to 37.6% in 2008, increasing by 82.5%, which can be said
significant.
The degree of inconsistency among the three

self-evaluations by private entrepreneurs has been
significantly reduced
We can analyze the degree of consistency among the three self-evaluations
by private entrepreneurs in terms of their status by comparing the degree
Table 16.9. Analysis of Consistency among Self-evaluations by Private Business Owners

in Terms of Status.
Correlation
variable Statistics 1993 1997 2000 2002 2004 2006 2008
Economic Correlation 0.556∗∗ 0.599∗∗ 0.538∗∗ 0.566∗∗ 0.742∗∗ 0.746∗∗ 0.780∗∗

status × coefficient
social Sample size 1,413 1,895 2,966 3,220 2,944 3,709 3,875
status
Economic Correlation 0.392∗∗ 0.425∗∗ 0.389∗∗ 0.421∗∗ 0.586∗∗ 0.605∗∗ 0.622∗∗
political Sample size 1,411 1,884 2,953 3,216 2,916 3,680 3,826
status
Social Correlation 0.661∗∗ 0.628∗∗ 0.670∗∗ 0.639∗∗ 0.779∗∗ 0.754∗∗ 0.780∗∗
political Sample size 1,412 1,885 2,954 3,216 2,917 3,682 3,826
status
Note: ∗∗ Significant on the level of 0.01.

of correlation among them (see Table 16.9). It can be observed that gen-
erally the degree of correlation among the three self-evaluations by private
business owners has shown a trend of heightening (with some fluctuations
spotted as well), which goes to show that the degree of consistency among
them is also likely to increase. During the period 1993–2008, the coefficient
of correlation between economic status and social status (reputation) rose
by 40.4%, with that between economic status and political status (partic-
ipation) increasing 58.7% and that between social status (reputation) and
political status (participation) climbing 18.0%.
In comparison, the consistency between social status evaluation and
political status evaluation remains high throughout the years, with the
degree of correlation between economic status evaluation and social status
evaluation less high and the degree of consistency between economic status
evaluation and political status evaluation the least high. This might show
that the class of private entrepreneurs holds higher expectations for their
political status (participation). However, it is the degree of consistency
between economic status evaluation and political status evaluation that sees
the greatest growth, which is also consistent with the trend of the Chinese
government attaching more and more importance to the private economy.
The political participation of China’s private

business owners
As a social stratum that wields certain economic power, it is inevitable that
a wish for political participation gradually formed among private business
332 Chen Guangjin
owners, with some already taking action. Since there have been numerous
studies conducted in academic circles regarding the political participation
of China’s private business owners (e.g. Wang, 2007), we aim to briefly out-
line their main political participation methods and political participation
degree.
Judging from private entrepreneurs’ political participation activi-
ties over the years, to join political parties, serve as People’s Congress
representatives and the member of Chinese People’s Political Consultative
Conference (CPPCC) members and fill the position of committees of CPC
and/or governments at all levels are the main forms of political partici-
pation of private entrepreneurs, and judging from the results of previous
sample surveys of domestic private enterprises, to join the CPC is the most
important act of political participation (see Table 16.10).
During the 1993–2008 period, the proportion of private entrepreneurs
who are CPC members has shown a rising trend. Among those surveyed in
2008, CPC members accounted for 33.4%, 20 percentage points higher than
that in 1993, registering an impressive 151% growth. What is worth noting
though is that not all private entrepreneurs who are CPC members applied
and got accepted into the CPC after they became private entrepreneurs.
Actually, a large portion of them used to be governmental officials and
responsible persons at state-owned and collectively-owned enterprises prior
to starting their private businesses. According to our estimate, those who
became CPC members prior to starting businesses account for over 1/3 of
the total private business owners who are CPC members. This leaves 2/3
who became CPC members after starting their businesses, which still serves
as an important indicator of their strong wish for political participation.
As for the proportion of those private entrepreneurs who joined the demo-
cratic parties, the figure remained roughly unchanged during the 15-year
stretch, which goes to show that compared with joining the CPC, joining
the democratic parties is by no means the main choice of private business
owners.
To serve as People’s Congress representatives and CPPCC members is
another important political participation method for private entrepreneurs,
which, judging from the results of our field work, is also the one most
preferred by many private entrepreneurs. The practice of inviting private
entrepreneurs to serve as CPPCC members has been frequently adopted by
the Chinese government as a political participation method made accessible
to private business owners. Therefore, over the past decade examined in
the survey, the proportion of private entrepreneurs who served as CPPCC
March 5, 2013
16:48
China’s Fledgling Private Entrepreneurs in a Transitional Economy
9in x 6in
Table 16.10. Political Participation of China’s Private Enterpreneurs (Unit: %).

People’s Congress Those who fill CPC
representative CPPCC Member or governmental
proportion Proportion positions
Democratic
CPC party Subtotal of Prefecture Subtotal of Prefecture Subtotal of County
member member those at all level and those at all level and those at all level and
proportion proportion levels above levels above levels above
1993 13.3 6.6 — — — — — —

1997 18.1 4.7 10.3 2.5 22.0 8.7 2.3 0.8
2000 19.8 6.7 15.8 6.0 25.8 10.9 3.3 2.6
2002 29.9 5.7 17.4 5.7 25.1 13.4 2.5 1.8
2004 31.7 5.7 17.9 6.8 10.9 2.4 2.4 1.6
2006 32.5 5.0 19.0 7.4 26.2 11.2 2.6 1.3
2008 33.4 6.9 21.6 8.6 29.7 11.5 2.0 1.3
333
b1344-ch16
334 Chen Guangjin
members steadily rose, with its growth far less than that of the proportion
of private business owners who serve as People’s Congress representatives,
which has increased by over 11 percentage points, registering a whopping
110% growth. In addition, the proportion of private entrepreneurs who serve
as representatives of people’s congresses on the prefecture and city levels
has seen even greater growth, achieving a 2.44-fold rise, which shows that
the degree of political participation of private business owners has indeed
been steadily rising.
Brief Conclusions
Based on the analysis and discussion presented above, we can draw the
following basic conclusions and raise some questions worth delving into
regarding the development of China’s private enterprises.
First of all, after over 20 eventful years of development, China’s private
economy has finally seen itself making glorious achievements, with private
business owners growing into a new social stratum comprised of nearly
15 million people.
Second, the social sources of this class were mainly comprised of social
groups at the bottom of society in the early and middle 1980s, and since
the mid-1990s members of the middle and upper-middle classes such as
cadres, professional and technical personnel, managerial personnel with
state-owned enterprises and sales people have begun to dominate this class.
If we consider private business owners as the economic elite in China in this
age, it may be claimed that the formation mechanism of this elite group
has gradually shifted from elite circulation in the 1980s to elite reproduc-
tion in the mid-1990s. This is bound to exert a significant impact on social
differentiation and social mobility in modern China.
Third, growing from scratch, the economic scale commanded by China’s
private business owners has now reached an impressive level, with the stra-
tum beginning to play an increasingly prominent role in China’s economic
and social development, to which the government and society have also
been attaching increasing importance. During this process, the economic,
social and political status of China’s private business owners’ stratum has
also been steadily rising. In the meantime, it also means that the entry
threshold for members of other social strata to enter the stratum of private
business owners is becoming higher and higher.
Fourth, two general trends have formed in regard to the self-evaluations
by China’s private business owners of their relative economic, social and
political status. The first trend is that their evaluations show a tendency
to increase over time, especially their evaluations in terms of their relative
social status and political status. The second trend is that the consistency
among their evaluations is increasing, with the degree of inconsistency
steadily reducing. Of course, as far as the whole stratum is concerned,
the phenomenon of status inconsistency will not disappear under any
circumstances.
Fifth, the degree and scope of the political participation of China’s
private business owners has taken on a rapid positive trend, with Chinese
private entrepreneurs showing growing enthusiasm for political participa-
tion in terms of both awareness and action. On the one hand, this tendency
of politicization basically arises out of the close relationship between the
interests of this class and public power. On the other, as far as the whole
society is concerned, what exactly are its actual political consequences is a
question worth pursuing further.

Part Five
The Middle Class
337
338
17
The Formation of the Middle Class
in Brazil: History and Prospects
Introduction
Over the course of the last few decades, there has been no more opportune
moment to speak of the Brazilian middle class than now. Today’s debate
around this issue is so intense that it has gone beyond the limits of the
academy to spread throughout public channels, appearing in newspapers
and magazines, on television, etc. In general terms, many have defended
the idea of the growth of a middle class in Brazil — or even the emergence
of a new middle class.
Reports on families who, thanks to increasing incomes, experience a
rise in consumption patterns and move into market spaces that were in the
past the exclusive province of wealthier sectors are not uncommon. Such
cases have served to illustrate the idea that Brazil has become a country
that is made up mostly of middle-class households.
This debate, to a large extent, took its steam from recent academic
work that defined classes partially or exclusively on the basis of income or
access to consumption (Torres, 2004; Neri, 2008a; Souza and Lamounier,
2010; Oliveira, 2010). Nonetheless, within the social sciences, this topic
requires a more complex approach, given the fact that income and access
to or volume of consumption reveals little about people’s lifestyles, tastes,
values, behavior, and practices (Bourdieu, 2008) — important dimensions
of social life. An increase in income and consumption does not necessarily
represent a change in class position, much less inequalities of life chances.
339
340 A. Salata and C. Scalon
In recent years, Brazil has shown considerable rates of economic growth,

which together with a decrease in income inequality, policies of direct rev-
enue transfer, credit expansion, and the economic stabilization produced in
recent decades, have been capable of raising income and standard of living
for many families (Barros et al., 2010). Taking this economically positive
scenario as a basis, Neri (2008) has demonstrated the fall in lower-income
categories and correlative growth of intermediate-level groups — the so-
called “New Middle Class”. Nonetheless, notwithstanding the enormous
importance of factors such as wages, from a sociological point of view,
perhaps these are not the most adequate criteria to indicate growth or
shrinkage of the middle class. There are a number of sociologists who have
now questioned these approaches and their conclusions (Souza, 2010).1 In
the present chapter, we seek to explore the ongoing debate in Brazil on this
issue, beginning with a brief review of how the middle class is defined in the
literature on social stratification and presenting empirical data that can aid
in our understanding of the current situation of the Brazilian middle class.
In Search for a Conceptual Definition of “Middle Class”

Sociological discussion of the “middle class” constitutes a complex and long-
standing field of debate. There are passages in Marx that make reference
to intermediary groups, whether the small traders, shopkeepers, and handi-
craftsmen etc. (Burris, 1986: 317–349). Weber, on the other hand, through-
out his entire work, was attentive to the development of impersonal, rational
forms of authority through the formation of bureaucracy, to a large extent
responsible for the growth of the so-called new middle class as of the first
half of the 20th century (Mills, 1951).
Mills described this process quite well, putting together a broad study
of the formation of the new middle class in the United States of America.
Under Weberian influence, Mills analyzed the shrinking of the old middle
class — made up of small property owners — and the tremendous growth
of the new middle class (or “white-collar workers”) — administrators, man-
agers, technicians, office workers, sales persons, etc., in the US during the
first half of the 20th century.
1 See
also, news report published in the daily paper O Globo on 8 June 2008, entitled
“Educação e Trabalho são os Sı́mbolos da Classe Média” (Education and Work are
Symbols of the Middle Class). Access available at: http://oglobo.globo.com/economia/
mat/2008/08/06/educacao trabalho sao os simbolos da classe media-547610026.asp.
The Formation of the Middle Class in Brazil: History and Prospects 341
One of the greatest difficulties in dealing with the issue of the new
middle classes, particularly within the Marxist field, is related to the fact
that their members are not property owners yet manage businesses, engage
in non-manual labor, supervise workers and possess skills, authority and
status that distinguish them from other categories of non-property owners.
Weberian theory, insofar as it includes other factors and not property alone
as determinants of social classes, seems to offer a better contribution to our
understanding of these intermediate segments.
At any rate, up until today, these two currents have served as the
primary bases from which to begin to define classes and, more specifically,
to discern the defining characteristics of the middle classes. We are able
to discern a number of terms that have been used to refer to these groups,
such as “Service Class” (Goldthorpe, 2000), “New Class” (Gouldner, 1979),
“White Collar” (Mills, 1951), “Professional Managerial Class” (Ehrenreich
and Ehrenreich, 1979; Savage et al., 1995), and “contradictory locations
within class relations” (Wright, 1978; apud Wright, 1986) etc. There are
a range of arguments used to define the middle classes, and a number of
disagreements emerge around them.
In greater proximity to the Weberian framework, the English sociolo-
gist John Goldthorpe used the term “Service Class” (Goldthorpe, 2000).2
Together with Erikson and Portocarero (Erikson et al., 1979: 415–441),
Goldthorpe created one of the most utilized classificatory schemes that
exists today, the EGP (Erickson, Goldthorpe, and Portocarrero), which
was initially based on the notions of “market situation” and “working sit-
uation” developed by Lockwood (1958). In more recent works, however,
Goldthorpe (1995) has justified his classificatory scheme through recourse
to different types of employment contract.
The “Service Class” would be distinguishable from the working class
insofar as its employment is regulated on other bases. While workers are
paid for pieces produced, or fractions or hours of work, which are con-
stantly — directly or indirectly — monitored by employers, the middle
class maintains a service-providing relationship with those who hire them.
In this kind of contract, given the specificity of its human activity as well
as the enormous difficulties that emerge around monitoring and controlling
the kind of work it carries out, employment and remuneration are more sta-
ble and less directly linked to production. Furthermore, they receive greater
2 Thisterm, the “Service Class”, was coined by Karl Renner and used by Dahrendorf
(1959) as well, having an evident influence on Goldthorpe’s work.
benefits — better salaries, career opportunities, etc. — which do not apply

to the case of the “labor contract”.
The “Service Class” is made up primarily of professionals, managers
and high-level technicians. The “labor contract”, on the other hand, is
made up of unqualified manual and rural workers. Yet some categories
pertain, according to Goldthorpe (2000), to intermediary positions, which
lie between both types of contract: Non-manual employees and qualified
manual labor, technicians and supervisors.
In addition to Goldthorpe, another name that has been consolidated
as one of the most important within this discussion is the North American
sociologist Erik Olin Wright. His work has the merit of seeking to adjust
Marxist theory to the analysis of modern societies and thus making it pos-
sible to study middle classes through the Marxian theoretical legacy.
Wright (1986) has put his classificatory scheme together through ref-
erence to three different key elements: the means of production, skills, and
organization. Each one of these assets works as an axis through which
classes can be demarcated. Thus, the same class occupies different posi-
tions on different axes. Middle classes are characterized precisely by their
location within contradictory positions in relation to these different ele-
ments. They are not owners of means of production (excepting the case of
small employers), yet they hold skills or are in a privileged position with
regard to organization.
For Wright, middle classes are made up of small employers, managers,
supervisors, and qualified manual workers. In contrast to Goldthorpe, who
confers a unitary character on the “Service Class”, Wright envisions not one
but several middle classes. For Goldthorpe, the middle class is politically
closer to the upper classes, and tends to adopt a conservative stance; for
Wright, the nature of class coalitions that are built from different groups
emerge from political and organizational practices that characterize the his-
tory of class struggle, varying from one country to another. Furthermore,
insofar as Wright’s classification is based on assets and is directly linked to
the type of work that different groups carry out within the productive pro-
cess, Goldthorpe’s classification is based on the labor contract and market
situation of different classes.
The works by Mills, Wright and Goldthorpe go nowhere close to
exhausting the discussion on the definition of the middle class(es).3 As
3 Weshould not forget works of Gouldner (1979), Dahrendorf (1959), Savage et al. (1995)
and Bourdieu (2008).
we have already stated, the discussion is wide-reaching and demands con-

siderable space in order to be adequately treated (Savage et al., 1995). Yet
we believe that these authors are enough for now, so we may move on to
raise the main issues, challenges, and debates that characterize our topic.
The Brazilian Middle Class

There are a number of works dealing with the issue of the Brazilian middle
class (Fernandes, 1975; Albuquerque, 1977; Quadros, 1985; Romanelli, 1986;
Oliveira, 1997; O‘Dougherty, 1997; Bonelli, 1989; Figueiredo, 2004: 135–155,
among others) as stated by Pochman et al. (2006). Many, however, have had
a narrower focus, superimposed on other questions that do not necessarily
have to do with the middle class itself, and both the perspectives adopted
and the interests informing the research are quite varied.
More frequently, these works emerge within the field of economics and
focus on income. Nonetheless, the limitations of using income as a measure
of poverty or inequality have been amply expounded. Even Amartya Sen, a
Nobel laureate in economics, has recognized these shortcomings (Sen, 2001).
In this regard, the limitations of this type of analysis become evident, and
more so when applied to the study of social classes and, in this case, the
middle classes.
Until the middle of the 19th century, Brazil’s social structure showed
little diversification with the legacy of its colonial past as an agro-exporting
economy based on slave labor. During this period in Brazilian cities —
particularly along the Rio de Janeiro/São Paulo access — small groups of
liberal professionals, military officers, public employees and sales workers
were to be found, coming to a total of little more than 700,000 persons
or approximately 7% of the total economically active population (Barbosa,
2003; apud Pochman, 2006). From this moment on the middle classes began
to develop, forming socially significant strata in Brazil’s largest cities at
the beginning of the 20th century. Yet only as of 1930 — through import
substitution — was the economic basis of the middle classes able to expand
significantly.
Between 1930 and 1980, Brazil underwent an intense process of urban-
ization, economic expansion, and industrialization. During this period, the
Brazilian middle class expanded in virtue of the diversifying social struc-
ture and its creation of intermediary occupations, as well as the growth of
bureaucracy and services offered by the state. Concomitantly, the profile of
the Brazilian middle class began to change over the course of the period,
decreasing the participation of small property owners and increasing its

percentage of wage laborers.
From the decade of the 1980s through the year 2000, however, with
the cooling of the economy and structural changes in the labor market, we
begin to detect changes in the middle class. A portion of the traditional
intermediary employees within large firms began to undergo substitution
for sub-contracted services, and growing external competition led to reduc-
tions in number of staff or wages. Furthermore, attempts were made to
decrease the weight of the state through privatizations and reductions in
the bureaucratic apparatus. As a result, the participation of small property
owners increased significantly — with a corresponding decrease in wage
workers — and the industrial sector shrank while the commercial and ser-
vice sectors within the middle class grew (Pochmann et al., 2006).
This brief historical outline seems to leave little room for disagree-
ment. Yet disagreements regarding the way the middle classes are defined
or how they are measured are routine. Authors such as Langoni (1973) and
Queiroz (1965), for example, have measured the middle class through infor-
mation regarding individual and family income, while Santos (2002) and
Quadros (2003) use socio-occupational criteria to define it. Other authors
tend toward definitions linked to consumption (O’Dougherty, 1988), or
even diverse criteria such as educational level, occupation, and income
Fig. 17.1. Non-property owning middle class within the economically active population
during 1872–2000 in Brazil (%).
Source: IBGE — Demographic Census (Table by authors, based on data supplied by
Quadros (1991), apud Pochmann et al. (2006)).
(Figueiredo, 2004). There are few works that look at political behav-
ior (Saes, 1985), lifestyles, tastes, preferences, or even more pertinently,
practices (Owensby, 1999).
In the following sections, we will analyze the Brazilian middle classes of
the last decade, taking as backdrop our discussion of its supposed growth
(when measured through income). For these purposes, we will employ data
from the PNAD, or the National Study of Households (PNADs), carried
out by the Brazilian Institute of Geography and Statistics (IBGE).4
The Middle Classes in Brazil Over the Last Decade

The study coordinated by Neri (2008a) divides Brazilian society into five
classes (A, B, C, D, and E), which limits are established by income.5 Class E
includes those who earn up to 768 reais (a boundary established by taking
the absolute poverty line as the basis for calculations)6 ; those who earn
between 768 and 1,064 reais (calculated on the basis of the distribution
median)7 are considered Class D; the so-called “New Middle Class”, or
Class C, is made up of those who earn between 1,064 and 4,591 reais (the
90th of the distribution); and finally, those who make up the nation’s elites,
Classes A and B, are those with incomes above 4,591 reais per month. As we
have stated, the boundaries that are drawn around class groups are given
exclusively by income levels, using measures such as the median, decis, or
the poverty (misery) line as references.
Figure 17.2 shows the evolution of income categories (Neri, 2008a), for
recent years in Brazil.
Between 2002 and 2009, Class C (which has been referred to as the
“New Middle Class”) participated within the sample rose from 45.4% to
54.2% in 2009. Classes A and B made up 13% of the studied population in
2002, rising to 17% in 2009. Class D, which in 2002 represented 15.5% of the
4 The PNADs are applied on yearly basis, excepting those years that the Census (1980,
1991, 2000, 2010) was not carried out. They provide a representative sample of the
Brazilian population as a whole, with variables that supply a large volume of information
on issues such as income, educational level, occupation, geographic locale, family and
household information, etc. Thus, the PNAD has become one the most widely used data
bases for the country.
5 Classes A and B are usually put together, making up the Class A&B or AB.
6 Defined and calculated by the Center for Social Policies (Ferreira et al., 2003).
7 All boundaries have been calculated taking total family income per capita into con-
sideration. Nevertheless, the values presented here are equivalent to the total monthly
household income during the year 2006.
Fig. 17.2. Male population distribution, between 24 and 60 years old, by income levels
in Brazil ∗ , 2002 and 2009 (%).
Notes: ∗ Household income per capita jobs/prices constant.
∗∗ E (R$00,00–R$140,00)/D (R$141,00–R$222,00)/C (R$223,00–R$964,00)/AB (more
than R$965,00).
Source: PNADs, 2002, 2009/IBGE (Table by authors).
studied population, fell to 12.2% in 2009. Finally, Class E’s participation

fell from 26.1% in 2002 to 16.5% in 2009. Thus, we perceive an improvement
in income, with the proportion of lower income groups falling and middle
and high income categories having an intensified presence. We should draw
particular attention to the reduction of Class E and corresponding increase
in size for Class C.
In light of data of this sort, the notion that Brazil is becoming, or
has already become, a middle class country is now common currency. If
this were the case, it would certainly have consequences in relation to the
population’s demands, lifestyles, worldviews, aspirations, political views,
etc. Yet we believe there are other ways to measure the middle class,
particularly those who belong to the sociological tradition and are based
on socio-occupational information. There are better tools for interpreting
recent shifts in the middle class within the Brazilian social structure.
Since one of our objectives here is to provide international comparisons,
we will make use of the classificatory scheme developed by Erikson et al.
(1979), the EGP classification to which we made reference earlier. Originally
this scheme consisted of 11 classes, but here we will work with an aggregate
version that recognizes six different classes — also employed in Marques
et al. (2009) — as shown in Table 17.1.
Table 17.1. Converting EGP 11 to EGP 6.
EGPll EGP6
I — Higher-grade Profs and Adm Professional, administrators and

II — Lower-grade Profs and Adm managers
IIIa — Higher-grade routine non-manual Routine non-manual employees
IIIb — Lower-grade routine non-manual work
IVa — “Small” proprietors, with employees Small proprietors and employers
IVb — “Small” proprietors, without employees
V — Technicians and superv. manual work Skilled workers
VI — Skilled manual workers
VIIa — Semi- and unskilled manual workers Non-skilled workers
IVc — Rural employers Farm workers
VIIb — Agricultural workers.
With regard to the middle classes, the first category — professionals

and managers — is composed of high-level positions within the New Middle
Class, such as leaders, directors, managers, specialists and high status pro-
fessionals in general. Within the second category — routine non-manual
routine employees — we find, for example, secretaries, primary school teach-
ers, police officials, writers, journalists and sales personnel. If we put these
two levels together, we have what we could refer to as the New Middle Class
(or “White Collar workers”) in the sense that Mills has given to the term
(1951).
For Goldthorpe (2000), however, routine non-manual workers would
be closer to the “Labor Contract” than to “Service Relationship” — the
latter being more characteristic of professionals and managers. Locating
this segment (routine non-manual) between the middle and working classes
tends to generate disagreement (Devine, 1997; Santos, 2002). At any rate,
part of the bibliography and empirical work already carried out in Brazil
on this segment reveals that the division between manual and non-manual
labor, and the contempt that exists for the first type, leaves a heavy mark
on the identity of the Brazilian middle class (Owensby, 1999; Saes, 1985).
It is for this reason that we will clarify the routine non-manual employees
as part of the middle classes.
We come finally to the class of small proprietors — or “Old Middle
Class” (Mills, 1951) — which is made up of directors, managers, sales
representatives, producers, sellers, among others, all of whom are either
employers or self-employed.
Table 17.2 supplies information on the distribution of males, between

24 and 60, using the six-class EGP scale:
Table 17.2. Relative and Absolute Presence of Males between 24–60 Years Old of EGP
Classes in Brazil, 2002–2009.
Year
2002 2009
EGP No. % No. %
Professionals, administrators and managers 2,835,632 8.7 3,461,407 9.0

Routine non-manual employees 4,269,793 13.1 5,863,331 15.2
Small proprietors and employers 2,986,857 9.1 3,024,758 7.8
Skilled workers 7,552,212 23.1 9,296,971 24.1
Non-skilled workers 8,621,318 26.4 10,410,875 26.9
Farm workers 6,402,854 19.6 6,594,503 17.1
Total 32,668,666 100.0 38,651,845 100.0
It is important to observe that all classes have grown in absolute terms,

reflecting the growth of the economically active population in Brazil over
recent years. Yet the relative share of different classes in the social structure
does not undergo significant modification between 2002 and 2009.
The first three categories together — “Middle Classes” — represented,
in 2002, 30.9% of the population studied; eight years later, in 2009, this
percentage had risen to 32%. In the year 2002, professionals and managers
and routine non-manual workers made up 21.8% of the economically active
population; by 2009 this percentage had rose to 24.2%. Small proprietors,
in turn, made up 9.1% of the economically active population in 2002, drop-
ping to 7.8% in 2009. Notwithstanding these small percentage changes, we
believe that the most important thing to highlight here is the sustained
level of middle-class presence in the Brazilian social structure over recent
years, when measured using socio-occupational criteria.
Yet perhaps we should note the small shifts that have taken place within
this class (see Table 17.3).
The Table 17.3 seems to present evidence of a reversal of the tenden-
cies noted by Pochmann et al. (2006) over the last two decades of the 20th
century, in which the proprietary middle class seemed to be approaching
the proportion of wage earners within the middle classes. In 2002, almost
30% of the middle class was made up of small proprietors; in 2009 this
percentage dropped to 24.5%. On the other hand, the proportion of routine
Table 17.3. Composition of the Brazilian Middle Class, 2002–2009 — for

Males between 24 and 60 Years Old.
Year
2002 2009
Middle Classes % %
Professionals, administrators and managers 28.1 28.0

Routine non-manual employees 42.3 47.5
Small proprietors and employers 29.6 24.5
Total 100.0 100.0
non-manual workers went from 42.3% in 2002 to 47.5% in 2009. Nonethe-

less, it is important to emphasize that this is an extremely heterogeneous
category which includes occupations with low levels of prestige, job auton-
omy, stability, and income, notwithstanding their white-collar status. On
the other hand, professionals and administrators remained stationary at the
level of around 28%. This shows that the proportion of wage earners within
the middle class grew, but this growth was restricted to its lower-status
occupations.
The data we have presented up until now may be taken as testimony
that the different ways of measuring the middle class may lead to quite
distinct results and conclusions. When defined through income criteria, such
as Class C (Neri, 2008) — it appears that there has been substantial growth
over the last few years. Yet when the criteria employed are the type of
occupation and labor market position, the class seems more stationary, with
only minor changes in its internal composition.8 In the following section,
we will look at the evolution of certain characteristics of the middle class
in recent years.
Characteristics of the Brazilian Middle Class Over

the Last Decade: Income, Educational Levels, Race
and Consumption.9
As we have mentioned, over the last few years Brazil has enjoyed a favorable
economic context in which individuals and families have moved from lower
8 The results are similar even when we consider females and/or other age groups.
9 In annex, tables that characterize the middle class by gender and age as well.
Table 17.4. Average Income∗ by EGP Classes in Brazil, 2002–2009 — for Males
Between 24 and 60 Years Old.
Income
Var. %
EGP Year Mean (R$) (2002–2009) Std-Dev (R$)
Professionals, administrators 2002 3,522.9 2.7 3,605.1

and managers 2009 3,616.4 7129.4
Routine non-manual 2002 1,317.8 1.6 1,507.1
employees
2009 1,339.2 1,471.0
Small proprietors and 2002 2,349.5 4.2 3,474.4
employers
2009 2,448.4 3,983.7
Skilled workers 2002 959.3 13.3 883.8
2009 1,086.5 939.6
Non-skilled workers 2002 817.7 9.8 821.2
2009 897.6 863.3
Farm workers 2002 508.5 15.0 1,381.0
2009 585.0 1,134.3
Note: ∗ Income from primary employment/constant prices, 2009 (INPC).

to intermediate income levels. Table 17.4 helps us to understand which

classes have benefitted most from increased income between 2002 and 2009:
All groups presented an increase in income over the period studied.
But we should draws attention to the fact that the groups who benefitted
most were those situated at the base of the social structure, within man-
ual occupations. Within the middle class, small proprietors were those who
experienced the greatest percentage of growth (4.2%) in average incomes,
which went from R$2,349.5 in 2002 to R$2,448.4 in 2009. Among profes-
sionals and managers there was an income increase of 2.7%, and among
routine non-manual workers, 1.6%.
It is also interesting to note that even among the groups we consider
here to be “middle class”, there is enormous distance between their income
levels. Professionals and administrators, for example, had average incomes
of R$3,616.4 in 2009, much higher than the R$2,448.4 of the small propri-
etors. Among non-manual routine workers, the average monthly income was
R$1,339.2 in 2009, quite close to that of qualified manual workers, whose
average was R$1,086.5. At least in relation to income, qualified manual
workers (whose average income went up 13% in recent years) moved closer
Table 17.5. Years of Schooling by EGP Classes in Brazil, 2002–2009 — for Males
Between 24 and 60 Years Old.
Years of Schooling
0–4 5–3 9–12 12+ Total
EGP Year Mean % % % % %
Professionals, administrators 2002 13.4 5.8 8.2 24.1 61.9 100.0

and managers 2009 14.2 2.5 4.9 20.8 71.8 100.0
Routine non-manual 2002 10.7 11.8 23.3 44.4 20.6 100.0
employees 2009 11.7 7.0 15.3 49.1 28.5 100.0
Small proprietors and 2002 9.3 25.6 24.7 31.5 18.2 100.0
employers 2009 10.0 19.6 22.8 37.3 20.4 100.0
Skilled workers 2002 7.5 36.6 34.9 24.1 4.3 100.0
2009 8.8 25.0 30.0 37.4 7.7 100.0
Non-skilled workers 2002 6.8 44.1 33.9 19.8 2.2 100.0
2009 7.9 32.2 32.6 30.8 4.4 100.0
Farm workers 2002 4.0 78.9 15.0 4.9 1.2 100.0
2009 4.9 68.1 19.1 10.1 2.7 100.0
to routine non-manual workers; the latter, in turn, representing the group

that experienced the lowest percentage of gain in income.
An important characteristic of the middle classes is its degree of social
closure (Devine, 1997). Table 17.5 provides data on how this issue has
unfolded in relation to the educational level of this strata in Brazil.
The average of years of study completed drops as we move from the top
levels of the hierarchy toward its base, yet there is a clear tendency toward
a rise in educational levels for all groups from 2002 to 2009.
The column indicating the percentage of people with 12 or more years
of schooling represents a clear boundary for entrance into the middle class.
It is important to clarify that in Brazil, to complete 12 years of schooling
means having finished at least one year of university study. If we consider
that for the entire Brazilian population of persons over ten years old, those
with this higher level of schooling did not even reach 10% in 2009, the
significance of this degree of educational attainment becomes evident.
Among groups that do not make up part of the middle classes, in
2009, the majority of people with 12 years of schooling or more were con-
centrated in the category of skilled manual labor: a mere 7.7%. Among
small proprietors, 20.4% had at least 12 years of schooling. For routine
non-manual workers, 28.5% fell into this category, as did no less than
71.8% of all professionals and managers. Furthermore, the latter group

figures as the most uniform in this regard, that is, educational level —
even in relation to other middle class segments. In 2009, over 90% of its
members had at least nine years of schooling; among routine non-manual
workers this percentage remained at 77%, with a corresponding 57% for
small proprietors. While in these two latter groups there is a “reason-
able” level of representation of people at all educational levels, the former
maintains a significant concentration of people at the highest educational
level.
An important characteristic of Brazilian society is its stratification by
color or race, an aspect which is currently under debate.10 We believe that
distribution by race may be an important indicator of the degree of social
closure among the middle classes. Table 17.6 brings out some interesting
data in this regard.
In 2009, the percentage of those in the population studied who
self-identified as black made up 51.1% of the total (in 2002 this percentage
was 45.4%). Nonetheless, none of the middle class segments included
Table 17.6. Color or Race by EGP Classes in Brazil, 2002–2009 —

for Males between 24 and 60 Years Old.
Race
White Black∗ Total
EGP Year % % %
Professionals, administrators 2002 76.3 23.7 100.0

and managers 2009 71.7 28.3 100.0
Routine non-manual 2002 62.1 37.9 100.0
employees 2009 55.1 44.9 100.0
Small proprietors and 2002 67.0 33.0 100.0
employers 2009 62.1 37.9 100.0
Skilled workers 2002 54.2 45.8 100.0
2009 47.9 52.1 100.0
Non-skilled workers 2002 50.0 50.0 100.0
2009 43.2 56.8 100.0
Farm workers 2002 43.2 56.8 100.0
2009 38.5 61.5 100.0
Note: ∗ The category “Black” includes “black” and “brown”.

10 For a summary of this debate, see Ribeiro (2006).

had similarly high rates of black participation. Among professionals and

administrators, black members did not represent even 30%; among routine
non-manual workers, non-whites were reportedly 45%, and among small
proprietors less than 40%. Among all other classes, however, black (non-
white) members were reported to be 52% in 2009 (at least), while reported
as (at least) 45% in 2002. It is significant to note the concentration of
the black population within the categories of rural and unskilled manual
workers.
Once again, among the middle classes, the professional and administra-
tive segment stands out, this time with 70% white. The other two segments
of the middle class bear greater similarity to one another on this item,
showing a slightly higher number of blacks within the category of routine
non-manual workers.
The expansion of consumption throughout the Brazilian population is
another much-discussed issue in recent years. Table 17.7 shows the number
and percentage of households that have particular consumer goods (cell
phones, computers, refrigerators, washing machines and car) in 2002 and
2009: If we look at the totals in Table 17.7, we note that the percentage of
households with specified consumer goods rose considerably between 2002
and 2009; in this regard, cell phones and home computers are particularly
significant.
On all items, the position of professionals and administrators stands
out. They invariably enjoy higher percentages of the resources consid-
ered than other groups. Furthermore, within the middle class, small pro-
prietors and routine non-manual workers are similar on all items except
automobile ownership (for which our numbers show 50.9% for the first
group and 39.3% for the second). Households headed by members of the
middle class fare better than those of manual and rural workers, yet the
distance between them was much larger in 2002 than in 2009. In rela-
tion to refrigerators as a household item, for example, there is virtually
no difference between these groups, and it is only among the rural seg-
ment that a significant number of households without them can still be
found.
At any rate, it is important to draw attention to the limitations of an
approach that measures consumption solely on the basis of the possession
of durable goods. A more thorough sociological analysis would call for the
study of consumer practices, revealing patterns, tendencies and tastes that
may vary considerably amongst individuals or groups of individuals who, in
March 5, 2013
16:48
354
9in x 6in
Table 17.7. Percentage of Households with Specific Consumer Goods by EGP Classes in Brazil,
2002–2009 — for Heads of Household from 24–60 Years of Age.
Consumption Goods
Cell Washing
Handbook on Social Stratification in The BRIC Countries:. . .

EGP Year phone Microcomputer Refrigerator machine Car∗
Professionals, administrators 2002 77.0 58.0 98.5 71.4 —

and managers 2009 97.4 84.0 99.6 79.4 67.6

Routine non-manual 2002 53.4 23.8 96.7 49.0 —
employees 2009 94.2 57.2 98.5 59.7 39.3
Small proprietors and 2002 58.6 31.8 94.8 53.8 —
employers 2009 91.6 57.1 97.2 62.3 50.9
Skilled workers 2002 36.8 11.8 93.3 34.5 —
2009 88.3 39.3 97.0 49.2 32.5
Non-skilled workers 2002 30.8 6.3 89.3 27.2 —
2009 85.7 29.2 94.9 38.6 25.1
Farm workers 2002 12.8 2.5 60.7 9.2 —
2009 56.9 9.4 80.1 14.8 16.7
Total 2002 38.9 16.4 87.6 35.2 —
2009 84.8 40.3 94.3 46.5 33.9
Note: ∗ Information available only for the year 2009.

Source: PNADs, 2002, 2009/IBGE (Authors’ tabulations).
b1344-ch17
terms of volume or quantity of consumption of consumer goods and services,

appear quite similar.
Two more general conclusions may be gleaned from the data reported
in Table 17.7. In the first place, we note the distance between middle classes
and manual workers, with regard to the income and the educational level,
racial composition, and possession of certain types of goods. The middle
classes clearly have higher earnings (except the case of the routine non-
manual workers), show more closure with regard to education and race, and
tend to fare better in terms of the consumer goods they enjoy. Nonethe-
less, in recent years the classes that have been most benefitted by increased
income and consumption are, proportionately speaking, those who are clos-
est to the base of the Brazilian social structure.
Moreover, it is also clear that there are important divisions within the
middle class. The position of professionals and administrators is signifi-
cantly higher, including high incomes, high educational levels, households
that are equipped with a greater wealth of consumer goods and representing
a large white group in terms of racial composition. In contrast, we note the
proximity of routine non-manual workers to manual workers, particularly
if we consider the skilled members of this latter group. The latter group,
in turn, is the one whose earnings increased the least while the number
of non-whites went up. In relation to automobile ownership, the distance
between this group and that of skilled manual workers was a mere 6.8% in
2009. In this sense we can perhaps say that in recent years the “lower mid-
dle class” and the more skilled segments of the working class have moved
closer together.
Conclusion: Brazil, a Middle-Class Country?

As we have already had a chance to indicate, over the last few years the
hypothesis that Brazil is becoming a middle-class country has been increas-
ingly popular. The main argument used to sustain this thesis has been the
growth of groups with intermediate income levels, particularly group C —
often posited as a “New Middle Class” (Neri, 2008).11
However, when we take a look at the socio-occupational composition
of Class C as presented in Table 17.8, we are able to perceive its real het-
erogeneity: Within Class C, both in 2002 and 2009, we can find people
who are professionals and managers as well as unskilled and rural workers,
11 See Fig. 17.1 in this chapter.

Table 17.8. Socio-Occupational Composition (EGP) by Income∗ Levels∗∗ in Brazil,

2002–2009 — for Males Aged Between 24 and 60.
EGP
Prof. Routine Non-
and non- Small Skilled skilled Farm
adm. manual proprietors workers workers workers Total
Income
level Year % % % % % % %
E 2002 1.0 5.3 3.8 16.4 25.4 48.0 100.0

2009 0.7 4.4 3.1 14.5 25.5 51.9 100.0
D 2002 2.2 10.6 5.3 27.6 32.8 21.5 100.0
2009 1.4 11.0 4.4 24.0 34.8 24.3 100.0
C 2002 6.9 16.4 9.6 28.2 29.6 9.3 100.0
2009 5.5 17.7 6.9 28.8 30.4 10.6 100.0
AB 2002 34.2 17.9 20.3 13.1 10.9 3.6 100.0
2009 30.1 18.8 16.2 17.6 13.1 4.2 100.0
Notes: ∗ Income for main source of employment/prices constant, 2009 (INPC).

∗∗ E (R$00,00–R$140,00)/D (R$141,00–R$222,00)/C (R$223,00–R$964,00)/AB (over
R$965,00).
Source: PNADs, 2002, 2009/IBGE (Authors’ tabulation).
small proprietors, skilled workers, and routine non-manual labor. Unskilled

workers make up the largest portion of this category, at approximately 30%;
they are followed by skilled manual workers at 28%, routine non-manual
labor (17%), rural workers (10%), small proprietors (6.9% in 2009) and
professionals and administrators (5.5% in 2009).
All middle class segments together (professionals and administrators,
routine non-manual workers and small proprietors) made up 32.9% of
Class C in 2002, and 30.1% in 2009. This was barely over half of the percent-
age of manual workers within this group: 59.2% in 2009. Thus it remains
clear that it is significantly difficult to speak of Brazil as a predominantly
middle-class country merely based on the growth rates for the immediate
income level categories over the last few years.
Through the above data, the expansion of the labor market and
income increases in Brazil, particularly for classes at the lower rungs of
the social structure, are certainly observable. But using socio-occupational
classifications, there is no verifiable corresponding growth of the middle
classes within the Brazilian social structure between 2002 and 2009.
Furthermore, we see that over the last few years the composition of
this middle class underwent minor shifts, with the decrease, on the inside,
of segments of small proprietors and an increase in the representation of

routine non-manual workers — which indicates a reversal of the tendencies
that Pochmann et al. (2006) found for the latter two decades of the 20th
century. In addition to this, the data we have worked with demonstrate
that the Brazilian middle classes are made up mostly of whites and people
with medium to high educational levels.
Within the middle classes, professionals and administrators stand out
for their high income levels, high rates of individuals with higher education
and small proportions of non-whites. Routine non-manual workers, on the
other hand, are moving closer to skilled manual workers both in terms of
income and racial composition. In this sense, rather than speaking of a “New
Middle Class” we might be better off speaking of a portion of the working
class that, in relation to particular features — income and consumption —
is moving closer toward the lower segments of the middle classes.

18
The Middle Class in Russian Society:
Homogeneity or Heterogeneity?
N. E. Tichonova and S. V. Mareyeva
The appearance of growing middle class at the beginning of 20th century

in Western Europe and USA was the result of a transition within West-
ern countries to a post-industrial model of society, which involved changes
to the structure and forms of organization of industrial production and
stimulated the appearance of the welfare state and of third sector of the
economy. Therefore, when analyzing the existence, quantity, and specific
characteristics of the middle class in Russia, the questions that arise are —
what stage of progress Russian society has reached nowadays and what
positions potential representatives of the middle class occupy in the social
and professional structures of society?
The answer to these questions are far from obvious, especially consider-
ing that the data about the socio-professional structure of Russia provided
by state statistical organizations, and the similar data based on social sur-
veys, suggests different directions of development for this structure; if the
first suggests a transition to post-industrial society, then the second states
the opposite tendency.1 Nevertheless, despite the difference in the available
estimations, the share of white-collar workers2 is evaluated to be a little
1 http://www.gks.ru
2 Management personnel of different level, professionals and semi-professionals, like mil-
itary men; office workers, like technical service workers serving for certain clients; small
business entrepreneurs, self-employed people and craftsmen who are also traditionally
included in the middle class.
359
360 N. E. Tichonova and S. V. Mareyeva
more than 50% of the working population.3 If we look at the educational

level of the working population, considering only those who have at least
specialized secondary education, i.e., at least theoretically gain profit for
their human capital according to the “New Middle Class” concept, then
the proportion of all working people would not be less than 50% of each
age cohort in the 20 to 60 age range according to data from the Federal
Service of State Statistics of Russia.4
In either case, when matching figures of professional status and profes-
sional education in at least the second level, we get the figure of maximal
possible quantity of the middle class in Russia at the level of no more than
50% of the working population, which would be an even smaller share of the
general population including retired people. The external structural limit
not only demonstrates the potential of limit middle class growth in modern
Russia, but also says a lot about the stage of progress that its economy is
currently on. This is the situation in which it is only possible to speak about
the transition from industrial to post-industrial types of development, and
which corresponds more to the Western Europe during the 50s–70s years of
last century, rather than current state of European society. And the profes-
sional structure of Russia is simply not able to change quickly considering
its dependence on a certain level of economic progress. The creation of
each workplace that can provide the person occupying it with the potential
of belonging to the middle class costs at least tens and often hundreds of
thousands of rubles.
At the same time, as can be seen from the history of the middle-
class concept, it is absolutely adequate for this particular stage of societal
progress. This means that the concept is potentially very useful in modern
Russia. Low share of the “old” middle class in Russia, which reaches 15–
20% in some European countries, makes it theoretically easier to examine
the situation. It allows us to focus on so-called “new” middle class and to
define it in the social structure of population with the most accuracy.
The empirical database for our analysis consists of data from the
national sociological research institutes (researches of Institute of Complex
Sociological Researches and Institute of Sociology of Russian Academy of
Science for years 2003, 2008, 2009, and 2010). In particular, we are refer-
ring to the national surveys of Institute of Complex Sociological Researches
and Institution of Sociology, “Middle class in modern Russia” (March 2003,
3 http://www.gks.ru
4 http://www.gks.ru
The Middle Class in Russian Society: Homogeneity or Heterogeneity? 361
n = 2,106); “Poor people in modern Russia: Who are they? How do they
live? What do they strive for?” (March of 2008, n = 1,751); “Russian
everyday life during the crisis: The view of sociologists” (February of 2009,
n = 1,749); “Is Russian society ready for modernization?” (February–
March 2010, n = 1,734). Samples for all of these studies represented the
country’s population by the region of living, and inside of each region by
the type of the settlement, gender, and age.
The key question for middle class analysis is the methodology of its def-
initions. Because of the differences in defining the middle class, estimations
of middle class size in modern Russian society given by different researchers
vary a lot. Based on analysis of foreign5 and Russian6 materials which are
devoted to the role of middle class in class structures, and considering the
research questions, the methodology of this social subject’s definition was
elaborated based on the features of those structural positions that the rep-
resentatives of middle class occupy in the society. Two base criteria were
used: First is a character of socio-professional status which marks certain
structural positions in the employment relationship; and second is the level
of human capital (the level of education was used as its indicator).
Usage of this particular criteria is considered to be sufficient for for-
eign research. However, two more criteria were introduced considering the
Russian conditions: The level of welfare (not like the level of income itself,
but because middle class should be able to provide at least simple repro-
ductions of itself as a class and its human capital); and indicator of self-
identification which is used to sift out those outsiders that would certainly
not comply with middle class based on peculiarity of attitudes and corre-
sponding behavior.
5 Wright,E. O. (1997). Class Counts: Comparative Studies in Class Analysis, Cambridge

University Press. Goldthorpe J. H. and A. McKnight (2003). The Economic Basis of
Social Class-Sociology Working Papers, University of Oxford. Gilbert D (2002). The
American Class Structure, 6th edition, New York: Wadsworth Publishing.
6 Many Russian and foreign researchers have focused on the problems of the middle
class in Russian society, like E. M. Avraamova, L. A. Belyayeva, G. G. Diligenskiy,

T. I. Zaslavskaya, M. Kivinen, T. M. Maleva, L. N. Ovcharova, N. E. Tichonova, L.
A. Khakhulina, O. I. Shkarant and many others (e.g. Avraamova, E. M. (2008). “The
Middle Class of the Putin’s Era.” Sociological Science and the Present, No. 1, pp. 28-
36; Belyayeva, L. A. (2007). ”Once Again About Middle Class in Russia.” Sociological
Research. No. 5, pp.3-13; Maleva, T. M. (2003) (ed.). The Middle Classes in Russia:
Economical and Social Strategies, M.: Gendelf; Tichonova, N. E. and S. V. Mareeva
(2009). Middle Class in Modern Russia: Theories and Reality, M.: Alfa, etc.).
Thus, the following criteria were used to separate the middle class:
(1) non-manual labor; (2) specialized secondary education or higher; (3)
indicators of average monthly income per person not lower than average
figures for given types of settlement or the quantity of available durable
goods not lower than median value for the population in general; (4) integral
self-appraisal by the individual of his status in the society at not lower than
four points inclusive based on 10-points scale.
Belonging to the middle class for the non-working population is based
on three criteria given above (out of four), not considering professional
status. Empirical tests showed that the representatives of non-working pop-
ulation who were separated this way as belonging to the middle class, were
connected to structural positions that characterize the middle class, i.e.,
occupied them before, or would most likely occupy them in the future
(retired people with higher education, students from educated families etc.).
Applying these four criteria to the results of empirical research shows
that in the year 2008 (i.e., the period before the economic crisis), a third
of the Russia’s population (34%) could be ranked as middle class. This
share is rather high, but one should consider that the middle class is not
homogenous in structure. It can be divided into steady core, which has
strong characteristics peculiar to the middle class, and also periphery, where
these characteristics become weaker. Two base characteristics that reflect
the specificity of the structural positions of middle class were again used
to differentiate the middle class to its core and periphery — the socio-
professional status and the level of education. The managers with higher
education, businessmen, and specialists with computer skills were ranked
as the core of the middle class. Other representatives that were included
in middle class based on four criteria, were included in neighboring periph-
ery of the middle class core, which together with the core itself formed
the structure of the middle class in general. Those Russians did not meet
one of the criteria except socio-professional status, i.e., those who did not
correspond to either the educational level, or welfare, or self-identification
criterion formed the distant periphery of the middle class. Those who can-
not be considered as the middle class by socio-professional status, as well
as those who have corresponding level of education and socio-professional
status were not evaluated considering both the level of welfare and self-
identification formed often population.
The data shows that the volume of the middle class significantly
increased during the period of economic growth preceding the crisis
(see Fig. 18.1). However, the crisis of 2009 broke the positive growth
2003 11 18 23 48
2008 14 20 17 49
2009 11 15 25 49
2010 15 21 20 44
core body of the middle class neighboring periphery distant periphery rest of the population
Fig. 18.1. Dynamics of share of different social groups %.
tendency of the middle class. By the spring of 2009, the share of the middle
class in the general population had decreased from one-third to a quarter
(26%) and the share of the middle class in the structure of the active urban
population had decreased from over 40% to 30%. Nevertheless, the volume
of the middle class increased again to over a third (36%) by the spring of
2010 and stabilized at 33% in 2011.
Such dynamics indicate that the process of Russian middle class forma-
tion continues. Besides the core, it has quite large peripheral groups that
are more dependent upon external economic conditions. The fluctuation of
the volume of the middle class during the years 2008–2010 was primarily
the result of the crisis of 2009, in which the Russian people’s self-appraisal
of their status in society greatly decreased, and this exact criterion became
the main obstacle for them to be included in the middle class (before crisis
in the 2008, 60% of those who did not qualify for the middle class were
characterized by non-matching socio-professional status; this characteristic
became the leading factor for missing the middle class requirements again
in 2010). Thus, the situational decrease of self-evaluation resulting from
the crisis reflects some instability and unsteadiness of the peripheral part
of the middle class at the labor market, affecting a decrease in its volume
and confirming the fact that at the current stage the middle class in Russia
is heterogeneous, has no strict borders, and is subject to changes connected
to the change of external conditions.
One of the reasons for such heterogeneity of the middle class is the
differences caused by the socialization of representatives of its different
subgroups. The data shows that compared to the periphery of the middle
class, and other classes of population, the core of the middle class has a
higher volume of those who have undergone primary socialization in the
public and regional centers, as well as in Moscow and St. Petersburg, which
in particular form 40% of the core distant of the middle class and 29%
the core of the

19 41 31 9
middle class
neighboring periphery 29 42 18 11
distant periphery 36 38 18 8
other population 48 32 15 5
in village, rural areas in district capital, small town
in Republic or region capital in Mocsow or S. Petersburg
Fig. 18.2. Answer to the question: “Where did you live when you entered school” among
representatives of different social groups in the year of 2010, % of the group.
of its neighboring periphery. The similar population group formed 26% of

the periphery, and other population only one fifth went through primary
socialization in big cities. The share of those who went through the primary
socialization in small towns and villages is considerably lower in the middle
class rather than in other groups of population (they form a quarter of
the middle class opposed to more than a third in the distant periphery and
almost half among often population; the core of the middle class also differs
considerably from its neighboring periphery by the share of those who come
from big cities, (see Fig. 18.2).
In general, those who went through socialization in a big city have a
higher chance to be included in the middle class. However, it is necessary
to point that even in the core of the middle class most of its representatives
come from the “small Russia”, which can affect the nature of the formation
of the social subject, reflecting the peculiarity of mind and behavior of
its representatives. When analyzing the peculiarity and characteristics of
the Russian middle class, it is necessary to take into account the fact that
practically two-third of the middle class underwent initial socialization in
small towns or villages.
It is also necessary to consider the level of education of parents when
talking about the conditions of socialization of representatives of the middle
class. It appears that this fact is closely connected to belonging to one
or another social group. As analysis shows, the level of education among
the parents of the middle class representatives appears to be considerably
higher than other social groups, and the core of the middle class differs
significantly on this parameter from the neighboring periphery that belongs
to the middle class as well (see Fig. 18.3).
the core of the middle class 21 35 44
37 34 29
distant periphery 52 31 17
62 29 9
no professional education one or two with professional education

one or two with higher eduction
Fig. 18.3. The level of parents’ education in different social groups in 2010, %.
Thus, parents’ educational levels considerably differentiates middle

class, especially its core from other social groups. Among other population
most Russians have parents with a level of education lower than specialized
secondary education, and only 9% has one or two parents with higher edu-
cation, while representatives of the core of the middle class in 44% of cases
have one or two parents with higher education, and only in 21% of cases,
their parents did not have professional education of at least second degree.
For the middle class in general these figures are 35% and 30%, respectively.
If we look at this situation from another perspective, it is necessary to
point out that among Russians whose parents did not even have specialized
secondary education, only 23% appeared in the middle class (and in 72%
of cases they were in the neighboring periphery rather than the core of the
middle class). Mainly such Russians appeared to be part of other population
that did not qualify for either the middle class or its peripheral groups.
Thus, the middle class is primarily being formed from the children of
families with high educational levels. However, considering the fact that
the share of the hereditary urban population with both the parents having
higher education is less than half even in the core of the middle class,
it becomes obvious that currently there is a considerable inflow from the
outside to the positions corresponding to the middle class, and it happens
out of the process of intergeneration reproduction.
It is also necessary to emphasize that the current stage of the middle
class formation in Russia is characterized by the existence of big and rel-
atively unstable peripheral groups and rather significant heterogeneity of
the subject itself from the point of socialization condition and classes that
its representatives come from.
However, this heterogeneity will be partially smoothed out because
of the reproduction of the middle class, as the children of current
the core of the 61 14 19 6

middle class
41 12 35 12
25 28 34 13
governmen privatized new private collective, individual business activity, other
Fig. 18.4. Sector of employment where representatives of different groups earn their
general income in 2010, % (for working population).
representatives of the middle class will go through socialization in the con-

ditions that are more similar to each other than their parents had, and
will assimilate general norms and standards that are typical for the middle
class.
Now let us turn to the question of the distribution of the middle class
representatives by the employment sector — the types of businesses where
they earn general income (see Fig. 18.4).
Half of the representatives of the middle class (51%) are employed by
state enterprises, while over one-third work in the privatized or new private
enterprises. The neighboring and distant periphery appears to be rather
similar by the distribution of its representatives by enterprise type, and it
is possible to say that the difference between these groups are mainly con-
nected not to this factor, but most likely to existing differences in the posi-
tions that they occupy in similar sectors of economy. Over 60% of the core
middle-class representations are state enterprise employees. Such specificity
of the Russian middle class obviously has influence over many features of the
mind and behavior of its representatives, specifics of revenue and on their
human capital, etc. This accounts for the important difference in structural
positions for the middle class in Russia and the difference in the process
of its development compared to the same process in the West. Besides the
fact that the formation of the middle class in Russia began considerably
later in time, the specifics of its structural positions lies in high concen-
tration in the state sector of economy. As a result, while representatives of
the Western middle class took part in market relationships offering human
capital, the product that is in demand in the market, in Russian conditions
the connection of the middle class and its assets with market mechanisms
is not that definite, though it can be partially realized through the mech-
anism of secondary employment. As can be seen from the data, secondary
employment is more often among the middle class than among the other
the core of the middle class 11 59 24 6
7 43 46 4
4 20 69 7
Can influence decision-making of the entire enterprise

Can influence decision-making of the department
Practically nothing at work depends on their opinion
Could not answer
Fig. 18.5. Evaluation of the degree of influence on the decision-making process at work
among respondents from different population groups in 2010, % (for working population).
population found: 17% of its representatives combine working at different

jobs, 31% practice working at two jobs or overtime work at the main job,
while the same figures for those who do not belong to the middle class are
10% and 25%, respectively.
However, despite their localization in the state sector, exactly what
positions are characterized by important specific characteristics that are
traditionally connected to particular the middle class — power resource,
work independence career, strategies?7 In particular, the specificity of the
structural positions of the Russian middle class in the system of employment
relationships lie in the higher level of power at the workplace (see Fig. 18.5).
Representatives of the middle class in 59% of cases can influence
decisions that affect the entire enterprise or its subdivisions. There are
70% of such representatives are in the core of the middle class, and 50% in
the neighboring periphery. In the distant periphery, there are only 40% of
such representatives, and only a fourth are that degree of influence at the
workplace among the other population.
These differences are certainly connected with the different professional
structures of the middle class and other groups of the population. But in
general, the power resource in the middle class can be found considerably
more often than administrative high level positions, which provide evidence
of middle-class specifies management in this respect.
7 Gilbert,D. (2002). The American Class Structure, 6th edition, New York: Wadsworth
Publishing; Wright, E. O. (2000). Class Counts: Comparative Studies in Class Analysis,
Cambridge University Press; Goldthorpe, J. H. (1982) “On the Service Class: Its Forma-
tion and Future.” In Giddens, A. and G. Mackenzie (eds.), Social Class and the Division
of Labour, Cambridge University Press.
46
the core of the middle class 4
27
neighboring periphery
5
15
distant periphery
8
9
rest of the population
7
Promotion Demotion
Fig. 18.6. Change of working status of Russians from different population groups during
2005–2010, % (for working population).
Besides, specifics of middle class structural positions lie in the fact that
its representatives has career growth opportunities — there are certain
career trajectories that are not common for structural positions of other
social groups (see Fig. 18.6)
Thus, 46% of the core of the middle class and 27% of its neighboring
periphery claim that they were promoted in the last five years, when in the
distant periphery, there are 15% of those, and just among other population
9% specifics (with 7% who were demoted). This confirms the conclusion
about the middle-class of structural positions: exactly those positions are
characterized by power resources, higher independence, career strategies,
etc.
However, the specifics of current stage of Russian middle class forma-
tion lie not only in characteristics of its structural positions, but also in
non-simultaneous formation process of features typical for middle class in
its consciousness and behavior, which is taking place with different speed
and success in its different subgroups and fields. This affects the ability of
the middle class to perform functions that are usually associated with it
in modern societies. This conclusion can be illustrated by examples from
different spheres of life of the middle class.
The data shows that the Russian middle class at its current stage
formation most successfully performs the role of “conductor” of innovative
practices; in the sphere of leisure, information technologies, new consumer
products, etc. And it is spreading from the core to the neighboring and
then the distant periphery. In particular, the data shows that new lifestyle
is being set under the influence of computer technologies in the middle
class, which the most important demonstration and result of its coping
with innovation practices (see Table 18.1).
Table 18.1. Using of Information Technologies by the Middle Class and Other
Population Groups in 2010, %.
Core of the Neighboring Distant Other

Characteristics middle class periphery periphery population
Presence of computer 94 76 49 43
Do not use computer 0 36 54 67
Use computer at least 92 51 40 24
few times per week
Use the Internet at least 77 41 29 18
few times per week
Table 18.1 shows that the middle class (both its core and neighbor-
ing periphery) differs from the other groups by parameters of both com-
puter and internet usage. Computers and the internet occupy all spheres
of life for the middle class. The middle class actively learns the usage of
both computer and internet and uses it for personal needs, leisure, and for
work. The special characteristics of the middle class and its difference from
the other population groups from the point of mastering and reproducing
innovative practices connected to using information technologies becomes
strongly apparent and considerably differs middle class from the other pop-
ulation groups. Thus, 83% of the middle class has computers, while less
than half of representatives of the distant periphery and other population
have computers. 56% of the middle class uses internet at least a few times
a week, while this is the case for at most a fifth of the other groups.
The process of collective middle class consciousness formation is going
successfully, but is far from completion so far. That can be seen from the
data on tolerance level towards competitive market economy and other
characteristics of individual consciousness of the middle class representa-
tives and other population groups (see Table 18.2).
As can be seen from the data towards, tolerance competitive market
conditions is higher among representatives of the middle class than among
the population groups. The greater part of the middle class agrees that
competition is good, that equal opportunities are more important than
equal income. However, there are no significant differences here since more
than half of both the middle class and the other population choose the
opinions that show their acceptance of market conditions in general. Nev-
ertheless, the quantitative difference between the middle class and the other
population groups is quite noticeable. The core of the middle class shows
Table 18.2. Consent with Alternative Values in Different Groups of Society in 2010, %.
The core of
the middle Neighboring Distant Other
Opinion class periphery periphery population
Competition is bad, it 11 25 28 33
makes stronger the bad
characters of person
Competition is good. It 89 75 72 67
makes people to work
harder, prompts to
advance new ideas
Equal income, status and 19 36 37 43
conditions of living of
any person is more
important, than
Equal opportunities to
reveal capabilities
Equal opportunities to 81 64 63 57
reveal capabilities of
each person are more
important than equal
income and conditions of
living
It is better to live like 27 46 51 57
others rather than stand
out among others
It is better to stand out 73 54 49 43
among others and to be
a bright personality
rather than live like
everyone else
It is important what 40 49 61 58
economic situation will
be in the country as few
things depend on me
My well-being depends 60 51 39 42
mostly on me
most support for market condition, equality of opportunities, and demon-

strative higher internal focus of control.
If we select only those who demonstrated positive attitude to market
economy in both pairs of opinions (positive attitude to competition and
society of equal opportunities over equal income), we can find that there
are 73% of such Russians in the core of middle class and 50% in neighboring
periphery, while in distant periphery there is less than a half of them (48%),
and the same share among other population amounts to just 42%.
Besides, representatives of the middle class more often agree that it is

better to stand out from others and be a bright personality than live as the
others. They less frequently demonstrate external locus-control, attributing
crucial role in their lives to the external obstacles, which reflects tradition-
alistic type of thinking. Thus, the representatives of the middle class show
more effective and productive values in the conditions of modern society.
Again, the core of the middle class demonstrates more economically effec-
tive attitudes and values. 50% of the middle class core, 34% of its close
periphery, and 22% of the other population groups chose values of individ-
ualism and inner locus-control in both the dilemmas. But it is also worth
mentioning that so far there is only half of consequent followers believe in
such values even in the middle class.
Thus, on the one hand, the Russian middle class copes with the function
of bearing values and attitudes that are typical for the national culture,
which helps it to successfully integrate and stabilize society. On the other
hand, analysis of these types of values and attitudes of the middle class
demonstrates the readiness of its representatives to embrace values that
are more productive in modern conditions, and to accept the “rules” and
institutions of the market economy.
As for the political thinking and behavior of the middle class, this
aspect is considerably contraversial so far. Let us illustrate the picture of
the political attitudes of the middle class with its views on the ideal political
system (see Table 18.3)
The picture of political attitudes in the middle class is not so straight-
forward, as we see. On the one hand, the overwhelming majority of middle
class representatives agree that each person must have the right to defend
his opinion, and almost 60% consider that the true democracy is impossible
Table 18.3. The Middle Class Representatives Attitude to Different Aspects of Ideal
Political System in 2010, %.8
Opinion Agree Disagree
Every person must have a right to defend his opinion even in 78 7

the case the majority adhere to other opinion
The real democracy is impossible without political opposition 59 16
The task of opposition is not criticizing the government, but 60 20
providing help in its work
8 There was also answer “hard to say” that is not shown in the table.
without political opposition. On the other hand, 60% of the middle class
agree that the task of opposition is not to criticize the government, but to
provide help in its work. Such an opinion is contrary to modern views on
the structure of the democratic political system that is inherent in Western
countries. This confirms the fact that it is still early to speak about the
formation of the Russian middle-class political conscisousness similar to
that in developed modern societies of the West. Neither the middle class in
general, nor is its core capable to play an independent role in the political
sphere.
This conclusion is confirmed by the data about how middle-class rep-
resentatives stand up for their interests. When asked what ways they used
to defend their interests in the last year before the survey of year 2008,
most representatives of the middle class answered that they did not need
that (58%). The percentage of such opinion in the distant periphery was
52%, and it was less than half among other population. However, such data
confirms the more stable condition of the middle class situation compared
to other population groups, but not the special character of their conscious-
ness. If we look only at Russians who had such a need it appears that over
half (57%) of the middle class still did not take any action, considering it
to be useless. This share is rather high, but it appears to be even higher in
other groups of the population and makes 66% among the distant periphery
and 88% among other population. As for the most frequently used meth-
ods in that representatives of the middle class used to defend their inter-
ests, only one definitely stands: 23% of middle-class representatives acted
independently using their personal connections when facing a necessity to
defend their interests. The figure is 15% in the distant periphery and only
11% in the other groups of population. These differences confirm not only a
higher activity of the middle class when it comes to the immediate interests
of its representatives, but also that the middle class has more possibilities
to solve its problems using social capital that it possesses in higher volumes
than the other groups.
The other ways of defending their interests are much less frequent in
middle class. Only 11% of those who needed such a defense applied to
court, 11% applied to the government and public organizations, and 4%
took part in the actions of trade unions of public organizations. These
shares are higher than distant periphery and other population, but they do
not demonstrate high activity of the middle class in the context of public
and political institutions. This situation can easily be the result of external
obstacles and institutional limits, but still it reflects the special character of
middle-class consciousness and way of thinking. Using their social capital or

informal practices could be the most rational way for them, considering the
institutional barriers to applying to the court or government authorities and
the duration of these procedures. 28% of those who needed to defend their
interests in the middle class were using their personal connections and/or
agreed to solve their problems for a fee, while for the distant periphery and
other population these figures were considerably lower and amounted to
18% and 16%, respectively.
On the other hand, this situation means that the middle class that is
forming in Russian society is not ready to act as an independent after and
united social subject, and the defense of interests by its representatives takes
place at the individual rather than the group level, and generally without
the use of formal institutions. Thus, considering the results, the middle
class is not ready to defend its interests as a class. Heterogeneity of middle-
class interests, which it is not homogenous in structure is connected to the
tail that. Therefore, also serve as an obstacle middle-class representatives
of are more ready to defend their interests and more active in that respect
than the other population groups, but they do not currently have a base
for consolidation and the collective defense of their rights. It is possible to
say that the modern Russian middle class as a social subject does not hold
enough negotiation power, and its influence on the political development of
country is questionable from this point of view.
Finally, let us address the question of human capital of middle class
representatives, which is closely connected to the problem of middle-class
heterogeneity. The data shows that in general the middle class successfully
performs function of work force with a high level of human capital repro-
duction (representatives of the middle class more often invest in themselves
or in their children, increase the level of their education, gain new knowl-
edge and skills etc.). However, the tendency that can be seen during recent
years in this sphere, decreasing level of investment in the middle class,
both for themselves and their children, can have a negative effect on per-
form the ability of the middle-class to this function. Though the tendency
that is noticed in recent years in this sphere, in particular, is decreasing in
the investment of the middle class, both for themselves and their children,
this can still have a negative effect on their performing this function (see
Fig. 18.7).
Heterogeneity of the middle class is obviously in noticeable this ques-
tion, as the neighboring periphery is characterized by a lower level of invest-
ment in its human capital than the core. Thus, only 24% of the core of the
71
Medical services 55
63
36
Educational services for adults 21
23
23
Recreation services for adults 18
20
2003 2008 2010
26
Recreation services for 17
children
24
44
Educational services for 25
children
32
Fig. 18.7. Dynamics of using some of the paid services by the representatives of the
middle class, years 2003, 2008, 2010, %.
middle class did not enrich their knowledge in anyway during loaf three
years, while this share for the neighboring periphery is more than half
(58%). This data demonstrates a qualitative difference between these sub-
groups of the middle class. Having a similar level of welfare and similar
possibility to increase their human capital, the representatives of the neigh-
boring periphery, as opposed to the core can realize the irrationality of such
investments for themselves. Their structural positions seldom have the pos-
sibility of promotion (only 12% say that their job gives them the possibility
of being promoted, with the figure of 34% for the core of the middle class),
and this serves as a signal that the human capital of certain quality is not
currently in demand by Russian economy, which leads to decrease in of
investments in human capital.
It is also important to notice that among the representatives of the core
of the middle class actions taken to increase the level of their human capital
by gaining new knowledge and skills practically do not show any dependence
on the level of their cultural capita. Those representatives of the core of the
middle class who went through initial socialization in a town or village fall
behind in this question, but for its other representatives, irrespective of the
size of the city where they were socialized and the level of their parents’
education, the level of investments in their human capital is very close.
In the close periphery, gaining knowledge and skills depend on the level of
cultural capital, and the share of those who enrich their knowledge increases
with the increasing size of the town of primary socialization and level of
parental education. Thus, a special model of attitude to their human capital
and the human capital of their children is formed in the core of the middle
class, as well as recognition of human capital as the main asset that demands
investments is formed. In the neighboring periphery, the reasonability of
such investments is more questionable and the level of investments is lower
than in the core of the middle class, which is mainly conditioned by the
cultural peculiarity of its representatives. In the future, such a situation may
lead to the further polarization of the middle class, its core and neighboring
periphery diverging in futural roles and position in the conditions of the
new economy (economy of knowledge).
Finally, let us touch on the question of the modernization potential of
the middle class. The course of modernization announced by Russian gov-
ernment raises questions about the potential actors of this modernization,
social subjects that could support modernization initiatives at the micro
level and function successfully and effective in the new conditions. Middle
class, and its core in particular has the role of one of such subjects forms
the direction of modernization that can be implemented for the country in
general. In such conditions it is important to understand which features of
the modernized society are accepted by the middle class and which are not,
and in what sense its attitudes and behavior may make the modernization
process more successful, and where they fall behind.9 Many aspects of these
problems are already described above, so let us summarize the conclusions.
As for economic modernization, the core of the middle class appears
to be ready to act as its subject. The core of the middle class accumulates
the most educated representatives of Russian society who have a high level
of cultural and human capital and invest effectively in it. Besides, the rep-
resentatives of Russian middle class can be already characterized by their
attitude to work typical for societies that are considerably further along the
road to modernization (61% of the middle-class core and 43% of working
9 We understand modernization as the process that is going in different forms considering

peculiarities of national cultures and historical experience of the countries, due to which
traditional societies reach the state of modern based on economic, social, cultural, and
socio-cultural modernization. By socio-cultural modernization we mean formation of new
norm and values systems, including first of all spreading of individualism and rationality
which, together would form a base for formation of new social institutions.
representatives of the neighboring periphery, as well as third of the dis-

tant periphery and a fifth of the working population consider their job as
a means for self-actualization and self-realization), by economic rational-
ity (only 16% of the middle class would prefer to spend an occasionally
gained one million rubles for leisure rather than invest it), and have a high
evaluation qualities such as initiative and professionalism. All these charac-
teristics supported by the high investment in information technologies, as
mentioned above, can promote inclusion of middle class main body in the
structure of the new economy’s workforce. The neighboring periphery of the
middle-class core also has positive difference from other groups of the pop-
ulation by a number of parameters, although the dynamics of investment
in human capital by its representatives suggests that it is not possible to
predict its successful functioning in the conditions of the new economy for
all of them. Most likely process of, polarization, will become more apparent
in Russian middle class formation process, which has been noticed in the
last few decades in the Western countries as well.10 As a result, represen-
tatives of the middle-class core will occupy the structural positions that
would from positions of the neighboring periphery.
Processes connected with socio-cultural modernization are successfully
going on the middle class as well. As discussed earlier, in the middle class
a type of mind is forming that is based on non-conformity and personal
responsibility, as opposed to the other groups of the population where the
values of conformism and external locus-control prevail (these tendencies
do not change when examining groups with similar levels of welfare among
representatives of the dsitant periphery and other population over the half
of which could still be characterized by external locus-control). The differ-
ence between the core of the middle class and the other population groups
is strongly visible when choosing between traditional and modern values.
59% of the core of the middle class favors innovation, new concepts and ini-
tiative, while over half of the other groups favor respect toward traditions
and customs.
The model of goal-rational planning is successfully taking shape in the
middle class. Almost two-thirds of the core of the middle class (73%) plan
their life in at least the short-term period. This share goes down to 61%
in the neighboring periphery and to less than half (43%) in the distant
10 Castells (1996; 2002).

and other population periphery, i.e., the middle-class core demonstrates

considerably different planning ability is opposed to other populations.
In regards to political modernization, as shown above the influence
of the middle class, and even its core is not significant. It is too early
to talk about the formation of political consciousness similar to that in
modern developed societies when talking about the Russian middle class.
Neither the Russian middle class in general, nor its core is able to perform
as subjects of political modernization by western model.

19
The Rise of the Middle Class in India
since Independence
K. L. Sharma
The Concept of the Middle Class

Middle strata or classes have always existed in human society. However,
classes at the top and bottom have generally been reckoned as the rulers
and the ruled. Karl Marx is known for identifying the bourgeoisie and
the proletariat, a theory that undermines the growth of the “new mid-
dle classes” (Bottomore, 1970). However, Marx realized the existence of
“middle classes”, such as the large numbers of small producers, craftsmen,
artisans, small farmers, self-employed professional men, but his assertion
that they would disappear has not been found true. Under the capitalist
system of production, they have been largely absorbed as paid employees
in large capitalist enterprises (ibid.: 25). Marx refers to this with the term
“middle strata”, in-between the bourgeoisie and the proletariat.
Engels equated the English middle-class or middle-classes with the
French bourgeoisie, and distinguished the latter from the “aristocracy”. But
Marx used the term “middle strata” in the sense of “petty bourgeoisie”,
to designate the class or strata between the bourgeoisie and the working
class (Bottomore, 1985: 333–334). The Marxist notion of “middle class” is
quite hazy, even though it has had considerable influence, along with the
concept of “class”, on studies of class stratification in both rural and urban
India. Marx realized that the increasing size of the middle class was an
important feature of the development of capitalism (ibid.: 333). However,
Bottomore writes, “Neither Marx nor Engels made a systematic distinction
between different sections of the middle class, in particular between the ‘old
middle class’ of small producers, artisans, independent professional people,
379
380 K. L. Sharma
farmers and peasants, and the ‘new middle class’ of clerical, supervisory,
and technical workers, teachers, government officials, etc”. (ibid.: 333)
Marx and Engels considered the middle class to be politically conserva-
tive, or as forming, with the labor aristocracy, a reformist element in work-
ers’ movements. In the 1920s and 1930s, Marxists saw the middle classes as
the main social basis of the fascist movements. “Middle class radicalism”
is also known in some developed capitalist societies. Differentiation of the
middle classes is crucial to understand its role in the economy, polity, and
society. The upper stratum of the middle class would comprise shopkeep-
ers, small producers, highly-paid professionals, and managerial personnel.
In Marxist analysis, these categories would merge into the bourgeoisie. The
lower middle class would have low-paid professionals, technical or supervi-
sory workers, clerical workers, etc.
The Rise of the Middle Class in India

The Indian experience shows that the middle class expanded enormously.
The service class has emerged as a big section in administration, indus-
try, and in the private sector. British rule created a middle class so as
to ensure smooth sailing for its rule in India. The state in India since
independence has created a structure of administration that requires a
large class of white-collar workers, administrators, and professionals. In
post-independence India, the most well-known work on the middle class is
The Indian Middle Classes: Their Growth in Modern Times (Misra, 1983),
which was first published in 1961. Misra defines class in the following man-
ner: Society is divided into classes or groups of people joined together by
the motives of common economic interest, common ways of behavior, and
common traits of character. Each class forms a hierarchy of status accord-
ing to the varying quality of social prestige and power expressed through
the standard of living, nature of occupation, and wealth. A social class is in
fact a complex phenomenon whose complexity grows with the existence or
emergence of a wide range of interests connected with the ownership and
management of economic and social institutions (ibid.: 3).
Before the advent of British rule in India, there were merchants, traders,
moneylenders, and other commercial groups, which could be placed between
the landed aristocracy and the peasant-folk. The British created large-scale
business enterprises, which in turn resulted in the creation of a class of tech-
nicians, administrators, supervisors, and clerical workers. Professions such
as medicine, education, and journalism not only grew as new fields, but
The Rise of the Middle Class in India since Independence 381
also added to the size of the middle classes. Capitalism, too, enhanced the
growth of the middle classes, rather than a simple polarization consisting of
the bourgeoisie and the proletariat. A money-based economy was already
in existence prior to the British rule, when Indian traders constituted a
class of middlemen who managed the business of mercantile and banking
houses, made advances to producers, and supplied finished goods to mer-
chants (ibid.: 7). Certainly the caste system did not encourage migration
and mobility and a clear crystallization of classes and their internal differ-
entiation. Unevenness was also there in the growth of the middle classes in
the British period. New business classes grew slower than the literary and
intellectual classes because the latter had their traditional caste superiority.
English education and technology, more than any other factor, created
a middle-class society. Educated professionals, such as government servants
and lawyers, college teachers, and doctors constituted the bulk of the Indian
middle classes. Mercantile and industrial elements were a minority. Misra
has enumerated the following groups as the middle classes (ibid.: 13–14):
• Merchants, agents, and proprietors of modern trading firms.

• Salaried executives, such as managers, inspectors, supervisors and tech-
nical staff.
• Higher salaried groups of institutions and societies, in both public and
private sectors.
• Civil servants and other public functionaries, excluding at the top, but
including the people in services in agriculture, education, public works,
transport and communications.
• Members of the principal recognized professions, such as lawyers and
doctors, lecturers and professors, writers and journalists, musicians and
artists, and functionaries in transport and communications.
• Holders of the middle grades of proprietary tenures of land.
• Well-to-do shopkeepers and hotel-keepers.
• Rural entrepreneurs.
• Full-time students engaged in higher education.
• Clerks, assistants, and other non-manual workers.
• Upper range of secondary-school teachers, and officers of the local bod-
ies, social and political workers.
The above middle classes were formed as a result of the British educa-
tional policy to create a class comparable to their own to lubricate British
rule in India. Thomas Babington Macaulay, who was the architect of the
382 K. L. Sharma
British policy on education, observed: “We must at present do our best to

form a class who may be interpreters between us and the millions whom we
govern — a class of persons Indian in blood and color, but English in tastes,
in opinions, in morals and in intellect” (ibid.: 154). This can be taken as
the baseline for understanding of the dynamics of Indian middle classes in
India since Independence.
In a recent edited book, Sanjay Joshi (2010) has raised the question
of whether a “middle class” was formed in the colonial era, or if it existed
before colonial rule. It is generally perceived that colonial rule created condi-
tions for the emergence of the middle class. But what was the precise nature
of the middle class? What were the structural dynamics of colonial rule that
facilitated its emergence? What role did Indians play in fostering the iden-
tity of this group? These questions about the volume edited by Joshi were
brought up by Rajagopal (2010: 39–41) in a review of the book. It has been
opined that modernity and capitalism have created groups such as writers,
novelists, and intellectuals who could be considered as the middle class.
However, the British preferred not to use the word “middle” for India’s “cer-
tain number of leading, intelligent and patriotic” people (Markovits, 2008).
During British rule, Aurobindo Ghose used the word for the first time in
1893, for a group of journalists, barristers, doctors, officials, graduates and
traders. Such a group was a “microscopic minority” of India’s large popula-
tion. Since then, the word “middle class” has been freely used by politicians,
intellectuals, and professional academics. As such, “middle class” is used
to indicate a variety of social experiences and standings. The dimensions
of caste, religion and gender are often added to this. Today, in India, it is
used to denote collectivities in the “public sphere”, such as professionals,
intellectuals, and middle and top ranking officers. Mostly, members of the
middle class aspire for upward mobility to attain higher status and leader-
ship roles. Are “middle classes” groups of “middlemen”, mediating between
different sections of society? Maybe such a situation existed during the colo-
nial era, but today, Rajagopal (op.cit.: 41) observers: “The catchall category
of the middle class then consists of a motley crowd-traditional and western-
ized intellectuals, salaried government employees, professionals, merchants,
traders, students, educated unemployed, and so forth”.
The Middle Classes in Post-Independence India

Based on data from the 1951 census, Bettelheim (1968: 84–105) has ana-
lyzed the proletariat and petty bourgeoisie. He observes that it is difficult
to decide exactly which social group(s) constitute(s) the “middle class(es)”

in India. Generally two categories of people are included under the term
“middle classes”: (1) business and office workers, and civil servants; and
(2) the petty bourgeoisie, specifically small tradesmen, small industrialists,
and craftsmen employing a few wage-earners, and “independent workers”
(doctors, lawyers, etc.) (ibid.: 88). This is not a strictly satisfactory defini-
tion, because it consists of two distinct social categories. Bettelheim (ibid.:
89) observes that the non-agricultural middle classes contain about one-
fifth of the non-agricultural population, whereas the working class contains
about one-seventh or one-eighth. The rest of the non-agricultural popu-
lation — about three-fifths — consists of social groups doing traditional
non-agricultural work: craftsmen and small shopkeepers.
Since our independence six decades ago, the structure of the middle
classes has been changing rapidly vis-à-vis socio-political and economic
changes in Indian society. The middle classes have changed in terms of
their size, role, and functions mainly due to the nature and character of the
Indian state (Sharma, 2007b: 246–251). Shah (1998: 149–183) reports that
the middle class has grown in size disproportionately with economic growth
in Gujarat (a province in India). We can safely say that the expansion of
the middle classes has no one-to-one correspondence with economic growth.
The Indian state, after the end of British rule, in its new avatar, through
new bureaucratic, professional, and educational institutions, created vast
new middle classes. In the newly created middle classes, members were
drawn from among the upper and the middle castes, and also from the
lower castes as per the provisions of the constitution of India. Since the
middle classes are a product of both capitalist development and the state,
a conflict would exist between the entrenched middle classes and the lower
classes aspiring for the status of middle class by having access to lucrative
white-collar jobs.
Caste, religion, language, networks, income, occupational background,
education, family background, etc., determine elite formation in India
(Navalkha, 1989). It has been reported that select social positions are
usually taken by persons from select social strata. Higher education is
still under the grip of the upper castes (select groups), and they con-
trol the positions of prestige, power and responsibility. For example, edu-
cation is today more of a status stabilizer than an invader on status-
rigidities. Jayaram (1977) reports that within the four most prestigious
institutions in Bangalore, 60% of its members are Brahmins, 34% are Lin-
gayats and Vokkaliga, and only 4% are lower caste students. Navalkha’s
384 K. L. Sharma
findings (op. cit.) are quite revealing. 81.3% of Hindu respondents hailed
from the upper castes (Brahmin, Kayastha, Vaishya, and Kshatriya), 6.8%
from the higher cultivating and other intermediate castes, and only 4.6%
from lower castes. Furthermore, 86.5% of the respondents were of urban
origin, 89.3% were educated in modern-educational institutions, and 79%
belonged to the most advantaged stratum of society. A couple of stud-
ies (Pranjape, 1983: 1474–1475; Baxi, 1982; Gandhi, 1982; Lal, 1988: 337–
402; Sharma, 1984; 1988; Singh, 2005: 337–351) indicate the dominance of
the upper castes in the legal profession, and stratification among lawyers
and relations between lawyers, judges, munshis (assistants), touts, and
clients. A couple of studies of industrialists, technocrats and managers
(Lal, 1988) and academicians (Bhoite, 1987; Khanna, 1988) also corrob-
orate the nexus between social structure and the formation of the middle
class.
Despite a rapid expansion of the middle classes, they do not themselves
produce any material values (Rudra, 1989: 142–150). They depend for their
economic gain on the largesse of the other two classes, as well as the state.
Middle classes are a highly differentiated lot. On the upper end, they are
close to the bourgeoisie/capitalists, and on the lower end, they are akin
to the working classes. Andre Beteile (1989: 151–55) has doubts about
the intelligentia as a ruling class. Thus, there is a marked heterogeneity
among the middle classes. They are neither rulers nor producers (Sharma,
1997: 94–99). Middle-class consciousness is reflected in its actions by way of
increased salaries, higher positions, residences in bigger urban centers, etc.
The members of the middle classes who are in government and the public
sector seek higher status through promotions and choice placements, and
those who are in corporate or private sectors often do so by seeking new
jobs in quick succession both in India and abroad.
Paradigm shifts in India’s economy, polity, and society have correspond-
ingly transformed the structure of the middle classes. The Indian constitu-
tion, Five Year Plans, development programs, panchayati raj institutions,
globalization, etc., would require educated men and women, profession-
als, ministerial staff, and social workers in large numbers, to facilitate the
execution of the state policies. From 1950 up to 1969, Five Year Plans
and the processes of change and development were the wellspring of the
new middle classes and of the transformation of the middle classes of the
pre-1950 period. With the introduction of the nationalization of banks in
1969, and the expansion of higher education, professions, migration and
mobility, a new middle class emerged in the post-1970 period. A further
transformation and expansion of the middle class can be seen from the
1990s onwards, marking the coming of globalization. Education in engineer-
ing and management has achieved new heights in the past two decades. We
can see today again the transformation of the middle classes in the post-
globalization era.
Thus, in the beginning, after independence, the ideology of development
helped in the creation of a significant middle class. After the slackening of
this ideology the new middle class emerged with different interests and
desires (Deshpande, 1997: 294–318). The post-1990s new middle class can
be characterized by transnationally dominant ideologies of globalization and
structural adjustment. This has further led to the growth and differentiation
of the Indian middle class.
Reservations for the Other Backward Classes (OBCs) category in 1993
and the initiation of globalization in 1991–1992 together have considerably
changed the structure of India’s middle classes. On the one hand, the upper
castes were denied jobs, due to the implementation of 27% jobs for OBCs as
per the Mandal Commission recommendations; however, on the other hand,
globalization continued to favor them substantially in getting jobs in India
and abroad in the corporate sector (with fat salaries and perks). Today,
the Indian middle class has created a global space for itself. Its members
(professionals, namely, engineers, scientists, and managers) are no longer
tied to government jobs. However, such a new-middle class is not close to
the seat of power. The nexus between the upper castes and government
jobs has also become considerably weak. Kochhar (2004: 20) calls such a
class as “denationalized middle class” (DMC).
Due to complex dynamics of the middle class in terms of its var-
ied growth and differentiation, it becomes difficult to ascertain the exact
nature and contents of the class in everyday life. It is often referred to in a
very vague sense. All of those who are not visibly poor, and not conspicu-
ously rich or well-off, are referred as the middle classes. Deshpande (2003:
125–150) considers that the “middle class” is more of a symbolic term than
a factual description. We may then ask: (1) Can we conceptualize “middle
class” based on per capita consumption? (2) What about the assets pos-
sessed by the people? Deshpande considers consumerism too narrow a basis
to capture the critical multidimensional role of the middle class today, and
makes the following useful observations:
• The middle class is the class of the people that articulates the hegemony
of the ruling bloc by way of the language of legitimation and mediation
between the bloc and other classes.
386 K. L. Sharma
• The middle class is the most dependent on “cultural capital” and on

the mechanisms of its reproduction.
• The middle class specializes in the production and dissemination of
ideologies.
I have stated earlier (Sharma, 2007: op. cit.) that despite its ideologi-
cal base and moorings, the consumerist thrust of the present middle class
cannot be overlooked. Varma (1998: 170–214) talks of three middle classes
based on a survey by the National Council of Applied Economic Research
(NCAER) in 1994. They are:
• The consuming class (150 million people).

• The climbers (275 million).
• The aspirants (27 million).
Besides these middle classes, six million people are very rich at the
top. However, Varma observes that the middle class in India should be
seen in terms of its historicity and relations with higher and lower classes.
The middle class in India is a socio-economic and political phenomenon.
It is also a social-status entity. It is quite a systemic construction and an
action phenomenon. The middle classes were even referred to, idiomati-
cally, as “new status groups” or “new castes” (Beteille, 1969), because of
secular/new occupations adopted by members of different castes.
Varma (op. cit.) provides some details on the classes’ annual incomes
and possession such as cars, televisions, video recorders or players, wash-
ing machines, geysers, fans, etc. All of these exist in far lower numbers in
India households as compared to South Korea, Mexico, China, Thailand,
Malaysia, etc. He points out that only 81% of middle-income households
(16% of the total population) and 59% of low-middle households (33% of the
population) own a fan. Even with regard to bicycles and watches, Indians
have much less compared to China.
Varma says that despite this situation, the middle class exists in India,
but it is the middle class of a poor country. The middle class is changing fast
both in terms of its size and magnitude. Varma asks the middle class for
its own self-introspection and for a serious thought for good of the country.
Like Varma, Gupta (2007: 11–31) uses the expression “The Shallow Middle
Class” to refer to it being based solely on consumption. Even with this
consideration, the Indian middle is far behind the USA, Canada, etc. Based
on the data compiled by Natrajan (1998: 163), Business Today (1996: 86),
and the NCAER Survey of 1996, Gupta paints a gloomy picture of India’s
middle class. For example, in America, there exist 214 cars per 1,000 people,
251 refrigerators, 289 washing machines, and 365 color TVs. In India, the
figures are simply 3.1, 7.7, 1.5, and 7.1, respectively. Gupta states that the
Indian middle class really refers to the better-off people who call themselves
middle class. The Indian middle class is different from the Western middle
class as the latter has a wider social base in terms of its social relations
with other classes and with society as a whole. In India the middle class
is dependent on the poor to keep itself afloat and thrives on connections,
family and patronage. Allegiance and privilege are considered the cherished
values by the Indian middle class.
Dipankar Gupta calls the members of the Indian middle class “miscast
modernizers” (op. cit.: 19–21). He writes: “To be rich in Mumbai or Delhi,
therefore, is not the same as being rich in New York. A rich lifestyle can
be pursued in India primarily because cheap labor is still plentiful in this
country. Thus to maintain an affluent lifestyle, the 1.6 million ‘high income’
urban Indians would require the support of several million poor people. In
fact, neither the Indian nor the Western middle class is actually in the
middle. In India, it is actually the better-off who call themselves middle
class. But in the West, it practically includes the entire population. The
Western middle class has such a wide social base that it leaves little room
for the politics of patronage and privilege to flourish” (op. cit.: 19). In
the West, then, consumption is not the determinant of being middle class.
This is more seen in terms of interpersonal interaction, supported by the
values of democracy and individualism. The Indian middle class thrives on
connections, family and patronage (privilege).
In contrast, Das (2000: 279–290) perceptively examines the rise of the
middle class in contemporary India, while disapproving of the role of the old
middle class, which he considers mainly the bureaucracy. He writes: “The
most striking feature of contemporary India is the rise of a confident new
middle class. It is full of energy and drive and it is making things happen.
That it goes about it in an uninhibited, pragmatic, and a moral fashion is
true. It is different from the old bourgeoisie, which was tolerant, secular,
and ambiguous. The new class is street-smart. It has had to fight to rise
from the bottom, and it has learnt to maneuver the system. It is easy to
despair over its vulgarity, its new rich mentality. But whether India can
deliver the goods depends a great deal on it” (op. cit.: 280).
The new middle class is based on free entry, education, and capability.
However, a new class based on money alone, without social responsibil-
ity, has also emerged. The middle class is growing quite rapidly, and by
388 K. L. Sharma
2020 half of the population may fall in this category. As such, the middle
class would have a considerable impact on Indian politics, markets, and
society as Gurcharan Das has envisioned. Indian Institutes of Technology
(IITs), Indian Institute of Management (IIMs) and some universities like
Delhi University and Jawaharlal Nehru University have contributed to the
formation of the new middle class. However, according to Das, the middle
class today is more of a consumption-based class. He provides possession
of “goods” as the main basis, and he estimated that by 2007, 450 million
people were in this category.
The class character of Indian society is changing fast. As we have dis-
cussed in the chapter on entrepreneurship, traditional business communities
included the Marwaris (Jains and Banias), Chettiars, Parsis, etc. However,
today some of the agricultural castes, such as Jats, Yadvs, Marathas, Vel-
lalas, Reddys, Nadars, and Ezhavas have also taken up business enterprises.
Brahmins and Muslims exist in the software business, such as in Infosys and
WIPRO respectively. Guha (2008: 700–701) observes that besides change
in the social base of the capitalist class, the surge of economic growth has
led to an expansion of the Indian middle class. The middle class is located
between a small elite and a large impoverished mass. At 1998–1999 prices,
the households having an annual income in excess of Rs. 70,000 formed
the middle class, with a strength of 25 million Indians. Those who earned
less than Rs. 140,000 a year consisted of only 55 million people. The new
middle class is the target of new products and services, such as cable televi-
sion, mobile phones, refrigerators, automobiles, designer clothes, sunglasses,
whisky, cigarettes, etc. Consumption rather than savings is the new credo
of the middle class.
Misra (op. cit.) argued that the Indian middle classes were nationalist
in its orientation and contributed much to the freedom struggle. Misra
was also of the view that the middle classes divided India. Fernandes
(2006: XXIII), agreeing with Misra’s thesis, also observes that the new
middle class is marked by its social and cultural visibility, but its political
role is often invisible. Fernandes hints at its low participation in elections
(voting). Fernandes’ main points are in regards to the historical roots of the
new middle class, framing the liberalizing middle class, social capital, labor
market restructuring, new economy of India, state power, space and civic
life, and liberalization, democracy and middle-class politics. The visibility
of the new middle class is not only in the public sector, but all across civil
society. Fernandes has given several examples of the presence of the new
middle class in both sectors of Indian society. In both situations the middle
classes are agents, mediators, negotiators, interpreters, and links between

the people and political leaders.
Caste and Middle Classes

The presence of the upper castes in the new middle class has declined
considerably due to the gains earned by the middle and the lower castes
after independence. The reservation policy for the SCs and STs from 1950
onwards, and particularly for the OBCs since 1993, has facilitated a con-
siderable space in the civil services and educational institutions for these
“backward” sections. The English-speaking upper castes have been reduced
in coveted government jobs. Globalization–liberalization have, however,
more than compensated for the loss suffered by the upper castes, while
the middle classes have found jobs with much more income in the corpo-
rate sector in both India and abroad. The intermediate castes are lagging
behind the upper castes in this new segment of the Indian middle class.
Thus, we need to understand the new middle class both in terms of
indigenous factors, such as caste, language, rural–urban background, region,
religion, etc., and the new factors, such as the policy of the state, global-
ization, liberalization, etc.
In a recent study, Jodhka (2010: 41–48) finds that dalits have taken
up business as self-employed persons in Haryana and Uttar Pradesh. This
indicates that the scheduled castes are also joining the ranks of the middle
classes in the private sector. They are now self-employed as petty shop-
keepers, hotel-owners, workshop-owners, dealers, agents, contractors, skilled
service-providers, doctors, etc. Despite hardships and impediments, the dal-
its have taken up independent entrepreneurship.
Shah (1998: 250–254) writes: “Members of the SCs/STs, artisan castes
and other backward castes have also joined the middle class, though their
proportion is small.” A brief review of “middle classes and professional
elites” is provided by K.L. Sharma (1997: 94–99), in which he analyses the
genesis of the middle class and professional elites. A couple of empirical
studies are mentioned by Sharma relating to higher education, the legal
profession, technocrats, scientists, managers, doctors, university teachers
and the intelligentsia.
As we discussed earlier, the upper castes constituted the middle classes
in Indian society immediately after independence. However, due to vari-
ous contradictions and conflicts of interests between the better-off and the
deprived, higher and lower castes, rural and urban people, a new middle
390 K. L. Sharma
class has emerged in both rural and urban India. The middle castes and a
select section of the lower castes are transforming themselves from lower-
caste status to middle-class status. Some sections of society have emerged as
“demand groups” (Rudolph and Rudolph, 1987) and look more like “mid-
dle classes”. Middle classes are far more conspicuously visible in indus-
try, bureaucracy, politics, and education, in both the public and private
spheres.
This is not to deny the fact that caste resilience has facilitated social
mobility easier and faster, particularly after India’s independence. India has
a substantial middle class in terms of its presence in contemporary society
in the economy and polity. Singh (1993: 11–21) states that Indian middle
classes are a very articulate, active, and powerful segment. The expansion of
the market and trade (since the 1990s), information knowledge and media
exposure of the people, expansion of services, etc., have created a strong
new middle class in India. Singh reports the following points in relation to
the role of the new middle classes:
• Structural cleavages in its composition.

• A lack of harmony with the national ideology/social change.
• Dominance of the upper and middle castes among the middle classes.
• Creation of cleavages between the upper middle and the lower caste
groups within the reserved categories.
Singh also states that the middle classes tend to share a mindset, which
decries values of liberalism, social justice, and principles of sharing or sacri-
fice. The Indian middle class is rapidly taking to consumerism and short-run
utilization values. The middle class in India is characterized by a situa-
tion of double-crisis, namely, of success and of failure. In the first instance,
it strengthens the market, trade, media and skilled manpower. But this
is negated by its ideological moorings and narrow social base. Fernandes
(op. cit.) has emphasized that under liberalization, there has been a hege-
monic rise of the new middle class in India. At the same time, however,
she also mentions that there is great heterogeneity within the middle class,
and therefore, its interests are disjunctive rather than cohesive, and there
is something like class contestation between the upper and middle classes
(upper castes) who has been benefited from privatization and economic lib-
eralization. The middle classes of the unionized state sector have not ben-
efited from liberalization. Differentiation of the Indian middle class needs
to be seen simultaneously from both sides, namely, according to external
factors such as the state, neoliberal economic policies, and also from the
perspective of internal factors such as caste, language, region, religion, and
rural/urban backdrop.
It is generally perceived that a new middle class has emerged in the
post-globalization period in India. As Misra (op. cit.) considered shaping
of the middle class by Indian nationalism, and freedom and division were
both created by the middle class. Fernandes (2006), in a recent edited work,
in several contributions sees the middle class as the subject and agent of
nationalism and explores its place in contemporary politics. She observes:
“The new middle class is marked by its social and cultural visibility, yet
its political role is often invisible. Meanwhile, its claims tend to be coded
in terms of representative citizenship, yet in practice are often defined by
exclusionary social and political boundaries” (2006: xxiii). Fernandes finds
the role of the middle classes to be a crucial factor in today’s electoral and
cultural politics, but this is undermined by its low voter turnout. Despite
this, the middle class can play a significant role in shaping policy agen-
das and gaining access to state power through the cultural, socio-spatial,
discursive and organizational practices within civil society (op. cit.: 193).
From a cultural point of view, the middle class has led and mobilized people
against price-rises for strikes, urban renewal programs, etc. Fernandes talks
more of middle class subjectivity and practices. The book focuses on the
following points:
• The historical roots of the new middle class.

• Framing the liberalizing middle class.
• Social capital, labor market restructuring, and India’s new economy.
• State power, urban space and civic life.
• Liberalization, democracy and middle class politics.
The reservation policy, income level, status of jobs, liberalization, aspi-

rations for professional jobs, and consumerism are the main determinants
of the middle class. But there is no monolithic or undifferentiated middle
class. There are upper-middle classes, middle-middle classes, and the lower-
middle classes. Caste lies behind the apparent face of the middle class. The
middle class is neither detached from the state nor is completely dependent
upon it.
Today, generally speaking, people are more conscious of their status in
terms of income, education, nature of job, etc., than their caste, ethnicity,
religion and rural–urban background. People have been identified in class
392 K. L. Sharma
terms, such as salaried, business, manual labor, and agriculturists. Each of

these categories has been further divided into several sub-categories. Impor-
tant changes have occurred in India’s class structure and all groups have
been benefited from these changes and from new opportunities for social
advancement.
A new middle class has emerged in rural India, comprising those who
have been benefited by land reforms, the green revolution, education, white-
collar jobs, non-farm occupations and the development programs of the gov-
ernment. The emergence of new opportunity structures and capabilities of
some families and individuals to extract benefits from such a situation have
created a new middle class in rural India as well. These beneficiary families
and individuals are not necessarily the middle castes. On the contrary, they
may be from among the upper castes to a great extent, and only a minority
of them may be from middle and lower castes, minorities and the scheduled
tribes (Sharma, 2007: 246–251). As such, correspondence between caste and
class remains quite unrealistic. Based on several studies and analyses, we
can say that the upper castes constitute the middle classes in Indian soci-
ety. Though the upper castes have become weak socially and ritually, they
have either retained their superior economic standing or have regained their
lost economic status by having access to new economic opportunities in the
post-reservation and post-globalization era. “New status groups” are, in
fact, new middle classes to a considerable extent.
Concluding Remarks
Today, “class” is viewed as a real phenomenon. It is no more so much
a hidden fact behind one’s caste, kinship, religious, or rural–urban back-
ground. It is seen across the caste hierarchy and in varied contexts and
situations. Class polarization has become a recognized and accepted phe-
nomenon. Education and occupation have added more class polarization as
both are indicators of social status and income. Middle class status is a
vague notion, but it is aspired by all those lower classes who wish to shed
the label working class. The middle class in India has expanded enormously,
particularly in the public sector since independence up to 1991–1992, and
it is still growing rapidly. But in the last two decades, the middle class in
the corporate and private sectors has also begun to expand rapidly for the
reasons described in this chapter. Globalization has created a new “space”,
which is being taken by the entrenched middle class. The aspiring class is
also seen as being in a race with the established middle class.
Beteille (2007: 945–952), while comparing classes and communities,

acknowledges the significance of a class approach particularly due to the
increased role of occupation and education in the formation of a new middle
class. The presence of the middle class in castes and ethnic groups is also
indicative of the significance of class not only as an economic phenomenon,
but also as a social entity. The anti-reservation agitations in 1991–1992
against the Mandal Commission and earlier in Gujarat were led by a mid-
dle class drawn from the upper castes whose prospects of securing govern-
ment jobs were adversely affected by the reservation policy (Shah, 1998:
op. cit.). India’s middle class is volatile, ambitious, and also a nerve cen-
tre of state and society. India has middle classes in business, agriculture,
professions, and administration (Stern, 2003). All these classes aspire to
reach higher levels. For example, the agrarian middle classes aspire to join
the ranks of the urban middle classes by having education and white-collar
jobs in cities. This applies to all other classes as well in their respective
domains. The business-minded middle classes dream of having the status
of bourgeoisie-capitalists and so on.

20
The Heterogeneous Composition
and Multiple Identities of China’s
Middle Class
Li Chunling
Since the initiation of China’s reform and opening up campaign, along-

side the stable development of China’s economy, a social group called the
“middle class” has emerged. In the last ten years, due to the rapid eco-
nomic development and steady progression of urbanization and significant
improvements to people’s material and cultural level, the emergence of a
growing “middle class” in Chinese society has been increasingly clear. Based
on available research, this chapter aims to give a brief outline of the basic
characteristics of China’s middle class. The data used in this chapter comes
from multiple sources.1
1 (1)Census data collected by National Bureau of Statistics of China (1982; 1990; 2000)
and 1% population sampling survey data (2005); (2) China’s urban family income sur-
veys collected by Institute of Economics, CASS (1988; 1995; 2002), sample sizes being
31,827, 21,696, and 20,632 respectively. For details about the survey methods and basic
information concerning the data collected, please refer to Gustafsson et al. (2008: 337);
(3) Social structure change data collected by the Institute of Sociology, CASS (2001)
and Chinese General Social Survey (CGSS) 2006, CASS, sample sizes being 6,193 and
7,061 respectively. For details about the survey methods and basic information regarding
the data collected, please refer to Li Chunling (2005: 17–18) and (Peilin et al., 2008);
(4) Beijing Middle Class Survey (2007), sample size being 450; a sampling survey of
450 families randomly chosen in 15 moderate-to-upscale housing communities in seven
districts of Beijing; (5) about 500 interviews.
395
396 Li Chunling
Controversial Definitions of “Middle Class”

Who are defined as the “middle class”? What is the exact definition of
“middle class”? These are rather controversial questions, as multiple defi-
nitions of “middle class” are prevalent in Chinese society, some of which are
contradictory. People normally adopt four standards when defining China’s
“middle class”. The first is income, which implies that the middle class have
relatively high and stable incomes; the second is the type of job — the mid-
dle class consists of those who work in professional/technical or managerial
positions; the third is educational background — the middle class consists
of those who have received higher education; and the fourth is consumption
level and lifestyle — the middle class people are able to sustain a relatively
high level of consumption and lead fairly comfortable lives. While there
are some common traits shared by these standards, an agreement has yet
to be reached as which standard is the determining one. Currently there
are at least three prevailing definitions of “middle class”: the stereotypical
image of the “middle class” as portrayed by public opinion, the definition of
“middle class” as proposed by the government, and the concept of “middle
class” put forward by sociologists.
The stereotypical image of the “middle class”

as portrayed by public opinion
The public media and advertisers also propagate a stereotypical image of
the middle class based on consumption habits and lifestyle, and so consump-
tion level becomes another standard for defining the middle class. Accord-
ing to this stereotype, the middle class tends to live in large apartments in
moderate-to-upscale housing communities, drive expensive or even luxuri-
ous cars, wear designer clothes, and take frequent vacations. As a result of
the discussion and publicity regarding the middle class as described above,
in the public consciousness it is generally considered that they are high-
income, high-consumption entrepreneurs, professional managers, and elite
intellectuals. The middle class envisaged is, however, vastly different from
the concept put forward by sociologists, who maintain that these people
constitute only a small portion of the “upper middle class”. The popula-
tion of the middle class that conforms to the stereotypical image formed
by public opinion is only a fraction of the total population of the country,
constituting no more than 10%. However, since this stereotype of the mid-
dle class is widely prevalent in society, in defining middle class, sociologists
must take this public image into account.
The Heterogeneous Composition and Multiple Identities of China’s Middle Class 397
The definition of the “middle class” as proposed

by the government
In defining the middle class, the government usually adopts the income
standard. In official documents, the middle class is referred often as the
“middle income group”, a concept invariably associated with the govern-
ment’s policy objectives. At the First Plenary Session of the 16th Central
Congress in November 2002, General Secretary Jiang Zemin proposed the
policy goal of “expanding the middle income group”, which was considered
as a signal that the government was resolved to promote the development
of the country’s middle class. Adopting the income standard, some official
theorists and government departments proposed a series of definitions for
the middle class on the basis of which they further estimated their popula-
tion and size. However, there still remains a hard question in defining the
middle class, i.e., what should be the group’s threshold income? Proposi-
tions put forward by experts and scholars vary greatly. Some suggest that
those who earn an annual salary of US$5,000 and above should be consid-
ered as the “middle class”, while others prefer a threshold of US$30,000 and
above. Due to the vast gap between rural and urban incomes, it is rather
difficult to set a unified income standard for the middle class. Therefore,
the income level has not yet been accepted as a unified standard.
The concept of the middle class as put forward

by sociologists
Sociologists believe that only a small proportion of the “upper middle class”
conform to the image of “middle class” as portrayed in the public media,
and most of the members of the “middle class” do not earn and spend that
much. On the other hand, they also contend that definition of the middle
class purely based on income deviates from the true essence of the concept.
“Middle income group” covers all kinds of social groups, which is hardly
likely to develop a common class identification, class consciousness and class
culture.
Sociologists normally define the middle class on the basis of occupation
and employment status. Following the tradition of Neo-Marxist and Neo-
Weberian class theory, they emphasize the importance of distinguishing
between the employer and the employee, the manual worker and the mental
worker. The difference between white-collar workers and blue-collar workers
is the dividing line between the middle class and the working class, and the
distinction between the middle class and upper class lies in whether or not
398 Li Chunling
one owns the production materials. In addition, Chinese sociologists tend

to argue that modern Chinese society is distinct from the Western societies
in that the state controls the most important and voluminous resources,
and therefore the power arising out of the positions in the government is an
important factor in determining class position. Owners of small-to-medium-
sized enterprises, the self-employed and small business owners, and regular
white-collar employees constitute the middle class, with the self-employed
and small business owners considered the “old middle class” and white-
collar employees referred to as the “new middle class”.
The sociologists’ definition is also questionable in that it suggests that
almost all white-collar employees are middle class, which leads to the
China’s middle class accounts for 25%–30% of the country’s total popu-
lation, an estimate rarely believed by critical scholars. Furthermore, the
majority of those considered middle class by sociologists do not see them-
selves as middle class, for they believe that their socio-economic status
is far below what should be considered middle class. In order to solve this
problem, sociologists incorporate the standard of occupational classification
and employment status, as well as some other indicators such as education,
income and consumption level. Due to the fact that different indicators
are adopted, sociologists’ estimates of the size of Middle Class also vary
greatly.
The Composition and Size of the Middle Class

Categorizing the middle class
Based on Chinese sociologists’ perceptions of the middle class as described
above and Goldthorpe’s Neo-Weberian class categories, the author hereby
proposes six class categories for which the Chinese middle class. The six
categories are: (1) entrepreneurs (business owners who employ more than
20 people); (2) the new middle class (professional/technical and managerial
personnel); (3) the old middle class (small employers who employ less than
20 people and small business owners who do not employ anyone); (4) the
marginal middle class (regular office workers and non-manual service work-
ers); (5) the working class (technicians, supervisors, skilled manual work-
ers, semi-skilled and non-skilled manual workers); (6) agricultural workers.
Please refer to Table 20.1 for details.
This six class scheme is based on occupational classification combined
with the evaluation of employment status (whether one is the employer
or the employee). This kind of categorization entails two concepts of the
Table 20.1. Goldthorpe’s Class Categories Juxtaposed with China Six Class
Categories.
Goldthorpe’s class categories Six class categories of Chinese society
I Higher-grade professionals Entrepreneurs class (employing

II Lower-grade professionals 20 people or more)
New middle class
IVa Small proprietors, artisans, Old middle class
etc., with employees
IVb Small proprietors, artisans,
etc., without employees
IIIa Regular office workers Marginal middle class
IIIb Non-manual business
and service workers
V Technicians and supervisors Working class
VIa Skilled manual workers
VIIa Semi-skilled and unskilled
manual workers
IVc Farmers Agricultural workers
VIIb Agricultural workers
middle class, one being the broadly-defined middle class, i.e., the concept of
“big middle class” that includes entrepreneurs, the new middle class, and
the old middle class; and the other being the narrowly-defined middle class,
i.e., the concept of a “core middle class” that refers exclusively to the new
middle class (also known as modern middle class). In addition, there was
also the emergence of a marginal group between the middle class and the
working class, i.e., the marginal middle class, which boasts certain middle-
class characteristics, such as emulating the middle class in terms of values,
attitudes and lifestyles, but also bears a certain resemblance to the working
class (they are more similar to the working class in terms of income and
living standard). This kind of middle-class categorization is better suited
for the purpose of conducting middle-class analysis in a rapidly developing
society such as China.2
2 Inmost of the developed countries, the middle class has become a relatively stable
social group, consisting of an overwhelming majority of the social members, namely:
those who are neither capitalists (who only make up an extremely small proportion)
nor blue-collar workers (whose proportion has also dropped to a rather low level) can
be counted as the middle class; the proportion of the old middle class declines the fastest,
which no longer constitutes a relatively independent group among the middle class. And
the differences between the new middle class (medium-to-high-level white-collar workers)
and the marginal middle class (lower-level white-collar workers) are not very pronounced.
But in Chinese society, the middle class is still in its infancy, with the new middle class,
400 Li Chunling
According to the class categorization in other societies, the entrepre-

neurial or capitalist is an upper class that lies above the middle class.
In accordance with sociologists’ discourse on the social class structure of
capitalism, traditional capitalist society mainly comprises two classes, i.e.,
the capitalist class and the working class. In modern capitalist society,
however, a middle class between these two original classeses has emerged,
giving rise to a three-part class structure that consists of the capitalist
class, the middle class, and the working class. In modern Chinese society,
the class of business owners has been considered an important constituent
of the middle class. This is because the class of the business owners is a
newborn calss. Along with the emergence of the old middle class (individual
commercial and industrial households), they have led to profound changes
in the class structure. More importantly, the emergence of the class of the
business owners is widely seen as a symbol of the middle class’s arrival.
In the institutional environment of the current Chinese society, the class
of the business owners’ is by no means the most advantageously-positioned
class holding the most resources. Compared with them high-ranking CPC
and governmental officials and senior executives at large SOEs are better
positioned and have far more resources at their disposal. Therefore, from
this perspective, we may conclude that the class of the business owners is
not an upper class that lies above the middle class, but rather a part of the
middle class, with only a small number of business owners belonging to the
upper class.
The different social groups within the middle class

According to the above-listed categories, the middle class defined here con-
tains three groups: the class of the business owners, the new middle class,
and the old middle class. In addition, the marginal middle class may also
be considered as a subgroup. The four groups boast different characteris-
tics in terms of their economic conditions, social status and socio-political
influence. The new middle class can be further divided into two groups:
the new middle class in the public sector and the new middle class in the
non-public sector. Based on available research results, we can give a brief
description of the characteristics of the four groups within the middle class.
the old middle class and the marginal middle class differing from one another in terms
of numerous class characteristics (such as economic living conditions, lifestyles, values,
and socio-political attitudes).
The class of the business owners consists of both active economic oper-
ators and political affiliates. They earn rather high incomes and are fond of
spending money on luxury items as status symbols, especially luxury cars
and expensive villas. Although this class makes up only a small proportion
of the middle class (refer to the data furnished below), they lead the way
of middle class in the field of income and consumption, and to some extent
are seen as the “face” of the middle class. Business owners normally main-
tain close relationships with the government and its officials, and through
certain means even influence the government with regards to economic pol-
icymaking especially at the local level, but their influence in the political
sphere has been greatly restrained. Generally speaking, the class of the
business owners tends to pledge political allegiance to the government in
exchange for economic favors.
The new middle class also has close ties to the government. The major-
ity of the new middle class members work in government departments,
state-owned enterprises, and public service units administered by the gov-
ernment (refer to the data in Table 20.3). As the government provides the
middle class job securities, growing incomes and numerous kinds of ben-
efits, their socio-economic situations hinge, to a large extent, on a strong
and stable government. In the meantime, they have more channels to influ-
ence the government with regards to policymaking and safeguarding their
own interests. Some other members of the new middle class work for pri-
vate enterprises and foreign-funded enterprises, whose incomes are usually
much higher than those working in the public sector and constitute a highly
influential consumer group. They are also the “face” of the middle class in
terms of their consumption habits and lifestyle. On the other hand, they
wield relatively weak influence on the political sphere, with most of them
indifferent to politics. Compared with the new middle class members who
work in the public sector, they have relatively fewer channels and means
through which to exert their influence on the policymaking process.
In comparison to other segments of the middle class, the old middle
class (i.e., individual industrial and commercial households) enjoys a rel-
atively lower social status and may even be exposed to a certain amount
of discrimination. Most members of the old middle class earn medium-to-
high incomes, but their economic status is far from stable and they do not
enjoy much social benefit and economic security. In terms of government
policymaking, the old middle class is always the neglected group, which
rarely has the opportunity and means to have its voice heard. Some gov-
ernment policies such as market rectification and old city reconstruction
402 Li Chunling
have partially harmed the interests of the old middle class, and therefore
they harbor grievances against the departments that enforce those polices
(such as the administration for Industry and Commerce, taxation author-
ities, and sanitary inspection authorities). Among all of the groups of the
middle class, the old middle class is particularly massive (refer to data in
Table 20.2), but it is rather difficult for them to unite in any concerted
effort.
The core of the marginal middle class is comprised of young people
born in the late 1970s and 1980s who have received medium-to-high levels
of education and work in lower-level white-collar jobs, collectively referred
to as “minor white-collar workers”. One prominent characteristic they boast
is that they have the capability to make concerted efforts and to mobilize
the media and public opinion. As a generation brought up in the inter-
net age, they tend to spend more time online, and through the internet
and other means of communication unique to the information age they
extensively exchange their sentiments, views, and information, and can
rapidly create cultural trends, achieve social mobilization and even take
concerted group actions. They enjoy expressing their view on the internet
and the media, and can always successfully attract the public’s attention.
The “minor white-collar workers” usually face intense job competition, and
as jobs with state-owned employers that can provide stability, generous ben-
efits, and job security become fewer, they are forced to settle for low-wage
jobs that lack such security. They look keenly forward to enjoying higher
living standards in terms of income and consumption — but their low pay
and the ever-rising housing costs make it hard for most of them to realize
this dream, which leads to a certain “middle class anxiety”, which, however,
also serves as a perverse incentive for them to work harder.
The size and growth rate of the middle class

According to the middle class categorization presented earlier, and based
on census data and the 1% Population Sampling Survey Data as well as
other statistical data and nationwide sampling survey data collected over
the years, the author estimated the growth of the urban middle class during
various periods. The results are shown in Table 20.2.3
3 Due to the fact that rural population makes up a large proportion of China’s total
population, if we pool the samples from the rural areas and cities together, we will find
the proportion of agricultural workers is rather high with the proportion of the new
middle class relatively lower. In addition, since the middle class mainly exists in cities,
Table 20.2. Proportion (%) of Urban Middle Class in 16–60 Years Old Urban
Population, 1982–2006.
Business New Old Marginal Working

Year owners class middle class middle class middle class class
1982 0.0 13.9 0.1 19.7 66.3

1988 0.1 17.2 3.2 23.8 55.7
1990 0.5 19.6 2.2 19.9 57.8
1995 0.6 22.1 5.5 26.6 45.2
2001 1.5 16.6 10.3 33.2 38.4
2002 1.1 23.6 11.1 29.1 35.1
2005 1.6 21.0 9.7 31.4 36.3
2006 0.6 18.8 19.6 25.4 35.7
Note: The 2001 and 2006 data are for towns (low proportion of the new middle class
and high proportion of the old middle class); other data are for cities.
The percentage for the five classes in the years 1982, 1990 and 2000 were
calculated on the basis of census data and the statistics of private business
owner and individual industrial and commercial households for each of the
three years in the survey. The 2005 figures were calculated on the basis
of the 1% population sampling survey (including information concerning
employment status), and the percentage for the five classes in the years
1988, 1995 and 2002 were calculated on the basis of data from nationwide
sampling surveys conducted by the income distribution research project of
the Institute of Economics, Chinese Academy of Social Sciences (CASS).
The percentage for 2001 and 2006 were calculated on the basis of the data
from two nationwide sampling surveys (social stratification research project
and CGSS) conducted by the Institute of Sociology, Chinese Academy of
Social Sciences. Though the calculations might not be so accurate due to
the fact that different categorization indexes were used for each group of
data, the trend of urban middle class growth has been sufficiently revealed.
During the 24-year stretch from 1982 to 2006, the urban middle class
grew by nearly ten percentage points, with the old middle class almost grow-
ing from scratch and achieving a growth of over ten percentage points. The
rapid growth and considerable scale of the old middle class is one prominent
characteristic of the development of China’s middle class. In most Western
countries, the growth of the new middle class always meant a sharp decline
in adopting Goldthope’s EAMC class categorization, this article chooses to exclude rural
samples (agricultural workers) and only compares and analyzes the five classes in cities.
404 Li Chunling
in the size of the old middle class. In Eastern Asian countries, the bur-
geoning of the new middle class has not led to any significant decline in
the size of the old middle class, which has remained stable throughout the
years. In China, the new middle class and the old middle class grew harmo-
niously side by side. In the meantime, the marginal middle class has also
grown significantly during the 24-year span, registering a ten percentage
point increase. The marginal middle class serves as the reserves for the new
middle class and the new middle class, whose growth also indicates that the
size of the middle class, will continue to grow. Accordingly, the proportion
of the working class in the total urban population will continue to drop.
If we use EAMC’s two concepts, i.e., the “big middle class” and the
“core middle class”, to estimate the size of China’s urban middle class, then
the “big middle class” (including the entrepreneurs’ class, the new middle
class and the old middle class) shall account for approximately 40% — or
35% if we exclude the elite of urban society (around 5%, they belong to the
upper class that lies above the middle class). The “core middle class” (new
middle class) then constitutes of roughly 20%–23% of the urban popula-
tion, or 15%–18% if we exclude the 5% upper-class elite. If we extend the
middle class categorization adopted in EAMC to the whole country, after
accounting for 50% of the rural population nationwide, the proportion of
the “big middle class” comes to 20%, with that of the “core middle class”
(new middle class) reaching approximately 8%–9%.
Characteristics of middle class composition

The middle class distribution by sector and profession
China’s middle class has arisen out of a process of violent institutional
change, i.e., the shift from a planned economy to a market economy. During
the planned economy era, almost all employees worked for the public sector.
In 1982, all members of the new middle class and marginal middle class
worked for the public sector, while the class of the business owners and the
old middle class were simply nonexistent (see Table 20.3). As reforms in the
economic sphere progressed, the class of the business owners and the old
middle class began to emerge in the private sector. In the meantime, the
members of the new middle class and marginal middle class also started to
migrate into the private sector, thus injecting new elements of the middle
class into the non-public sector. However, up till now most members of the
new middle class (62.2%) and marginal middle class (54.2%) have chosen
to remain in the public sector.
March 5, 2013
16:48
9in x 6in
Table 20.3. Urban Middle Class Composition by Economic Sector, Profession and Gender.
Distribution by sector(%) Distribution by profession (%)

Proportion
New middle class Marginal middle class New middle class of women (%)
Public Non-public Public Non-public Professional/technical Government Managerial New middle
sector sector sector sector personnel officials personnel class
1982 100.0 0.0 100.0 0.0 — — — —

1988 99.6 0.4 99.6 0.6 70.2 21.7 8.1 38.2
1995 99.1 0.9 98.2 1.8 63.7 12.3 23.9 39.9
2002 87.0 13.0 76.9 23.1 66.7 12.2 21.1 38.4
2006 62.2 37.8 54.2 45.8 71.2 10.3 18.5 38.8
b1344-ch20
406 Li Chunling
Professional/technical personnel, managerial personnel, and CPC/ gov-

ernment officials are the three major job categories the new middle class
mostly falls into. However, the proportion of those who work in these
jobs among the middle class has fluctuated during various periods (see
Table 20.3). Though fluctuating somewhat throughout the periods, the pro-
portion of the professional/technical personnel remains the highest among
the new middle class. The proportion of CPC/government officials has been
steadily dropping. The proportion of the managerial personnel hit rock
bottom in 1988, spiked nearly three times in 1996, then dropped slightly
thereafter. In the 1990s, the proportion of managerial personnel rapidly rose
among the new middle class due to an increase in the number of enterprises
and expansion of enterprises, and the emergence of a large number of town-
ship enterprises. In the late 1990s, many township enterprises and some
state-owned and collective enterprises went bankrupt, causing the pace of
growth in the number of managerial personnel to slow down.
Education level and age composition of the middle class

In the last decade, China’s secondary and higher education has been
growing rapidly, with people’s level of education profoundly improved.
Accordingly, that of the middle class has also been dramatically enhanced.
The average years of education received by the new middle class and
marginal middle class have been steadily increasing (see Table 20.4), grow-
ing by 4.5 and 5.1 years respectively during the 1988–2006 period. In the
meantime, the education level of the entrepreneurs class and old middle
class has also been enhanced. In 1988, the education level of these two
groups was rather low, with the average years of education received even
lower than those for the working class. During the 1988–2006 period, how-
ever, they grew by eight and 3.4 years, respectively. The average years of
education received by the business owners class rose most rapidly. In the
1980s and 1990s, the business owners class owned solid economic capital
but lacked cultural capital, and today it has grown into a class that boasts
both economic capital and cultural capital, with the average years of edu-
cation approximating those of the new middle class which boasts the most
cultural capital.
In terms of age, the middle class seems to be younger and younger
(see Table 20.4), especially the entrepreneurs class, the new middle class,
and the marginal middle class. This might be attributable to the fact
that the development of emerging industries provides young people with
Table 20.4. Education Level and Age Composition of Urban Middle Class.
Average years of
education Average age(years)
1988 1995 2002 2006 1988 1995 2002 2006
Entrepreneurs’ class 5.8 9.7 10.9 13.8 41.5 41.2 43.1 35.1
New middle class 10.4 12.3 13.2 14.9 42.5 45.6 41.6 36.0
Old middle class 6.4 8.1 9.2 9.8 35.1 35.6 39.7 38.3
Marginal middle class 8.8 10.6 12.2 13.9 38.7 40.7 39.0 34.9
Working class 7.3 8.5 9.4 9.3 34.8 41.9 40.7 37.25
Table 20.5. Gender Composition of Urban Middle Class (2006, %).
New middle class

Business Professional/ Govern- Manage- Old Marginal
owner technical ment rial middle middle Working
class personnels officials personnels class class class
Men 86.7 48.0 87.5 82.1 55.0 57.9 55.9

Women 17.9 52.0 12.5 17.9 45.0 42.1 44.1
more opportunities and better channels to move upward rapidly. However,

the average age of the old middle class and the working class has risen
somewhat.
The gender composition of the middle class

The proportion of women among the middle class has remained stable
throughout the years (see Table 20.5). Slightly over 60% of the new middle
class members are male, with 40% being female. The sex ratio also remained
stable among other groups of the middle class, which were also dominated
by men meaning that the dominance of men in the middle class is hard to
change.
Data furnished in Table 20.5 further shows that the more authoritative
a group is or the more resources it holds, the higher the proportion of men
there are. And men and women are roughly equal in size in groups that are
less authoritative. For instance, the CPC/government officials and man-
agerial personnel in the business owners’ class and new middle class hold a
relatively large amount of economic and management resources, hence the
two classes boast the highest male proportion. Conversely, among the pro-
fessional/technical personnel, old middle class and marginal middle class
there are only slight differences between the proportion of men and women.
408 Li Chunling
Family background and the initial profession of the middle class

As a newborn class, the current middle class is actually the first generation
of the middle class, which makes it inevitable that they take on the fol-
lowing characteristics: They are from diversified family backgrounds, with
rather complicated personal working experiences. Table 20.6 lists the fam-
ily backgrounds of the middle class (fathers’ class positions) and the class
positions of their initial professions. An overwhelming majority of business
owners and old middle class members come from relatively low social strata.
Nearly 60% of them originated in peasant families, with over 20% coming
from working class families. Among the middle class, the new middle class
enjoys the best family background, but over half of them still originate
from the working class or have a peasant family background. Among all
the members of the middle class (including the business owners class, the
new middle class, the old middle class, and the marginal middle class),
65.3% come from working class or peasant family background.
Table 20.6. Family Background and Initial Profession of Middle Class (2001, %).
One’s own class position
Business New Old Marginal

Father’s class owners middle middle middle Working
position class class class class class Peasant Total
Business owner 0.0 7.9 3.8 8.5 21.1 58.7 100

class
New middle class 0.0 37.1 2.5 7.7 21.0 31.7 100
Old middle class 0.0 6.6 10.0 2.7 24.3 56.4 100
Marginal middle 0.0 16.5 1.5 22.6 26.5 32.9 100
class
Working class 0.0 7.1 2.2 4.8 39.5 46.4 100
Class position of one’s current profession
Class position Business New Old Marginal

of one’s initial owners middle middle middle Working
profession class class class class class Peasant Total
Business owner 2.1 9.1 8.5 13.2 31.2 35.9 100

class
New middle class 0.9 37.1 2.0 23.7 22.2 14.1 100
Old middle class 0.0 5.1 5.9 5.2 47.6 36.1 100
Marginal middle 0.0 15.8 1.5 28.2 34.7 19.8 100
class
Working class 0.0 1.8 1.8 7.2 49.8 39.4 100
Data in Table 20.6 also shows that most members of the middle class
(56.5%) once worked in blue-collar jobs prior to becoming middle class.
67.1% of business owners and 83.7% of the old middle class members once
worked as peasants and blue-collar workers. 54.4% of the marginal middle
class members also worked as peasants and blue-collar workers previously.
Even 36.3% of the new middle class members once worked as peasants and
blue-collar workers.
The heterogeneous backgrounds and diversified job experiences of the
first generation of the middle class and their close ties with the working class
and peasants all exert a significant impact on the formation of the modern
middle class. The characteristics described above hinder the fostering of a
unified status identity and consumption culture among the first generation
of middle class, and status identity and consumption culture are important
indicators marking the class’s formation.
Income levels and the consumption habits of the

middle class
The proportion of high-income middle class
Although sociologists are inclined to define the middle class on the basis
of profession or employment status and related indexes, the current debate
regarding China’s middle class seems to be more concerned with the stan-
dard of income. As mentioned previously, the public as well as many experts
and scholars have adopted the income standard to define the middle class,
with people forming the impression that only those who earn high incomes
and sustain high consumption levels can be counted among the middle
class. How, then, can many members of the middle class defined according
to the standard adopted by sociologists meet the standard as adopted by
the public?
Li Peilin and Zhang Yi designed an income standard for identifying
the high-income earners.4 They used data from the nationwide sampling
surveys conducted by Institute of Sociology, Chinese Academy of Social
Sciences in 2006 (CGSS data) to calculate the average per capita income
that year, and then determined the income threshold for “high-earner”
to be 2.5 times the average per capita income. They defined those who
4 For details concerning the determining and calculation of this income standard, please
refer to the paper “Size, Identification and Social Attitudes of China’s Middle Class” as
included in this collection and written by Li Peilin and Zhang Yi.
410 Li Chunling
earned an income within the range between the average income level and
2.5 times the average income level as the “middle-income group”. Following
this line of thinking, the author used calculations based on data from CGSS
sampling surveys conducted by CASS in 2006 and adopted the amount of
2.5 times of the average per capita urban income (28,272 RMB) as the
threshold for high income, and the amount of 2.5 times of the average per
capita urban family income (21,715 RMB) as the threshold for high-income
families. In other words, in 2006, those who earned an annual per capita
income of 28,272 RMB or above can be counted among the high-income
group (i.e., the middle class that conforms to the stereotype formed in the
public consciousness), and the families that earned an annual per capita
income of 21,715 RMB or above can be counted among the high-income
families (i.e., middle-class families that conform to the stereotype formed
in public consciousness).5
Table 20.7 also shows the proportion of high-incomers among the four
middle class groups. All groups except the business owners class boast a
rather low proportion of high-incomers. Less than 1/3 of middle class mem-
bers, less than 1/5 of the old middle class members and slightly more than
1/10 of the marginal middle class members earned an annual income of
28,272 RMB and above. Among all members of the middle class only 18%
Table 20.7. Average Annual Income of the Middle Class and Proportion
of the High-income Middle Class (2006).
Average annual Proportion of

income (RMB) high-incomers (%)
Business owner class 46,495 75.0

New middle class 26,422 28.3
Old middle class 18,630 16.7
Marginal middle class 16,971 11.7
Working class 11,371 3.7
Note: The annual average income figure for the business owner class as fur-
nished in the table is obviously lower than the actual level, which may be
attributed to the fact that the sampling surveys mainly focused on small
business owners instead of owners of medium-to-large-sized businesses.
5 Itis worth noting that since the determining of an income threshold for defining middle
class or middle class family is a rather complex and controversial issue, this article chose
only to tentatively adopt a standard line so as to facilitate the estimation of the growth
of middle class income.
Table 20.8. Proportion of High-incomers and High-income Families (%).
High-incomers High-income families

Year City/Town Nationwide City/Town Nationwide
1988 0.5 (City) — 0.7 (City) —

1995 0.8 (City) — 0.8 (City) —
2001 3.4 (Town) 2.1 3.4 (Town) 1.7
2006 8.6 (Town) 4.6 5.8 (Town) 3.0
could be counted as “high-incomers”. Based on this figure, we can further

estimate that around 11% of the urban population and 6% of the national
population conform both to the middle class standard proposed by sociolo-
gists and the stereotype (middle-class people being high-earners) formed in
public consciousness. The difference between the two definitions of middle
class leads to a strange social phenomenon: Most of those defined by sociol-
ogists as middle class do not recognize themselves as such, complaining how
they have not been able to sustain a middle class lifestyle yet. At the same
time, this dissatisfaction also becomes the driving force for the middle class
to pursue greater economic rewards and enhance their living standards.
Admittedly, in recent years more and more members of middle class have
joined the ranks of high-earners. Table 20.8 shows that the proportion of
high-earners among both the urban population and the national population
has been steadily rising.
Data in Table 20.8 is calculated by adopting the high-income stan-
dard line for 2006, i.e., those who earn an annual per capita income of
28,272 RMB and above shall be considered as “high-incomers” and those
families that earn an annual per capita income of 21,715 RMB and above
shall be considered as “high-income families”, and accounts for the con-
sumption index (actual purchasing power). The standard line for the income
of a high-earner in 2001 was 26,964 RMB and that for a high-income family
was 18,542 RMB, whereas the standard line for the income of a high-earner
in 1995 was 22,476 RMB and that for a high-income family was 18,542
RMB and the figures for 1988 were 13,896 RMB and 8,141 RMB, respec-
tively. In accordance with the above-mentioned standard lines, Table 20.8
also shows the proportion of high-income earners during those years. During
the 1988–2006 period, the number of high-earners grew rather significantly.
In 1988, the high-incomers as identified by the current income standard
accounted for less than 1% of the urban population, but by 2006 the high-
earners in cities and towns accounted for nearly 9%. This means that in
412 Li Chunling
cities the proportion shall not exceed 10%. In the meantime, the growth
rate of the high-earners seems also to be accelerating since 2001. During the
2001–2006 period, their proportion grew by five percentage points, which
translated into an average annual growth of 1%.
Income growth of the middle class

Table 20.9 lists the average annual income of each class during various
periods and the growth thereof. Among the first four rows of Table 20.9,
the data for 1988, 1995 and 2002 were from nationwide sampling surveys
of cities, and the data for 2006 was from nationwide sampling surveys of
towns. The last eight rows of Table 20.9 (data for the period 2000–2007)
was data from Beijing middle class surveys.
In 1988, there was a small income gap between the ordinary members
of the “salaried class” (including the new middle class, the marginal middle
class and the working class), but the gap between their incomes and those
of the business owners class and old middle class members was rather wide.6
The average income of the business owners class was 54 times that of the
working class, while the average income of the new middle class was only
1.3 times that of the working class. Apparently, at this point, as far as
income is concerned, the new middle class had not yet detached itself from
the “salaried class”, or shall we say, the middle class phenomenon had not
yet occurred in China.
In 1995 and 2002, there began to appear increasingly larger income
gaps among the members of the “salaried class”, with the average income
of the new middle class standing at roughly 1.5 times that of the working
class in 1995 and 1.7 times in 2002. By 2006, the average income of the
new middle class had become 2.3 times that of the working class. In the
meantime, the income gap between the new middle class and the business
owners class had also narrowed to some extent, with the average income
of the new middle class surpassing that of the old middle class.7 During
the same period, the new middle class began to detach itself from the
“salaried class” and gradually to merge with some small-and-medium-sized
6 In the urban society then, there were rather few business owners and individual indus-
trial and commercial households (old middle class), which mainly operated out of small
towns and rural areas.
7 Since the 1990s, the number of business owners has been steadily increasing, with
the number of large-sized business owners still remaining low. It is usually difficult for
sampling surveys to draw on the entire samples of business owners, so what Table 20.9
shows was only the income data of small-to-medium-sized business owners.
March 5, 2013
16:48
9in x 6in
Table 20.9. Income Growth of the Middle Class (City/Town).
Business owners New middle Old middle Marginal middle

class class class class Working class
Average Average Average Average

annual Average annual annual annual
income Growth annual Growth income Growth income Growth income Growth
(RMB) rate (%) income rate (%) (RMB) rate (%) (RMB) rate (%) (RMB) rate (%)
1988 93,725 — 2,217 — 12,993 — 1,996 — 1,732 —

1995 12,229 −87.0 7,981 256.0 6,969 −46.4 6,395 220.4 5,199 200.2
2002 19,694 60.7 15,531 94.6 10,435 49.7 11,945 86.8 9,329 79.4
2006 46,495 136.1 26,422 70.1 18,630 79.2 16,971 42.1 11,371 21.9
2000∗ 58,000 — 42,162 — 28,027 — 19,732 — 15,824 —
2001∗ 59,600 2.8 44,398 5.3 23,934 −14.6% 21,298 7.9 34,492 118
2002∗ 61,600 3.4 47,219 6.4 27,053 13.0 24,404 14.6 18,058 −47.6
2003∗ 97,600 58.4 51,228 7.8 30,244 11.8 26,958 9.5 16,440 −9.0
2004∗ 106,000 8.6 55,434 8.2 41,605 37.6 29,629 9.9 17,435 6.1
2005∗ 116,000 9.4 58,944 6.3 37,581 −9.7 36,508 23.2 17,778 2.0
2006∗ 142,000 22.4 67,088 13.8 43,159 14.8 45,315 24.1 22,010 23.8
2007∗ 178,000 25.4 81,411 21.4 53,122 23.1 58,457 29.0 26,480 20.3
Notes: The data are ∗ from Beijing middle class survey (2007) with the figure of income in each relevant year based on the recollection
of the respondents; the class categorization of those surveyed is based on their profession and employment status obtained in 2007
(which means the profession and employment status information might not be the same prior to 2007); the “working class” mentioned
in the survey refers to those who live in the middle class communities (in most cases other members of the family being middle class).
b1344-ch20
414 Li Chunling
business owners and high-income industrial and commercial households to

form a moderate-to-high-income group that constituted the middle class
stereotyped by the public opinion.
In addition, we can also detect the growth of middle class income in big
cities since the start of this century by examining the data from the middle
class surveys conducted by the Beijing city government. Compared with
other classes, the new middle class has achieved the most stable income
growth, with the growth pace still picking up. The income growth of the
marginal middle class is similar to that of the new middle class, which
means some of them are approximating the new middle class in terms of
income. The growth rate of the income of the business owners class is higher
than that of the new middle class, but its annual growth rate seems to be
rather unstable.
The middle class’s housing expenditures

The increase in middle-class income and the number of the middle class
is well reflected in consumption, especially in housing spending. In mod-
ern Chinese society, the ownership of comfortable and spacious homes has
become an important status symbol for the middle class. Table 20.10 lists
the proportion of private property owners during various periods. In 1988,
the proportion of private property owners among the urban population was
only 13.7%; the figure rose to 41.7% in 1995 and 75.9% in 2000, with the
proportion of private property owners among the new middle class reaching
as high as 80.6%. During the 2000–2005 period, the home ownership rate
did not rise, which might be attributable to the fact that the sustained peak
in housing prices had damped consumers’ spending on housing.
However, during the five-year span, the home ownership rate among the
new middle class still rose by approximately 13 percentage points; among
the marginal middle class, by six percentage points; and among the working
class by one percentage point. Since 2006, the prices of commercial housing
products have dramatically soared, which led to the severe situation that
not only are the working class and the marginal middle class unable to
afford them, but some members of the new middle class also find themselves
incapable of affording them. Those young white-collar workers have begun
to see the ever-higher housing price as the biggest obstacle that prevents
them from becoming middle class, with the housing problem starting to
become the crux of the “middle class anxiety”.
March 5, 2013
16:48
Table 20.10. Proportion of Private Property Owners during Various Years (%).
9in x 6in
City
owners middle middle middle Working
Year Category Nationwide City class class class class class

1988 Ownership rate — 13.7 — — — — —
1995 Ownership rate — 41.7 — — — — —
2000 Ownership rate 86.3 75.9 — 80.6 — 68.3 70.2
Self-built 72.7 31.2 11.5 19.9 28.2
commercial 5.6 15.6 24.0 18.2 14.0
housing 8.0 29.1 45.1 30.2 28.0
purchased
public
housing
purchased
2005 Ownership rate 88.0 75.2 — 80.6 — 64.5 59.8
Self-built 71.6 31.8 14.8 19.1 28.6
commercial 7.5 21.5 36.7 24.5 15.1
housing 8.9 21.9 29.1 20.9 16.1
purchased
public
housing
purchased
2007 (Beijing only) one — 100.0 82.7 71.4 57.6 —
more than one 60.0 21.9 23.1 6.5 —
b1344-ch20
416 Li Chunling
Table 20.11. Private Car Ownership Rate (%) during Various Years.
City
National Rural owner middle middle middle Working
Year Average Town area class class class class class
1995 — 0.1 — — — — — —
2001 1.0 1.7 0.5 24.1 1.9 3.2 0.9 0.5
2006 2.5 3.3 1.9 100.0 7.0 6.1 6.7 1.2
2007 — — — 100.0 22.5 19.6 9.2 —
Beijing
The middle class’s expenditure on cars

While the young and middle-aged members of the middle class think that
the ownership of private cars is an indispensable part of the middle class
lifestyle, some older middle class members used not to consider it as impor-
tant. But in recent years, however, some mid-aged and elderly members
of the middle class have also begun to think seriously about purchasing
private cars. In modern Chinese society, the ownership of private cars has
become the second status symbol of the middle class. In addition, as the
prices of cars keep dropping, it becomes more tempting to the middle
class.
The owners of those low-cost cars was no longer as counted class the
middle class, and only the owners of expensive or even luxurious private cars
can be considered as middle class. Table 20.11 lists the private car ownership
rate across years. Nationwide, private car ownership among Chinese families
remains rather low, reaching only 2.5% in 2006. Cities saw the most growth
in private car ownership rate; during the 2001–2006 period, the private
ownership rate climbed among the new middle class, the old middle class
and the marginal middle class, with private car ownership already widely
prevalent among the business owners’ class.
Conclusion
The emergence of the middle class in Chinese society is undoubtedly a
significant trend. No matter what standard is adopted to define the middle
class, we can clearly detect its steady expansion. This means that the middle
class still accounts for only a small proportion of China’s total population.
The middle class as defined by sociologists based on the classification of pro-

fessions and related indexes has reached a considerable size in China’s urban
society, but the number of those who conform to the stereotypical image
of the middle class as formed in the public consciousness remains rather
low. China’s social structure is still mainly comprised of the peasants and
workers, and it will take a long time to grow into a middle-class-dominated
society.

Part Six
Income Inequality
419
420
21
Income Inequality and Social Stratification in
Brazil: Key Determining Factors and Changes
in the First Decade of the 21st Century
L. G. Costa and C. Scalon
Introduction
The unequal distribution of income in Brazil, a country that is still one
of the most unequal countries in the world, has not been in news for some
time now, as observed by a number of authors (Barros et al., 2000: 123–142).
The unequal distribution rates affect families’ living conditions, especially
among the poor. Even though we keep this in mind while doing research, we
still must continue to evaluate the impact of income inequality on current
Brazilian social conditions.
However, it should be emphasized that analyzing inequality in soci-
ology needs to go beyond the overly simplistic idea that its main cause
is income inequality and that monetary redistribution is the only way to
promote equality and social justice. Inequalities have a number of differ-
ent causes, derivations, and imbrications that cannot be reduced to the
economic realm. This would be reductionism, which social science, when
confronted by such a complex contemporary society, cannot accept. Among
inequality’s numerous dimensions are distributing empowerment, not only
economic, but also cultural, and political, among others.
Even though Brazil went through a rough period during the 1990s and
later in the year 2000 to create jobs for its labor force (especially since this
421
422 L. G. Costa and C. Scalon
was also a time in which the country assimilated the idea of flexible employ-
ment which had a negative impact on unemployment rates and income),
the first decade of the new century has proven quite satisfactory. All in all,
the economy promises to improve, as does the labor market.
The aim of this study is to analyze the general determining factors
that have caused these income inequalities to shift, whether domestic per
capita income or just plain domestic income. We have taken into analysis
of the period between 2001 and 2009, giving special emphasis to: (1) The
evolution and change of domestic per capita income inequalities in Brazil:
National and international structural characteristics; (2) domestic income
inequalities as characterized by gender; (3) regional aspects of domestic per
capita income inequality; (4) social stratification and domestic per capita
income in Brazil; and (5) the effects of domestic income inequality.
The analysis was undertaken using the results of the National Domi-
ciliary Research by Sample — IBGE’s micro-data (PNAD), a method
implemented in 1967 — which has been systematically used by Brazilian
researchers ever since then to investigate Brazil’s demographic and socio-
economic status. PNAD is a kind of domiciliary sample research expert.
Having multiple objectives, the research group investigates a number of
diverse socio-economic characteristics in the country, and some of these
characteristics analyzed present resistance in the data, such as those of the
general population, education, employment, income and residential charac-
teristics. Other characteristics studied present periodical variations, such as
migration, fertility, marriage, health and nutritional rates. Other topics are
also eventually included in the system, should the country feel that such
information be necessary.
Methodologically, the study aggregates two kinds of analysis. The first
is a description of average domestic income variables: average per capita
domestic income, gender, and occupation. The second is a linear regression
used to test the effects of each independent variable (sex, age, race, edu-
cational experience, International Socio-economic Index of Occupational
Status (ISEI), social protection, region and rural/urban) on the depen-
dant factor, namely domestic income. Both domestic income and domestic
per capita income rate values were corrected by the National Price Index
for the General Consumer (IPCA/IBGE 2010). The domestic per capita
income was obtained by summing up all available PNAD incomes, whether
monetary or not, representing all household residents, and dividing by the
number of inhabitants in each household.
Income Inequality and Social Stratification in Brazil 423
The Evolution and Change of Income Inequality in Brazil:

National and International Structural Characteristics
According to Silva (2003), the kinds of earnings analyzed by PNAD are
notorious for being limited to monetary incomes, either employment income
or from other sources. The institution, however, does not contemplate non-
monetary income, nor does it include imputable incomes such as the posses-
sion of certain goods (e.g., home ownership), which quite likely affect both
the unequal income distribution rate and estimated poverty rates. This is
why caution should be exercised when interpreting PNAD results.
By examining the temporal evolution of household income inequalities
over previous decades, we may note that in the 1980s Brazil’s inequality
indicators increased alarmingly, especially after 1986 when the Gini index
went up to 0.64. The Gini only dropped to 0.60 between 1993 and 1999,
creating a kind of “stability” in income inequality levels in the country
(Barros et al., 2000).
Yet even though the Gini index uses a correct standard of analysis,
it was not alone in picking up the intensity of changes in income inequal-
ities that took place during this period. According to Silva (2003), the
fraction of total earnings appropriated by the 20% of the wealthiest inhab-
itants as compared to those appropriated by the 20% of the poorest was
24 times greater. This proportion went up 34.4 times in 1989, indicating a
43% growth rate. In other words, income inequalities practically acquired
temporal stability when analyzed by the Gini index, but, on the other hand,
were still extremely high when looking at pendulum movements between
the two opposite extremes of the income distribution spectrum. This is
why it’s important to consider which methodological tools are more capa-
ble of providing a more direct diagnosis of the causes of the high Brazilian
inequality rate.
The values calculated using the Gini coefficient between 2001
and 2009, representing per capita household income, are presented in
Table 21.1.
By examining Table 21.1, it appears that average per capita household
earnings went up by almost 20% from 2001 to 2009. Even though the income
under consideration is insufficient to cover basic household needs, the result
of the Gini coefficient showed that household income inequalities dropped:
From 0.59 in 2001 to 0.54 in 2009. These results may have been influenced
by the Real Plan in 1994, which made significant recuperation in possible
earnings, and even advanced in terms of important distributive factors.
Table 21.1. Average Per Capita Domestic Income in Brazil.
Year Average Median Gini N
2001 600.63 307.96 0.594 44474442

2002 645.98 327.53 0.589 46310896
2003 610.59 337.99 0.583 47823118
2004 621.06 345.21 0.572 49687913
2005 659.63 375.72 0.569 51313105
2006 700.42 402.02 0.563 50949635
2007 708.46 418.70 0.556 53326845
2008 747.89 447.09 0.548 55067079
2009 715.88 433.62 0.543 183392057
Source: PNADs (2001–2009). Deflated income IPCA 2010.
This, of course, does not mean a total economic recuperation, especially

considering the national labor market at the end of the 1990s.
As Soares (2006) has shown, these improvements in household per
capita income inequality indicators are also the result of income trans-
fer programs, such as the Family Voucher (Bolsa Famı́lia), responsible for
( 14 ) the drop in inequality rates between 1995 and 2004. The other three-
quarters ( 34 ) were attributed to salary inequality reductions. In this last
case, these changes are related to growing formal employment, leading to
increased demands for qualified labor and consequently better per capita
household earnings among laborers. With the current improvements in the
economy, even demands for less qualified labor may have reflected positively
on per capita household earnings. Another important variable is improve-
ments in the country’s educational system, which has brought more quali-
fied laborers to the job market along with better-paying jobs.
The income classes in Table 21.2 are part of Neri’s (2008) work. These
groupings are important because they allow us to observe changes in the
pattern of economic classes, since per capita household earnings had risen
and income inequalities had dropped in the previous analysis.
The income distribution median was initially calculated for the income
classes used in Table 21.2, in reference to PNAD data from 2006. The AB
class corresponds to the 10% wealthiest households. Class C corresponds to
those falling between the median and the limit-line of the 10% of the wealth-
iest households. The D class corresponds to the interval extending from the
poverty line to the income distribution median. Finally, the E class falls
below the poverty line, thus classifying these individuals as indigents, using
a monetary definition in the form of a group of food products corresponding
Table 21.2. Domestic Income Classes in Brazil.
Year Class E Class D Class C Class AB N
2001 33.7 14.9 40.7 10.7 107543291

2002 29.0 16.1 43.5 11.4 103142627
2003 31.0 16.0 42.6 10.5 104781660
2004 29.0 16.6 44.0 10.5 106882920
2005 26.9 16.2 45.5 11.4 109468624
2006 24.8 14.5 47.8 12.8 110884076
2007 22.0 14.1 50.4 13.4 112320426
2008 19.7 15.2 50.9 14.2 114116288
2009 18.9 13.2 53.1 14.8 115118339
to 2.288 calories, according to World Health Organization recommenda-

tions, quoted in Neri (2008).
By using this definition of economic classes, as observed in Table 21.2,
an evident growth in Class C becomes observable. In 2001, Class C repre-
sented 40.7% of the population; in 2009, this number reached 53.1%, rep-
resenting a 12.4 point percentage growth within a decade. A 4.1% growth
in Class AB is also visible (this percentage represented 10.7 in 2009, it
rose to 14.8 in 2001), as is a reduction in the D and E classes. In other
words, income standards among the population improved in a meaningful
way during this period, due to the reallocation of individuals from lower
income classes to medium and higher bracket groups. On the other hand,
since the constructed income classes do not correspond to social structure
classes, in each bracket there may be different social classes which would
not allow us to speak in terms of a new Brazilian middle class, but merely
infer an increase in consumer power. For example, if we were to join the
AB and C classes together in Table 21.2, over 40 million new Brazilian
consumers would become visible. In spite of an expansion limited by the
persisting problems of budget deficits, inflation, and internal debts, among
other factors, growth may be seen in the internal market and consequently
a drop in income inequality rates in the country.
From an international perspective, Latin America always comes to the
forefront regarding income inequalities. With a Gini coefficient of 0.53 in the
mid-2000s, Latin America was 18% less equal than Sub-Saharan Africa and
36% less than East Asia and the Pacific, and 65% less equal than countries
with high income levels.
Brazil is a large country with over 190 million inhabitants, most of
whom live in urban centers. The economy, in per capita terms, is one of
70.0 57.2 55.0 58.5 59.5 55.3

60.0 48.8 52.0 48.9
54.4 53.7 51.6 52.3 54.9 53.2 50.5 48.4
46.9 47.1 43.4
50.0
40.0
30.0
20.0
10.0
0.0
ia
c
bia
r
l
ile
iti
a
o
s
uay
or
la
a
a
uay
a
bli
ru
azi
a
do
liv
ura
tin
xic
Ric
uel
agu
nam
ma
Ha
uad
Ch
Pe
lom
pu
lva
Br
Bo
ug
gen
rag
nd
Me
nez
ate
car
sta
Re
Ec
Pa
Sa
Ur
Co
Ho
Pa
Ar
Ve
Gu
Ni
Co
an
El
nic
mi
Do
Gini Coefficient 2000–2010
Fig. 21.1. Gini rate for domestic income in 19 Latin American Countries from 2000 to
2010.
Note: Cuba was not computed in this analysis.
Source: Human Development Report 2010.
Obs.: The Gini coefficients were multiplied by 100 to facilitate the analysis. Thus, zero
represents complete income and 100 represents complete income inequality.
the most developed in the region, close to Mexico, Chile, and Argentina.
However, as Fig. 21.1 demonstrates, the Gini coefficient points towards an
even higher result (55.0) in relation to the other three countries. There was
a clear improvement in the Brazilian rate from late 1999 (64.0) through
the first decade of the new century. Yet within this context of international
analysis, Brazil still has one of the worst income inequality rates (HDR,
2010). The persistence of this social problem in a relatively wealthy country
like Brazil is still explained in the same way: Income is derived from all the
actives people possess, but in Brazil these actives (physical, educational,
and financial capitals, etc.) are still concentrated among the very few, hence
maintaining low-income levels among the poor.
According to Reis and Schwartzman (S/D), poverty and inequality
are not fruits of a “duality” that would apparently exist among differ-
ent segments of society, because nowadays Brazil is totally integrated in
its language, mass media, transportation, and market. The problem is that
poverty is still essentially rural, especially in the northeastern states and
depressed agricultural zones in Minas Gerais, and also the poor outlying
urban sprawls that are home to rural migrants whose integration into the
consumer market does not correspond to that of the labor market. As in
the past, these high levels of poverty and exclusion are still caused by a
combination of legacies, conditions, and choices made of an economical,
political, and cultural nature. The authors claim that it would be ingenu-
ous to suppose that poverty and inequality can be eliminated merely with
“political goodwill”, or by redistributing the resources of the rich to the
poor. In Brazil, what must be confronted is apparently the greatest corre-
late of income inequality in the country: Education. Without educational
credentials, Brazilians are condemned to occupying lower quality jobs and,
as a result, earning lower salaries. This is the direct correlation between
educational scarcity and income inequalities in Brazil.
Domestic Income Inequalities as Characterized by Sex

An income differential between men and women, in considering the produc-
tive process, is not a new fact. Studies carried out in the 1990s demonstrated
that in industry, higher qualifications were masculinized and non-qualified
work was feminilized. The higher a woman’s qualifications, the more likely
she was to be unemployed. Higher-level jobs are awarded to men and tra-
ditional “female ghettos” have been accentuated in factories, relegating
women to feminine jobs and other stereotypes (Hirata et al., 1997). In
other words, understanding how feminine work is actually used cannot be
explained by technical imperatives. This kind of comprehension may only
be attained as a logic employing a sexual division of labor in activity sectors
and place of work, part and parcel of a global sexual division of productive
and reproductive work in contemporary society. Therefore the quality of
feminine work in both formal and informal sectors is always conducive to
lesser pay, thus proving its attractive and unequal character (Silva, 1997).
In the 1990s, even with educational expansion and greater access to
universities, income inequalities between men and women were still evident.
As a general rule in Brazil, men’s earnings were 65% higher than women’s
in 1996 and also in the highest scholastic brackets (15 years or more of
schooling), 85% of men received more than 5 (five) minimum wages against
only 66% of women (Posthuma, 1998).
In Table 21.3, differences between men’s and women’s income persist,
but, at the same time, decrease. While from 2001 to 2004 male household
heads earned around 30% more than female household heads, from 2005
on these differences started narrowing, and in 2009 male household heads
still earned 19% more than their female counterparts. This is a significant
result, but still hasn’t had greater impact on income inequalities, because
Table 21.3. Average Domestic Income Using Household Reference and Sex in Brazil.
Women Men
Year Mean Median N Average Median N M/W
2001 1666.63 950.29 3447133 2214.15 1179.06 10408091 1.33

2002 1697.75 982.58 3777217 2188.55 1179.10 10673427 1.29
2003 1572.36 910.79 4045210 2051.68 1138.49 11182722 1.30
2004 1608.13 929.41 4390464 2083.58 1155.13 11581951 1.30
2005 1766.23 1039.48 4710850 2151.80 1194.78 12026629 1.22
2006 1785.40 1037.20 4739734 2264.08 1266.35 11085427 1.27
2007 1874.98 1111.38 5633814 2329.28 1373.02 12183740 1.24
2008 1969.01 1199.50 6319855 2424.22 1417.59 12471525 1.23
2009 1937.24 1180.69 18707012 2297.30 1395.93 37405372 1.19
according to the 2005 ILO evaluation, more women than men were doing
unpaid work, especially domestic work.
In Table 21.4, we see that a greater proportion of household heads in
the more income deprived quintiles were women from 2001 to 2009. To the
contrary, male household heads could be found among the higher income
quintiles. This corroborates with previous theories that a greater proportion
of poor families are headed by women in Brazil.
These results show that the growing number of women being incor-
porated as paid laborers has provoked intense negotiations regarding their
working conditions vis-à-vis men, putting them in a strategic position in
managing their homes, including disrupting masculine supremacy as family
providers, which is more common in less privileged classes.
Aspects of Income Inequality — Contrasting Rural and

Urban Areas and Regions
Brazil is renowned for its immerse territorial size and diverse natural
and regional attractions. It is equally renowned for its great urban–rural
disparities, as well as regional disparities.
Studies demonstrate that accelerated urbanization began in Brazil in
the 1940s. Demands made by large migratory fluxes led to the emergence
of Brazil’s major cities, which concentrated administrative systems and a
demand for economic services and activities, thus leading to strong nucle-
uses of industrial concentration, especially in São Paulo and in Rio de
Janeiro. According to Costa (2009), starting in 1940, urbanization in
March 5, 2013
16:48
9in x 6in
Income Inequality and Social Stratification in Brazil
Table 21.4. Quintile Income Using Household Reference and Sex in Brazil.

Women Men
Mid Mid Mid Mid
Lowest Lowest Middle Highest Highest Lowest Lowest Middle Highest Highest
Year 20% 20% 20% 20% 20% N 20% 20% 20% 20% 20% N
2001 26.1 20.8 18.2 17.9 17.0 3346686 15.6 18.7 20.4 21.7 23.6 9109245
2002 26.3 20.4 18.7 17.6 17.0 3643386 15.5 18.9 20.2 21.9 23.5 9342945
2003 27.8 20.9 18.6 17.5 15.2 11949146 17.0 19.6 20.6 21.0 21.9 30658356
2004 27.7 21.7 18.3 17.2 15.1 12610189 16.9 19.3 20.7 21.1 22.0 31089958
2005 26.7 21.1 18.5 17.7 16.0 13611407 17.1 19.5 20.6 21.0 21.8 31117815
2006 26.5 21.6 19.2 17.5 15.2 14418416 17.0 19.3 20.4 21.2 22.2 31591318
2007 26.8 21.2 19.0 17.1 16.1 15973433 16.6 19.4 20.5 21.5 22.0 31461960
2008 26.0 21.2 18.7 17.4 16.6 17750695 16.6 19.3 20.7 21.5 21.9 31279805
2009 26.1 21.0 18.4 17.6 16.9 18101268 16.5 19.5 20.9 21.4 21.8 31824422
429
b1344-ch21
Brazil rose from 15.3% to 39.6% in 1970, a characteristic that has marked
the intense disparity between urban (20.9 million inhabitants) and rural
(2.6 million inhabitants) growth, multiplying eightfold this difference start-
ing from the decade quoted above. The accelerated urban growth in this
period wasn’t only caused by migration, but also by the natural increase
in urban natives strongly related to diminishing mortality rates in the city;
and fertility rates were still high, especially in the Southeast where the
life-expectancy rate was eight times higher than the national average and
16 times higher than that in the poorest Northeastern states (Klein and
Bacha, 1986: 187–202).
For Pastore (1979: 31–72), regional disparities in Brazil contributed
to the imbalance in job opportunities, and for this reason, quite distinct
patterns of mobility were expected between regions. Those who migrated
in this period to more economically developed urban regions became
upwardly mobile, in sharp contrast to their parents’ occupations (Pastore
and Silva, 2000; Januzzi, 2000). On the other hand, the positive points
of economic development collided with concentrated income and a lack of
public structure to provide those collective consumer goods and services
which the expanding urban population demanded (Silva and Hasenbalg,
1988).
From the 1990s on, the rural population started dropping and a slow
urban growth started from 1991 to 1996 (10.9%) and from 1996 to 2000
(3.7%) (Costa, 2002). The changes taking place in Brazilian rural regions
impressed researchers who feared that the countryside would become com-
pletely depopulated.
The decade of 2000s witnessed great economic diversification in rural
areas, with highly differentiated regional dynamics gaining greater visibil-
ity according to their integration into the more dynamic nucleus of the
Brazilian economy. This makes the South and Southeast, and to a lesser
extent, the Mid-West, the center of recent changes in the countryside. Con-
sequently, the city is no longer the exclusive locus for industry, commerce,
and services (Reis, 2006).
On the other hand, great income differentials persist, despite having
decreased between 2001 and 2009. According to Fig. 21.2, in 2001 per capita
household earnings in urban areas were 2.7 times greater or 170% more than
those in rural areas; yet in 2009 the income differences dropped, with the
urban per capita household income rate 2.2 times or 120% greater than the
rural rate. The differences are still significant.
3.0 2.7 2.7

2.5 2.4 2.5 2.4
2.5 2.2 2.3 2.2
2.0
1.5
1.0
0.5
0.0
2001 2002 2003 2004 2005 2006 2007 2008 2009
Fig. 21.2. Domestic income per capita — urban/rural ratio.

Source: PNAD (2001–2009). Deflated income IPCA 2010.
It would be more correct to relate this continual drop in differential

earnings between urban and rural areas to the fact that the Brazilian
rural population is no longer exclusively employed in agricultural activi-
ties, which permits growth in other sectors, such as secondary and tertiary
industries — urban style work but located in rural areas. Some examples
are leisure activities and tourism, and also the partial outsourcing of agri-
cultural production (Silva, 1997). This phenomenon permits the country to
create a balance in job offers and income in the countryside, since unem-
ployment and underemployment were decisive factors for expelling laborers
from rural regions. In other words, changes in the last decades have made
it possible for rural areas to retain and attract laborers for new kinds of
jobs, besides promoting alternative sources of income.
Naturally, urban and rural inequality rates accompany regional inequal-
ity rates. Unfortunately, regional growth is not homogeneous, thus provok-
ing greater economic stagnation in certain areas while promoting economic
expansion in others. The Southeast concentrates greater wealth, especially
because of the industrialization process there, yet it is worth mentioning
that regional inequalities in Brazil can also be attributed to other motives,
among which is the country’s whole colonization process. In any case, dif-
ferentiated regional development became clearer after better infrastructure
was implanted in the Southeast — in terms of transport, jobs, housing, and
a greater variety of agricultural cultures in this region. According to Oliveira
(2000), these factors were decisive for establishing industrial activities in the
Central-South region as well. The capacity to create new resources in these
regions also created even greater disparities in per capita income between
regions.
Table 21.5. Average Per Capita Domestic Income per Region in Urban Brazil.
Southeast:
Year North Northeast Southeast Mid-West South N Northeast
2001 440.34 399.39 778.79 659.48 753.44 37830140 1.95

2002 497.57 458.47 751.95 772.85 771.46 318530 1.64
2003 458.70 423.69 775.80 683.77 757.75 40870944 1.83
2004 479.17 447.42 782.32 708.19 789.28 41895464 1.75
2005 528.93 463.16 833.06 779.49 835.80 43302906 1.80
2006 566.60 517.98 876.25 811.34 878.13 42935827 1.69
2007 570.20 505.78 864.77 918.53 893.81 45184701 1.71
2008 582.08 547.93 927.71 931.18 922.43 46683624 1.69
2009 599.64 544.78 883.63 904.24 921.55 153600702 1.62
Note: Rural areas in the North have only gained complete coverage by PNAD research
since 2004.
Table 21.6. Average Per Capita Domestic Income per Region in Rural Brazil.
Southeast:
Year North Northeast Southeast Mid-Wwest South N Northeast
2001 188.13 151.88 333.62 308.82 350.64 6644302 1.77

2002 177.75 158.25 296.02 348.61 385.09 53344 1.67
2003 201.55 167.55 330.52 307.98 440.74 6952174 1.64
2004 290.15 189.15 330.05 375.49 435.99 7792449 1.14
2005 256.30 187.68 389.68 406.68 420.25 8010199 1.52
2006 278.65 212.08 383.86 416.56 501.63 8013808 1.38
2007 359.99 229.99 419.31 412.41 555.83 8142144 1.16
2008 334.05 251.40 463.98 453.03 508.35 8383455 1.39
2009 338.89 244.17 445.78 485.59 579.45 29791355 1.32
Note: Rural areas in the North have only gained complete coverage by PNAD research
since 2004.
In Table 21.5, by merely considering urban areas and comparing the two
extremes of the Brazilian regional economy, it may be seen that despite a
rising per capita average income for Northeastern households, the Northeast
is still below the income levels enjoyed by Southeastern households. In 2001,
these differences in per capita household earnings expanded between the
Southeast and Northeast to 95% and in 2009 this result dropped to 60%.
Table 21.6 shows that inequality levels in average per capita household
income between rural Northeastern and Southeastern households were less
than those observed in Table 21.5 for urban inhabitants in the same regions.
Even so, in 2001 household dwellers in the Southeast had 77% more per
capita household income than their Northeastern counterparts, even though
from 2004 to 2007 this percentile difference fell from 10% to 14%. Until 2009,
the difference between per capita household earnings between the Northeast
and Southeast was 30%.
There is a tendency towards decline in regional inequalities. This data
shows innumerous factors contributing to these findings. Besides global-
ization and economic overture, other processes such as well-articulated
commercial development between Brazilian regions and adjusting under-
privileged regions to the productive structure of the Southeast have helped
to reduce regional disparities.
Social Stratification and Income in Brazil

Stratification studies in Brazil started incorporating international research
(Erikson et al., 1979; Hout, 1988: 1358–1400; Grusky and Diprete, 1990:
617–637; Biblarz et al., 1996: 188–200; Hauser et al., 1997: 177–298),
as research references for analyzing the Brazilian occupational structure
(Scalon, 1999; Ribeiro and Salon, 2001: 53–96). We will now adopt the
EGP occupational scheme, created by Erikson et al. (1979), so that we
may analyze per capita household income inequalities in this country.1
Inequality, as previous data has demonstrated, is quite expressive in
this country because of its multidimensional and multifaceted nature. This
is what gives contours to the social structure and has such an impact on
relevant problems such as guaranteeing social justice and the destiny of
democracy itself, which, in a wider sense, means participation and citizen-
ship. This makes it indispensible to learn more about the characteristics
of class structure, because class has a direct relation to income inequalities
and, consequently, poverty. Certain mobility studies show just how rigid
and unequal Brazil’s class structure is (Scalon, 1999), which not only leads
to the reproduction of such inequalities, but also to the crude scence of
unequal opportunities.
In the year 2000, Table 21.7 shows an increase in per capita house-
hold income in each occupational category between 2001 and 2009, with
the exception of small proprietors with no employees, who suffered a 6%
drop. Even so, the result was significant, showing a new and quite complex
1 Alsosee the classic study on social mobility by Erikson and Golthorpe (1993), The
Constant Flux.
Table 21.7. Average Per Capita Domestic Income per Occupational Group (EGP) in
Brazil.
2001 2009
EGP Média Gini N Média Gini N
I — Higher-grade Prof & 2927.84 0.468 641013 3166.44 0.441 2746084

Adm
II — Lower-grade Prof & 1698.23 0.486 727294 1743.45 0.449 3414942
Adm
IIIa — Higher-grade Routine 1099.79 0.475 1636808 1249.75 0.453 7534795
non-manual
IIIb — Lower-grade Routine 680.86 0.458 1402278 840.11 0.418 6724918
non-manual work
IVa — “Small” proprietors, 2170.55 0.525 609692 2045.28 0.513 2398267
with employees
IVb — “Small” proprietors, 811.40 0.537 723492 820.03 0.478 2662686
without employees
IVc2 — Rural Self-employed 280.54 0.543 857148 432.12 0.517 3182163
IVc — Rural employers 1083.84 0.630 138867 1721.53 0.579 328027
V — Technicians and 1102.34 0.495 244932 1216.33 0.478 1519959
supervisor manual work
VI — Skilled manual 498.86 0.434 2689311 666.75 0.412 12563577
workers
VIIa — Semi- & unskilled 429.23 0.450 4475646 557.87 0.417 19593036
manual workers
VIIb — Agricultural 234.47 0.484 1810006 348.22 0.462 7371274
Workers
Total 759.90 0.499 15956487 891.87 0.468 70039728
evolution from the decade of the 1980s, with subtle losses and gains in
income (Silva, 2003).
Table 21.7 not only shows an increase in the average per capita house-
hold income, but also shows that the income inequality rates for each occu-
pation improved, the same result as in the Gini coefficient, which is higher for
smaller proprietors (with or without employees), for autonomous rural strata,
and rural employers, indicating greater income inequality in these strata.
In general, the data has highlighted that per capita household earnings
in the occupational strata increased, but these results are still rather het-
erogeneous. Average per capita household income differences in this occu-
pational structure are quite significant.
Effects on Domestic Income Inequalities

In this topic, we will employ a multivariate regression so that we may
analyze the dependence of one variable, which we will call the dependent
(income transformed into log, in this case a household income log), on

explicative or independent variables. Our aim is to estimate the effects
of these variables on the dependent variable.
The multivariate model may be briefly described as such:
Yi = α + β1 X1i + · · · + βk Xki + εi
K > 1 represents the number of independent variables in the model. β

will therefore have a partial effect on Y as regards to an increase in the
unit X, “controlling” for all the other k − 1 variables. Achieving statistical
control means evaluating the independent effect of the variables observed.
The nominally explicative variables included in this model were trans-
formed into dummies, worth zero and one. The continuous explicative vari-
ables did not suffer any alterations. In order to understand how the variables
were measured, we have described how each of them was organized:
(a) Gender: 0 = woman and 1 = man; (b) Race: 0 = black and mixed-
race and 1 = white; (c) Rural/Urban: 0 = rural and 1 = Urban; (d) Region:
0 = Northeast and 1 = Southeast; (e) Age: measured in complete years;
(f) years of schooling; (g) International Socio-economic Index (ISEI);
(h) Social protection: 0 = informal and 1 = formal.
Before starting the analysis, it should be emphasized that we have
incorporated two variables requiring further explanation, “ISEI” and “social
protection”.
This study employs the ISEI variable, better known as the International
Socio-economic Index of Occupational Status.2 This index allows us to use
continuous variable analysis techniques. The ISEI method of measuring
status was invented by Ganzeboom et al. (1992) using the occupational
codes from the International Standard Classification of Occupations (ISCO)
88. In order to apply them to Brazilian data, the national IBGE codes
had to be converted into ISCO 88 codes. These codes measure employment
attributes that convert an individual’s education into income. By construct-
ing a scale, occupations were arranged into a hierarchy so as to highlight
an indirect influence of education on income. Optimal scaling techniques
were used through an interactive logo rhythm involving a series of regres-
sive equations. This scale is based on the International Stratification and
Mobility File, a databank that uses information from many different coun-
tries, whether these be underdeveloped countries such as India or developed
2 ISEI is an abbreviation of the International Social-Economic Index of Occupational

Status, nomenclature used in technical literature. See Ganzeboom et al. (1992).
Table 21.8. Linear Regression — Domestic Income Log.
Variables Coef. Std. Err. P >t
Sex Masculine (1) 0.001 0.004 0.902

Race White (1) 0.124 0.004 0.000
Formal (1) 0.166 0.005 0.000
Urban (1) 0.191 0.007 0.000
Southeast(1) 0.317 0.005 0.000
Anoest 0.068 0.001 0.000
Age 0.008 0.000 0.000
Isei 0.008 0.000 0.000
cons 5.737 0.010 0.000
N 110051
Note: Signifigance level: 5%.
countries such as the United States. The variables used here include edu-
cation, occupation, age, and income.
The social protection variable only covers laborers (thus excluding their
employers) employed in the formal job market, including autonomous work-
ers who contribute to social security, those having work documents, and the
military. Informal work includes all those who do not enjoy any sort of social
protection such as work documents and/or some sort of social security.
Since we are using PNAD, it was necessary to multiply the weight of
the original expansion by the sample fraction thus creating new weights.
This allows us to obtain estimates of parameters identical to those obtained
using the original PNAD weights, with the estimated standardized errors
reflecting, on the other hand, the real size of the sample (Silva, 2003).
According to Table 21.8, the regression, whose household income serves
as a dependent variable registered R2 , around 38%, and only the sex vari-
able was not significant, i.e., in relation to other variables included in the
model, it had no effect on the log’s dependent variable, which is house-
hold income. The R2 value should be viewed with certain skepticism, since
social phenomena are hard to apprehend and models cannot be expected
to explain their variations as precisely as in other areas of research. This is
why what is most important is looking at the significance of the effects of
independent variables on the dependant variable. Our aim here is to appre-
hend which given factors have more explicative value in the model and their
relevance to understanding the variable object of the analysis.
The analysis of the beta standardized coefficients in Table 21.8, shows
that a greater impact may be felt on income due to differences in the
regional extremes between Northeast and Southeast. This result is not
surprising since we already know that income differences between these

two regions are quite accentuated. The relationship between age and income
also falls within the expected direction, upwards, indicating that the older
people are, the higher their incomes.
The second most influential variable on household income is the loca-
tion of the household. As such, urban households may concentrate up to
21% of income as compared to rural households. Having a registered job,
i.e., signed work documents and having employers that pay into social secu-
rity, is also a sound indicator that formalized work increases household
income.
Another significant result deserving our attention is race. Specialized
researchers have noted that race is meaningful because it is tied to differen-
tial forms of access and precarious schooling conditions, especially among
blacks and mixed-raced individuals. As far as job market discrimination
goes, blacks usually occupy the worst positions. When combined, these fac-
tors produce a direct impact on differential household incomes.
The schooling years variable of the study, as expected, bears a positive
relation to the household income log, since the more years people invest in
education, the better their income tends to be. Less years in school mean
fewer career possibilities and, as such, less income.
Conclusion
Perspectives on income inequalities in Brazil have been positive and the ten-
dency is for these inequality rates to drop even more in the coming years.
There are evident possibilities of economic growth, yet also tremendous
challenges that must still be dealt with, such as regional income redistri-
bution between urban and rural areas. This explains the importance of
incorporating marginalized areas and regions into new perspectives, not
only commercial, but also of sustainable growth, paying greater attention
to social and environmental impacts, thus leading to greater gains, not only
from an economic, but also from political and cultural points of view.
However, inequalities are not limited to the income distribution. A
sociological analysis must expose other factors and mechanisms involved in
producing and reproducing inequalities, whose origins are as varied as their
manifestations. By recognizing the complexity of analyzing contemporary
societies in general, and inequality in particular, Social Science must go
beyond the restricted spaces of pure income statistics, circumscribed to
economic studies on inequality.
Finally, Brazil needs to resolve its educational deficit with the majority
of its population. Schooling is especially important at this stage since a
country’s development is highly influenced by the quality of its Society,
citizens, and culture. The consequences of increased schooling are positive
for the country, not only from an economic point of view, but also in view
of such important aspects as public participation, culture, and citizenship,
among others.
22
Income Inequality in Russia
Y. Epikhina
Definition of Key Categories

This article examines the average per capita income change in Russian
households and the structure of income sources. It is based on the data
of the Russian Longitudinal Monitoring Study (RLMS) cutting across the
period from 1994 to 2009.
The analysis of income is to a large extent dependent on its defini-
tion. Implicit in this definition is the assumption that the recipient of
income relies on sources that contribute to the household or individual well-
being. Hence, the definition of income elaborated by the ROSSTAT — the
Russian State Statistical Agency includes “income of an individual from
entrepreneurial activity, salary of hired workers (calculated salary level
corrected by change in wage arrears coverage), social benefits (pensions,
assistance, stipends, insurance and other payments), revenues from prop-
erty in the form of interest from bank accounts, shares, dividends and
other revenues)” (M. ROSSTAT, 2008: 102). We shall expand this defi-
nition by incorporating into it payment from all possible sources of income.
The Chapter “Income” of the RLMS helps us to designate eight possible
sources:
1. Salary.
2. Social benefits (coverage of gasoline expenditures, subsidies, child-
rearing benefits, housing assistance benefits, other payments made by
the social services of the state, monetary replacement of social benefits,
pensions, stipends, unemployment benefits, alimony, insurance cover-
age).
3. Intra-family money transfers.
439
440 Y. Epikhina
4. Assistance from private sources — individuals or organizations (exclud-

ing state organizations).
5. Revenue from the sale of leasing property as well as from the sale of
precious stones, foreign currency, shares and other valuable assets.
6. Revenue from capital investment.
7. Borrowing (credit or debt relations with organizations or individuals).
8. Revenue from exploiting personal land plots.
It is notable that our classification is different from the one proposed

by the family-oriented RLMS questionnaire and the classification proposed
by A.Ya. Burdyak, L. N. Ovcharova, D. O. Popova and R. I. Popova and
the one used in the RLMS in 1994–2003 (2005: 10). The authors com-
bine sources of income present in the RLMS questionnaire in the following
groups:
1. Salary and natural payments. It includes the salary and natural pay-
ments on the main and second jobs and revenue from occasional jobs.
2. Pension.
3. Stipends.
4. Benefits, including unemployment benefits, child-rearing benefits and
fuel cost coverage.
5. Monetary assistance, including inter-family transfers, assistance of aid
and other organizations.
6. Income from the sale of lease of personal property.
7. Income brought in by family land plots.
8. Other income including alimony, investment-related revenues, insurance-
related revenue, income generated from debt return and borrowing.
It is notable that the categorization proposed by A. Ya. Burdyak and

her colleagues call for a more detailed account of income defined as “social
benefits”. In proposing our categories, we maintain the following princi-
ple: Who (or what) is the initiating agent of income generation? Pen-
sions, stipends and all kinds of benefits as well as alimony are regulated
by Russian Law. The state is the main agent for this kind of revenue,
therefore, we decided that it was possible to merge all these sources into
one group. At the same time, we thought it logical to separate income
generated by the household from income that came from other private
sources or aid organizations (in the categories proposed by A. Yf. Burdyak
and her colleagues, these sources were merged into one group “monetary
assistance”).
Income Inequality in Russia 441
Therefore, we shall define income as the aggregate sum of monetary

means received by the household from all of the above-mentioned sources.
It should be noted that the RLMS questionnaire targeting families contains
a question that seeks to establish what the monetary revenue of a household
was. Complementary analysis shows it brought about results that differed
from the one that came out from the aggregate computation. The cause
of the difference is clear: the respondents might not regard all the sources
mentioned above as “income”. For instance, means received from credits,
the sale of precious stones or currency are set apart by respondents from
aggregate income. Meanwhile, our interpretation of the term presupposes
inclusion of these sources into the aggregate sum.
The computed aggregate income serve as the basis for the calculation
of the indicator that we shall use further on — per capital income. The
latter is defined as the relation of aggregate family income to the number
of individuals belonging to the same household.
For each round of the monitoring study, we computed the following
indicators of inequality: Gini and Theil indices as well as decile coefficient
of differentiation. The results are presented in Table 22.1.
Table 22.1. Gini and Theil Indices as well as Decile Coefficient of Differentia-
tion.
Year Gini Theil Decile coefficient
1994 0.51 0.27 80.6

1995 0.53 0.35 97.7
1996 0.56 0.30 1532.5
1998/1999 0.53 0.34 150.5
2000 0.52 0.30 59.7
2001 0.46 0.19 32.3
2002 0.47 0.22 33.9
2003 0.49 0.28 36.44
2004 0.50 0.36 35.76
2005 0.44 0.22 24.84
2006 0.47 0.26 29.19
2007 0.45 0.22 23.23
2008 0.45 0.25 22.9
2009 0.40 0.17 16.80
Source: Russia Longitudinal Monitoring Survey, RLMS-HSE, conducted

by HSE and ZAO “Demoscope” together with Carolina Population Cen-
ter, University of North Carolina at Chapel Hill and the Institute of
Sociology RAS. (RLMS-HSE sites: http://www.cpc.unc.edu/projects/rlms,
http://www.hse.ru/org/hse/rlms) This is also the source for all other tables
in this chapter.
442 Y. Epikhina
In the post-Soviet times, the distribution of income is characterized

by a high level of inequality. We can single out several distinct periods
in the dynamics of income inequality over the last two decades. The first
half of the 1990s brought about a steep rise in inequality provoked by eco-
nomic reforms. As Table 22.1 shows, from 1994 to 1996, income inequality
dramatically increased, reaching its peak in 1996. At this point, differen-
tiation described by the Gini and decile coefficients reached the highest
point in post-Soviet history (0.56 and more than 1,500 correspondingly).
After that high point, inequality started to gradually decrease. During the
period from 1998 to 2001, the Gini indicator went down to 0.46, the Theil
index — to 0.19, the decile coefficient 32.3. It is fair to assume on the basis
of these figures that the first few years, after the Russian economy defaulted
in 1998, were marked by a gradual decline of income inequality. However,
later developments upended this assumption: Inequality started to grow
again from 2002 to 2004. From 2005, inequality resumed its decline and in
2009 it dwindled to the lowest point in post-Soviet period. It has to be said
that despite positive dynamics, the level of income differentiation remains
quite high. In 2009, the income of the most prosperous decile group was 17
times bigger than the aggregate income of the lowest decile group. The Gini
coefficient was equal to 0.4, which is much higher than in other European
countries. It should also be noted that the computation does not include
the most prosperous group of large-scale asset owners inaccessible to a mass
survey.
Change in inequality patterns can be exemplified by a changing ratio
of income between quintile groups (see Table 22.2).
From 1994 to 1996, income level of the first (the poorest) and second
quintile groups kept losing part of their income to the more prosperous
groups of the population. In 1996, the level of inequality was the highest,
income of the first quintile group constituted only 1.3% of the entire per
capital income. At the same time, the proportion of income received by
the fifth (the most prosperous) quintile group reached 60%. In other words,
from 1994 to 1996 the differentiation process brought about a reduction
in the income level of the poorest groups and a corresponding increase in
the level of prosperity for the richest, the fifth quintile group. It is worth
noting that in the indicated period, the first quintile group comprised the
largest proportion of households that did not have any income. In 1994, the
first quintile group constituted 15.2% of the entire group, in 1996 it grew
to 42.1%.
The gradual decrease in the inequality observed in 1998–1999 was

caused by a redistribution of income from the fifth quintile group in favor
of the less well-to-do parts of the population. From 1998 to 2009, the pro-
portion of income received by the fifth quintile group fell by 10% (from
58.6% to 48.3%). The proportion of income in the first quintile group went
up from 2.2% to 6.0% — in the second, from 7.8% to 10.5% — in the third,
from 12.6% to 14.7% — and in the fourth, from 18.8% to 20.0%. In the first
quintile group, the proportion of households with zero income came down
from 25.8% (1998/1999) to 3.7% (in 2009).
If we analyze changes in income differentiation from 1996 to 2009, it
becomes obvious that its level significantly decreased. The Gini coefficient
went down from 0.56 to 0.40, and the Theil index from 0.30 to 0.17. How-
ever, as Table 22.2 shows the redistribution of income from the more pros-
perous to less ones was not significant: The proportion of income in the
first quintile group went down by less than 5%. A closer look reveals that
the years of stable economic growth saw no significant shifts in the distri-
bution of income: From 2004 to 2008 there was no change in the proportion
of aggregate income allocated to the relevant quintile groups. The smaller
gap between the rich and the poor brought no dramatic improvements to
the well-being of the less prosperous strata of the population. Russian soci-
ety came to have a stable pattern of income distribution that resulted in
Table 22.2. Distribution of Per Capita Income in Quintile Groups, %.
Quintile groups
Year of study 1(the poorest) 2 3 4 5 (the richest)
1994 2.8 8.5 12.8 19.4 56.6

1995 2.6 7.8 12.0 18.5 59.0
1996 1.3 6.8 12.4 19.9 59.6
1998/1999 2.2 7.8 12.6 18.8 58.6
2000 3.4 8.2 12.2 18.1 58.1
2001 4.2 9.6 13.7 20.3 52.3
2002 4.1 9.2 13.4 19.8 53.4
2003 3.9 8.6 12.5 18.6 56.3
2004 4.2 8.6 12.2 18.2 56.9
2005 5.0 9.7 13.9 20.3 51.2
2006 4.4 9.0 12.9 19.3 54.3
2007 5.0 9.8 13.4 19.3 52.5
2008 5.1 9.5 13.4 19.7 52.3
2009 6.0 10.5 14.7 20.6 48.3
444 Y. Epikhina
Table 22.3. Variation Coefficient, %.
Quintile groups
Year 1 (the poorest) 2 3 4 5 (the richest)
1994 71.5 15.6 10.6 14.3 146.5

1995 72.3 14.6 11.2 15.1 265.9
1996 111.0 23.2 12.3 15.7 118.9
1998/1999 82.0 18.9 10.1 14.5 289.0
2000 62.2 13.3 9.6 13.8 154.3
2001 53.2 12.7 9.1 13.6 81.9
2002 52.9 12.9 10.7 12.6 111.1
2003 49.3 12.2 11.0 12.6 245.1
2004 50.0 11.0 10.4 12.2 320.4
2005 47.8 10.1 9.7 12.0 169.1
2006 47.0 11.3 10.4 12.7 165.1
2007 42.2 11.4 10.0 12.0 140.5
2008 42.5 11.0 9.2 11.9 191.3
2009 39.6 10.2 9.0 11.8 112.2
the following ratio: The first and second quintile groups received no more
than 17% of the aggregate per capita income, while the fourth and the fifth
quintiles received more than 70%.
This observation allows us to assume that the decrease in the level of
income differentiation results not only from the redistribution of income
but also from the decrease in the variation of income inside quintile groups.
While the level of inequality inside these groups goes down, the level of
inequality between them is stable or goes up. To test this hypothesis,
we calculated the variation coefficient for each of the quintile groups
(Table 22.3).
The aggregate can be regarded as homogeneous when the coefficient
does not exceed 30%. As the data shows, the second to the fourth group can
be qualified as homogeneous. Within the period of observation the variation
coefficient characterizing them fluctuated from 9.0% to 14%. The years of
1996 and 1998/1999 may be an exception when the variation coefficient
in these groups exceeded the mentioned threshold. It is notable that the
first and the fifth quintile groups are characterized by the highest variation.
The year 1996, marked by a high level of inequality, saw the coefficient go
over 100%. In 2001, the decrease in inequality leads to a reduction in the
coefficient value in the first quintile group to 53.2%, and in the fifth, to
81.9%. The following vacillations of inequality are linked to a change of the
variation value observed in these quintile groups. The second significant
decrease in inequality is explained by the further reduction of the variation

coefficient. In 2009, the variation value in the first quintile group reaches the
lowest level for all the years of observation (39.6%), while in the fifth group
it goes down significantly in comparison with previous years (112.2%). In
other words, it is possible to refer to the process as the homogenization of
income groups.
The Structure of Income and Inequality

It follows from Table 22.4 that the most popular sources of income for the
Russian population are social benefits and salary. However, the importance
of these sources has been subject to significant variation across time. In the
period of 1994–1996, characterized by a rise in the level of inequality, the
weight of these sources in household budgets decreased in relative terms.
In 1998, the proportion of households that relied on these sources began to
increase gradually. Therefore, in 2009 the proportion of households getting
social benefits made up 70.1% — an increase of 16% in comparison with
1996. The proportion of household with salaries as the main source came
to 75.0% — an increase of 23% over the figures of 1996.
The proportion of intra-family transfers and “debts and credits” was
also subject to change. While the proportion of households that received
material assistance from relatives rose to one-fourth, the debt and credit
Table 22.4. The Structure of Income Sources, %.
Intra- Debts Sale of Revenue Investment-

Social family and personal from related
Year benefits Salary transfers credit property PLP Aid revenue
1994 74.2 6.3 18.7 25.3 9.7 6.3 6.3 2.3

1995 69.3 7.2 17.3 24.2 9.7 7.1 4.6 1.8
1996 54.0 52.1 20.2 25.9 11.2 8.0 5.1 1.4
1998/ 58.9 55.8 21.0 24.2 7.9 6.5 5.4 0.9
1999
2000 65.9 62.8 23.5 21.6 8.2 10.3 6.0 1.0
2001 70.5 67.9 22.2 20.5 9.7 9.6 6.8 1.1
2002 72.6 68.9 22.7 18.0 8.5 6.4 6.2 1.0
2003 73.5 69.0 25.5 17.5 8.1 9.7 6.3 0.8
2004 72.9 70.7 25.9 15.8 7.9 7.5 5.1 0.8
2005 71.6 72.2 26.5 15.4 7.8 7.6 5.9 0.6
2006 69.5 73.7 25.7 15.1 7.4 6.4 5.6 0.8
2007 69.4 73.9 23.8 12.7 7.1 5.6 4.6 0.6
2008 69.9 74.5 24.6 11.0 7.2 5.1 4.2 0.5
2009 70.1 75.0 23.1 10.1 7.2 5.7 4.5 0.4
446 Y. Epikhina
behavior implying financial dependency on individuals outside the family

or organizations became smaller. The proportion of households borrowing
money came down from one-fourth in 1994 to one-tenth in 2009.
The structure of income sources is characterized by relative stability.
On the whole, the proportion of households that relied on other than salary
sources or benefits varied from 4% to 10% (for each income source). It is
worthwhile to note that investment-related sources of income regressed to
a lower status — from 2.3% (1994) to 0.4% (in 2009).
By early 2000, a relatively stable structure of income sources had
emerged. In it, social benefits and salary came to the fore as the most popu-
lar ways of getting income. They are followed by intra-family transfers and
borrowed means (debts and credits). The least popular sources were profits
received from the sale of personal property, personal land plots (PLP), aid
from individuals or organizations, and investment-related revenue.
The data shows that the Russian households pursue a flexible policy
towards the formation of their budgets. As Table 22.5 shows, the propor-
tion of households that have only one source of income is tantamount to
one-third. In the period from 2002 to 2006, the proportion of such house-
holds came down to 27%–29%. The majority of households fill their budget
by exploiting several sources of income. The households with one source of
income rely, in most cases, on social benefits and salary. In the early 1990s,
close to one-fifth of all one-source households relied on social transfers.
However, from the year 2000 onwards, the proportion of such households
came down to 15%.
At the same time, the proportion of households that relied exclusively
on salaries as a source of income was on the increase. By 2009, it reached
16.7% — doubling the level of 1994. It is symptomatic that the proportion
of households supported only by intra-family transfers, the sale of PLP
products, the sale of property or credit and debts was the highest in 1996
when households relying only on salary constituted slightly over 50% (the
lowest for all years of observation). It is fair to assume that the above-
mentioned sources of income came out as a means to fill the gap in the
absence of regular salary.
Table 22.6 illustrates the change of the proportion of income sources in
the per capita income of Russian households. The data shows that the main
proportion of the summary per capita income of the Russian households is
formed by two income sources — social payments and salary. In 1994, these
two sources constitute two thirds of the per capita income, but by 2009 it
had gone up to 77.8%. At the same time, the proportion of social benefits
March 5, 2013
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Table 22.5. The Proportion of Households Living off Only One Income Source, %.

Year benefits Salary transfers credit property PLP Aid revenue Total

1994 21.3 8.2 0.9 1.6 0.5 0.2 0.1 0.1 32.9
1995 20.9 9.4 0.8 1.6 0.3 0.8 0.1 0.0 33.9
1996 14.1 10.8 1.9 3.7 1.5 1.3 0.2 0.0 33.5
1998/1999 18.0 13.2 1.6 2.4 0.6 0.7 0.1 0.0 36.6
2000 17.1 11.4 0.7 0.9 0.3 0.6 0.1 0.0 31.1
2001 16.1 2.5 0.5 0.4 0.2 0.4 0.0 0.0 30.1
2002 15.9 11.9 0.5 0.2 0.2 0.1 0.0 0.0 28.8
2003 14.8 11.8 0.6 0.3 0.1 0.3 0.0 0.0 27.9
2004 14.1 2.8 0.6 0.1 0.1 0.2 0.0 0.0 27.9
2005 13.9 13.1 0.5 0.1 0.1 0.2 0.1 0.0 28.0
2006 13.1 14.5 0.6 0.2 0.1 0.3 0.0 0.0 28.8
2007 14.9 15.9 0.7 0.1 0.1 0.1 0.0 0.0 31.8
2008 14.3 16.0 0.5 0.1 0.1 0.0 0.0 0.0 31.0
2009 14.0 16.7 0.4 0.1 0.1 0.1 0.0 0.0 31.4
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448 Y. Epikhina
Table 22.6. The Structure of the Per Capita Income of Russian Households, %.

1994 23.5 40.4 6.5 12.4 10.5 2.4 1.7 2.4

1995 20.2 40.5 5.5 10.9 16.7 4.2 1.4 0.6
1996 19.8 42.4 7.7 11.7 12.2 3.7 1.4 1.1
1998/1999 22.7 40.0 6.8 10.9 13.9 4.1 1.2 0.4
2000 19.7 43.2 6.3 0.4 13.0 5.6 1.4 0.4
2001 21.2 51.4 6.1 7.9 8.0 4.0 1.2 0.3
2002 21.8 50.7 5.6 7.8 9.8 2.2 1.8 0.3
2003 18.5 46.0 6.3 9.7 14.6 3.6 1.2 0.2
2004 17.9 47.6 5.8 8.7 16.1 2.7 1.0 0.2
2005 20.6 51.1 6.3 9.3 9.0 2.6 0.8 0.2
2006 17.5 50.8 5.6 11.9 10.0 3.2 0.7 0.3
2007 18.0 54.7 5.1 11.5 7.9 1.5 0.6 0.7
2008 18.4 53.2 7.1 7.9 10.4 2.1 0.8 0.1
2009 22.6 55.2 4.8 6.7 7.6 2.4 0.6 0.1
has not been changing in any significant way. It was at its minimum in 2006
(17.5%) and its maximum was reached in 1994 (23.5%). The weight of salary
came to be gradually growing from 1994 to 2009. The years 2000–2001 saw
a real breakthrough when the proportion of salary in income grew by 8%.
On the whole, within the period described by the data the proportion of
salary in the per capital household income grew from 40.4% (1994) to 55.2%
(2009).
The second important role in the formation of Russian household bud-
gets is played by such sources as income from the sale of personal property
or borrowing from individuals or organizations. Prior to 2001, as well as
in 2003–2004, the aggregate proportion of income related to these sources
reached 25%. The intra-family transfers and income that came from the
sale of PLP products occupied a small but stable niche in the households’
budget. The intra-family transfers covered between 5% and 8% of the family
budget, the PLP products never exceeded 5%. The least important sources
have been aid and investment.
To estimate the contribution of each source to the scale of inequality,
we shall use the Theil decomposition index. In this case, decomposition is
equal to a ratio of income to the summary value of the index. This strategy
of analysis allows one to determine sources of income that contribute to
inequality in a negative way by reducing it and sources that play a positive
role by increasing it. The summary results are presented in Table 22.7.
Table 22.7. The Results of the Decomposition of the Theil Index by Sources of Income.

1994 −7.7 28.4 6.2 25.5 34.6 1.3 4.1 7.5

1995 −8.6 24.0 3.2 14.4 60.8 4.0 1.3 1.0
1996 −2.8 40.3 8.6 19.2 27.5 2.7 1.7 2.8
1998/ −5.1 24.3 3.8 17.2 53.6 4.4 1.3 0.4
1999
2000 −9.9 26.2 4.4 24.6 45.2 6.9 1.9 0.7
2001 −12.6 54.9 8.3 19.5 21.7 5.5 1.6 1.1
2002 −9.4 42.1 4.2 20.0 34.5 2.2 5.8 0.6
2003 −11.1 17.2 5.4 21.5 62.7 2.4 1.7 0.2
2004 −6.4 13.6 4.3 16.0 68.9 1.7 1.6 0.2
2005 −9.5 2.4 6.0 26.2 44.8 3.4 0.9 0.8
2006 −9.1 20.9 2.6 38.9 37.3 8.2 0.6 0.6
2007 −117 29.6 3.9 48.8 25.4 0.1 0.6 3.3
2008 −9.0 19.9 14.6 25.5 45.1 3.1 0.8 0.1
2009 −10.1 37.6 4.0 29.1 35.2 3.2 0.8 0.2
The data testifies that social benefits are the only source of income
contributing to a reduction of income inequality. The variation of its con-
tribution dovetails with changes in the level of inequality. In 1996, when
income inequality was at its peak, the contribution of social benefits to a
reduction of social inequality constituted 2.8%. In the same year, the pro-
portion of households that received income from inter-family transfers came
to the lowest point in recent history (54%). In 2001, the level of inequality
went down, a development that coincided with a growing contribution of
social benefits into the reduction of inequality (12.1%). The proportion of
households receiving this kind of income rose to 66%.
It is now a common view that salary contributes the most to the gap
between rich and the poor in contemporary Russia. The results of analysis
prove that its contribution is quite significant. In 2001, the proportion of
inequality generated by salary differentiation came to be equal to 54.9%, in
1996 and 2002 close to 40%. However, in 2003, 2005 and 2008, this contri-
bution did not exceed 20%. The differentiating role of two other sources —
income from the sale of personal property and borrowing — turns out to be
more significant. In the period from 2003 to 2008, income from property sale
came to weigh more than any other source in the total of income inequality
(more than 60%). To make a long story short, in Russian society income
differentiation stems not only from the existing salary variation, but also
450 Y. Epikhina
from the difference in the amount of possessions accumulated by households

in the previous period. The possessions count only if they can be converted
into income. The accessibility of the borrowed money is another factor with
an impact on the level of differentiation.
The results of the study show that the role of other sources of income
(intra-family transfers, income from the sale of PLP products, aid, and
investment-related income) is small. The contribution of intra-family trans-
fers or income from PLP products does not exceed 10% (with the exception
of 2008 when the intra-family transfers made up 15% of inequality). The
proportion of such sources as aid provided by individuals or organizations
or investment-related income stayed at the level of 2%–3% before 2005 and
1% or less after that breaking point (with the exception of 2007 when con-
tribution to investment-related inequality constituted 3.3%).
It is obvious that three sources of income contribute the most to income
inequality. These are the salary, income from the sale of property, and bor-
rowing. The total weight of the last two sources tends to exceed the weight
of the first one. Social benefits seem to be the only source of income capable
of reducing income inequality. However, the proportion of this source to the
reduction of the gap does not go over 12%.
Territorial Income Inequality

Contemporary Russian sociology and economics abound in books and arti-
cles dedicated to territorial inequality. Inequality is analyzed on the basis of
economic (e.g., gross regional product, per capita income) and social indica-
tors (e.g., crime rate, life expectancy, unemployment level). G. Otvintseva,
O. Voronkova and E. Stukalenko (Litvintseva et al., 2007: 119–131) use
ROSSTAT (government statistical agency) data collected in 2000–2005 to
analyze income inequality for 78 subjects of the Russian Federation across
five quintile groups. The authors use the Gini coefficient to prove the
inequality was deepening in the given period. The Gini index grew from
40.5% in 2000 to 42.9% in 2004 (Litvintseva et al., 2007: 121). The data
also runs across seven Federal districts. The authors claimed that the deep-
est rift was characterized in the Central Federal District. The average per
capita income in Moscow was 36.8 times greater than that of the Ivanovo
region. The Gini coefficient dividing the two regions was equal to 50.3%.
The Far Eastern district came out as the one with the smallest gap. The
highest per capita income observed in the Magadan region was only 10.7
times higher than that of the Amur region with the Gini coefficient equal
to 36.6 (Litvintseva et al., 2007: 123).
The authors analyzed the impact of social transfers on the level of inter-
regional inequality. They compared the inequality level with and without an
input from social transfers and came to the conclusion that social transfers
contribute to a reduction of inequality in the regions: “In 2000–2005, the
Gini indices of actual average per capita income were lower than relevant
indices that did not include social transfers. In 2004, the Gini index for the
entire country was equal to 42.9% without social transfers and 38.5% with
them included” (Litvintseva et al., 2007: 126).
Smirnova explores the problem of inequality by comparing economic
(GRP and per capita average income) and social indicators (crime rate
and economic crime rate) across regions (Smirnova, 2005: 118–125). Her
study is based on statistical data provided by the ROSSTAT in 2002.
She interprets differentiation as the magnitude of variation represented
in the difference between the highest and lowest values of the varia-
tion coefficient computed for 78 subjects of the Russian Federation. The
highest level of variation is manifest in the per capita gross regional
product. The scale of variation reaches the figure of 72.2% (a differ-
ence between the maximum value (99.92%) of the variation coefficient
in the Ural Federal district and the minimal value (27.76%) in North
Western Federal District). The scale of income variation is on the aver-
age equal to 43.75% ranging from 65.59% in the Central Federal Dis-
trict to 21.84% in the Siberian one (Smirnova, 2005: 120–121). In addi-
tion, Smirnova applies the Lindberg asymmetry index to measure the scale
of inter-regional income inequality per se. The computations showed that
only the Siberian Federal district can render positive inequality values. It
implies that in most other regions the average income is below the aver-
age All-Russian level. In the remaining six Federal Districts, the value of
the Lindberg asymmetry index varies from −20 (Northern Western Fed-
eral District) to −50 (Southern Federal District) (Smirnova, 2005: 124).
The results of the analysis conducted by Smirnova point to a significant
difference in the per capita income between and within the Federal Dis-
tricts.
According to Lavrovsky and Shiltsin, the majority of regional study
experts agree that the level of regional differentiation in Russia is high and
is trending even higher. Postnikova and Shiltsin insist that various regions
have a different input into the general regional differentiation (Postnikova
and Shiltsin, 2009: 67–86). In 2000, they calculated that the deviation from
an even distribution of the GRP owes to the presence in the equation of two
regions — Moscow and Tumen. Their aggregate input into the coefficient of
variation is tantamount to about 50% (11.6% and 37.7% correspondingly)
452 Y. Epikhina
(Postnikova and Shiltsin, 2009: 70). From 2000 to 2006, the input of two
regions — Tumen and Chukotka — underwent significant change. Their
aggregate contribution increased from 39.1% in 2000 to 45.3% in 2006
(Postnikova and Shiltsin, 2009: 70–71). Hence, according to Postnikova and
Shiltsin, three regions — Moscow, Tumen and Chukotka — come out as
factors of growth for regional differentiation. As far as other regions are con-
cerned, there is evidence that their inter-regional differentiation has been
stabilizing or even going down annually by an average of 1.5% (Postnikova
and Shiltsin, 2009: 72).
The design of the RLMS sample does not admit of differentiation anal-
ysis in regional terms. However, there is an important possibility to analyze
income differences across settlement types. There are four types of settle-
ment referred to by the RLMS questionnaire — regional center, city, town,
and village. Table 22.8 presents data on the proportion of per capita income
falling into each of the mentioned categories and the way they structure the
sample. For each type, a coefficient is calculated that represents the ratio
between the proportion of aggregate income and the proportion of the pop-
ulation residing in each settlement type.
The results of analysis show that the distribution of income among
households is affected by the level of urbanization of the relevant settle-
ment type. Households residing in regional centers enjoy certain privileges
in comparison with others; their share of income exceeds their proportional
size in the sample. From 2005, the coefficient reflecting the ratio of income
and the proportion of such households in the sample is approximately 1.2.
On the other hand, rural households find themselves in a situation of pri-
vation: They constitute one-fourth of the entire sample, but account for
no more than one-fifth of the aggregate income. Despite some variation
it is possible to say that the distribution of income is dependent on the
type of settlement: The higher the level of urbanization, the bigger is the
proportion of income allocated to the settlement households.
The analysis of the data allows us to make the following conclusions. In
spite of tendencies moderating the level of income differentiation, inequality
in Russian society remains high. The order of distribution that emerged in
the last few years leads to a situation when the poorest 10% of the popula-
tion get no more than 5%–6% of the entire per capita aggregate income
and the richest 10% get almost half of it. The reduction in inequality
observed in the last decade owes both to the leveling of income in the
low and high resource groups and the lukewarm tendency of equalization.
There is convincing evidence that up to now a stable structure of income
March 5, 2013
16:48
9in x 6in
Table 22.8. Distribution of Per Capital Income by Settlement Type.
Regional center City Town Village

Pro- Pro- Pro- Pro- Pro- Pro- Pro- Pro-
portion portion portion portion portion portion portion portion
of of popu- Co- of of popu- Co- of of popu- Co- of of popu- Co-

income lation efficient income lation efficient income lation efficient income lation efficient
1994 51.2 41.5 1.23 26.6 28.1 0.95 6.3 5.6 1.13 16.0 24.7 0.65
1995 44.3 40.6 1.09 34.2 28.6 1.20 6.0 5.6 1.07 15.5 25.2 0.62
1996 47.8 39.6 1.21 30.5 27.8 1.10 5.8 6.0 0.97 15.8 26.6 0.59
1998/ 43.6 39.8 1.10 33.3 28.5 1.17 5.6 5.9 0.95 17.5 25.7 0.68
1999
2000 42.4 38.8 1.09 33.0 27.7 1.19 5.2 6.2 0.84 19.4 27.2 0.71
2001 50.5 44.6 1.13 26.5 24.8 1.07 5.7 5.5 1.04 17.3 25.1 0.69
2002 52.3 43.9 1.19 27.2 25.2 1.08 4.4 5.6 0.79 16.0 25.3 0.63
2003 55.5 42.4 1.31 24.1 26.8 0.90 4.4 5.4 0.81 16.0 25.4 0.63
2004 46.4 42.9 1.08 32.6 26.7 1.22 5.9 6.1 0.97 15.1 24.3 0.62
2005 50.1 40.7 1.23 26.5 27.4 0.97 5.2 6.3 0.83 18.2 25.6 0.71
2006 51.2 42.1 1.22 26.5 27.0 0.98 6.5 5.3 1.23 15.8 25.6 0.62
2007 52.2 41.6 1.25 25.3 27.2 0.93 4.1 5.4 0.76 18.4 25.8 0.71
2008 48.7 42.4 1.15 28.6 27.6 1.04 6.4 6.0 1.07 16.3 24.0 0.68
2009 51.1 42.2 1.21 24.6 26.8 0.92 5.9 6.3 0.94 18.4 24.8 0.74
453
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454 Y. Epikhina
sources has emerged with emphasis on the role of social benefits and salary.
These income sources account for 70% of the per capital aggregate income
in Russia. The biggest boost to income inequality comes from such sources
as the sale of personal property and borrowing money from individuals or
organizations. The territorial structure makes a significant contribution to
income differentiation. The higher the level of urbanization is, the more
overall aggregate the settlement gets.
23
Poverty and Income Inequality in India’s
Urban and Rural Areas
K. L. Sharma
Introduction
Traditionally, Indian society is characterized by a rigid caste hierarchy,
based on birth and ascription. Birth in a particular caste determines higher
or lower rank in the system of caste stratification. Marriage, occupation
and opportunity are all determined by birth as per the caste system.
By and large, a correspondence has been there between caste hierarchy and
economic/income inequality in India. How can we know about economic
inequality? Can we know it based on consumption? Is income inequality uni-
formly found in different regions, villages, towns, and metropolises? What
are the main reasons for economic inequality? Is it due to inequality of
opportunity? Is scarcity of resources the main cause of inequality?
How to Define Poverty and Inequality?

Economists tend to define poverty and inequality by considering the dis-
tribution of consumption expenditures, which is usually less than that of
income. This is not a correct perspective, however, as the rich save more
than the poor. More important is the inequality of opportunity than the
income as such. Inequality of opportunity is determined by the differen-
tial distribution of resources and infrastructural arrangements. Facilities,
like electricity, irrigation, agricultural land, healthcare, education, etc.,
in the villages, and higher education, industrialization, means of trans-
port and communication, and high level of professionalism, would pro-
vide more opportunities to people in towns and cities. Due to limited
income range, income inequality in India is low, compared to several
455
456 K. L. Sharma
advanced countries and even China, because of a wide range of economic

opportunities and the vast differentiation of economic structure. Another
point is related to the interlinking of economic growth and development.
The UN Human Development Reports and National Social Service (NSS)
reports indicate that growth has not reduced inequality. Rather, it has
increased inequality. India’s educational inequality is quite alarming. Eco-
nomic growth has not shown improvements in public health. Even the rise
in GNP has not resulted in reduction of income inequality. Growth has
raised the GNP, but at the same time the concentration of higher income
in a few hands has also increased. Artisans, farmers and self-employed
rural people have not been benefited from globalization or from the with-
drawal of the state from the market, curtailment of public amenities and
subsidies. However, growth is inevitable, and poverty reduction can also
be ensured by growth, provided it is accompanied by fair distributive
shares.
Gunnar Myrdal on Poverty and Inequality

Indian economists lack consensus on the appropriate criteria and measure-
ments of poverty and inequality. Generally, they tend to relate inequal-
ity with unemployment, poverty, and malnutrition. Before we reflect on
the recent discourse on poverty and inequality, it may be desirable to
observe that an average consumption level hides tremendous inequalities
(Myrdal, 1968: 563–579). Realizing the difficulty of having actual and reli-
able estimates of savings from income and then assessing consumption,
Myrdal related income levels with the ramifications of poverty. There is
greater inequality in underdeveloped regions. In India, the average income
is extremely low, but the dispersion around this average is also relatively
wide. For 1955–1956, the average income per month was just 14.6 rupees
(about ten cents in US dollar), or 175.2 rupees or less per year. At the
end of 2010, the situation was vastly different. A skilled worker/mason got
about rupees 250 per day. In view of such a vast change in Indian economy,
the situation depicted in Myrdal’s monumental work — Asian Drama —
does not carry any worthwhile value. Today, social stratification is much
less an obstacle in social, spatial, and occupational mobility. The following
points were made by Myrdal:
1. In South Asia (particularly in India) income is somewhat less evenly

distributed than are consumption expenditures.
Poverty and Income Inequality in India’s Urban and Rural Areas 457
2. Inequality in the income distribution tends to be greater in underdevel-

oped countries than in the developed countries.
3. The plight of the masses of people in the underdeveloped economies of
South Asia would be serious enough if income was evenly distributed.
Each income recipient would then receive an amount equal to the
extremely low national average.
4. In South Asia, a person’s social and economic position tends to be static;
the limitations on upward movement are severe.
5. In South Asia, a low average income, income inequality, and social strat-
ification are causally interrelated. But social stratification is itself an
aspect of inequality.
6. The average income is close to the bare subsistence level of the poor
classes. Hence, income inequality among them cannot be very high.
7. The upper strata in a poor village in India may not have a significantly
higher income than sharecropping tenants or landless peasants. But even
then the two are different. The former often receive incomes without
working while the latter work for income to have a bare survival. Thus,
despite a high degree of income equality, society may be quite inegalitar-
ian. The pronounced income inequalities should also reflect the overall
social stratification. Besides income inequalities, differences in regard
to leisure, enjoyment of status and exercise of power and authority are
equally or even more significant aspects of social life.
8. However, a close connection exists between the above economic and
social factors. The inequality in social status creates major incentives to
withdraw from economic activity. By the same logic, economic prospects
are curtailed by status restrictions. Such a situation does not persist
today to a large extent as we have indicated earlier. In 1955–1956, per
capita income in India was 241 rupees, and in 1957–1958, it was 245
rupees. The highest income was 804 rupees in New Delhi in 1955–1956,
and 892 rupees in 1957–1958. The lowest income was in Manipur, with
102 rupees in 1955–1956, and 104 rupees in 1957–1958. Today, average
income has increased manifold as we will discuss later on. Restrictions
based on status have nearly disappeared. Income as an important basis
of social status is a well accepted criterion.
Recent poverty estimates for 1987–1988, 1993–1994 and 1999–2000

show consistency with per capita expenditure, state domestic product and
agricultural wages (Deaton and Dreze, 2002: 3729–3748). However, in the
1990s regional disparities increased, with the Southern and Western regions
458 K. L. Sharma
doing much better than the Northern and Eastern regions. “Economic
inequality also increased within states, especially within urban areas, and
between urban and rural areas” (ibid.: 3729). Deaton and Dreze also observe
that social progress in areas like health and education is quite noticeable,
but it has followed very diverse patterns, ranging from accelerated progress
in some fields to slow down and even regression in others. Regional imbal-
ances and disparities characterize the 1990s. The situation in the liberal-
ization era is distinctly different form the one we have described as given
by Detan and Dreze. Jayadev et al. (2007: 3853–3863) find increases in
wealth levels in India across virtually all groups, including inter-personal
wealth inequality. In 2002, there were sharp differences in the growth rates
of wealth holdings in the middle and upper income states, suggesting diver-
gence in wealth inequality. Thus, there were large differences in the levels of
wealth holdings according to socioeconomic categories. The following points
have been made by Jayadev et al. (ibid.: 3861–3862):
1. The vast majority of the population, divided along caste, size-

distribution or occupation has witnessed increases in its absolute wealth
levels during the period of liberalization.
2. Increases in wealth levels have been unequal across different groups and
axes. At the top, the wealthiest 20% are different from the rest of the
population, and the top 1% is making solid gains compared to the rest
of the population.
3. A 3% increase in annual growth-rate between 1991–1992 and 2002–2003
has produced rapid accumulation of household assets across the country.
Financial assets and transportation have witnessed highest growth.
4. This trend is replicated across castes, occupational groups, rural and
urban groups, etc. However, there is a concern regarding the rural–urban
gap, from 1.37 in 1991–1992, it has arisen to 1.5 in 2002–2003.
5. The middle income states with their phenomenal urban growth seem to
have witnessed an impressive accumulation of household assets.
6. There is a strong social basis for economic exclusion and perpetuation
of poverty among the asset-poor communities, such as SCs and STs,
Muslims and the uneducated.
Amartya Sen’s Views on Inequality in India

Recently, the question of inequality has been comprehensively examined
by Amartya Sen (2002). He advocates the perspective of functioning and
capabilities as approaches to the study of economic inequality. Sen goes

beyond analyses of incomes, wealth and utilities in the understanding of
equality/inequality. He writes: “The theory of inequality evaluation has
close links with that of assessment of poverty, and the choice of space
becomes a central concern in identifying the poor and in aggregating
the information about the states of those identified. If poverty is seen as
the deprivation of some minimum fulfillment of elementary capabilities, it
becomes easier to understand why poverty has both an absolute and a rela-
tive aspect” (ibid.: 9). Behind the apparent inequality of income, there are
other deep-rooted forms of inequalities. The question of inequality requires
locating the central social arrangement, which may be seen in terms of
“unfreedoms” having their roots in caste, region, gender, language, and
many such other apparently non-economic aspects of society. Sen argues
in favor of both the aggregative and distributive aspects of the evaluation
of inequality. The aggregative mechanism explains the general principle or
demand for equality, and the distributive refers to its specific distributive
utilities for different sections of society. Inequality can be found in the
social arrangements itself, and therefore, it may exist in terms of differ-
ences in capabilities and powers that different people would have. As such,
according to Sen (ibid.: 146), inequality can be best understood in terms of
its “efficiency advantages”. He writes: “A significant inequality has to be
acknowledged first, before it is examined as to whether it is justified or not”
(ibid.: 146). While disagreeing with John Rawls (1999) on using primary
goods as the basis of the difference principle in his “justice as fairness”, Sen
pleads for substantive capabilities and opportunities to reduce inegalitarian
social arrangements.
Inequality of income and poverty are quite visible and much discussed
aspects of Indian state and society. The P. C. Mahalanobis Committee, set
up in 1960, considered poverty and inequality as coterminous problems of
Table 23.1. Categories of People.
West India East India South India Total India

Categories of people Percent of total agricultural families
Peasant landlords 14 9 8 10
Other peasants 56 59 29 52
Agricultural workers 30 32 63 38
Source: Gunnar Myrdal (1968). Asian Drama, Vol. II, Penguin Books, p. 1057.
460 K. L. Sharma
Table 23.2. Land Area Belonging to Each Group as Per-

cent of Total Area.
Absentee landlords 16 13 4 13
Peasant landlords 23 22 32 24
Other peasants 59 55–60 56 58
Agricultural workers 2 5–10 8 5
Source: Myrdal (1968: 1057).
the independent India, and suggested a new pattern of income distribution

to reduce poverty. Dandekar and Rath (1971) defined poverty in terms of
economic inequality, that is, expenditure and income, required for suste-
nance. They estimated an annual consumer expenditure of Rs. 324 per
capita in the rural areas and of Rs. 486 per capita in the urban areas
based on 1968–1969 prices. The people who spent below these estimates
were considered “poor”, and about 40% in the rural areas and about 50%
in the urban areas were found to be living below these minimum levels
of subsistence. Beteille (2007: 4455–4463) considers poverty and inequality
as distinct concepts and observes that the relationship between the two is
neither clear nor direct.
Income Inequality in Rural India

Income inequality is reflected in the poverty of a household or of an
individual. Based on this simple fact/assumption, poverty and inequal-
ity have been studied as two sides of the same coin. Debates on poverty,
particularly among planners and economists, have been quite intense. What
is poverty? How to identify the poor? What are the patterns of poverty in
rural and urban India? How reliable are data generated by different agen-
cies? What are the main perspectives on poverty? Other than income, what
are other criteria which affect poverty? These and some other questions have
been raised from time to time.
Unemployment and underemployment are a primary cause of inequality
and poverty in India in general, and in rural India more specifically. Even
today, nearly 60% of rural people depend upon agriculture, and non-farm
sources of income are quite scarce. Since agriculture is still largely depen-
dent upon monsoons, droughts often adversely affect crops. Labor utiliza-
tion in agriculture and allied economic activities largely depends upon good
rains. In the 1950s (1955) social stratification in Indian agriculture was as
follows:
Myrdal (ibid.: 1085) observed that without substantially improving

income and living standards by a larger and more intensive labor input,
poverty could not be reduced. For example, in West Bengal in the 1950s,
the average number of family members was 6.2, the average number of earn-
ers was 2.0, and earners as percent of family members were 33.0 (one-third
of total members). Thus, two-third members were non-earners.
Labor utilization outside traditional agriculture is also not conducive,
mainly due to weak institutional motivation and encouragement. How-
ever, the green revolution of the late 1960s and 1970s changed the face of
agriculture and labor utilization by way of intensive cultivation, commer-
cilization of crops and a new nexus with urban markets. But it has never
been conclusively said that the green revolution has decreased poverty.
A good number of social scientists, particularly Marxist economists, have
observed that due to green revolution, rich farmers have become richer
and the poor ones have become poorer. An overall increase in economic
growth has further intensified the discourse on poverty and inequality in
India.
Without going into the intricate methodological issues relating to mea-
surement/assessment of poverty and inequality in terms of expenditure on
consumption in terms of calories for rural and urban people or levels of
income and savings, etc, based on some selected studies an attempt may
be made to understand poverty in rural India. A study of 12 villages of
Rajsamand and Udaipur districts of Rajasthan (India) shows that a num-
ber of households had climbed out of poverty in the past 25 years. At the
same time, a large number of previously non-poor households had fallen into
poverty (Krishna, 2003: 533–542). The reasons for getting out of poverty
and falling into poverty were not the same. Net gain in poverty alleviation
was not substantial. Some of the findings of this study are quite reveal-
ing. The percentage of households varies from a low of 4.1% in one village
to a high of 47.3% in another village, in a radius of about 100 km. Since
some have come out of poverty in a period of 25 years, others have fallen
to poverty in the same time, and therefore the net gain in poverty reduc-
tion is actually quite small. 31% households experienced poverty for the
first time in 25 years, and the remaining 69% have remained poor con-
tinuously for more than 25 years. 33% of households that were poor 25
years ago have managed to find their way out of poverty. Lastly, escape
and decline are not symmetrical with each other. Here, we may point out
that what people themselves do to increase their income must be carefully
studied. What the government or any external agency does to enhance
462 K. L. Sharma
employment/income cannot provide a full picture of the structure of poverty

and its dynamics.
Srinivasan (2007: 4155–4165) observes that the official poverty lines
based on energy norms to measure poverty require a critical examination.
The average energy norms of 2,400 and 2,100 calories for rural and urban
people, per capita per day, respectively, do not make much sense in terms
of nutritional value, and the very averaging hides highs and lows in the con-
sumption of calories. Srinivasan argues for “broadening of the concept of
poverty”. The official definition of poverty and income inequality does not
incorporate goods and services managed by the households in raising their
economic standing. The government policy interventions intended to allevi-
ate poverty by providing particular goods, or services, or sources of income
may be reconsidered as the only effective means for helping the poor. More-
over, the question of access to public goods, services and resources is not
equally and beneficially available to all sections of society, particularly the
poorest of the poor.
While presenting a profile and diagnostic picture of poverty in Uttar
Pradesh, Valerie Kozel and Barbara Parker (2003: 385–403) highlight the
fact that the poor are a heterogeneous group. They are deprived not only
in material (income) terms, but have also low human development and live
in an uncertain and threatening environment. Poverty is caused by low
levels of assets and low and uncertain returns. Three major challenges are
there with regard to the poor: (1) scarcity of economic opportunities, (2)
lack of empowerment to take advantage of available goods and resources,
and (3) the non-availability of an effective safety net against the brutalities
committed by the dominant sections. The following perceptions were noted
about rural poverty in 1998–1999:
1. Landlessness or possession of only poor-quality, non-irrigated lands.

2. Reliance on intermittent, casual wage employment, especially in the
agricultural sector, and on foraging or begging.
3. Lack of basic literacy, job skills.
4. Limited access to social networks for jobs in the non-farm sector.
5. Chronic indebtedness.
6. Desertion by male spouse, being widowed, or being a woman, living
alone without an adult male.
7. A high dependency ratio, many daughters, and a lack of sons.
8. Ill health or disability of the primary breadwinner.
9. Poor quality mud and thatch housing, insecurity of housing tenure.
Table 23.3. Incidence of Poverty by Caste Shown in Uttar Pradesh.
Incidence of poverty Percentage of

Year Caste group Urban Rural Overall Population Poor
1987–1988 SC/ST 48.3 56.2 55.3 24 32

Other 35.7 37.5 37.2 76 68
Overall 37.4 42.3 41.3 100 100
1993–1994 SC/ST 57.5 58.6 58.4 23 33
Other 31.3 37.0 35.7 77 67
Overall 35.0 42.4 40.9 100 100
1999–2000 SC/ST 44.1 44.0 44.0 26 35
Other 30.3 29.4 29.6 74 65
Overall 32.5 33.2 33.1 100 100
Source: Kozel and Parker (2003).
10. Social or caste identity — low caste status as a strong indicator of

poverty.
Based on the data of the NSS for 1987–1988, 1993–1994, and 1999–
2000, the incidence of poverty by caste in Uttar Pradesh is shown in
Table 23.3 above.
Table 23.3 clearly indicates a considerable difference between the SCs
and STs and the general population, on the one hand, and in the rural and
the urban settings on the other, in the incidence of poverty.
A study of the Southern state of Karnataka (Murgal et al., 2003:
404–408) based on the NSS data of the 55th round shows that there is con-
siderable heterogeneity in the extent and depth of poverty within the state.
There is a regional variation in poverty within the state. In the same region,
there are higher levels and concentrations of poverty, and these have a direct
bearing on agricultural wages, employment shares, and district domestic
products. However, the rural–urban differentials in poverty rates are not
considerable. Table 23.4 shows the pattern.
Table 23.4. Karnataka NSS.
Karnataka Rural areas Urban areas

NSS region Head count Poverty gap Head count Poverty gap
Rural 18.2 26.8 3.0 5.2

Urban 24.5 24.1 5.1 5.2
Overall 20.1 — 3.6 —
Source: As above.
464 K. L. Sharma
Poverty Lines for Rural and Urban India

Without going into the complex nature of measurement mechanisms of
poverty in India, we can simply say that in the past two decades the Indian
poor have drawn considerable attention by the social scientists as well as
from government agencies and NGOs. Some facts are presented here. Sun-
daram and Tendulkar (2004: 5125–5132), based on the NSS data for 1993–
1994 and 1999–2000, conclude that educational endowments are known to
raise the productivity of the workforce and reduce poverty. The poor/non-
poor contrasts in terms of education are quite sharp. The illiterate working
rural poor are 71%, whereas their urban counterparts are 47.5%. Male–
female contrasts are sharper among the working poor than among the
non-poor workers. The same also holds true across the rural–urban divide.
Table 23.5 shows the above patterns:
India’s growth in the post-globalization period has benefited nearly 150
million people out of a population of 1,125 million. About half of India’s
poor are in seven states, namely Bihar, Orissa, Uttar Pradesh, Madhya
Pradesh, Rajasthan, Chhattisgarh and Jharkhand. Besides varying poverty
lines in different states, differences between rural and urban are enormous
regarding poverty. According to Shukla (2010a), there is one India whose
inhabitants enjoy higher per capita incomes than Brazil, there is a second
one, larger than the first one, which is slightly poorer than Indonesia, and
a third India, that is double in size to the sum total of the first two, but
almost as poor as Bangladesh. Shukla mentions that bottom 60% Indian
Table 23.5. Worker–Population Ratios in Poor and Non-Poor Households by Gender

and Rural–Urban Location: All-India, 1993–1994 (Worker–Population Ratios per 1,000).
Poor households Non-poor households

Level of education Males Females Persons Males Females Persons
Rural India
Illiterate 59.74 87.82 70.81 37.38 72.96 49.55
Literate upto Primary 25.87 9.54 19.43 30.94 17.60 26.38
Upto Secondary 12.38 2.46 8.47 24.33 8.07 18.77
Above Secondary 2.01 0.19 1.29 7.36 1.36 5.31
Urban India
Illiterate 37.88 71.16 47.50 13.04 37.27 17.52
Literate upto Primary 33.96 19.99 29.92 23.81 20.73 23.24
Upto Secondary 23.45 7.35 18.79 35.10 20.13 32.33
Above Secondary 4.72 1.51 3.79 28.05 21.87 26.91
Source: Economic and Political Weekly, November 27, 2004, Vol. 34 No. 48,
pp. 5125–5132.
households account for 30% of national income and about 40% of private
final consumption expenditure. The top 40% households in India have 72%
of income and almost 90% of surplus income. Thus, such is the pattern of
income and social stratification.
The share of farm income which was 74% of rural incomes, in the 1970s,
would be just 32% in 2015–2016. Thus, non-farm growth is substantial in
rural India. Over 42% of rural households draw their income from non-farm
occupations. Those who are engaged in modern occupations saw a 200%
increase in income. Urban people would have three times more income than
rural people. The top 20% in both rural and urban India are the maximum
gainers. The share of the bottom 20% is around 7%, whereas of the top
20% the share is around 37%.
The Indian economy has attained a GDP growth rate close to 9%,
saving about 30%, with a reduction in revenue deficit and increment in
direct taxes of more than 5%. However, compared to industrial growth,
agriculture is lagging far behind (9% in industry and 2.3% in agriculture
in 2005–2006). Thus, 60% of the Indian people who depend upon agricul-
ture do not get much from the processes of globalization and liberalization.
Unemployment in rural India is increasing at a fast rate. However, two
contradictory findings can be found: (1) Poverty in both rural and urban
areas has substantially declined since 1980s; and (2) Consumption inequal-
ity across individual households increased between the period 1993–1994
and the period 1999–2000. Thus, there was a substantial increase in income
inequality among the highest income earners.
Shukla (2010b) finds that today only 22% of all urbanization is due to
migration. In the future, urbanization will be haphazard and ad hoc. Most
of our urban growth would happen in existing mega cities, like Mumbai and
Delhi. India’s top 20 cities account for just 10% of the country’s population,
but earn more than 30% of the national income, spend 21% of it, and
account for close to 60% of the surplus income. Inequality levels appear
quite high in the top 20 cities. 53% of households in the topmost income
quintiles are the top 20 cities. In other cities, there are 30%, and in rural
India there are just 12%.
A total of 45 million households have MNREGA Cards1 — almost 30%
of all rural households. 41% of the rural people drew their income from
1 This card is issued under Mahatma Gandhi National Rural Employment Guarantee
Act. Under this Act an unemployed Indian is entitled to get employment for at least 100
days in a year on a fixed daily wage.
466 K. L. Sharma
self-employment in agriculture, while 35% had labor as a source of liveli-

hood, and 11% were salaried (in 2004–2005). In 2009–2010 self-employment
fell to 23%, income from labor rose to 42%, and that from salaries went up
from 11% to 19%. There was a 49% jump in employment generation for
women. Investment in agriculture has declined from 4.7% in 2007–2008 to
1.6% in 2008–2009 (Shukla, 2010c).
Poverty and inequality are coterminous. The poor states and districts
also have greater inequality. Chaudhuri and Gupta (2009: 94–110) explain
the significance of a district-wise analysis of levels of living and patterns of
poverty. Some of their findings are as follows:
1. Rich states have a high level of inequality compared to poor states.

However, in the urban sector, many of the poor states also have high
levels of inequality.
2. There has been an intense rural–urban divide even at the district level.
Performance of different parameters in the same districts is not uniform
and congruent.
3. Levels of living, poverty and inequality have far more disparity at the
sub-state level than across states. There is wide spatial disparity in the
level of living within Indian districts.
4. There are pockets of critical poverty, and of grim urban poverty in spite
of the high average urban level of living.
5. There is a polarization in the level of living in terms of the concentration
of affluence or poverty.
6. However, in about one-fourth of rural districts and more than half of the
urban districts, poverty has declined by nearly 10%.
How to reduce poverty? Most economists continue to believe that

differences in the per capita gross domestic product, agricultural growth,
and the share of bottom 40% of the population in consumption would
explain inter-state differences in poverty rates (Virnani, 2008: 54–62).
To eliminate poverty, Virnani stresses economic policies that promote
growth, focus on programs of agriculture and rural development in the
poorer states, and target subsidies at the bottom 40%. Modern manufac-
turing and commerce must receive top priority.
It is not corroborated that growth reduces or eliminates poverty.
Poverty reduction is not a simple outcome of economic growth, it is the
result of distributive justice ensured by government policies and programs
of action. A study of 20 villages in two districts of Gujarat over the past 25
years has shown that some have escaped poverty and others have become
poor. 9.2% of all households escaped from poverty and 7.3% of households
fell into poverty at the same time (Krishna et al., 2003: 5171–5179). The
following four categories of households were identified (ibid.: 5173):
Category A: Poor then and poor now (remained poor).
Category B: Poor then and not poor now (escaped poverty).
Category C: Not poor then but now poor (became poor).
Category D: Not poor then and not poor now (remained not poor).
Despite the lack of a full-proof distributive system, economic growth is a
crucial factor in poverty alleviation. Anti-poverty programs, greater gender
equality and increased democratic decentralization also play a significant
role in poverty reduction (Nayyar, 2005: 1631–1639).
During 1993–2000, there was little or no reduction in poverty, however,
between 1993–2002, there was the perception of a decline in poverty, and
between 1999–2005 (Himanshu, 2007: 497–508). Manna (2007: 3108–3015)
also reports that reductions in inequality and poverty because of rural–
urban differences in the average daily per capita calorie requirement of the
Indian population has narrowed significantly. The official per day calorie
requirements of 2,400 for rural and 2,100 for urban are on higher side. Based
on reliable estimations, Meena finds that it is 2,290 calories per capita per
day for rural and 2,250 for the urban areas. The poverty line for rural areas is
Rs. 334.23 and Rs. 614.46 for urban India, as estimated by Meena, which is
different from the official poverty line of Rs. 327.56 for rural and Rs. 454.11
for urban India as per the year 1999–2000 estimates. However, the studies
by Sundaram (2007: 3121–3131) and Patnaik (2007: 3132–3150) show some-
what disappointing results of the present-day economic situation, particu-
larly with regard to the poor in India. Sundaram observes a sharp accelera-
tion in workforce growth during 2000–2005, but he also notices a slowdown
in the rate of growth of labor productivity in the economy as a whole. He
also finds a slowdown (a decline) in real wage growth in both rural and
urban India. Between 2000–2005, a marginal acceleration in poverty reduc-
tion occurred. A clear slowdown is there in the number of self-employed
and regular wage/salary workers in the “above poverty line” households.
Even more emphatically than Sundaram, Patnaik argues that not only is
the level of absolute poverty in India high, there has also been an adverse
impact of neoliberal policies on poverty. She emphasizes the nutrition norm
and mentions that in 1999–2000 nearly half of the rural people who were
actually poor had been excluded from the set of the officially poor. Patnaik
states that for 2004–2005, while the official estimate of rural poverty is
28.3%, her estimate is that 87% people were below the poverty line.
468 K. L. Sharma
Contrary to Patnaik’s analysis, Datta (2008: 61–67) finds the reduction

of the poverty ratio in 2005–2006 compared with 2004–2005 significant.
The reduction in the poverty ratio 1.4 or 1.6% is higher than the decline
of 0.8% observed between 1993–1994 and 2004–2005. It is really a diffi-
cult task to define poverty and relate it to income. It is also not quite
easy to know the actual income of the people, particularly of those who
are not salaried people. A large majority of people are in agriculture and
self-employed economic pursuits or informal industrial sector. The Below
Poverty Line (BPL) Census in 2002 (Mehrotra and Mander, 2009: 37–44)
used a long list of 13 main points and several points, including landholdings,
type of house, availability of clothing, food security, sanitation, ownership
of consumer durables, literacy status of highest literate, status of household
labor, means of livelihood, status of children, type of indebtedness, reason
for migration and preference for assistance. The criteria suggested for the
2009 BPL Census included occupational categories, affirmative action cat-
egories, and social categories for the BPL people in rural areas. For urban
areas, the criteria are related to social vulnerability, occupational categories
and place of residence.
Poverty estimates continue to remain a puzzle. In a recent paper,
Himanshu (2010: 38–48), while working on the official data (the NSS con-
sumption data for 2004–2005) for the urban poverty estimate of 25.7%
using the multiple reference period, finds the incidence of rural poverty on
HCR basis 41.8% for rural people against the official estimate of 28.3%.
The estimates show much larger rural–urban differences but less concen-
tration of either rural or urban poverty in a few states. The question of
the BPL households has become quite problematic and complicated. It has
also become an item of political agenda of ruling parties. But again the
question is: How should we measure the BPL? Dreze and Khera (2010:
54–63) have suggested the method of exclusion and inclusion for a “social
assistance base” (SAB). The criteria include assets, facilities, education,
type of house, landholdings, etc., and relate the same with rural–urban,
gender, marital status, literacy and education. Based on the permutations
and combinations of exclusion–inclusion criteria and social background of
the people, Dreze and Khera have proposed a rank-order to facilitate iden-
tification of the BPL households.
Another study by Sarkar and Mehta (2010: 45–55) reveals that the
labor market generates a difference in wage and income based on resi-
dence (rural or urban), employment status, educational level, industrial
groups and gender. Sarkar and Mehta observe: “The wage differential across
different segments has increased in the post-reform period. The trends

in wage rates clearly indicated rural–urban and casual-regular dualism.
The wage gap between agriculture and non-agriculture for regular work-
ers in rural areas had been narrowing. However, in urban areas, the wage
gap between the secondary and tertiary (services) sectors was widening
probably reflecting the service-oriented pattern of economic growth” (ibdi.:
54). Sarkar and Mehta find a continuous increase in economic inequality,
with a sharp increase during the post-reform period. The rural and urban
inequality had increased with rising inequalities in the upper income group.
Workers receiving higher wages and regular workers were far more bene-
fited than casual wage earners. The interests of the poor, less educated
and semi-skilled workforce need to be protected. The level of education,
number of working days and employment status are interrelated aspects.
Besides these factors ethnic and caste-based identities of group members
also affect access to skills and education, and mobility (Thorat, 2010:
47–53).
Concluding Remarks
1. The official estimates have generally underestimated the intensity of
poverty, while independent scholars have often found poverty more than
the official estimates.
2. Poverty in rural and urban areas is not the same because of differences
of access with regard to sources of income.
3. Socio-cultural factors, such as caste, religion, education, etc, affect wages
and earnings.
4. Economic/income inequality is generally congruent with social hierar-
chy in terms of rural/urban background, caste rank, and educational
status.
5. Economic inequality varies between the states, within the states, between
districts, within the districts and between and within villages and towns,
and across the social groups.
6. Recognition of the BPL households and schemes for providing them
guaranteed employment at least for 100 days in a year are the efforts
made by the government of India.
7. A wage rise has been made from time to time, particularly for the rural
and urban poor, artisans, casual, semi-skilled and skilled workers.
8. India has equality in politics, namely universal adult franchise, but there
is inequality in social and economic life.
470 K. L. Sharma
Appendices
No. 1
Table 23.6. Comparison of Actual Expenditure around Poverty Line against Normative
Expenditure.
Education Calories capita

Food and health per day
All All All All All All
Reference poverty line rural urban rural urban rural urban
Rural Andhra Pradesh 0.88 1.01 0.72 0.84 1,710 1,825

Assam 0.92 1.03 0.58 0.81 1,806 1,977
Bihar 0.99 1.13 0.49 0.77 1,928 2,146
Chhattisgarh 1.00 1.09 0.80 1.78 1,837 1,962
Gujarat 0.88 1.00 0.91 1.45 1,742 1,768
Haryana 0.76 0.89 0.60 0.95 1,670 1,800
Himachal Pradesh 0.85 0.94 0.59 1.03 1,847 1,947
Jammu & Kashmir 0.83 0.94 0.43 0.58 1,792 2,016
Jharkhand 0.83 0.95 0.43 0.57 1,844 1,991
Karnataka 0.92 1.06 0.86 0.91 1,651 1,751
Kerala 1.07 1.20 1.73 2.19 1,445 1,704
Madhya Pradesh 0.88 0.99 0.91 1.13 1,834 1,880
Maharashtra 0.98 1.12 1.21 1.69 1,738 2,384
Orissa 1.11 1.27 0.99 1.30 2,052 2,167
Punjab 1.02 1.14 0.61 0.80 1,709 1,868
Rajasthan 0.85 0.99 0.57 0.60 1,909 1,971
Tamil Nadu 1.00 1.16 1.01 1.45 1,589 1,748
Uttarakhand 0.85 1.01 0.54 0.73 1,811 1,947
Uttar Pradesh 0.94 1.08 0.78 1.03 1,996 2,115
West Bengal 0.87 1.00 0.90 1.11 1,815 1,957
All-India 0.92 1.06 0.85 1.14 1,840 1,999
(Continued )
Table 23.6. (Continued )
Education Calories capita

Food and health per day
All All All All All All
Reference poverty line rural urban rural urban rural urban
Urban Andhra Pradesh 1.00 1.09 0.62 1.05 1,628 1,627

Assam 0.88 0.95 0.42 0.72 1,756 1,931
Bihar 1.00 1.13 0.40 0.82 1,944 1,947
Chhattisgarh 0.94 1.05 0.98 1.64 1,781 1,774
Gujarat 0.85 0.95 0.67 0.80 1,575 1,644
Haryana 0.80 0.95 0.71 0.82 1,534 1,800
Himachal Pradesh 0.68 0.86 0.94 0.47 1,422 2,119
Jammu & Kashmir 0.74 1.00 0.35 0.66 1,420 1,959
Jharkhand 0.84 0.96 0.71 0.69 1,907 2,013
Karnataka 1.00 1.13 0.66 0.67 1,643 1,712
Kerala 1.01 1.13 1.38 1.48 1,456 1,503
Madhya Pradesh 0.94 1.05 0.71 1.29 1,718 1,804
Maharashtra 0.96 1.10 1.04 1.52 1,592 1,696
Orissa 1.03 1.20 0.76 0.78 1,909 2,056
Punjab 0.89 1.05 0.55 0.90 1,532 1,789
Rajasthan 0.91 1.03 0.98 1.17 1,711 1,816
Tamil Nadu 0.96 1.10 0.85 1.45 1,567 1,715
Uttarakhand 0.94 1.08 0.60 0.89 1,829 1,850
Uttar Pradesh 0.99 1.11 0.84 1.25 1,818 1,926
West Bengal 0.98 1.05 0.63 0.92 1,751 1,757
All-India 0.94 1.06 0.79 1.22 1,691 1,766
Note: All rural represents the actual expenditures around the poverty line class with
starting reference as the all-India rural poverty line for 2004–2005. Similarly, All urban
represents the actual expenditures around poverty line class with starting reference as
the all-India urban poverty line for 2004–2005.
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Table 23.7. Characteristics of Households by Alternative Poverty Lines.
Percentage of households in each group

Household type Education of HH head

Casual labor Illiterates
and and literates Possess Share of Calories
Casual self-employed up to luxury food in total per capita
Categories labor in non-farm Illiterates primary goods consumption per day
Rural
K. L. Sharma
Poor–Poor 51.7 65.7 60.4 84.8 1.3 63.0 1,642
Non-poor–Poor 46.3 61.3 53.5 79.9 3.2 62.3 1,830
Poor–Non–poor 27.1 39.6 44.3 75.5 5.6 46.4 1,824
Non–poor–Non–poor 25.2 43.3 35.8 62.8 19.0 56.6 2,299
Urban
Poor–Poor 28.6 73.78 43.6 73.2 6.7 59.1 1,600
Non-poor–Poor 18.3 70.56 31.3 69.6 14.1 58.3 1,757
Poor–Non–poor 15.9 61.86 28.7 53.9 22.0 50.3 1,742
Non-poor–Non-poor 6.2 48.11 11.9 29.9 56.2 44.8 2,182
Note: The category before the stroke (–) is the status of the household by existing official poverty line of the Planning
Commission and the category after the under-stroke is the status of the households by our poverty lines. For example,
Non-poor–Poor category of households was non-poor using the existing official poverty line but is poor by the new
poverty lines.
Source: Himanshu, 2010, EPW, Vol. 45, No. 1, pp. 38–48.
b1344-ch23
No. 3
Table 23.8. National Poverty: Head Count Ratio.
1993–1994/1999–2000 2004–2005
URP MRP URP MRP
Rural
Poverty Ratio 37.3 27.1 28.3 21.8
Number of Poor (Million) 244.0 193.2 220.9 170.3
Urban
Poverty Ratio 32.4 23.6 25.7 21.7
Total
Poverty Ratio 36.0 26.1 27.5 21.8
URP = uniform recall period, MRP = mixed recall period.

Source: Virmani (2008).
No. 4
Table 23.9. Change in Poverty Rate between 1993–1994 and 2004–2005.
% Point per year Compound annual
1993–1994 to 1990–2000 to 1993–1994 to 1990–2000 to

2004–2005 2004–2005 2004–2005 2004–2005
URP MRP URP MRP
1 Rural 0.78 1.06 2.48 4.26

2 Urban 0.60 0.38 2.07 1.68
3 Total 0.77 0.87 2.40 3.56
Source: Virmani (2008).

474 K. L. Sharma
No. 5
Table 23.10. State-Specific Poverty Lines for
2004–2005 (Rs/month).
Rural Urban
Andhra Pradesh 292.95 544.30

Assam 387.64 378.38
Bihar 356.36 461.40
Gujarat 353.93 540.80
Haryana 414.76 504.20
Himachal Pradesh 394.20 504.20
Jammu & Kashmir 391.26 504.20
Karnataka 324.17 603.50
Kerala 429.07 562.90
Madhya Pradesh 324.48 59.00
Maharashtra 362.25 664.50
Orissa 325.65 544.00
Punjab 410.38 456.10
Rajasthan 374.57 531.10
Tamil Nadu 351.86 551.70
Uttar Pradesh 369.76 487.10
West Bengal 382.82 446.10
All-India 358.03 540.40
Source: Economic and Political Weekly, Febru-

ary 10, 2007 Vol. 42, No. 6, pp. 497–508.
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Poverty and Income Inequality in India’s Urban and Rural Areas
No. 6

Table 23.11. Pattern of Regular and Casual Wage (in Rs) of 15–59 Groups at 1993–1994 Prices.
Wage per day Growth rate (%) Ratio

Sector 1983 1993 2004 1983–1993 1993–2004 1983–2004 1993/1983 2004/1993 2004/1983
Regular Rural(R) 40 57 78 3.43 2.89 3.15 1.43 1.37 1.95

Urban(U ) 59 77 101 2.57 2.50 2.53 1.31 1.31 1.71
Total 51 69 92 2.92 2.65 2.78 1.35 1.33 1.80
R/U 1.5 1.4 1.3 0.7 0.9 0.8 — — —
Casual Rural(R) 17 21 29 2.03 2.98 2.52 1.24 1.38 1.71
Urban(U ) 24 30 36 2.15 1.67 1.90 1.25 1.20 1.50
Total 17 22 30 2.49 2.86 2.68 1.29 1.36 1.76
R/U 1.4 1.4 1.2 1.1 0.6 0.8 — — —
Source: Computed from Unit Level Data of Various NSS Rounds.
475
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476
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No. 7
Table 23.12. Trend of Rural Agricultural and Non-agricultural Wage (in Rs) of Regular and Casual Workers of 15–59 Age Groups at
1993–1994 Prices.
K. L. Sharma
Sector 1983 1993 2004 1983–1993 1993–2004 1983–2004 1993/1983 2004/1993 2004/1983
Regular Agriculture 20 26 39 2.53 3.75 3.15 1.30 1.50 1.95

Non-Agricultural 48 62 82 2.47 2.57 2.52 1.29 1.32 1.71
Ratio 2.4 2.4 2.1 1.0 0.7 0.08 — — —
Casual Agriculture 15 20 25 2.78 2.05 2.40 1.33 1.25 1.67
Non-Agricultural 23 29 38 2.23 2.49 2.36 1.26 1.31 1.65
Ratio 1.5 1.5 1.5 0.8 1.2 1.0 — — —
Source: Economic and Political Weekly, Vol. 45, No. 37.
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Poverty and Income Inequality in India’s Urban and Rural Areas
No. 8

Table 23.13. Pattern of Urban Sectoral Wage (in Rs) of Regular Workers of 15–59 Age Groups at 1993–1994 Prices.

Sector 1983 1993 2004 1983–1993 1993–2004 1983–2004 1993/1983 2004/1993 2004/1983
Regular Primary 56 80 139 3.46 5.15 4.32 1.43 1.74 2.48

Secondary 57 70 82 1.98 1.45 1.71 1.23 1.17 1.44
Tertiary 60 80 108 2.78 2.77 2.77 1.33 1.35 1.80
Tert./prim. 1.07 1.00 0.78 0.8 0.5 0.6 — — —
Tert./sec. 1.05 1.14 1.32 1.4 1.9 1.6 — — —
Casual Primary 20 23 26 1.34 1.12 1.23 1.15 1.13 1.30
Secondary 26 33 40 2.30 1.76 2.02 1.27 1.21 1.54
Tertiary 24 29 35 1.82 1.72 1.77 1.21 1.21 1.46
Tert./prim. 1.20 1.26 1.35 1.4 1.5 1.4 — — —
Tert./sec. 0.92 0.88 0.8 0.8 1.0 0.9 — — —
Source: Economic and Political Weekly, Vol. 45, No. 37.
477
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478 K. L. Sharma
No. 9
Table 23.14. Population Share of the Poorest and Richest States in the
All-India Percentile Classes (Rural).
Population in the bottom Population in the top

10 percentile classes 10 percentile classes
States (i.e., MPCE ≤ Rs. 270) (i.e., MPCE ≥ Rs. 890)
Orissa 31.1%(926)∗ 3.7%(265)

Chhattisgarh 24.1%(325) 3.3%(182)
Kerala 2.3%(50) 37.5%(1598)
Punjab 0.5%(9) 31.9%(1005)
Note: ∗ The figures in brackets give the number of sample households falling
in respective percentile classes.
Source: Chaudhuri and Gupta (2009).
No. 10
Table 23.15. Population Share of the Poorest and Richest States in the All-India
Percentile Classes (Urban).
Population in the bottom Population in the top

10 percentile classes 10 percentile classes
States (i.e., MPCE ≤ Rs. 395) (i.e., MPCE ≥ Rs. 1880)
Orissa 28.2%(436)∗ 3.4%(48)

Chhattisgarh 24.6%(344) 3.2%(58)
Punjab 1.3%(45) 13.6%(280)
Himachal Pradesh 1.7%(6) 19.1%(99)
Note: ∗ The figures in brackets give the number of sample households falling in
respective percentile classes.
No. 11
Table 23.16. Year-wise Population Below Poverty Line.
Year Population below poverty line (%)
2000 35
2001 35
2002 25
2003 25
2004 25
(Continued)
Table 23.16. (Continued)
Year Population below poverty line (%)
2005 25
2006 25
2007 25
2008 25
2009 25
Note: Definition of Population below poverty line: National

estimates of the percentage of the population falling below
the poverty line are based on surveys of sub-groups, with
the results weighted by the number of people in each group.
Definitions of poverty vary considerably among nations.
For example, rich nations generally employ more generous
standards of poverty than poor nations.
No. 12
Table 23.17. Number and Percentage of Population Below Poverty Line.
Rural Urban Combined

No. of No. of No. of
persons Percentage persons Percentage persons Percentage
Year (Lakh) of persons (Lakh) of persons (Lakh) of persons
1973–1974 2,613 56.4 600 49.0 3,213 54.9

1977–1978 2,642 53.1 646 45.2 3,289 51.3
1983 2,520 45.7 709 40.8 3,229 44.5
1987–1988 2,319 39.1 752 38.2 3,070 38.9
1993–1994 2,440 37.3 763 32.4 3,204 36.0
Note: The head count ratio declined from 56.4% in 1973–1974 to 37.3% in 1993. A total
of 94 in rural sector and from 49% to 32.4% in urban sector resulting in a significant
drop of the poverty ratio from 55% in 1973 to 36% in 1993–1994 for all India. The
absolute number of the poor had, however, remained at the same level of around 320
million due to population growth. The decline in urban poverty ratio by about one-third
is very significant as it coincided with a period of rapid urbanization. Although there
has been progress in reducing poverty at the macro level, there exists wide rural, urban
and inter-State disparities.
Source: Planning Commission of India.

24
Structural Characteristics and Trends
of Income Inequality in China
Chen Guangjin
On the income inequalities in contemporary China, extensive research has

been conducted by a lot of scholars from China and other countries. What-
ever measurement standard is employed, the conclusion drawn almost in
unison is that the income inequalities in China have widened since reform
and opening up. This chapter mainly analyzes the trend and internal struc-
ture of the widening of China’s income inequalities, the inequality between
urban and rural areas and that among different regions, the economic differ-
entiation among social strata, and the formation mechanism of the income
inequalities in China.
In this chapter, our analysis will be mainly based on the data from three
sources. First, the General Social Survey (GSS) conducted by the Institute
of Sociology of Chinese Academy of Social Sciences (CASS) in 2008. The
sampling method applied to this survey is the probability proportionate
to size sampling (PPS). It sampled 260 townships and urban subdistricts
from 130 sampled counties in 28 provinces (excluding Hainan, Tibet, and
Gansu); then from these townships and urban subdistricts, 520 villages
and urban communities and were sampled; finally 7,139 household samples
were obtained. The second data source is the China National Nutrition
and Health Survey (CHNS) which was jointly conducted by the University
of North Carolina of the USA and the Chinese Academy of Preventive
481
482 Chen Guangjin
Medicine.1 This is a kind of panel survey, started in 1989 and repeated in

1991, 1993, 1997, 2000, 2004 and 2006; the information collected in these
surveys included the previous year’s residents, employment, income, etc. of
sampled households. It employed a method of random stratified sampling
of groups by multiple phases to collect data from eight to nine provinces of
the East, Central and West of China. Therefore, we have a sampling survey
data pool of national household income in eight individual years, covering a
time span of 20 years from 1988 to 2007. The third source is China’s official
statistical data — the Chinese Statistical Yearbook has provided the data of
the disposable income of the urban residents and the per capita net income
of the rural residents throughout the country, and the provincial statistical
yearbooks have provided the data of the annual incomes of urban and rural
residents of each province.
Trend of China’s Income Inequalities

This chapter first investigates the basic pattern of the change of inequality
in the per capita income of China’s urban and rural households, and the
result of the investigation is presented in Table 24.1. In this table, we use
Theil indexes L and T and the Gini coefficient to measure the degree of the
income inequality. In terms of the statistical properties of the three indica-
tors, the Gini coefficient is especially sensitive to the change at the middle
of the income spectrum, the Theil index T is sensitive to the change at the
higher end of the income spectrum, and the Theil index L is sensitive to
the change at the lower end of the income spectrum. That is why they are
often used simultaneously (Wan, 2008). It should be noted that, in the cal-
culation of the two Theil indexes, the sample households with zero income
and an extreme sample with RMB 2.362 million in per capita household
member income in 2007 were disregarded to reduce the excessive impact of
the extreme values to Theil indexes and Gini coefficient.
As can be seen from Table 24.1, the average level of household mem-
ber per capita income in China has been rising; at the same time, the
degree of differentiation in the distribution has also been rising. For exam-
ple, the standard deviation markedly increase every year except a somewhat
1 Thissurvey was jointly sponsored by the national Institutes of Health of the USA (R01-
HD30880, DK056350, and R01-HD38700), the Carolina Population Center and China
Center for Disease Control and Prevention. The survey owner has generously provided
seven years of survey data. I would like to express my gratitude here.
Structural Characteristics and Trends of Income Inequality in China 483
Table 24.1. Trend of Distribution Inequality in Per Capita Income of Household in

China during 1988–2007 (Yuan).
Theil Theil Gini Number of

Average Median index L index T coefficient samples
1988 1,060.3 892.8 0.1398 0.1287 0.3990 3,743

1990 1,081.8 907.6 0.1222 0.1053 0.3797 3,586
1992 1,529.2 1,164.7 0.1017 0.2145 0.4260 3,410
1996 3,137.2 2,525.0 0.1418 0.1237 0.4091 3,805
1999 3,953.5 2,999.6 0.1841 0.1628 0.4589 4,300
2003 5,608.2 3,802.9 0.2082 0.1805 0.4943 4,318
2005 6,743.6 4,306.5 0.2363 0.2179 0.5225 4,359
2007 8,237.4 4,774.0 0.2465 0.2445 0.5384 6,986
Data Sources: CHNS, GSS·CASS (2008).
decrease in 1990 than in 1988, and the difference between the average and
the median becomes larger and larger. In general, the later on the timeline
the greater the difference in the income distribution; accordingly, the degree
of inequality in income distribution has been increasing year by year, quite
within expectations.
The year 1996 can be considered as a turning point in the pattern
of change in China’s income inequalities. Before this year, Theil index T
and Gini coefficient fluctuated, while since this year all the three indicators
have been increasing steadily and reached a height in 2007. A retrospec-
tive look at China’s reform can confirm that 1996 is indeed an important
landmark year. By the year of 1996, almost all of the township collective
enterprises completed the ownership reform after years of market-oriented
reform since 1992, and most urban collective enterprises and small and
medium-sized state-owned enterprises had undergone a similar reform. The
ownership refrom at such large scale transformations would undoubtedly
exert a significant impact on China’s income distribution. Table 24.1 is a
reflection of such impact. Therefore, we can hardly draw the same con-
clusion as some researchers that the marketization and privatization have
narrowed down income gaps (e.g., Chen Zhiwu, 2006)
The degree of the income inequalities in China is rather high even
by international standards; in fact, China’s income situation could be
considered highly unequal (Table 24.2). China’s per capita GDP in 2010
reached around USD$4,000, sending China into the rank of the countries
of medium-to-low income level; however, the income inequalities have no
improvement when compared to 2007.
484 Chen Guangjin
Table 24.2. Distribution of Gini Coefficient of Countries (Regions) Worldwide by

Groups.
North Latin
Europe America America Oceania Africa Asia Total
0.2–0.299 19 0 0 0 0 1 20
0.3–0.399 21 1 0 2 11 17 52
0.4–0.499 2 1 8 0 13 7 31
0.5–0.599 0 1 12 1 5 3 22
0.6 and above 0 0 0 0 5 0 5
Total 42 3 20 3 34 29 130
Note: The data of Asia does not include that of Mainland China, Hong Kong, and
Taiwan. The Gini coefficient of Hong Kong is 0.533 in 2007, and that of Taiwan is 0.326
in 2000.
Source: Compiled according to the data provided by CIA (2003–2008).
The Structural Characteristics of Change in the Pattern

of China’s Income Inequalities
In order to analyze the income groups’ composition and change, we
employed the quintile grouping method and obtained the following results
(see Table 24.3). Table 24.3 shows some trends in the structural change of
income shares of different groupings. Firstly, except for the highest 20%
group, of which the share in the total income shows a rising trend, the
income shares of all other groups show a general decline. Secondly, 1996
is an important year. Before this year, each group’s income share showed
fluctuation, and the ranges of the fluctuation were relatively small, no mat-
ter whether they were going up or down. Afer this year, the income shares
of the four lower-income groups have been declining, and the income share
of the highest-income grouping has been increasing. Thirdly, the ratio of
the income share of the highest-income group and the lowest-income group-
ing, which showed fluctuation before 1996, has been going up steadily since
1996, reaching over 22: times by 2005.
Then we use the median relative distribution approach (Handcock and
Morris, 1999) to investigate the population distribution and its change in
different income groups (see Table 24.4). In and before 1996, the important
change of income inequality was basically the increase of the population
proportion in the highest-income group and the decrease of the population
proportion in the lowest-income group. After 1996, the population propor-
tion in the highest-income group continued to increase, and more than dou-
bled the population proportion of the group in the base year. At the same
March 5, 2013
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Structural Characteristics and Trends of Income Inequality in China
9in x 6in
Table 24.3. Income Shares and Changes of the Groups by Quintile Grouping Method.

Income shares (%) Ratio between
the shares of the
highest-income
group and
Next Next-highest lowest-income
Lowest 20% lowest 20% Middle 20% 20% Highest 20% Total group Sample size
1988 4.4 10.5 16.9 24.2 44.0 100.0 10.0:1 3,743

1990 4.9 10.9 17.0 24.7 42.5 100.0 8.7:1 3,586
1992 4.3 9.6 15.4 23.9 46.8 100.0 10.9:1 3,410
1996 4.4 10.1 16.1 24.0 45.3 100.0 10.3:1 3,805
1999 3.3 9.0 15.2 23.3 49.3 100.0 14.9:1 4,300
2003 2.8 8.0 13.7 22.8 52.7 100.0 18.8:1 4,318
2005 2.5 7.2 13.0 22.1 55.2 100.0 22.1:1 4,359
2007 2.6 6.7 11.8 20.2 58.7 100.0 22.6:1 6,986
sources: GSS·CASS, CHNS (2008).
485
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486
9in x 6in
Table 24.4. Change in Population Distribution of Groups Based on the Median Relative Distribution Method Approach (%).
Lowest Highest
group Group 2 Group 3 Group 4 Group 5 Group 6 Group 7 Group 8 Group 9 group
1988 10.0 10.0 10.0 10.0 10.0 10.0 10.0 10.0 10.0 10.0
Chen Guangjin
1990 8.0 9.9 10.7 11.3 10.2 8.6 9.8 10.8 9.7 11.1
1992 8.0 11.3 10.3 10.6 10.0 8.1 8.5 7.4 8.9 16.9
1996 9.1 9.6 11.0 10.2 10.1 9.3 8.9 9.2 9.1 13.5
1999 11.8 11.0 8.8 9.4 9.4 7.9 8.8 9.0 8.5 15.5
2003 12.9 10.0 8.8 9.6 8.7 7.3 7.2 6.6 8.9 19.8
2005 12.7 11.9 8.8 8.4 8.2 6.3 6.9 7.1 8.1 21.4
2007 11.7 10.9 10.2 9.6 7.6 6.6 6.7 7.1 8.1 21.5
Sources: CHNS, GSS·CASS (2008).
b1344-ch24
time, the population proportion in the lowest-income group also began to

increase, and at a certain point increased almost 30% when compared with
the population proportion in the base year. The population of Group 2 (the
next-lowest group) showed a slight upward trend as well, while the popula-
tion proportion of the groups in the middle all showed downward trends. In
other words, in terms of the distribution of the population, the structural
characteristics of the change in income inequality in Chinese society at this
stage is that the relative distribution of the population is moving towards
the two ends of the income spectrum. This trend will be more significant
if the household population in each group is taken into consideration. The
trend will be a serious challenge to China’s goal of expanding the middle-
income population.
Urban–Rural and Inter-Regional Income Inequalities

in China
In this section, we will investigate the income inequalities and changes
between urban and rural areas, among different regions, and within urban,
rural, or regional areas respectively.
Income inequality between urban and rural areas

Firstly, let’s consider the income inequality between urban and rural areas
in China. Table 24.1 shows the change of the ratio of urban household per
capita disposable income and rural household per capita net income. It
will not be difficult to discover that the change of the urban–rural income
inequality in China has experienced four stages since 1978.
The first stage is 1978–1984, when the gap between China’s urban and
rural income declined year by year. The reason for the decline is that the
rural economic reform, especially the universal implementation of the house-
hold contract responsibility system, greatly stimulated the enthusiasm of
farmers in production and promoted the fast development of the rural econ-
omy. This, coupled with the reform on the pricing of agricultural products
and the advancement of agricultural production technologies, caused rela-
tively rapid income growth in rural China (Lin Yifu, 1994; Chen Guangjin,
1996). During this period China’s urban reform had not yet started in an
all-rounded way. The income of urban residents was generally determined
by the state through the mechanism of the planned economy rather than
by the market; therefore, its growth was relatively slow.
488 Chen Guangjin
3.11 3.23 3.21 3.22 3.28 3.33 3.31

2.8 2.86 2.9
2.71 2.79
2.57 2.58 2.65
2.51 2.47 2.51
2.4
2.28 2.2
1.86
1978 1985 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Fig. 24.1. Trend of the gap between China’s urban and rural income during 1978–2008.
Source: Chinese Statistical Yearbooks (multiple years), China Statistics Press.
The second stage is 1985–1994, when the inequality between urban

and rural incomes witnessed a continuous expansion. In this period, the
township enterprises in rural areas developed rapidly and provided a new
source of income for rural households. Meanwhile, the reform started in
urban areas, especially in urban enterprises. In order to encourage the
enthusiasm of the enterprises, the state reformed the income distribution of
the enterprises. One outstanding aspect of the reform was to allow enter-
prises to raise employee wages, bonuses, and benefits according to their own
economic condition, especially bonuses and benefits. Some enterprises even
abused their authorization to over-distribute bonuses and benefits regard-
less of the actual situation of their business (Dong, 1999). As a result, the
income level of urban residents increased at a faster rate than rural resi-
dents, although the urban reform of economic system in this stage could
hardly be called successful.
The third stage is during 1994–1997, when the gap between the incomes
of China’s urban and rural residents once again narrowed. The narrowed gap
was probably caused mainly by the large-scale public-enterprise restructur-
ing, especially the state-owned enterprise reform featuring so-called “focus-
ing on big enterprises and letting go the small”. On the one hand, the reform
adjusted the interest relationship between the enterprises and their employ-
ees; on the other hand, it resulted in a total number of 30 million of layoffs.
The state adopted some measures to help the laid-off workers, e.g., helping
younger worker to get reemployed, establishing various unemployment relief
programs and pension security for older laid-off workers (the so-called “40
and 50 years old” people), and requiring the restructured enterprises to pay
reform compensation and social security for the early retirees in accordance
with relevant government regulations. However, the implementation of these
policies was far from ideal, so that a kind of new poor population appeared
at a large scale in urban areas. This had undoubtedly had a negative influ-
ence on the income increase of the urban residents. The rural township
enterprises also went through a similar reform during this period. Although
the reform might have also affected the level of benefits of the residents
of rural communities where the rural collective enterprises were located,
it generally promoted the development of rural non-agricultural economy
and increased the opportunities for the rural labors to get non-agricultural
jobs. In addition, there were more farmers who chose to work or do business
in cities during this period, and urban restructured enterprises preferred to
hire the lower-paid rural migrant labors to reduce cost. As a result, the non-
agricultural income of the rural households increased at a relatively faster
rate. Therefore, we can say that the income gap between urban and rural
residents would narrow down under the influence of the above-mentioned
factors.
The fourth stage is from 1998 to the present, when the urban–rural
income gap has been expanding. With the further development of the mar-
ket economy, all kinds of deep-rooted factors that affect the urban–rural
income distribution have begun to exert more and more influences. For
example, the return of education has been constantly increasing, while
farmers, who are generally on lower education levels, are at a disadvan-
tage. Even when more and more rural migrant laborers get employed in
non-agricultural sectors, the rise of their income levels is limited by the
rural-migrant-worker system based on the dualistic social structure charac-
teristic of China the rural at one end, and the urban at the other end. In
fact, China’s cheap labor refers mainly to the hundreds of millions of rural
migrant workers. Therefore, although rural households’ non-agricultural
income has been increasing with the expansion of the rank of rural migrant
workers, the growth rate of increase of their income has no chance to catch
up with the growth rate of the urban residents’ income, which inevitably
resulting in a continuous expansion of the income gap between the two (Li
Shi et al., 2008). To make matters worse, the income growth of rural house-
holds was also affected by the ever-increasing levies of local governments,
especially before 2005. The heavy levy on farmers was the most prominent
social problem of the rural society during this period.
490 Chen Guangjin
Income inequality among different regions

To analyze China’s income inequality among different regions, one can start
from the perspective of different provinces or from the larger geographical
regions defined by the gaps due to the imbalance of economic and social
development. Here we adopt the second perspective, that is, to divide China
into three regions with significant development gaps: the East, the Central,
and the West. Originally, the official division of regions was based solely on
the geographical location of the provinces (it actually also largely reflected
the difference in the economic development level of these provinces); the
subsequent adjustments in fact reflected the change in the state’s poli-
cies in regional development, especially the policies of the Great Western
Development and the Northeast Region Revitalization. After comprehen-
sive consideration of the geographical factors, ethnic factors, and the change
of the 1995–2008 per capita GDP ranking of each province, we included the
nine provinces of Shanghai, Beijing, Tianjin, Guangdong, Zhejiang, Jiangsu,
Fujian, Liaoning, and Shandong in the eastern region. These provinces
represent the highest level of China’s economic development and are all
located on the South and East of China along the coastline. We included
ten provinces of Heilongjiang, Jilin, Hebei, Henan, Hainan, Hubei, Shanxi,
Hunan, Jiangxi, and Anhui in the central region. Geographically, except
for Hainan, they are located in the central region; economically, they are
mostly on a comparable level. Finally, we included the twelve provinces of
Inner Mongolia, Guangxi, Sichuan, Chongqing, Guizhou, Yunnan, Tibet,
Shaanxi, Gansu, Qinghai, Ningxia, and Xinjiang in the Western region.
Geographically, they are all located in the Southwest and Northwest of
China, and except for Shaanxi and Chongqing, all of these provinces are
either ethnic autonomous regions or have high percentage of ethnic minority
population.
Since China uses different methods for collecting statistical informa-
tion of urban and rural household per capita income, the analysis of the
pattern of change of the income inequality of the urban and rural areas at
the regional level will need to be done separately. Table 24.5 is the result of
the analysis based on official statistical data. Due to the limitation in data
acquisition, we selected the data of the urban household per capita dis-
posable income and rural household per capita net income of these regions
in and after 1995 to make the comparison. While calculating the urban or
rural residents’ per capita income of the three regions, we used the urban
and rural population of each province to conduct a weighted treatment.
Table 24.5. Trends of Inequality of Urban–Rural Per Capita Disposable Income in the
East, the Central, and the West Regions of China (Yuan).
Urban per capita disposable

income in the three regions and Rural per capita net income in
the gap the three regions and the gap
East: East:
Central: Central:
East Central West West East Central West West
1995 5,092 3,745 3,800 1.34:0.99:1 2,479 1,434 1,134 2.19:1.26:1

1996 5,779 4,177 4,240 1.36:0.99:1 2,939 1,792 1,388 2.12:1.29:1
1997 6,212 4,465 4,555 1.36:0.98:1 3,173 1,990 1,558 2.04:1.28:1
1998 6,501 4,610 4,821 1.35:0.96:1 3,310 2,065 1,660 1.99:1.24:1
1999 7,061 4,951 5,184 1.36:0.96:1 3,397 2,101 1,696 2.00:1.24:1
2000 7,744 5,287 5,573 1.39:0.95:1 3,495 2,133 1,695 2.06:1.26:1
2001 8,933 5,727 6,148 1.45:0.93:1 3,315 2,134 1,685 1.97:1.27:1
2002 9,319 6,441 6,630 1.41:0.97:1 3,892 2,343 1,855 2.10:1.26:1
2003 10,513 7,149 7,194 1.46:0.99:1 4,116 2,446 1,962 2.10:1.25:1
2004 11,762 7,863 8,635 1.36:0.91:1 4,511 2,779 2,186 2.06:1.27:1
2005 13,451 8,787 8,770 1.53:1.00:1 5,156 2,728 2,072 2.49:1.32:1
2006 15,035 9,875 9,717 1.55:1.02:1 5,280 3,381 2,589 2.04:1.31:1
2007 17,106 11,467 11,344 1.51:1.01:1 5,968 3,936 3,033 1.97:1.30:1
2008 19,371 13,055 13,007 1.49:1.00:1 6,760 4,544 3,524 1.92:1.29:1
Source: Calculated according to the data provided in 2009 Statistical Yearbooks of the
31 provinces countrywide.
As early as the period of 1978–1995, the income inequality of the urban

and rural areas of the three regions already showed signs of expansion
(Yang Canming, 2003). As can be seen from the analysis result shown
in Table 24.5, the regional gap in urban household per capita disposable
income mainly central exists between the Eastern region on one hand and
the central and the Western regions on the other hand; the gap between
the Central and the Western regions is largely insignificant. The regional
gap of urban-resident income has been shrinking since 2006, while it gener-
ally had been enlarging before the year. The regional gap of rural-resident
income is even larger than urban-resident income and the rural-resident
income demonstrates a clear step-down inequality pattern of the Eastern
region being the highest, then the Central region, and then the Western.
It can also be seen that the general trend of the gap of the rural-resident
income between the East and the Central and West is slightly declining
with narrow fluctuation. In most of the years, the gap of the rural-resident
income between the Central and the West enlarged slightly, but it began
to shrink slightly since 2005.
492 Chen Guangjin
China’s inter-regional income differentiation is caused by complicated

reasons. There are historical reasons, as well as the fact that state policies,
market opportunities, resource utilization methods, etc. are more advan-
tageous to the Eastern than to the Central or the West (Yang Canming,
2003). The fact that the inter-regional gap of the rural-resident income is
larger than that of the urban-resident income shows that the radiation and
promotion effect of urban economic development in the rural areas of the
Central and Western is weaker than that of the Eastern region; an impor-
tant proof on this is that the rural non-agricultural economy in the East is
far more advanced than that of the Central and the West.
China’s income inequalities and the economic

differentiation of social classes
The stratification model of China’s society developed by Lu Xueyi and oth-
ers divides the population into ten strata or classes, namely state and social
administrators, private entrepreneurs , corporate managers, professionals
and technicians, clerks, small proprietors, industrial workers, employees of
service sectors at lower levels, agricultural workers, and unemployed and
underemployed people (Lu Xueyi, 2001). An analysis conducted in the 2008
survey samples by using the highest professional stratum of any working
member in a household as the representation of the household’s social stra-
tum. The analysis shows that the proportion of the ten strata are 1.8%,
1.3%, 2.4%, 5.1%, 7.3%, 9.1%, 15.8%, 11.6%, 39.8%, and 5.7%, respectively.
Income inequality among social strata

There is significant inter-stratum income inequality in China, as well as
intra-stratum gaps that cannot be ignored (Table 24.6). First, as can be
seen from the per capita income of the sample households of each stratum,
the household per capita income of the stratum of private entrepreneurs sits
at the top, equaling 6.5 times of that of the households of agricultural labor-
ers. Except for the unusual situation of the sample households of the unem-
ployed and under-employed people (they may have more non-employment
income sources), generally speaking, the higher the professional stratum is,
the greater the household per capita income is, and vice versa. According
to the decomposition analysis of Theil index T by groups, the contribution
of all the inter-stratum income inequalities to the total inequality reaches
26.3%. Of course, the major factor is the intra-stratum gaps, which con-
tributed 73.8% to the total gap.
Table 24.6. Analysis of Intra-stratum Income Inequalities of China at Present

(Yuan/%).
Per Theil Theil Gini Sample

capita income index L index T coefficient size
State and social 15,435 0.1562 0.1547 0.4380 124

administrators
Private entrepreneurs 24,780 0.2484 0.2154 0.5286 88
Corporate managers 22,031 0.2168 0.2459 0.5204 166
Professionals and 15,165 0.1475 0.1432 0.4258 352
technicians
Clerks 13,084 0.1299 0.1275 0.4028 508
Small proprietors 9,053 0.2016 0.2233 0.5048 627
Employees of service 8,796 0.1518 0.1644 0.4271 802
sectors
Industrial workers 8,470 0.1642 0.1771 0.4487 1,101
Agricultural laborers 3,822 0.2043 0.1983 0.4894 2,798
Unemployed and 7,118 0.1910 0.1844 0.4827 374
underemployed people
Total 7,946 0.2467 0.2451 0.5360 6,940
Note: When calculating each index of inequality, samples with zero income and extremely
large value were disregarded.
Sources: GSS · CASS (2008).
Second, the degree of intra-stratum income inequality is rather high,

reflecting the significant social and economic differentiation within the
strata. In particular, three indicators of inequality show unanimously that
the three strata of private entrepreneurs, corporate managers, and small
proprietors have a huge intra-stratum income inequality, highlighting the
fact that their intra-stratum economic differentiation is most significant.
The differentiation is understandably inevitable as such people mainly rely
on economic resources and business operations to obtain gains. In respect of
other strata that mainly rely on professional skills and labor to obtain gains,
the intra-stratum inequalities are relatively smaller, granted that they have
all past the internationally recognized warning line of 0.4 of Gini coefficient.
The intra-stratum income inequality of the sample households of agricul-
tural laborers is significantly higher than that of other manual labor strata.
This can be explained by the stratum’s feature that the farmers need to
rely not only on their labor but also on a certain amount of assets in order
to conduct agricultural production. In general, the intra-stratum inequality
expands when the way to obtain income of the sample households of a stra-
tum closely relates to the scale of the production assets they own or manage.
494 Chen Guangjin
Third, we still need to pay attention to the intra-stratum income dif-

ferentiation among the sample households. Although there is greater intra-
stratum differentiation in the strata of higher social and economic status,
inequality occurs on a higher income level. In contrast, the intra-stratum
differentiation in the strata of lower social and economic status occurs at a
lower income level. If taking into consideration of the much larger scale of
these lower strata, the occurrence of the bigger differentiation at the lower
income levels means that the income level of a considerable proportion of
the population in these strata is even lower. This situation is particularly
evident in the sample households of the strata of agricultural laborers and
unemployed and under-employed people. As we know, the Theil L index,
Theil T index, and Gini coefficient have their own unique statistical char-
acteristics, namely, L index is sensitive to the concentration on the lower
end of the spectrum, the Gini coefficient is sensitive to the concentration
on the middle part of the spectrum, and T index is sensitive to the concen-
tration on the higher end of the spectrum (Wan Guzughua, 2008). For the
agricultural laborers and unemployed and under-employed people, the L
index value is higher than the T index value, indicating that the lower end
of the spectrum covers more households than the higher end. Therefore, the
narrowing of China’s income gap has the most significant correlation with
the improvement of the income level of the middle and lower strata.
Inter-stratum asset inequality

In a society where there is serious income differentiation, the inter-stratum
asset differentiation is inevitable. Our foci are: one, the inter-stratum
inequality of per capita household assets (including productive assets, finan-
cial assets, housing and other non-productive assets) of the sample house-
holds of each stratum; two, the inter-stratum inequality of the assets that
can generate new income (including productive fixed assets, productive
liquid assets, and financial assets).
First, we will investigate the inter-stratum inequality of the assets of
the sample households of the strata (Table 24.7). In terms of per capita
from the stratum of assets, the sample households of private entrepreneurs
have scored RMB 632,000 in value, taking the top position. The value
of per capita assets of the sample households of corporate managers
is RMB 100,000, less than that of the private entrepreneurs, but the
RMB 530,000 is still large enough to compete with the top position. In terms
of household asset value, the sample households of private entrepreneurs
Table 24.7. Analysis of Asset Inequalities of Each Social Stratum of China at

Present (Yuan/%).
Per Theil Theil Gini Sample

capita assets index L index T coefficient size
State and social 354,221 0.3053 0.2710 0.5771 120

administrators
Private entrepreneurs 631,988 0.2522 0.2398 0.5543 86
Corporate managers 530,223 0.2558 0.2017 0.5131 166
Professionals and 331,676 0.3189 0.2446 0.5621 350
technicians
Clerks 316,690 0.3305 0.2717 0.5613 498
Small proprietors 221,311 0.4466 0.4696 0.6597 630
Employees of service 213,310 0.4298 0.3044 0.6145 789
sectors
Industrial workers 174,655 0.4162 0.3181 0.6191 1,069
Agricultural laborers 75,511 0.3934 0.3584 0.6359 2,759
Unemployed and 189,617 0.4184 0.2850 0.5890 373
Total 174,183 0.4754 0.3915 0.6684 6,840
Data Source: GSS·CASS (2008).
and corporate managers are in the first group. State and social administra-
tors, professionals and technicians, and clerks are in the second group. Sole
proprietors and employees service sectors are in the third group, and indus-
trial workers are in the fourth group. The sample households of agricultural
laborers have the least amount of per capita household assets — less than
RMB 76,000, accounting for 11.9% of that of the sample households of the
private entrepreneurs. The situation with the sample households of unem-
ployed and under-employed people is special. The value of their per capita
household assets is 2.51 times higher than that of the sample households
of agricultural laborers. Maybe the employment status at the time of sur-
vey cannot reflect their real household financial situation in the past. In
general, the inequality of household assets of the surveyed households is
huge. The values of all the three measurement indicators of inequality are
rather big. Of course, the intra-stratum inequality of the household assets
of the sample households of each stratum is not small either. However, after
observing the inequality indicators of the sample households of each stra-
tum, it can be discovered that the intra-stratum inequality of the strata
of lower economic and social status is more significant than those of other
strata. The result of decomposition of Theil T index by group indicates that
the huge intra-stratum inequality makes the intra-stratum differentiation
496 Chen Guangjin
of all contribute 82.4% to the total inequality, that is, the inter-stratum
differentiation only contributes 17.6% to the total. Of course, if the number
of groups is reduced, the contribution of inter-stratum differentiation can
be higher (Wan Guanghua, 2008).
It should be noted that the survey data of household assets may not
have completely reflected the true financial status of the sample households.
We find that a considerable proportion of the survey subjects reported that
their household did not own any productive or financial assets; some even
refuse to report the relevant information. For example, we find that, in the
survey of GSS CASS (2008) 44.8% of the survey subjects claimed that they
had no financial assets; 44.4% of them claimed that they had no productive
assets. The claims of not owning productive assets are more reliable than
the claims of not owning financial assets. After all, the vast majority of
the urban households do not engage in business activities. For those who
engage in business activities such as agricultural workers, sole proprietors,
and private entrepreneurs, the percentage of those who claim not owning
productive assets is lower. It is not hard to see from Table 24.8 that the
distribution of financial and productive assets of managers is highly concen-
trated, with the Gini coefficients over 0.9. In contrast, the degrees of asset
concentration in the sample households of private entrepreneurs and agri-
cultural laborers are relatively low. In terms of inter-stratum inequality, the
sample households of agricultural laborers own the least amount of financial
assets; the sample households of industrial workers own the least amount of
productive assets. What’s more, although the sample households of private
entrepreneurs own more financial and productive assets than the house-
holds of any other strata, it appears that the contemporary in China they
are mostly smaller players whose economic scales are not yet big enough.
Brief Summary
The analysis conducted in this chapter shows that China’s income inequal-
ity is rather high compared with the rest of the world. The analysis on the
structural characteristics of the income inequality shows that only the group
with the highest income has been continuously adding to their share of the
total income and the shares of all other groups have been declining. The
analysis of the structural change of the characteristics of median income
relative distribution shows that the population distribution in each group
is moving to the two ends of the respective spectrum; the middle-income
groups are shrinking in the distribution areas.
March 5, 2013
16:48
Structural Characteristics and Trends of Income Inequality in China
9in x 6in
Table 24.8. Analysis of Intra-stratum Asset Inequalities of Each Social Stratum in China at Present Unit: Yuan/%.
Financial assets (Yuan) Productive assets (Yuan)

Percentage Percentage

Per capita of zero Per capita of zero
assets Gini Number of asset assets Gini Number asset
(Yuan) coefficient samples report (Yuan) coefficient of samples report
State and social 6,218 0.7879 106 33.0 638 0.9439 115 81.7
administrators
Private entrepreneurs 22,263 0.8933 78 39.7 30,806 0.7546 78 39.7
Corporate managers 19,068 0.8705 153 28.1 3,346 0.9691 168 82.7
Professionals and 8,747 0.8408 323 38.1 11,573 0.9655 339 84.4
technicians
Clerks 6,811 0.8522 471 35.0 6,677 0.9906 483 81.8
Small proprietors 4,228 0.9128 595 42.9 9,959 0.8689 576 23.1
Employees of service 3,289 0.8938 739 46.4 1,857 0.9765 754 81.6
sectors
Industrial workers 3,256 0.8762 1,040 44.8 748 0.9352 1,022 60.5
Agricultural laborers 937 0.9012 2,631 51.8 2,379 0.7434 2,554 10.2
Unemployed and 2,261 0.9096 364 52.5 1,996 0.9687 366 80.6
Total 3,531 0.9119 6,506 46.3 3,307 0.9163 6,459 44.4
Data Resource: GSS·CASS (2008).
497
b1344-ch24
498 Chen Guangjin
Since the beginning of reform and opening up, China’s urban–rural and
inter-regional income gaps have been widening, and the urban–rural gap is
larger than the inter-regional gap. The inter-regional gap is increasingly
reflected in the gap between the Eastern, on one hand, and the Central
and the Western regions, on the other. Eventually, the urban–rural and
inter-regional gaps will be reflected in the gaps among social strata. In
terms, of the structural change of social strata, the analysis shows that the
years of education of the economically active members of the households
of the lower-middle and lower strata are significantly shorter than those of
the upper-middle and higher strata, an indication that the former’s human
capital is significantly less than that of the latter.
In recent years, the Chinese government has made it clear that the trend
of income gap expansion between urban and rural areas and among different
regions and members of the society must be reversed. The government has
adopted a series of measures to implement relevant policies to achieve this
goal. On the one hand, China has been increasing the transfer payments to
rural areas, to the West, and to disadvantageous groups and has committed
to the improvement of the social security system; on the other hand, China
is preparing for a plan of comprehensive reform of the income distribution
and formulating economic and social policies with a view to increasing
people’s income and expanding consumption. With the implementation of
these measures and plans, I believe there will be opportunities for China to
gradually reduce its income inequalities.
Part Seven
Educational Inequality
499
500
25
Educational Inequality and Social
Stratification in Brazil
M. da Costa, M. C. Koslinski and L. G. Costa
Introduction
Historically, the Brazilian educational system has been marked by great
inequality and problems related to the quantity and quality of the edu-
cation provided. The population’s low level of schooling, the high stu-
dent failure rates or insufficient performance are features that illustrate
this situation. Despite the recent expansion in enrollment at various edu-
cational levels, plus measures that seek to assess and promote quality in
Brazilian education, the inequality of access to educational opportunities is
evident.
The first part of this chapter briefly describes the main trends in the
Brazilian educational policies over the last two decades, after the restora-
tion of a democratic regime. Then, it provides evidence of its advances
and setbacks in terms of the access to the various levels of education and
with regard to the result and quality of the basic education. The second
section presents data illustrative of the inequality of access and character-
istics peculiar to educational stratification in Brazil, such as the contrasts
between public and private schools. Finally, the third section presents some
analyses of the relation between education and occupation in this context
of extreme inequality of educational opportunities.
Educational Reform and Expansion

In the last few decades, we have observed a constant expansion of the Brazil-
ian educational system, which has led to a Brazilian educational agenda
from the issue of inequality of educational opportunities to the problem
501
502 M. da Costa, M. C. Koslinski and L. G. Costa
of quality. Such discussion has been intensified since the 1990s, with the
universalization of fundamental education and the greater continuity of
educational policies in the ambit of the federal government, in particular
regarding the constitution and consolidation of educational assessment sys-
tems.
In the 1970s, during the military regime, we observed some advances
that impelled the expansion of Brazilian education: Under the new law1
compulsory education was extended from four to eight years. In this period,
in the absence of means to evaluate the quality of Brazilian education, edu-
cational inequality was measured by the analysis of educational opportuni-
ties, given that compulsory education was not universalized, and the school
flow, as the high failure rates acted as an important filter for fourth study
through the education system (Schwartzman, 2005; Franco et al., 2007).
However, until the 1990s, the Ministry of Education’s (MEC) policies
and guidelines, as well as those of the states and municipalities, had not
presented continuity. This period was characterized by random policies, in
which each administration had endeavored to rupture from the projects and
actions developed by the previous government (Cunha, 1995; Franco et al.,
2007). The changes occurred not only due to the change of administration
every four years, but also due to the constant changes of Education Minis-
ters or Secretaries during the same mandate. Such discontinuity of policies
in education led to grave consequences: It prevented the maturation of the
structures and bureaucracies dedicated to educational management, made
it impossible to assess policies systematically, and aroused suspicion from
the teachers, who resisted the new changes or proposals, and finally, it
resulted in a waste resources.
The resumption of democracy in the mid-1980s was accompanied by
various advances in the legislation of education, brought first by the 1988
Constitution, and then by Lei de Diretrizese Bases da Educação 1996 (Law
of Guidelines and Bases of Education). Since 1995, the cycle of discontin-
uous educational policies had been interrupted, leading to greater stability
in the guidelines followed by the MEC, and permanence of its ministers.
Among the main trends following the 1988 and 1996 educational leg-
islation, we can see greater autonomy given to the municipalities and the
decentralization of education, greater concern with students progress and
quality of public education, emphasis on fundamental education and the
1 Lei
de Diretrizes e Bases da Educação de 1971 (Law no. 5.692/71) (Law of Guidelines
and Bases for Education, 1971).
Educational Inequality and Social Stratification in Brazil 503
introduction of elaborate systems of assessment. This period was charac-

terized by the universalization of fundamental education by great expan-
sion of other educational levels and by the growth in the completion rates
of basic education.2 As we shall see below, at the fundamental level, the
quality, and no longer the access, became the focus of the discussion about
educational inequality.
An important point introduced by the new legislation was the greater
autonomy guaranteed to the municipalities via the decentralization of
resources and responsibilities towards these spheres of government.3 The
new guidelines for national education also brought greater democracy in
school management through incentives to elect principals and have greater
school autonomy, as well as provision for greater participation of parents,
students and the local community with the institution and expansion of the
attributions of the school councils (Koslinski, 2000).
Another important change observed in this period was the reorganiza-
tion of the finance of education. On the whole, the new law for the finance
of education, implemented as of 1998, determined the linking of part of the
education resources to fundamental education. Such resources comprised
a fund in each state of the federation, and they began to be distributed
among the states and municipalities4 in accordance with the number of stu-
dents enrooled in their fundamental education networks. A small increase
in resources was provided by the federal and state governments with less
capacity to finance their educational systems. Thus, the new finance law
sought, on the one hand, to homogenize the resources available to the states
and municipalities, with the aim of decreasing disparities between the edu-
cation provided by these different networks. On the other hand, there was
an intention to decrease the inequality among the regions of Brazil, as the
states of the Northeast region (economically least developed and collecting
least tax revenue) were the ones that received most complements from the
central government (Koslinski, 2000).
2 According to Lei de Diretrizes e Bases da Educação (1996) (Law of Guidelines and

Bases for Education, 1996), basic education covers infant education (children up to six
years old), fundamental education with a duration of eight years (compulsory for children
and adolescents aged 7–14) and middle level education, with a duration of three years
(the correct age to frequent this level is 15–17). Recently, fundamental education was
expanded: now covering nine years and compulsory for those aged 6–14.
3 The new education laws allow the municipalities to organize their own systems of
education.
4 According to the new education legislation, the states and municipalities are the spheres
of government responsible for providing fundamental education.

Finally, the new law, on the one hand, can be viewed as an incentive
to the supply of educational resource or an increase on schools offered,
especially on the part of the municipalities. On the other hand, it shows
the priority given to this educational level along with the detriment to
other levels of basic education (infant education and middle level education)
(Koslinski, 2000; Veloso, 2009). As a result, we observe a greater number
of students completing fundamental education and a robust expansion of
middle level education. However, with the rules coupled to the major part
of the resources allocated to fundamental education, there was a fall in the
expenditure per student in middle level education.
In 2007, the education finance law was reformulated5 and in general
terms, it followed the former law governing distribution of resources among
the networks. However, the new resource distribution rules covered, besides
fundamental education infant education and middle level education.
One of the principal changes in the Brazilian educational system in the
last 15 years has been the implementation and consolidation of the educa-
tional assessment systems. National assessment systems began to be devised
at the end of the 1980s, and were consolidated with the establishment of
the Sistema de Avaliaçãoda Educação Básica (SAEB)6 (Basic Education
Assessment System).
Since 1995, this system of assessment has included a sample of students
from fundamental education and middle level education, from the private
and public networks in specific series. It uses measuring instruments of stu-
dent proficiency in mathematics and Portuguese language, besides a survey
to collect data on the students’ socio-economic characteristics and study
habits. The objective of the implementation of the system was to monitor
the quality of basic education and serve as a basis for definition of priorities
and policies for improvement in the quality of education.7
5 The Fundo de Manutenção e Desenvolvimento do Ensino Fundamental e de Valorização

do Magistério (FUNDEF) (Fund for Maintenance and Development of Fundamental
Education and Valorization of Teaching) was substituted by the Fundo de Manutençãoe
Desenvolvimento da Educação Básica (FUNDEB) (Fund for Maintenance and Develop-
ment of Basic Education).
6 Besides the systems of national assessment, in the same period, we observed state and
municipal initiatives.
7 In the same period, we observed the creation of the Exame Nacional de Ensino Médio
(ENEM) (National Middle School Examination), which assesses the performance of stu-
dents at the end of the Basic Education. The assessment has a voluntary character and
has recently been used as a mechanism for selection for entry to Higher Education — pub-
lic and private universities. Finally, the Exame Nacional de Desempenho de Estudantes
(ENADE) (National Examination of Student Performance), assesses the graduate courses
and is applied to students entering or concluding the assessed courses.
As of 2005, the SAEB was extended. Besides the already existing

sampling system, an assessment system that had a census-like character
was added, which assesses performance in mathematics and Portuguese
language of students in the fifth and ninth years of fundamental education
in all urban public schools. Thus, it became possible to produce information
on students performance and the quality of the education in the munici-
palities for each school unit, and compare educational systems as well as
school establishments.
Following this new form of assessment, in 2007 the government launched
Plano de Desenvolvimento Escolar (School Development Plan). Among
innumerable measures, there is one that could tentatively be denom-
inated as accountability for educational results: the Institution of the
Índice de Desenvolvimento da Educação Basica8 (IDEB) (Basic Educa-
tion Development Index) (Costa and Koslinski, 2008). The IDEB had two
basic objectives: (a) detect schools and educational networks in which
students present low performance and proficiency; and (b) monitor the
evolution of the performance of the schools and educational networks
over time.9
Although, from the most optimistic perspective, the new assessment
system and the educational indicators can lead to the institution of policies
that contribute to improve the quality of education, such initiatives have
not been received without resistance. In general, the arguments against
centralized assessment are dedicated to highlighting their supposed liberal
inspiration. External assessment on a large scale is frequently regarded as
an instrument of school hierarchization, crystallization of school advantages
and disadvantages, privatization of public education and concealment of the
socially unjust character of the distribution of school opportunities (Coelho,
2008; Souza and Oliveira, 2003).
Despite the great development and dissemination of external assess-
ment data, there are still few state and municipal programs that use high-
stake systems to make schools and teachers accountable for their results.
Some states and municipalities have adopted diverse systems of salary
8 IDEB combines information on performance obtained by the students at the end of

their basic education (the fifth and ninth years of the fundamental education and the
third year of the middle level education) with an indicator of the promotion rate to the
following school grades.
9 At first, the Ministry of Education listed around a thousand of municipalities with the
lowest IDEB with the aim of directing specific policies to raise their indicators of learning
and students progress rates.
incentives, granted individually to teachers and other supporting staffs who

achieve satisfactory results. Others have adopted low-stake policies based
on the divulgation of informative bulletins for the school personnel and
students’ parents, which should serve as aids to assessing the schools. Nev-
ertheless, the majority of such initiatives still have not been assessed and/or
do not count on, conclusive assessments concerning the impact they exert
on the quality of education (Brooke, 2006: 377–401; 2008: 93–109).
Expansion of education: Access versus quality

The period between 1995 and 2003 described above, due to the better conti-
nuity of the educational policies, was also characterized by great expansion
of education in terms of the population served, as well as by the completion
rates of fundamental and middle level education.
As one can observe in Fig. 25.1, at the end of the 1990s, a universal
attendance was almost achieved in the compulsory schooling age category.
Whereas 90.5% of the population aged from 7 to 14 were attending school
in 1995, this percentage rose to 96.3% in 2001 and 97.9% in 2009. This
was a reflection of the new finance policies and emphasis on fundamental
education that characterized the MEC’s policy, especially in the second
half of the 1990s, as well as continued urbanization of the country, which
in 2010, reached 84% of the population in urban areas.10
There also occurred accentuated expansion in enrollment for children
aged 4–6. In 1995, 53.5% of the children in this age range were enrolled
in school establishments, and this percentage rose to 70.4% in 2001 and
100.00%
80.00%
60.00%
40.00%
20.00%
0.00%
1995 1997 1999 2001 2003 2005 2007 2009
4–6 years old 7–14 years old 15–17 years old
Fig. 25.1. Percentage of population enrolled in basic education — per age group.
Source: Todos pela Educação (2008; 2009) — INEP — MEC.
10 In 1990, the figure was 75%.

84.6% in 2009. Finally, there was growth in the enrollment rate for adoles-
cents aged 15–17. In 1995, 66.6% of the population in this age range were
enrolled in basic education, and this percentage rose to 78.4% in 2001, and
reached 82.2% in 2009. This expansion is a result of the universalization
and extension of fundamental education to nine years, compulsory for chil-
dren aged 6–14, and as the new finance rules, which as of 2007, began to
encompass infant and middle school education.
However, the expansion of the enrollment for the population aged 4–17
did not represent an equal impact on the net enrollment or on the comple-
tion rate at the fundamental and middle school levels:
According to Figs. 25.1 and 25.2, whereas, in 2007, 79.1% of the popu-
lation aged 15 to 17 were matriculated in basic education, but only 48.0%
were matriculated in middle school education. The majority of the rest were
matriculated in fundamental education due to several grade repetition that
characterize Brazilian education.
Figure 25.3 shows the great expansion in the completion of fundamental
and middle level education. Whereas, in 1995 only 29.2% of 16 year olds
had completed fundamental education, this percentage rose to 46.7% in
100.0
80.0
60.0
40.0
20.0
0.0
1993 1995 1997 1999 2001 2003 2005 2007
Infant education Fundamental education

Middle level education
Fig. 25.2. Net enrollment rates for each educational level.11

Source: IBGE–PNAD.
11 The net enrollment rate “expresses the number of children enrolled at a level of edu-
cation that belongs to the age group corresponding to the level of education in question,
divided by the total population of the same age group” (cf. educational statistics. Sources
in Education: Guide for Journalists. Brasilia: Fórum Mı́dia & Educação, 2001). The age
ranges that correspond to infant education, fundamental education and middle level edu-
cation are 0–6, 7–14 and 15–17 respectively. The obligatory fundamental education was
extended for the age range 6–14.
70.0%
60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
1995 1997 1999 2001 2003 2005 2007 2009
% of 16 year olds population that have completed fundamental education

% of 19 year olds population that have completed middle level education
Fig. 25.3. Fundamental and middle level education conclusion rate.

2001, and 63.4% in 2007. Similarly, in 1995 only 17.2% of 19 year olds had
completed middle level education. This percentage rose to 32.1% in 2001
and reached 50.2% in 2009.
Despite the growth in completion rates, this is still far from universal-
ization of enrollment for compulsory education and growth of matriculation
for youths in the range 15–17. Such evidence indicates that diverse causes,
among which is the occurrence of multiple repeated study years, lead youths
to abandon school before they have completed important stages in their
schooling.
Finally, we also observed a large expansion in the enrollment in higher
education (see Fig. 25.4).
The expansion occurred as much in the public sector as in the pri-
vate, but the last decade was marked by a major expansion in the pri-
vate institutions: The enrollment increased from 1.57 million in 1991 to
5.95 million in 2009. However, when the net enrollment is considered, in
2007, only 13.1% of the population from 18 to 24 was matriculated in higher
education.
Finally, with the great expansion of enrollment in basic education and
the increase in the completion rate in the fundamental and middle school
education, the quality of education became a major bottleneck and concern
for the Brazilian educational system. As seen above, the data from the
SAEB became comparable as of 1995, which allowed speculation regarding
a possible decline in the quality of Brazilian education.
8
6
4
2
0
1991 1993 1995 1997 1999 2001 2003 2005 2007 2009
Total Enrollment
Enrollment in Private Institutions
Enrollment in Public Institutions
Students Completing Higher Education
Fig. 25.4. Enrollment and completion in higher education (in millions).

Source: Higher education census — INEP — MEC.
Reading
60.0%
40.0%
20.0%
0.0%
1995 1997 1999 2001 2003 2005 2007 2009
4th grade fundamental education students at or above adequate level

3rd grade middle level education students at or above adequate level
Fig. 25.5. Percentage of students at or above the adequate level in reading in Brazil.
Figure 25.5 shows the fall between 1995 and 1999 in the percentage
of students who reached the level of skills and competences expected or
adequate in literature at each level of education (the fourth and eighth years
of fundamental education, and the third year of middle level education). We
observe that, as of 1999, these percentages have been slowly increasing, but
still have not attained the results obtained in 1995.
A similar trend is observed in relation to the skills and competences in
mathematics from 1995 to 1999: a small fall in the percentage of students
who reach the adequate or expected level at each stage of education (see
Fig. 25.6). However, since 2003, we have observed a more marked increase
in this percentage only for students of the first segment (the fourth grade)
of fundamental education.
Maths
40.0%
30.0%
20.0%
10.0%
0.0%
1995 1997 1999 2001 2003 2005 2007 2009

3rd grade middle level education students at or above adequate level
Fig. 25.6. Percentage of students at or above the adequate level in maths in Brazil.
It is worth stressing that the results were hardly satisfactory and show
the low quality of Brazilian education. In 2009, only 34.2% of the students
of the fourth grade of fundamental education, 26.3% of those of the eighth
grade of the fundamental education and 28.9% of the students of the third
year of the middle level education, had reached the adequate level in read-
ing. The indexes are even more alarming for the competences acquired in
mathematics: only 32.6%, 14.8% and 11.0% respectively.12
The main conclusion we can draw from the data above is that the
expansion of education was not accompanied by the quality offered by the
school establishments.
Finally, in the 2000s a significant increase in public expenditure on
education was observed. The percentage of direct public investment in edu-
cation in relation to the GDP rose from 3.7% (3.2% for basic education) in
2000 to 4.7% (4.0% for basic education) in 2008 (MEC/INEP). However,
the emphasis on expenditure on higher education is a cause for concern as
shown in Fig. 25.7.
Even faced with the low completion rate and low quality basic educa-
tion, the focus of public expenditure on education has been on the higher
education. Even though the expenditure gap between the higher education
and the basic education decreased in the last decade, in 2009 the mean
12 The low quality of Brazilian education can also be observed via the PISA results: In
2009, Brazil was in the 54th place among the 65 participating countries. The average of
the results in reading, mathematics and sciences for Brazil was 401 points, well below
the average of 496 points for the OECD countries.
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Total Expenditure Basic Education
College/Higher Education
Fig. 25.7. Direct public investment per student (R$).

Source: Todos Pela Educação (2008; 2009) — INEP — MEC.
expenditure per student in the former was 5.2 times greater than the lat-
ter. Such a historical expenditure pattern for education has exerted a great
impact on the educational inequality in Brazil, as public higher education
is mainly frequented by students from the private system of basic education
and from the classes of higher socio-economic status (SES).
The next section deals in more details with the question of educational
inequality in the Brazilian context.
Stratifying the Educational System and Inequality

in Educational Opportunities
As demonstrated previously, the great expansion of access to school matric-
ulation in Brazil has not been accompanied by initiatives on substantially
reducing the severe social inequality in the ambit of the educational systems.
There are basically two mechanisms to explain the phenomenon of the per-
sistence of socio-economically based inequality in the context of educational
expansion, as described by Lucas (2001). The first mechanism points out
the known practices of tracking and guiding of students’ trajectories. The
second emphasizes on the transitions between different educational stages,
analyzing factors associated to students’ progress or desistance, and seeking
to explain the tendency that the effect of socio-economic origin decreases
while one’s education advances through the series. Lucas presents a perspec-
tive (Effectively Maintained Inequality) that seeks to conciliate the two
approaches and strengthens the perception that the association between

social inequality and educational opportunities seems difficult to mitigate.
In the Brazilian case, the expansion of the access to school at the dif-
ferent levels of education has not benefited all social segments equally. For
example, in the generations throughout the 20th century, the mean years
of schooling for the rural and urban residents have not narrowed much
(Table 25.1). Only after the growing up of those born in the 1980s, the gap
seems to begin to decrease.
Also, the difference between the years of schooling completed in differ-
ent region remained almost stable, but having really been enlarged when
comparing the Northeast and Southeast regions, the poorest and wealthiest
of the country respectively (Table 25.2). Throughout the 20th century, this
Table 25.1. Average Schooling Years for Urban and Rural Residents.
Born Born Born Born Born Born Born

in in in in in in in
1921– 1931– 1941– 1951– 1961– 1971– 1981–
1930 1940 1950 1960 1970 1980 1984 Total
Urban 3.45 4.30 5.63 7.24 8.30 9.01 10.00 7.81

Rural 1.27 1.59 2.22 3.28 4.58 5.20 6.50 4.10
Gap between 2.18 2.71 3.40 3.96 3.72 3.81 3.50 3.71
urban and
rural
Source: PNAD (2009).
Table 25.2. Average Years of Schooling by Region.

1921– 1931– 1941– 1951– 1961– 1971– 1981–
1930 1940 1950 1960 1970 1980 1984 Total
North 2.18 2.77 4.06 5.83 7.10 7.82 8.65 6.80

Northeast 1.90 2.60 3.64 5.05 6.24 7.14 8.24 5.91
Southeast 3.78 4.60 5.82 7.42 8.51 9.21 10.34 7.94
South 3.47 4.17 5.46 6.95 8.21 8.97 10.14 7.62
Westcenter 2.78 3.29 4.86 6.71 7.98 8.77 9.75 7.53
Gap between 1.88 1.99 2.18 2.37 2.27 2.07 2.09 2.02
Southeast
and
Northeast

average gap has been enlarged, stabilized and presented a low decline, for
those born at the end of the last century.
For urban–rural comparison, it is true to argue that the intense pop-
ulation from the countryside to the cities imigration might have affected
the perception of maintained inequality; and in terms of the populations
a whole, the contrast between the regions presents the problem in a clear
manner. In all the regions, there was a marked process of urbanization,
which allows one to envisage the unequal educational expansion.
In two other aspects, however, a reduction can be perceived in the
inequality of access and continuity in education. When the data on the
years of schooling reached, according to gender and color, are aligned, an
aspect of the modernization of the country during the 20th century becomes
evident. Differences referring to these dimensions (Tables 25.3 and 25.4)
were gradually reduced during the process of intense urbanization, reversing
the educational gaps between women and men.
However, following the inspiration by the sociological theory that accen-
tuates the aspects of tracking in educational systems, a large persistent
inequality exists according to people’s social status. There are evident dis-
advantages for those in poorer socio-economic conditions. It is necessary,
however, to explain particular characteristics of Brazilian social segregation
with regard to school opportunities and performance.
The Brazilian educational system is constituted basically of public13
and private entities. In general, the more affluent residents in urban areas
Table 25.3. Average of Years of Schooling by Gender.

1921– 1931– 1941– 1951– 1961– 1971– 1981–
1930 1940 1950 1960 1970 1980 1984 Total
Men 3.34 4.00 5.15 6.61 7.51 8.07 9.22 7.13

Women 2.95 3.75 5.01 6.69 7.98 8.83 9.82 7.37
Gap 0.39 0.25 0.14 −0.08 −0.47 −0.76 −0.59 −0.24
between
men and
women
13 There is a guideline in the federal law establishing that municipalities principally take
care of the fundamental and pre-school levels, while states are dedicated to the middle
level education. However, there is superimposition and some competition among state
and municipal networks, which have independent centralized authorities.
Table 25.4. Average of Years of Schooling by Color.

1921– 1931– 1941– 1951– 1961– 1971– 1981–
1930 1940 1950 1960 1970 1980 1984 Total
White 3.91 4.84 6.15 7.76 8.83 9.52 10.47 8.19
Black and 1.81 2.49 3.73 5.34 6.63 7.49 8.65 6.26
Brown
Indio 1.30 3.14 4.71 5.06 6.22 6.96 9.70 6.06
Gap between 2.09 2.35 2.41 2.42 2.20 2.02 1.82 1.94
Black–Brown
and White
frequent private schools at fundamental and middle school level. At the

higher level, this composition is altered, with great movement of students
from private schools to the public sector. There is not a national educa-
tion system, not to mention a public system on a private system. There
are controls and regulations at the national and state level, exercised by
organs, such as the Conselho Nacional de Educação (National Education
Council) or state councils, but one can say that private schools and public
networks (state and municipal) enjoy reasonable autonomy. This auton-
omy, in the case of public networks, tends to be reduced in the ambit of
the schools. Furthermore, it is observed that, at the fundamental and mid-
dle school levels, there exist some federal schools (few in relation to the
number of schools and students attending these schools14 ). Such federal
schools tend to be among those with the best reputation and most popu-
lar in the country. Private, state and municipal schools co-exist in a highly
hierarchized model, in such a manner that there are some state and munici-
pal public schools that enjoy greater prestige — and better performance —
than various private schools. However, on the whole, it can be affirmed
that private schools are, as a set, clearly superior to state and munici-
pal ones. There is a historical trend that Brazilian educational thought
operates with a dichotomic model counterpoising the public and private
14 According to the Censo Escolar 2009 (School Census), the federal network was
responsible for only 0.09% of the enrollment in public schools in fundamental edu-
cation and 1.23% of the enrollment in public schools in middle school education
(MEC/INEP).
Mean = 316
Mean Math Grades
Mean = 287
Private 316
High SES
Private 287
Mean = 239
Low SES
Public
Mean = 257 257
High SES
Public 239
LowSES
School Mean SES
Fig. 25.8. School performance and socio-economic status — SAEB 2001.
spheres. This model considerably limits what is observed, strong hierar-

chies within these two fields. Whether using a socio-economic index (ISEI)
or a centralized performance assessment, the superimposition of a portion
of the public and private schools suggests the existence of a blurred frontier,
although it is very clear that the hierarchy is favorable to the private schools.
Figure 25.8 portrays what has been stated with schools in the City of Rio de
Janeiro as an example, which can be taken as an example of the country’s
school hierarchization.
Figure 25.8 presents information about the socio-economic level and
mean performance in mathematics at schools with students from the ninth
year of fundamental education in a national assessment. Each school is
identified by a dichotomic classification regarding the SES and performance
in the SAEB described above and its status as public or private. There is
no federal public school in this sample.
Figure 25.9 presents the hierarchy in the set of public schools in Rio
de Janeiro for mathematics in the fifth year of fundamental education,
according to the mean socio-economic level of the students. It may, as shown
above, represent the differentiation in the Brazilian public networks.15
15 We have carried out studies on the phenomenon of the very unequal distribution
of educational opportunities in Brazil in the ambit of public education networks. Our
results to date indicate the existence of powerful segregating mechanisms operated by
the educational bureaucracies and social and political networks, according to classical
models of patrimonialism and clientelism.
Fig. 25.9. School performance and socio-economic status — ProvaBrasil 2005 (Brazil
Exam).
Therefore, in the Brazilian case, the distinct school networks that

bear a marked differentiation in their socio-economic compositions present
enormous differences in the students’ levels of learning. The PISA,
the international exam that assesses proficiency in samples of 15-year-
old students, reveals the intensity with which socio-economic differences
impact learning in school. In Brazil, there is a considerable gap in the
mean performance achieved by students taking the PISA, considering
whether the students frequent federal private schools or public schools.
Figure 25.10 demonstrates this gap which always exceeds the standard
deviation.
As the investigation about education has demonstrated, the transi-
tions to more advanced series tend to progressively reduce the impact of
the family’s socio-economic level on the permanence of students in school.
Silva and Hasenbalg (2002: 67–76), however, postulate that, in Brazil this
phenomenon is less clear. Transitioning to the final year of middle school
education, and, above all, to higher education is closely associated with
social stratification in a circular model of causality. The following data refer
to this inequality of opportunities that assure persistence of Brazilian social
600
Proficiency 500
400
300 Federal Public
200 Private
100
Non Federal Public
0
General Reading Math Sciences
Fig. 25.10. Mean proficiency per administrative unit.

Source: PISA (2009).
45.00%
40.00%
35.00%
% of students
30.00%
25.00%
20.00% Public Network
15.00% Private Network
10.00%
5.00%
0.00%
1 2 3 4 5 6 7 8 9 10
Fig. 25.11. Percentage of students at the higher education according to the deciles of
household income per capita.
stratification. Figure 25.1116 shows the inequality of access to higher edu-

cation, according to household income per capita, and Fig. 25.12 presents
the participation of non-white students at the different levels of education.
Although there is conceptual independence between color and SES in Brazil,
a close association between these dimensions is still observed.
Remembering that PISA collected a sample of 15-year-old students (not
in a specific series), and considering the country with the highest GDP in
the region when compared to other Latin American countries, in PISA
(Table 25.5), the bad overall result for Brazil can be attributed, in part,
to the great inequality of school opportunities for the students due to their
social origin.
16 Figures 25.11 and 25.12 were extracted from Siteal, an organization that systematizes
educational information in Latin America.

Adult literacy course
Regular - pre-school
Fundamental education
Middle level education
Higher education
Postgraduate
0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 80.00%
Fig. 25.12. Percentage of non-white students by school level.

Source: Siteal.
Table 25.5. Average Proficiency in PISA 2009 in

Latin America in Countries.
Mean Reading Math Sciences
Peru 368 370 365 369

Panama 369 371 360 376
Argentin 396 398 388 401
Colombia 399 413 381 402
Brazil 401 412 386 405
Mexico 420 425 419 416
Chil 439 449 421 427
Urugua 427 426 427 427
Source: PISA (2009).
Not all the news, however, is negative. Analyzed longitudinally, the

Brazilian educational indicators manifested in the PISA show signs of dis-
crete improvement. Compared to other Latin American countries and to the
OECD, the Brazilian disadvantage has been reduced since 2009 in relation
to this latter set of countries.17 It must be stressed that to enhace the per-
formance of Brazilian students in PISA does not enlarge the gap between
public and private schools, in the period when the test was applied. The
improvement in the average performance has been pulled, principally, by
17 Chile is the country with the most remarkable improvement in students performance
in PISA.
the improvement in the performance of the lower strata. How much this
improvement can be attributed to the reduction in Brazilian social inequal-
ity, to the social policies in general, or the educational policies in particular,
are still to be studied.
Impacts of Educational Inequalities on Class Structure

and Occupation
The relation between education and job opportunities has historically been
strong and sustained by the great inequality in the distribution of schooling
in the Brazilian context, as described above. However, recent studies indi-
cate a decrease the influence of one’s class origin as well as a small decrease
in the income inequality (measured by the Gini index) that is attributed to
the decrease in returns on education in relation to the expansion of access
and extension of schooling, and to the reduction in educational inequality
over the last few decades (Souza et al. 2010: 77–100; Ramos, 2007: 281–301).
This section presents analyses that use data from the Pesquisa
Nacionalpor Amostrade Domicı́lios (PNAD, 2009) [National Household
Sample Survey] in order to deal briefly with the impact of education on
unemployment and occupational status.
Education and unemployment

As innumerable variables are quite closely related to the analysis of the
condition of occupation in the employment market, we decided to assess at
least the weight of some of them by using a logistical regression model.
Table 25.6 shows significant results for all the variables in the model,
indicating that being occupied in the labor market stems basically from the
set of characteristics, ascribed and acquired, of the individuals.
It is observed from the result that schooling continues to be an impor-
tant factor in getting a job. This result expresses that part of the opportu-
nities in the employment market reflect, above all, the qualification of the
individual. It is noteworthy that many Brazilians enter the labor force very
young, and acquire qualifications during their work (Hasenbalg, 2003).
With regard to gender, an advantage of employed men (66%) in relation
to women is observed. This phenomenon indicated by the gender variable
was expected, given that, in the occupation indicators, males are also at
an advantage over females. In this sense, the effect of segmentation of the
labor market continues to predominate.
Table 25.6. Logistical Regression Estimating the Probability of Employment.18
Variables Coef. Odds Std. Err. P>t
Higher education (omitted)

Middle level education −1.070 0.343 0.045 0.000
Fundamental education −1.135 0.321 0.051 0.000
Without schooling −0.362 0.696 0.065 0.000
Gender — Male (1) 0.672 1.958 0.026 0.000
Color — White (1) 0.226 1.253 0.027 0.000
Urban (1) −0.968 0.379 0.061 0.000
Southeast(1) 0.151 1.162 0.028 0.000
Constant 3.614 37.114 0.075 0.000
N 81,492
Color is also significant. The non-whites are those who present the worst
occupation rates. This is because color is linked to some differentials, among
which are the access to school for the blacks and the browns, and also ele-
ments that suggest the existence of discrimination in the employment mar-
ket. These factors combined produce a direct impact on the employability of
this group. It is worth stressing that studies conducted in the 1980s showed
that racial stratification in Brazil is not reduced to stratification by class.
Besides this, the blacks and the browns not only presented a lower level of
schooling, but also obtained lower returns for each year of schooling, when
compared with the whites (Hasenbalg and Silva, 1988).
The urban variable has a negative effect on the chances of individuals
being employed. The hypothesis for explaining such a result is that, in
the urban zone, the employment supply does not manage to match the
demand from the workers, many of whom are migrants without sufficient
qualification to be hired in industrial occupations. On the other hand, the
most urbanized region of the country, the Southeast, offers around 1.2 times
more job opportunities for individuals than in the Northeast region. This
fact can be explained by the urban and job concentrations that are greater
in the Southeast than the rest of the country.
18 The nominal explicative variables included in the model were transformed into dum-
mies, with zero values and with one exception, the education variable. Thus, we describe
the organization of each variable in the following manner: (a) Gender: 0 = woman and
1 = man; (b) Color: 0 = black and brown and 1 = white; (c) Rural/Urban: 0 = rural
and 1 = urban; (d) Region: 0 = Northeast and 1 = Southeast; (e) Schooling: divided
into four levels of schooling in complete grades: 1 = Higher Education (Indicator),
2 = Fundamental Education, 3 = Middle School Education, and 4 = Without schooling.
Education and status of occupation by means

of the socio-economic index — ISEI
In order to analyze the impact of education on occupational status, a linear
regression was applied to estimate the variable, ISEI.19
According to Table 25.7, the regression recorded R2 around 36%, and
only two variables in the model were not significant: color and region, that
is, these variables when controlled by education, gender and rural/urban,
had no effect on the dependent variable, ISEI.
The analysis of the coefficient in the second column of Table 25.7 show
that the major impact on ISEI arises from schooling.21 This result does
not surprise, as we know that, among Brazilians, the difference in terms of
Table 25.7. Linear Regression — Socio-economic Index.20
Variables Coef. Std. Err. P>t
Higher education (omitted)

Middle level education −18.284 0.163 0.000
Fundamental education −28.181 0.192 0.000
Without schooling −41.219 0.167 0.000
Gender — Male (1) 7.040 0.097 0.000
Color — White (1) −0.058 0.103 0.576
Urban (1) −1.527 0.149 0.000
Southeast (1) −0.106 0.108 0.328
Constant 42.293 0.215 0.000
N 149,164
19 The measure, ISEI of Occupational Status was created by computing the sum of the
weights with socio-economic characteristics of each individual within the occupations,
generally education and income, and occasionally other characteristics, such as family
background and financial condition (Duncan and Jones, 1972). The ISEI scale captures
the basic parameters of the stratification processes, as it measures the attributes of
occupation that convert education one’s into income.
20 The nominal explicative variables included in the model were transformed into dum-
mies, with zero values and with one exception, the education variable. The continuous
explicative variables waas not altered. For a better understanding of the way the vari-
ables were measured, below we have a descriptive scheme of the organization of each
one: (a) Gender: 0 = woman and 1 = man; (b) Color: 0 = black and brown and 1 = white;
(c) Rural/Urban: 0 = rural and 1 = Urban; (d) Region: 0 = North-East and 1 = South-
East; (e) Schooling: divided into four levels of schooling in complete grades; 1 = Higher
Education (Indicator), 2 = Fundamental Education, 3 = Middle School Education and
4 = Without schooling; (f) ISEI.
21 Although the educational level is included in the construction of the ISEI measure,
which certainly increases the association among them, we can assure that the correlation
occupational status by schooling is quite accentuated. The less the years

of study, the lower levels of the individual’s career, that is, the less will be
his/her chance of getting a good job in the labor market, above all, in an
occupation of superior status.
The second variable of greater influence on the ISEI was gender, show-
ing that the opportunities of career projection are still more directed to
men than women. The explanation about the differences between men and
women are not reduced to this direct result, however, it is concentrated
more in the distributions by strata. In other words, it is in the segmen-
tation of the employment market itself, which allocates men and women
differently into specific occupations.
Another significant result that deserves attention is the effect of the
variable of concentration of the households, urban and rural, on the ISEI.
We note that, in the urban areas, there is less chance of individuals becom-
ing concentrated in rural occupations in relation to living individuals in the
rural zone. Naturally, it was expected that this inequality between the rural
and the urban would appear, as historically there was always an imbalance
between them in labor market opportunities.
Concluding Remarks
This paper, limited in its approach to such a phenomenon as complex as
it is classical in sociology, followed paths often used in the treatment of
the association relationship social inequality and educational disparity in
Brazil. We have adopted a procedure that accentuates recent aspects of
contextual changes on both sides of the problem. In effect, there are alter-
ations in the pattern of Brazilian social inequality, in the near past and there
are no negligible changes in the configuration of the Brazilian educational
systems.
In the field of educational policies, an effervescent atmosphere is
observed, with many initiatives and intense controversy concerning how
to confront the dilemmas of an inequality of opportunities that is very per-
sistent and complex in its multiple causes, but unanimously recognized as
being strongly associated to more general social inequality in the country.
We have recorded reciprocal impacts of the social inequality on educational
indicators, and these on the occupational and socio-economic opportunities
between the two variables is not high to the point of invalidating the inclusion of years
of study as an explicative variable in the model.
of the individuals, composing what the sociology of the education usually

denominates as “virtuous circles” and “vicious circles”.
On the whole, the issues covered by this chapter, as well as change
of the contemporary educational agenda in Brazil, arise from the creation
and improvement of the information and assessment systems of Brazilian
education throughout the last 20 years. Regarding the controversies with
a more speculative and ideological character, the educational agenda has
progressively inclined towards the search for solutions with evidence-based
policies. The accentuated broadening of the bases of access to the educa-
tional system is an important conquest of our recent past, but according
to what the data has been revealing, it seems not to have been sufficient
to promote a substantial reduction in school inequality. The decrease in
vertical segregation of our educational systems accentuates the perception
of strong horizontal segregation, manifested, above all, in the differences in
learning among the socio-economic strata, school networks and geographi-
cal regions.
One fundamental issue at present is to find out if the Brazilian edu-
cational agenda will go beyond the cycle of extension of access, based on
the model that can be characterized as “more of the same”, or it will enter
the terrain of discussions about the organizational standards of the systems
and the very unequal distribution of educational opportunities that they
engender.

26
Inequality in Education: The Case
of Russia
D. Konstantinovskiy
Introduction
Humankind has been dwelling on the ideals of equality for millenniums. In
every époch, these ideals have engrossed the minds of people of different
social standing. There is no philosopher that did not write about equality
or at least remark about it, and there is and has been no politician, political
party, or social movement that did not manipulate this issue.
The way in which the education system works and the main princi-
ples of social organization inevitably make the subject of equality special,
partly because one cannot ignore the issue of equal allocation of educational
opportunities provided by the society, i.e., opportunity to study and secure
an academic qualification. For many people, educational opportunities are
of intrinsic value. This is usually called the terminal value, and is especially
important for all those who are involved with education professionally or in
any other way. Another reason is that education, qualifications, and occupa-
tions, while worthwhile inherently, are also instruments to reach one’s goals,
thus considered as an important investment capital. In such an instrumental
(or even utilitarian) sense, educational opportunities also define access to
other public goods later in life.
Equality is an urgent issue in many spheres besides education. Processes
happening in the sphere of education reflect the situation in the country on
the whole and make significant impact on the society.
A representative research of the 1960s by V. N. Shubkin (Shubkin et al.,
1964; Shubkin, 1970) carried out in Siberia drew a lot of response in Russia.
It showed that Russian society did have educational inequality, status
525
526 D. Konstantinovskiy
transmissions and other similar phenomena common in other societies. It

was proved that in reality, people hailing from different backgrounds (e.g.,
from the elites to the lower social strata) had different opportunities. The
propaganda-instigated myth was blown up by sociological research and dis-
posed of with the help of scientific data.
A number of researchers in Russia and abroad believe that it is most
important to study young people’s attitudes and social behaviors, in partic-
ular their attitude and commitment to reaching certain educational goals
and their real opportunities at hand. This issue has been central to the
sociology of education for decades now (Nieto, 2005: 43–64). Contradictions
between the declaratory equal rights to education and the real social stratifi-
cation are quite rightfully approached as societal problems. The importance
and timeliness of this can be seen from several interrelated aspects.
It is directly related to the issues of democracy and inequality, whose
functions make them closely linked to the educational system on the whole,
because educational opportunities define social mobility to a large extent.
Education opportunity is also important from the point of view of
society’s intellectual potential. Social appeal of education for the youth,
their educational goals and real opportunities for those from different social
strata, put together, define society’s future level of education, and the num-
ber and quality of skilled workers who are the key to the development of
the modern world.
The issue of educational equality itself is also directly related to what
is called “social well-being”. Education lays the groundwork for further
career and lifestyle differences between “weaker” and “stronger” groups.
Individuals evaluate their place in the world prescribed by the society
and the (un)fairness of their careers in the given circumstances judging
by the balance between their own expectations, plans and attitudes upon
entering adult life and the reality of limited opportunities. Understand-
ing the inability to reach a desired status or an expected standard of life
or get a favored job inevitably leads to permanent dissatisfaction with
one’s life. Young people get convinced that they are underprivileged and
consigned to the sidelines both in economic and social terms. Thus, they
become ideal subjects for political manipulations being tools, instruments
or material in the hands of other actors rather than independent actors
themselves.
The problem of inequality seems to be especially serious in contempo-
rary Russia, wherein social stratification and social mobility are becoming
Inequality in Education: The Case of Russia 527
widely discussed. Current social situation makes one particularly worried

about young people’s life-tracks and the potential negative results of their
setbacks and discontent. Speaking of the intellectual potential, the fact
whether it is used efficiently or not will to a large extent be crucial to
Russia’s position in the rapidly changing world. Each aspect of the problem
is making its contribution to the public opinion and state policy in terms
of defining demand for investments and developing potential policy strate-
gies. Using new models of development, Russian society is bound to face
their positive and negative consequences and study the developing social
mechanisms, emerging conflicts and ways of conflict-solving Russian cases.
These are among the most pressing issues for the sociology of education in
Russia.
Research results discussed hereafter have several things in common:
they are aimed at describing young people’s chances at the start of their
lives, their expectations, and real opportunities in terms of education and
social mobility.
Transformational Dynamics at Schools

During the erstwhile Soviet era, young people from elite backgrounds would
traditionally receive higher levels of education with prestigious professions
and become more successful in life (in terms of official recognition alongside
their careers). Factors such as their proximity to power, their privileged
social position, cultural and financial capital, as well as their explicit and
implicit benefits had an impact on other relatively high profile social groups
and established conditions for the reproduction of their parents’ high social
status (more or less) and for ascendant social mobility.
Study materials1 showed that social differentiation at schools intensi-
fied alongside significant transformations in the country. Schools unwillingly
became part of social selection, the results of which manifested again in a
rougher way at the end of the schooling period. Schooling period started
at kindergarten level and developed all the way through to adolescence,
when teens were expected to be under the supervision of the school. Let us
examine the results of social selection in terms of the line-up of school grad-
uates (we are speaking about full-time complete secondary education here),
i.e., those young people who managed to overcome the ultimate barrier of
1 Here and further, data from a survey started in 1962 is used (Konstantinovskiy, 2008).
Fig. 26.1. Social structure dynamics of upper-grade students in a daytime secondary

schools (%), Novosibirsk Region.
the Russian education system on their way to a higher social status, which
necessarily requires a higher level of education.2
As shown in Fig. 26.1, in the early 1960s, children of the administra-
tors of Novosibirsk Region amounted to less than one-tenth of all daytime
secondary schools in the region. Children coming from families of skilled
2 Data was analyzed by aggregate groups, where social status was defined by the parents’
social position in terms of authority and property, as well as their employment and levels
of education. School graduates from several types of families were analyzed: children of
administrators of highest, middle and lowest ranks in the administration of the region,
in the party, at factories, etc.; children of non-administrative specialists with higher
education; children of employees with secondary vocational or general education; children
of workers and peasants, i.e., people in non-administrative positions with low educational
level and doing manual labor. Such grouping is conventional for the Russian society and
Russian sociology on the whole.
School students would fall into a certain category if both or at least one of their
parents fit the description. If the parents come from different social groups, the one with
a higher social status was taken into account (e.g., if a father is teaching at university and
the mother is a lab assistant with secondary vocational education, their child would fall
into the “specialists’ children” category). Of course, such an approach has its limitations,
but it allows to perform necessary analysis.
The 1994 survey sample also gave birth to a new category, which we called small
businessmen’s children. Speaking of Novosibirsk Oblast, the parents of most of the chil-
dren used to be engineers at research institutions or in the military industry, but were
forced to open small jobbing shops, trade outlets or work as suitcase traders bringing
goods from abroad.
specialists made up to nearly one-fourth of the graduates, or one-third

together with the former. One-third of all graduates came from blue-collar
families (including industrial workers and peasants), while slightly less than
one-fourth came from white-collar families.
In the early 1980s, social composition of school graduates changed due
to an earlier implemented purposeful social policy aimed at making sec-
ondary education universal. By that time, the share of the age cohort com-
pleting senior secondary education had jumped from 30% to over 60%. The
share of administrators’ children had decreased twice, while the share of
white-collars’ children grew nearly by 30%, i.e., becoming the main source
for mass education.
Greater quantitative and qualitative changes followed. In 1994, admin-
istrators’ children comprised over one-fourth of all school graduates in the
region, growing by 600% in relative terms. It had increased seven times in
comparison to the early 1980s and 3.5 times in comparison to the early
1960s. Administrators’ children became dominant at schools, while the
share of blue-collar workers’ children declined by 2.5 times.
These results were compared with several samples where the percentage
distribution among school graduates proved to be nearly the same as in the
main sample. They were also tested on the data from other local surveys
conducted in the same schools. Results by schools studied consequently in
1963 and 1983 or in 1983 and 1994 showed the same results as in the main
sample, regardless of the level of urbanization in the town.
Was this specific for Siberia? Survey data from Moscow, Novosibirsk
and Krasnodar showed that children from higher social groups prevailed
among those who completed full secondary education. According to the
Fig. 26.1, in 1998 the proportions of school graduates remained nearly the
same. It is obvious that a new situation had already been established and
become stable. The leap and the transformations had been completed by
1994. The only group that strengthened its position was small business-
men’s children, who were hardly visible in 1994 (1.4%) but had already
reached 13.4% in 1998, which was nearly the same share as blue-collars’
children.
On the one hand, such changes partially reflect the transformations in
the social structure; but on the other hand, our analysis leads us to believe
that they are to a large extent defined by the deepening social differentiation
in the sphere of education. It was interesting to compare the composition
of students with the latest census data; quantitative analysis of this data
proved the trend of growing social differentiation in the sphere of education.
Studies show that there was re-allocation of opportunities for complete

secondary education between the children of workers and peasants on the
one hand, and administrators’ children on the other hand, in favor of the
latter. The former dropped out of the school system at earlier stages at
an even faster pace. The total share of administrators’ and white-collars’
children among school graduates reached 50%, i.e., the group that used to
be the largest became a minority, while the smallest group represented over
25% of all graduates.
Did the level of urbanization cause any changes in the social composi-
tion of children completing full secondary education?
Relative changes in the social composition of school graduates in
Novosibirsk region was analyzed, as well as in other cities, small towns,
and villages of Novosibirsk Region. The analysis showed specific aspects of
the changing profile of general secondary education. The effect of certain
factors was different across different social groups, i.e., they caused differ-
ent behavioral changes in young people. Nationwide factors that affected all
social strata in the country had different consequences for different social
groups among the youth. Such groups were not at the same “starting level”
in terms of the perception of external influences: each had their own living
conditions, interests, traditions, values in terms of education or the status
of various professions, and, of course, their own cultural, social and financial
capital. They also varied in terms of their reactions to external conditions
depending on their informational environment and other factors.
How did such changes occur?
It is important that withdrawal from school at various levels (often
called “dropout”) grew significantly in the period analyzed. Official statis-
tics showed the time when the most intense stage of the process began. Let
us only use the most vivid cases in Fig. 26.2 that shows the growing level
of withdrawal from school in various grades.
Withdrawal from grades was relatively low and stable in the early 1980s
but it began to grow during 1986–1987, when the social and economic
changes in the country were becoming visible. The process continued to
intensify and reached its peak by the mid-1990s.
Such dynamics, of course, can be explained by social reasons. In the
early 1980s, the number of school graduates changed through unequal
influxes of boys and girls coming from various social groups (as shown in a
comparative study of the 1963 and 1983 surveys). Reverse processes hap-
pening in the 1990s were similarly caused by the refluxes of various groups,
some of which could be compared to streamlets while others to real rivers.
% 7
0
2
9
00
/8
/8
/8
/8
/9
/0
/9
/9
/9
/9
/0
/0
/0
/0
81
83
85
87
89
91
93
95
97
01
03
05
07
08
/2
99
19
19
19
19
19
19
19
19
19
20
20
20
20
20
19
School years
7th - 8th grades 8th - 9th grades
Fig. 26.2. Decrease in the number of school students from the seventh to the eighth
and from the eighth to the ninth grades (difference in the number of students at the
beginning of an academic year).
Notes: For transition from the seventh to the eighth grade, the number of students is
given according to the list at the beginning of an academic year for the seventh grade,
excluding pupils who repeat the grade and newly arrived for the eighth grade (migrants
at alias).
For transition from the eighth to the ninth form — similarly.
Source: Primary data of Federal Service of State Statistics.
Why would students leave grades so often? There were of course eco-
nomic reasons, as mentioned earlier: One does not really think about school
when the family is experiencing hardships and one has to help their parents.
Another reason was the decreasing interest in education in difficult times
when a successful person was the one who had a stand at a local market, not
the one with two degrees. Such changes, however, had begun even earlier:
professions requiring vocational training or higher education were becoming
less and less prestigious (Konstantinovskiy, 1999: 131–188), and the youth
are of course very sensitive to such processes. Such conditions just helped
young people use their right to choose their path in life freely.
Data from the mid-2000s bring evidence of further changes: blue-collars’
children returned back to school (since the economic situation was not grave
anymore and education became prestigious once again). This gives clear evi-
dence that secondary education is becoming nearly universal. The dropout
rate has been decreasing, though it is still higher than that in the 1980s.
This means that the teenagers are not only using their rights to choose
their life paths, but also making use of their rights to secure education, as
guaranteed by Article 43 of the Constitution. Apparently, the financial sit-
uation too has been improving on the whole, encouraging families to send
their children back to school (especially when school education can be quite
expensive).
At the same time, it is necessary to remember a very important and
highly powerful institutional factor that causes a lower dropout rate, or
rather forces students to stay at school. The reason is a new school fund-
ing scheme, i.e., per capita financing, which means that schools with few
students are bound to be shut down. School teachers and administrators
therefore face the risk of losing their jobs and getting work they might not
like, so school teachers are trying to do all they can to preserve the same
number of students, e.g., they are recommending higher scores to lower
performers. This is quite dangerous because it can develop into a situation
when students would just pretend to study and teachers would pretend to
teach. While such a trend would reduce the dropout rates and ensure the
survival of certain schools, it has become a major problem for the Russian
education system nowadays and can also cause a potential collapse in the
quality of education, which is an important requisite in the modern world.
Schools in the 2000s

A study of Russian schools3 helped identify several types of schools in terms
of the resources they had (including both material resources, i.e., building,
library, equipment, etc., and symbolic resources):
1. Schools without any special facilities (e.g., gymnasium, etc.) or special-

ized programs (e.g., physics & mathematics, liberal arts, etc.);
2. Schools with good facilities or programs but with a low share of high-
quality teachers;
3. Schools with good facilities or programs with a high share of high-quality
teachers;
4. Schools with good facilities or programs and the majority of the teachers
being high quality.
3 This
part of chapter is based on the data of a 2005–2006 survey of Russian schools (see
Konstantinovskiy et al., 2006).
Educational performance was evaluated by the results of school gradu-

ates’ Uniform State Examination (USE) and the rate of their admission to
universities. In the end, schools were split into three groups:
1. “The worst” ones with low USE results and low university admission
rate;
2. “Average” ones with average USE results and average university admis-
sion rate or with low USE results but high university admission rate or
vice versa);
3. “The best” ones with high USE results and high university admission
rate.
As a result, the schools were further clustered into eight groups. There is
no direct relationship between school type and performance, yet the results
varied greatly. Group 1: Schools without any special facility or programs,
with a low share of high-quality teachers, rarely have their own websites
and e-mail addresses, with a significant share of “problematic” students
(some of them even registered with the police). Most of such schools are
in the rural areas. Their graduates show a low USE result and rarely go
to universities. Group 8: Schools with good facilities (usually gymnasiums)
and some strong programs in certain disciplines often providing some extra
services. Such schools have a large number of high-quality teachers and
non-budgetary financing, well-equipped libraries, etc. Students from such
schools often have the best performance at USE and have the highest uni-
versity admission rate. More than 50% of such schools are situated in the
capitals of different Russian states.
Let us analyze the accessibility of education at different kinds of schools,
i.e., access to education of different quality levels, from the point of view of
barriers to securing quality education.
Barriers include a number of factors that make it difficult for students
with limited resources to go to a school. . How high the barrier could be
is determined by the probability of a student, who does not have enough
resources, to overcome the barrier, but is still enrolled and graduates from
a certain school. Let us look into the most important barriers.
Socio-cultural barrier: Families’ social

and cultural capital
There is a clear relation between the quality of students’ secondary educa-
tion and their parents’ education, sector of employment, and job positions.
Fig. 26.3. Percentage of parents with higher education, in 2006.
Parents’ education is the first indicator of the socio-cultural barrier

(Fig. 26.3). Only 28–29% of parents in Group 1 schools have higher educa-
tion versus 77–80% in Group 8. There is a nearly linear dependence (though
one cannot really talk of linear dependence in a group model due to the fact
that “quality” increases across groups is not linear itself). From Fig. 26.3,
we can conclude that the probability of a child of non-degree parents getting
into a school in Group 8 is around 20%, and this barrier is rather high.
Another indicator of the socio-cultural barrier is parents’ sector of
employment. In Group 1 schools, two-thirds of the fathers work in the
industrial sector versus only 40% in the Group 8 schools. 36% of the moth-
ers in the latter group work in science, education or healthcare (the national
average being 27%), and only 17% of the mothers in the same group work
in service industry (the national average being 29%).
The third indicator is parents’ job positions. The better the school is,
the fewer mothers are doing any kind of manual labor, their share being 39%
in Group 1 and only 8% in Group 8. In Group 8 schools, 14% of mothers
are white collars or holding executive positions, the national average being
6%. Fathers’ position is no less important. In Group 1 schools, 2% of all
fathers are business managers and 57% are blue-collars, while in Group 8
schools 11% of fathers are senior business managers (twice the national
average) and only 12% are blue-collars (nearly one-third of the national
average).
These are the key indicators of the socio-cultural barrier: parents’ edu-
cation, sphere of employment, and job positions. Their cumulative effect
makes the barrier one of the highest in the contemporary situation of
inequality, therefore, having a significant social and cultural capital in the

family is key for their children to get good education, which would ensure
rising social mobility or at least help children preserve their parents’ social
status.
The territorial barrier: Mobility and resources

This barrier is nearly equal to the socio-cultural barrier in terms of its
height. It includes the type of settlement, distance between school and
home, transport availability, number of schools available, and the level of
urbanization. Any of these factors can become either an obstacle or resource
to securing education.
Type of settlement is important as a territorial inequality factor in
securing complete secondary education. Good schools are mostly situated in
big cities and administrative centers of the regions (Fig. 26.4). “Ordinary”
schools are, on the contrary, mostly situated in urban-type settlements and
local centers, rarely in big cities. Data from a pan-Russian survey suggest
that a child living in the rural area or in a small urban-type settlement has
practically no chances of studying at a Group 6 or Group 8 school, unless
territorial deprivation is somehow compensated for.
It is also important that nearly 60% of all students and their parents
are concerned about the proximity of school when choosing one. This is
most important for students in Group 1 and Group 2 schools (68–69% of
the respondents) and much less important in the “best” groups (35% of
the respondents). Location is a highly differential factor that draws the line
between the “best” schools and the rest (in a way, it defines the students
and parents in the latter).
Fig. 26.4. Territorial barrier percentage of schools situated in regional centers in 2006.
Territorial barriers are complex and diverse, not just because of the
large number of collateral factors that only fix inequality but also because
they help replicate it further. The importance of the territorial barrier is
also caused by the strong interdependence between horizontal and verti-
cal mobility. People who are not “confined” to a particular place and are
ready for (can afford) “quality education” have better chances in life nowa-
days. Due to the high levels of differentiation across schools, territorial
mobility in secondary education becomes as important as that in higher
education. Our survey has only proved that this is true in a post-industrial
society.
Economic barrier: Explicit and latent inequality

Economic barrier is not the last in the list of the most prominent barriers.
When analyzing economic inequality as a factor of schools stratification,
one should take into account both explicit factors (e.g., family income) and
latent factors of accessibility of education (which, for example, is not always
officially financial).
The most explicit differentiating factor is financial condition. In
Group 1 schools, 30% of students and their parents say that they only earn
“enough to buy essentials” versus 13% in Group 8 schools. The answer “we
can afford anything we want, we have no financial problems” was chosen by
5% of the respondents from “low-level” schools and 13% of the respondents
from the “best” schools. When comparing Groups 1 and 8, the family’s
financial condition is evidently seen as a key factor for the accessibility of
good education. The picture is even clearer when analyzing the answers
to the question whether the family owns a computer. In Group 1 schools,
38% of the families have a computer, while in Groups 6 and 8, 86–87% of
the families do. This does not just show the correlation between financial
condition and school quality, but also the parents’ degree of engagement
in intellectual labor (such families are usually better “equipped” and more
“computerized”) or their readiness to spend more on providing their chil-
dren with quality education.
Another problem is fee for education (Fig. 26.5), which is one of the key
factors of the economic barrier. Less than 1% of the respondents in Group 1
said that education at their schools was “on a payment basis only” versus
7% in Group 8. The situation with “admission fee” is nearly the same: such
fee is a barrier on the way to Group 8 (and also Group 7) schools: 12% of
parents from such schools said they had had to pay some kind of such fee.
Fig. 26.5. Economic barrier: Percentage of schools providing free education in 2006.
40% of Group 1 respondents said their children’s education was fully free
versus 11% in Group 8.
We can conclude that the economic barrier is based on both formal
and informal payment mechanisms, as well as on the existing economic
stratification. It also includes personal, subjective reasons, such as the
attitudes and perception on the educational payment as being a real bar-
rier on one’s way to a good school. Such perceptions, especially prevalent
among families from “low-level” schools, only contribute to the inequalities
of opportunities.
After Graduation
Young people start planning their future personal life shortly before their
graduation. Such plans are based on their attitudes toward different pro-
fessions, social statuses, opportunities, and therefore, taking reality into
account.4
Parents’ social status and children’s life plans

It has been shown throughout the years that young people’s life plans differ
depending on their parents’ social and professional status. The higher the
4 From here on, the paper is based on the data of a survey started in 1962. In the spring
shortly before graduation from school, students were asked to evaluate the appeal of
different professions and describe their intentions, while in the fall of the same year they
were asked to talk about the real path they have chosen (see Konstantinovskiy, 2008).
Fig. 26.6. Structure of upper-grade students’ personal plans (Novosibirsk Region, 2004).
status, the more strongly young people (in that status group) wanted to
continue their education at universities. At any taken year of the time series,
the share of young people intending to get a university degree correlated
positively with their parents’ social and professional statuses. Students from
lower social strata usually prefer other educational institutions.
In Fig. 26.6, one can see the typical structural differences in terms
of life plans among school graduates from different social groups. Admin-
istrators’ children are the most ambitious and intend to get higher edu-
cation; specialists’ children opt for other opportunities besides higher
education; white-collars’ children have an even lower level of aspirations;
while the aspirations of blue-collars’ children are the most “pliable” and
unambitious.
The data collected over a long period of time helped see a changing
correlation between the intentions of school graduates from different social
groups and changes in the social situation in general. It had a certain effect
on all social groups regarding educational opportunities. Changed social
situations forced young people to nurture realistic goals. However, certain
aspects of the situations had different effects on different social groups.
Survey data analysis helps see the dynamics between young people’s inten-
tions, changes in the system of secondary education, and changing attitudes
towards different professions.
One can assume the intentions of youngsters at school-level. At least,
there are reasons to believe that those who went to senior high school
in the 1960s and 1990s did so because their life’s goals required a
higher educational level; such goals usually included obtaining a univer-
sity degree. However, some young people lower their ambitions at the end
of the general secondary education when they realize their own limitations
better.
The formation of life’s plans can be seen as an important and intrinsic
part of the process of socialization. Taking into consideration the results
of the study, one has to admit that at this stage of socialization, young
people from the bottom of the social hierarchy are often forced to face
social inequality, especially when it comes to education, and to readjust
their life’s strategies to match the reality.
Level of urbanization
Similar results were found when analyzing life plans of young people grad-
uated from schools located in areas with different levels of urbanization.
Young people in the regional administrative centers were the most
ambitious, followed by those from smaller cities and towns and finally,
those from rural areas. In other words, the higher the level of urbaniza-
tion in the area where the school was located, the more the students would
choose to continue their education. This has been proved to be a distinct,
long-standing, steady correlation.
Senior high school students’ life plans according to the level of urban-
ization are shown in Fig. 26.7.
Fig. 26.7. Structure of school graduates’ personal life plans (Novosibirsk Region, 1998).
Research data helped show group dynamics and identify the levels of
“persistence” and “pliability” in a changing situation. For example, the
number of school graduates from regional capitals in the 1980s who intended
to pursue higher education decreased by 20% only in contrast to other
groups, and got back to the previous level in the 1990s, nearly equal to the
1960s situation.
On the whole, the survey data suggest that the level of urbanization
is a significant factor when it comes to defining young people’s life plans.
This factor has the same regulatory control. Young people from areas with
different levels of urbanization have different life intentions; their reactions
to the changes in the social situation, in general, also vary. It is quite clear
that the situation with life plans also varies from region to region due
to educational infrastructure, labor market, population composition, and
other regional elements.
First Real-life Step upon Graduation

Social background and life opportunities
The survey data show that children from different social groups have differ-
ent chances of getting admitted into educational institutions. Together with
the different opportunities for complete secondary education, this shows evi-
dence for the existence of social inequality in education. School graduates’
chances in getting into university have always correlated with their par-
ents’ status. Figure 26.8 shows different types of social behaviors in terms
of education among senior high school students.
The intentions on further education among children from relatively high
social groups can be described thus — during the survey, administrators’
and specialists’ children at senior high schools displayed strongest intention
on getting university education. In contrast, blue-collars’ and sometimes
even white-collars’ children rarely showed any intentions to go to univer-
sity; and were rarely seen among school graduates or even newly admitted
students. This is the mechanism of social selection that regulates the tran-
sition from secondary to higher education.
Young people from the top of the social hierarchy were more advanced
in terms of improving their social status, education, future sphere of employ-
ment and even specific professions. Most of these people had degrees in
economics, finance, or law. It is believed that such spheres are most pres-
tigious and high-profile and that can enable such young people to achieve
these long-awaited privileged positions in a restructuring society.
Fig. 26.8. Choices of graduates after secondary school (Novosibirsk Region, 2004).
Time series also proved that school graduates’ opportunities depended

on the situational dynamics, i.e., the extent to which the behavior of young
people from different social groups was influenced by the situation.
Influence of urbanization level

The higher the level of urbanization in an area where a school is located, the
better young people’s chances in education are. This trend is evident during
the entire period of education. School graduates in regional administrative
centers had the best chances of becoming university students, followed by
aspiring young people from smaller cities and towns, with rural school grad-
uates having practically no chances to continue their education.
Rural school graduates would most often go to specialized secondary
schools, followed by those from towns and cities, unlike students from
regional centers who would rarely pursue such education. New students
of vocational schools usually come from small towns or from the rural areas
but rarely from big cities and regional centers.
Parents’ status plus urbanization: “The strong”

and “the weak”
It is interesting to look into the dynamics of the first steps taken by the
representative graduates from high-potential groups and outsider groups.
This can be considered as an attempt to study initial life strategies of young
Fig. 26.9. Choices of graduates after secondary school for girls from Administrators’
families (Novosibirsk).
people with very different starting condition. This also helps understand the
life paths of young people from intermediary social groups.
Administrators’ daughters from regional centers represent a “strong”
group. The majority of such girls would inevitably enroll into universities
(see Fig. 26.9).
In the past couple of decades, nearly every fifth female student would
take up economics or finance courses. Other appealing subjects are law,
mass communications, and IT. Those administrators’ daughters who went
to colleges and vocational schools also chose courses in economics, finance,
trading, or management. Some of them sincerely wanted to pursue a career
in the chosen sphere, but for most of them their interested profession was
seen as a backup plan for “losers”.
The situation was very different for their peers from peasant families
(Fig. 26.10).
Peasant girls in our sample who managed to get into universities usually
chose pedagogics. Apparently, this is typical for rural girls especially for
those who are from peasant families and represents a very popular group-
specific life model. Those who went to specialized secondary schools usually
chose secondary medical or pedagogical schools. Those who chose to pursue
vocational training most often went in for the courses related to economics
and finance, e.g., accounting.
Fig. 26.10. School graduates’ real behavior dynamics (% of the group).

Peasants’ children, girls, villages of Novosibirsk Region.
Conclusions
Social differentiation in the sphere of education in Russia increased over
the years of social transformations. This can be seen both in young people’s
education paths and in the structure of their life plans, which shows that
young people are especially sensitive to external factors.
For a while, it appeared that the situation had changed prompting equal
opportunities for different social groups in securing secondary education.
However, in reality, there is even more differentiation among schools in
terms of their education quality and performance, and each type of school
aims at serving a particular social group. The quality of secondary education
is a key factor in influencing young people’s chances of going to university.
Children from the higher social strata still receive better education and are
more successful in seeking higher education. In other words, educational
inequality has not decreased. Unfortunately, inequality continues to persist
in accessing vocational and higher education. Young people from the lower
social groups are still bound to go to “weaker” schools and remain at the
fringes.
On the whole, the situation is as follows.
School students and their parents often show no interest in exploring or
using the opportunities provided by the system of education. Such children
and their parents either have no motivation to reach higher positions in the
society or they have a motivation but do not see education as a means to
reach their goals. As a certain body of research shows, the attitude towards
education is closely related to the value structure dominant in the social
groups.
On the other hand, there is also inequality in accessing to education,
especially quality secondary and vocational education (while the former
is prerequisite for the latter). As a result, hereditable social status is legit-
imized and inequality continues to be reproduced, instead of leveling oppor-
tunities and education-mediated social lifts. Those who have an active
position and are trying to secure better education but cannot overcome
the obstacles on the way to what should in theory be available for every-
one, are bound to fail. Such people usually have a very high, clearly evident
motivation for achievement; however, their intentions are blocked by the
existing social barriers.
Another important category among the actors in the sphere of edu-
cation are those who voluntarily lower their expectations (and, therefore,
are not active) because they are not confident of overcoming all the barri-
ers on their way to securing quality education (or afterwards) and related
social goods; such people do not aspire to any achievements in the sphere
of education because they cannot overcome the barriers or at least believe
so. This is a result of the way they perceive reality: young people set goals
according to a realistic (often pessimistic) view on the situation. They might
have a motivation for getting a higher position in the society through edu-
cation but their intentions are readjusted when they come to think of the
barriers.
As a result, it can be said that people have begun to accept the
existing situation and, in a way, ensure that differentiation and inequal-
ity in education would continue to exist: the first group (those who are
not interested in the opportunities related to education) supports the
current state of affairs with their dismissive attitude to education, while
the second (those who lower their expectations) do so through their real
behavior. The representatives of the second group actually attempt to
put their ideals declared into practice. While leaders of the two groups
manage to get into relatively high positions at schools and later at uni-
versities, most of the representatives of these groups fail. Together with
those who lower their expectations (according to the “rules of the games”
imposed by the society), they enter into a situation when high aspi-
rations clash with real life. As R. Merton suggested, such a situation
Table 26.1. Distribution.
Goal Means Behavior Result

Social Participation
Group mobility Education in competition Success
The winners + + + +
The outsiders + + + −
The pessimists + + − −
“Others” + − − +/−
The desperate − − − −
generates a model that welcomes deviant behavior.5 We show the results

in Table 26.1.
Groups’ names are, of course, nominal. “The winners” are those who
are looking for vertical social mobility, who perceive education as a means
for reaching their goals, actively pursue quality education that would enable
mobility and actually acquire such an education by enrolling and completing
their education in institutions of their choice and finally being rewarded
with a professional qualification (either the one they desired or the one they
managed to get). “The outsiders” also aspire to a social status that would
be higher or at least equal to that as their parents and see education as a
means to reach their goals; they also compete for better quality education
and popular professions but fail.
“The pessimists” would like an opportunity for ascending social mobil-
ity and even understand that it can be accessed through education but do
not expect to overcome the barriers (due to certain social and economic
factors, etc.); whether they really cannot overcome them or just choose to
believe so, they lower their expectations and do not take any actions.
“Others” is a deliberately worded nominal group name, even metaphor-
ical one, and that is why it is in quotation marks in Table 26.1. It assumes
that the representatives of this group have different values. Of course, social
welfare and social mobility are important for them as well but they see other
means for reaching such goals. What could those be? The readers are wel-
come to imagine such means, which could include opening a small business,
racketeering or many other such options. Therefore, the results of this group
can be both positive and negative, depending on the means chosen.
5 See Merton (1949, p. 148).

Finally, there is “the desperate” group. Unfortunately, such a category

does exist. It includes those who are at the edge of poverty line or below
it; and having no resources to change the situation or those who believe
they have met a dead-end. They do not aspire to a higher social status
and, therefore, do not see education as a means of personal mobility and,
obviously, do not compete for relatively prestigious positions.
Inequality in terms of access to quality education, which is a key to
social mobility, remains an important social problem. It is quite clear that
those whose parents can afford a good school, extra studies and a good uni-
versity have better chances of receiving high-quality education at reputed
schools and universities and getting prestigious jobs.
One has to admit that we are now experiencing the transformation in
certain functions of education, and such processes are not limited to Russia
only. They include social selection at the beginning of the 20th century,
which anchored the then-existing social stratification, through a merito-
cratic ideology, which gave grounds for the attempts to provide equal oppor-
tunities in education (somewhat successful in terms of secondary education
but unsuccessful in terms of higher education), to the current “parento-
cratic” model, meaning that “children’s education is becoming more and
more dependent on their parents financial standing and aspirations, rather
than their own talents and efforts”.6 Such differentiation is clearly seen
at schools already and becomes even more transparent in higher educa-
tion, affecting young generation’s life trajectories and aggravating social
inequality even further.
However, it would be wrongful and meaningless to blame the educa-
tional system itself only. It only reflects what is happening in the society on
the whole. The educational reform that is being discussed addresses some
of the issues above, but it can neither solve nor aggravate the situation too
much. The educational system is just a mirror of the society.
Is it possible to level opportunities in education at all?
There are, of course, certain mechanisms but they were not always used
positively. For example, administrative measures aimed at regulating the
composition of university students in the USSR in the 1970s (e.g., privileges
for villagers or people sent by certain plants or kolkhozes; quotas for expe-
rienced workers, etc.) changed the composition of the student community
for a while. However, this concerned first-year students only because most
6 See Brown (1992).

of the “privileged” students would drop out before graduation.7 Moreover,

such measures triggered a drop in the quality of education because uni-
versities had to lower the standards. Also, contrary to the expectations,
blue-collars’ children did not really want to continue their education.8 In
other words, this approach turned out to be inefficient and only caused
negative changes.
It is quite clear that direct action should not target educational system
only; it should be complex and based on stable financial and administra-
tive support. It is especially efficient at earlier ages. Therefore, it is very
important to focus on developing preschool education.
The programs aimed at neutralizing negative social and economic
effects can be quite diverse across different regions and should take into
consideration social stratification and its role in the provision of education.
The programs should be subject to manifold unbiased evaluation that would
also list potential opportunities and real limitations. Such programs should
be developed with a clear understanding of their potential results and con-
sequences in all possible spheres and aspects. We can be sure that they
would be ambiguous and would possibly bring out further contradictions,
which, in their turn, would require new responses. This, however, cannot
be used as an argument against any kind of research or practical measures.
The issue of the costs suggested by researches is inappropriate. The
society is changing and, therefore, constantly challenged by a broad range
of social consequences, some of them definitely positive, others implicitly
negative, which require some kind of response. The most important thing
is that the society should not give some groups more opportunities at the
expense of others. Discrimination measures are absolutely unacceptable,
and the society should aim at leveling the opportunities for young people
no matter what their social background is.
7 See Aitov and Filippov (1988).

8 See Gerchikova (1988, pp. 76–81).

27
Education and Social Stratification in India:
Systematic Inequality
K. L. Sharma
Education as a System of Social Stratification

All over the world, education is considered a means of enlightenment and
emancipation for those who do not have access to education, particularly
quality education. The caste system did not encourage equal access to edu-
cation because the top ranking caste, namely, Brahmins, were supposed
to receive education for the performance of intellectual and priestly func-
tions. The British encouraged English education for creating manpower for
strengthening its rule in India. A selected group of people from among the
upper castes took advantage of this politically motivated initiative by the
British. Both the Brahminic and the British models of education created
status distinctions. After India achieved its independence in 1947, several
measures have been taken to provide access to education at all the levels,
from elementary to secondary to the university level. However, equal access
to education is not an easy path because of uneven social arrangements
and institutions, including caste, community, family background, the rural–
urban divide, and socio-political networks. Besides such structural barriers
and hindrances, educational institutions are also of an uneven nature, right
from elementary schools to colleges and universities. The hierarchy of edu-
cational institutions obstructs equal access even to the highly motivated
and capable aspirants, because being poor, they are not in a position to
afford the high cost of education at the school and higher levels.
The British established higher educational institutions which created
“colonial” modernity in India. Alongside, the Indian princely states also
549
550 K. L. Sharma
established such institutions which were more of a “native” character.

Frenz and Berkemer (2006: 1261–1268) state that initially there was no
distinction between British and “native” patterns of education, as both
were concerned with altruistic goals. Rulers made investments in education
as measures to enhance their own status in the eyes of their subjects and
neighbors. There is not much “native” modernity as such today. There is in
fact “national” modernity, and also a hangover of the “colonial” modernity
in India’s higher education. Frenz and Berkemer write: “Modern” here ide-
ally means that education was accessible not on the grounds of status and
caste, but on the “modern” principles of “class and wealth” (op. cit.: 1266).
From this “modern” form of education developed “national” modernity,
as this was felt necessary for change of the “colonial” rule. The demand
for independence was a consequence of the nationalist ethos in higher
education.
At all the levels, education from elementary to secondary to higher
levels, is stratified in terms of location, medium of instruction, quality of
teaching, social background of students, profile of teachers, infrastructure
and branding of schools, colleges and universities. The cost of education
depends upon the name and fame of a given school. Private schools, namely,
English medium and convent schools are preferred and they too are consid-
erably stratified. The government and municipal schools are least preferred,
barring Central Schools that cater to the educational needs of children of
transferable central government (including Defense and paramilitary per-
sonnel) by providing a common program of education.
Ranking of schools and colleges is known to one and all in a particular
town or area. Therefore, “quality education” becomes a scarce commodity
with more people wanting to send their children to few good schools as
per the ranking. For the first generation learners, no doubt education is a
means of enlightenment, awakening and self-realization. As we have seen,
access to education is differentiated and inegalitarian. So far in India there
is no free education and it is not compulsory and uniform for all children.
Efforts are on for making education free and compulsory for children up
to the age of 14 at government-controlled or supported schools. As quality
schooling is highly structured and hierarchical, managed and controlled by
private agencies — individuals, families, and castes/communities — cul-
tural or knowledge monopolies and privileged forms of school would con-
tinue. Mahatma Gandhi (2007: 439–440) advocated compulsory and basic
education with a view to weaken the role of family, caste and community in
social production, and to bring up children under less unequal conditions.
Education and Social Stratification in India: Systematic Inequality 551
Gandhi desired to combine education with material production, to close

the gap between manual and mental work. He considered education as a
means of an all-round development of the personality. Gandhi was for a
more open relation between school and society, and a dialogical relation
between teacher and the taught.
Karl Marx talked about Educational Praxis (Gramsci, 1971) for a
complete uniformity among children at the school. Gramsci, following the
Marxist Educational Praxis (MEP), examines the modern radical education
in terms of the sociology of curriculum, the apparent continuity between
the culture of the school and that of daily life, problems of language and
literacy in education, the role of the state in the provision of education, the
cultivation of elites and the role of intellectuals, the problems of vocational
education and the nexus between the theory and the practice in the field
of education. Is there politics in education? Gramsci looks at education in
the context of his radical political theory, but certainly as a means of a
basic social change. Education has been at the centre of all those who are
concerned with the transformation of society. Paulo Freire (1973) talks of
education system as a means to maintain “culture of silence”, “domination”
and “submerger”. Illich (1973) thinks of the futility of schooling. Accord-
ing to him, the school could be considered as the sacred cow. He considers
school as a central myth-making system. Since schooling is tied into self-
image of contemporary man, there needs to a de-schooling of society. By
de-schooling, he means ritualization of progress and irrational consistencies
can be checked.
Educational Reforms and Expansion

Indian society continues to be characterized by rural–urban disparities, the
role of caste and family in social mobility, rich–poor divide, hierarchy of
schools, colleges and universities, etc. Education is more of a sponsored
phenomenon, rather than a contest, hence ascription (caste, family, parent-
age) plays a significant role regarding access to quality institutions. Every
metropolis and big town or city has a clear hierarchy of schools in public
perception. For the last forty years, Jawaharlal Nehru University (JNU), at
New Delhi has been the most sought-after institution for higher education.
So is the case of Delhi University and some other lesser universities in other
parts of India. Higher education in general, and quality higher education in
particular, has become a conservative or status-stabilizing factor in mod-
ern India. Despite considerable expansion of colleges and universities, like
552 K. L. Sharma
Indian Institutes of Technology (IITs) and Indian Institutes of Management

(IIMs), higher education continues to be a means of the perpetuation of
inequality or reproduction of intellectual power. Such a problem is more
evident in India because of severe structural impediments and cultural dis-
sonance of Indian society. However, even the advanced countries are not free
from such a conservative role of higher education (Bourdieu, 1988; Bourdieu
and Passeron, 1977). Education reproduces nobility. In France, for example,
the very selection procedure in educational institutions legitimizes “unequal
gifts”. Economic and social differences are transformed into distinctions of
quality, and this legitimizes the transmission of the cultural heritage. Elite
perpetuation and status retention are the net consequences of such a system
of education.
With a view to making education as a vehicle of social transformation,
several initiatives have been taken in India, which have not significantly
checked the status-stablizing role of education, though education has bene-
fited the first generation learners, and also those who have been benefited by
the constitutional provisions, namely, the Scheduled Castes and the Sched-
uled Tribes. Under the provisions of the B. P. Mandal Commission, the
other Backward Castes (OBCs) are also receiving the benefits since 1993.
The following Commissions and Committees for educational reforms have
been constituted by the Government of India (Ghosh, 2007):
1. S. Radhakrishnan Commission (1948) for Higher Education.
2. A. L. Mudaliar Commission (1952) for Secondary Education.
3. D. S. Kothari Commission (1964–1966) for Higher Education.
4. The 1986 New National Policy on Education, Government of India.
5. Acharya Ramamurti Committee (1990).
6. Muni Ram Saikia Committee (1996).
Among the Commissions and Committees, the Khothari Commission
is considered quite exhaustive and relevant in giving new directions in
higher education. Ghosh (ibid : 456) writes: “It (the Kothari Commission)
suggested an internal transformation in education to relate it to life, the
needs and aspirations of the people, a qualitative improvement to raise
its standards and a quantitative expansion of educational facilities on the
basis of manpower needs and equalization of educational opportunities.”
The Commission also emphasized science education as an integral part of
school education and improving its teaching at the university level. Work-
ing experience, vocational education, moral and spiritual values, national
consciousness, social service, etc., were given due importance in the report
of the commission. A common school system with equal access to children

from all social strata was also suggested. It has remained only a dream
so far. How can one think or build a common mode of schooling in highly
structured inegalitarian Indian society? Socio-economic inequalities perpet-
uate the inegalitarian educational system, and the latter in return supports
the existing social and economic inequalities. It is a vicious circle and a
paradoxical situation.
Twenty years after the submission of the Kothari Commission report,
in 1986, the National Policy on Education was announced. From the point
of social stratification, the policy seems to be an important document. It
stresses equal access to education to all, irrespective of class, caste, creed
or sex, and in areas, including backward, hilly and desert areas. Ghosh
(ibid.: 458) observes: “It envisages a common educational structure like
10 + 2 + 3, a common core in the curriculum program at some level, an
understanding of the diverse socio-cultural systems of the people while moti-
vating the younger generations for international cooperation and peaceful
existence.”
We may say that the New Education Policy of 1986 stressed the need
for removal of disparities and upon incorporation of equal opportunities for
the deprived sections, namely, women, scheduled castes, scheduled tribes,
the physically challenged and the minorities. Eradication of illiteracy, adult
education, universal enrollment and retention up to 14 years, etc., were the
main steps suggested for elementary education.
For higher education, quality improvement and the expansion of uni-
versities and colleges were both considered the need of the hour. More
autonomous colleges and open universities were recommended. On the
whole, the document on New Education Policy was quite comprehensive
and inclusive. It has been implemented by way of new model schemes, non-
formal education, and a national core curriculum at the school level; and
at the higher education level, by establishing national regulatory bodies for
assessment and accreditation, for ensuring quality education in engineer-
ing, management, teacher training, and National Eligibility Test (NET) for
college and university teachers quality assurance has been implemented at
least in a formal sense.
There has been a phenomenal expansion of school and higher education
institutions. Today, India has more than 500 universities, and of which,
more than 40 are financed and controlled by the Central Government. The
number of IITs and IIMs has also gone up considerably in the last two to
three years. A total of 16 Central Universities, eight IITs and eight IIMs
554 K. L. Sharma
have been established, and efforts are on to invite foreign universities to

India. Public–private partnership has also received a boost. It is felt that the
development of education has been politically motivated and lop-sided as it
has not attacked socio-economic inequalities, regional parity, and unequal
access to quality education. The National Knowledge Commission of India
has advocated for manifold expansion of higher education in India.
Based on the recommendations of the National Knowledge Commission
(NKC), the Government of India has prepared the Draft Higher Education
Bill 2010, for approval of the Indian Parliament. The NKC has suggested for
a need to create an overarching regulator in higher education. The Bill seeks
to have greater centralization of power, particularly in the appointment of
Vice-Chancellors (Anant and Kumar, 2010: 10–13). Several new central
universities, IITs, and IIMs have already been created to expand higher
education. The NKC and the UGC hold quite divergent views on higher
education. The UGC focuses more on the establishment of new universities
and institutions with public funding. The NKC emphasizes on encouraging
private players and foreign collaboration, and on self-sufficiency to meet
the cost of education. However, it is felt that the recommendations of the
NKC are devoid of a sound analysis and are not supported by evidence
(Tilak, 2007: 630–633). Tilak is not appreciative of increase in enrollment
without assurance of quality education. NKC’s recommendations are rather
vague (and appear impractical too) on the establishment of a centralized
regulatory authority in place of a couple of national regulatory bodies for
governance of universities and financing higher education. A similar point
is also made wherein it is observed that the recommendations of the NKC
lack details and data base. The role of private sector has not been prop-
erly conceived and defined. The role of the NKC in promotion of higher
education is also considered somewhat doubtful.
Inequality of Educational Opportunities

Education is an agency of social change and equality, particularly for the
first or the second-generation learners. However, there are unequal social
opportunities for education. Education has the ability to rank people in
terms of quality and relevance of the type of education that one receives.
Despite the conservative role of education, because of its reproduction in
the same families, castes/communities, it becomes a radical praxis for the
deprived sections who become beneficiaries of higher education, by way of
heightened consciousness and concretization.
However, educational inequality in India is of a highest order, and

it has not shown a sign of decline in recent decades. Gender, caste, reli-
gion, and rural–urban differences not just determine unequal access to
education, even outcomes of education can be seen in terms of hierarchies
based on gender, caste, religion and rural–urban hiatus. Even globaliza-
tion has not significantly reduced gaps in schooling. Education continues
to be low priority for majority of women, with inter-religion and inter-
caste disparity. However, participation in school education has been quite
encouraging. From 19.2 million in 1951–1952, school enrollment and com-
pletion have gone up to 113.6 million in 2001. Gross primary school enroll-
ment is almost 100%. From 18% in 1951, it was 65% in 2001. Accord-
ing to Dougherty and Herd (2008), a fairly rapid increase in literacy
and school participation has been seen due to economic reforms and lib-
eralization. Between 1983 and 2004, rural poverty declined from 46.9%
to 28.4% at a rate of one percent a year (Lanjouw and Murgai, 2009:
243–263).
An uneven distribution of education due to social impediments such as
rural–urban background, gender and caste inequalities is prevalent even
after more than six decades of India’s independence. Paranjape (2007:
213–216) arrives at the following conclusions regarding unequal access to
education in Maharashtra:
1. The distribution of education is extremely skewed, particularly in the

rural regions and specially, among the socially backward sections.
2. The inequality in spread of education, as measured by Gini, is much
higher among females than males, in both rural and urban regions.
3. The caste-based inequality is sharper in rural areas.
4. Urban males show the least disparity, while rural females show the high-
est disparity in educational attainment.
5. Gini values are higher when average schooling levels are lower. Moreover,
Gini falls when fall in literacy is supplemented by a rise in attainment
of higher levels of education, particularly post-secondary (op. cit.: 216).
Several scholars have observed that “education poverty” is the net
result of such a state of education, and this is seen through unequal access
to education and low levels of educational attainment. Access to educa-
tion is differentiated as there is a hierarchy of educational institutions,
more or less parallel to social hierarchy in India. Andre Beteille (2008:
40–48), while agreeing with Edward Shils (1992: 242–268), observes that
“the universities of the 21st century have to operate in an intellectual
556 K. L. Sharma
environment that is radically different from that of the 19th century and
earlier”. “The Indian universities must expand and multiply, and they
must be socially inclusive” (op. cit.: 48). In an open society, the univer-
sities are accountable to the public for their excellence in teaching and
research. No discrimination based on gender, community and class can be
allowed, because a university needs to prove itself as a centre of science
and scholarship. Beteille focuses on uneven development of schools, col-
leges and universities, levels of education, social stratification, the middle
class, disparate standards, examination and certification, pressures on uni-
versities, teaching and examining, and neglect of research as the major
issues in the present-day higher education. Shah (2005: 2234–2242) dis-
cusses falling standards of higher education and research and suggests basic
changes to the established structure in dealing with the changing reality on
the ground.
Enhanced privatization of higher education is a new development.
Although private schools and colleges have been in existence since the
British times, the deemed private universities are a recent phenomenon.
Several questions have cropped up due to privatization, including higher
cost of education, inegalitarian access to education, marketization of edu-
cation, etc. However, there is a view that private control promises quality.
At the same time, it is felt that privatization sharpens social divisions and
inequalities as the state withdraws and private interests prosper (Kumar,
2003: 5163–5166). Panikkar (2011: 38–42) argues that today India’s educa-
tional policy prioritizes private profit over public good and will encourage
cultural and intellectual imperialism. Generally, private universities enter-
ing into foreign markets are profit-seeking institutions. Higher education
is hanging between state and market (Tilak, 2005: 4029–4036). Another
factor is caste-based quotas in higher education, which has devalued merit
and excellence in access to education. Can the disadvantages caused by
caste, region, gender, religion, rural/urban background be reduced by way
of caste-based reservations in higher education? Is it a democratic way
to minimize socio-cultural inequalities? What about de-reservation of the
creamy layer or adequately benefited sections of the society? The views
on these questions are sharply divided in favor of and against reserva-
tions. In a special issue of Economic and Political Weekly, Patel et al.
(2004: 2151–2184) analyzed the problems and challenges relating to educa-
tional policy, privatization, contractual teaching arrangements, medium of
instruction, education abroad, etc.
Family background plays a crucial role in regard to access to educa-

tion, particularly quality education at the school and the university lev-
els. Today, the so-called English-medium or “public” schools managed by
private hands are mushrooming in villages. The families which are in a
position to afford higher cost of education prefer to send their children
to the English-medium schools, rather than the government schools. With
the coming up of private sector in higher education, thousands of colleges
and institutes have sprung up, particularly in the fields of teacher training,
engineering, management, life sciences, etc. A couple of private universi-
ties have also been established, providing professional education. Whether
coming up of public–private partnership in higher education would prove a
boon or a simple “marketization” or “trade” in education remains a puzzle
at this juncture.
Every society expects equality of educational opportunity, but it is
difficult to assess it in a definitive manner. Based on various reports, it can
be said that due to several factors, including social awakening, economic
development and political freedom, there has been a decline in inequality
of educational opportunity in the post-liberalization period. Asadullah and
Yalonetzky (2010) observe that the state of Kerala stands out as the least
unequal in terms of educational opportunities. Besides Kerala, Rajasthan,
Gujarat, Uttar Pradesh and Bihar have witnessed large-scale fall in the
ranking of inequality of opportunities. West Bengal and Orissa also made
significant progress in reducing inequality of opportunity. Except the central
region, which experienced downward mobility, the Southern, Northeastern
and Eastern regions experienced upward mobility in terms of decline in
inequality of opportunity.
Despite Commissions and Committees and the New Education Pol-
icy of 1986, India continues with the colonial legacy, at least in two
ways: (1) english-educated manpower to administer India; and (2) struc-
tures, institutions, and norms and procedures, which were created by the
British.
Two social consequences followed from the British legacy: (1) uneven
spread of higher education; and (2) regional disparities. These two tenden-
cies can be seen even today as we have discussed above. Hierarchy based on
educational attainments became a social fact. Besides, higher education was
restricted to coastal/port towns, such as Kolkata, Mumbai, Chennai, etc.
Since the British desired to restrict English education to their advantage,
on the eve of the independence in 1947, India had only eight universities,
558 K. L. Sharma
Table 27.1. University Level Institutions.
As on As on As on
University level institutions 31.03.2002 31.03.2006 02.07.2007
State Universities 178 217 232

Deemed Universities 52 102 114
Central Universities 18 20 24
Private Universities 0 10 11
Institutions of National Importance 12 13 13
Institutions set up by State Legislature 5 5 5
Total 265 367 399
Source: Background papers of the University Grants Commission (India) for the
XIth Five Year Plan. Quoted from Pawan Agarwal (2009). Indian Higher Education.
New Delhi: Sage Publications, p. 3.
600 colleges, and 200,000 students. Today, India is next to the USA in terms
of quantitative expansion of higher education (see Table 27.1):
The number of universities has exceeded more than 500 in 2010. Cen-
tral Universities are now more than 40, as nearly all provinces of India have
at least one Central University. Similarly each state has at least one IIT
and one IIM. Some states have medical and technology universities as well.
The number of national laboratories and science institutes has also gone up
in 2009 and 2010. Central Universities and IITs, IIMs, Indian Institutes of
Science, All-India Institute of Medical Sciences are considered at the top of
the hierarchy of the universities. State Universities are next to the above in
the hierarchical order. Special institutions and other universities, namely,
open universities and private institutions are ranked below. Deemed uni-
versities occupy low rank. However, there are always exceptions. Some Cen-
tral and State Universities are not upto the expected mark of excellence,
whereas some private and deemed universities have been performing quite
satisfactorily.
In its 11th plan, the Government of India has decided to open up insti-
tutions in different states (see Table 27.2).
Access and quality are central concerns of higher education. Access
depends upon two factors: (1) expansion of institutions of higher education,
and (2) the capability and opportunity to have access to quality education
institutions. The following impediments have been discussed by Agarwal
(op. cit.: 49–50) in regard to equity and access to higher education:
1. Rural–urban disparties.
2. Inter-state variation.
3. Gender disparities.
Table 27.2. List of Institutions opened by the Government of India.
Number and type 11th Plan 2008–09

of institutions Location outlay outlay
16 New Central Jharkhand, Bihar, Orissa, Punjab, 2000 cr. 50 cr.

Universities Haryana, Himachal Pradesh,
Uttarakhand, J&K, Karnataka,
Kerala, Tamil Nadu, Gujarat,
Rajasthan, Goa# , MP$ ,
Chhattisgarh$
14 World Class West Bengal (Kolkata), Assam 2800 cr. 60 cr.
Central (Guwahati), Orissa, Bihar,
Universities Maharashtra, Tamil Nadu,
Karnataka, Andhra Pradesh,
Gujarat, Rajasthan, Madhya
Pradesh, Kerala, Punjab, UP
Eight New IITs and Orissa (Bhubaneswar)∗ , Bihar 2000 cr. 50 cr.
IT (BHU) to be (Patna)∗ , Gujarat
Upgraded to IIT (Gandhinagar)∗ , Punjab∗ ,
Status Andhra Pradesh (Hyderabad)∗ ,
Rajasthan∗ , Himachal Pradesh,
Madhya Pradesh (Indore)
Eight New IIMs Meghalaya (Shillong)∗ , Jharkhand, 660 cr. 10 cr.
Tamil Nadu, J&K, Chhattisgarh,
Uttarakhand, Haryana,
Rajasthan
Source: Agarwal (2009).

[Rs. 10 million = Rs. 1 Crore (cr)].
4. Inter-religious group disparities.

5. Social groups within religion.
6. Income disparities.
7. Occupational disparities.
8. Inter-caste disparities.
The hierarchy of colleges is also a well-recognized fact. For example,

in Delhi, the Indian capital, all colleges are affiliated with the Univer-
sity of Delhi. The colleges, which are in the campus of the university, are
considered the best ones, but again they are differentiated or graded as
superior/inferior by the students, parents and the public. St. Stephen Col-
lege is considered number one, and then comes the Hindu College. Shri Ram
College for Commerce is considered the best in Delhi for Commerce stud-
ies. Miranda House, a women’s college, is rated as number one for female
students. Some constituent colleges of Delhi University are also considered
560 K. L. Sharma
Table 27.3. A Comparative Picture

of Participation in Higher Education.
Country Participation
France 50%
The UK 52%
The USA 81%
Canada 100%
Indonesia 11%
Brazil 12%
Mexico 14%
Thailand 19%
India 7%
Source: Pawan Agarwal (2009).
good. Likewise, some off-campus colleges are also considered equally good,
such as Lady Shri Ram College, I. P. College, Sri Venkateshwar College,
Jesus & Mary College, etc. Next in one hierarchy are the Delhi Government
colleges. Some colleges are controlled by trusts, and they are normally con-
sidered lower than the government-run colleges. Some of these have also
the status of autonomous colleges. Colleges managed by individuals and
families are not valued much. Generally, such colleges are least preferred.
Today, only 13% of our people who complete school education, opt for
higher education, though we are next to the USA in the absolute expansion
of higher education. Our participation was just 7% about five years ago.
Participation is greatly differentiated in terms of quality and location of
the institutions and performance of the students. Table 27.3 provides the
comparative picture of participation in higher education in 2005.
Despite this, the Indian students in the USA in 2002–2003 were 74,603,
whereas Chinese were 64,757, Korean 51,519, Japanese 45,960, etc. This
was possible because of some excellent Indian institutions, which included
the IITs/BITS, IIMs, AIIMS/medical colleges, universities, including Delhi
University, Jawaharlal Nehru University, Pune University, etc.
A few decades ago, Universities of Bombay, Madras, Calcutta, Alla-
habad, Patna, Lucknow, Rajasthan, Banaras Hindu University, Aligarh
Muslim University, etc., were the leading universities of India. However,
today Delhi has emerged as an epicenter of higher education. There is
an exodus from Bihar, Bengal, Orissa, and some other states for higher
studies at Jawaharlal Nehru University and Delhi University, located in
Delhi. The universities are stratified, and so are professional educational
institutions. Education has played a significant role in the emergence of
a new middle class and a new power elite and also in the perpetuation
of the old middle class through quality functional education. The role of
family in higher education (also in school education) is considerably more
than that of caste and community. Only economically better-off families
are able to afford expensive school and university education in Delhi and
other metropolises and big towns.
In a sociological study of university in India, Beteille (2010) points
out a strong demand for equality on the one hand, and persistent inequal-
ity on the other. Beteille mentions that the number of universities has
increased quite substantially due to economic, social and political consid-
erations rather than academic reasons. According to Beteille, a university
needs to be socially inclusive, maintaining academic standards. For this,
schooling should enable the students from the disadvantaged sections to
equip for higher education. Removal of disabilities and creation of abilities
are equally important. Mindless expansion of universities may harm the
country. Without quality education at the school level, university cannot
become a socially inclusive institution.
Doctoral research is also lopsided as it is concentrated in some states
and quality research is done at a very few universities. Delhi has 19 univer-
sities, and it is the PhD capital of the country (Chhapia, 2010). From 1998
to 2007, Delhi has produced over 17% of the total doctoral theses in India.
West Bengal comes second with 11.9% doctoral theses, and Maharashtra is
third with 8%, though it has 96 universities. During 1998–2007, total PhDs
are 114,188, of which Delhi has 7,872, West Bengal 5,421, Maharashtra
3,942, Andhra Pradesh 3,695 and Madhya Pradesh 3,262. Other facts are:
1. Two-thirds of doctorates are awarded to males.

2. Only one in two people who register for a PhD, completes it.
3. Most PhDs in recent years are in humanities and social sciences.
4. There is a low research interest in professional courses like science and
technology, engineering, and commerce.
Generally, only a few universities and institutions have been producing

good doctoral research. With a poor research degree, one cannot compete
in today’s globalized world for proper jobs.
Stratified Educational System

The nexus among inequality, elite education and status retention has time
and again been established. The reproduction of society and culture through
562 K. L. Sharma
education is an ongoing issue for debate in France (Bourdieu and Passeron,

op. cit.; Bourdieu, op. cit.). Besides symbolic dominance and power acquired
by education in general, professional programs of study, internationalization
of education and its marketing have made professional education highly
expensive. This has encouraged in India privatization of higher education
and its commodification. Universities and colleges are more in the mould
of market-places, of buyers and sellers. As a result of this, one can see
stratification of students as:
1. In the top institutions (public sector).
2. In reasonably good private institutions (in the disciplines of engineering,
pharmacy, medicine, etc.).
3. Ordinary government/private universities and colleges.
Social stratification in education implies inclusion of some and exclusion
of others, seeking admissions, particularly in the top-ranking universities
and institutions. The so-called “order of excellence” is legitimized by the
family. Resourcefulness of the family ultimately matters a lot in inclusion–
exclusion for higher education. Along with teaching, saleability of education
in terms of well-managed receptions, air conditioned classrooms and hostels,
modern transport facility, cultural activities, placements and visits by pop-
ular personalities are some of the new criteria for marketization of higher
education.
The following questions may be relevant regarding the present-day
stratified educational system:
1. Can education in its present stratified form contribute significantly to
the process of equalitarianism and modernization?
2. Is “quality” education a resource-material in a few hands?
3. Is education not power, a means of control in relation to the less edu-
cated?
4. Education is for what?
5. Education is for whom?
6. How could privatization of higher education help the highly diversified
and inegalitarin Indian society?
7. Who gets what and at what cost and quality from privatization and
globalization of higher education?
In response to these questions, we can say that the socio-cultural and
economic background of the students is directly related to unequal access
and performance. Stratificatory educational institutions are also a cause of
inequality in academic learning and performance. The inequality of the
educational system more or less corresponds with the social inequality.

Education does not result necessarily into maintenance or reproduction
of social differentiation (or inequality). Existence of inequality within the
educational system may be due to social stratification in Indian society.
Stratification is an inequitable part of the society and the educational sys-
tem exists within its orbit. Equality can be achieved through education,
because education is also the basis of ranking, and hence it raises a person’s
status in society. The SCs, STs, OBCs and rural people have raised their
socio-economic statuses through education. Education is a means of occu-
pational mobility with more income. But at the same time, there is a need
to see how highly educated people, professionals, scientists, and medical
doctors are generally from the same families and communities, generation
after generation. It implies that the resourcefulness of the given families
facilitates easy access to education, and their performance further adds to
resourcefulness as they join, after completion of education, the elite circles
of professionals, civil servants and business executives.
Education and social stratification are closely related as the latter
affects access to education and attainments, and the former brings about
perceptible change in an individual’s status, income, and job. The prob-
lem is inextricably complex because both society and education are highly
stratified. Individuals and families are stratified in terms of caste, income,
and assets, rural–urban background, etc., and education is stratified based
on medium of instruction, quality of teaching, location, infrastructure and
on an overall name and fame of a school, college and university. All the
people having unequal social standing cannot be benefited equally from the
chosen educational institutions. India has established hierarchies of both
society and education. Status-stablization is considerably a consequence
of quality education (Aikara, 2004: 25–52). The privatization of education
in the neoliberal era has not weakened the nexus between education and
stratification. Education is increasingly becoming a market phenomenon
due to its privatization. High cost of education in the private sector denies
access to the not-so-well-off sections of society. Thus, the deprived individ-
uals/aspirants do not have access to quality education in the public sector,
and due to unaffordable cost of education in the private sector, they remain
deprived of market-friendly education.
Concluding Remarks
We need a drastic new policy on education, much different from the 1986
policy. Two decades of globalization have allowed private players in higher
564 K. L. Sharma
education in the name of the public–private partnership. Partnership needs

to be defined in terms of duties and responsibilities assigned to the “private”
institutions. A constant evaluation of the partnership in comparison to
the “public” institutions can provide a proper assessment of the role and
functioning of the self-financing institutions. Public institutions, with some
exceptions, may also be made accountable to the stakeholders, namely, the
public, the students, the parents and the state. The quality of education is
the biggest casuality in the public institutions, and profit-making seems to
be the real motive in the private institutions, with some exceptions.
Education in India favors men over women. The presence of women is
negligible in professional programs of study, namely, engineering, medicine,
agriculture, law, etc. Their maximum participation is in liberal arts and to
some extent in scientific disciplines. Even in general, some states, namely,
Bihar, West Bengal, Uttar Pradesh, Madhya Pradesh, and Rajasthan are
lagging far behind Kerala, Tamil Nadu and Maharashtra. The Indian state
is spending very little on education. In 2007–2008, an average expenditure
on education was 3.84% of the state’s domestic product. Bihar spent 6.75%,
which was the highest, but Bihar had 34.8% literacy compared to Kerala’s
100% with 5% expenditure. Nearly 28% people are illiterate plus below
primary level.
Finally, rural people are now realizing the significance of education as
a means of good citizenship, social awakening, mobility, and better employ-
ment. Literacy and education for girls is becoming a desirable mission.
Education among girls has discouraged child marriage, encouraged employ-
ment, and fostered a sense of identity and self-reliance. Equality between
men and women still has a long way to go, but hope for its realization has
increased as a result of greater education among women.
Appendices
No. 1
Table 27.4. Faculty-wise Women’s Enrollment in India (2009–2010).
Women % of Total
Faculty enrollment women enrollment
Arts 2,772,580 49.08

Science 1,129,255 19.99
(Continued )
Women % of Total
Faculty enrollment women enrollment
Commerce/Management 915,719 16.21

Education 180,771 3.20
Engineering/Technology 276,806 4.90
Medicine 202,803 3.59
Agriculture 15253 0.27
Veterinary Science 4,519 0.08
Law 89, 256 1.58
Others 62,140 1.10
Total 5,649,102 100.00
Source: GOI, Annual Report, MHRD (2009–2010), cited from Sharma

and Mishra (2010: 360).
No. 2
Table 27.5. Educational Attainment Indices of States (1990–1991 to 2007–2008).
1990– 1992– 1995– 1998– 2001– 2004– 2007–

States 1991 1993 1996 1999 2002 2005 2008
Kerala 78.2 81.3 82.8 84.4 93.7 96.1 100.0

Tamil Nadu 51.1 56.7 61.7 66.4 72.9 85.3 92.7
Maharashtra 48.8 56.0 60.6 65.6 75.8 82.2 89.0
Karnataka 45.7 50.8 54.3 58.2 64.2 72.6 78.5
Orissa 30.2 35.5 40.6 50.2 56.5 66.4 73.5
Gujarat 55.2 57.4 59.8 62.1 66.0 70.1 73.2
Haryana 41.1 47.6 52.4 57.2 62.3 67.6 73.1
Punjab 45.5 49.2 53.3 58.1 62.6 67.3 72.3
Andhra Pradesh 31.7 35.7 40.3 45.7 52.1 65.7 71.5
Rajasthan 24.5 29.4 34.5 39.6 47.3 57.6 61.7
Madhya Pradesh 22.0 29.8 35.9 42.0 48.6 55.6 60.3
Uttar Pradesh 19.7 25.2 29.8 34.4 41.2 48.4 53.6
West Bengal 26.5 29.6 33.1 36.4 40.4 46.9 51.0
Bihar 0.0 3.8 8.1 12.1 20.4 28.7 34.8
Source: Ministry of Human Resource Development, Government of India, New Delhi,

“Selected Educational Statistics”, various issues, Registrar General of India,
New Delhi, Economic and Political Weekly and Economic Survey cited from Ram
and Kaur (2010: 384).
566 K. L. Sharma
No. 3
Table 27.6. Per Capita Public Spending on Education(Rs. Per Annum)

(1990–1991 to 2007–2008).
1990–1991 2000–2001 2007–2008

States Education Education Education
Andhra Pradesh 161.00 496 1,001

Bihar 147.00 401 483
Gujarat 227.00 764 960
Haryana 206.00 673 1,334
Karnataka 180.00 677 1,249
Kerala 268.00 780 1,611
Madhya Pradesh 152.00 346 462
Maharashtra 234.00 1, 034 1, 259
Orissa 149.00 491 794
Punjab 265.00 790 1, 262
Rajasthan 191.00 614 874
Tamil Nadu 232.00 714 1, 287
Uttar Pradesh 160.00 363 633
West Bengal 213.00 580 795
All States 192.00 605 961
Source: “Reserve Bank of India: State Finances — A Study of Budgets”,

various annual issues, cited from Ram and Kaur (2010, op.cit.: 393).
No. 4
Table 27.7. Expenditure on Education as Percent of State Domestic Product (1990–

1991 to 2007–2008).
1990–1991 1995–1996 2000–2001 2005–2006 2007–2008

States Education Education Education Education Education
Andhra Pradesh 1.39 1.84 2.96 3.71 3.97

Bihar 3.10 5.88 7.50 7.82 6.75
Gujarat 1.83 2.60 4.26 2.97 3.17
Haryana 1.02 1.74 2.62 2.83 3.09
Karnataka 1.82 2.82 3.82 4.11 4.92
Kerala 2.16 2.91 4.22 4.85 5.00
Madhya Pradesh 2.09 3.08 4.14 3.62 4.59
(Continued )
1990–1991 1995–1996 2000–2001 2005–2006 2007–2008

States Education Education Education Education Education
Maharashtra 1.43 2.10 4.42 3.61 3.47

Orissa 1.83 2.90 4.71 4.31 4.75
Punjab 1.28 1.85 2.94 3.50 3.74
Rajasthan 1.80 3.11 4.58 5.25 4.79
Tamil Nadu 1.85 2.35 3.50 3.41 4.34
Uttar Pradesh 1.85 2.62 3.87 4.93 5.56
West Bengal 2.14 2.12 3.55 3.35 3.42
All States 1.63 2.34 3.61 3.73 3.84
Source: “Reserve Bank of India: State Finances — A Study of Budgets”, various annual
issues. Indian Journal of Public Administration, Vol. 61, No. 3, July–September 2010,
cited from Ram and Kaur (2010, op.cit.: 394).
No. 5
Table 27.8. Estimates (Crore) of Illiterates and Literates below Primary Level of Youth
Population (15–24 Years).
Age
group Urban Percent Rural Percent Total Percent
15–19 Total population 3.58 30.09 8.32 69.91 11.90 10.60

Years Illiterate 0.27 7.8 1.53 18.5 1.80 15.28
Below primary 0.20 5.7 0.79 9.5 0.99 8.36
Below primary 0.18 5.8 0.74 10.6 0.92 9.08
Below primary 0.39 5.75 1.53 10.01 1.92 8.69
Illiterate + below 1.04 5.14 6.18 27.83
primary
Source: Projected Population of Youth (15–24 years) as per Population projections for
India and states 2001–2026, Office of the Registrar General and Census Commissioner,
India, New Delhi, 2006.
NSS 61st Round, “Report No. 517: Status of Educational and Vocational Training in
India”, 2004–2005 cited from Sirohi (2010: 399).
568 K. L. Sharma
No. 6
Table 27.9. Estimates (Crore) of Educational Levels of Youth Population (15–24
Years).
Age
group Urban Percent Rural Percent Total Percent
15–19 Primary 0.48 13.3 1.48 17.8 1.96 16.45

Years Upper primary 1.07 29.8 2.53 30.4 3.60 30.22
Secondary 0.97 27 1.44 17.3 2.41 20.22
Higher secondary 0.53 14.9 0.48 5.8 1.01 8.54
20–24 Primary 0.37 11.4 1.02 14.5 1.39 13.52
Years Upper primary 0.65 20.2 1.40 20 2.06 20.06
Secondary 0.43 13.3 0.75 10.7 1.18 11.52
15–24 Primary 0.84 12.39 2.50 16.29 3.35 15.09
Years Upper Primary 1.72 25.22 3.93 25.64 5.66 25.51
Secondary 1.40 20.47 2.19 14.28 3.59 16.18
Source: Projected Population of Youth (15–24 years) as per Population projections for
India and state 2001–2026, Office of the Registrar General and Census Commissioner,
India, New Delhi, 2006.
NSS 61st Round, “Report No. 517: Status of Educational and Vocational Training in
India”, 2004–2005 cited from Sirohi (2010: 401).
28
Educational Inequality and Educational
Expansion in China
Li Chunling
Educational stratification is an important aspect of social stratification.

The distribution of educational opportunities in the population will greatly
determine the basic characteristics of social stratification. Meanwhile, the
educational selection mechanism is a key mechanism that leads to socio-
economic differentiation. Over 30 years since economic reforms, the Chinese
government has implemented a series of educational reform measures. As
a result, the education system has become increasingly market-oriented,
the educational selection rules have become increasingly elite-oriented, and
the stratum differentiation and inequality of the distribution of educational
opportunities have showed signs of expansion. With the deepening of eco-
nomic reforms, the labor market has been gradually established and the
economic return of education has been increasing; therefore, one’s educa-
tion level becomes an important factor in determining one’s socio-economic
status.
At the same time, the Chinese government has been investing heavily in
developing the education cause. Universal nine-year compulsory education
has become standard. The scale of higher education has expanded. The
supply of educational opportunities has been expanding quickly. As a result,
the education level of the population and the labor force has been improving
continuously. However, opportunities in higher education are still scarce
resources and there is fierce competition for these opportunities, and the
inequality in higher education still exists. Based on the census data over
the years and the national sampling survey data, this chapter summarizes
569
570 Li Chunling
China’s educational stratification and inequality in education, analyzes the

mechanism for educational stratification and its change, and investigates
the impact of educational level on one’s socio-economic status.
Education Reform and Education Expansion

Over the last 30 years, the most prominent changes to China’s educational
system are reflected in two aspects: education reform and education expan-
sion. With the reform of the socio-economic system, China’s education sys-
tem changed as well. The original education system featured strict planning
and service to the general public, but it has gradually weakened. The new
education system is more and more differentiated, marketized and elite-
oriented. Meanwhile, the scale of China’s education has been expanding
rapidly and the number of opportunities for education has been growing
apace.
Education reform: Elite- and market-oriented

The resumption of the entrance examination system to higher education
in 1977 is one of the signs of the beginning of China’s economic reforms.
Since then, China has gradually established a set of systems for rigorous
level-by-level entrance examinations. The systems marked the fundamental
change in the educational selection rules: a shift from an educational model
of service to the general public to one oriented to the service of elites.
Meanwhile, under the constant pressure of the market-oriented economic
system, the educational system has also been promoted gradually, including
the industrialization of education, diversification of education investments,
and the constant rising of education costs (tuition).
Under the influence of the then-popular ideology, China’s education
system before the economic reforms (especially during the Cultural
Revolution) pursued a philosophy of equality in education, which empha-
sized education for workers, farmers, and soldiers. At that time, the Chinese
government adopted a series of measures to promote education equality,
including expanding the scale of education, lowering tuition costs, having
free admission and providing students with stipends, as well as abolish-
ing the entrance examination system, reducing the load and requirements
of education programs, prioritizing the enrollment of those from families
of workers and farmers, and so on. These measures effectively cut off the
Educational Inequality and Educational Expansion in China 571
link between family background and the accessibility to education, signif-

icantly reduced the class differences in the accessibility to education, and
improved the degree of equality in the distribution of education oppor-
tunities. Studies conducted at that time confirmed that China’s inequal-
ity in education was not only below that of the Western countries, but
also lower than that of other socialist countries, such as the Soviet Union
and Eastern Europe (Deng and Treiman, 1997; Parish, 1984; Whyte, 1975;
1981).
In 1978, the ruling party’s ideology and the social goals it pursued were
greatly adjusted. As related elements, the educational policies and models
were also changed greatly. Economic growth became the primary goal of the
ruling party. People’s socio-economic differentiation was no longer an intol-
erable phenomenon; rather, it became an incentive mechanism. Eliminating
class differences and providing opportunities for upward mobility for worker
and farmer families were no longer the primary function of education;
rather, selecting and educating talents for economic development (“real-
ization of the four modernizations”) became the primary function. Under
the macro trend of the transformation of the ideology and functions of edu-
cation, education reforms since the beginning of the economic reform can
be summarized as a shift in this respect: shift from an education model to
serve the general public to an elite-oriented education model, marked by
the resumption of the college entrance examination system in 1977. Sub-
sequently, high school entrance examination and other lower-level entrance
examination were introduced to gradually establish a set of systematic and
rigorous level-by-level entrance examination system. To match the level-
by-level entrance examinations, the difficulty of the course was increased.
Meanwhile, schools were classified into key schools and non-key schools, and
key schools are further classified into national key schools, provincial key
schools, city key schools, and district (county) key schools, etc. (Jin, 2000;
Dongping Yang, 2002). As a result, a graded elite-oriented education system
was gradually established. Through the level-by-level entrance examination
and the selection of students by key and non-key schools, the education sys-
tem, to certain degree, became what Sorokin called “a machine to ‘gentrify’
and stratify the society” (Sorokin, 1927). On the one hand, it selected the
talents (“top student”); on the other hand, it left out other people level by
level. Undoubtedly, although the elite-oriented development of education
helped the selection and cultivation of elites and talents, it had negative
impact on those from rural areas, poverty-stricken areas, urban poor fami-
lies, and families in which the parents’ education level is lower. These people
572 Li Chunling
often become the victims of elimination of the educational competition. As a

result, the class differentiation and urban–rural differentiation of the access
to education intensified.
The second direction of education reform is a shift from the planned
system to a market system (“educational industrialization”). A centerpiece
of this shift is the diversification (“multiple channels”) of the investments
in education. The funding of education changed from being borne largely
by the central government to from multiple channels. The central govern-
ment financed some key schools, while most of the schools were funded by
local governments. Some schools were even funded by private investments.
This policy has expanded the inter-regional differentiation of education,
because the rich regions and urban areas have more educational resources
than the poor and rural areas and can provide more opportunities in educa-
tion. What is more, the schools themselves are asked to supply part of the
educational funding and they are allowed to generate revenue to support
education. In fact, this part of the funding burden will be passed onto the
parents of the students through various fees required by the schools. This
has caused constant rising of tuition and other education-related fees, which
the economically disadvantaged families cannot afford, resulting in dropouts
of some rural children in elementary, middle and high school stages. To
solve this problem, the government took measures to gradually reduce or
waive school tuitions. In 2008, a national policy was adopted to have free
nine-year compulsory education. The policy effectively alleviated the bur-
den of education on the families of poor students. However, at the same
time, institutions of higher education abolished the free education policy
in the late 1990s: they started to charge tuitions in 1994 and have raised
the tuition year by year since then. The soaring costs of higher education
have forced some people from rural and poor families to give up the higher
education, thus expanding the inequality in higher education (Zhou et al.,
1998; Hannum and Xie, 1994; Li Chunling, 2003a).
Education expansion
The 30 years of economic reforms has witnessed the rapid expansion of
China’s educational system. By the end of 1980s, universal elementary
school education was achieved. By the end of 1990s, universal nine-year
free education (i.e., middle education) was basically achieved. Since the
beginning of this century, the coverage of high school education has also
increased (Fig. 28.1).
100% 90000000
Education funding (10,000 Yuan)

90% 80000000
80% 70000000
70%
Enrollment rate
60000000
60%
50000000
50%
40000000
40%
30000000
30%
20% 20000000
10% 10000000
0% 0
1990 1992 1994 1996 1998 2000 2002 2004 2006
Net enrollment rate Elementary school to

Education funding
of school-age children middle school
Middle school to high
High school to college
school
Fig. 28.1. Education funding and enrollment rates of each level of education.
90 83.5 1884.9
2000
78.8 82.5
75.1 1800
80 73.2 1738.8
1600
70 63.8 1561.8
1400
60 1333.5
51 46.1 1200
50 43.3 1108.6
1000
40 903.4
800
27.3 719.1
30 600
556.1
20 413.4 400
10 340.9 200
206.3
0 0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
College enrollment of same-year high school graduates (%) College student (10,000)
Fig. 28.2. Trend of growth of China’s higher education (1990–2007).
In 1999, the Chinese government adopted the policy to expand col-

lege enrollment; as a result, the scale of higher education was rapidly
expanded and higher education opportunities was rapidly increased
(Fig. 28.2). In the following five years (during the implementation of college
enrollment expansion policy), Chinese college enrollment rate grew at an
average annual rate of 20%. The rate of college enrollment of high school
574 Li Chunling
graduates surged from 46.1% in 1998 to 83.4% in 2003. In 2005 (the peak of
the enrollment expansion policy), country-wide college enrollment was 4.7
times of that of 1998, the gross college enrollment rate was 21%, and the
college student body was 4.6 times of that of 1998. Since 2006, due to the
sticking problem of difficult employment of college graduates, the college
expansion has slowed down, but it still maintained an annual growth rate
at about 5%.
The surge in China’s education increased the supply of the education
opportunities, resulting in continuous improvement of people’s average
years of education. According to the data of 2006 National Sampling Sur-
vey done by the Institute of Sociology of the Chinese Academy of Social
Sciences, the average years of education for those born in 1931–1940 is 4.5
years; for those born in 1941–1950, 5.9 years; for those born in 1951–1960,
6.7 years; for those born in 1961–1970, 7.9 years; for those born in 1971–
1980, 8.8 years; and for those born in 1981–1985, 9.6 years (since some
people in this range have not yet finished school education, the actual aver-
age years of education should be higher).
Inequalities in Educational Opportunities

The pattern of distribution of educational opportunities reflects the basic
situation of education inequality. Currently, the most prominent inequality
in educational opportunities exists across different social strata and between
urban and rural residents. The differences in the education levels among
different ethnic groups are also very obvious, but the gender inequality in
education is shrinking quickly.
Inequality in educational opportunities across strata

People from different family backgrounds are significantly different in the
levels of education; the higher the socio-economic status of the family is
the higher level of education of their children can get. Figure 28.3 shows
how a father’s occupation and education level influence his children’s edu-
cation. The children from families of managers and clerks have the highest
average years of education with 13.2 and 13.4 years respectively. They are
followed by children from families of professionals and technicians, employ-
ees of retail and service sectors, and industrial workers with average years
of education being 11.8, 11.7, and 11.3 years respectively. The children of
Children’s years of education (Yuan)

18
16
14
12
10
8
6
4
2
0
ria ct l
se tota
d
ol
l w ors
es
an
rs
ho
ke
di
in vic of
cl ians sis
le
sc
e stu
ol
or
ge
op
s
ho
c n
ol
ry
se ee
le
ni sio
du e
ov te
s
pe
ho
sc
ta
l
er
d loy
co
ab ua
s
ch s
en
sc
ge
ag
e
er
te fe
r
st
ks
of rad
an mp
or
at
dl
em
le
o
rm
an
gh
er
er
id
ni
pr
l
e
g
co
M
m
fa
el
hi
ju
lit
Father’s occupation and education level
Fig. 28.3. Inter-stratum inequality in education.

Source: Data of 2005 Sampling Survey of 1% of Population (people born in 1975–1985),
National Bureau of Statistics.
farmers have the least years of education, only 8.3 years. A father’s edu-
cation level has an even greater impact on the years of education of his
children. For children whose fathers’ highest education is college gradu-
ate studies, college, or junior college, the years of education are 15.5, 15.3,
and 14.5 years, respectively; when the fathers are high school graduates
or middle school graduates, the children’s years of education are 12 and
10.4 years, respectively; when the fathers only have elementary school edu-
cation or are illiterate, the children’s years of education are only 8.4 and
6.4 years, respectively. In addition, a family’s financial status also impacts
on children’s education opportunities. Children from high-income families
have an average education of 13.9 years, while children from middle and
low-income families only have an average education of 9.9 years.
The inter-stratum inequalities in higher education are even more signif-
icant. Figure 28.4 shows the difference in the higher education opportunities
for people from different family backgrounds. Children from families of man-
agers and clerical staff have the highest college enrollment rate, 53% and
56.5%, respectively. They are followed by children from families of profes-
sionals and technicians, 38.9%. The college enrollment rates of children from
families of employees of retail and service sectors and industrial workers are
relatively low, 30.8% and 26.1% respectively. The college enrollment rates
of children from farmers’ families is extremely low, only 2.5%. A father’s
education level has a decisive impact on children’s opportunities of higher
education. If the father received higher education, the probability of his
576 Li Chunling
100
90
Percentage of children with
college education (%)
80
70
60
50
40
30
20
10
0
r ia to l
ol
st sec tai
nd
rs
l w rs
es
ho
re
ilie -
ke
cl ns ls a
m w
di
le
sc
ol
fa lo
in ice of
or
ge
s
h ve stu
op
m s me
ho
a a
ol
ry
e nd
rv s
lle
ci n
s
pe
se ee
ho
sc
ta
ilie co
ni sio
o te
er
m a
co
s
en
d loy
ge
sc
ab ua
ag
m in
e
co le
er
ch s
ks
or
at
dl
te rofe
fa igh-
em
in idd
lle
of rad
rm
an
an p
du
gh
er
er
id
ni
em
co
M
m
fa
el
hi
ju
lit
g
p
Father’s occupation, level of education and Income
Fig. 28.4. Inter-stratum differentiation in the inequality of higher-education

opportunities.
Source: Data of 2005 Sampling Survey of 1% of Population (people born in 1975–1985),
National Bureau of Statistics.
children entering college is very high. For the children of those who have
master’s degrees bachelor’s degrees or diplomas, the college enrollment rates
are 94.4%, 86%, and 75.7% respectively. For the children of those who com-
pleted high school and middle school, the college enrollment rates are 35.2%
and 15.7%. For the children of those who only studied at elementary school
or who are illiterate, the probability of college education is extremely low,
only 4.4% and 3.1%. In other words, 65.3% of the children of high-income
families have received college education, while only 15.5% of the children
of middle and low-income families have received college education.
The above data have clearly showed China’s inter-stratum inequality
in education opportunities. It is noteworthy, however, that a father’s edu-
cation level appears to have a greater impact on children’s education than
his occupation and income, that is, in term of the access to education, a
family’s cultural capital plays a more important role than its social capital
and financial capital. In terms of the impact of a father’s occupation on edu-
cation, children of children’s professionals and technicians are not the most
advantageous group. This is a big difference between China’s society and
its peers. This may be because of the urban–rural differentiation in China’s
stratum of professionals and technicians. A large number of professionals
and technicians are in rural areas. Their children do not have the advantage
in getting education. Another possible reason is that many Chinese profes-
sionals and technicians have not received higher education themselves. In
terms of the changing trend of the inter-stratum inequality of education

opportunities, some relevant studies point out that in the 30 years before
the economic reforms (1950s, 1960s, and 1970s), the inequality in education
reduced significantly; in the first 20 years after the start of the economic
reforms (1980s and 1990s), the inequality in education was expanded; but
it remained stable in recent years (Li Chunling, 2003a; 2010).
Inequality in educational opportunities between urban

and rural residents
Urban–rural inequality is one of the most obvious inequalities in contem-
porary China. Due to the influence of the long-standing duel structure
of society that has separated urban and rural areas, and the influence of
the residence registration system, there is a very serious socio-economic
inequality between urban and rural residents, which also leads to serious
educational inequalities between them. The analysis of the inter-stratum
educational inequality in the previous section revealed that, for children of
farmers, the average years of school education and opportunities for college
education are much less than those of other strata; the data in Table 28.1
further reflect the big gap between urban and rural residents in the level
of education. Overall, the average years of education of urban residents are
3.33 years longer than those of the rural residents. From a historical per-
spective, the gap in the average years of education between urban and rural
residents has been more than three years. For those born in 1931–1970, the
gap in education between the urban and rural residents appears to have
shrunk with the passing of time. However, for the group of people who
were born most recently (1971–1980), urban–rural educational inequality
has showed renewed expansion.
Table 28.1. Average Years of Education for Urban and Rural Residents.
Born in Born in Born in Born in Born in Born in

1921– 1931– 1941– 1951– 1961– 1971–
1930 1940 1950 1960 1970 1980 Total
Rural areas 1.58 2.65 4.29 5.58 6.71 7.23 5.64

Urban areas 4.86 6.48 7.72 8.81 9.78 10.54 8.97
Urban–rural 3.28 3.83 3.43 3.23 3.07 3.31 3.33
gap
Source: Data of 2005 Sampling Survey of 1% of Population, National Bureau of

Statistics.
578 Li Chunling
Other relevant studies also confirm that the urban–rural inequality in

access to education has expanded since economic reforms (Li Chunling,
2003a). In addition, the urban–rural gap in higher educational opportunities
has also been expanding. The college enrollment expansion policy imple-
mented since 1999 has quickly increased the urban residents’ opportunities
for higher education, but the opportunities for rural residents have increased
at a slower pace. As a result, the urban–rural gap of higher education oppor-
tunities widened markedly. Before the implementation of the college enroll-
ment expansion policy (1990s), the opportunities to get college education
for urban residents were 3.4 times those of rural residents (in the cases
of same family background, same gender and same ethnic identity), while
after the implementation of the policy, this gap was expanded to 5.4 times.
The expansion of urban–rural educational inequality has drawn the
attention of the policymakers. Over the past decade, the government
adopted some policies and measures that aimed to narrow the urban–rural
gap in education. These policies included increasing investments in educa-
tion in rural areas, reducing the educational burden of farmers, reducing or
waiving tuition, advancing free education in rural areas, increasing financial
aids to poor students, and so on. However, although these policies improved,
to some extent, the conditions of education in rural areas, they failed to
fundamentally reduce the urban–rural inequality in education.
Gender inequality in education

Gender inequality in education is long-standing in Chinese society, because
traditional values advocate “a woman’s virtue comes from her ignorance”
and male superiority. After Chinese Communist Party came into power in
1949, the government implemented a policy of gender equality and encour-
aged women to receive education; as a result, the educational inequality
between men and women was gradually narrowed (see Table 28.2). After
the beginning of the economic reforms, China made a commitment to the
international community on gender equality in education. In 1995 and
2000, the government formulated and promulgated the Master Plan of the
Development of Chinese Women (1995–2000), and the Master Plan of the
Development of Chinese Women (2001–2010). The government also set up
goals that the gross higher education enrollment rate of women should reach
15% and that the lifelong educational level of women should be improved.
In addition, the policies and measures also required greater gender
awareness in the curricula reform, education content, and teaching methods,
Table 28.2. Men and Women Average Years of Education by Gender.
Born in Born in Born in Born in Born in Born in

1921– 1931– 1941– 1951– 1961– 1971–
1930 1940 1950 1960 1970 1980 Total
Men 3.80 4.98 6.13 7.30 8.04 8.46 7.23

Women 1.19 2.46 4.24 5.69 7.11 7.97 5.95
Gap between men 2.61 2.52 1.89 1.61 0.93 0.49 1.28
and women
Source: Data of 2005 Sampling Survey of 1% of Population, National Bureau of

Statistics.
as well as improving the gender distribution structure in different disciplines

and gradually forming a lifelong education system that involves efforts of
the general public and the whole society. From equality in school enroll-
ment to women’s lifelong learning and addressing the gender bias in cur-
ricula and teaching materials, etc., the state’s attention to gender equality
in education has covered the starting point, the process, and the result
of education. These efforts initiated the shift from equal opportunities in
system and establish the gender equality in substantive education and effec-
tively enhanced the expectations of women’s education and the educational
opportunities. At the same time, the continuing expansion of China’s educa-
tion system in recent decades quickly increased women’s education oppor-
tunities. The education inequality between men and women was further
reduced. For those who were born in 1971–1980, the average years of edu-
cation of men and women are very close. The latest survey data show that
in the age groups of those born in 1980s and 1990s (although some of them
have not yet completed school education), the average levels of education
of men and women are basically the same. To some extent, it can be said
that women are the biggest beneficiaries of the expansion of education.
The increase of women’s opportunities in higher education is even more
significant. The data in Fig. 28.5 show the increase in the number of female
college students and the proportion of women in the total college student.
Since the implementation of the college enrollment expansion policy of 1999,
the number of female college students has been increasing rapidly, and
the proportion of women students in the total college students has risen
steadily which reached 48.06% in 2006 and this ratio is still rising. In 2010,
the National Women’s Federation claimed that women had accounted for
49% of the total college student. Some other relevant studies found that,
under the same conditions (such as the same family background and ethnic
580 Li Chunling
900 60%
800
50%
700
600 40%
500
30%
400
300 20%
200
10%
100
0 0%
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Women student body (10,000 people) Percentage of women students (%)
Fig. 28.5. 1977–2006 college student body and gender distribution.

Source: “China’s Achievement in Education: Statistical Materials”, China Education
Statistics Yearbook, and China Education Industry Statistics Yearbook.
identity), the probability for women to go to colleges was far greater than
that of men (Li Chunling, 2010). Women have demonstrated an advantage
over men in the competition for the opportunities in higher education.
This advantage may be partially attributed to the rigorous level-by-level
examination system, especially the college entrance examination system. It
appears that women are easier to adapt to the examination system than
men and achieve success in the system. This trend may mean that in the
competition for the opportunities of higher education, Chinese women will
soon (perhaps in several years) surpass men, just like what happens now in
many developed countries.
Although the gender gaps in the education level and gender inequal-
ity in education in rural areas are fading, the gender difference in educa-
tion and the follow-up effects still exist. At the same time, women from
lower strata and vulnerable families are in a disadvantageous position in
the competition for educational opportunities. First, family background
impacts more on women than on men in the access to education; par-
ents’ occupation, education level, residence registration status, and finan-
cial conditions have a greater impact on the access to education for women.
This means that women from families of middle and upper-strata class
have more educational opportunities than men of the same conditions,
while women from families of lower strata or whose parents have lower
education levels have less education opportunities than men of the same
conditions.
Second, the gender gap in education in the urban and rural areas
is very different. The status of residence registration has a more signif-
icant impact on women than on men in terms of access to education.
Status of residence registration can explain 12.3% of the differentiation
in years of education of women, but can only explain 8.1% of the dif-
ferentiation in years of education of men. While the urban women have
the same access to education as men and in some aspects are better,
the rural women’s access to education is significantly less than men. The
years of education of women who do not have agricultural residence reg-
istration are 3.6 years more than those who do; while in men, this gap
is 2.7 years (Li Chunling, 2003a). In addition, the gender difference in
higher education opportunities has also shown a similar pattern — women
are more likely to be influenced by family background in college enroll-
ment. Women from families of higher social strata and urban areas have
more opportunities to seek higher education than men from similar condi-
tions, but women from families of lower social strata and rural areas have
lesser opportunities to seek higher education than men from similar con-
ditions. The higher education opportunities for urban women show a clear
upward trend, while the higher education opportunities for rural women
seem to manifest a downward trend. This has led to a bizarre phenomenon:
When the gender gap in higher education opportunities for urban popu-
lation is shrinking and women even show certain competitive advantages,
the gender gap in higher education opportunities for rural population is
widening.
Education’s Impact on Strata Differentiation

In most industrialized societies, the level of education or human capital will,
to a certain extent, decide one’s socio-economic status. In China, before
the economic reforms, the government promoted socio-economic equality,
stressed the philosophy of equal income and social status, and used educa-
tion as an important means in the promotion of the socio-economic equality.
As a result, there was not much correlation between the education level and
the occupation and the income level. Since the beginning of the economic
reforms, the impact of the differentiation of education on social stratifica-
tion has become greater and greater, and the economic return of education
has been rising steadily. Education differentiation has become a very impor-
tant factor in one’s occupation and upward social movement. Education
becomes one of the most important mechanisms in social stratification.
582 Li Chunling
Impact of education on economic status

In the 1970s, American sociologist Parish (1984) evaluated the rate of
economic return of China’s education. The value obtained was negative,
that is, education level had no positive effect on one’s income, rather, it
could even have negative effect. Therefore, Parish and others dubbed the
then China’s society as a “destratification” society, that is, the factors that
caused socio-economic differentiation in other societies, such as education,
did not play a role in China’s society, or even play a negative role. The
impact of “destratification” in education even extended to the 1980s when
reforms were in the early stages. The then Chinese scholars called this
phenomenon “reversed wage disparity between mental and manual work”:
the intellectuals and technicians or white-collar workers earned less than
blue-collar workers who did manual work. However, since the beginning
of the economic reforms, with the establishment of the market-oriented
economic system and the improvement of the labor market, the impact
of education on personal income has gradually increased, and the rate of
economic return on education has been increasing.
As shown by the data in Fig. 28.6, before the economic reforms, the
rate of economic return on education in China was zero. The rate began to
pick up in the first decade of the economic reforms (1980s), but it was sig-
nificantly lower than the international average. In the 1990s and the early
years of this century, the rate of economic return on education increased
rapidly and reached average rate of the Asian countries by 2006, that is, for
every additional year of education, income would increase by 11%. With
the further advancement of the market-oriented reforms, China’s economy
Fig. 28.6. Rate of return of education in China’s urban areas over the years and the
comparison with international standard.
was gradually integrated into the globalized economic system. This, cou-
pled with the upgradation of its industrial structure and the development
of high-tech industries, China’s income distribution obviously tilted toward
the people who have good education or knowledge. The rise in the rate of
return on education led to China’s huge changes in the income distribution
mechanism. We can say that education or human capital has replaced the
seniority rules of the planned economy period and become today’s impor-
tant standards in adjusting the income distribution.
However, some special systems and structural characteristics of Chinese
society have affected the relationship between education and income.
Because of the effects of these systems and structural factors, the labor
market is divided into different sections, and the degree of differentiation
of each section in industrialization and marketization varies widely, lead-
ing to different rules for the income distribution and different return on
education across different regions, sectors, and groups of people. The sys-
tem’s most significant impact on the income gap and return on education
is the dual-element social structure that divides the urban and the rural
areas. There are fundamental differences in the income distribution system
between urban and rural areas. In urban areas, education level is the key
factor affecting one’s income and employment opportunities; in rural areas,
however, the impact of education on one’s income and employment status is
weak. Currently, the rate of return on education in urban areas has reached
the international average (11%), while that of the rural areas is very low
(4%). The difference between urban and rural areas in the rate of return on
education is seven percentage points. This shows that the impact of educa-
tion on economic differentiation has a significant difference between urban
and rural residents (Li Chunling, 2003b).
The division on the system level between the public sector and the
private sector has also led to differences in the return on education. An
important assumption in the change of China’s income distribution on a
system level is that, in the transition from the planned economy to the
market economy, a series of market mechanisms that determine the income
distribution will replace the distribution mechanisms of the planned econ-
omy and education or human capital, which is one of the most important
distribution mechanism of the market economy, replacing the traditional
principle of egalitarian distribution. In current China’s society, the public
sector (within the system) and the non-public sector (outside the system)
co-exist and the income distribution rules of these two sectors are different:
The return on education outside the system is higher than that within the
584 Li Chunling
system. Outside the system, it is a common rule that the education level
will impact one’s income, while within the system the impact of education
on income is more obvious in some institutions (Li Chunling, 2003b). How-
ever, the scale of the income distribution within the system is also in a
process of marketization, and the return on education has been increasing
and the level of return rate outside the system has been accepted.
The return on education in China has clear gender differences. The
education level has a greater impact on women’s income level than on men’s.
In the countrys rule women’s rate of return on education is 1.9% higher than
men’s. In urban areas, women’s rate of return on education is 1.5% higher
than men’s (Li Chunling, 2003b). For women, raising her education level
is an important way to increase personal income; for men, however, some
other means (such as by virtue of physical strength, special skills, risky
opportunities, etc.) are also available to achieve the objective. In addition,
the rural migrant workers’ rate of return on education is very low. Some
studies show that education level has an insignificant effect on the income
level of rural migrant workers (Li Peilin and Zhang Yi, 2003).
The correlation between education and income is not necessarily always
positive, but rather that education at different levels has different degrees
of impact on the increase of income. Generally speaking, the middle level of
education has the highest rate of economic return, but it is also subject to
regions and sectors. In general, in more industrialized areas (urban areas)
and sectors (within the system), a higher level of education has a greater
impact on income; while in less industrialized areas (rural areas) and sectors
(outside the system), a relatively lower education level has a more favorable
impact on the increase of income (Li Chunling, 2003).
The impact of education on job opportunities

The impact of education on socio-economic differentiation is reflected not
only in income, but also in the competition for job opportunities. Education
level will affect the income of the employed people and one’s job opportu-
nities. The data in Table 28.3 show the impact of education level on the
probability of unemployment.
The data in Table 28.3 show that, the probability of unemployment for
those whose education levels are below junior college is two to three times
higher than those with higher education. However, there is not much dif-
ference in the probability of unemployment across the education levels that
are below junior college. For example, comparing with those with junior
Table 28.3. Impact of Education Level on the Probability of Unemployment of the

Working Age Population.
Variables N=5,037 N=3,144 N=1,893 N=2,611 N=2,426
No education 0.9088∗∗∗ 2.1003∗∗∗∗ 0.3514 0.9216∗∗∗ 0.6227∗

(2.48) (8.17) (1.42) (2.51) (1.86)
Elementary 0.7419∗∗∗∗ 2.0161∗∗∗∗ −0.3555 0.0313 0.9523∗∗∗∗
school (2.10) (7.51) (.70) (1.01) (2.59)
Middle school 1.0353∗∗∗∗ 1.6436∗∗∗∗ 0.3282 0.4756∗ 1.3407∗∗∗∗
(2.82) (5.17) (1.39) (1.61) (3.82)
High school or 1.0628∗∗∗∗ 1.2650∗∗∗∗ 0.4235 0.9592∗∗∗∗ 1.0137∗∗∗∗
occupational (2.90) (3.54) (1.5) (2.61) (2.76)
high school
Constant −2.0789∗∗∗∗ −2.0431∗∗∗∗ −3.1780∗∗ −2.3256∗∗∗∗ −1.7145∗∗∗∗
-2 Log likelihood 5402.814 3846.089 691.500 2053.024 3039.717
Chi-square 69.402∗∗∗∗ 210.760∗∗∗∗ 8.282 41.484∗∗∗∗ 57.355∗∗∗∗
Note: Logistic regression coefficient table, dependent variable is “whether in unemploy-

ment status”, 1 = yes; 0 = no. Significance level ∗∗∗∗p ≤ 0.000; ∗∗∗p ≤ 0.005; ∗∗p ≤ 0.01;
∗p ≤ 0.05; the data in brackets are odds ratio; the data used in this table are not weight
data.
Source: Data of 2001 National Sampling Survey done by the Institute of Sociology of
Chinese Academy of Social Sciences.
college diplomas or above, the probability of unemployment for those with-

out any education is 2.48 times higher; for those with elementary education,
2.10 times; for those with a middle school education, 2.82 times; for those
with high school and occupational high school education, 2.90 times. This
reflects the fact that, for those with junior college diplomas or above, the
probability of unemployment is lower, while the education levels below that
does not make much difference in the probability of unemployment.
The data in Table 28.3 also show that in urban areas, the lower the edu-
cation level is, the higher the likelihood of unemployment, whereas in rural
areas one’s education level has no effect on unemployment. The regression
equation of urban samples shows that the probability of unemployment of
those with high school or occupational high school education is 3.54 times
higher than those with junior college diplomas or above; for those of middle
school education, 5.17 times; for those of elementary school education, 7.51
times; for those with no education, 8.17 times. The situation is completely
different in rural areas, where the regression coefficient is insignificant in
each education level. This may be due to the fact that the employment
structure of the rural areas does not need any highly-educated people. A
common phenomenon in rural China is that the young people with high
586 Li Chunling
school or occupational high school diplomas have nothing to do, while those
with lower education levels (mostly the elderly and women) engage in agri-
cultural and sideline production.
In addition, the relation between education level and gender difference
reflected in unemployment probability do not have a clear pattern; however,
in general, the education level has a greater impact on women’s employment
than on men’s. For men, when comparing with those of junior college diplo-
mas or above, the probability of unemployment for those with high school
or occupational high school education is 2.61 times higher; for those with
no education, 2.51 times higher; for those with middle school education,
1.61 times higher; and surprisingly, for those with only elementary school
education, there is no significant difference in this aspect. This may be due
to the employment structure of men. Currently, there are a large number
of low-tech, manual, and labor-intensive industries that can provide a large
number of jobs for men with lower levels of education (elementary school
and middle school). As a result, their probability of unemployment is not
higher than those with higher levels of education.
People of high school or occupational high school education are not
willing to engage in the manual work, and they are disadvantaged when
competing for technical or white-collar jobs with those of higher education
level. The situation of women is somewhat different from men. Comparing
with those of junior college education or above, the probability of unem-
ployment for women with lower education levels is significantly higher. The
highest probability occurs in women with middle school education, 3.8 times
higher than those with junior college education or above; for those women
with elementary school and high school education, the gaps are 2.59 and
2.76 times respectively. The probability of unemployment of those without
any education is not significantly different from those with junior college
education or above.
Education’s impact on occupation

In contemporary society, occupation will largely determine one’s status
in the social, while education level will to a large extent determine one’s
occupation. Sociologists designed a set of measurements to put the socio-
economic status of each occupation in order (e.g., socio-economic index)
and found that the socio-economic status of occupation highly correlated
with the level of education. The higher the education level is, the easier
people can find jobs with high socio-economic status; those with a lower
education level may be stuck in jobs of lower occupational prestige for their
whole lives. In China’s society before the economic reforms, the impact of
education on occupation was insignificant; since the reform, however, edu-
cation has been exerting an increasingly strong impact on the occupation.
The data in Table 28.4 reflect the degree of the impact of education level
on one’s occupational status.
The regression coefficients of model 1 of Table 28.4 show that the
education level is an important factor in determining occupational sta-
tus. On average, people with middle school education are 2.755 percentage
points higher in the socio-economic index of the occupation than those with
no education; those with high school and occupational high school educa-
tion are 6.563 percentage points higher; those with junior college education
or above are 17.897 percentage points higher. Both model 2 and model 3
compare the gender differences in the attainment of occupational status.
Data analysis shows that the factors affecting the occupational status of
men and women have similarities and differences. Education level impacts
the occupation of both men and women, and it appears to have a more
significant impact on men. For women, the positive influence of this fac-
tor begins to show from the education level of elementary school and gets
stronger and stronger as education level improves. Women of middle school
education are 2.289 percentage points higher in socio-economic index than
women without education; women with high school and occupational high
school education are 6.064 percentage points higher; women with junior
college education or above are 16.374 percentage points higher.
For men, elementary education level has no significant effect on the
attainment of occupational status; the positive effect of education will not
phase in until middle school level. The effect will get stronger as the educa-
tion level rises. Men with middle school education is 3.595 percentage points
higher in socio-economic index than men without education; for men with
high school and occupational high school education, 7.481 percentage points
higher; for men with junior college education or higher, 19.23 percentage
points higher. Both model 4 and model 5 compare the gender differences
in the attainment of occupational status in urban areas. In urban areas,
the education must reach a fairly high level before it has any impact on
the occupation. For men, only junior college education or above can have a
significant positive impact on the attainment of the occupational status —
an increase in the socio-economic index by 19.573 percentage points, high
school and occupational high school education only produce a relatively
weak effect (the significance of the regression coefficients is at a low level),
March 5, 2013
16:48
588
9in x 6in
Table 28.4. Impact of Education Level on Occupational Status.
Education
level
(reference

group: no Model 1 All Model 2 Model 3 Model 4 Model 5 Model 6 Model 7
education) samples Men Women Urban men Urban women Rural men Rural women
Elementary school 0.421 0.950 0.235∗∗∗ 1.861 1.191 0.727 0.119

(0.44) (0.913) (0.484) (3.242) (1.450) (0.828) (0.411)
Middle school 2.755∗∗∗ 3.595∗∗∗ 2.289∗∗∗ 4.922 3.436∗ 2.633∗∗ 1.699∗∗∗
(0.448) (0.913) (0.495) (3.194) (1.376) (0.836) (0.437)
Li Chunling
High school and 6.563∗∗∗ 7.481∗∗∗ 6.064∗∗∗ 7.510∗ 8.388∗∗∗ 7.018∗∗∗ 4.166∗∗∗
Occupational (0.499) (0.967) (0.581) (3.229) (1.447) (0.922) (0.567)
high school
Junior college or 17.897∗∗∗ 19.230∗∗∗ 16.374∗∗∗ 19.573∗∗∗ 19.311∗∗∗ 17.506∗∗∗ 9.748∗∗∗
above (0.663) (1.131) (0.878) (3.297) (1.656) (1.642) (1.679)
Age −0.005 0.018 −0.033∗ 0.087∗∗ 0.054 0.007 −0.038∗∗
(0.010) (0.014) (0.014) (0.030) (0.030) (0.015) (0.014)
Men 1.588∗∗∗ — — — — — —
(0.205)
Urban residence 4.609∗∗∗ 5.238∗∗∗ 3.941∗∗∗ 2.641∗∗∗ 1.340 5.434∗∗∗ 2.592∗∗∗
registration (0.337) (0.505) (0.443) (0.808) (0.067) (1.039) (0.957)
(Continued)
b1344-ch28
March 5, 2013
16:48
Table 28.4. (Continued)
9in x 6in
Father’s
occupation
Educational Inequality and Educational Expansion in China

(Reference
group: Model 1 All Model 2 Model 3 Model 4 Model 5 Model 6 Model 7
Farmers) samples Men Women Urban men Urban women Rural men Rural women

Managers 3.022∗∗∗ 2.591∗ 3.531∗∗∗ 1.127 0.169 2.057 7.601∗∗∗
(0.676) (1.038) (0.861) (1.295) (1.233) (3.502) (1.528)
Professionals and 2.305∗∗∗ 1.828∗ 3.036∗∗∗ 1.726 0.204 0.641 4.160∗∗∗
technicians (0.589) (0.860) (0.793) (1.376) (1.222) (1.094) (1.109)
Clerical staffs −0.757 −0.938 −0.482 −1.729 −2.543∗ −2.035 −1.435
(0.576) (0.867) (0.747) (1.282) (1.150) (1.249) (1.068)
Sole proprietors 2.956∗∗∗ 3.915∗∗ 1.784 −1.008 −1.951 8.108∗∗∗ 8.517∗∗∗
and the (0.930) (1.299) (1.321) (2.179) (1.867) (1.549) (2.248)
self-employed
Industrial workers −0.293 −0.603 0.053 −3.254∗∗∗ −2.859∗∗∗ 2.376∗∗∗ 1.776∗∗∗
(0.335) (0.520) (0.425) (0.802) (0.721) (0.742) (0.524)
Constant 47.435∗∗∗ 47.320∗∗∗ 48.880∗∗∗ 48.374∗∗∗ 48.835∗∗∗ 47.399∗∗∗ 48.651∗∗∗
(0.068) (1.112) (0.735) (3.450) (1.684) (1.069) (0.703)
Value 0.396 0.389 0.385 0.358 0.344 0.182 0.164
Note: Logistic regression coefficient table, the dependent variable is the socio-economic index, the control variables are age, residence
registration status, father’s occupation, and gender.
Significance level ∗∗∗ ≤ 0.001; ∗∗ ≤ 0.01; ∗ ≤ 0.05; the data in brackets are standard deviations. The data used in the analysis in this
table include only those of the 16–60 year-old non-student samples.
Source: Data of 2001 National Sampling Survey done by the Institute of Sociology of Chinese Academy of Social Sciences.
589
b1344-ch28
590 Li Chunling
while the middle school and lower-level of education does not have any
significant impact on the attainment of the occupational status.
For women, the education level of high school and occupational high
school have a positive impact on the attainment of the occupational
status: Compared with women with no education, women with high
school and occupational high school education are 8.388 points higher in
socio-economic index; women with junior college education or above are
19.311 points higher. Both model 6 and model 7 compare the attainment
of the occupational status by men and women in rural areas. Education
level has a significant impact on the attainment of occupational status for
both men and women in rural areas on men, but with a stronger impact.
Compared with men without education, men whose education levels are
middle school, high school and occupational high school, junior college or
above are higher in the socio-economic index by 2.633 percentage points,
7.018 percentage points, and 17.506 percentage points respectively, while
women of the same education levels are higher in the socio-economic index
by 1.699 percentage points, 4.166 percentage points, and 9.748 percentage
points respectively. Overall, the education level is an important factor in
the attainment of occupational status, and its impact on men is obviously
more significant than on women; however, only the middle level of educa-
tion or above has a positive impact on men, while for women, the positive
impact starts from the elementary level of education.
Conclusion
Since the beginning of the economic reforms, education has been playing a
growing role in the social stratification of contemporary China, and in recent
times, it has become an important mechanism leading to socio-economic
differentiation. The expansion of the income gap and the differentiation
of classes and strata in China over recent decades are inseparable from
the intensified stratification of education. On the one hand, education is
making a greater and greater impact on the attainment of socio-economic
status of individuals, and the education level partially determines individ-
uals’ income, job opportunities, and the attainment of occupational status.
On the other hand, the competition for education as a scarce resource is
getting intense. Those from the families of more superior status are more
likely to be successful in getting good education opportunities, while those
from rural families, low-class families, or poor families can only get fewer
educational opportunities, thus resulting in greater inequality in education.
The unequal distribution of educational opportunities further propels the

socio-economic differentiation and inter-generational transmission of class
status. In other words, education makes the current socio-economic dif-
ferences carried over to the following generations, thus making the differ-
entiation trend stable and permanent and resulting in the formation of a
relatively stable structure of class and stratum. The Chinese government’s
measures to expand education and promote educational equality are reliev-
ing some of these tensions, but these policies and measures currently are
only effective in reducing the inequality in education at the elementary and
middle school levels, whereas the inequality in education still persists at the
high school and higher education levels. Even though gender inequality in
education has narrowed significantly in the past several decades, education
inequality between urban and rural areas continues to develop.

Part Eight
Consumption
593
594
29
Beyond Social Stratification:
A New Angle on Consumer Practices
in Contemporary Brazil
M. Castañeda
Analyzing consumption in social science is still an epistemological problem.

Barbosa and Campbell (2006) explore the problem by asking: If consuming
is a singular or specific experience, what is its ontological or epistemologi-
cal meaning? Has the prevailing ontology/epistemology of emotions, which
has led to subjectifying daily experiences to the extent that people only
recognize the world by way of their experiences, eliminated any sort of
interpersonal objectivity? If objective events have given way to a diversity
of subjective experiences and realities, can we only evaluate consumption as
a personal experience? If so, would this represent a rejection of reason and
its substitution by emotion? Does differentiation, in intensity and charac-
ter, of inter-subjective emotional responses keep us from forming a common
objective basis for defining what actually constitutes consumption?
The greatest obstacle, however — more than a subjectivist bias —
seems to be the productivist bias in social science. This has led Barbosa and
Campbell (2006) to observe that consumption still appears as an irrelevant
topic when compared to production, the predominating analytical focus
of the majority of social science-based consumer analyses. As such, the
exteriority of consumption to production is ignored.
A consistent criticism of this bias may be found in the correlation that
Campbell (2001) establishes between the romantic ethic and the spirit of
modern consumption. The author calls attention to the fact that com-
mercial revolutions and consumption preceded the industrial revolution.
595
596 M. Castañeda
Therefore, three dynamics of social change are relevant and not merely the
productive and industrial variants.
This consumer and commercial revolution may be seen as a sort of
destiny for the protestant ethic, since it was spearheaded by the newly-
born bourgeoisie, a highly puritan sector of English society. It is unlikely
that this bourgeoisie — puritans with a longstanding work and frugality
ethic — would imitate an aristocracy disdained for excessively valuating
luxury, leisure, and indulgence.
Thus, cultural innovations such as novels, gothic style, cultivating
romantic love, among others, made it possible for a new bourgeoisie to
emerge as a cultural trend setter, giving “expression to values and atti-
tudes quite distinct from those who had characterized the lifestyle of the
English elite” (Campbell, 2001: 54).
In light of epistemological difficulties and the productivist bias in ana-
lyzing consumer phenomena in the social sciences, this chapter will question
the predominating way in which phenomena denominated as “consump-
tion” have been dealt with by social scientists.
While writing this chapter, I was surprised at not being able to find any
recent work in Brazil that used the level and structure of consumption as
indicators for understanding social stratification in this country, probably
owing to the lack of quantitative data produced on a national scale.1
This “discovery” led me to add to this recently reworked chapter, a new
analysis (Castañeda, 2010) using a practice theory perspective, specifically
developed by the English sociologist Alan Warde, which points to new ways
of establishing a research agenda for social science. Warde’s theory seems
better adapted to the transformations that have been taking place in con-
temporary societies, as well as in the social sciences themselves.
This research agenda was put together by using contributions from
Pierre Bourdieu and the partnership between Mary Douglas and Baron
Isherwood — their theoretical studies that were published in the late 1970s
using a more structuralist perspective, a more culturalist bent and studies
with by Daniel Miller and C Campbell, which were published since the late
1980s up to their more recent work.2
1 Scalon (2009) points out that the “most recent” and general data on mobility in Brazil,
a survey, goes back to 1996.

2 In Brazil, this sociological approach to consumer phenomena may be found in research
from the Consumer Study Group (http://estudosdoconsumo.com.br/, accessed on 9

March 2011), as well as the National Consumer Studies Meeting (ENEC).
Beyond Social Stratification: A New Angle on Consumer Practices 597
While elaborating this text, I considered highlighting general tendencies

on spending patterns and preferences among Brazilian consumers. This
was made possible after having access to an economist and market-based
quantitative study held in 2010. As such, my analyses all refer to this same
year (Curtis et al., 2010).
This kind of data, though, has also reinforced a more general under-
standing of the term consumption, extrapolating spending aggregates or
consumer preferences, aspects that, in any case, are better appreciated in
macroeconomic analyses and marketing research. In contemporary soci-
eties, attempts to create a universal concept to define consumption opens
up a myriad of possibilities, as long as we arrive at a generic denomination
capable of classifying whole series of phenomena.
This is why I find it more adequate to work with a more restricted def-
inition such as the practice theory perspective developed by Warde (2005),
who sees consumption as a process of engaging agents in acts of appro-
priation and appreciation of goods, services, achievements, information or
environments, purchased or not. This means any group of practices in which
agents participate and, in doing so, exercise a certain degree of discrimi-
nation for diverse ends — utilitarian, expressive or contemplative, among
others.
I would also like to highlight the consumer as a basic term in this intro-
duction. In economics, as early as the 19th century, neo-classical consumer
theory attributed sovereignty to an undistinguished consumer, based on the
idea that individuals know what is best for them. These individual make
unrestricted decisions based on the most comfortable way of satisfying their
preferences.
From the 1930s, this theory was supplanted by the idea of aggregated
consumption, especially in the theories of Keynes and Kalecki, who prac-
tically ignored the actual consumers. At the end of the 1970s, consumers
started finding their way back to economic analysis by conducting studies
on technological dynamics. These studies see consumption as a dynamic
element of the economy. This is how a reevaluation of demands and mar-
kets started, getting more and more space, even if not reaching hegemony
in social science.
Warde (2005) rejects the idea of people acting out consumer moments
as rational, sovereign actors or as ingenuous victims, easy to manipulate.
He also distinguishes between the common usages of the term “consumer
aggregate”, as apparently prevail economic analyses. For this author, orga-
nizing practices and consumer moments is imposed on individuals. Within
598 M. Castañeda
the social science field, consumers are seen as individuals possessing rights
and responsibilities, as citizens who interact with the market.
I will now go back to look at how social phenomena classified by the
term consumption in social science are dealt with, emphasizing Pierre
Bourdieu’s legacy and consequently presenting the limitations of social
stratification theory so that I may configure a new panorama of consump-
tion in emerging economies, using the results of a recent survey (Curtis
et al., 2010). Afterwards I will return to the practice theory perspective
in order to present what I see as the aspects fundamental to envisioning a
research agenda on consumer phenomena, as these have come into being in
contemporary societies.
Consumption, Lifestyle, and Social Stratification:

Bourdieu’s Legacy
In his analysis on fashion as a social phenomenon, Simmel (2008) makes
evident the antagonism between trends towards egalitarian unification and
trends towards individual self-exclusion. The author identifies parallelism
in relationships between individuals and each individual’s psychic elements.
These elements lead the individual to adopt a conduct and style that is
converted into a fashion, depending on the rhythm of its manifestation and
the individual’s own desire to call attention to him or herself.
A lifestyle thus reflects the way in which a person or group of peo-
ple experience their world, how they behave, and how they make choices.
Bourdieu (1983) sees a distance between these elements and individuals’
and groups’ “basic necessities”, understood here as determining their min-
imal survival, i.e., food, shelter, etc.
However, the author relativizes this idea by reminding us that if eat-
ing is a necessity, how one eats, choosing between different types of food
or even utensils, not to mention options taken when choosing different
kinds of materials, may indicate values that constitute distinction strate-
gies in a social milieu. As such, choosing a certain object can reveal anx-
ieties, practices, adherence to values, and distinction strategies in a given
society.
Bourdieu (1983) points out that praxis as well as the ownership of mate-
rial and symbolic goods express a lifestyle derived from the same operating
practical factor, i.e., habitus, a system of durable and flexible dispositions,
a taste that expresses objective necessities resulting in certain kinds of con-
stant and systematic preferences.
Hence taste, aptness, and the tendency to appropriate certain categories

of goods are among the main aspects of living a certain lifestyle. This is
a unitary group of distinctive preferences that express, within the specific
logic of each micro-symbolic space — such as dress, language, posture and
consumer patterns — the same expressive intention, the start of a unit
of style. Consequently, for Bourdieu (1983), lifestyles can be translated as
routine practices that can be incorporated into habits such as eating or
dressing, acting in a certain way, and also in getting together with others
and participating in interactive spaces.
I would like to demonstrate how Warde (2005) makes advances regard-
ing this argument by emphasizing practices as a tool for analyzing con-
sumer phenomena in contemporary societies. Before doing this, though,
I will present the results of research that will help us understand consumer
phenomena as part of social class stratification, understood in this sense
as consumer spending and preferences in a quantitative perspective (Curtis
et al., 2010).
Spending and Preferences of Countries Consumers

of Emerging Economies in 2010: The Limits of Social
Stratification in Consumer Analyses
In this section, I will review the results of the Credit Suisse Emerging Con-
sumer Survey 2011, a quantitative study carried out recently, in December
2010.3 The objective of the survey was “to establish a unique profile of
spending patterns and preferences of a consumer who is at the heart of
a structural shift in global demand” (Curtis et al., 2010: 3). Using this
research, though, does not mean considering its results as absolute truths.
My interest is more geared towards questioning how the procedures used
have been naturalized in social scientifics analysis.
Keeping in mind that Curtis et al. (2010: 3) aim to “provide insights
not available from traditional sources of economic information”,4 I will
3 The research was carried out as a partnership between the Credit Suisse Research
Institute that financed and holds responsibility for the analysis and AC Nielsen, a global
business leader in marketing research that produced the primary data by conducting
interviews. The sample was gathered among 13,000 people in seven countries (Brazil,
Russia, India, China, Egypt, Indonesia, and Saudi Arabia), representing about 3.2 billion
people. The results, the analysis, and the tabled data may be accessed on https://
emagazine.credit-suisse.com (accessed on 4 March 2010).
4 I would like to make it clear that I am not contesting the utility of this kind of research
when applied to financial market interests or investigating investment opportunities in

600 M. Castañeda
try to call attention to the analytical, methodological and epistemological

differences between two such close fields as economics and the social sci-
ences, especially with regards to consumption, as it crosses over both
fields.
It is worth pointing out here how intensely research procedures from
economics have spilled over into social sciences. In spite of having found
support from a single recent study, this should be sufficient enough to show
us that economic models used to measure social stratification are not ade-
quate tools for analyzing consumer phenomena in contemporary societies,
at least as far as the social sciences are concerned.
Curtis et al. (2010) did research in seven different countries that are
considered as “emerging economies”: Brazil, China, Russia, India, Indone-
sia, Egypt, and Saudi Arabia. Besides demographic variables, the survey
takes 11 categories into account regarding the spending habits and pref-
erences of consumers in each of the seven countries listed above: income
and other, automobiles, food and beverage, home and personal care, lux-
ury goods, technology and internet, telecommunications, travel, property,
education, and healthcare. The study specifically looks at those goods and
services acquired by the consumers interviewed, with special emphasis given
to income variables. The already outdated distinction between luxury and
necessity is also considered, as well as more typical class categories, i.e.,
high, middle, and low.
Despite identifying parallel factors in each of the countries researched,
many meaningful differences arose between them. Besides income growth
and demographic aspects, these differences also sprung from social and cul-
tural factors that configured distinct spending priorities in each market.
Yet the authors were not really interested in researching such social and
cultural factors, which is perfectly coherent in light of the approach (eco-
nomic), used in this study.
Considering the structural backdrop, Curtis et al. (2010) suggest that
“discretionary” consumers reallocate expenses so they may acquire “items
essential to survival”. This is a biased conclusion based on the mistaken pre-
sumption that there really is such a thing as “essential” goods and services,
emerging markets, as seems to be the case with this study. However, besides doubting its
efficiency, even in this case, there are clear limitations to extending this kind of research
to sociological analysis because of unfilled gaps regarding the specifical social and cultural
dynamics in each of the markets researched, as the authors of the survey have noted.
and that other items may thus be treated as “superfluous”, especially in

absolute or universal terms.
Owing to this mistaken presupposition on which the research is based,
the authors claim a general trend towards spending on “useful items” —
used here to mean transport, education and financial services — that bear
a more linear relationship to income. Increased spending on leisure, consid-
ered as “discretionary spending” is thus seen as being more typical among
higher income brackets.
This is how the authors were able to identify spending increases on
(1) “essential items”, more common in those countries classified as “low
income”, i.e., India, Indonesia, and Egypt; (2) “useful items”, basically
transport and technology, in “mid-level income” countries, in this case
Brazil, China, and Russia and (3) “luxury items” in high-income countries
such as Saudi Arabia.
Curtis et al. (2010) observe that “emerging” consumers are very opti-
mistic about the future. This conclusion came about after asking inter-
viewees how they envisioned their personal finances in a near future; if
they have a family income or if they plan on taking vacations. The inter-
views demonstrated the deeply persisting income inequalities in these coun-
tries. Figure 29.1 visualizes how the future is perceived by way of personal
Fig. 29.1. Perceptions on the state of personal finances in the last 6 months.
Source: Credit Suisse Emerging Consumer Survey 2011.
602 M. Castañeda
finances in the researched countries, a variable the authors associated with

optimism, in the case of “emerging consumers”.
This kind of analysis flows over to a typical economics discourse in
which an increase in “real income” gives impulse to demand, especially in
function of absolute increases in spending on “discretionary” goods and ser-
vices in general, but also “essential” goods and services, which would be the
case in Indonesia, Brazil, and China. This line of reasoning would explain
why consumers in these three countries may be considered as “optimists”
while those in Russia and Egypt are presented as “pessimists”. This research
tool is capable of presenting interesting contrasts regarding “optimistic”
consumers, in the sense that Brazilian consumers are greater “spenders”
while their Chinese counterparts are greater “savers”.
But how does it increase our understanding of the way such consumers
actually act and think about what they did, the real aim of a social science
approach?
Here it is necessary to distinguish between optimistic and pessimistic
consumers based strictly on the variable income, ignoring contrasting social
and cultural values in distinct markets. This would explain why other “gen-
eral” or superficial differences (depending on one’s point of view) may be
seen as an effect of implanting a banking system in Russia, giving priority
to healthcare in Brazil, and of a relatively high degree of sophistication in
India’s pro-savings behavior.
One aspect that interested the survey’s financers was ascertaining con-
sumer preferences for local or international brand names. By observing a
pattern in which “top-brand” goods and services carve out more space in
markets when income levels rise, Curtis et al. (2010) confirm the traditional
view that international brands earn a greater market share among higher
income segments, while local brands do better with lower income groups. In
addition, they indicate that by acquiring “essential” goods, higher income
consumers do not necessarily prefer international brands.
The relationship between the public and private sectors came into
question regarding health and educational services. This relationship also
presents a strong correlation to increased income levels, which would help
explain why greater governmental investment results in families spend-
ing less, and why an older economically active population spends more
on healthcare, while younger economically active members spend more on
education. The authors once again observe that cultural differences and
social trends create pressure for better educational outputs, yet, at the
same time, they are not swayed by such differences.
Fig. 29.2. Savings as a percentage of income.

Source: Credit Suisse Emerging Consumer Survey 2011.
The heavy emphasis on spending and saving patterns creates struc-

tural differences in the spending economy; for example, China places 31%
of its income into savings, while Brazil and Egypt reserve 10% and 7%,
respectively, as can be seen above in Fig. 29.2.
However, how would these distinctions made by Curtis et al. (2010)
explain or help us understand consumer phenomena in a sociological way
when the survey was structured using an economics perspective? I hope to
fill this gap by using a practice theory perspective in the upcoming topic
and thus lay new bases for a consumer research agenda.
As far as Brazil is concerned, the survey ignores historical processes
that are still underway, such as institutional democracy, which started in
the 1980s, and economic privatizing which started in the 1990s, especially
when state-held businesses such as telephone services were sold. Curtis
et al. (2010) prefer to stick to real income growth in the first decade of
the 21st century. This corroborates my impression that this survey uses an
economistic perspective that, as I have been emphasizing, can only fulfill
its own aims.
In dealing with Brazil, the authors point out that “discretionary spend-
ing” predominates, initially being viewed as a counterpoint to low savings
rates. By analyzing the composition of expenses, Curtis et al. (2010) use
604 M. Castañeda
a wider spectrum, containing both discretionary and essential spending,

which results in low savings rates (10%) when compared with China (31%).
However, these spending patterns are strongly tied to the legacy of the
high-inflation decades of 1980/90. As such, the survey ignores the recent
political and economic transformations that have been taking place in Brazil
over the last 15 years. The authors need not be so surprised by increasing
expenses in real actives such as home ownership which is generally financed
by bank loans and one of the fundamental aspects of Brazilian consump-
tion, apparently a consistent pattern within the line of research used, albeit
isolated from its political and historical background.
In addition, Curtis et al. (2010) give a lot of attention to how much
Brazilians spend on healthcare, initially associated with investments in
human capital in detriment to financial capital. The authors were able
to demonstrate that these expenses were not a counterpoint to govern-
mental spending, which is actually high, but to the low quality of public
health services in Brazil. On the other hand, it is worth keeping in mind
that healthcare may also be seen as a family discretionary expense as the
authors have categorically explained.
In sum, a practice theory perspective may demonstrate how to analyze
consumer phenomena in a way that is more in tune with a sociological
perspective. Thus the aim of this paper is presenting insights to stimulate
the construction of a new consumer research agenda, rather than actually
constructing such an agenda here.
Consumption and Practice Theory: Working Toward

a Research Agenda
Barbosa and Campbell (2006) see consumption in contemporary societies as
an ambiguous field to research because it contemplates simultaneously: (1) a
social process with multiple forms of providing access to goods and services;
(2) a social mechanism for producing meaning and identities, independent
of acquiring any given good or not; and (3) a strategy used by many different
groups in their daily lives in order to define rights, lifestyles, and identities.
Consumption is thus a central category in defining and understand-
ing contemporary societies, but is also a complex field of sociological
investigation because it encompasses many different activities and social
actors, as well as goods and services that go beyond the realm of commodi-
ties acquired as purchases. This “going beyond” purchases includes those
goods and services that are offered by governments or within the domestic
world of love, affection, family ties, and feminine domestic work.
This is why Castañeda (2010) gives emphasis to practice theories,
because these aim at comprehending how social life comes about in a plu-
ralist and flexible fashion in counterpoint to statistics and regimes rooted
in local contexts on the one hand, and accommodated complexities, differ-
ences, and peculiarities on the other (Warde, 2005). This is why both any
given social order as well as individuality result from practices.
Initially, we may distinguish between practice and practices. A practice,
in the singular, gives the idea of praxis, a description of human action in
contrast to theory or thought. This is not what is being considered here.
I am more interested in practices, in the plural, which represent routine
behavior that connects certain elements to others by way of nexuses.
Practices are meanings that join together and coordinate actions and
discourses, whether corporal or mental activities, things and their different
utilities, an accumulated and intelligible knowledge of emotional states and
motivations. Consequently, if practices comprehend action and discourse,
sociological analysis should be geared towards practical activities and their
representations (Warde, 2005).
Two notions are central to the concept of practices. The first is the
notion of coordinated entity, understanding the nexuses between actions
and discourses as they unfold in time disperse in space. These nexuses are
connected by way of three elements: How one understands what to say and
do; procedures explicated through rules, principles, precepts, and instruc-
tions; and involvement in teleological-affective structures that comprehend
ends, projects, questions, proposals, beliefs, emotions, and states of humor.
The other notion is performance, or the distinct ways of understanding
a multiplicity of simple and constant actions as reproduced in practices.
Thus an individual may be understood as a corporal and mental agent
following diverse practices that are not necessarily coordinated among each
other (Warde, 2005).
Mental activities that are conventions for understanding, knowledge,
and desires configure the elements and qualities of practices in which indi-
viduals participate. They are not individual qualities, but according to
Warde (2005), coordinated entities require a performance in order to exist,
and this performance can only exist as related to practices.
Here we have social forms made routine, providing means to understand
bodies in movement, how objects are manhandled, how subjects treat and
describe things, and how they understand the world. This turns speaking
606 M. Castañeda
about “social practices” into a tautology, since all practices are social as
they involve beliefs and understandings that appear in different places and
points in time, captured by different bodies and minds known as individuals.
Warde (2005) tries to expand the concept of practices in order to distinguish
between dispersive and integrative practices.
Describing and formulating rules and explicating and imagining social
life characterize a performance in dispersive practices which demand, from
the start, understanding different ways of appropriating an explanation.
In addition, certain abilities are necessary in order to be able to identify
an explanation right as it takes place so that one may elaborate another
explanation that responds to that which was initially appropriated. In this
case, the initial understanding of these practices refers to a “how to do
something”, as well as to the capacity of sharing collective practices, a
performance in specific contexts and a series of common understandings
that constitute a sphere of recognition of a particular act as an explanation.
Integrative practices, on the other hand, are the “most complex ones
found, constituting particular domains of social life” (Schatzki, 1996: 98;
apud Warde, 2005). Among these, Warde (2005) relates agricultural cultiva-
tion, making purchases, cooking, and doing business. In certain specialized
forms, they may also include dispersive practices, such as, discourses and
actions used in understanding cooking practices or even for following the
rules of these practices, as well as their particular engagements.
The elements highlighted up to now are all part of a philosophical
bearing of practices, characterized by idealization, abstraction and slight
attention paid to the social processes of creativity and reproducing prac-
tices. However, sociology deals with situations of permanence and change
in regarding practices and their participants. Warde’s perspective is entic-
ing for calling attention to the different nexuses of actions and discourses
present in individual and group performances in practices as well as conflict
and political alliances inherent to performance and practices of reorganiza-
tion.
Thus analyzing consumer phenomena in light of a theory of prac-
tices involves non-instrumentalized notions of conduct in observing rou-
tine rules, of emotion, materialism, and desire. Many practices are involved
in consuming that, as such, cannot be defined in a restricted way, merely
considering market exchanges. This is why Warde (2005: 137) understands
that “consumption is not a practice, but a moment practically in every
practice”.
Consumption may be understood as a process in which consumers con-

stitute the agents of practice in consuming and become engaged in acts
of appropriating and appreciating goods, services, experiences, informa-
tion or environments, whether these are purchased or not. A consumer is
able to discern, to a certain degree, in order to attend to various different
proposals: utilitarian, expressive, or contemplative, among others. Thus,
consumption is a dispersive practice, because it happens frequently and in
different places, way beyond what we are capable of registering or reflecting
upon.
However, declarations in which the term “consumption” is used fre-
quently make reference to purchases and acquisitions. Buying things is an
integrative practice, because it involves the nexuses of actions and dis-
courses that are related to what people enjoy or hate, as well as some
people’s disposition to avoid buying things all together. On the other hand,
consumption is an inescapable and momentous phenomenon that frequently
happens yet is not generally that important to most people at all.
Practices may also be differentiated internally in any number of dimen-
sions. They don’t represent a uniform plane in which agents participate in
the same way, but a specialized and dedicated domain that comprehends
distinct competences and capacities.
In order to analyze agents’ capacities, Warde (2005) proposes seven dif-
ferent antimonies used to distinguish between agents sharing certain prac-
tices: (1) new and old; (2) theoretical and technical; (3) generalist and
specialist; (4) conservative and radical; (5) visionaries and followers; (6)
experts and the relatively ignorant; (7) professionals and amateurs. These
antinomies are relevant to understanding participants’ roles or the structure
of their positions when they participate in practices.
Beside these antimonies, the author indicates differentiation based on
the potential contributions of participants in reproducing and developing
practices. This leads him to resort to categories such as insiders, regulars,
tourists, and foreigners in order to delineate the different levels of invest-
ment made by each agent in any particular universe of practices possessing
a specific value.
Disputes over taste may be understood as the result of internal differen-
tiations of practices. Thus, Warde (2005) distances himself from Bourdieu;
while Bourdieu focuses on social classification as a process of gaining access
and assimilation to practices and external resources that refer to distinct
positions within fields, Warde covers a distinction between understandings,
608 M. Castañeda
procedures, and engagements, understanding that disputes over taste seem

to have their own dynamics, independent of practices.
The differences between nexuses of actions and discourses for these
participants — their understandings, the procedures they adopt and the
engagements to which they aspire — may vary independently from one or
another element of these nexuses, within groups of participants, in function
of their different ways of learning. This is why the analytical proposal of
practice theory runs into the necessity of a detailed examination of how
nexuses — understandings, procedures, and engagements — are acquired
and, therefore, adapted to specific performances. As such, practices possess
developments and histories that can offer responses for better understand-
ing why people do what they do and how they do it.
Since practices are socially constructed, involving rules of collective
learning to construct competencies, they use power as an important element
in creating justifiable behavior. This explains why the main implication of
practice theories is that resources for changing behavior appear spread out
over the development of practices whose concept combines the capacity to
be simultaneously responsible for reproduction as well as innovation in a
given society.
Practices’ potential for social reproduction can be found in formal and
informal codifications that govern conduct without participants having to
reflect or demonstrate awareness and betraying certain inertia. Thus, in
practice theories, the emphasis given to processes as habits, routines, prac-
tical consciousness, tactical and traditional knowledge, among others, turns
performing certain practices into something that is neither completely con-
scious nor reflexive.
Giddens (1984) apud Warde (2005), for example, highlighted the cen-
tral role of routine, even without being able to monitor performance in
a reflexive way, which would reveal agents’ dispositions toward action, as
specific practices that become consolidated and incorporated. This makes
routines emotional and corporal as much as the cognitive base of behav-
ior. Bourdieu’s concept of habitus also gives meaning to incorporated and
structured dispositions, seeing conventions as a central element towards
understanding what it means to be engaged in practices.
Yet Warde (2005) observes that similar practices may present differenti-
ated performances if the nexus elements of actions and discourses — under-
standings, conventions, and aspirations — are differentially distributed
among participants. As such, these performances may be seen as a group
of satisfactory or great practices, more adequate or better than others.
This indicates that practices also possess the potential for innovation in
function of the dynamics by which people adapt, improvise, and experi-
ment in different situations.
This double potential, and especially the possibility of innovation,
change the perspective by which, for example, production affects consump-
tion and vice versa. Thus Warde (2005) understands that the effects of
production on consumption and vice versa, are intermediated by nexuses
of actions and discourses surging from practices.
Therefore, by using Warde’s perspective, consumption represents a
multi-dimensional social phenomenon manifested as a series of practices.
The nature and processes of this phenomenon may be explained, as such, by
personal engagement in these practices, which may assume distinct mean-
ings: love and devotion, analogous to scarification rituals (Miller, 2002);
communicating messages, demarcating social relations and cultural hostil-
ity (Bourdieu, 1983; Douglas and Isherwood, 2006); creative collage tactics
expressing resistance, revenge, or vengeance (De Certeau, 2011); citizen-
ship and social participation (Canclini, 1995; Beck, 2002); participation
in politics (Hirschman, 1983; Giddens, 1996; Stolle et al., 2005), including
the environmentalization and politicizing of consumption (Paavola, 2001;
Portilho, 2005; Castañeda, 2010) and self-attributing socio-environmental
responsibilities (Eden, 1993; Portilho, 2008; Castañeda, 2010). All of this
opens up new analytical possibilities for social science, extending beyond
social stratification analyses, and thus demanding a research agenda that
incorporates practices.

30
Consumption and Lifestyle in Russia
The radical transformation that took place in Russia at the end of the
20th century exerted an enormous influence upon the society, causing huge
changes in the socio-economic positions, material standards of living, and
consumption abilities of the majority of citizens. The lifestyle of different
categories of Russian citizens changed fundamentally because of the trans-
formation affected by the changes of volume and structure of personal con-
sumption, social and life experiences of people. In this chapter, we consider
lifestyle as (1) a person’s behavior in specific situations, and as (2) definite
actions of an individual or social group, to form their way of life. A lifestyle,
acquired in the process of societal development and based on accumulated
experience, sets the stable reproduction of the definite practices. Giddens
defines it as “more or less integrated complex of practices which are chosen
by the individual, not only because these practices satisfy the utilitarian
requirements but materialize the specific narrative of self-identity” (Gid-
dens, 1991: 81). This is the definite integrity of social practices in different
spheres of life. A lifestyle means commonly repeated set of practices that
allows a definite person or family to refer to the right social group (E. M.
Avraamova, 2003: 352).
Among the complex of social practices that form lifestyle, the con-
sumption practices are directly related to how a person lives and builds up
his/her life. This thought was initially explored in Weber’s works that con-
nected the status stratification with comfort consumption principles and
peculiarities, and that reflect the specific character of a lifestyle (Weber,
1994: 147–156). This was later, more precisely, deliberated by Veblen in his
611
612 P. M. Kozyreva, A. E. Nizamova and A. I. Smirnov
concept of demonstrative behavior. Veblen is considered to be the founder

of the tradition of lifestyle studying in the context of a consumer’s behavior
(Veblen, 1984).
Consumption is a differentiating action from the point of lifestyle vari-
ety. The lifestyle differentiation is discussed mostly in acquired “movable”
property, real estate, durable goods, and services consumption. A consump-
tion activity and consequently the choice of the definite lifestyle depend
upon the consumption abilities of a person. The higher the consumption
abilities are, the wider the spectrum of affordable lifestyles will be. Changes
in consumption pattern affect lifestyle that in turn impacts the social struc-
ture. There is a weakening connection between social structure and lifestyle
and a cardinal change of everyday objects surrounding in the period of social
transformations caused by deep changes in the consumption structure and
model.
Consumption Dynamics in the Context of Lifestyle

Formation
During the radical reform of the last 20 years, the amount and structure
of the income and expenses of Russian families, which reflect their con-
sumption abilities of different lifestyles, changed drastically. At the same
time the constant decreasing of the income in the 1990s transformed into
consistent increase at the beginning of the new century.1 For example, from
1992 to 1998, the average real income of households decreased by 42.6%,
and by the end of 2008, they increased 3.1 times, thereby reaching the
maximum value for the whole research period in.1 Higher incomes have
led to higher expenditures, which is a key factor researching the connection
between consumption and lifestyles. There are many evidences showing that
the correlation between the level of income and the level and structure of
consumption is not direct.
In 2008, in comparison with 1992, monthly expenditures of house-
holds increased 1.7 times, and in comparison with 1998 when the
consumption abilities of households were minimal, 2.4 times (Table
30.1). This increase was observed in the expenditures for food and
non-food products, but their increases are not at the same levels.
During 1998–2008, the total household expenditure on food increased
1 Householdsor family in this research means people living together and sharing income
and expenses.
Consumption and Lifestyle in Russia 613
Table 30.1. Monthly Household Expenditures (in December 2003 rubles).
Years of data collection

Expenditure
categories 1992 1996 1998 2000 2002 2004 2006 2008
Food expenditures
Milk products 404 374 257 264 328 330 389 451
Meat, fish, poultry 1,341 1,135 752 793 1,007 1,025 1,179 1,373
Potatoes 175 136 39 170 150 109 157 90
Bread 642 732 440 463 386 420 326 398
Fruits, vegetables 656 396 196 256 323 350 400 474
Other food products 1,712 870 754 752 764 757 789 887
Eating out 280 321 212 290 427 486 572 674
Home-made products 585 679 804 687 591 493 454 521
Alcohol 324 195 125 135 150 146 164 162
Total expenditure 6,119 4,838 3,582 3,810 4,127 4,116 4,431 5,030
Non-food expenditures
Tobacco products 172 137 128 108 128 135 139 156
Clothes 920 748 680 790 856 791 1,065 1,176
Fuel, gas 119 266 163 275 305 351 440 533
Electronic goods and 478 777 535 790 693 1,311 1,751 2,393
other durable goods
Services and leisure 150 1,175 726 1,079 1,276 1,402 1,950 2,456
Education, loan, 403 191 209 117 284 367 834 1,685
insurance
Dwelling cost, utility 125 338 275 303 492 581 861 1,075
services
Shares, bonds 57 11 2 1 0 0 23 0
Other goods (soap, toys, 546 — — 138 227 252 305 355
newspapers, etc.)
Savings 186 251 192 309 413 305 571 689
Total expenditure 3,155 3,894 2,910 3,909 4,675 5,496 7,938 10,519
Total food and non-food 9,274 8,732 6,491 7,719 8,802 9,612 12,369 15,550
expenditures
Note: Since December 1994, category Fuel includes petrol, gas cylinders, and wood.
During the previous surveys, wood and gas cylinders were part of utility services cat-
egory. The surveys of the years mentioned above show the share of each kind of fuel:
1994: petrol — 49%, wood — 19%, gas cylinders — 32%; 1996: petrol — 56%, wood
— 18%, gas cylinders — 26%; 1998: petrol — 58%, wood — 16%, gas cylinders —
26%; 2000: petrol — 71%, wood — 11%, gas cylinders — 18%; 2002: petrol — 72%,
wood — 11%, gas cylinders — 17%; 2003: petrol — 71%, wood — 13%, gas cylinders
— 16%; 2004: petrol — 73%, wood — 13%, gas cylinders — 13%; 2005: petrol — 73%,
wood — 14%, gas cylinders — 13%; 2006: petrol — 75%, wood — 12%, gas cylinders
— 12%; 2007: petrol — 77%, wood — 12%, gas cylinders — 11%; 2008: petrol — 83%,
wood — 10%, gas cylinders — 7%.
Source: Russia Longitudinal Monitoring Survey, RLMS-HSE, conducted by HSE
and ZAO “Demoscope” together with Carolina Population Center, University of
North Carolina at Chapel Hill and the Institute of Sociology RAS. (RLMS-HSE
sites: http://www.cpc.unc.edu/projects/rlms, http://www.hse.ru/org/hse/rlms) This
is also the source for all other tables and figures in this chapter.
by almost 40%. Even after such considerable changes, they were less than
in 1992 at 17.8%, however, higher than the level of 1996. As for the total
expenditure on non-food products, they increased 3.6 times.
Before 1998, the expenditure on certain types of food were constantly
decreasing. Only homemade products were the exception, where opposite
tendency was observed. Later on, a brighter picture emerged. At the same
time when the expenditure on milk and meat products, poultry and fish,
fruit and vegetables were constantly increasing, the expenditure toward
homemade products was decreasing, and the expenditure potatoes, bread,
alcohol and many others fluctuated.
The non-food expenditure was increasing unevenly during 1998–2008
(in real value). Thus, education fee, insurance, loan fee increased eight
times, the expenditure on electronic goods and other durable goods by 4.5
times, dwelling cost and utility services by 3.9 times, different services and
leisure by 3.4 times. The savings of Russian families increased more than
three times for 10 years. Against this backdrop, the expenditure increase
on clothes (1.7 times), fuel (1.7 times), tobacco expenses (1.2 times) do not
appear very impressive.
We should pay particular attention to the changes in the expendi-
ture structure, corresponding to socio-economic changes happening in the
country. From 1992 to 2008, food expenditure share was cut off from
72.6% to 45%, but the non-food expenditure share grew up from 27.4%
to 55% (Fig. 30.1). Despite these fundamental changes, the average food
expenditure share remained rather high in Russia, much higher than that
in developed countries. In the USA, Britain, Sweden, Germany and other
Western European countries, the average share of the food expenditure
fluctuates within 6%–15%. The Russian households’ food expenditure share
80 72.6 72.2 69.8 67.4 67.4

70 62.4
58.2
56.1 54.1 55
60 53.9 51.1 53.2 52.5
50
40
46.1 45.9 48.9 46.8 47.5 45
30 43.9
41.8
37.6
20 32.6 32.6 Food
27.4 27.8 30.2
10 Non-Food goods
0
1992 1994 1995 1996 1998 2000 2001 2002 2003 2004 2005 2006 2007 2008
Fig. 30.1. Structure of expenditures: food and non-food products (%).

turned to be even higher than that in some other countries (Mexico, Turkey,
etc.).
Low income of a part of the citizens, the forced increase in their expen-
ditures on non-food products, accommodation fee and utility services, and
decrease in food expenditure caused the deterioration in the eating struc-
ture of certain part of Russian families, which has negative consequences
for the health of poor population. The greatest burden associated with
procuring food is observed among the pensioners (singles or couples), while
the lowest — among married couples with children under 18 years old (the
share on food is 53% and 34.4% respectively).
Following lifestyle expenditure patterns were observed during the
reporting period from 1992 to 2008: Dining or eating out expenditure
increased from 3.1% to 3.9%, expenditure on alcohol decreased from 3.1%
to 1.2% while durable goods expenditure rose from 2.3% to 6.2%, expendi-
ture on services and leisure increased from 1.5% to 12.8%, and dwelling cost
and utility services increased from 1.5% to 11.3% during the same reporting
period.
Table 30.2 shows the monthly expenditure of households, ranked by per
capita expenditure quintile for 2008, which indicates huge inequality in the
consumption abilities of different families. The analysis of the data reveals
an important tendency indicative of the stable decrease in the monthly food
expenditure. In 2008, the food expenditure was about 54% of the household
budget of the poorest quintile and only 20% of the household budget of the
richest quintile. Generally, in 2008, the households of the upper quintile
spent 3.4 times more on food per month than the households of the lower
quintile did.
There is also a considerable difference in the differentiation of monthly
expenses between the quintile groups regarding other expenditures. Thus,
the difference in the monthly expenditures on milk products as well as meat
and fish between the upper and lower was 3.7 times; for potatoes about five
times; for vegetables and fruits about 5.7 times; and eating out about 8.8
times.
There is a considerable difference between the upper and lower quintiles
for non-food expenditure, which reached 16 times in 2008. The biggest
inequality is on the electronic goods and other durable goods. In 2008,
the richest households spent almost one fourth of their budget on durable
goods, while the poorest spent about 2%. The consumption activity of
the poorest is mainly limited in buying products immediate consumption.
The richest group dominates completely in volume of savings as well. The
Table 30.2. Monthly Household Expenditures by Quintiles Based on Per Capita Expen-
ditures for the year 2008 (in December 2003 rubles).
Per capita expenditure quintiles

Expenditure
categories Lower 20% 21–40% 41–60% 61–80% Upper 20%
Food expenditures
Milk products 194 353 481 538 692
Meat, poultry, fish 615 991 1,362 1,610 2,288
Potatoes 31 53 85 127 154
Bread 350 387 397 445 411
Fruit, vegetables 154 307 446 587 874
Other food products 432 666 934 1,136 1,270
Eating out 166 346 557 838 1,466
Home-made products 351 457 578 686 531
Alcohol 50 70 129 214 351
Total expenditure on 2,343 3,630 4,970 6,180 8,036
food
Tobacco products 89 134 137 194 226
Clothes 329 621 1,006 1,340 2,589
Fuel, gas 113 305 433 650 1,167
Electronic goods, 93 232 668 1,354 9,640
durable goods
Services and leisure 442 778 1,324 1,934 7,819
Education fee, loan, 130 422 720 1,718 5,448
insurance fee
Dwelling cost, utility 575 905 1,105 1,220 1,573
services
Other goods (soap, 162 248 328 379 661
toys, newspapers,
etc.)
Savings 44 162 366 638 2,239
Total expenditure on 1,976 3,809 6,088 9,428 31,361
non-food
Total food and 4,320 7,439 11,057 15,608 39,397
non-food
expenditures
amount of savings of households in the upper and the lower quintiles in

absolute term differ more than 50 times. There are about 6% of savings in
the richest households’ budget, while the poorest saved about 1% of their
budget. There is a huge difference, reaching almost 40 times in education,
loan, and insurance fee.
Rich families have the resources to organize good holidays and pay
for expensive services. In 2008, they spent almost 18 times more than the
poorest 20% of the households on services and leisure. In general, services
and leisure expenditures were about 20% of the richest households’ budget,
which is twice more than the corresponding part of the poorest families’
budget. It should be mentioned, among other differences, that the difference
between the households of the upper and the lower quintiles for monthly
expenses on fuel and gas in 2008 made up about 10 times, clothes more
than eight times and tobacco products by approximately 2.5 times.
Dwelling cost and utility services constitute the main part of the budget
of poor and indigent families. In 2008, these expenses were more than 13% of
the households’ budget of the lower quintile and less than 5% of the upper
quintile households’ budget. In 2000, these indices were much lower —
7.1% and 2.6%, respectively. At the same time, in absolute terms, the rich
households’ expenditures on dwelling and utility services in recent years
have been about three times more than the corresponding expenditures of
poor families.
Hence, the transitional period conditions caused the difficult situation
of some groups of the population and the reduction of personal consump-
tion levels. One of the features of the transitional period was intensification
of the expenditure differentiation, gap deepening in the consumption stan-
dards between poor and rich social layers. This tendency became apparent
in the intensive gap in non-food expenditure not only between the rich and
the poorest households but also between the rich and the rest of Russian
families. In 2008, the upper quintile households’ expenditure exceeded the
expenditure of the preceding fourth quintile by 2.5 times. At the same time
the difference in non-food expenditure reached 3.3 times. The inflation and
the considerable differentiation in price growth of different products and
services, the dynamics of the real income of different kinds of households,
rise in cost of dwelling and utility and transport services, rise in expenses
on education and medical service, have been the main factors of changes in
consumption structure in recent years.
The income, occupation, credit resources differentiate the consumption
abilities of households, but the inter-relation of the income with the level
and structure of the consumption expenditure is still rather moderate. As it
is shown in the correlation analysis, consumption is dependent upon gender
and age of the family members, occupation/profession, location and many
other factors.
Forming consumption strategies, families often concentrate on the
desired levels of consumption and the definite life standards they would
like to acquire. That is why, depending on the type and phase of a life
Table 30.3. Income, Expenditures and Savings of Households in 2008. (in December 2003
rubles).
Total income and Average income and Average savings

expenditures of expenditures per household and
a household (per capita) per capita
Per
Type of house- Per
a family Income Expenditures Income Expenditures hold capita
Singles and 11,066,6 13,292,1 7,489,8 9,004,4 896,6 601,4

couples —
(non-
pensioners)
Couples with a 24,380,5 23,546,6 7,052,1 7,052,0 568,3 175,9
child or
children
younger
than 18
Couples with a 20,267,3 18,953,5 5,974,3 5,615,6 1,032,9 304,7
child or
children older
than 18
Family consisted 17,277,9 14,772,9 7,192,1 6,054,3 778,2 316,7
of adults
(second
generations
couples) —
pensioners,
non-pensioners
Extended 27,975,2 26,469,9 5,625,2 5,280,6 910,4 160,9
families with
children
One-parent 12,778,0 13,869,4 4,772,8 4,972,2 612,9 173,1
family with
children and
other adults
Singles and 7,069,4 6,754,5 5,143,5 5,113,0 382,6 273,1
couples
(pensioners)
cycle, there might be a stable gap, positive or negative, between the cur-
rent income and expenditure. Thus, the expense exceeding the income is
observed in the case of young single respondents and couples, as well as
one-parent families with children, who prefer living in debt for some time
or using savings (Table 30.3).2 Young families, one-parent families with

children and pensioners save up less than those families where there are
many adults such as couples with adult children, extended families with
children, families consisting of adults but not pensioners. The noteworthy
thing is that singles and couples-non-pensioners are more likely to get into
the upper expenditure quintiles, while the singles and couples-pensioners
to the lower ones.
It is the family’s potential, on how it manages the income defines the
family’s of life and quality lifestyle. At the same time, consumption depends
not only on the family income, but other factors, including the increasing
number of household appliances, dwelling conditions, and value orienta-
tions. Modern dwelling reflects the achievements of scientific and technical
progress. In recent times, Russian families possess modern household appli-
ances and gadgets. Rise in consumption activities have been accompanied
by changes in people’s preferences. The desire to have a particular model
of car or household appliances is getting more real for many families.
In the last two decades, the increasing investment on durable Rus-
sian households has been characterized as a positive tendency (Table 30.4).
Households have progressed to goods in better durable goods. Thus, from
1992 to 2008, the fraction posses of households owning cars has been dou-
bled. As a result, there are one third of families owning cars since some of
them own even two or more. In 2008, 23.3% of the families owned Russian
cars and 11.4% owned foreign cars.
More and more Russian citizens can be called private owners, as they
own their apartments, dacha, cottages, land and so on. In 2008, 88.7% of the
families lived in privatized dwellings. There was some reduction of dacha
owners since 2000, due to that the former dachas were transformed into
more comfortable country houses. The analysis does not reveal how owning
a dacha is related to what they earn, but the well-off families reduced
evidently.
Today, almost every Russian family has a color TV-set. The number of
households owning video-recorders is reducing gradually, while the number
of people with modern gadgets for cultural purposes is increasing. From
2005 to 2008, the fraction of households owning DVD-recorders and DVD-
players rose from 16.6% to 44%; those who owned microwave ovens rose
from 19.5% to 43.8%. Despite the fact that Russian households have such
2 The problem of overspending in different countries is revealed in the following: Charles

et al. (2006), Brewer et al. (2006), etc.
March 5, 2013
16:48
620
9in x 6in
Table 30.4. The Percentage of Owners of Different Durable Goods at the Time of the Survey.

Years of survey
Durable goods 1992 1994 1995 1996 1998 2000 2001 2002 2003 2004 2005 2006 2007 2008
Black and white TV-set 53.7 53.5 48.9 43.4 34.5 29.8 24.4 21.5 18.2 13.4 10.1 — — —
Color TV-set 54.6 61.9 64.8 67.6 73.5 75.9 79.3 82.9 84.4 87.8 90.6 92.7 95.0 96.4
Video-recorder 3.1 13.3 18.8 24.7 32.2 33.4 36.3 38.8 40.5 42.6 42.2 41.8 40.3 35.2
DVD-recorder — — — — — — — — — — 16.6 29.8 39.3 44.0
Computer — — — — 4.0 4.1 6.3 8.2 11.0 16.1 20.6 26.7 32.2 38.2
Car, lorry 16.5 21.4 22.4 22.5 24.8 26.3 26.8 28.6 26.9 27.8 28.5 29.6 32.1 34.5
Refrigerator 93.0 92.9 93.7 92.8 92.4 93.3 93.0 94.4 94.2 94.6 95.4 — — —
Refrigerator (frost-free) — — — — — — — — — — — 21.6 29.2 35.0
Washing machine 76.6 79.3 80.0 78.4 78.5 79.1 78.0 78.9 80.1 80.4 82.4 — — —
Automatic washing machine — — — — — — — — — — — 39.7 46.2 53.0
Microwave oven — — — — — — — — — — 19.5 28.8 36.4 43.8
Digital camera — — — — — — — — — — — 9.0 13.6 19.7
Dacha∗ 17.8 29.7 29.4 30.8 30.9 30.4 28.9 28.8 27.3 27.1 25.3 25.3 23.7 24.4
Note: ∗ Dacha means a cottage or a house with a garden in the country, owning a dacha is taken into consideration only for urban
households.
b1344-ch30
standard consumption sets as a refrigerator and washing machine at the

same level as Western-European countries, other new modern gadgets are
still not affordable by many. But this gap is reducing fast. From 2006 to
2008, the number of the households owning modern frost-free refrigerators
increased from 21.6 to 35%, and automatic washing machines rose from
39.7 to 53%.
Big lifestyle changes are connected with purchasing and using of per-
sonal computers and other hi-tech gadgets, which has changed the process
of communication radically. More Russian families have bought computer.
In 1998–2000, about 4% of households owned a personal computer (PC),
while in 2008 the number grew up to 38.2%. In 2000, about one third of
respondents informed using PC during the previous 12 months, in 2008,
more than a half reported using the PC. During that period, the number of
urban residents using PC for work or studies increased from 22.3% to 31.4%.
The dynamics of using PC among the employed was similar. The number of
users among women and men is approximately the same, but women (42%),
more often than men (36%) use PC for working purposes. Older people use
computers less, whereas the educated younger people are using the PCs
more. The number of internet users is constantly increasing. The number
of the Internet users, among the respondents of the monitoring, increased
three times in six years: from 12% in 2003 to 33% in 2008. The consid-
erable dynamics of using the internet for working purposes was observed:
2000 — 6%, 2008 — 17%.
In general, different families are provided with different household
appliances. The level of their durable goods varies with how high the status
of the settlement is and consequently how big it is. The most expensive
provision is noted in regional centers, and the least in the countryside. The
lawmakers, senior officials and managers, followed by high and middle qual-
ified specialists, take up the leading position in all durable goods provision
indices while the office clerks and service workers’ families are at the level
quite comparable with that of the qualified industrial workers. It should
be mentioned that on average the office workers more often buy comput-
ers than the industrial workers (59% vs. 49%), digital cameras (38.5% vs.
25%), foreign cars (20.7% vs. 13.6%), while the industrial workers more
often buy cars for domestic. The qualified farmers and unqualified workers
least possess any durable goods.
Different types of the families possess durable goods in an unevenly

manner. The highest level of provision of durable goods is observed in cou-
ples with children under 18 years old and in extended families with chil-
dren, the lowest in young families and couples–pensioners. Thus, among
households consisting of pensioners, 11.4% own a vehicle domestically pro-
duced and 2.8% own an imported car; 2.5% own digital cameras; 7.6%
own personal computers, 23.2% own microwave ovens; 23.9% own frost-free
refrigerators; and 34.1% own automatic washing machines. Besides, the
peculiarities of consumption behavior relating to durable goods are defined
by the levels of education and some other socio-demographic factors, and
the local environment and culture.
Common and Specific Consumption

and Lifestyle of Urban and Rural Population
In the beginning of the 21st century, the rising consumption followed by an
increase in incomes and expenses was observed both in the cities and the
countryside. However, the consumption practices in the cities and coun-
tryside had many differences, which had been caused by reforms in some
sectors of the economy, the peculiarities of socio-economic development of
the regions, and the characteristics of the urban and rural communities.
In spite of the similarity of evaluation of the material side of their life,
there are considerable in financial condition differences between the urban
and rural population. In 2008, the average income per person in the city
exceeded that in the rural by 1.8 times. At the same time, the income of
a city household was almost 80% more than the income of the country
household. The country pension was just about 85% of the city pension.
In 2008, the monthly expenditure of a city household was 1.4 times
higher than a country household (Fig. 30.2), whereas their total expendi-
tures on food were approximately the same. While the rural households
lagged behind the city households in the consumption of milk products,
meat, fish and poultry, fruit and vegetables, they were compensated by a
higher amount of consumption on homemade products and other food prod-
ucts (Table 30.5). Though high expenditure on bread in the countryside in
comparison with the city needs special attention (almost 1.4 times).
The differences on food expenditure between the urban and rural pop-
ulation are mostly decided by whether they have farms or not. In recent
years, for a big part of the population it is not necessary to increase the
production on vegetable, fruit and other rural products on their farms for
20000 17931
18000
14749
16000 14092
12880
14000
12000 10315 9606 10670 10699 10537
9299 9158
10000 8290
11965
8000 6989 10354
6000 9125 9548
8334
4000 7693 7330 7457 7186 City
6286 7013 6928
2000 5624 Village
0
1994 1995 1996 1998 2000 2001 2002 2003 2004 2005 2006 2007 2008
Fig. 30.2. Total expenditures of urban and rural households.

(rubles in December 2003)
their personal (family) needs to compensate the lack of income. There is

also no need to increase production for the city population. It is obvious
that farm products can be used both for personal consumption and for sale,
but the basic motivation today is to provide oneset and the family with all
necessary things. This motivation dominates in the urban people who own
a dacha with a garden or piece of land, and in a way have motivated the
rural people too.
However, farming for the urban people is not a very important life
support. The majority of the city people do not consider their land which
is usually six hundred m2 , as a source of income or the main resource of
food products for their families. But at least raising vegetables and fruit
for personal consumption allows the urban people to have more balanced
food and save some money. But for small towns and villages self-provision
with food is still a very important part of life.
The situation in the rural is absolutely different from the city. For the
rural people, a farm is often the most important source of survival. During
the economic crisis in recent years, the rural people were ousted from the
non-farm employment and took upon farming as their livelihood. Thus,
many rural families opted for natural farming. Now, even after retirement,
they consider private farming as one of the main sources of living support.
But the role of private farming should not be overestimated. Its efficiency
is rather low as it requires a lot of investments (many rural people do not
have any savings in cash), energy and time, which are not always worth
spending. That is why private farming cannot compensate for the lack of
financial means from the common main sources like wages.
March 5, 2013
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624
9in x 6in
Table 30.5. Monthly Expenditures of the City and Country Households by Quintiles Based on Per Capita Expenditures in 2008 (rubles
in December 2003).

Lower 20% 21–40% 41–60% 61–80% Upper 20% Total
Expenditure
categories City Country City Country City Country City Country City Country City Country
Food expenditures
Milk products 253 124 411 225 527 255 606 341 751 479 527 251
Meat, poultry, fish 674 532 1,079 851 1,434 1,102 1,704 1,362 2,244 1,629 1,480 983
Potatoes 48 9 58 42 87 56 129 212 149 116 98 74
Bread 310 431 351 494 364 553 381 562 386 514 361 499
Vegetables, fruit 174 122 350 221 472 359 635 458 921 556 535 298
Other food products 408 486 627 812 844 1,245 1,014 1,271 1,245 1,475 857 948
Eating out 166 168 356 296 565 522 817 609 1488 350 720 357
Homemade products 120 751 173 1,227 250 1,666 280 1,700 260 1,914 222 1,323
Alcohol 53 52 73 62 148 93 237 190 341 388 180 128
Total expenditure on 2,206 2,676 3,478 4,231 4,689 5,851 5,803 6,706 7,783 7,422 4,980 4,863
food
(Continued )
b1344-ch30
March 5, 2013
16:48
9in x 6in

Lower 20% 21–40% 41–60% 61–80% Upper 20% Total

Expenditure

categories City Country City Country City Country City Country City Country City Country
Tobacco products 83 96 123 157 145 123 196 175 261 131 167 133
Clothes 310 354 563 833 963 1,066 1,407 1,096 2,501 1,518 1,219 856
Fuel, gas 81 201 181 577 289 838 508 1,233 1,068 1,664 456 758
Electronic goods, durable 98 87 177 418 563 1,147 1,236 1,518 9,976 9,076 2,683 1,711
goods
Services and leisure 473 435 857 706 1,409 937 2,114 1,395 7,709 4,920 2,722 1,309
Education insurance 114 113 293 784 735 766 1,792 1,605 6,425 3,361 2,054 1,044
Dwelling cost, utility 841 305 1,101 540 1,241 535 1,422 640 1,799 924 1,312 533
services
Other goods (soap, toys, 167 165 258 240 335 305 396 313 717 360 392 256
newspapers, etc.)
Savings 43 89 154 179 346 427 601 845 2,242 1,702 741 502
Total expenditure on 2,212 1,844 3,707 4,434 6,026 6,142 9,673 8,820 32,698 23,656 11,747 7,101
non-food
Total food and non-food 4,418 4,520 7,185 8,665 10,715 11,993 15,475 15,526 40,481 31,078 16,727 11,965
expenditures
625
b1344-ch30
There are great differences, up to 1.7 times, between the urban and
rural families in non-food expenditure. In 2008, the urban households spent
2.6 times more than the rural families on services and leisure activities,
and twice more on education, loan and insurance payments. The reason
for this difference could be attributed to the limited abilities of the rural
people in securing education, medical and everyday services. Besides, the
urban residents spend almost 1.7 times more on electronic and other durable
goods, 1.4 times on clothes. But at the same time, their dwelling cost and
utility services expenses are much higher (almost 2.5 times).
In 2008, with better incomes, the urban residents spent less for food
than the rural people (42.1% vs. 51.3%). The situation was similar in the
previous years (for example, 2003–2007). From the point of lifestyle changes,
the increase of eating out should be mentioned, which is closely connected
with a rapid development of the fast-food industry. Such developments take
place faster in the cities. In 2008, the urban households spent 4.1% of their
budget in eating out, while the rural spent only 2.8%. It is significant that
on average the city households spent much more than the rural households
on the dwelling until and utility services (13.6% vs. 6.2%), services and
leisure (13.7% vs. 9.6%), fuel (6.4% vs. 2.2%).
The analysis of the monthly expenses of the households per person
in quintiles reveals an interesting fact that the urban residents’ spending
expenses exceed the rural residents only in the upper quintile. There is
a similarity relating to food expenses. Concerning non-food expenses, the
urban residents dominate not only in the upper quintile but the fourth and
the lower quintiles.
The urban families, having the most costly lifestyle (upper quintile),
differ from the same level of rural families by spending more on milk, meat,
poultry and fish, eating out, services and leisure, education, loan, insurance,
dwelling cost and utility services. The rural families in the upper quintile
spend more on bread, alcohol, other food products and fuel. They absolutely
dominate over the urban families in homemade products and spend a little
less for electronic goods and durable goods.
The monitoring data confirms that many durable goods of cultural
and everyday use became an important part of life for the majority of both
only urban the the rural residents. The traditional durable goods (TV-set,
washing machine, refrigerator) in urban and rural household donot differ
much. It even relates to such regions as Republic Altay where the fraction of
the rural population reaches 45%. However, as regards the hi-tech gadgets,
the rural possess population less than the city population (Table 30.6).
March 5, 2013
16:48
9in x 6in
Table 30.6. The Percentage of the Owners of Different Durable Goods in the City and Country at the Time of Survey.
Years of the survey

1994 1996 2000 2002 2004 2006 2008
Durable

goods City Country City Country City Country City Country City Country City Country City Country

Black and 49.2 67.1 38.4 56.6 26.3 39.4 18.4 30.0 10.5 21.0 — — — —
white TV-set
Color TV-set 69.8 37.5 76.5 44.0 82.3 58.5 87.9 67.9 92.2 75.0 94.6 86.1 97.0 94.7
Video-recorder 15.4 6.7 28.5 14.5 37.3 21.1 42.2 25.8 46.2 30.5 — — — —
DVD-recorder — — — — — — — — — — 32.0 23.5 45.2 40.4
Computer — — — — — — 10.2 1.6 19.8 4.3 30.3 11.1 43.7 18.7
Car, lorry 22.3 18.6 23.7 19.5 26.0 25.7 27.3 28.8 26.9 28.2 27.9 29.0 33.8 33.9
Refrigerator 95.7 84.1 96.1 84.3 96.4 84.8 97.2 85.8 97.3 86.8 — — — —
Refrigerator — — — — — — — — — — 22.9 13.7 37.4 25.2
(frost-free)
Washing 79.9 77.3 79.9 74.7 80.7 74.8 79.8 75.1 81.8 75.8 — — — —
machine
Automatic — — — — — — — — — — 46.1 15.1 60.5 28.0
washing
machine
Microwave — — — — — — — — — — 33.1 16.4 48.4 30.3
oven
Digital camera — — — — — — — — — — 11.1 3.1 23.6 8.1
627
b1344-ch30
In particular, there are 2.3 times less rural households owning personal
computers (18.7% to 43.7% among city dwellers). There is a great contrast
between the urban and the rural in using computers: About two-thirds of
urban residents and only one-third of the rural residents use PC actively
(active PC users, while PC for work purposes — 44% are city dwellers and
only 25% are rural dwellers).
The number of the families in the rural owning frost-free refrigerators,
automatic washing machines, digital cameras is considerably low. If people
living in the city more often own an imported vehicle (12.8% vs. 7.2%),
most people in the rural areas own domestically produced Russian cars
(27.5% vs. 21.9%).
The urban residents yearn to buy the most advanced, therefore the
most expensive and high quality models of goods for cultural and every-
day use. In this case the prestige embodied in the goods is an important
element of consumption preferences. The desire to have a prestigious car,
refrigerator or mobile telephone is more typical for urban residents than
the rural ones. That explains the fact that the rural families use only those
goods that are absolutely essential (Table 30.7). The comparative analysis of
the median values indicates that frost-free refrigerators, automatic washing
machines, microwave ovens, video-recorders and DVD-players, computers
Table 30.7. The Age of Durable Goods in the City and in the Country, 2008.
Total Urban Rural

Durable goods Average Median Average Median Average Median
Color TV-set 6.4 5.0 6.5 5.0 6.1 5.0

Video-reorder 7.4 7.0 7.4 7.0 7.1 6.0
DVD-recorder, 2.7 2.0 2.7 3.0 2.6 2.0
DVD-player
Computer 3.2 3.0 3.3 3.0 2.7 2.0
Russian car 10.0 8.0 9.8 8.0 10.5 9.0
Foreign car 5.5 3.0 5.0 3.0 7.8 4.0
Lorry 10.0 9.5 9.7 9.0 10.4 10.0
Tractor 14.3 14.5 11.0 10.0 15.3 15.0
Motorcycle, scooter, 14.3 16.0 13.1 14.0 15.6 17.0
motorboat
Refrigerator 5.0 4.0 5.2 4.0 4.1 3.0
(frost-free)
Freezer 8.6 7.0 9.5 8.0 5.9 4.5
Automatic washing 4.2 3.0 4.7 4.0 2.7 2.0
machine
Microwave oven 3.2 3.0 3.4 3.0 2.4 2.0
Digital camera 1.8 2.0 1.8 2.0 1.7 2.0
were purchased by the city households averagly one year before the rural
families did. These tendencies are not valid in the case of vehicles, motor-
cycles, scooters and other expensive transport, which the city dwellers can
afford to buy more often. The formation of convergence trends in the mod-
els of consumer behaviors of urban and rural population is restricted by
limited resoures of the rural population.
Generally, the city households are better equiped with durable goods
than the rural households. The profound differences in the level of living
and conditions of life between urban and rural areas overlapping the sys-
tem of an inter-regional and intra-regional differentiation create a mosaic
picture of the quality of life of the population. While in some rural areas
the development of a modernized lifestyle is observed, in others the typical
features for the passing epoch are dominating or gradually drifting to the
social and cultural marginality. If in some areas the villages are enlarged
and enhanced by the process of catching up with lifestyle the urban, villages
are degrading and disappearing. At the same time the growing desire of a
great number of the people to acquire new models of materials stimulates
the new lifestyle.
The ability to aquire durable goods in a family depends on their income
and living conditions. The quality of dwelling directly influences the strat-
egy of their consumption. In this context, it should be mentioned that there
are huge differences in utilities used: between the urban and rural house-
holds (Table 30.8). The city families, who made their living conditions bet-
ter or those who are confident to do it soon, show the highest consumption
activity.
The urban dwellers have better abilities for consumption of expen-
sive durable goods and services than the rural dwellers (Table 30.9). In
particular, there are more urban families who can afford extra classes,
Table 30.8. Urban Rural Utilities in the Rural and

Households, 2008 (in %).
Type of
utility Total City Country
Central heating 70.8 87.8 20.6

Central water supply 84.6 94.8 54.6
Hot water supply 63.7 79.6 17.0
Central sewage 71.1 87.6 22.3
Telephone 64.4 74.1 36.1
Central gas supply 67.2 73.9 47.4
Electronic cooker 18.9 21.6 10.9
Table 30.9. Estimation of Affordability of Durable Goods and Services (%).
Possibilities All respondents City Country
Pay for extra classes of their children 51.5 57.4 36.0

(music, sport, etc.)
Pay for high school education 36.2 39.8 27.3
Save up for serious purchase (car, 13.8 14.9 11.0
summer cottage, etc.)
Living conditions improvements (buy an 5.8 6.0 5.2
apartment, room, house)
Family vacation abroad 7.2 9.2 1.6
sports, high school education for their children and save up for such expen-
sive purchases as a vehicle and dacha. The urban families can also afford
traveling abroad. But they have the same difficulties, as the rural families
in solving housing pattern. The lawmakers, high-rank officials, managers
living in the city have better consumption abilities than the others. 38.6%
of them save for big purchase; 29.1% save for traveling abroad; 19.7% save
for improving their living conditions. The specialists with college and high
school education are following them with a big gap (accordingly 23%, 16.6%,
and 8.3%). The qualified industrial workers take the third place: 22% can
save up for purchases big; 8.1% are able to improve their living conditions;
whereas 7.4% save for a vacation abroad.
Analyzing the data given in Table 30.9, it should be noted that the
real inequality of purchasing abilities of the urban and rural population is
serious. It is due to that the respondents’ answers leave out the differences
in value orientations, interests, needs and pretensions. The urban and rural
dwellers often estimate their consumption abilities from different positions.
For the rural dwellers, the improvement of living conditions means building
or buying a country house; to an urban dweller it would means purchasing
an expensive apartment. on average, the urban dwelling cost in Russia is
2.7 times more than in the rural. While the rural dwellers dream about
high school education for their children, richer urban dwellers are sending
their children to the best high schools in Russia, and the richest consider
prestigious foreign universities for their children.
3. Differentiation of Assets and Styles Variety

Provision of durable goods could determine social class or lifestyle a per-
son’s. Often within the same family, the different lifestyles and consumption
patterns can be noticed; this is typical for transformation periods since

1991. As lifestyles are based upon consumption behaviors, the members of
a household can have various lifestyles.
From the aspect of style variety, there is a small group of households
(2.3%) that have no durable products. Their lifestyles can be characterized
as “outdated”, when compared with the consumption pattern of Russians
during the last two decades. Most of such households are in the country-
side, though they are spread in the cities as well. 11.4% of them live below
the poverty line and struggle for survival, while on average, 3.6% Russian
households are considered as poor. It is typical that the average per capita
income in such household is two times less, than in average. Two thirds
of households of the consist of the lonely retired men and women, three-
quarters consist of unemployed people with low level of education. Only
one-tenth has children under 18 years old. Many families live in uncomfort-
able habitation, and do not possess a telephone. For the given groups, the
indicators of provision by central water heating and gas is lower than the
average figures. Most of such families that consist of retired people do not
have either means to purchase and use costly modern products of everyday
and cultural purpose. The families that consist of younger people mainly
live in the hostel dorms. Their everyday life is mostly socialized, and the
lifestyle does not assume modernization.
There is another category of household that can afford only a TV set out
of all durable goods. Their share reaches 16.3% of all researched households.
Such households are presented two times higher in the countryside and
1.5 times higher in the small provincial towns, than in other settlements.
Among them, the fraction of households consisted of elderly single women
and retired persons is two times higher than the sample. This explains the
fact that in such families the share of profit from the salary is lower than
families that do not even have a TV set, but have a higher average per
capita income. Adult members of such households are notable for the low
level of education. The lifestyle with such a diminishing life provision is not
directly connected to poverty, but can characterize stagnant poverty. The
housing conditions of households that only have one TV is slightly better
than those who do not have durable goods, but much worse than other
families.
The peculiarities of lifestyle of all households that own different durable
goods are defined not only by the quantity of goods available in the house-
holds, but also by the number of durable goods. To define the groups
of durable goods that differentiate the households by consumption pat-

terns, the procedure of factor analysis was used (the method of Principal
components, Varimax rotation with Kaiser Normalization), that allowed to
define five factors that unites almost 50% of dispersion. (Table 30.10).
The first group of durable goods, including computer, automatic wash-
ing machine, microwave oven, DVD-recorder or DVD-player, digital camera,
passenger car of foreign production, characterizes a situation that leads to
a lifestyle that can be called “modernized”. Such lifestyle is most inherent
to the modern urban and quite prosperous family.
There is the strongest influence of this factor on differentiation of house-
holds’ equipment with durable goods. If we single out the main body of
households that are forming a corresponding way of consumption, only
4.3% of families have all goods representing the main body of this factor.
This proportion of these households, although not very big, is sufficient to
let us talk about. The majority of such households (more than 60%) live in
regional and republican centers. The high living standard based on the life
style of each household member? Three-quarters of them are composed of
three to four people; that is the sample percentage of families of the same
size in the sample.
Adult members of the families that are related to category of successful
are well educated, and hold high and important posts in business and poli-
tics. They have a tendency to purchase goods that would demonstrate their
Table 30.10. Matrix of Rotated Components.
Goods groups
Durable goods 1 2 3 4 5
Computer 0.757 −0.023 −0.006 0.040 −0.024

Digital camera 0.729 0.072 0.080 −0.026 −0.061
Microwave oven 0.523 −0.079 0.313 0.110 0.045
DVD-player, player 0.464 0.075 −0.070 0.372 0.040
Tractor, mini tractor −0.022 0.708 0.020 0.015 0.123
Lorry 0.064 0.600 0.092 −0.010 0.150
Motorcycle, motor scooter, motor boat −0.032 0.452 −0.124 0.010 −0.182
Separate freezing room −0.124 0.278 0.627 0.071 −0.189
Refrigerator (frost-free) 0.229 −0.093 0.517 −0.107 −0.087
Automatic washing machine 0.439 −0.208 0.480 0.085 0.70
Color TV −0.186 −0.121 0.300 0.751 0.53
Videotape recorder or video player 0.240 0.096 −0.236 0.619 −0.040
Russian car 0.140 0.187 0.099 0.101 0.792
Foreign car 0.401 0.094 0.226 0.127 −0.605
success, i.e., products of high quality, luxurious goods, the new models of
cars and items of cultural and domestic purposes.
While analyzing the households’ durable goods, the households’ con-
sumption pattern depends on family’s age and life cycle was confirmed. For
example, having children in families the differentiates models of durable
goods consumption. Families that have one child or several children under
seven years old make only 6.9% of all households, but 20.3% of these house-
holds possess properties for modernized lifestyle. As for the families with
children from 7 to 18 years old, 7.9%, their share in the sample is of such
households but the assets under consideration are 18%. 70% of the house-
holds under study are mixed families consisting of working family members
and children. The above level of durable goods than typical in the sample
families with children (availability is 22.6% extended is twice more for that
in of them). These families that are more interested in purchasing new goods
are also the most active buyers of washing- and dishwashing machines, fur-
niture, computers, musical instruments and other goods of domestic and
cultural purposes.
The second group of durable goods3 consists of lorries, tractors or mini
tractors, motorcycles, motor scooters or motor boats, i.e., transport and
technical devices that are associated with rural lifestyle. Households of
prosperous village dwellers, farmers or businessmen who have business in
a village are among those who possess such goods. This group is not huge
(only 2% of families have a lorry and 2.3% have a tractor or a mini tractor);
but it is quite stable as we can see by the dynamic data of Russia Longitudi-
nal Monitoring Survey (RLMS-HSE). It is interesting that not only village
families have tractors or mini tractor, but also some town-dwelling families
also have one. We are talking, first of all, about families who live in small
provincial towns, have some plans and are practicing home production.
Among the goods in the third group, we can mention separate freezers,
microwave ovens, automatic washing machines, frost-free refrigerators, i.e.,
goods comprising traditional items that almost a third of Russian house-
holds possess. Such a set of household goods can be a basis for forming
two lifestyles. One of them is typical for a quite prosperous part of pen-
sioner families. These families whose material well-being is made of transfer
payments have different goods that ease household work, but at the same
3 The second factor accounts for 9.6% of the variance, the third — almost 8%, the
fourth — 7.6%, the fifth — almost 7.3%.
time they do not have the modern goods, such as computers, digital cam-
eras, DVD-players etc. Households that have relatively high level of aver-
age income per person adapt a slightly different style that combines both
domestic and technological orientation. In these households most families
have children under 18, along with the basic household goods, such as com-
puters and digital cameras. These families are characterized by a lifestyle
of simplicity, pragmatism and thirft. The members of such families belong
to different age groups and have quite high level of education.
The fourth group of durable goods that consists of color TVs, DVD-
players, videotape recorders proves that the owners of such goods prefer
“unpretentious leisure” to other kinds of cultural leisure. The tendency to
purchase such goods conforms to the availability of spare/leisure time. The
availability of leisure time prompts the families to secure goods that can
be utilized for their entertainment. These goods can be found in one-fifth
of households — almost 20% of them live in villages where conditions for
satisfaction of cultural needs and sports are limited and their home is the
primary sphere of spending their spare time. The considerable majority
of such households represent extended mononuclear families with children
under 18, who are the main users of the technical goods under study.
The fifth group of durable goods is the domestically produced cars and
purchasing such cars is directly connected with the lifestyle of more than
23 of the households. Among them we can see married couple-pensioners,
married couples with one little child and also extended families with adult
children. The average income per person in such households is the highest
in regional centers and cities, whereas in small towns and villages it is the
smallest. Households in the city and in the village have almost no differ-
ence in the income allotment that is formed at the expense of transfers and
salaries. This may indicate the formation of a specific lifestyle associated
with the presence of the domestic car when a certain type of employment
and wages can afford the purchase of a car of good brand. In this group,
we can see a small correlation with the availability of lorry and tractor
or a mini tractor, that can prove that domestically produced car is not
an item of prestige, or demonstration of one’s standard of living, but is
just of organizing household life under the conditions of Russian’s speci-
ficity which lies territories, prevalence of home production of consumption
goods etc.
In general, the forms of participation of families and their members in
consumption are subject to changes, and they can be influenced by differ-
ent factors. Property infrastructure of the family is a regulator of relations,
carrier of definite norms in the sphere of consumption. Peculiarities of con-

sumer behavior are dominated by such factors as the size and structure
of incomes and expenses of the family, its composition and the develop-
ment cycle, the range of the availability of durable goods, the character
of demands, consumer preferences and evaluation of consumption oppor-
tunities, traditions and habits, place of living, socio-demographic charac-
teristics of family members. The analysis of the character of consumption
organization in the family, the study of structure, the level and dynamics
of consumption enables us define different types of family from the point of
variety of lifestyles.

31
The New Emerging Consumption
Class and Their Lifestyles
K. L. Sharma
Interlinking Consumption, Lifestyles, and Stratification

There are three distinct approaches to the study of consumption, lifestyles,
and social stratification. They are: (1) the Marxist, (2) the Weberian, and
(3) the Veblenian. According to the Marxian approach, consumption implies
basically two large categories: (1) productive consumption, and (2) unpro-
ductive consumption. The first is essential for human existence. The sec-
ond comprises consumption of consumer goods, particularly by the ruling
class, and the non-productive sectors of the state (Bottomore, 1983: 92–93).
Further, consumption has both a physiological and a historical dimension,
and these are tied to the “system of human needs”. The historically deter-
mined needs originate from new developments of the productive forces and
a changed relationship of forces between social classes. Marx realizes “popu-
larization” of consumer goods and services by the bourgeoisie. The capital-
ist system of production manipulates the consumer. In turn, the consumer
determines the pattern of production. Anything produced, beyond basic
human needs, becomes selective and humanly creative, depending upon the
preferences and choices of the selected people who can afford the high cost of
the consumer goods. Such consumption makes people different and distinct
from the common people or proletariat.
While drawing a clear analytical distinction between economic, social
and political orders or class, status and party, Weber (1970: 180–195) talks
of “social honor” in the context of status groups. Weber states that “status
situation” is a typical component of life determined by a specific, positive
or negative, social estimation of honor. This honor may be related to a class
637
638 K. L. Sharma
situation, but not necessarily always. “Quality” of status is characterized

by a lifestyle. Those who share a distinct style of life constitute a status
circle, a network of “social” intercourse. Differences in the styles of life
may be determined by several factors, including differences in education,
or by legally guaranteed and monopolized claim to sovereign rights or to
income and opportunities for profit. Thus, according to Weber, a “status
group” is a group socialized through its special styles of life, its conventional
and specific notions of honor, and the economic opportunities it legally
monopolizes (ibid.: 300).
In a true sense, a classical conception of “consumption” is given by
Veblen (1899), who draws a distinction between exploit and drudgery. The
employments, which are considered worthy, honorable, noble, etc., are in
the category of the exploit, and those which imply subservience or sub-
mission — those which are unworthy, debasing, ignoble, etc. — are in the
category of drudgery. The concept of dignity, worth, or honor has emanated
from the development of classes and of class distinctions. Veblen traces the
genesis of this idea from primitive formation up to the modern industri-
alization. Predatory instinct, prowess, exploit, wealth, etc., have remained
the basis of “social honor” and distinct status in human society. A vicari-
ous leisure class has evolved distinct from the working class. The division
of labor itself reflects such a distinction today. Vicarious consumption of
goods by such a class is a conspicuous phenomenon. It can be seen in
consumption of food, clothing, dwellings, furniture, and in the domestic
establishment (ibid.).
Veblen writes: “The consumption of luxuries, in the true sense, is a
consumption directed to the comfort of the consumer himself, and is, there-
fore, a mark of the master” (ibid.). “Conspicuous consumption of valuable
goods is a means of reputability to the gentleman of leisure.” With accu-
mulation of wealth, the leisure class develops with differentiation within
the class. “There is a more or less elaborate system of rank and grades.”
A hierarchical gradation of the leisure class emerges. Veblen also refers to
the concept of conspicuous “waste” along with conspicuous “consumption”
and “expenditure”. Even the conspicuous “waste” is supposed to add to
the distinct status which one enjoys based on the conspicuous consumption
and expenditure.
Changes in Consumption and Lifestyles

Pierre Bourdieu (1991: 55–56) talks of “conspicuous consumption” by
training as an apparent technical wastage which fulfils social functions of
The New Emerging Consumption Class and Their Lifestyles 639
legitimation, to a socially guaranteed competence. According to Bourdieu,

tastes in food, culture and presentation are indicators of class because
trends in their consumption seemingly correlate with an individual’s fit in
society. Each fraction of the dominant class develops its own aesthetic crite-
ria. Such a situation has arisen today in Indian society, particularly among
the top rich and the upper middle class people. A space of lifestyles is evi-
dent in different fields: politicians, professionals, urban and rural middle
classes also favor consumerism. Guha (2008: 588–589) observes a profound
change in the lifestyle of Indian politicians. He writes: “Once known for
their austerity and simplicity, they now lived in houses that were large and
expensively furnished. Driving flashy cars and dining in five-star hotels,
they are, indeed, the “new maharajas”. The “distance between Gandhi
(Mahatma) and Gandhi (Rajiv), remarked one observer, “is a vast traverse
in political ethic. The dhoti is out, so is the walking stick, wooden sandals
and traveling in third-class railway compartments. Gucci shoes, Cartier
sunglasses, bulletproof vests, Mercedes Benz cars and state helicopters are
in. Indian politics no longer smells of sweat, nor is it particularly clean and
odorless — it reeks of aftershave”.
The opening of economy has also led to startling changes in Indian soci-
ety. Thousands of foreign firms are today operating in the Indian market.
During 1991–2010, foreign firms made inroads into several areas, ranging
from telecommunications to chemicals, food processing, clothes, cosmetics,
watches, fountain pens, electronics, cars, etc. Guha (ibid.: 699) writes: “Of
the projects that actually got off the ground, the most visible brands were
in the consumer sector. Cars made by Ford and Honda, TVs by Samsung,
phones by Nokia and drinks by Pepsi and Coca-Cola”. Companies, such
as Philips, Microsoft and General Electric had also shown their presence
during 1991–2000.
Consumption and Consumerism

The consumer market in India has witnessed an exponential growth under
liberalization. In 2005, a study by National Council of Applied Economic
Research (NCAER) showed India’s potential in leveraging purchasing power
parity. Demand for consumer durables and expendables has increased along
with an increase in India’s middle class population. India’s 20 cities generate
more than 30% of its income, having less than 10% of India’s population.
It is projected that in these 20 cities, by 2016, more than half of their
population would become truly middle class. Because of the rise of India’s
640 K. L. Sharma
consumer market, there would be more than 570 million middle class Indi-
ans by 2025, and more than 290 million people would move from desperate
poverty to a more sustainable life. India would become the world’s fifth-
biggest consumer market, seven places up since the mid-2000s.
Consumption is not merely a lifestyle quotient. Consumer is not only
an active subject, he is also a moral and political subject. Consumerism
indicates the nature and direction of economic growth and emergence of new
social groups and relationships. Today, India has the most expensive cars,
the most sophisticated consumer gadgets, designer clothes and accessories,
and five-star living (Varma, 2004: 88–96). The credit card industry has
mushroomed. About 70% of Indian people use mobile phones, irrespective
of whether one is poor or not so. According to a recent estimation, the
average income of an Indian is just US$2 a day. Consumerism has come to
India with a sense of celebration. Enormous money is being spent by the
multinationals and big national companies on advertisements and publicity.
Varma gives examples of the growth of several companies which have come
up after 1991.
However, Dipankar Gupta (2009: 68–83) does not provide a rosy picture
of the effects of the post-globalization-liberalization period. He observes
that there is “the middle class myth” in India as a consumer class. One
needs to know: “Who Buys What In India?” Gupta also asks: What kind
of middle class are we really talking about? IT professionals, he says, are
more in Silicon Valley than in India. Consumption standard alone is not
an indication of a strong middle class. Only 3% of Indian households own
cars. In America 4.5 million households below the poverty line own cars,
with 290,000 of these households owning upto three cars. Gupta observes
that India’s economic growth is limited to a few favored areas, namely, the
services and IT sectors. One wonders where and how this expansion of con-
sumerism is going to occur, asks Gupta. Who are these super-consumers?
Poverty in India persists abysmally, despite nearly 10% growth rate.
Gupta says that about 30% of Indians still live on US$1 a day. A false
impression about growing prosperity and a nationwide reduction of poverty
is being created over the past two decades. We have today a little more than
60% literate people, but only 5% of the Indian workforce has had vocational
training. In Germany, Japan, and South Korea, it ranges from 70% to 95%.
India has much less qualified engineers, compared to the USA, Germany,
and even Philippines (ibid.: 71). Gupta also talks of “the consumer market
illusion”. In 2007, India had more than 200 million cell phones. China had
449 million cell phone subscribers during the same period. The same story
is about cars. India has just seven cars per 1,000, compared to 500 per
1,000 in Germany. In Thailand, there are 27 cars per 1,000, in Mexico 130
per 1,000, and in Malaysia 147 per 1,000. Use of cheap consumer goods or
cosmetics does not create a strong consumer class, as we see in the case of
the developed countries.
Disparities between Urban and Rural Areas

Poverty and malnutrition persist in India as a horrifying phenomenon. From
time to time starvation deaths have been reported. In tribal districts of
Orissa, Chhattisgarh, Jharkhand, Madhya Pradesh, Rajasthan, etc., star-
vation has caused deaths. In 1985, in Koraput and Kalahandi districts
of Orissa, more than 1,000 deaths were reported due to starvation. With
regard to consumption and styles of life, clearly, there are two patterns: One
is “India”, represented by the urban English-speaking middle class people,
who are engaged in lucrative white-collar jobs; the other is “Bharat”, rep-
resented by the village people, engaged in agriculture and manual work,
with low levels of income. The two have distinct lifestyles and sources of
income.
Has the Indian state effectively attacked poverty and curbed the con-
spicuous consumption of the rich? Varma (op.cit.: 90) asks this question
and says that the so-called welfare state has failed to alleviate poverty in
India. Concern for the deprived and the suffering is not a sensitive issue for
the rich and the state. Varma writes: “The rich in India have always lived
a life quite uncaring of the ocean of poverty around them” (op. cit.: 90).
Varma quotes Noam Chomsky, who said in 1996 that the Indian elite had
a lifestyle more opulent than anything he had seen even in America (op.
cit.: 90). The richest of the rich in metropolis like Mumbai live in extremely
luxurious apartments and bungalows, and just close to these skyscrapers
live the poorest of the poor in slums, who are half-fed and half-clothed.
The Indian village is no longer as isolated as it used to be about a
century ago. It is not a well-knit community, in terms of interpersonal rela-
tions, cooperation and homogeneity. The village is considerably stratified in
terms of income, resources, and lifestyles. Despite the country-town nexus
(Sharma and Gupta, 1991), rural people are at the margin of Indian soci-
ety, compared to their counterparts in urban India. Besides dependence on
vagaries of monsoon, there are other impediments, including lack of oppor-
tunities for employment, quality education, and healthcare facilities. The
“urban bias” in Indian polity deprives the rural poor from the fruit of their
642 K. L. Sharma
own products, including food grains, vegetables, handicrafts, etc. Such a

situation is an indicative of the persisting divide between the urban and
the rural people. Even the urban poor, despite being situated in towns and
cities, remain deprived of proper education and healthcare due to their low
economic standing. The divide between the urban and the rural people
and between the rich and the poor speak of the differences in consumption
patterns and lifestyles.
In India, despite considerable economic growth, there is an increasing
inequality in income distribution. The UN Development Report 2009 men-
tions that inequality is rising rapidly. We therefore need economic growth
on a war-footing with a hope that it would ultimately lead to distributive
justice. Economic growth results in the reduction of poverty. Only through
poverty alleviation, India can provide better healthcare, quality education,
suitable housing and other services. The main problem in India is inequality
of opportunity relating to land, education and social status.
Data on distribution of income are hazy and inadequate to show us the
magnitude of the requirements of consumer goods. The consumer-class is
so heterogeneous and spread out in different parts of India that it becomes
difficult to uniformly determine quality and prices of consumer goods. Pur-
chasing power of consumers is more location-specific. Consumption habits
also matter a lot in determination of the size of consumer market. How-
ever, income remains an important factor in determination of patterns
of consumption. NCAER has classified the Indian consumer as shown in
Table 31.1.
Heterogeneity of consumers ranging from the poor to the rich makes it
quite difficult to know the market size of particular consumer goods. Besides
income, social, cultural and demographic factors determine the market.
Consumerism carries socio-cultural gains in addition to material utility.
Branded goods and items add to cultural and social upliftment. Income,
education, and urbanization have created demands for status-enhancing
goods. The NCEAR study shows that in 1950–1951, 82% of consumption
Table 31.1. Classification of Indian Consumer By NCAER.
Annual income (Rupees) Categories of consumers
<16, 000 = 00 Destitutes

16,001–22,000 Aspirants
22,001–45,000 Climbers
45,001–2,15,000 Consumers
>2, 15, 001 The rich
expenditure was on essential items such as food, beverages, rent and fuel.
After 20 years, it came down to 78%, but by 1990–1991 it came down further
significantly to 64%. In 2009, expenditure on the essential items was just
40%. India is going to have a huge long-term consumption boom as a result
of rising disposable incomes, higher life expectancy, rapid urbanization and
changing lifestyles. The consumer market has grown by 19% between 2006
and 2008. There is a perceptible decline in expenditure on basic food items,
and there is a clear increase in spending on hotels and restaurants, utilities,
rent, medical expenses, recreation, personal transport and education. The
increase in these items is as much as 29%.
Emerging Consumption Stratification

Globalization and liberalization have not only created a new class of con-
sumers; they have also changed the social composition of the middle class
and also that of the entrepreneurial class. Business and entrepreneurship
are no more restricted to trading communities such as the Marwaris,
Jains, Banias, Khatris, Chettiars and Parsis. Peasants too have taken
to entrepreneurship (Singh, 1985). Marathas, Vellalas, Reddys, Nadars,
Ezhavas, Jats, Yadavas, etc., have shifted to entrepreneurship from agri-
culture and allied economic pursuits. Even upper castes like Brahmins and
Kshatriyas have taken up trade and entrepreneurship. Today, India com-
prises a small elite at the top and a large impoverished mass at the bottom,
and a substantial middle layer in-between the two. Since, the top is small,
and the bottom is incapacitated by its poor economic standing, the middle
class, and particularly the middle–middle and the upper–middle segments
are the new consumers and targets of the producers of consumer goods.
New products and services are generally targeted towards them. They are
the people who use expensive goods and items, such as cars, cell phones,
and televisions. Delhi has more automobiles than that of Mumbai, Chennai
and Kolkata, put together.
There is no doubt that India has emerged as a modern consumer
economy. A hierarchy of tastes and styles is now an acknowledged fact.
Certain brands are often mentioned by the young men and women as
their preferential clothes, perfumes, and electronic items. They also often
talk about “original” products, such as Levi’s, Sony, Christian Dior, etc.
Mercedes Benz and BMW cars are an indication of very high status and
economic standing. Regarding such a situation in India, Dipankar Gupta in
his book — Mistaken Modernity: India between Worlds (2007) talks of the
644 K. L. Sharma
“Westoxicated Elite, Gentlemen or Gentoos”. Modernity for Gupta implies

a pattern of social relations in a society, having dignity of the individ-
ual, adherence to universalistic norms, elevation of individual achievement
over privileges or disprivileges of birth, and accountability in public life.
He writes: “Once these attributes are in place, it does not really matter if
there is high-level technology, superfast transit systems, or consumerism.
Generally speaking, technology and consumerism are consequences of the
four characteristics of modernization listed above, and do not by themselves
constitute modernity” (ibid.: 12–13). The Indian middle class is understood
solely, though wrongly, in terms of consumption. Even in terms of assets
and possessions, such as owning of televisions, wrist watches, cars, etc.,
India is still at a very low level (ibid.: 17–19).
In the western countries, there is a positive relationship between height-
ened consumerism and modernity. Gupta writes: “Consumerism in the West
is based on a strong middle class, which has a very wide base, and where
poverty and human degradation of the kind we see in the developing world
have been tackled some generations ago. Their consumerism, therefore,
appears rather like an engine of economic progress and an active agent
of consumer satisfaction, than merely as a symbol of wealth and of cultural
alienation” (ibid.: 25–26).
Gupta (ibid.: 90–92) recognizes the emergence of greater homogeneity
of consumer goods across the world, but he observes that there is a mis-
match between production facilities and consumerism at the national level.
Hyper/super facilities are available, but a majority of people are unable
to afford them. Such an unevenness regarding consumerism speaks vol-
umes about inequality and stratification in India. Consumerism in India
has taken away attention from the facilities for the disprivileged and the
downtrodden.
Class, Consumption and Lifestyle

Recently, in place of concepts like the bourgeoisie/petty bourgeoisie, leisure
class, lifestyles, status-honor, etc., a couple of new concepts, such as con-
sumer society, consumer culture, consumer identity, consumer market, and
consumer class have surfaced in post-globalization literature, particularly
related to the new middle classes. A recent study by Palackal (2011)
shows that the middle class appears as a great consumer and beneficiary
of consumer culture. The middle class exhibits significant cultural shifts.
In his study of Youth of Kerala, Palackal mentions that “consumption”
has become a fundamental modality in a globalized world. A race for

seeking status through consumer goods has become a new phenomenon.
Consumption is considered as an essential ingredient of a satisfied life,
providing a sense of fulfillment and social space. It creates an identity. Con-
sumer goods are seen as a privileged part of identity. Consumer’s choice
has become the buzzword of the present-day production and marketization
(ibid.: 6–7).
The patterns of consumption in India largely resemble the cosmopoli-
tan cultural forms. The local markets are today flooded with western
goods. Marketing has become vibrant and dynamic because of the glob-
alized consumption patterns. Advertisements through television and print
media provide images of luxurious lifestyles, motivating acute desire for con-
sumption. People are seeking a creation of status-identities by conspicuous
lifestyles. A sense of being modern, free and distinct is being expressed
by expensive lifestyles. Branded and expensive consumption goods grant
higher status than the unbranded and less expensive items. Consumer cul-
ture and social status are being related particularly by the middle class.
Business India, in its issue of 18 August 2002, reported that with the
coming up of liberalization in 1991, the Indian middle class acquired a
new prominence as one of the world’s largest markets, as a different breed
of entrepreneurs and consumers. The Indian middle class has the following
characteristics:
(1) International in outlook and aspirations.

(2) Sophisticated and liberal in lifestyles and attitudes.
(3) Adventurous and demanding in leisure activities (Palackal, op.cit.: 11).
Normally, we classify classes into high, middle and low for purposes of
analysis. For having more specificity in analysis, for example, the middle
class has been sub-divided into lower middle, middle-middle and upper-
middle, based on income earned by an individual or a family. Such a dis-
tinction within the middle class is necessary because of its internal differen-
tiation not only in terms of income, but also because of occupational status
and prestige. The higher the income-occupation based status, the higher
would be the level of consumption of goods and services, which would pro-
vide social status and prestige. For the sake of retaining their social status,
the upper middle class members often even take loans for goods, such as
cars, computers, refrigerators, houses, or even for education abroad. Today,
the possession of selected branded goods is considered a status symbol.
646 K. L. Sharma
No more do the words — “consumption” and “lifestyles” sound alien

to the Indian upper middle class people. Consumption has become a new
culture, a lifestyle, and an indicator of superior/higher status, compared
to those who do not fall in that category of “consumption culture”. Thus,
we are not talking of a routine and essential pattern of consumption and
lifestyle. Our discussion is related to the stratified system of consumption
and lifestyle, which ranks people high and low. Obviously, consumption
is conspicuous, it is demonstrable, and at times even if it is a “waste”,
it is considered worthy of a cultural or symbolic significance for status-
stabilization/enhancement. Uberoi (2008: 40–59) talks of three lives of
things, with or without prices of the factors of production in the post-
modern world: (1) the machine life (use value), (2) the market life (exchange
value), and (3) the vogue life (social value). The vogue life of things fol-
low social/cultural logic or illogic. The vogue life changes very fast com-
pared to the machine life and the market life. However, all the three are
interrelated, that is, machine, material and vogue lives. The vogue life is
conspicuous and expressive in nature. It demands changes in both machine
and material lives, and also prospers based on the continued renewal of
the two.
Kumar (2003: 675–694) discusses “consumption and lifestyle” in
Banaras, in terms of pan eating, gender, clothes, food, region, class and
occupation, caste, religion, and change. These are important variables in
the analysis of consumption and lifestyle, but for our purpose, class and
occupation seem to be more relevant. Kumar here mentions that in some
way, the elite-lower class interaction is glimpsed in the lifestyle of the city,
and can provide an insight into some puzzles of social and political behav-
ior. However, a good life is not the monopoly of the rich alone. Even the
poor man may be rich in internal qualities, equilibrium, devotional-style and
carefreeness. The rural people and the poor ones enjoy during village fairs,
festivals, holidays, outdoor trips, lilas (participatory theatre), darshan (vis-
its to shrines), music, dance, sports, the cinema, and consumption of addic-
tives, such as pan, tobacco, and bhang. The poor have a life of their own
through celebration, communication and passion (ibid.: 685–687). But the
fact remains that the poor are deprived of those goods and services, which
are enjoyed by the upper and the upper middle classes, and the same are
appropriated by them for their cultural, social and political superiority and
dominance. Thus, it is not the question of “minimum needs” for survival.
It is a complex issue. The point is that some people are enabled to extract
economic benefits from the system, and then those are transformed into
social and political gains through conspicuous consumption and lifestyle.

Class and culture have mixed up due to the process of globalization and
liberalization.
Concluding Remarks
In conclusion, we can say that production is not simply for the gratifica-
tion of essential/bare human needs. Beyond the survival level, production
is also for cultural and social reasons. In fact, such production is based
on societal changes, including changes in technology, politics, and culture.
Whenever consumption is based on these changes, the nature of produc-
tion also changes. Such changes are not uniformly accessible to the people.
Those who have more access have more consumption of luxurious goods
and services. Globalization and liberalization have contributed a lot to the
process of a new pattern of consumption and lifestyle. A new middle class,
particularly comprising professionals, such as engineers, managers, scien-
tists, entrepreneurs, and NRIs, has emerged, enjoying the new age of luxury
goods. A new system of social stratification is emerging. But such a class
is not a monolith. It is highly differentiated, based on income, occupation,
and status. It is estimated that such a middle class in India comprises more
than 300 million people. The main point is that such a class is quite per-
ceptible in metropolises, big cities and urban centers which have become
the hub of software industries and globalized marketing.

32
The Stratification of Consumption among
Social Classes, Occupational Groups,
and Identity Groups in China
Tian Feng
Preface
Following 30 years of reform and opening up, which is known as a period
of economic growth and social transformation, the income level in China
has been steadily rising. In actual terms, during the 1980–2008 period the
per capita disposable household income of urban residents and rural res-
idents increased to RMB 15,781 and RMB 4,761, respectively, which is a
growth of 33-fold and 25-fold. Economic theories normally consider con-
sumption to be a function of income, which means that as income rises,
consumption will also increase. From 1980 to 2008, the per capita consump-
tion expenditure of urban residents and rural residents increased 27.3 times
and 22.6 times respectively. During the same period, China also achieved
a 66.1-fold increase in GDP, and the growth of income of Chinese resi-
dents basically tracked that of consumption, with the pace of consumption
growth significantly lower than that of economic growth and slightly lower
than income growth. The increase in income and consumption levels means
that after people’s basic consumption needs are satisfied, their consumption
levels and consumption structure also begin to show signs of growth and
transformation, and their consumption patterns and lifestyles become more
and more diversified. China, by and large, has started to enter the phase of
mass consumption.
649
650 Tian Feng
Research Background
Economic growth not only increases people’s income, but also contributes
to the enlarging income gap between different social groups, with the Gini
coefficient of the Chinese residents’ income rising from 0.3 in 1978 to 0.47 in
2008, well beyond the internationally-accepted alarm level of 0.4. Accord-
ing to relevant statistics released by National Bureau of Statistics of China,
the consumption level between urban and rural residents changes in much
the same way as the Gini coefficient shows. The consumption level between
urban and rural residents once declined steadily in the 1980s, dropping from
2.9 in 1978 to 2.2 in 1984, after which it kept climbing, reached its peak at
3.8 in the mid-1990s and remained on a relatively high level ever since, with
the ratio in 2008 reaching as high as 3.6. In the meantime, among the total
consumption of urban and rural residents, the proportion of consumption
attributable to rural residents has declined, while that of the urban resi-
dents has increased. From 1978 to 2008, the proportion of rural residents
among the total population of China dropped from 82.08% to 54.32%, and
the proportion of rural residents’ consumption to the total consumption of
all residents also plummeted from 62.1% to 25.1%, indicating that the pro-
portion of rural residents’ consumption dropped faster than that of rural
population. It also goes to show that since the country’s reform and open-
ing up campaign, the per capita consumption level of rural residents has
actually decreased as compared to that of urban population.
The consumption gap among Chinese residents is not just reflected
between urban and rural residents. In terms of urban household consump-
tion, the most obvious change is the rapidly widening gap in consumption
level between the high-income group and other income groups: In 2001, the
consumption level of urban medium-to-high income group was 64.5% of that
of high-income group; the figure plummeted to 55.6% in 2007, registering
a whopping 9% drop, indicating that in an urban society as wealth and
income keep moving to the handful of elite people in the wealthy stratum,
the consumption gap between the wealthy stratum and ordinary strata also
becomes more and more pronounced by the day.
The consumption gap between rural income groups remains relatively
stable, with no phenomenon of widening consumption gap between the
wealthy stratum and ordinary strata, which indicates that social wealth
in rural areas has not yet shown any signs of concentration. Generally,
the increase of consumption level and the widening consumption gap mean
that the differentiation between different consumption groups will intensify.
Characteristics of group differentiation is bound to infuse into consumption,
The Stratification of Consumption 651
with this kind of differentiation not just reflected in consumption level, but
also in consumption structure and consumption pattern. In addressing the
differences between social strata in terms of consumption level, consump-
tion structure and consumption pattern, this chapter aims to analyze the
validity and feasibility of consumption stratification as a social stratification
indicator.
Literature Overview and Measurement Indicators

As the economic and social focus shifts from the manufacturing industry
to the service industry and the traditional large-scale production mode is
replaced by a consumption-led mode of production, consumption as a whole
new perspective has gradually become a valid analytical paradigm for social
stratification in the post-industrial and post-modern society. Prominent
among the sociologists who pioneered this analytical tool are Bourdieu,
Baudrillard, and Veblen.
Bourdieu can rightly be counted among the first few eminent sociolo-
gists to conduct analysis and research on life and consumption, with stra-
tum featured prominently in his social reproduction theory. He regarded
stratum as a group of people who dwell in similar positions in social space,
share similar conditions for existence, and take similar stands, emphasizing
that people’s status in social structure is jointly determined by economic
capital and cultural capital, while consumption, as a demonstrative prac-
tice, is a sign and symbol that indicates one’s social status. In this sense,
therefore, people’s consumption preference, i.e., class taste and lifestyle,
serves as a better standard than traditional social stratification indicators
such as income, profession and rights in revealing the stratum each social
member belongs to (Rong, 2007).
Because of their similar positions in social space, in terms of the pat-
tern of material and cultural consumption, people further produce differ-
ent tastes, which in turn determine their consumption choices, which are
adopted as a stratification standard. Consumers’ choice of consumption
patterns depends not just on their economic capital, but also on the distri-
bution of cultural capital, with the latter becoming increasingly important.
Economic capital and cultural capital jointly determine the quantity of
material and cultural consumption that people choose and the way they
choose them. Especially in terms of cultural consumption, the upper strata
always manage to drive the lower strata out of their consumption “club”
by exploiting their own cultural advantages.
652 Tian Feng
Baudrillard placed a greater emphasis on the symbolism of consump-

tion, arguing that people no longer consume for the mere purpose of
fulfilling their daily needs, but have been attaching more and more impor-
tance to the implication and symbolism of their consumptions. On the one
hand, symbol consumption builds on social differences, and on the other
hand, it can also entrench social differences. Therefore, the most promi-
nent characteristic of modern consumption is symbol consumption, with
the symbol associated with consumption serving as the identity code for
each social member, which can be further adopted to clearly stratified soci-
ety. Veblen contended that the foundation of social reputation and social
status is wealth ownership, with the purpose of consumption of lower class
being to fulfill their needs to subsist and reproduce, and that of upper
class being to showcase the quality of their life and show off their extrava-
gant spending, given that the upper class people are no longer consuming
merely for daily needs. As is different from the traditional society, middle
class people constitute the majority of conspicuous consumers in modern
society.
Unlike economists, sociologists tend to perceive consumption as a social
behavior tinged with certain social meaning or symbolism, instead of a
mere economic act. Mayer regarded consumption as a new indicator for
social stratification, pointing out that there are obvious differences between
consumption and purchasing, and that the attitudes and purposes relating
to consumption all bear strong social meanings (Mayer, 1978:151–167). And
just because of this, it was only after they proposed their interpretations of
consumption theories, had some researchers been able to conduct empirical
research on consumption stratification in different countries and regions.
Aydin adopted Bourdieu’s reproduction theory and Gidden’s social
structure theory and utilized Turkish national statistics to analyze the
impact of economic and social factors on consumption pattern, taste and
lifestyle, concluding that such social stratification variables as income, edu-
cation and profession determine consumption pattern and lifestyle (Aydin,
2006). Katz-Gerro and Talmud used data from the Israeli research cen-
ter and adopted the method of structural equivalence to configure similar
household consumption patterns into stratification index, and after com-
paring them with income deciles arrived at relatively satisfactory results
(Katz-Gerro and Talmud, 2005:109–132). Using the expenditure data of
Swedish families, Bihagen analyzed the different categories of consumption
and expenditure of each class and came to the conclusion that high-income
stratum needs to spend a large amount of money in conveying to other
people that they belong to the high-income stratum, such as attending

social activities outside the family, so as to maintain their own economic
and social status, which also lends credence to Bourdieu’s social reproduc-
tion theory (Bihagen, 1999:119–151).
During the process of China’s social transformation, major changes in
the social and institutional environment lead to the reallocation of economic
and social resources and the reshuffling of social classes, with the founda-
tion for each social class shifting from political status to the combination of
social, economic and political resources, as embodied by different ideologies,
lifestyles and consumption patterns. Consumption stratification as a whole
new field of research also came under the scrutiny of the Chinese sociolo-
gists. Wang Ning maintained that consumption and social stratification are
two interpenetrating subjects, with the relationship between consumption
and social structure being the “internalization of externality”, i.e., struc-
turalization of structuralization; and that consumption differentiation is
consistent with social strata differentiation (Ning, 2001). Especially in the
area of research on the middle class, scholars attach more importance to
consumption characteristics, with high consumption tendencies and unique
consumption characteristics forming the actual foundation for establish-
ing indicator for social stratification (Xiao Wentao, 2001; Li Qiang, 1999;
Zhang Wanli, 2002), and with each social stratum exhibiting prominent
consumption characteristics.
Scholars such as Mr Li Peilin pointed out that during the process of
China’s economic structural transformation and institutional shift, due to
the double-track system and invisible income prevalent in the income dis-
tribution, the consumption structure has become a stratification indicator
that can better reflect actual situations (Li Peilin and Zhang Yi, 2000) and
adopt Engel’s coefficient as a stratification indicator to conduct relevant
analysis. Li Chunling (Li Chunling, 2005) used data from social strata sur-
veys in 2001 and analyzed the differences among the consumption patterns
of China’s ten major social strata. He Mingsheng experimented with estab-
lishing 18 basic factors, generalized six categories of consumption patterns
and lifestyles on different levels (He Mingsheng, 1996), and analyzed the
differences among China’s social strata from the perspective of consump-
tion, concluding that consumption can well reflect the differences among
different social strata.
These studies have lent strong credence to the argument that there
is a relationship between consumption and social stratification in terms of
both theoretical research and empirical research, from which we may readily
654 Tian Feng
observe that the key to verifying the relationship between consumption and
social stratification is the establishing of an effective consumption indicator
that can be compared with social stratification.
This chapter aims to establish a relationship between consumption and
social stratification, which not only involves the consumption level and
consumption capacity in the strict economic sense, but also includes the
cultural factors implied in consumption patterns. In particular, instead of
regarding consumers’ needs as a mere economic need, it considers them as
belonging to a certain social group and puts them under the social culture
and material environment they belong to. Therefore, it is not sufficient to
merely analyze people’s consumption level and quantity, consumption pat-
tern shall also be regarded as a social behavior with group characteristics
and styles, thus consumption is liberated from its cause-and-effect rela-
tionship to economic status and becomes a consumption behavior with the
function of self-initiated social positioning in the production-based social
relationship system.
Consumption indicators can be divided into four operational indica-
tors: consumption level (total household expenditure), consumption struc-
ture (Engel’s coefficient), ownership of consumer durables, and consumption
pattern. Total household expenditure/spending and consumption structure
can be calculated directly from relevant national statistical data, while own-
ership of consumer durables and consumption pattern need to be computed
based on particular consumption survey data.
In analyzing ownership of consumer durables, some scholars (Li
Chunling, 2007) chose to have it weighted. In weighting consumer durables,
this chapter adopts the formula: w = 1/(p + 1), with w representing weight
and p representing average ownership of consumer durables per household.
The more prevalent a consumer durable is, the lower the weight will be.
On the basis of weighting, we further computed the marks of consumer

durables by adopting the formula: S = wi × ni , with wi representing the
weight of consumer durable i and ni representing the ownership of consumer
durable i.
In analyzing consumption pattern, we divide the three consumption
patterns, food, clothing and transportation, into five levels, on a scale of one
to five with five being the highest grade, and then conduct factor analysis on
the three consumption patterns to find the common factor of consumption
pattern, which is then adopted as an operational indicator for measuring
the level of each consumption pattern.
Table 32.1. Level of Consumption Patterns of Each Social Stratum.
Category Food Clothing Transportation
Upper level (5) Upscale Designer apparel Driving private

restaurants shops, large cars
shopping malls
Medium-to-upper Medium-scale Regular apparel Driving
level (4) restaurants malls, shopping public-owned
online cars, taking
taxies
Medium level (3) Popular Supermarkets, Taking public
restaurants for street stands, transportation
the masses, fast wholesale/small
food shops markets
Medium-to-lower Little restaurants, Village fairs, other Walking, cycling
level (2) street food stalls, places
snack bars
Lower level (1) Rarely eating out Eating at home, Others
not sure
Table 32.2. Factor Loadings of Operational Consumption

Indicators.
Operational consumption indicators Factor loading
Consumption pattern factor 0.6242

Engel’s coefficient 0.1044
Total household expenditure 0.5282
Mark of consumer durables ownership 0.8215
Based on the above, we established the four operational indicators:

consumption level, consumption structure, ownership of consumer durables,
and consumption pattern, on which we further conducted factor analysis.
And from the results of factor analysis, we obtained a common factor with a
characteristic value of 1.37. Among the factor loadings of the four indicators,
those of ownership of consumer durables, consumption pattern and total
household expenditure are relatively high, while that of Engel’s coefficient
is relatively low.
Relevant analysis shows that there has not formed a consistent rela-
tionship between Engel’s coefficient and social hierarchy, for the Engel’s
coefficient of some lower strata does not represent their actual consump-
tion level due to certain reasons. Especially after China has transformed
itself from an impoverished country to a moderately developed country,
656 Tian Feng
Engel’s coefficient as an indicator for measuring consumption might yield

distorted results. This is why during the factor analysis Engel’s coefficient
is treated separately from other operational indicators, with its factor load-
ing kept relatively low. For easy comparison, in this chapter we still incor-
porate Engel’s Coefficient into factor analysis, and after calculating the
scores of common factor of consumption, we divide society into some decile
groups according to the scores, which we further divide into such strata
as the wealthy stratum, the well-off stratum, the medium-to-upper stra-
tum, the medium stratum, the medium-to-lower stratum, the impoverished
stratum, and the most impoverished stratum, which are then used to ver-
ify the relationship between consumption stratification and other social
stratifications.
Consumption Differences between Each Social

Stratum in Current Chinese Society
This chapter will use data from the comprehensive survey on social condi-
tions conducted by the CSSA Sociology Institute in 2008, divide social
groups into ten social strata as state cadres, private business owners,
managers/operators of state-owned and collective enterprises, managers/
operators of non-public-owned enterprises, professional/technical person-
nel, clerks, individual industrial and commercial households and the self-
employed, urban workers, peasant workers, and peasants, and analyze the
differences between each social stratum in terms of consumption level, con-
sumption structure and consumption pattern.
Total assets and consumption levels for each

social stratum
While the state cadre stratum owns special power resources and enjoys
relatively high political status, in terms of economic status it is the private
business owner stratum that enjoys the most decisive advantages. According
to relevant survey data, the private business owner stratum boasts the
highest household assets, amounting to RMB 84,000, with its consumption
level obviously higher than that of other social strata, roughly 13 times
of that of the peasantry stratum, which boasts the lowest consumption
level. The managers of private enterprises and state cadres come in second
place, with their total household expenditure amounting to RMB 54,000
and 49,000 respectively.
Fig. 32.1. Consumption and household assets of each social stratum.
The assets owned by managers and operators of state-owned and

collective enterprises are greater than those of the professional/technical
personnels and clerks, but their average consumption level is lower than
that of the professional/technical personnels and clerks, which might be
attributed to the fact that partial costs are not incorporated into house-
hold consumption and there exists certain public fund expenditure. The
consumption level of individual industrial and commercial households is
slightly higher than that of urban workers, while that of the peasant work-
ers stratum is significantly lower than that of the former two strata. The
annual total household expenditure of the peasantry stratum which boasts
the lowest consumption level even account for over one-third of their house-
hold assets, which means that in terms of the relationship between assets
and consumption, once caught in social and economic turmoil, the massive
peasant stratum may very likely have to struggle to make ends meet.
Consumption types for each social stratum

The differences in consumption level between each social stratum determine
consumption differences. This chapter adopts Engel’s coefficient as one of
the indicators for measuring consumption differences between each social
stratum, discovering that the percentage of private business owners who
belong to the wealthy group is the highest at 59.1% and the stratum is also
the only one among the ten social strata that has no members on either the
“basic subsistence” line or the poverty line. It indicates that as the stratum
658 Tian Feng
that benefits the most from China’s social and economic reforms the pri-
vate business owner stratum has now joined the “get-rich-first” group. Sec-
ond, after examining the Engel’s coefficient, we further notice that the
percentage of peasants who belong to the wealthy stratum is also quite
high, reaching an impressive 47.9%. However, it does not reflect their true
consumption level and consumption structure, because the peasant stratum
has a limited capacity for economic payment, with their own level of food
consumption also rather low. In addition, most of their food consumptions
are self-produced without any unified market price to value them, which
invariably leads to confusing results.
The percentage of managers and operators of non-public-owned enter-
prises and state cadres who belong to the wealthy group in terms of con-
sumption is 47.3% and 45.1% respectively, with that of the professional/
technical personnels, clerks and individual industrial and commercial house-
holds and the self-employed who make the group also exceeding 40%.
Surprisingly, the percentage of managers and operators of state-owned and
collective enterprises who belong to the wealthy group in terms of consump-
tion is only 35.9%, while that of peasants who make the group reaches as
high as 39.9%. It obviously should not have been the case given their respec-
tive economic and social status. The reason lies in that many consumption
items of managers and operators of state-owned and collective enterprises
have not been marketized and monetized, which leads to a relatively low
consumption expenditure, which in turn causes the Engel’s coefficient to
trend upward. This point is further corroborated by the phenomenon of
“high asserts, low consumption” as identified among managers/operators
of state-owned and collective enterprises as described above. It is exactly the
opposite with the peasant worker stratum: Most of them work in cities, with
their assets and income relatively low and consumption relatively high, who
can be called “low-asset owners and high consumers”. Only by reducing the
proportion of their food consumption can they manage to accumulate some
savings. Consequently, it may be further observed that the percentage of
peasant workers who belong to the “impoverished” group in terms of con-
sumption is also the highest, reaching 12.6%. Urban workers are the group
that takes the biggest hit in the market economy reform, with the percent-
age of those who belong to the wealthy group in terms of consumption being
the lowest, at 30.7%, and that of those belonging to the “basic subsistence”
group and “impoverished” group in terms of consumption reaching as high
as 27.7%, which indicates that they are actually the social strata leading
the toughest lives.
Table 32.3. Engel’s Coefficient of Each Social Stratum.1
Moderately Basic
Social strata Wealthy Well-off prosperous subsistence Impoverished
State cadres 45.1 19.6 17.7 13.7 3.9

Private business 59.1 31.8 9.1 0.0 0.0
owners
Managers/ 35.9 22.6 20.8 11.3 9.4
operators of
state-owned
and collective
enterprises
Managers/ 47.3 23.7 16.1 10.8 2.2
operators of
non-public-
owned
enterprises
Professional/ 41.0 24.8 19.4 9.9 5.0
technical
personnels
Clerks 41.3 17.1 20.6 12.7 8.3
Individual 42.1 22.2 15.4 13.6 6.7
industrial and
commercial
households
and the
self-employed
Urban workers 30.7 20.6 20.9 17.8 9.9
Peasant workers 39.9 17.0 17.9 12.6 12.6
Peasants 47.9 20.5 13.1 11.0 7.5
The consumption structure for each social stratum

Consumption differences are also reflected in consumption structure. In
terms of the consumption structure for each stratum, the percentage of
consumption expenditure on food among state cadres and private business
owners is less than 25%, indicating that by exploiting their political and
economic advantages the two social strata have managed to lead a pleasur-
able life as far as consumption structure is concerned. Among other social
1 According to the measure set by the Food and Agricultural Organization of the United
Nations, an Engel’s coefficient above 59% represents absolutely poverty; 50–59%, barely
enough food and clothing; 40–50%, a “moderately well-off” standard of living; 30–40%,
a “well-to-do” standard of living; and below 30%, a “wealthy” life.
660 Tian Feng
strata, that of the urban workers is the largest, reaching 31.9%. And that
of the peasant workers stratum and peasants stratum reach 31.4% and
26.2% respectively, which doos not necessarily mean that their consump-
tion structures have attained the level of affluence, but that due to reasons
relating to social institutions and social environment, as they have to spend
more on other aspects of life, which invariably lowers their basic living and
consumption level. For instance, the medical expenditure of peasant work-
ers and peasants account for 8.1% and 11.5% of their total consumption
expenditure, respectively, obviously higher than other social strata. And as
state cadres are still entitled to free medical care, a remnant of the planned
economy era, they only spend a meager 3.7% of their total consumption
expenditure on medical care.
Clothing consumption exhibits the characteristic of “the higher the
social ladder, the higher the proportion of clothing consumption”. State
cadres, private business owners, managers and operators of enterprises who
belong to the medium-to-upper strata of society spend over 8% of their
total expenditure on clothing; professional/technical personnels and clerks
who belong to the medium stratum spend over 6.5%; those belonging to
the medium-to-lower stratum spend over 5%; and peasants spend less than
5% of their total expenditure on clothing, indicating that it is still diffi-
cult for those of the medium-to-lower stratum to maintain basic level of
consumption.
For state cadres, the bulk of their spending goes to education and
entertainment, indicating that though in economic terms state cadres still
cannot be counted among the “get-rich-first” group, they have managed to
take the lead in living a pleasurable life as far as consumption structure
is concerned. The marketization of education exerts significant impacts on
each stratum, with the percentage of spending on education all exceeding
10%. Those of the medium-to-lower stratum spend disproportionately little
on education and entertainment due to the reason that their children cannot
afford the high tuition fees and are forced to stop pursuing higher education.
According to news report, over 80% of the children of peasant workers chose
not to go to high school.
Private business owners spend the most on transportation and commu-
nication. Compared with managers/operators of state-owned and collective
enterprises, those with non-public-owned enterprises tend to spend more on
transportation and communication, which indicates that there exist public
fund expenditures in public-owned units.
March 5, 2013
16:48
Table 32.4. The Consumption Structure of Each Social Stratum (%).
9in x 6in
Individual
industrial
Managers/ Managers/ and
operators operators commercial
of state- of non- households

Private owned and public- Professional/ and the
The Stratification of Consumption

State business collective owned technical self- Urban Peasant
cadres owners enterprises enterprises personnels Clerks employed workers workers Peasants
Housing 3.3 4.7 2.5 3.1 6.9 7.0 7.2 6.3 5.1 2.1
Food 24.3 21.8 31.2 27.6 28.0 29.7 28.3 31.9 31.4 26.2
Clothing 8.1 9.6 8.0 7.9 6.7 7.3 5.4 5.6 5.4 4.5
Medical care 3.7 3.2 7.1 8.7 5.9 5.1 6.4 7.3 8.1 11.5
Transportation 10.8 16 10.8 12.1 10.2 10.1 11.5 7.2 9.4 7.8
and commu-
nication
Education and 27.7 15.1 13.9 14.9 13.6 12.6 12.2 11.3 10.2 10.9
entertainment
Utilities 4.1 6.3 7.7 6.3 5.4 5.1 5.3 6.5 5.3 4.0
Domestic 3.4 2.6 1.7 3.2 5.1 2.7 2.6 2.8 2.3 2.8
electronic
appliances
Daily 1.2 1.1 1.4 1.7 1.5 1.4 1.4 1.4 1.5 1.4
necessities
Interpersonal 8.2 7.1 5.0 6.7 5.9 5.4 6.9 4.8 5.4 8.7
relationships
Other 1.4 5.1 6.1 2.8 6.1 6.2 4.5 5.6 8.4 11.9
661
b1344-ch32
662 Tian Feng
In addition, what is noteworthy is that all social strata spend a

relatively considerable amount of money on maintaining interpersonal rela-
tionships, all accounting for 5% of the total spending. The peasant stratum
which boasts the lowest consumption level even spends an astounding 9.4%,
which indicates the fact that interpersonal relationships are still of strong
relevance in rural China.
Ownership of consumer durables among each

social stratum
In terms of consumer durables ownership, regular consumer durable goods
ownership has reached saturation in each social stratum, with the aver-
age ownership of color TV sets and mobile phones in each social stratum
exceeding one and that of color TV sets, refrigerators and telephones reach-
ing saturation in most of the social strata. The ownership of other consumer
durables among peasant workers and peasants is significantly lower. After
excluding the peasant workers stratum and peasant stratum, the ownership
of refrigerators, washing machines and landline telephones among families
of each stratum also exceeds 0.8. Such new consumer goods as private cars
and computers are also rather prevalent, with the ownership of comput-
ers among people of medium-to-upper stratum already exceeding 0.7. This
indicates that in terms of the popularization of large consumer durables,
the income of the peasant worker stratum and the peasant stratum have
not caught up with the consumption growth, with the consumption capac-
ity of these two strata rather limited. And given limited income growth,
such government-sponsored campaigns as “home appliances going to the
countryside” and “automobiles going to the countryside” schemes cannot
effectively jump-start the consumption capacity of peasant workers and
peasants.
Consumption patterns for each social stratum

The Chinese people tend to depict a lifestyle comprising four aspects: food,
clothing, housing, and transportation. And different social strata have dif-
ferent manifestations in these four aspects. With relatively easy access to
public fund, the stratum of state cadres and the stratum of managers/
operators of state-owned and collective enterprises boast the fewest people
who “rarely eat out”. And the stratum of private business owners and the
stratum of managers/operators of non-public-owned enterprises boast the
most people who choose to dine at upscale restaurants, accounting for 12.2%
March 5, 2013
16:48
9in x 6in
Table 32.5. Ownership of Consumer Durables among Each Social Stratum.
Individual
industrial


Color TV set 1.5 2.1 1.5 1.5 1.3 1.3 1.3 1.2 1.2 1.0
Refrigerator 0.9 1.3 1.0 1.0 0.9 0.9 0.8 0.8 0.5 0.3
Washing 1.0 1.2 1.0 0.9 1.0 0.9 0.8 0.9 0.6 0.5
machine
Private car 0.1 0.7 0.2 0.2 0.2 0.1 0.2 0.1 0.0 0.0
Computer 0.8 1.1 0.8 0.8 0.8 0.7 0.3 0.5 0.2 0.0
Landline 0.9 1.4 1.0 1.0 0.9 0.9 0.8 0.7 0.6 0.5
telephone
Camcorder 0.2 0.2 0.2 0.1 0.2 0.1 0.1 0.1 0.0 0.0
Piano 0.1 0.0 0.0 0.0 0.1 0.0 0.0 0.0 0.0 0.0
Microwave oven 0.6 0.8 0.7 0.6 0.6 0.6 0.3 0.4 0.2 0.0
Mobile phone 2.5 2.6 2.3 2.4 2.0 2.3 1.8 1.8 1.9 1.1
663
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664 Tian Feng
and 8% respectively. A relatively large proportion of professional/technical

personnels and clerks dine at medium-scale restaurants, popular restau-
rants for the masses, and snack bars. And over 40% of individual industrial
and commercial households, the self-employed and urban workers rarely eat
out. In the rare cases that they do, they invariably choose small restaurants
and snack bars. A 58.5% of peasant workers and 66.8% of peasants rarely
eat out, with snack bars being their first choice.
In terms of clothing, there are great differences between each social
stratum with respect to the place to purchase clothing items. What is
noteworthy is that private business owners buy over 40% of their cloth-
ing items at designer apparel stores, while people from other strata do
not buy that much clothes at such stores. Among the upper stratum and
medium stratum, people tend to share similar clothing consumption pat-
terns. For instance, state cadres, managers/operators of state-owned and
collective enterprises, managers/operators of non-public-owned enterprises,
professional/technical personnels and clerks purchase approximately 40%
of their clothing items at large shopping malls and 50% at regular apparel
stores. People from lower social strata tend to buy clothing at regular
apparel stores, with the peasant stratum mainly purchasing clothes at vil-
lage fairs. As an emerging, alternative way of shopping, online shopping is
opted by 4.5% of professional/technical personnels, the highest proportion
of all strata, which may be explained by the fact that as the most tech-
savvy and skilled social strata it can embrace new stuff and new way of life
most readily.
In terms of transportation, public transport is the most widely adopted
way. Additionally, cycling and walking are also popular. Those who drive
private cars are mainly concentrated in the medium-to-upper social stra-
tum, with over 45% of private business owners choosing to drive private
cars, the highest of all. There are also 9.1% of private business owners
who drive public-owned cars. Besides private business owners, 7.8% of state
cadres and 7.5% of managers/operators of state-owned and collective enter-
prises drive public cars. Over 10% of state cadres, managers/operators of
state-owned and collective enterprises, managers/operators of non-public-
owned enterprises and professional/technical personnel drive private cars,
indicating that private cars have become increasingly prevalent among
medium stratum and above. Few people among lower social strata own
cars, with their main means of transportation being walking, cycling and
taking public transport.
March 5, 2013
16:48
Table 32.6. Lifestyle of Each Social Stratum (%).
Individual
9in x 6in
industrial


Food
Snack bars 17.6 13.6 5.1 15.1 13.1 21.6 22.5 22.2 22.0 21.0
Street food stands 7.8 13.6 7.5 18.3 12.6 12.7 6.7 12.9 8.7 1.4
Small restaurants 25.5 18.2 17.0 20.4 18.0 18.4 18.5 19.2 16.8 12.9
Fast food stores 9.8 4.5 9.4 16.1 14.0 14.9 8.6 9.5 11.9 4.7
Popular 23.5 4.5 34.0 18.3 23.9 24.4 12.1 14.4 5.5 2.5
restaurants for
the masses
Medium-scale 35.3 31.8 28.3 28.0 24.8 21.0 7.7 10.9 3.2 0.9
restaurants
Upscale 3.9 13.6 1.9 7.5 1.4 3.5 1.0 0.5 0.0 0.1
restaurants
Other places 0.0 0.0 1.9 0.0 0.0 0.0 0.7 0.5 0.9 0.5
Rarely eating out 15.7 36.4 20.8 22.6 27.9 25.7 45.6 40.6 52.5 66.8
Clothing
Designer apparel 15.7 40.9 17.0 22.6 18.9 22.2 9.2 11.5 6.7 0.8
stores
Large shopping 43.1 45.5 43.4 41.9 42.8 39.4 18.5 23.7 13.3 4.8
malls
(Continued )
665
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March 5, 2013
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666
Individual
industrial
9in x 6in

Regular apparel 52.9 40.9 54.7 49.5 51.4 52.1 48.8 52.7 48.8 28.8
shops
Supermarkets 5.9 4.5 7.5 11.8 10.8 14.9 9.1 11.0 12.6 5.7
Street stands 9.8 4.5 9.4 8.6 7.2 6.7 21.0 18.9 22.0 27.7
Wholesale/little 11.8 18.2 7.5 14.0 11.3 14.9 17.3 24.3 15.8 8.1
Tian Feng
markets
Village fairs 9.8 0.0 1.9 6.5 5.9 3.5 14.9 3.6 25.5 50.0
Online shopping 0.0 0.0 0.0 5.4 1.8 1.0 0.3 0.8 0.4 0.3
Other places 0.0 0.0 1.9 0.0 0.5 1.0 1.7 1.7 1.4 3.1
Transportation
Walking 31.4 13.6 24.5 36.6 32.9 29.5 41.3 40.5 42.7 48.2
Taking public 49.0 22.7 47.2 53.8 51.4 59.7 40.8 47.8 43.6 37.3
transportation
Taking taxies 9.8 13.6 7.5 11.8 8.1 11.7 3.5 4.7 1.6 1.3
Driving 7.8 9.1 7.5 5.4 2.3 4.8 1.7 1.7 1.1 0.7
public-owned
cars
Driving private 13.7 45.5 11.3 12.9 11.7 7.0 8.1 2.9 1.8 0.9
cars
Cycling 45.1 27.3 39.6 35.5 40.1 39.0 48.2 51.2 54.3 51.7
Others 0.0 0.0 1.9 0.0 0.0 0.0 0.3 0.0 0.0 0.5
b1344-ch32
Fig. 32.2. Housing assets of each social stratum.
In terms of “housing”, since there is little comparability between hous-

ing in urban and rural areas and different regions, it is difficult to choose the
right indicator to compare the housing quality. However, as far as property
value is concerned, we may conclude that the housing properties of private
business owners and managers/operators of non-public-owned enterprises
are the most valuable, followed by those of state cadres, with those of peas-
ant workers and peasants being the least valuable. Additionally, we can
also see that the average number of self-owned housing property among
each social stratum exceeds one, with home ownership ratio exceeding 90%,
which indicates that housing consumption boasts strong rigidity among all
social strata, meaning that anyone, whichever stratum he/she belongs to,
will consider housing as a necessary consumption item. Therefore, the rising
of housing prices is bound to exert a profound impact on the consumption
capacity of ordinary social strata.
We expound the differences between each social stratum in terms of
consumption level, consumption structure, ownership of consumer durables
and consumption pattern, leading to the question of whether consumption
differentiation can be used as a factor in identifying social strata, or in
other words, whether the differences between each social stratum in China
can be reflected by consumption, with the results consistent with those
obtained through the approach of occupational stratification. To find out,
we will need to combine factors of consumption level, consumption struc-
ture, ownership of consumer durables and consumption pattern and conduct
a comprehensive analysis.
668 Tian Feng
The Relationship between Consumption Stratification

and Other Kinds of Social Stratifications
According to classical theories of social stratification, there shall be a close
relationship between consumption stratification and occupational stratifica-
tion, income stratification, and strata consciousness. From the calculations
of relevant survey data in 2008, it may be concluded that there does exist
such a relationship.
Consumption stratification by occupation

In the occupational hierarchy, the private business owner stratum boasts the
highest proportion of people who are financially wealthy, reaching 72.7%,
with that of those financially well-off reaching 22.7%, meaning that 95.4%
of private business owners are counted as wealthy and well-off people, which
well reflects the social reality in current China. 33.3% of state cadres belong
to the wealthy stratum, with 27.5% belonging to the well-off stratum,
21.6% belonging to the medium-to-upper stratum and 11.7% belonging to
the medium stratum, indicating that as far as consumption is concerned,
state cadres are still of high positions. 37.7% of managers/operators of
state-owned and collective enterprises belong to the wealthy stratum, a
proportion slightly lower than that of their counterparts in non-public-
owned enterprises. However, the proportion of managers/operators of state-
owned and collective enterprises who belong to the medium-to-upper
stratum and above is generally higher than that of their counterparts in
non-public-owned enterprises, which indicates that as far as consumption
stratification is concerned, the two strata do not differ very much from
each other.
A high proportion of professional/technical personnels and clerks
belong to the medium stratum, with those belonging to the medium-to-
lower stratum, the impoverished stratum and the most impoverished stra-
tum accounting for only a small percentage. As the major constituent of
middle class, they are also situated in the middle of the consumption hierar-
chy. The proportion of urban workers, individual industrial and commercial
households and the self-employed, peasant workers and peasants among the
medium-to-lower stratum, the impoverished stratum and the most impover-
ished stratum exhibits a trend of increasing growth, with them all belonging
to lower social strata; especially in terms of consumption, 39.5% of peasants
belong to the impoverished stratum and the most impoverished stratum,
and only 2.3% of them belong to the well-off stratum and the wealthy
March 5, 2013
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9in x 6in
Table 32.7. Distribution of Each Occupation in Consumption Hierarchy (%).
The most Medium- Medium-

impoverished Impoverished to-lower Medium to-upper Well-off Wealthy

stratum stratum stratum stratum stratum stratum stratum

State cadres 0 2 3.9 11.7 21.6 27.5 33.3
Private business owners 0 0 0 4.6 0 22.7 72.7
Managers/operators of 0 1.9 0 7.6 22.7 30.2 37.7
state-owned and
collective enterprises
Managers/operators of 0 0 2.2 14 20.4 23.7 39.8
non-public-owned
enterprises
Professional/technical 0.5 0 3.7 12.2 27.9 20.3 35.6
personnels
Clerks 0 2.2 3.2 11.8 25.4 24.4 33
Individual industrial and 3.4 5.4 16.7 21.7 26 13.4 13.6
commercial households
and the self-employed
Urban workers 2.5 4.3 12.3 19.8 31 17.8 12.3
Peasant workers 4.6 8.9 24.9 22.5 24.8 9.8 4.6
Peasants 21.1 18.4 30.1 19.7 8.4 1.5 0.8
669
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670 Tian Feng
stratum, which starkly indicates the reality that the economic and social
status of peasants remain rather low and there are drastic gaps between
urban and rural areas, with the rural consumption disproportionately low.
Consumption stratification by income

There is a closer relationship between income and consumption. We can
readily observe that the higher the income the higher the consumption.
58.6% of the wealthy stratum in terms of income belongs to the wealthy
stratum in terms of consumption, with only 0.7% belonging to the impov-
erished stratum and the most impoverished stratum. 35.8% of the most
impoverished stratum in terms of income belongs to the impoverished stra-
tum in terms of consumption, with only 1.0% belonging to the wealthy
stratum and the well-off stratum. The proportion of people from other
income strata in consumption hierarchy also changes according to the pat-
tern that more people from higher income strata belong to higher consump-
tion strata, while more people from lower income strata belong to lower
consumption strata. Even after adjusting for the variable of family mem-
ber number, the partial correlation coefficient between income stratification
and consumption stratification reaches 0.64, indicating that there exists a
relatively strong correlation between income stratification and consumption
stratification.
Consumption stratification by subjective strata

identification
The 2008 survey also inquired about subjective stratum consciousness, ask-
ing the surveyees to identify the social stratum they belonged to. Rele-
vant analysis shows that consumption strata can better reflect subjective
stratum consciousness, with the partial correlation coefficient between the
two reaching 0.34. About 50% of those who perceive themselves as belong-
ing to the upper stratum belong to the wealthy stratum and the well-off
stratum in consumption hierarchy. Over 40% of those who perceive them-
selves as belonging to the medium-to-upper stratum belong to the wealthy
stratum and the well-off stratum in consumption hierarchy. And 26% of
those who perceive themselves as belonging to the medium stratum belong
to the wealthy stratum and the well-off stratum in consumption hierarchy.
Those who perceive themselves as belonging to the medium-to-lower stra-
tum are mainly concentrated in the medium-to-upper stratum, the medium
stratum and the medium-to-lower stratum in consumption hierarchy.
March 5, 2013
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9in x 6in
Table 32.8. Distribution of Each Income Stratum in Consumption Hierarchy (%).

Medium- Medium- The most
Wealthy Well-off to-upper Medium to-lower Impoverished impoverished
Consumption stratum stratum stratum stratum stratum stratum stratum
Income
Wealthy stratum 58.6 18.1 14.2 5.2 3.3 0.7 0.0
Well-off stratum 20.7 25.6 31.0 13.6 6.3 1.7 1.1
Medium-to-upper stratum 8.4 18.8 34.1 23.2 11.0 3.1 1.4
Medium stratum 2.2 5.6 25.0 28.3 25.8 8.3 4.7
Medium-to-lower stratum 0.5 1.7 10.3 25.1 34.7 16.9 10.8
Impoverished stratum 0.0 1.2 5.4 14.8 26.5 23.8 28.4
The most impoverished stratum 0.0 1.0 8.6 16.0 18.9 19.8 35.8
671
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March 5, 2013
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672
9in x 6in
Table 32.9. Distribution of Each Perceived Stratum in Consumption Hierarchy (%).
Medium- Medium- The most

Stratum Wealthy Well-off to-upper Medium to-lower Impoverished impoverished
consciousness stratum stratum stratum stratum stratum stratum stratum
Tian Feng
Upper 34.8 15.2 23.9 13.1 10.9 0 2.2
Medium-to-upper 26.6 15.8 20.2 18 12.4 4 3
Medium 14 12 21.7 21.7 18.1 7.5 5.1
Medium-to-lower 6.5 10.6 22.4 20.9 20.4 9.6 9.7
Lower 1.5 3.5 13.3 16.9 25.4 17.7 21.7
Hard to say 7 8.1 20.9 14 24.4 8.1 17.4
b1344-ch32
17.7% of those who perceive themselves as belonging to the medium-

to-lower stratum belong to the impoverished stratum in consumption hier-
archy, while the proportion for those belonging to the most impoverished
stratum in consumption hierarchy reaches 21.7%. Due to the influence of
the “central tendency”, there are greater differences between subjective
stratum consciousness and the objective indicators for consumption strat-
ification, which nonetheless complies basically with the requirements of
stratification.
Table 32.9 analyzes the relationship between consumption stratification
and the three standards, occupational stratification, economic stratification
and stratum consciousness, coming to the conclusion that there exists a rel-
atively close link between consumption hierarchy and the three standards,
and that those belonging to high social strata in terms of occupation strat-
ification, economic stratification and stratum consciousness also belong to
high strata in consumption hierarchy. Likewise, lower social strata are also
well reflected by consumption stratification. Generally, consumption strati-
fication indicators that combine factors of consumption level, consumption
structure, ownership of consumer durables and consumption pattern can
sufficiently reflect differences between social strata.
Conclusions and Implications

Before reform and opening up, the social identity and social status of peo-
ple generally remained unchanged, with differences among them in terms
of income and social security benefits mainly based on political status
and occupational status. Although there were certain income differences
between social classes, due to a strongly egalitarian distribution and con-
sumption system and the state’s strict control of consumer goods under
the planned economy system, the consumption structure and consumption
level of most households were rather similar. After reform and opening up,
due to ongoing socio-economic differentiation, China’s social stratum sys-
tem has undergone a radical change, with the original rather simple social
structure comprising “two classes and one stratum” (working class, peas-
ant class, and intellectual stratum) going through a dramatic transition to
ten major social strata (Lu Xueyi, 2002). In the meantime, the consump-
tion level, consumption structure and consumption pattern of each social
stratum are also undergoing increasing differentiation.
Adopting occupational grading standards, this chapter analyzed the
consumption of each social stratum and discovered that social stratum
674 Tian Feng
differentiation can be reflected by differences in consumption level, con-

sumption structure, ownership of consumer durables, and consumption pat-
tern. Those higher in the occupational hierarchy tend to consume more,
with their Engel’s coefficient approximating that of the well-off stratum;
they tend to maintain upscale consumption in terms of consumption pat-
tern, with the ownership of regular household consumer durables prevalent
and the ownership of new, big-ticket consumer goods such as automobiles
and computers also high. Those lower in occupational hierarchy tend to
maintain a low level of consumption, and due to the influence of the marke-
tization of consumption in education and medical care, their Engel’s coef-
ficients cannot truly reflect their actual consumption structure, yielding
“distorted” results. Although the ownership of regular household consumer
durables is also nearly prevalent, the ownership of new, big-ticket con-
sumer goods is still relatively low, and in terms of consumption pattern
they mainly sustain a medium-to-low-scale consumption.
During the current social reform in China, the original occupational
stratification system has undergone certain changes, with the occupational
boundaries between industries, professions, and ownerships more blurry.
Income stratification is also hard to measure due to the influence of “gray
income” and deliberate under-reporting. Subjective stratum consciousness
exhibits a “central tendency”. Consumption not only reflects differences
in occupational status, it can also be used to construct new stratification
indicators: consumption stratification indicators constructed by integrating
factors of consumption level, consumption structure, ownership of consumer
durables and consumption pattern can better identify different social strata.
There is a close link and strong consistency between consumption stratifica-
tion and such other stratification standards as occupational stratification,
stratification by economic status and subjective identification.
Currently, consumption is a hot topic for academic researchers in China.
This chapter focuses primarily on quantitative research using survey data,
without conducting any analysis on consumption culture, consumption con-
ception and social functions of consumption. In terms of exploring and
constructing consumption stratification indicator, efforts shall be made to
combine both on-site research and comparative analysis, in order to further
improve the consumption stratification indicator, and enhance its applica-
bility in social sciences.
Part Nine
Class Consciousness and Values
675
676
33
Working Class Formation in Brazil:
From Unions to State Power
A. Cardoso
Presentation
Getulio Vargas was a virtuous (in a Machiavellian sense) political personage.
In 1930, he headed a successful military coup d’état against a 40-year-old
oligarchic regime and ruled the country from then on. He was the main
figure of the 1934 Constituent Assembly that named him the constitutional
president, and later headed another military coup in 1937, then ruled as
a dictator until 1945 when he was thrown from power by the same mili-
tary that had supported him eight years ago. Democratic elections brought
him back in office in 1950 before he committed suicide in 1954 amidst an
intense conservative campaign which was escalating into another military
coup. The coup was halted by the President’s dramatic act, but its pos-
sibility would haunt all succeeding democratic governments until its final
actualization in 1964.
Vargas was by far the most important Brazilian political figure of the
20th century. The virtù of his political project was to give way to what I
will call here a double binding mechanism that assured the accumulation of
capital and at the same time granted workers a share in the distribution
of wealth produced via state-sponsored redistributive social policies. This
mechanism also assured workers voice in the political arena, both through
a state-controlled but increasingly militant labor movement and its connec-
tions with political parties in ever more competitive political settlements.
The combination of these elements resulted in socially ingrained political
dynamics which shaped workers’ economic, social and political aspirations
and identities in profound and enduring ways, defining the scope and hori-
zon of their collective identity and class consciousness. It is impossible to
677
678 A. Cardoso
say anything about the working class in Brazil without immediate reference
to this legacy (which Brazilians label the “Vargas Era”). In the following
sections, I will argue that every new generation of workers had to cope with
this legacy in a way or another, and no other competing political project has
had the strength or the resources to overcome it, mostly because it has been
a binding mechanism that has cemented the country’s capitalist sociability
throughout history.
Inclusion
The inclusion of the working classes in the Brazilian social dynamics and
political regime was accomplished mainly (though not exclusively) through
the multi-dimensional regulation of the labor market.1 The political organi-
zation, mobilization, cooptation, or control of the working classes and their
labor representatives throughout history cannot be properly understood
out of the framework of the establishment of legal guarantees for the indi-
vidual workers, which gave them visibility vis-à-vis the state, ensured them
some relief in unemployment, defined minimum wages, mandated maximum
working hours etc., while social security systems provided a social safety
net for workers and their families. In Brazil, like in other Latin American
countries, the regulation of the labor market was the vehicle for their inclu-
sion under the import substitution industrialization model, and workers
had real hopes of being included in the regulatory framework guaranteed
by the state.
Nobody will deny that the formal labor market and its institutions
have never included all workers. The informal sector has been and still is
large in the country. But the expectation of inclusion has always played an
“inclusive” role amongst Brazilians and has always been a central aspect of
their aspirations and projects, especially among those who fled the coun-
tryside in search for better living conditions in the urban areas after at
least the 1930s. It must be noted that expectation was occasionally fulfilled
because of the high turnover rates that characterized the urban labor mar-
ket dynamics, and this has helped to universalize the experience of a formal
1 In1943, Varga’s authoritarian regime consolidated the labor legislation enacted after the
1930 coup d’état in a unified code, the Consolidation of the Labor Law (Consolidação das
Leis do Trabalho — CLT). The code regulates working hours, protection of women and
adolescents, paid annual leave, overtime work, safety at work and many other contractual
issues. It also regulates the union structure and collective bargaining, including the right
to strike. In a word, work related individual and collective rights.
Working Class Formation in Brazil: From Unions to State Power 679
employment as synonym to state protection, albeit most often too short to

assure enduring socio-economic security.
Figure 33.1 brings strong evidence of the adhesion of Brazilian rural–
urban migrants to the promises of the “Vargas Era”. It depicts the number
of work registry books (carteiras de trabalho) issued by the Ministry of
Labor from 1930 to 1976,2 the number of urban formal jobs created, and
the increase in the urban Economic Active Population (EAP) during the
period. Until 1940, the formal urban labor market had created less than two
million out of five million existing occupations, and the Ministry of Labor
had issued less than 800,000 work registry books. From 1940 to 1950, of
near 1.8 million jobs created, 1.2 million were formal jobs. However, the
Ministry of Labor issued 2.7 million work books, equivalent to 230% of
25,000
Work books Urban EAP Formal urban jobs
20,000 20,109
15,000
12,887
10,000 9,585
6,043 7,403
5,000 5,034 4,840 4,386

3,564
1,913 2,698
1,828 1,281
769 1,165
-
Before 1940 1940-50 1950-60 1960-70 1970-76
Fig. 33.1. Evolution of the urban EAP, the number of work registry books expedited
by the Ministry of Labor and of the number of formal jobs created in Brazil, 1940–1976
(in thousands).
Source: IBGE: Anuário Estatı́stico do Brasil, several years; and IPEADATA for estimates
of the urban EAP and of the social security contributors. Here contribution to social
security is taken as a proxy of the creation of formal jobs.
2 The work registry book (carteira de trabalho) was created by Vargas in the early 1930s.
Every formal job generates a record in the book with information on salary, working
hours, occupation, annual paid leave and a few others. It also registers the end of the
job, including its reason (just cause, voluntary leave etc.) If a job is registered in the
worker’s book, it is because the employer is (at least formally) prepared to comply with
the labor law.
680 A. Cardoso
the number of formal jobs created. This seems to be strong evidence that
workers did believe in the possibility of being incorporated in the formal
labor market. This dynamics had been deepened in the following years.
Considering the entire period, the increase in the number of formal jobs was
equivalent to only 38% of the number of workers who qualified themselves
for a formal occupation by getting their work registry books. Reading the
evidence differently, it can be said that migrant workers’ hopes of inclusion
had to face a discount rate of 62%, which was the proportion of work book
owners that exceeded the number of formal jobs created.
What is important for the dynamics of Vargas’ double binding mecha-
nism is that migrant workers did get their books, irrespective of the sheer
probability of making them useful. They seemed to believe in the promise
of inclusion, and qualified themselves for its eventual fulfillment. This seems
to be strong evidence that the formal labor market and its regulations, with
its promises of socio-economic security and guarantees of interest represen-
tation, have become one of the most important, if not the most important,
inclusive mechanisms in the country.3 It fed a long-lasting process of sub-
ordinated but at the same time desired incorporation of workers in the
capitalist dynamics. But this is only one side of the picture.
The overarching inclusive mechanism that fed workers’ expectations
over time was never universal in practice, but its intransience has much
to do with the fact that the Brazilian labor law is constitutionalized. The
constitutions of 1937, 1946, 1967, and 1988 have all accepted the terms of
the 1934 constitution which first inscribed the labor code in its body, under
the auspices of Getúlio Vargas. The most ambiguous one was that of 1946,
of course. Vargas was expelled from office in 1945 by a presumably demo-
cratic military coup d’état perpetrated to assure the general elections Var-
gas was trying to control (Gomes, 1988; Werneck Vianna, 1999). The Con-
stitutional Assembly gathered in 1946 was expected to destroy the pillars
of the proto-fascist “Estado Novo”, the authoritarian, corporatist regime
instituted by Vargas’ 1937 constitution. But this did not happen. While
condemning fascism and corporatism, the 1946 code did not derogate the
CLT (see footnotes 1, 2, 4), either in its individual or collective rights. The
authoritarian union structure created by Vargas and the detailed regulation
of the labor market remained intact.4 The repressive rights to strike and
3I developed this in length in Cardoso (2010).

4 The union structure designed in 1939 by the Vargas regime and still in effect is composed
of local, municipal unions, federations congregating at least five unions of the same
the state-controlled collective bargaining system were also kept untouched.5

This cohabitation of a series of authoritarian regulations in a democratic
institutional settlement would characterize the Brazilian Industrial Rela-
tions’ system ever since, and would mold workers’ and their representatives’
strategic action in profound ways.
In fact, the Brazilian Communist Party (PCB) was proscribed again in
1947,6 and the new democratic government intervened in all major unions
controlled by the communists and other union leaders in one way or another
linked to the Vargas’ political project.7 The interventions were legal, once
they were provided in the CLT. But they were ambiguously constitutional,
for the 1946 national code stated that unions were free, adding that the
law would regulate their constitution and practice. The Dutra government
has not made tabula rasa of the 1946 constitution, but the ambiguity of
the constitutional provisions inaugurated a process of legal, judicial and
political disputes around the definition of workers’ collective rights that
had resumed until the 1964 military coup.8 Filho (1979) analyzed laws,
decrees, parliament debates and jurisprudence and proved the point from
the legislation point of view. But this is only a symptom of a larger, political
dynamics that has shaped the system’s overall identity.
In fact, after the proscription of the PCB in 1947 and the subsequent
interventions in official unions, President Eurico Dutra repeatedly post-
poned elections in the union system (Filho, 1979). Many leaders had been
or would be in office for ten years or more, nominated either by Vargas’
(1937–1945) or Dutra’s ministers of labor. The first elections only occured
category of workers in a federated State, and confederations of at least three federations.

The legal federations and confederations have little, if any bargaining power today, but
they are still entitled to a certain share of the union tax (more on which below). This has
created an incentive for the reproduction of a federation–confederation system which is
completely isolated from the labor movement but which has access to funds.
5 The 1937 constitution forbade strikes and lock-outs, while the 1946 one provided that
strikes were free “according to the law”. In June 1946, the Dutra government enacted the
Decree 9.070 regulating strikes, in practice criminalizing them much in the 1937’s terms.
The Decree can be found in http://www.jusbrasil.com.br/legislacao/126565/ decreto-
lei-9070-46 (visited in November 2010). Collective bargaining was also controlled by the
Ministry of Labor, which instructed and defined bargaining’s scope and content.
6 The PCB was funded in 1922, and declared illegal in 1927. In 1945, it was legal again,
and proscribed in 1947 but returned to legality in 1985.

7 The literature on the matter is increasing in recent years, see Motta (2002), Ferreira
and Reis (2007), Ridenti and Reis (2007).

8 Eurico Gaspar Dutra succeeded Vargas in 1946 and stayed in power until 1950, handing
it back to Vargas after democratic elections.

682 A. Cardoso
in 1950 under the new Vargas democratic rule (1950–1954). In 1951, the
“ideological statement” was banished, and the communists would gain con-
trol over a good majority of the most important manufacturing unions in
Rio de Janeiro, São Paulo and Rio Grande do Sul, and most especially in
the rural areas of the Northeast.9 During Vargas’ and Jango’s (1961–1964)
pro-labor governments, and also Juscelino Kubitschek’s (1955–1960) and
Janio Quadros’ (1961) labor-neutral governments,10 the “corporatist” union
structure proved to be a powerful tool in the hands of militant union lead-
ers. Contrary to the “classic” interpretation of the period,11 in many sectors
grassroots participation was the norm, not the exception (Nogueira, 1990;
Negro, 1999). Especially after 1954, the banned communists and other pro-
scribed or repressed political militants ambiguously combated the repressive
union structure while at the same time compete for its control via elections.
Once winning official unions’ elections, leftwing militants would virtually
close them to any possible competition, and a good part of the militant’s
energies were devoted to winning and keeping control over official unions.
The Ministry of Labor was the single constraining power to militance, and
an important one, but after 1950 labor ministers were seldom explicitly
anti-labor.12
Important for the argument put forward here, critique of the union
structure and the CLT were part of the overall process of identity formation
9 See Reis (2007) and French (2004). The “ideological statement” was instituted by the
Vargas dictatorship and it was mandatory for candidates in union elections. The state-
ment was emitted by the Department of Political and Social Order (DOPS) and informed
whether the worker was or had been communist or shared other “antisocial” ideologies.
The statement was banned in 1946, reinstituted in 1950, banned again in 1951 and
instituted anew in 1967.
10 A good measure of the anti- or pro-labor practices of different governments are the
number of federal interventions in official unions. According to Erickson (1979: 67–68),

the Dutra government perpetrated 219 interventions. Under Vargas’ second term there
were seven interventions, 35 under Kubitschek (1955–1960). There is no information on
interventions for the 1961–1963 period, but in 1964 and 1965 the military intervened in
761, or 37% of the 2,049 existing workers’ unions (last figures in Martins, 1989: 75 & 100).
Interventions were concentrated in São Paulo, Rio de Janeiro and Pernambuco (mostly in
this state’s rural areas). See also Figueiredo (1978: 137), who offers smaller numbers (433
interventions in the 1964–1965 period) due to a more restrict definition of intervention,
meaning the deposition of elected officials and nomination of Ministry of Labor’s dele-
gates to administer it. Martins (1989) and Erickson (1979) use the statistics presented by
the Minister of Labor to the Congress in a 1965 official audience about the interventions.
11 I refer to the very influential works of Cardoso (1969, reprinting an article from 1961),
Rodrigues (1966), Martins Rodrigues (1966) and most particularly Weffort (1970).
12 Many of them were also willing to control unions’ actions. Erickson (1979) lists the
names and gives a brief profile of all ministers of labor since the creation of the Ministry
in 1931.
of the PCB’s union action. From within the authoritarian union structure,
the militants would gather fiduciary and institutional resources that fed
their recurrent intents to build an autonomous union structure, most spe-
cially a central federation that could coordinate the workers’ movement in
a national perspective. The General Workers’ Command (Comando Geral
dos Trabalhadores — CGT) created in 1962 and controlled by the PCB
until its destruction in 1964 was an autonomous central federation, cre-
ated irrespective of the CLT’s explicit provisions forbidding inter-category
organizations (Sandoval, 1994; Santana, 2001).
The same institutional, legal resources gave the proscribed communists
a niche in which they could thrive and from which they would influence the
political process. Just as the new unionists by the end of the 1980s, the com-
munists and their allies of the Brazilian Labor Party (Partido Trabalhista
Brasileiro — PTB) were virtually hegemonic in Brazilian unionism at the
doors of the 1964 military coup (Martins, 1989). And they were in control
both of the autonomous CGT and of the major official unions, including
most federations and confederations (Weffort, 1970).
These very brief remarks should suffice to show how flexible was the
“corporatist” union structure from organized labor’s point of view. That is
why I used corporatist in quotes. The overall legal system was formally
corporatist, but if the government was not explicitly anti-labor, corpo-
ratism was synonym to militance for communists, leftwing PTB affiliates or
Catholic militants, Marxists not aligned with the communists and indepen-
dent leaders not aligned with the Ministry of Labor. The union structure
instituted by Vargas did actually structure the union’s political marked, but
the “ministerialistas” (unions directly controlled by the Ministry of Labor)
were one amongst a myriad of other political and syndical affiliations.13
And in the second half of the 1950s, they were a poor minority.
13 In 1960, a National Workers’ Congress III was held in Rio de Janeiro. The cleavages
within the movement resembled in many ways that of the 1983’s congress that gave
birth to the Unique Workers Central (Central Única dos Trabalhadores — CUT). The
identity of all participants was defined in relation to the official union structure, either
opposing or supporting it. The difference was basically the strength of both postures.
Leftwing PTB and PCB militants wanted the end of the control of the Ministry of
Labor over that structure, but not the end of the “union tax” and the monopoly of
representation granted to official unions. The “ministerialistas”, or “pelegos” militants
allied to, or directly controlled by the Ministry of Labor opposed any reform. And the
“renovadores” (“renovators”) comprised all sorts of leftwing militants not aligned with
the PCB, including Catholic militants, independent socialists and Marxists, and inde-
pendent union leaders, strongly opposing the union structure (Martins, 1989: 82–86). In
1983, these same strategies were present at the congress that created the CUT, though
under different denominations, except for the PCB militants, now allied to the “pelegos”
684 A. Cardoso
All these were a clear result of Vargas’ political project. He knew

that organized labor would sooner or later “be the government”.14 On
1 May 1951, in a public discourse he also exhorted workers to “unite and
gather in your unions as free and organized forces. The authorities will
not be able to curtail your freedom, neither use pressure nor coercion.
The union is your fighting weapon, your defensive fortress, your instru-
ment of political action. Presently, no government will survive or have an
efficient power to implement its social policies if it does not have the sup-
port of the workers’ organizations” (Vargas, 1952: 322). The words free,
freedom, weapon and action are crucial here. They are antipodes of the
union structure Vargas had created, but he knew that the democracy would
open the way for its actual renovation. He was channeling the workers’
militance to the institutional, state-sponsored apparatus. He told work-
ers that this very apparatus should be freely occupied and agitated by
them not as a way to overcome capitalism, but as a way to redistribute
its products in a regulated way. He offered workers in general and work-
ers’ leaders in particular an identification project which was essentially
political.
To put it more clearly: Workers moved from rural areas to the cities
in search for better living conditions, and there they found state-protected
jobs and a militant labor movement demanding effectiveness of the existing
provisions to the employed workers, and extension of those provisions to
ever larger proportions of the working class, as well as a better place for
workers both in the emerging democracy and the capitalist distribution of
wealth. Formal labor market’s restricted scope and the employers’ resis-
tance to comply with the law has made a promise of all this (French, 2004),
but for most workers this market was a credible one, capable of feeding their
desires and aspirations. The credibility of the whole system was assured by
the labor movement’s ability to make the labor rights the horizon of its
collective identity, which means that the very identity of the system was
the production and reproduction of a project of the universal inclusion of
all workers in the dynamics and benefits of “organized capitalism” in its
Brazilian version. This has created a double binding system of incentives,
against any reform. The new unionists were the 1980’s “renovadores”, now a hegemonic
force.
14 Vargas said this in a discourse directed to workers on 1 May 1954, few weeks before
his suicide. In his words, “Today you are with the government. Tomorrow you will be
the Government” (Vargas, 1969: 473).
vested interests and actual political action from the part of labor leaders
and different governmental bureaucracies and party militancy on the one
hand; and of strong aspirations of inclusion from the part of the emerging
working class on the other hand. This is the system which explains most
of the overall political and social dynamics of the 1945–1964 period. The
struggle for the effectiveness and efficacy of the legal social rights instituted
by Vargas gave stability to the project, since the rights were constitutional-
ized, thus worth fighting for. This system, as I extensively argue elsewhere,
structured the capitalist sociability in the country as the main legitimat-
ing mechanism of its ingrained inequality.15 And these were nothing but
the very boundaries of the Vargas political project of giving capitalism a
legitimate institutional, competitive, state-controlled framework of devel-
opment, the reality of which depended on workers’ willingness to organize
and act to make it real. As a consequence, workers’ social identity and class
consciousness were mediated by the labor rights, and the labor rights, while
ineffective and contested by employers, were the horizon of their collective
action for most of the pre-1964 period.16
Repression
The 1964 military coup d’état would prevent workers from becoming “the
government”, but the military rule would soon taste the strength of the
inclusive mechanisms created by Vargas in unsuspected (and unexpected)
ways. The authoritarian regime would again ban the communists, silence
the labor movement and reinforce the dormant repressive features of the cor-
poratist union structure (including the “ideology statement”), now adding
new ones. As footnoted (footnote 10), some 760 interventions in unions
took place in 1964–1965, and the vast majority of the militants in unions
15 By capitalist sociability, I understand the instantiation of the structuring elements
of the social fabric in the day to day class relations. It is the action that takes the
“other” into account as an integral set of expectations, desires and normative expecta-
tions towards “me”, concerning the world as it should be. Those expectations, however,
are not the same for all actors, for capitalism is based on the unequal distribution of
social, political and economic resources, in such a way that the day to day encounters
that instantiate its structuring elements are power relations at the “end” of which the
unequal distributions are confirmed, reproduced, denied or reverted, but never neglected.
I develop this at length in Cardoso (2010).
16 The point was proposed for the first time by Paoli (1988).
686 A. Cardoso
with more than 1,000 affiliates were simply sacked (Martins, 1989).17 How-
ever, the control over the union structure, strict as it has been, was never
totalitarian. Elections were never totally banned, as it had happened under
Dutra. They were surely controlled, and divergence from the “revolution’s”
aims was formally not tolerated. Nonetheless, in 1968 a series of strikes in
the São Paulo and Belo Horizonte metropolitan regions showed that there
was fire beneath the ashes.18 The official unions were under control, but mil-
itancy was not, or not completely. There appeared to be room for a renewed,
autonomous unionism growing outside the grids of the state-controlled
corporatism.
And again, the 1968 AI-5 opened new ways for the implacable repres-
sion against dissidence, leaving little place for any union action at all except,
once again, controlled elections. As a matter of fact, the Institutional Act
Number 5 was the most repressive of a series of measures enacted by the mil-
itary dictatorship to control opposing social forces. It suppressed the habeas
corpus, closed the National Congress and intervened in the Supreme Court.
In practice, from 1968 to at least 1974 Brazil was in state of siege, and
all individual and collective rights and guarantees were suspended. Most of
the assassinations, deportations and torture of the opponents to the regime
took place in this period.19 But as mentioned, elections in unions were
not forbidden. And elections, even when controlled, are energetic moments.
They mobilize strategic discourses in search for adherents, motivate part
of the rank and file, involve actual voting procedures and open the way for
dissidence, if this is intelligent enough to grow unnoticed to the panoptic
eyes of authoritarian rulers. One cannot explain the “new unionism” (more
on which below) without immediate reference to this subterranean process
of militance building under the military regime (Negro, 2004: 279). Lula
was elected for the first time in 1969 for a secondary position in the São
Bernardo’s Metal Workers Union (in the São Paulo Metropolitan Region),
17 Itshould be noted that the communist-controlled City of São Paulo’s Metal Workers’
Union, the largest metal workers’ union in the country, had some 1,800 shop stewards
when its board was sacked by the military in 1964 (Nogueira, 1997: 21). Since the CLT
had no provisions for shop stewards, their presence resulted from union-to-firm collective
agreements and it is a clear indication of the communists’ grassroots militant strategy
previous to 1964, as well as of the flexible character of the labor code in a non-repressive
political environment. See also French (2010).
18 These crucial strikes were studied, among others, by Weffort (1972), Neves (1995), and
Negro (2004).
19 See, among others, the excellent revised book of Ridenti (2010).
and again for its directing board in 1972, becoming its president in 1975 at
the age of 30. Most new unionist prominent leaders were already in office
in presumed military controlled unions. And many others were compet-
ing for the direction of existing unions against military nominated union
bureaucrats in controlled elections, and some of them would succeed here
and then.20
It is of no minor importance that these new militants could thrive
within and despite the military regime’s control over unions. A good part of
them had close connections with the Catholic Church’s “Pastoral Operária”
and its “Theology of Liberation”.21 After the AI-5 public meetings and
gatherings were virtually forbidden, but the Church’s events were not.
Within temples or in events coordinated by the Church many leftwing
militants, most of which belonging to a myriad of Marxist dissidences of
the official communism, could gather and “keep the flame burning” while
awaiting for better junctures.22 Their survival as militants within the union
structure must also be taken into account in the explanation of the rapid
reorganization of the labor movement after 1978.23
20 For the role of the “oposições sindicais” (organized opposition to official unions) see
Sluyter-Beltrão (2010), Antunes (1988), Nogueira (1997), Cardoso (1999b), and Negro
(2004).
21 If the Catholic Church had played a crucial role in the 1964 coup d’état, supporting the
military and the conservative anti-communist wave that led to it, it has also been crucial
in the resistance to the dictatorship when it hardened the repression against opponents.
The Church harbored dissidents, organized workers in its “pastorais”, preached against
assassinations and torture, deepened discourses and practices of its “Theology of Libera-
tion” and its “option for the poor’ etc. “The Church’ here is an euphemism, of course, for
this institution was never a monolithic ideological block, and part of its leadership orga-
nized official First of May celebrations in conjunction with the military while combating
communism in its homilies (Negro, 2004). Dominicans and Franciscans were among the
most energetic anti-dictatorship militants, and many would face torture, death and exile,
see Ridenti (2010). But in many junctures the National Confederation of the Brazilian
Bishops (NCBB) would make public its positions against the dictatorship’s violence and
arbitrariness. Catholic militants were central to the “new unionism” and to the decision
to build a new political party, see Keck (1992), Löwy (2007) and Martinez (2007).
22 Not all Marxist dissidents of communism joined the armed resistance to the dictator-
ship. Many fled the country before being forced to, others would adopt different names
and occupations (many would get a manufacturing job), others would occupy the union
structure etc., see Ridenti (2010), Karepovs and Leal (2007).
23 It was probably Leôncio Martins Rodrigues (1989) who first called attention to this
particular feature of the rapid reorganization of the labor movement after the strikes of
1978.
688 A. Cardoso
The control of the union structure by the military and the repression
of workers’ movement disrupted the double binding mechanism of the Var-
gas’ political project. Rural workers kept on migrating to the cities in ever
higher waves in search for better living conditions,24 but found nothing but
low salaries, authoritarian work regimes and silenced unions,25 now spe-
cialized in providing health and judicial services to their affiliates (Martins
Rodrigues, 1966), instead of fighting for a project of redistribution and
citizenship. This means that, for most migrant workers, during authori-
tarianism the possibility of access to the labor and social rights linked to
the formal labor market was lived as an illusion, not a credible promise.26
Employers could evade the labor law without retaliation either from unions
or the state. The military dictated ever harsher wage policies while setting
the value of annual real minimum wage at one-third the level of the year of
its institution (194027). In that respect, the military succeeded in disrupt-
ing the legitimating, political moment of Vargas’ mechanism substituted
for sheer repression, and at the same time restricted and most of the times
forbade the struggle for the effectiveness of the labor rights, thus narrowing
the boundaries of workers’ inclusion in the capitalist dynamics to the oper-
ation of labor market brute forces. This has created tensions that were in
the very core of the authoritarian regime’s dynamics, and helped to force
its repressive frontiers, in the very moment a fraction of the military elite
24 As I show in Cardoso (2010), from 1960 to 1970, 36% of the rural population migrated
to urban areas, mostly to São Paulo and Rio de Janeiro. In the 1970s, the figure was of
42%. In 1980, 70% of the Brazilians lived in the cities. In 1940, there were only 30%. See
also Kowarick (1980) for the consequences of this process for the urban “spoliation”.
25 One of the best studies on the authoritarian work regimes in the auto industry in the
1970s is Humphrey (1982). The author combats the argument that auto workers were
a work aristocracy, as sustained by part of the literature on the 1978–1979 strikes. On
the same lines, Abramo (1999) gave a classic analysis of those strikes as a struggle for
dignity at work.
26 The literature on migration in Brazil is mammoth. For the feeling of delusion resulting
from the confrontation with the deteriorated, poor urban reality (including its precarious
labor market), see Durham (1973), Perlman (1977), Schühly (1981), Humphrey (1982),
Negro (2004), and Fontes (2008).
27 The minimum wage was a central element of the military wage’s policy, but not the only
one. In 1966, increases in contractual wages in the private sector started to be defined
by the government based on estimates of future inflation which would actually become
under estimates. Workers’ leaders who demanded increases above the official level could
be legally laid off and even imprisoned based on the “Law of National Security”. For
CLT provisions forbidding actions against economic policies, see Figueiredo (1978). For
the minimum wage, Cardoso (2010).
decided to prepare its withdrawal from power.28 This, I argue here, explains
the regime’s inability to respond to the “new unionism” when it became a
mass movement of demand for better salaries and working conditions. And
the mass character of the “new unionism” cannot be explained without
mentioning the regime’s repression of the workers’ demands for the effec-
tiveness of the labor rights, most especially the recovery of wage purchasing
power.
New Unionism
Not surprisingly, the strikes of May 1978 that gave birth to the “new union-
ism” were ignited by the discovery of the regime’s manipulation of the 1973’s
inflation index, which was used to set wage increases in the private sector
(Antunes, 1988: 18). The 1978’s wage bargaining in the metallurgic area
of the ABC region,29 in the metropolitan region of São Paulo, included
the recovery of the 1973’s manipulated inflation plus that of 1977. But
employers refused to concede on the first issue, which fused the strikes that
would rapidly spread to other economic sectors and states. Workers joined
in mass mobilization in spite of the violent repression that came about, and
the mass character of the movement made repression ever more costly and
unpopular. Dignity at work, distributive justice, fairness in working rela-
tions, better working conditions were central terms in the process of “new
unionism’s” identity formation (Abramo, 1999). This was also a crucial
aspect of the novelty of the emergent collective movement.
After 1978–1979, the labor movement became the natural estuary for
the various (more or less anonymous) forms of resistance to the military
regime, as Sader (1988) argued, and the regime was confronted with a signif-
icant rise in the costs of repression of the “emerging society” (O’Donnell and
Schmitter, 1986: 71), which saw in the “new unionism” a pressure point that
could bring about the downfall of authoritarianism.30 This particular con-
text contributed to the instantaneous politicization of the “new unionism”
and in the months and years that followed scholars and workers’ militants
28 For the fractions in the military elite as part of the will to open the regime, see, among
many others, Stepan (1986) and O’Donnell et al. (1986).

29 ABC stands for Santo André, São Bernardo do Campo and São Caetano, three indus-
trial (mainly metallurgical) areas in the Southeast of the metropolitan region.

30 The literature on the “new unionism” in Brazil abounds. Important books from dif-
ferent perspectives are Antunes (1988), Seidman (1994), Rodrigues (1999), and Sluyter-
Beltrão (2010).
690 A. Cardoso
would be very effective in constructing its identity as a complete novelty in

Brazil. Combining competitive and participatory occupation of the author-
itarian union structure inherited from the late 1930s, construction of a
parallel organizational structure freed from state control, grassroots mobi-
lization “of the masses” (and not only the represented workers) against the
authoritarian and post-authoritarian political regimes, and leftwing politi-
cal identity-formation (which resulted in the creation of a political party in
1980, the Workers’ Party — PT),31 the “new unionism” seemed to stand
alone as the genuine social and political expression of a modernized and
urbanized workforce.
Because of new unionism’s militant approach to workers’ interest rep-
resentation, Brazil experienced the most intense strike activity in Latin
America in the 1980s. Besides, some 30% of the formal employees were
affiliated to local unions by 1989, a figure that reached 45% in manufac-
turing and more than 70% in finance and education sectors. It is true that
the new unionism has never completely dominated the labor movement’s
political market.32 After 1979 the number of unions grew some 50% until
1989, but only 30% of this growth can be attributed to the direct influ-
ence of the new unionism (Cardoso, 1999a). In 1989, the overall budget
of unions amounted to near one billion US dollars financing the action of
over 10,000 unions representing 18 million workers in more than 30,000 col-
lective agreements, but only 14% of the existing unions were affiliated to
the Central Única dos Trabalhadores (CUT), the national central federa-
tion created in 1983 by the new unionists. If the CUT was by far the most
important and influential one, it had to compete with the “corporatist”
Central Geral dos Trabalhadores (CGT) and Confederação Geral dos Tra-
balhadores (also CGT), which affiliated other 10% of the existing unions.33
This means that 76% of the union market were not affiliated to any central
federation (Cardoso, 1999b: 79). All that notwithstanding, the reorganiza-
tion of the workers’ movement was led by the “new unionism” and it has
undoubtedly become the hegemonic force in it.
31 Seidman (1994) named this pattern as “militant unionism”. Sluyter-Beltrão (2010)
calls it “social movement unionism”. Both call attention to its novelty.

32 The term is proposed by Pizzorno (1978).
33 The two CGT were not exactly corporatist, for the labor law that regulated the union
structure would only make central federations legal in 1988. But those central federations
gathered what the new unionists called “pelego” leaders reminiscent of the military
regime’s repressive interventions (to which I will return) and other militants that opposed
the reform of the labor law.
Because of its efficacy in representing workers’ interests, public opinion

soon became highly favorable to unions, placing them amongst the most
trustful institutions in the Brazilian emerging democracy. In 1990, 56% of
the voters declared that unions were trustworthy, ranking them just below
the Catholic Church (82%) and the Supreme Court (62%).34 And as a
corollary to this hegemonic process, a top new unionist leader, Luis Inacio
da Silva, or simply “Lula”, was almost elected for presidency in 1989.35
It is true that the novelty of the “new unionism” was constructed
against a very simplified (and incomplete) version of the double binding
Vargas’ legacy. The alter of the “new” was a pattern of union action which
the prevailing literature had characterized as corporatist, state-controlled
and devoted to political, not collective bargaining.36 According to this per-
spective, and contrary to what we have just seen, unions lacked effective
control over their constituencies, had no plant-level penetration, were inef-
fective in collectively bargaining working conditions and were dependent
of the state for wage bargaining. They were also controlled by political
parties and served the parties’ (not workers’) interests as intermediates
in mass-maneuvering the disorganized workers in populist political settle-
ments, and derived their legitimacy from this connection, not from direct,
autonomous representation of workers’ interests. For most of this literature
the CLT had a ‘narcotic’ effect on union action: On the one hand, it assured
union survival irrespective of the number of affiliates, because of the “union
tax”; on the other hand, it regulated working contracts in a way that made
collective bargaining unnecessary.37 Union leaders had pragmatically relin-
quished their autonomy by adhering to the CLT benefits, which freed them
to act as political, not union leaders.
34 Instituto Brasileiro de Opinião Pública (IBOPE) poll of a representative sample
(3,650) of voters in Brazil. Data processed from original database, archived at CESOP/
UNICAMP.
35 In Cardoso (1999a; 1999b), I scrutinized these processes at length.
36 The literature on the matter abounds. Prominent and very influential arguments
are those of Weffort (1970), Rodrigues (1968), Rodrigues (1966), Schmitter (1971),
Erickson (1979), and Collier and Collier (1991). Strong critiques are Paoli et al. (1983),
Paoli (1988), and Gomes (1988). A step further was proposed by Santana (1998) and
French (2004), who names this as “corporatist consensus”. A multi-dimensional revision
may be found in Rodrigues (1999). The literature on populism was competently criticized
by Ferreira (2010).
37 The idea of a “narcotic effect” of the union structure is in Cardoso (1969, republishing
a paper of 1962) and is repeated by Rodrigues (1966) and Rodrigues (1968).

692 A. Cardoso
The “new unionism” was viewed as the opposite of all that.38 Most
of all, it was classified as autonomous vis-à-vis both the existing political
parties and the state repressive apparatus, the two main control mechanisms
of the previous 1964 era. Its main leader, Lula, would actually say that the
CLT was workers’ AI-5,39 and that it should be completely banished. In
his words, this would finally bring down the Vargas legacies, totally renew
Brazilian unionism and modernize the country’s labor relations.40
This dichotomous interpretation is no longer sustainable, of course.
A vigorous new labor historiography has put the events of the 1980s in
perspective, and the “new” emerged as heir of a multi-dimensional and
complex past that insisted in haunting the brains of the living. From this
revision’s standpoint, neither the “old” was that old, nor the new completely
novel.41 But it is my view that revisionism has gone too far. In many
respects the “new unionism” was actually new. First of all, thanks to the
military regime the previous leftwing political elite had been virtually wiped
out of the political arena by 1978. Those who had survived in the exile
returned in 1979 amidst the effervescence of the anti-military movements
headed by the “new unionism”.42 and they had to cope with a social force
over which they had no institutional power, little political influence and
about which they knew little or nothing. Most of all, this social force built
its identity as new against that of a parcel of the returning militants, who
was blamed by many for the failure of the pre-1964 democratic experience.43
The CUT was created in 1983 opposing the remaining communists and
old “pelego” bureaucrats, thus establishing a clear cut with the past labor
movement militants.
38 An important and influential statement of the novelty was proposed by Tavares de
Almeida (1983).
39 The quotation of Lula comparing the CLT with the AI-5 can be found in Munakata
(1981: 27).
40 This approach led an important analyst of the Vargas legacies to immediately acknowl-
edge the modernity of the new unionism. Its main feature would be the denial of tradi-
tional, electoral politics and the proposition of a project of political mobilization anchored
in civil society, see Vianna (1991).
41 The strongest statement in that direction is certainly Santana (1998). See also Negro
(1999; 2004).
42 The Amnesty Act was enacted in August 1979, after which banned figures such
as Leonel Brizola and Miguel Arraes, two top PTB leaders, and Luis Carlos Prestes,
Giocondo Dias and other communist top figures returned to Brazil.
43 The strongest argument blaming the communist-populist strategies for the military
coup is Weffort (1970).

Second, the working class was also new. In 1978, most of 1964 workers
had already retired or were considered too old in an urban labor market
that had to open room for two million or more new entrants every year
as a result of migration and natural population growth (Faria, 1983). New
unionists were young themselves. Lula and the prominent oil workers’ leader
Jacó Bitar, two major new unionist militants were both around 30 years
old. Bank workers’ unions’ directors (such as Gilmar Carneiro) were even
younger, so were the São Paulo Teachers’ Association (APEOESP)’s lead-
ers. Many of these militants had no contact whatsoever with the previous
“populist” or communist militants, but they were some of the most influ-
ential leaders amongst the new unionists.
Apart from the fact that new militants were emerging in a renewed
socio-economic environment, the renovation of labor relations in Brazil,
according to the “new unionism” (and this is a third element of its novel
identity proposition), should include a national collective contract freely
negotiated between workers’ and employers’ central federations, which
would be created as part of a reform of the union structure that would ban
the “union tax” and ratify ILO’s 87 Convention concerning freedom of asso-
ciation, among other central issues.44 If accomplished, this would represent
the end of a central aspect of the Vargas project, for labor relations would
change from its legislated historical shape to a new contractual scenario
anchored in free unions.
And indeed, the “new unionism” did contribute to partly, but impor-
tantly renovate the corporatist union structure while thriving within it
(Cardoso, 1999a). If only 14% of all unions were affiliated to the CUT in
1989, as mentioned earlier, these comprised all major public sector unions,
both in the direct and the indirect administrations; all major unions of
metal, mechanic, chemical, bank, oil, electricity, urban services, transports,
not to mention the vast majority of rural workers’ unions which were
affiliated to a central federation, were all CUT affiliates. And in the 1990s,
the CUT slowly but steadily consolidated a parallel federation and confeder-
ation structure to compete with the corporatist, bureaucratic bodies ruled
44 Literatureon this project abounds. An excellent recent analysis of the dilemmas and
difficulties faced by their proponents is Sluyter-Beltrão (2010). Some pre-1964 currents
preached in favor of the ILO’s 87 Convention and of collective contracts in place of the
CLT, but they have never been hegemonic in the union’s market of political exchange.
After the 1958’s “Declaration of March” the PCB, now a PTB unconditional ally, opposed
any reform that would end the “union tax” and the monopoly of representation of official
unions in a given jurisdiction (known as unicidade sindical) (Santana, 2001).
694 A. Cardoso
by old “pelego” administrators, thus organically coordinating the action

of its affiliates. As a consequence, the new unionists would enlarge the
scope of workers’ rights in a wide array of economic sectors, sometimes far
beyond the CLT provisions. Contractual rights concerning working condi-
tions, safety at work, shopfloor union representatives, rights to information
and access to workers at the plant level, regulation of working hours, work
shifts, fringe benefits such as transport, nurture, housing and health subsi-
dies are among the new issues negotiated by the “new unionism” for millions
of workers, especially after 1980.45
And last, though surely not least importantly, PT, the necessary pole
which, in Vargas’ double binding mechanism, should be responsible for the
construction and generalization of a working class based political project
of redistribution and citizenship under capitalism, was not the PTB. This
party had been created by Vargas in 1945 and has always been controlled by
the egresses of the capitalist elite and the urban middle classes (Benevides,
1989). Some union leaders have been PTB militants, but at least after 1954
the union market was increasingly dominated by the PCB,46 which had
decided that it would occupy the official union structure in alliance with
the leftwing PTB militants.47 In practice, the PTB became an electoral
machine closely linked to the PCB’s grassroots labor militance. The PT,
on the contrary, was created in 1980 by that very militance. True, it gath-
ered not only union leaders, but also Catholic Church activists, prominent
middle class intellectuals and communist dissidents of all sorts, many of
which egresses from the students’ movement, and all of them were notorious
anti-dictatorship militants. But its working class roots were clear enough
(Martinez, 2007), and they would be reassured by the creation of the CUT
45 For these issues, see Sluyter-Beltrão (2010). It is true that the communists had suc-
ceeded in negotiating similar new rights before 1964, and it is still an open question
whether the larger number of workers benefiting from these rights after 1978 (a quanti-
tative criterion) resulted from important qualitative differences in unions’ actions.
46 In March 1958, the PCB reviewed its political position and decided that the party
would ally with the “nationalist forces” of the nation to help deepen the country’s
economic development as a way to combat “the Yankee imperialism” and resolve the
“structural contradiction between feudalism in the countryside and modern capitalism
in the cities”. Amongst the prescribed strategies was the occupation of the union struc-
ture. The “Declaration of March”, as the document that marks this shift is known, can
be found in Carone (1982: 176–196).
47 In 1961, this alliance controlled five of the six existing official federations and most of
the major local federations and important unions. For the political divisions within the
labor movement in the 1960–1964 period, see Martins (1989) and Erickson (1979).
in 1983 by the very same core militant workers that had created the PT
three years ago.
From this point of view, the main novelty of the “new unionism” was
the proposition of a project of inclusion of workers in the emerging post-
dictatorial sociability constructed from below. Its identity was also socialist,
though the nature of the movement’s socialism has never been clear except
for its anti-communist and anti-capitalist character. A socialism built from
below based on mass mobilization in the cities and the countryside, headed
both by the political party PT and the central federation CUT, each playing
a complimentary role in bringing ever more adherents to the project, whom
in the process would shape the very nature of its socialism: Such was the
proposition of leaders such as Lula in 1980 and Jair Menegheli (president
of the CUT from 1983 to 1994). In this respect, the “new unionism” was
certainly an intent to overcome the boundaries of Vargas’ political project,
now from below, since the identity of workers’ movement was shaped against
and in opposition to capitalism and its state, contrary to Vargas’ project
of giving the state-organized capitalism a legitimating mechanism.
Neoliberalism
All that notwithstanding, the “new unionism” would renew the double bind-
ing mechanism of the capitalist sociability in Brazil in a way that would
certainly appeal to Vargas, surprisingly as it might have come up to some of
its main leaders. The Workers’ Party would soon win elections in important
cities and states, and its socialist discourse had to face the challenges of the
practical administration of a peripheral and poor capitalism. Restricted
public budgets in a highly inflationary economy exponentiated workers’
needs vis-à-vis the State’s ability to cope with them,48 and the PT admin-
istrations would sooner or later confront the CUT, especially its public
sector affiliates.49
On the other hand, and again very unexpectedly from a 1980s perspec-
tive, in the 1990s a good majority of the new unionists became resolute
supporters of the CLT and the major legacies of the Vargas Era, which Lula
48 PT’s first decisive electoral achievement was in the 1988 elections for the council of
cities such as São Paulo, Porto Alegre, Vitória, all capitals of their respective states, and
of São Bernardo do Campo, Campinas and a few others in the State of São Paulo, the
party’s cradle. In 1985 it won the elections in Fortaleza, capital of Ceará.
49 A recent and important study on the PT’s trajectory and its (sometimes turbulent)
relations with the labor movement was by Ribeiro (2008).

696 A. Cardoso
had called the workers’ AI-5. One of the main reasons for this, as I exten-
sively showed elsewhere (Cardoso, 2003), is the fact that, in Brazil as well as
in most Latin American countries, neoliberal policies undermined the very
pillars of the workers’ movement. Fernando Henrique Cardoso was elected
in 1994 with a modernizing discourse, the main pillar of which was the era-
sure of the “Vargas Era” (as had been Fernando Collor de Mello’s, for that
matter).50 Structurally, employment in manufacturing, banks, state-owned
companies and public sector at large shrank dramatically as a direct result
of those policies. Rising unemployment reduced workers’ bargaining power,
unions lost funds and capacity for collective action and grassroots mobi-
lization, collective bargaining became concession bargaining, real wages fell
countrywide, constitutionalized labor rights related to working hours, wages
and types of labor contracts were flexibilized etc.51 The project of renova-
tion of Vargas’ legacies from below was hit by market forces it could not
control or tame, mostly because it was unleashed by the state itself. In
this insecure scenario, the labor law appeared to most union leaders as
something worth fighting for, and even the project of reforming the union
structure was put into brackets. In a neoliberal, catastrophic scenario, the
ILO’s 87 Convention sounded like an invitation to organizational suicide.
Cardoso’s was surely the most systematic attempt to put an end to
the “Vargas Era” from above. Neoliberalism de-politicized the economy,
and tried and implemented a new coordination and cohesive mechanism:
market efficiency topped up with liberal democracy. Minimum State, mar-
ket as the main regulation mechanism, weak unions and social movements
and the vote as the exclusive, individual participation instrument were all
antipodes of the project of national building based on state-led capitalism
with some sort of social inclusion via redistributive social policies anchored
in workers’ organizations and social movements. No wonder that the 1990s
would surprise the new unionists fighting for the effectiveness of the CLT
(then subject to flexibilization of policies)52 while competing for power in
all public administration levels (municipal, state and federal) preaching
against neoliberalism and for the strengthening of civil society and state
institutions.
50 Collor was elected president in 1989 against Lula. He too had a radical, anti-“Vargas
Era” neoliberal project, but could not implement it for he was impeached in mid-1992.
51 For the Latin American case, see Cardoso and Gindı́n (2009), and also Cook (2007)
and Berg et al. (2006: 167).

52 I analyzed this extensively in Cardoso (2004).
Post-neoliberalism
After a purely leftwing coalition put together for the federal electoral cam-
paigns in 1989 and 1994, in 1998 the PT and its traditional leftwing allies
opened their coalition to left-center forces, and in 2002 it won the national
elections with a wide center-based coalition. However, in spite of its clear
pro-capitalist shape, this coalition had to face a strong confidence deficit
during the presidential campaign, since in the 1990s the PT and its social
movement allies had become the hegemonic actors in the anti-neoliberalism
political faction. In 2001, Brazil was at the door of bankruptcy due to the
failure of neoliberal rationale,53 and Lula had to make public a “Letter
to the Brazilians” in which he would defend the main pillars of the ongo-
ing macroeconomic policies to prevent speculative attacks on the country’s
fragile economy. Central bank independence, fiscal austerity, inflation tar-
geting and currency stability would all be maintained in the new admin-
istration. The critical socio-economic circumstances had apparently forced
too strong a move to the center of the political spectrum, away from a
project of state-led social transformations that had been the core of the
PT’s political identity.
If this is true, once elected the new government would bring about a
vast array of new concertation mechanisms. Organized labor and organized
civil society were brought into play in the new government. The Landless
Workers’ Movement (Movimento dos Trabalhadores Rurais Sem Terra —
MST) became a strategic interlocutor of the Ministry of Agrarian Reform;
the Ministry of Labor was handed to the CUT, its union leaders and tech-
nicians, and a National Workers’ Forum was instituted to discuss and pro-
pose a project of reform of the CLT; the Ministry of Health was occupied
by egresses of the sanitary movement that had been present in the very
birth of the Workers Party as one of its major middle class factions; for-
mer new unionist labor leaders were appointed to offices in strategic state-
owned companies, such as Petrobras (oil production), Furnas (electricity
production), Bank of Brazil, Embrapa (Brazilian Company for Agrarian
53 I do not have the space to go through this here, but in January 1999 Brazil had to
devaluate its currency after a series of crisis that had shaken Asia and Russia in 1998.
This sealed Cardoso’s fate, for he had won the 1998 elections against Lula promising not
to devaluate. Brazil had spent some 40 billion dollars (from an IMF loan) in 50 days
trying to secure its currency, to no avail. The years of Cardoso’s second term were of
rising inflation, unemployment, public debt and state fiscal crisis, while real wages kept
on falling. By the end of 2001 the neoliberal government was approved by no more than
18% of the population (Cardoso, 2003).
698 A. Cardoso
Research), Eletrobras (electricity) and many others; workers’ representa-

tives were nominated to a myriad of tripartite agencies that opened the
decision-making process. The new unionism had finally accomplished the
Getulio Vargas 1954 premonition. Workers were the government.
If the macroeconomic neoliberal rationale was shielded away from the
political battles, the substantive aspects of the policy-making were not. It
is true that PT and CUT have abandoned their strict socialist discourses,
but the consequence of these participatory decision-making process was the
implementation of a project of universal inclusion in the capitalist dynam-
ics via ameliorating the living conditions of the poor, mass inclusion of
lower-middle classes and poor strata in the consumption market through
subsidized credit mechanisms, redistribution of income,54 economic growth
and, most importantly, employment creation.55 All this was achieved under
strict macroeconomic stability measures aimed at controlling inflation. The
combination of these elements was a complete novelty in Brazil, since main-
stream economic wisdom have traditionally sustained that growth is infla-
tionary, so are policies on income.56 This project, it should be emphasized,
met the expectations of most Brazilians,57 and does explain most of Lula’s
success, especially his second term’s (2007–2010).
But workers’ support to successful inclusive policies was not the whole
of it. From the perspective proposed here, the inclusion of organized soci-
ety in many core federal administration agencies has distinguished Lula’s
government in crucial ways. Workers have become “the government” not
as a result of direct working class mobilization by strong unions as envis-
aged by Vargas. In 2002, the formal labor market harbored not more than
55% of the salaried workers (which means that 45% were not protected
54 Two main mechanisms of redistribution were created. The “Bolsa Famı́lia”, a minimum
income policy for families with per capita income of less than one dollar per day (now
reaching some 40 million individuals); and real increases in the minimum wage, which
affected the income of some 16 million households. The redistributive consequences of
these policies are measured by Soares et al. (2006).
55 During the Cardoso period, eight out of ten jobs created were informal. From 2003 to
2010, the equation was reversed, and 15 million formal jobs were created, a record in
Brazilian history. See Neri (2010).
56 A good recent analysis of this wisdom was by Wanderley Guilherme dos Santos “Lula
e sua herança”, in http://www.cartacapital.com.br/politica/lula-e-sua-heranca.

57 In October 2010, President Lula was approved by 85% of the Brazilians, while 77% eval-
uated his government as good or very good. See http://oglobo.globo.com/pais/eleicoes

2010/mat/2010/10/01/avaliacao-do-governo-lula-bate-recorde-diz-ibope-922675872.asp
(visited in January 2011).
either by collective bargaining or the labor law), and union density was of
19% of the salaried workforce, a direct result of Cardoso’s neoliberal poli-
cies (Cardoso and Gindin, 2009). In many respects, the workers’ access to
state power was achieved while workers’ movement was in its nadir.58 Also,
Brazil had become a mass democratic society opened to the vote of all citi-
zens of 16 years and above. The PT had certainly become the main electoral
machine of organized civil society, where most of its militants were recruited
(Ribeiro, 2008). No other political party in Brazil had ever achieved that in
scope and depth, but the 2002 coalition would not have won the national
elections without the support of others, “disorganized” voters, or of dif-
ferent categories of housewives, retired workers, students and salaried and
own account workers that remained outside the reach of the labor law.
Most of these social categories were not included in the political process in
the 1950s and were certainly not envisaged by Vargas as potential voters.59
What have all these people voted for when they decided to credit a political
coalition a project which was not clear from the start?
On the one hand, the sounding failure of strict neoliberalism opened
way to oppositional projects, and the PT and its allies were the uncon-
testable hegemonic anti-neoliberal forces. They were an obvious electoral
option. On the other hand, PT’s political discourse and previous admin-
istrative practices were based on an overarching ideal of social solidarity,
citizenship and social justice that has apparently seamed credible to the
majority of the voters, for its proponents had an identifiable history of
struggle for them, either in civil society or in office in cities and states.60
Rebuild the state, reconstitute the social fabric, bring solidarity back in,
there were the core of Lula’s campaign discourse in 2002.61 All this certainly
resonates the Vargas project. But the Vargas world had actually been left
far behind.
58 During Cardoso’s administration the annual number of strikes fell from 1,000 in 1994
to 500 in 1999 and less than 300 in 2002. See Cardoso and Gindin (2009: Figure 4).
59 Brazil had near 50 million inhabitants in 1950, and 15 million registered voters (or
30% of the population). In 2000, 109 million out of 170 million Brazilians were voters
(or 64%). Data from www.IBGE.gov.br.
60 Two policies among a myriad of others should be mentioned here: The participative
budget implemented in Porto Alegre by Olivio Dutra in 1989, extended to many other
cities in the 1990s; and the subsidies to poor families that kept children in school, imple-
mented in Brası́lia by Cristovan Buarque in the early 1990s, which was the first minimum
income policy in Brazil and set the parameters for Cardoso’s “Bolsa Escola” and Lula’s
“Bolsa Famı́lia”.
61 See Ribeiro (2008), among hundreds of others.
700 A. Cardoso
Conclusion
Lula has impersonated the trajectory of the poor rural migrant that comes
to the city in search for better living conditions, there finding a formal job
and a state-controlled channel of political participation. From this protected
realm of the countries’ evolving capitalism (the formal labor market and its
regulation institutions, unions included) he has headed the construction of
a political party that has slowly become hegemonic in the leftwing political
spectrum proposing a bottom-up project of erasure of the “Vargas Era”,
believed to be workers’ AI-5. This project was not a renewed capitalist
sociability. The aim was a socialist society, blurred as “socialism” may have
been from start to end. The socialist project was finally (and pragmatically)
abandoned in favor of a political program based on solidarity and social
justice when the PT started winning elections around the country. State
power became the main target of the new unionists and their allies. Labor
and social movements became the cradle of new political elites, and once
in office, they would occupy many of public administration’s most strategic
positions, which were obviously shared with their allies.
When neoliberalism gained momentum, this project of state-led capi-
talism was equated with the Vargas Era, for it was presumably sustained
by elites nurtured by the “union tax” and other “illegitimate”, heterony-
mous mechanisms inherited from an unwanted past. Fernando Henrique
Cardoso would actually name leftwing militants “a vanguarda do atraso”
(“the rearward vanguard”), and his project of reform of the CLT was explic-
itly designed to put an end to those legacies. Cardoso was probably not
aware that those legacies had actually bonded the capitalist sociability in
stable and profound ways, making tolerable the country’s social inequali-
ties and iniquities from workers’ perspective. The wish for a state-protected
job was the wish for socio-economic security, which could open an avenue
to social upward mobility and to better living conditions either for oneself
or for one’s children. Neoliberalism resulted in mounting unemployment
and sliding wages, to be coped with by workers’ investments in their own
employability. The state withdrew itself from workers’ horizon of expec-
tations and aspirations, putting nothing in its place but the market, the
dominion of the best fit. This political vacuum was occupied by the PT
and its allies, who were accused of trying to revive the Vargas Era. When
workers finally “got there”, the analogy was already set.
It is my view that the analogy is misleading in a way. It has been used
by interested parties in the political arena itself to label supporters of any
broad or diffuse program of state-led economic development. It has been
part of the ideological disputes over the destinies of the nation, and in the
1990s modernity was synonym to market, not state. Once in office, Lula
would praise Vargas for its social policies while condemning its authoritar-
ianism, and this added to the identity of his presidency against neoliberal-
ism. In both cases the Vargas’ legacies were a figure of political rhetoric,
and served to mark positions in the political and electoral field. This is
undoubtedly proof of the strength of Vargas’ figure, but is there anything
of substance under the surface of political marketeering?
Vargas’ institutions are still here. The CLT still constitutes the labor
market’s institutional bones.62 The majority of workers would prefer a for-
mal job if they could choose. Unions are still financed by the “union tax”
and have the monopoly of representation in a given jurisdiction. In 2003,
the Supreme Labor Court has mandated that it was up to the Ministry
of Labor to decide which one amongst any number of competing unions
would have the right to represent a given category of workers (Cardoso and
Gindin, 2009).63 In 2008, the central federations had their project of being
funded by a share of the “union tax” approved by the National Congress.
With this instrument the Lula administration has assured a stable funding
mechanism for the reproduction of labor movement-based political elites.
Now in government, top union leaders have pragmatically relinquished the
project of reform of the CLT, since workers’ and social movements are now
important elements of the government’s capillarity in civil society. From
this point of view, workers are really “the government”, and in office they
are concerned with the survival of their cradle institutions.
62 After 1998 many flexibilization measures were approved in Congress by the Cardoso
administration. But the overarching, protective rationale of the CLT is still alive.
63 The Constitution of 1988 freed unions from State control, thus changing the 1939
provision according to which unions had to be homologated by the Ministry of Labor,

which had legal control over union affairs, including elections, budget, expenditures etc.
The Constitution provided that unions no longer had to register with the public author-
ity. Nonetheless, because workers’ and employers’ organizations were still entitled to tax
their constituencies — the new Constitution maintained the “union tax” — labor courts
were flooded with complaints from unions created in the jurisdiction of already existing
organizations demanding access to the “union tax”. In response to that, in 2003 the
Supreme Labor Court established that the Ministry of Labor should decide which union
represents which workers in a given jurisdiction. The “spirit” of the Constitution, which
was inclined to consecrate freedom of association and union autonomy from state con-
trol, was importantly reversed by this decision. Since then, unions must register with
the Ministry of Labor again, and this authority has the power to “care for the ‘unicity’
principle”, or the monopoly of representation of the chosen union.
702 A. Cardoso
On the other hand, Lula and allies have certainly brought the state
back in, in at least two important ways. First, the PT administration has
partly repoliticized the economy. The neoliberal macroeconomic pillars are
still shielded from political disputes, but the State became a central engine
of economic growth by directly investing in infrastructure and financing
private investment with subsidies of all sorts.64 Second, the state is again the
main coordination mechanism of capitalist sociability, a place neoliberalism
had tried to hand to the market. This is not pure political rhetoric. By
offering workers a credible project of socio-economic inclusion and security,
and struggling with opposition forces to implement it, the state has once
again fed workers’ expectations and aspirations. This is once again bonding
the fate of the nation with that of its working population, thus giving
capitalism a smooth pathway to thrive. President Vargas was the first to
propose this project in Brazil. Lula has been its most recent impersonation.
64 Brazil has a National Bank of Economic and Social Development (BNDES), created
by the military back in the 1960s, which was the main instrument of government’s rapid
response to the 2008 subprime crisis. The bank finances employment policies and private
investments with subsidized interest rates. Its main resources come from the Workers
Aid Fund (Fundo de Amparo ao Trabalhador — FAT), a contributive fund charged on
private companies which finances unemployment insurance and the wage bonus (every
worker earning two minimum wages or less is entitled to one Christmas minimum wage
bonus per year) (Cardoso Jr. et al., 2006).
34
The Research of Class and Group
Consciousness in Contemporary
Russian Society
M. F. Chernysh
Methodology
For more than a hundred years, the problem of class and group conscious-
ness has been one of the research priorities in contemporary sociology. There
are epistemological and ontological reasons that explain the attention that
it has been getting. Epistemologically, the problem is viewed as a necessity
to critically re-evaluate the heritage of classical works of the conflictological
schools that to a large degree shape contemporary attitudes to social con-
sciousness and related matters. Karl Marx sparked off a public debate by
proposing a concept of class consciousness, and in later years, the neo-
marxists contributed to the debate. Marx viewed class consciousness as
an epigenetic phenomenon that is secondary to the main contradictions
of contemporary society. He viewed consciousness as a product of contra-
dictions between large social groups that differ by relations to the means
of production and position of dominance. Class consciousness appears as a
result of recognizing the existing economic order as unjust. However, before
the oppressed class decides that the economic order should be changed, it
must become aware of its social interests. Social interests, unlike values or
value orientations, are directly related to a position in the social structure,
and reveal their true essence in relations with other social groups. Hence
the concept of social interest finalizes the materialist view of society by
portraying it as a totality.
Economic progress invariably changes the forces of production includ-
ing workers who come in as of their key components. Workers progress
703
704 M. F. Chernysh
in line with other means of production. They acquire an ability to reflect

on social reality and become aware of the fact that they are an object of
exploitation. Their main antagonist — the owners of the means of pro-
duction — follow the same line of cognition and become conscious of the
fact that they are subjects of the relations of exploitation and domination.
When the oppressed class acquires class consciousness, it breaks out of the
chains of domination imposed by the capitalist superstructure and leaves
behind the “false” forms of consciousness. From “a class in itself”, workers
turn into “class for itself”, forming a social movment to change the existing
social order. In other words, consciousness emerges as another battlefield,
where the ruling class uses every possible instrument to imbue workers’ con-
sciousness with the idea to intransigence the capitalist order, and where the
workers in concert with intellectuals, standing on their side, reveal the true
nature of false, deceptive ideas, and show their true social, class meaning.
Marx illustrates the process of acquisition and loss of class conscious-
ness in his book “18th Brumaire of Louis Bonaparte”. In it, the class scheme
becomes a way to understand political contradictions while social interests
turn into a basis for concrete political decisions. By concentrating upon
the chronological description of class struggle, Marx abandons the general
pattern of viewing history as a struggle between two major classes and
instead introduces a multitude of actors – financial bourgeoisie, produc-
tive bourgeoisie, petty bourgeois, estate holders, small-scale agricultural
producers, army, bureaucracy, and “lumpen” strata that at some moments
of history can become a force that brings about social change.1 Political
struggle creates preconditions for contingent political alliances and in some
cases new social groups whose political interests become more important
than interests determined by the economic basis. It becomes obvious that
class consciousness does not originate out of an existing economic order but
from a crucible of concrete political struggles, conflicts and resolutions. In
politics, the ‘relations of domination’ have a priority over ‘economic rela-
tions’, where the latter are left with the possibility of influencing long-term
prospects.
R. Dahrendorf, one of the contemporary followers of the Marxist doc-
trine, used the logic of the “18th Brumaire. . . ” to build his doctrine of class.
In his book “Class and Class Conflict in Industrial Society”, he insists that
the relations of dominance/power contribute decisively to the process of
1 http://www.gutenberg.org/files/1346/1346-h/1346-h.htm
Class and Group Consciousness in Contemporary Russian Society 705
class formation where class conflicts are an outcome of power relations.

In part, the relations of dominance/power come to the fore because pri-
vate ownership (the fundamental institute of capitalism), has undergone
momentous change. The contradiction between the owner and hired worker
is mollified by the fragmentary character of property. Nowadays anyone
can become an owner of the means of production (in the majority of cases
minoritaire, no doubt), a status that in past, very few could even dream
about. In contemporary society, the elements of propertied class conscious-
ness are characteristic not only in those who own large stock, but also in
the workers who often acquire the stock of their own or other enterprises.
In part, the primary status of the relations of dominance owes to the fact
that the state assumes the role of a mediator in the relations between
social classes. The “big state” plays an important role of redistributing
social and material privilege from “owners” (who keep their control over
the means of production), to hired workers or non-working population. In
such a situation, the group consciousness is influenced by economic and
political factors. The result is that group consciousness emerges not only in
the working groups of the population engaged in relations with owners and
managers, but also in the strata that are excluded from this interaction, for
instance, in the group of pensioners. In such cases, the institutional basis
that contributes to the group consciousness formation concentrates in the
relations of redistribution and effectiveness of the state in performing its
social functions.
This assumption can be bolstered by a number of cases from the recent
Russian history and, in particular, by events that followed the adoption
of the 122th Law, the presupposed “monetization” of state-accorded priv-
ileges.2 The Law stipulated that some of the social benefits that the state
accorded senior citizens such as public transportation cost reduction or
access to free provision of medical drugs be transformed into monetary
form — a regular monthly payment. The proponents of the Law did not
hide the fact that it was meant to alleviate taxation of business that is
in the interests of the class of owners.3 When the Law was adopted, its
meaning became clear to those who were recipients of state benefits: It set
out to reduce the amount of social support services rendered to the pen-
sioners by the state. Awareness of the fact that the state jettisons some of
its important obligations in favor of the privileged class fermented a new
2 http://www.hrights.ru/laws/law76.htm
3 http://www.ng.ru/economics/2005-03-05/5 dmitriev.html
706 M. F. Chernysh
protest movement that ultimately led to mass demonstrations in which

tens of thousands of pensioners participated. They demanded to repeal or
radically alter the Law so the benefits are returned to them. The govern-
ment found itself under considerable political pressure, and had to retreat
and introduce amendments into the Law that allowed pensioners to choose
between the old “unmonetized” way of getting privileges or new way of
getting a monetary reimbursement. The Law was adopted in the interest of
owner class and it was not they who became an object of social protest, but
the state that was pursuing a neoliberal project of support for big business
to the detriment of the disadvantaged strata of the population.
Apart from the two factors mentioned above there is another factor
that is often defined as cultural dominance of the bourgeoisie in the form
of the so-called hegemonic project. The idea belongs to Antonio Gramsci
who strived to find an answer to the question of why the historical march
to socialism often peters out or even lapses back. Gramsci claimed that
under modern conditions, bourgeoisie are able to exercise full control over
advanced modes of communication and thereby get a chance to control
the masses by proposing a hegemonic project alternative to a program of
radical social transformation. The hegemonic project is a set of general
ideas that relate to the present state of the country, its near and long-term
future. The hegemonic project is devised as a social design that might be
attractive not only for the ruling class, but also for the petty bourgeoisie
and part of the working class. The projects usually claim to be based on
universal concepts emanating both from individual and group experience.
The project asserts, as its starting point, the assumption of the immutable
value of the private property as a most important precondition of social and
economic development. Lucacs emphasized that a possibility to overcome
“false consciousness” born out of the hegemonic project is feasible only by
crossing the line of concrete economic interests by rejecting a utopic vision
of the future, on the one hand, and a down-to-earth judgment that views
the world as a realm of dominance of material interests. However such an
optimistic view is quite infrequent among post-war Marxists. Marcuse and
Baudrillard held the view that in contemporary society permeated by con-
sumption practices and ideology, the consolidation of class consciousness
is virtually impossible. They accept the fact that the capitalist consumer
ideology comes out as a powerful force of attraction for various strata of
the population. Mass production with modern technologies opens way for
a large part of the population in the developed world to become involved
in the consumer race. Consumption transforms the cultural program of
contemporary societies. According to Baudrillard, consumerism turns indi-

viduals into an amorphous mass in which each individual is preoccupied
with his or her own life, with his or her “here and now” plans.
The non-Marxist sociologists initiated their own definition of class con-
sciousness. Max Weber joined the critics of the Marxist idea by mooting the
idea of a multidimensionality of social structure and, accordingly, multifar-
ious factors that have an impact on mass consciousness. Apart from class
that Weber regarded as an attribute of the sphere of material distribution,
there are, he believed other factors such as a position of an individual in
the power and authority structure and his or her position in the status
hierarchy. In this regard, entry into the labor market has a lot of influence
on how the entire social order is perceived. Class consciousness becomes
only one of many elements of the worker’s world vision. His or her desire to
change the existing social or economic system is mired by several motives,
including his/her desire for individual advancement. In the structural func-
tionalism, values are mainly regarded as a way to achieve social solidarity
and a pattern of latent model reproduction stored in the cultural domain.
Post-modernists elaborated upon the idea of culture as a factor preventing
transformation of society into a totality. According to Laclau, contemporary
culture is capable of producing an excess of meanings that are independent
from an individual’s structural position. He argues that in a post-modernist
society, class consciousness or consciousness that accepts the totality of the
historical process is impossible. Phenomena that in the past claimed the
status of a tragedy or at least a drama are reflected by mirrors of modern
culture as a farce. On the other hand, a farce is effervescent and can under
some conditions morph into a tragedy.
It is possible now to propose some assumptions relevant in the context
of an empirical study. First, it should be recognized that the principles of
solidarity are different in societies that find themselves at different stages
of development. The higher the general levels of well-being, the less likely
is solidarity based on class interests. The same is true of societies that
are poor; the lower the living standards are, the higher is the possibility
that class consciousness emerges. Second, the analysis of class consciousness
needs to take into account the nature of the modern state and its ability
to take on some of important redistributive functions. In this case, class
consciousness is shaped as a relation to the state and its policies. The state
is on the receiving end of demands that in the past were addressed to the
owners of enterprises. It is also paramount to take into account that in
modern societies, a large part of the population finds itself beyond social
708 M. F. Chernysh
relations formed by production. For this part of the population, attitude to

state distribution policies is a key element of social vision. Third, it is fair
to assume that mass consciousness is a venue for various social attitudes
born out of economic relations, and also a latent repertoire of cultural
models that Marxists qualify as “false consciousness” spawned off by the
hegemonic project of the ruling class. The values that are the product of
“cultural consciousness” are likely to be conservative, and oriented towards
the preservation of existing distribution parameters. They are also likely
to accentuate contradictory attitudes — individualistic orientation towards
achievement, on the one hand, and orientation towards solidarity over class-
based dividing line, on the other.
Empirical Results
Class and party preferences
Social scientists defined class consciousness as a set of general attitudes
resulting from membership in a large social and professional group. Class
consciousness is capable of manifesting itself in different ways. In some cases
general class-related values characterize electoral behavior: A class comes
out in support of a certain political party or a political program. For a
long time it was assumed that the working class must render support to
left-wing parties, or in such countries as the USA where the political party
is committed to expanding social support for the underdog of society. The
class of owners was expected to traditionally support the parties of lib-
eral orientation calling for a reduction of taxes, liberalization of the labor
code, scaling down of the state’s presence in economy. Such a dependency
continued until mid-1970s of the last century. Melvin Kohn drew attention
to the fact that in the US during the 1960s and 1970s, workers chose the
Democrats over the Republicans, and the middle class chose the Republi-
cans over the Democrats. However there is ample evidence that the ability
of the social system to act in such a way depends on whether it committed
to civil liberties and whether it is capable to accommodate opposing class
interests and related social groups. There is also ample proof that such
parameters of the system can only be sustained if citizens trust political
institutions and the state as a whole. In some cases, the level of trust is
related to class divisions in society. In a modern Russian society, the major-
ity trust the president of the country, whom it regards as an arbiter with a
potential to influence other political forces to work not only in the interests
Table 34.1. Trust in Political Institutions and State Bodies: Evaluation on 10-Point
Scale.4
Classes State Duma Courts Law enforcement
Managers 4.05 4.06 3.61

Enterpreneurs 4.24 4.56 4.23
Specialists with higher education 4.16 4.16 3.82
Clerks 4.29 4.41 3.88
Workers 3.72 3.84 3.57
Total 3.95 4.04 3.71
of the class of owners, but also other classes and strata of society. As far as
representative bodies, courts and law enforcement agencies are concerned,
the degree of trust accorded to them is very low (see Table 34.1).
In all social groups, the level of trust in political and state institutions
does not exceed the mid-point of the scale. It is symptomatic that all groups
display a low level of trust in law enforcement agencies. Only in the group
of entrepreneurs, their average level of trust is higher than four points. It
is obvious that worker’s level of trust is lower than that of any other social
group. The non-parametric Kruskall–Walles criterion testifies to the fact
that the difference is significant.
There is a difference between classes in their attitude to the key players
in the politics — politicians and political parties. In contemporary Russia,
the existing party system can be regarded as a product of guided politi-
cal evolution. For more than two decades the political structure has been
under pressure “from above” and primarily from the executive branch of
the Russian power system. The Russian political elite set out to implement
a political project which would assist in controlling the outcome of osten-
sibly free presidential and parliamentary elections. At present, the project
is being embodied in the “United Russia” party that has the full support
of the Prime Minister Vladimir Putin and President Dmitry Medvedev.
The party of power acts in the same way as its predecessors (Choice of
Russia, Our Home — Russia) staking a role in the mobilization potential
of bureaucracy on a federal and local level. Other political parties such as
“Just Russia”, “The Right Cause” or Liberal Democrats are also projects
4 Here and further the data of two surveys will be used. One is the ESS — European
Social Survey based on the All-Russia sample of 2,512 respondents, conducted in 2009,
the other is the Social Distinctions in Modern Russia based on the random sample of
2,100 respondents held consecutively in 1998 and 2007.
710 M. F. Chernysh
of the ruling elite designed to imitate political struggle and competition

of political agendas. The reality is that they are totally dependent on the
president’s administration and can be disciplined or even closed down at
any moment. Even the Communists, the largest opposition party, are kept
under control. They are allowed to criticize the party of power, but are
warned against challenging it in a major way. The Communists have been
using the opportunity to regularly launch vitriolic escapades against the
neoliberal policies, but in the same breath, for the last two decades they
have been voting for budgets implementing the neoliberal policy of social
spending cuts.
Trust in politicians (with the exception of the president and prime min-
ister) and political parties is low among all classes and social strata of soci-
ety (Table 34.2). There is, however, some significant variance between them
even against this backdrop. Among the managerial and clerical groups, the
level of trust is higher, whereas it is the lowest among the worker group.
Trust in political parties is somewhat higher than the average among the
specialist group and is considerably lower than the average among the
entrepreneurs. This hypothesis is confirmed by the Kruskall–Walles cri-
terion, the difference is significant (sig = 0.0).
In the ESS survey, respondents were asked if there was a party in Rus-
sian politics that they could qualify as “a close one”. Over half of the respon-
dents (51%) found no such party on the Russian political scene (Table 34.3).
The proportion of those who see such a party is the biggest in the group
of entrepreneurs (64.1%), in the group of workers it is the lowest (50.1%).
The intergroup difference is also made obvious by the level of support that
political parties enjoy among those who said there was such a party on the
Russian political scene.
Table 34.2. Trust in Politicians (with the exception of the presi-

dent and prime minister) and Political Parties: Evaluation on 10-point
Scale.
Classes Politicians Political parties
Managers 3.58 3.27

Entrepreneurs 3.46 2.86
Specialists with higher education 3.48 3.45
Clerks 3.70 3.54
Workers 3.03 2.97
Total 3.28 3.21

Table 34.3. Proximity to Political Parties (Proportion of Those who Defined the Party
as “a Close One”).
Managers Entrepreneurs Specialists Clerks Workers Total
United Russia 76.5 68.0 71.3 78.5 66.9 69.9

Communist 11.8 20.0 16.2 10.1 18.8 16.9
Party
Liberal 5.9 4.0 4.2 6.3 8.3 6.3
Democrats
Union of 5.9 4.0 1.1 0.0 1.4 1.3
Right-Wing
Forces
The “Apple” 0.0 4.0 2.5 0.0 1.0 1.6
(Yabloko)
Just Russia 0.0 0.0 3.1 1.3 1.9 2.2
The Green 0.0 0.0 0.6 0.0 0.2 0.3
Party
The “United Russia” tops the list in all social groups. However, there
is a significant difference between them as far as the structure of political
loyalties. The support for the party is the highest in the class of managers
and the lowest in the group of workers. Workers are more likely than other
social groups to support the Communist party and Liberal Democrats — a
party that capitalizes social disenchantment of the less prosperous strata of
the population. The results describing party differences served as basis for
further exploration of the differences in group allegiances. Correspondence
analysis was employed to bring out “proximity of social groups and political
parties”.
The analysis brought forth two dimensions that explain 80% of all
summary inertia of the data in question (Fig. 34.1). The first dimension
emphasizes close proximity of the “United Russia” and the group of man-
agers, clerks and Liberal Democrats, the “Union of Right-Wing Forces”, the
“Just Russia” and the entrepreneurs. The second dimension almost equal
to the first one in terms of inertia reveals that workers feel close to the
Communist Party, specialists — to the United Russia” and managers — to
the Liberal Democrats. It is also obvious that the “Union of Right-Wing
Forces” and the “Yabloko” address themselves to different electorates: The
“Union” appeals to owners (first dimension), the “Yabloko” — to special-
ists. The most popular parties occupy the place at the center of the chart.
They collect their electorate from various social classes. Despite a forceful
campaign launched by the party in power, class structure still has tangible,
712 M. F. Chernysh
Fig. 34.1. Correspondence analysis of two variables — class position and party choice.
differentiating influence on the political consciousness of the voters. While

workers lean to the parties of socialist orientation, owners and entrepreneurs
tend to support parties with liberal agendas.
Class and ideology in the minds of the Russians

Political science traditionally divides political attitudes into left and right.
In a transition society, such a division has, to a large extent, lost its mean-
ing. During the early days, the Communist and their allies in Soviet Russia,
in their struggle for socialism claimed themselves to be a left-wing force.
Now the Communists who keep lambasting the neoliberal government often
seem to be conservative and, correspondingly more right than left-wing. It is
not clear who occupies the right wing in the Russian politics. Traditionally,
a political party would be qualified as right-wing if it proclaimed support
of private property, individual freedom and entrepreneurship. In contem-
porary Russia, the orientation of right-wing parties is quite weak; parts of
their programs have been successfully incorporated into declarations of the
party in power. In addition, the right-wing parties respond to the pressure
from their electorate by accentuating ideas of equality of chances, and a
desire to assist the impoverished strata of the population (Table 34.4). The
Table 34.4. Ideological Orientation on a

Scale “Right-wing–Left-wing” (Average on
a 10-point Scale).
Mean St. Deviation
Managers 5.25 1.92

Entrepreneurs 5.73 2.50
Specialists 5.34 2.05
Clerks 5.39 1.75
Workers 5.33 2.13
Table 34.5. Satisfaction with Various Aspects of Life (Average on a 10-point Scale).
Managers Entrepreneurs Specialists Clerks Workers

Mean S.D. Mean S.D. Mean S.D. Mean S.D. Mean S.D.
Life in general 5.72 2.15 5.83 2.57 5.58 2.33 5.53 2.64 4.86 2.48
State of economy 3.55 2.26 3.48 2.16 3.64 2.12 3.50 2.25 3.31 2.18
Government 4.79 2.29 5.05 2.34 5.13 2.43 5.16 2.65 4.78 2.53
Education 4.54 2.19 4.23 2.47 4.47 2.29 4.35 2.37 4.50 2.41
Democracy 4.20 2.22 4.00 2.34 3.99 2.41 3.56 2.31 3.65 2.42
Health care 3.50 2.06 3.65 2.23 3.55 2.21 3.34 2.23 3.30 2.32
result is that the programs of right-wing parties often look like a mixed bag
of right- and left-wing slogans. In view of these developments, it is quite
hard to determine which parties occupy the relevant poles designated by
classical theory. When asked to identify themselves with one of the tradi-
tional political orientations, the respondents tend to choose midpoint of the
scale. In the present circumstances it looks like a strategy of evasion.
The Kruskall–Walles statistics confirm the absence of significant varia-
tion between the groups (Sig = 0.8). However some differences come to the
fore when the respondents evaluate their own lives and key aspects of the
reproduction process.
The worker group is characterized by a lower life satisfaction figure than
that of any other social group (Table 34.5). The Kruskall–Walles statistics
testify that these differences are significant (sig = 0.0). Workers tend to
grade the state of Russian economy lower than managers or specialists
even if the other two groups are less than optimistic about it. As far as
government performance is concerned, workers are inclined to evaluate it
lower than most other social groups. In this respect, they are quite close
to managers who are also quite critical of the present Russian government.
714 M. F. Chernysh
Table 34.6. Answer to the Question: Do You Feel You are a Discriminated
Part of Society? (%).
Yes 7.9 7.9 9.4 9.7 12.5

No 92.1 92.1 90.6 90.3 87.5
Total 100.0 100.0 100.0 100.0 100.0
Workers are more pessimistic about the state of Russian democracy than
managers, entrepreneurs or specialists. Their evaluation is as low as that of
the clerks who also regard the Russian political system as less than satisfac-
tory. All social groups are inclined to assess the state of Russian health care
as unsatisfactory. There is very little difference between the groups in this
respect. Summing up, we can say that the four dimensions of satisfaction —
satisfaction with life, economy, government performance, state of democ-
racy — reveal differences between classes that are statistically significant.
The differences are manifest not only in evaluation of the reproduction
institutions, but also in an oblique way — through reference to oneself as
a discriminated part of society.
The proportion of discriminated individuals is the lowest in the most
successful social groups — among managers and entrepreneurs (Table 34.6).
The percentage of discrimination goes up 1.5 times among the specialist and
clerk groups. In the group of workers it rises to a maximum. In it, every
eighth respondent believes that he or she is an object of discrimination.
Class and the role of the state

For more than two decades, stratification and value studies in Russia have
consistently proved that the majority of the Russian population comes out
in favor of state ownership not only in education and health care, but also
in industries such as metallurgy or transport. The commentators of this
outcome often claim that the etatist “instinct” of the Russian population is
a “relic” of the socialist past when the state was the owner of all significant
assets in the country. Such an assessment seems problematic in view of the
fact that support for state ownership is quite high in the group of young
Russians who have little first-hand experience of state socialism and learn
about it only through tales told by their parents or media. It is hard to agree
with the definition of these attitudes as “relic” for one more reason: Since
1990, the proportion of state economy has gone up in industries prompting
Table 34.7. Answer to the Question: Who Should Own Assets in Agriculture? (%).
The state 33.3 61.8 50.2 51.6 60.0

Local authorities 18.5 17.6 18.3 17.2 16.4
Private companies 48.1 17.6 23.1 24.7 17.3
Hard to say 0.0 2.9 8.4 6.5 6.3
the Russian market to achieve a fair rate of growth. In 1990, the proportion
of workers who supported state ownership in trade was equal to 49.0%, in
1998, it went down to 39.3%. The rest of respondents came out for a return
to a situation when, as in the Soviet times, shops would be owned by the
state or municipal authorities.
It is logical to assume that the explanation of this phenomenon lies not
in the past, but in the present, in a brazen inequality with which the state
cannot cope without changing the existing system of distribution. The idea
of a more active role for the state finds support not only in the group of
workers, but also in the group of managers, specialists and, paradoxically,
entrepreneurs. Workers differ from other groups by being more consistent
advocates of the idea (Table 34.7).
Survey data show that more than half of the population support the
idea of state ownership of agricultural companies. Close to one sixth assume
that agricultural property should belong to local authorities and one third,
to private companies. In the group of managers, only 30% of respondents
endorsed the idea, in the group of workers 60%. A similar division is
observed in response to the question on preferable ownership of leisure
infrastructure. Managers stand apart from other groups; 18.5% support
private ownership in this industry and 22.5% support municipal ownership.
In the groups of workers, clerks and specialists, the proportion of those who
are willing to support private ownership in leisure facilities is tantamount
to approximately 10% — 8.8%, 10.8%, 10.4% respectively. The rest favor
state dominance in this part of economy hoping — probably not without
reasons — that the state could invest more into the industry and hold prices
there on a level accessible to ordinary citizens.
Conclusion
Survey results testify to the fact that as far as mass attitudes are con-
cerned, class still matters. The variable “class” has a significant role in
716 M. F. Chernysh
shaping attitudes of most aspects of contemporary Russian life. Some issues

may provoke similar responses though motivated by different habita. Work-
ers may call for a larger role of the state in economy and in this respect
their interests may coincide with those of bureaucracy whose support for
a stronger state owes to their vested interests in the matter. Workers’ sup-
port for state control over industry may also concur with the interests of
the clerks who occupy low positions in corporate and state hierarchies and
therefore hope for a more equal order of asset and resource distribution.
It is fair to assume that classes and other factors affect group conscious-
ness. In critical periods of history, group consciousness is able to return to
patterns of perception born out of national or ethnic cultures. These pat-
terns may accentuate old culture-related models of distribution with the
state spearheading industrial development. In Russia, this strategy of crisis
management has a long history. The Russian society resorted to it many
times when facing a challenge of survival. The cultural patterns may explain
the popularity of such attitudes, their irrational demand to impose state
control in industries where it might be effective, but also in industries where
it can worsen the situation such as retail trade.
The political dimension of public consciousness reveals the presence of
a hegemonic project, expressed in the dominance of the party of power and
associated political forces. This project can rely on the prevailing power of
modern communication that has the ability to foster common attitudes over
class divides. In this situation, class interests do not cease to exist, they are
ousted or projected onto objects that are not directly related to the process
of distribution. There are reasons to believe (correlations prove it) that the
growth of nationalist or even chauvinist feelings in Russian society is an
outcome of projecting social tension onto objects that are closer and less
protected than the higher echelons of bureaucracy or business.
35
Social-Class Connection and Class Identity
in Urban and Rural Areas
K. L. Sharma
Bottomore (1970) considers the division of society into classes or strata,

in terms of a hierarchy of wealth, prestige, and power, as a prominent and
universal feature of social structure. In India, the Hindu society was divided
into four varnas based on socio-political and economic divisions. For exam-
ple, the Brahmans (the highest Varna) were assigned the tasks relating to
priesthood, learning and teaching. The Kshatriyas (warriors) were required
to rule over the society, maintain law and order, and guarantee safety and
security of the people. The third varna, namely, the Vaishyas, was respon-
sible for transactions, relating to trade and commerce. The Shudras (the
lowest Varna) were assigned the task of cultivation and service of the supe-
rior Varnas. These varnas were the four major all-India divisions of society,
and were different from castes and sub-castes which number today more
than three thousand or so.
Today, classes in India are not just confined to these four categories.
Classes have their roots in British colonialism and in the continuity of
some of the colonial institutions, though in a changed form, and in the
post-independence developments, including the constitution of India, legis-
lations, industrialization, formation of Indian states, urbanization, changes
in agrarian policies, provision of education, and migration and mobil-
ity. Recently, globalization and liberalization have strengthened the pri-
vate sector. A new class of workers, at different levels, has emerged. This
has also added a new dimension to India’s class structure, particularly in
metropolises and big cities.
717
718 K. L. Sharma
Class Formation and Class Consciousness

Two points may be mentioned here. First, a large number of studies on
class (both rural-agrarian and urban-industrial) have been influenced by the
classical Marxist approach. Second, as a reaction to the Marxist analysis
of India’s class structure, several studies have used the Weberian approach
to the study of rural society, by way of distinguishing between caste, class
and power, and resilience of the Indian society in relation to modernization
and industrialization. In addition, three other factors may also be noted in
regard to the formation of class and class consciousness: (1) Despite colo-
nial hangover, independent India has recreated a new class structure in
agriculture, industry and administration; and (2) Indian state has weak-
ened social impediments by providing provisions for weaker sections and
marginalized groups of people; (3) class is generally visualized and assessed
in terms of caste and power, but caste is also seen in terms of its command
over economic resources and possession/exercise of power.
Class is formed and reformed in every epoch. In the Communist
Manifesto, Marx and Engels (1975) in the opening statement make this
clear as they say: “The history of all hitherto existing society is the his-
tory of class struggles.” But Marx and Engels also considered “class itself
as a product of the bourgeoisie”. Even having realization about “status
groups” and conflicts between them, and “a manifold gradation of social
work”, according to Marx, the society as a whole was splitting up into two
great hostile camps, into two great classes directly facing each other —
bourgeoisie and proletariat. According to him, there were status groups
and a complicated arrangement of society into various orders, a manifold
gradation of social rank. The basis of the two classes was the direct relation
between the owners of the conditions of production and the direct produc-
ers, and it was considered as the foundation of the entire social edifice. Marx
also thought of the intermediate and transitional strata (middle classes) but
at the same time considered that they would wither away with increasing
polarization of the capitalist society into the two great classes, namely, cap-
italists and workers. Marx was clear of the view that class consciousness
had a direct bearing upon class membership, and the latter depended upon
one’s position in the structure of relations of production (Bottomore, 1985:
74–81). Let me make it clear that generally the Marxist concepts of “class”
and “class consciousness” have often been used by Indian social scientists.
As mentioned earlier, the other prominent approach is based on Max
Weber’s triology of “class, status, party” (1970: 180–195). Weber draws a
clear analytical distinction between economic, social and political orders.
Social-Class Connection and Class Identity in Urban and Rural Areas 719
However, like Marx, he is also of the view that there is “economically deter-
mined power and the social order”. The main reference in Weber’s analy-
sis is “power”, particularly the institutionalized power. Weber (ibid.: 181)
writes: “In our terminology, “classes” are not communities; they merely
represent possible and frequent bases for communal action. We may speak
of a “class” when (1) a number of people have in common a specific causal
component of their life chances, in so far as (2) this component is rep-
resented exclusively by economic interests in the possession of goods and
opportunities for income, and (3) is represented under the conditions of
the commodity or labor markets.” These points refer to “class situation”.
“The term ‘class’ refers to any group of people that is found in the same
class situation” (ibid.: 181). Andre Beteille (1965), for example, has distin-
guished between “caste, class and power”, drawing from Weber’s trichotomy
of “class, status, party”.
Beteille (1965) is known for his acceptance of the distinction between
caste, class and power, following Max Weber’s triology of “class, status,
party” (1970). However, lately Beteille (2007) considers “class” as a more
concrete entity, compared to status and power, which he considers as
abstract notions. Generally, classes are considered as unequal distribution
of income, assets and wealth. However, a clear conceptualization of class
by Marx, and its further dissection by Weber in terms of economic, social
and political orders, has not led to universal acceptance of the definition
of class. For coming out of the conceptual dilemma of class, in terms of
Marxian economic determinism versus the Weberian rationalism, Beteille
(2007: 140–142) refers to “an ambidextrous class”, which can be used in
both the senses, depending upon the relevance of the use of the concept of
class either in the Marxian sense or in that of Max Weber. Beteille writes:
“The coexistence of two sets of values makes it possible for individuals to
use either one or the other in the interest of specific material objectives”
(ibid.: 140). There has been a rise of a class of ambidextrous individuals
who are equally at ease to make use of both sets of values. For example,
Beteille says that the progressive farmer uses a variety of resources and
skills. New technology, power equipment, fertilizers, improved seeds, etc.,
are being procured through official or semi-official agencies. The progressive
farmers, at the same time, retain their traditional skills as well. They use
their ties of kinship and affinity. Beteille does not see, therefore, a rigor-
ous application of the Marxist concepts of class and class conflict. His view
is that a certain degree of tension and conflict is inevitable in a situation
of transition from backwardness to development. Development differently
720 K. L. Sharma
affects the proprietors of land and capital compared to sharecroppers and

wage laborers, as the latter are somewhat adversely affected and the former
are generally gainers of the process of change and development.
Classifications of Classes
The Indian Marxist scholars have followed the definition of class and its clas-
sification as given by Karl Marx. The owners of labor-power, owners of cap-
ital and landowners, who have wages, profit and rent, respectively, as their
sources of income, form the three broad classes. Thus, broadly, there are
three classes, namely, wage-earners, capitalists and landowners based upon
the capitalist mode of production. However, Marx finally acknowledges only
two classes: (1) bourgeoisie (capitalist), and (2) proletariat (wage-earners)
For Marx, class is not a mere category. In everyday life, it is a relationship,
not a thing (Das, 1990: 328–342). But there is “class in itself” and “class for
itself”. Class is a historical phenomenon, a social and cultural formation.
Thompson (1984) states that “class is defined by men as they live their own
history, and in the end this is its only definition”. A class is a real thing,
having a real existence, in a certain relation to the means of production. As
such, class relations and class consciousness are part of the experiences of
groups, such as factory workers, artisans, weavers, agricultural laborers, etc.
Such a set of people would constitute the class of proletariat in opposition
of the bourgeoisie (capitalists). Capitalism, in India, has not attained the
development heights equal to the highly industrialized societies, as India
does not have a bipolar class structure. Due to divergent modes of produc-
tion and India being a welfare state with a developing economy, there is a
multilayered class structure in India, without having crystalization of class
contradictions and conflicts. As such, we can perceive a capitalist class, a
dominant class, an exploited/oppressed class, a ruling class, a propertied
class, etc. Apart from the relations between the owners and the workers,
another basis for class analysis is — accumulation. Harriss-White (2004: 2)
includes owners, traders, officials, politicians, workers and entrepreneurs
(engaged in small-scale production and trade).
However, Harriss-White (ibid.: 31–34) finds a close link between caste
and class in India. She writes: “Caste still shapes ideologies of work and sta-
tus.” It makes for compartmentalized labor “markets”, with non-competing
groups whose opinions are severely constrained. It stratifies pay. By means
of caste, entry into the non-farm economy is screened. Caste affects work
done by women, scheduled castes. “Castes have indeed become interest
groups with reaches away beyond that of reserved jobs. Workers themselves
sometimes enforce the stratification of occupations by caste so as to main-
tain their hold over enclaves of the labor market or sectors of petty trade.
Caste is also the basis from which urban, occupation-based trade associ-
ations have evolved” (ibid.: 32). A large number of associations of work-
ers and owners are caste-based. Employers use caste to exploit labor and
thus keep it fragmented. Laborers too use caste identities to organize
and to enhance their status in the face of exploitation. But caste has a
tendency to conceal class interests. Harriss-White observes: “Caste has
become an instrument to regulate economic participation, as well as to
position people in a ranking of status, and the opposition between classes
is suppressed” (ibid.: 192). Role of caste in overshadowing class has been
somewhat exaggerated by Harriss-White. Migration, mobility, education,
modern occupations, etc., have weakened the hold of the caste system on
its members to a considerable extent. Emergence of non-farm occupations
in rural India has posed a challenge to the traditional caste-based economic
activities.
In terms of ranking, generally classes are classified as high, middle
and lower based on sources of income, landholdings and assets. Ideologi-
cally, classes are considered in terms of rich and poor, and in-between the
two are middle classes, comprising of the white-collar workers of different
grades and ranks, in both public and private sectors. In rural India, Thorner
(1960; 1976) mentions about three agrarian classes, i.e., that is, mazdoors
(laborers), kisans (cultivators), and maliks (landlords). Mazdoors were
generally landless, whereas kisans were substantial or self-sustaining farm-
ers, dependent mainly on family labor. Maliks were capitalist farmers who
generally hired agricultural laborers. Some of them were also absentee land-
lords. Industrialization received a boost after India’s Independence in 1947.
Though the industrial bourgeoisie was very small at the dawn of indepen-
dence, yet its influence in economic and political domains was immense.
Below the big bourgeoisie, were the small bourgeoisie and the middle classes
(Bettelheim, 1968). The situation, today, after more than six decades from
1947, has changed considerably in Indian economy (agriculture, industry,
and trade and commerce). The rise of the middle classes and the big busi-
nesses and industries have been remarkable since India’s independence, and
particularly from 1991–1992 onwards due to globalization and liberaliza-
tion. Workers in business, banks, government departments, and education
have gone up enormously. Even urbanization has accelerated as it is close
to 35% of India’s total population.
722 K. L. Sharma
Agrarian Classes in India

Class is both a rural and urban phenomenon. A class is grouping of people
based on common economic and occupational interests. Mobility in class
is characterized by available opportunities, capabilities, and achievement-
orientation of the aspiring individuals. Let us first discuss briefly about
the agrarian classes based on some selected studies. Dasgupta (1975:
1395–1414), based on a rigorous analysis of 126 villages from fourteen
states, discusses (1) the proletarianization of the poor peasantry with the
increasing resources in few hands; (2) the shift in the mode of agricul-
tural production from family-based subsistence farming to market-oriented
hired-worker based farming; and (3) the increasing diversification of eco-
nomic and social life in the village. Dasgupta reports the emergence of new
economism. Bhardwaj (1980), in her analysis of the rise of a middle class
and of a bourgeoisie in India, provides a classification of rural society in
terms of semi-proletariat, small holders, farmers, and rentiers. On the other
side, Bhardwaj divides the urban society into the industrial bourgeoisie,
the middle class or petty bourgeoisie (further divided into upper, middle
and lower middle classes), the industrial proletariat, semi-proletariat, and
lumpen proletariat. Mode of production and differentiation of peasantry
are two main considerations in the emerging agrarian relations.
There is no demarcation between agrarian classes. There is a small
class of landowners with extensive interests in trading and transport
activities, moneylending and urban property. Some people have also non-
farm income in rural areas. However, a majority of households own lim-
ited or none of the means of production. The capitalist farmers are also
moneylenders/merchants/contractors, who indulge in usury (Bose, 1985).
There is a clear process of polarization of the peasantry into a class of
rural capitalists and of agricultural laborers. Such a class-based polariza-
tion has always existed in Indian history, though caste and Hinduism to
a considerable extent blurred such economic divisions. As we have men-
tioned earlier, a clear distinction existed between the Aryans and the
Dasas in ancient India. In medieval India, agrarian hierarchy was charac-
terized by (1) the autonomous chieftains, (2) the intermediary zamindars,
and (3) the primary zamindars (Hasan, 1969: 18). Mahajans (bankers
and traders) were landholders and were also involved in moneylending
(Cohen, 1969: 57–58). Chandra (1986: 21–28) mentions about three cate-
gories, namely, (1) privileged classes, (2) cultivating classes, and (3) service
classes. Peasantry was also considerably differentiated (Sharma, 1997:
55–83) in British India, where the land tenure systems, namely, Zamindari
and Ryotwari settlements, further accentuated intra-class and inter-class

status distinctions. The abolition of these systems and introduction of land
reforms and green revolution in the post-independent India has created a
new agrarian class structure.
Today, the main issues concerning agrarian class structure include the
capitalist mode of production in agriculture and differentiation of peasantry.
Peasant families have been classified as top, middle, and lower. Mode of pro-
duction, indebtedness and asset structure are considered the main criteria
for agrarian inequalities (Kumar, 1978: 762–770; 812–820; 846–851). Caste,
class, power nexuses are reported in a large number of studies (Sharma,
op. cit.). Omvedt (1981: A-156) observes: “No analysis of class in rural
India can be complete without taking caste into account; for not only did
Indian feudalism have the specific feature of being structured and shaped
through caste, but caste, though in a somewhat different form, remains
equally viable and virulent today.” Even though the “feudal form of caste”
has received a decisive blow, the caste-class nexus persists in a transformed
form. Despite regional variations in rural class structure, we have today:
(1) Landlords.
(2) Owner-cultivators.
(3) Moneylenders.
(4) Cultivating tenants.
(5) Landless poor peasants (share-croppers).
Some well-off farmers have taken up enterprises in the villages and

also in nearby towns and cities. Elites are emerging from among those sec-
tions of rural people who have benefited from the fruits of development
in the independent India. However, Rudolph and Rudolph (1987) observe
that “class polarization” and “class politics” have not crystalized in India
because organized workers and private financial and industrial capital are
politically marginal. The state also controls policy, politics and market rela-
tionships. Rudolphs write: “Class polarization between wage workers and
capitalist farmers in India’s massive agricultural sector and rural society is
constrained by the leading role played in production and politics by small-
scale, self-employed “bullock capitalists”, cultivators who benefited from
the land reforms and “green revolution” and who rely more on family labor
and their human capital than on wage workers and machines” (ibid.: 2).
Such a view held by Rudolphs might be true for the pre-liberalization India.
Since 1991–1992, the situation has been changing rapidly. Dependence on
agriculture has reduced. Non-farm income has increased. Migration and
724 K. L. Sharma
mobility have occurred. The corporate and private sector has brought about
a noticeable change in the form of India’s class structure. “Privatization”
has become a buzzword even in social sectors, like health and education.
“Demand groups”, such as agrarian producers, students, and industrial
workers are not so effective as they used to be during the pre-liberalization
situation. In fact, after the B. P. Mandal Commission’s implementation in
1993, the demanding groups are the OBCs, minorities, poor sections from
among the upper castes and some other caste groups. Underlying these new
demanding groups may be economic reasons and relative deprivation, but
the mobilization by these groups is on social and religious plank. Thus, it
is more of an effort for economic and political empowerment through social
mobilization.
It is not correct to say that class is more of an urban phenomenon,
and that caste is more pronounced in rural India. As we have briefly dis-
cussed, class stratification quite clearly exists in village India. Village people
are conscious of class differences and relationships. Class relationships are
mediated by castes, tribes and religions or by their associations. Class rela-
tionships are also mediated by responses of other classes or their stimuli.
Patron-client and employer-employee affiliations, factions and panchayati
raj institutions also mediate class relationships (Stern, 2003: 88–89). There
are primordial groups as mediators of class relations, as we see in case of
Marwaris, Jains, Punjabis, Chettiars, Khatris, Parsis, etc.
Constitutional provisions, land reforms, green revolution, panchayati
raj institutions, etc., have created middle classes among the agriculturists
in certain parts of India, such as Punjab, Haryana, Western Uttar Pradesh,
Gujarat, Maharashtra, Karnataka and Tamil Nadu. These people have also
derived maximum benefits from policies and programs of the central and
state governments. Stern (op. cit.: 124) observes: “The cultivating middle
classes have become, more and more, parts of wider Indian classes.” They
are in league with their urban counterparts. Stern names such a change as
“bourgeois revolution”, as the cultivating middle classes have invested in
local small businesses, and some of their members have taken up salaried
jobs while some others have entered politics. Globalization has been more
favorable to them than common people in rural India. However, Stern’s
acceptance of Max Weber’s definition of “class”, in terms of a “market
situation” or in other words, fair competition between buyers and sellers,
does not seem quite apt, due to persisting dominance of the rural rich and
influential people. Exploitation and exclusion persist in social, economic
and political fields.
However, Breman (2003: 45–49) discusses that prosperity and pauper-

ization coexist in rural India. For example, he states that the sugarcane
crop has benefitted mainly the class of non-cultivating proprietors in South
Gujarat. Peasant capitalists have more surpluses, and there is underpay-
ment to the laborers. The dominant caste-class group demands more capi-
tal surplus, at the expense of the workers’ lives. Voices against exploitation
and underpayment are silenced under the façade of social harmony model.
Such a situation does not allow reduction of inequalities between the rich
and the poor, powerful and powerless. It is preached that conflicts must
be brought to an end by mutual consultation, compromise and harmony.
The ideology of class conflict is opposed. This amounts to the acceptance
of the ill-gotten property of landowners or misconstrued power of the pow-
erful. Outsiders are not allowed to interfere in the affairs of farmers and
laborers.
Classes in Urban India

Class formation in urban India implies understanding of the social back-
ground of entrepreneurs, managers, industrial elite, working class, white-
collar workers, the benefactors and controllers of the educational and
healthcare-related institutions, etc. Urban-industrial society comprises
occupational and income hierarchies, elite formation, professionals and
working classes, middle classes, associations and trade unions. Irrespec-
tive of the nature of a given town, urban class structure has been different
because of capital/labor relations, compared to a rural-agrarian system of
relations. Urban India consists, in a true sense, the capitalist class, the
middle class, and the working class. All the three classes are internally
differentiated. The middle and the working classes are in both public and
private sectors. The big property-owning industrialists, owners of multina-
tional companies, entrepreneurs have received a boost, particularly after
the commencement of liberalization and globalization in 1991–1992. The
middle classes, which were earlier employed mainly in the public sector,
have also enlarged due to enhanced privatization of economy. Consumerism
and international links in trade and commerce and in telecommunications
have created a new middle class, with new professionalism. A new cul-
ture of management has emerged. The urban class structure comprises
the bourgeoisie/capitalist class, which is divided into (1) big comprador,
and (2) small and medium bourgeoisie. The class of entrepreneurs is also
726 K. L. Sharma
differentiated in terms of the turnover, size and investment. Several stud-

ies of urban entrepreneurs have analyzed links between caste and religion
and entrepreneurial activities (Singh, 1985; Owens, 1973: 173–166; Akbar,
1990).
Middle classes and professionals are an important segment of urban
class structure. They render a variety of services while working in both
public and private sectors. The middle class comprises administrators, office
workers, medical doctors, engineers, managers, teachers, and social service
providers working in agencies and organizations, etc. The working classes
are below the lowest layer of the middle classes. These include industrial
workers, manual workers, arts and craftsmen, messengers, peons, helpers,
masons, construction workers, etc. However, the working class is also dif-
ferentiated in terms of skills and wages.
A total of 20% of India’s GDP is produced by the labor in the cor-
porate and public sector. The informal economy’s share is estimated at
60%, of which agriculture is the largest single sector. The self-employed
are the biggest chunk as they are nearly 56% of all workers. Nearly 36%
live below the minimum survival level (Harriss-White, 2004: 17–22). Social
structure, particularly caste, continues to influence class relations. Harriss-
White observes: “Caste still shapes ideologies of work and status. It makes
for compartmentalized labor “markets”, with non-competing groups whose
options are severally constrained”. It stratifies pay. By means of caste, entry
into the non-farm economy is screened. “Caste ideology also affects whether
women work at all, what work they can do, and how far from home they
may move” (ibid.: 31). Castes function as interest groups. Caste-dominated
occupational associations and unions have been formed in urban areas. In
Chanderi, which is a weavers town in central India, Sharma (1999) finds
that Muslims, mainly Ansaris, and Kolis (a scheduled caste) are engaged
in weaving. No other group from among the Muslims or among the Hindus
is engaged in weaving of clothes. Jains (Banias) are mainly master-weavers
(traders). Some Brahmins, Muslims and Kolis have also taken up trading
in sarees (a women’s wear) manufactured by the weavers. However, so far,
Jains have been highly successful in the saree trade. Thus, labor, trade and
caste/community are interlinked.
Kalecki (1972) and Jha (1980: 95) observe that the self-employed are a
distinct “class force”. There are no contradictions between labor and capital
or between labor and management. Contradictions are between the large-
scale, professionally managed capitalist enterprises of the private sector
and the working classes. In 1980, according to Jha, there were 30 mil-
lion “intermediate” income earners, having nearly 250 million dependents.
The number of the self-employed at the end of 2010 must have gone up,
nearly by three times. Such a big chunk of India’s class structure becomes
a force to reckon with in political terms. The self-employed control the
markets, and through the “politics of markets”, influence the political par-
ties. Today, the “middle classes” have consolidated as they are a nearly
400 million strong segment, economically well off, and also entrenched into
the administrative machinery and private sector management and business.
“Family business” (ascription) and business families (achievement) charac-
terize modern urban economy to a large extent.
India is diverse and heterogeneous, socially, economically and techno-
logically (Stern, 2003: 23–24). Stern observes: “The lines that separate
Indians into ethnic groups, castes and religious communities are hatched
and cross-hatched with the lines of class” (ibid.: 23). Cities in India, with
a population of over 100,000 (proper cities), and having modern industrial
and professional employment, have class consciousness and conflicts as facts
of urban life. In villages and small towns, class consciousness is not clearly
articulated and class conflict is shadowed by patron-client relationships,
factional and class conflicts. Wealth and power are the new class symbols
in rural India. People talk of rich and poor, strong and weak, and higher
and lower people ignoring their caste. Often today, people speak of the edu-
cated, lucrative white-caller jobs, urban, and upper-middle class members.
Classes and Socio-political Linkages

Class and politics are closely interrelated. Money power is trans-
lated/transformed into political power and vice versa. A comparative study
of Delhi and Chennai shows that the middle class people, mainly Brahmins
or Christians, have organized associational activities, and they have high
levels of education and income. This is to secure effective representation
or “empowerment” through participation in associations in civil society.
Resident Welfare Associations and NGOs and their fora and networks are
dominated by the wealthy and educated people (Harriss, 2007: 2716–2724).
There is also “stratification of associational activity”. The urban poor are
generally out of this political or empowerment activity. Identity politics
prevails over class politics (Beteille, 2007: 945–952). Identity politics brings
728 K. L. Sharma
into focus disparities between different communities. Individuals and house-

holds belonging to given castes/communities are found in almost all classes.
Beteille observes: “Identity politics succeeds where it underscores dispar-
ities between communities and obscures those within each one of them”
(ibid.: 951).
The other point is about the nexus between class and political power.
Barring the left-parties, all other political parties receive financial support
from the Indian bourgeoisie and economic dominants and entrepreneurs.
The bourgeoisie also patronize bureaucrats at all levels. Ghanshyam Shah
(1998: 225–269) observes that “in contemporary Gujarat, the business class
(merchants and industrialists) and rich peasants enjoy dominance. They
together form the dominant power elite, though they do not hold formal
positions of power” (ibid.: 264). He writes: “No cabinet can afford to antag-
onize them and also remain in power for a long time. There is competition
and rivalry within and between business houses, businessmen, industrial-
ists and rich peasants for protecting one’s own individual or group (based
on nature and type of business and industry), and are also united as pro-
ducers (in the case of rich peasants), businessmen and industrialists at
the district and state levels. They close their ranks when their collective
interests as perceived by them, are at stake. They often, but not always,
play decisive roles in the formulation of politics of the state promoting
their interest directly. However, they openly violate and sabotage vari-
ous laws which affect their interests adversely at the level of implementa-
tion” (ibid.: 264). In caste terms, most of the bourgeoisie in Gujarat come
from the upper and middle castes, namely, Banias, Brahmins, Rajputs and
Patidars.
The left-parties in particular have been organizing the peasants,
marginal farmers, share-croppers and landless workers. The fact is that
most of the big political parties, like the Congress, the Bhartiya Janta
Party (BJP), the Communist Party of India (CPI) and the CPI(Marxist)
rely on their trade unions for support. Most of the big business houses
have control over the newspapers and television channels, for example, the
well-known newspapers, like the Hindustan Times, the Times of India, the
Indian Express, the Hindu, the Statesman, etc., are all owned and con-
trolled by India’s big business houses, such as the Birlas, the Sahu-Jains,
the Goenkas, etc. These houses have also affinities with particular political
parties. Caste and class nexus and its relation to power is clearly reflected
in the case studies of nine states of India (Sharma, 1998). Caste is used
more as an economic interest group and a power bloc in these states rather
than a system of division of labor and intercaste relations. Castes mediate

class relationships. Castes also indulge in grabbing political power either
alone as simple castes or in coalition with other castes and communities,
including Muslims, Sikhs, Christians and Jains.
Today’s Capitalism, Transnational Corporations (TNCs) and con-
sumerism have reshaped India’s class structure. A new class of hardware
and software professionals, managers, entrepreneurs and consumers has
appeared. This has been possible because of liberalization policy adopted
by the government of India since 1991–1992. Trade restrictions have been
relaxed. International migration and mobility have also received a new
impetus. The TNC executives, global bureaucracy, professionals, mer-
chants, and media characterize a new class. In such a situation, one can
see beneficiaries, which would include the capitalists, the upper class/caste
people, the urban middle classes, the non-resident Indians (NRIs), the big
farmers, the professionals and the educated people. Many Indian companies,
such as Tatas, Ranbaxy, Asian Paints, etc., have entered into the markets of
many developing countries. Several Indian companies have occupied space
in the Forbes list of Corporate Titans. These are from both private and
public sectors. Indian diaspora in the USA has taken a significant place in
its economy and professional world.
Table 35.1. Economic Power by Religion and Community, 1995–1996.
Business Group Turnover Rs.

Religion/caste houses rank crores Rank
Marwari (H/J) 19 1 51,399 1

Punjabi (H) 7–8 2 18,161 3
Gujarati (H) 5–6 3 16,915 4
Parsi 3 4 35,463 2
Chettiar (H) 2 5 6,367 5
Brahmin (H) 2–3 6 6,172 6
Sindhi (H) 2 7 4,523 7
Christian (Syrian) 1 8 2,011 8
Nair (H) 1 8 2,148 9
Raju (H) 1 8 1,341 10
Muslim 1 8 1,287 11
Others 3 5,106 —
TOTAL 47–50 150,893
Note: H = Hindu; J = Jain.

Source: Data in Business Today, August–September 1997 in Dorin et al. (2000), p. 25.
Cited from Harriss-White (2004: 141).
730 K. L. Sharma
Table 35.2. Religion and Caste of the Owners of the Top 10 Corporate Companies
in Punjab.
Religious affiliation Sub-caste of Caste

Name of company∗∗ of chairman the chairman group
Ranbaxy, Mohali Sikh — Arora

JCT, Hoshiarpur Hindu Thapar Khatri
Hero Cycles, Ludhiana Hindu Munjal Arora
Mahavir Spinning, Ludhiana Hindu Oswal Baniya
Jagatjit, Kapurthala Hindu Jaiswal Baniya
Oswal Agro, Ludhiana Hindu Oswal Baniya
Vardhman, Ludhiana Hindu Oswal Baniya
JCT, Mohali Hindu Thapar Khatri
Malwa Cotton, Ludhiana Hindu Oswal Baniya
ICT Fibres, Hoshiarpur Hindu Thapar Khatri
Note: ∗∗ The companies have been arranged in the descending order according to
sales in the year 1994.
Source: Center for Monitoring the Indian Economy, 1995.
Cited from Harriss-White, 2004: 157.
Thus, the emerging class structure is certainly indicative of a new

paradigm, having varied implications for different sections of society.
The big bourgeoisie and the highly paid segment of the middle class are
major gainers. The unorganized sector has hardly benefitted from these
developments. Suicides by farmers, negative effects on indigenous arts and
crafts, and cut-throat competition have impoverished a large section of the
unorganized society. The recent slump in the American economy and its
effects on India are fresh in our minds.
Concluding Remarks
Class consciousness largely depends upon an individual’s existence in soci-
ety, particularly in relation to his or her economic activities. Since people
are essentially unequal, they develop a sense of higher and lower posi-
tions in society, and such a realization creates a feeling of identity of affin-
ity with one or other class or economic category. Marxist philosophy has
played a significant role in the formation of class consciousness and iden-
tity. The social background of the people and the milieu in which peo-
ple work affect the formation of class consciousness. However, there are
socio-cultural factors which at times inhibit the crystalization of class con-
sciousness. Economic associations and trade unions and movements have
generally mobilized workforce for the realization of demands of the work-

ing people. There are also counter-mobilizations to discourage the unity
of workers and professionals. In the post-globalization era, the role of the
Marxist ideology and trade unions has become noticeably weak. However,
despite globalization, the presence of caste and community in shaping class
consciousness remains, although in a somewhat muted form, due to migra-
tion and mobility and presence of the global market.

36
Stratum Consciousness and Stratum
Identification in China
Li Wei
During the 30 years of reform and opening up, China has undergone a
shift from an agricultural society to a modern industrial society and from
a planned economy system to a market-based economic system. Its social
stratum has also gone through major interest differentiations where the self-
identification and group consciousness of each social stratum has begun to
form, which lead to the inconsistency and fragmentation of stratum identity.
An Analysis of the Stratum Consciousness of Social

Groups in China Since Reform and Opening Up
The definition of class consciousness and stratum
consciousness
In observing the stratum shift during the process of social transformation
in modern China, class consciousness or stratum consciousness is an indis-
pensable perspective. From either a theoretical or a practical standpoint,
the presence of class consciousness always serves as the mark of class for-
mation and class exclusion. Class consciousness doubtlessly plays a pivotal
role in such a wide range of subjects of class analyses such as the class
structure, class formation, class consciousness and class action.
Class consciousness is an aspect of Marxist theory, referring to the self-
awareness of social classes, the capacity to act in its own rational interests,
or measuring the extent to which an individual is conscious of the historical
tasks their class (or class allegiance) sets for them.
733
734 Li Wei
Moreover, by definition, the objective interests of classes are fundamen-

tally in opposition; consequently, these opposing interests and conscious-
nesses eventually lead to class conflict. Class relations are based on a certain
mode of production. The production mode of the modern capitalist society
simplifies its class antagonisms. Society as a whole is more and more split-
ting up into two great hostile camps, two great classes directly facing each
other: bourgeoisie and proletariat.
However, such objective conditions as a shared economic status among
a large group of workers and the formation of common interests between
workers and capitalists only define a class in itself — as a structurally
determined object within the capitalist society. A class becomes a class for
itself only when it comes to the consciousness of the fundamental nature of
the capitalist division of society and of its common interests gets united in
its opposition and conflict with the bourgeoisie. (Marx, C1965/1847: 196;
1972/1852: 693).
In order to explore the formation of classes and strata during China’s
social transformation from a multi-dimensional perspective, we adopt the
concept of “stratum consciousness”. Stratum consciousness, as opposed
to “class consciousness”, is not a concept tinged with a very strong
collective consciousness. It refers to the subjective consciousness, eval-
uation and perception of a social member situated in a certain social
position with respect to social inequality and his own socioeconomic sta-
tus (Liu Xin, 2001). Unlike class consciousness, stratum consciousness
arises not merely from the relations of production and material and eco-
nomic interests, but also from the inequality and differences between
social strata in terms of economics, power, culture, technical resources,
lifestyle and interaction pattern. Stratum consciousness reflects the ten-
sion in the conflict between social strata, but does not necessarily indicate
the opposition and the break in relations between social strata in terms of
ideology.
Although class consciousness and stratum consciousness adopt different
conceptual and theoretical perspectives, they are rather similar as tools
for conducting practical sociological research. The usual subjects under
scrutiny include class perception/class awareness, class identity and class
conflict.
Consciousness of stratum differentiation

Consciousness of stratum differentiation refers to the public’s perception of
the differences between social strata.
Stratum Consciousness and Stratum Identification in China 735
1 Acceptance of China as a stratified society

In a survey of Wuhan residents conducted by Liu Xin in 1996 (hereinafter
referred to as “the 1996 Wuhan survey”), 76.8% of the urban residents
believed that people could be stratified according to socioeconomic status,
indicating that 3/4 of the public realized that the society they were in was
not an equal one. (Liu Xin, 2001: 10) The “Chinese General Social Survey”
conducted by the Renmin University of China in 2003 (hereinafter referred
to as “CGSS2003”) showed that 84.3% of the urban residents nationwide
held the opinion that social members could be divided into different social
strata. According to the results of the CGSS2003, 76.3% of the urban and
rural residents nationwide agreed with the proposition that “society can be
divided into such levels as upper, medium-to-upper, medium, medium-to-
lower and lower level”, with 71.2% believing that “the current society has
classes”.
2 It is a widely held view that the determining factors of stratum

differentiation mainly include income, power, and education
Both the 1996 Wuhan survey and the “Chinese General Social Survey” con-
ducted by the research group on the social structure of the CSSA in 2001
(hereinafter referred to as the “2001 strata survey”) looked into the factors
that affect the positions of strata in modern Chinese society. The Wuhan
residents’ survey showed that factors such as “income/wealth”, “power,
privilege and clout”, and “level of education” topped the list of stratification
indicators. In the survey of strata in Chinese society, money/wealth, power,
social status and education ranked high among factors in perceiving social
strata differences (See Table 36.1) These results corresponded to the view-
point of social stratification theory, i.e. economic resources, power resources
and cultural resources shall be regarded as the key to the formation of social
strata, which also indicated that the mechanism of social stratification in
China was shifting toward the strata differentiation paradigm at work in
modern industrial society.
3 Power plays a significant role in the mechanism of social stratification

in China
The 1996 Wuhan survey and the 2001 strata survey showed that in public’s
consciousness, the role played by economic factors and power-related factors
in determining people’s social status is far greater than that of education;
in other words, social stratum is not just a concept of economic status, but
also of power.
736 Li Wei
Table 36.1. Subjective Stratification Criteria Held by Chinese Public.
Percentage 2001 strata Percentage

1996 Wuhan survey (N = 754) survey (N = 2, 669)
Economic factors such as 81.6 Money & Wealth 73.7

income, wealth
Power, priviledge, clout 49.9 Power 54.6
Level of education 26.4 Level of education 22.5
Occupation, job 12.2 Occupation 14.7
Prestige, reputation 10.2 Social status 46.9
Employer 9.6 — —
Assets, ownership 8.5 — —
Intelligence, capability 6.4 — —
Personality, moral 5.8 Moral cultivation 12.1
cultivation
Standard of living, 5.6 Level of consumption 16.0
consumption pattern
Appearance, interaction 2.7 Lifestyle 11.4
pattern
Family background 2.3 Family background 10.4
In addition, the two studies also show that in China, occupation/

profession has not yet been adopted as the main indicator of social strat-
ification, which differs from the Western industrial society that features
an occupation-centered social stratification system. What is also notewor-
thy is the fact that factors such as origin and family background which are
used to determine an individual’s fate under a totalitarian regime now rank
the lowest among the numerous factors that affect the social stratification,
indicating that China is now no longer a politicized class society.
From relevant studies on occupational prestige, we can also gain a clear
view of the public’s perception and understanding of the mechanism for the
formation of social inequality. A survey of 63 cities in China conducted in
1999 by Xu Xinxin showed that the characteristics of occupational prestige
that ranked high included “political authority, scientific knowledge, com-
plex vocational skills and relatively high level of income” (Xu Xinxin, 2004:
129–132). Based on statistics of occupational prestige collected during the
2001 strata survey, Li Chunling drew the conclusion that people tended to
rank high all those who boasted the most power capital and cultural capital
in terms of occupational prestige; those who commanded the highest social
positions were high-ranking governmental officials and senior intellectuals
(Li Chunling, 2005: 173–174). The regression analysis of the socioeconomic
Table 36.2. Top Ten Occupations in the Two Surveys of the Occupational Prestige.
Occupational prestige survey 2001 strata survey

of 63 cities in China, 1999 N = 2, 599 N = 6, 193
Mark of Mark of
Rank Occupation prestige Rank Occupation prestige
1 Mayor 92.9 1 Chairman of the 90.2

Standing
Committee of
People’s
Congress at the
city level
2 Government 91.4 2 Mayor 89.9
minister
3 University 90.1 3 Court president 88.6
professor
4 Computer network 88.6 4 Engineer 87.9
engineer
5 Judge 88.3 5 Scientist 86.5
6 Prosecutor 87.6 6 Secretary of CPC 85.2
County
Committee
7 Lawyer 86.6 7 University 85.2
professor
8 Engineer with 85.8 8 University faculty 85.1
hi-tech enterprise member
9 Leading cadre of 85.7 9 Director of the 81.1
the governmental
CPC/governmental body
body
10 Scientist 85.3 10 Manager of the 80.2
foreign-funded
enterprise
index of occupations conducted by the two studies also shows that educa-
tion, income and power are the key factors in determining the occupational
prestige (See Table 36.2).
Consciousness of stratum identity

Stratum identity refers to social members’ judgment as to which stratum
they belong, i.e., whether members in each stratum have perceived the
boundary between “us” and “them”, the boundary that divides different
strata, and whether they have realized they share a common interest among
themselves.
738 Li Wei
1 Subjective stratum identification

Both the 2001 strata survey and the CGSS2006 contained contents regard-
ing the subjective stratum identification, although different titles and stra-
tum structures were adopted, with the results also considerably varying.
The results of the 2001 strata survey show that:
(1) There is a relatively high degree of consistency among social stratum

members in stratum identification
We can observe that among the five out of the nine social strata as identified
according to the objective criteria (state and social administrators, profes-
sional/technical personnels, individual industrial and commercial house-
holds, industrial workers, and agricultural laborers), over 50% identified
with their own stratum status (see Table 36.3). Although most (54.8%) of
those objectively classified as belonging to the stratum of private business
owners consider themselves as individual operators, it is generally under-
standable, because in reality the boundary between the status of private
business owners, especially small-to-medium business owners, and that of
individual operators is quite blurry. Those classified as private business
owners in the surveys are only labeled as such by the researchers according
to their own judgments and set of indicators. This result shows that the
differentiation of the objective strata has gradually seeped into the con-
sciousness of the stratum members, leading to the strengthening of their
stratum identification.
(2) Stratum identification also exhibits a certain degree

of dispersion and uncertainty
On the flip side, it can also be observed that for members of the top and
bottom strata objectively ranked the social hierarchy (such as state and
social administrators and agricultural laborers), they maintain relatively
high levels of identification within their own strata; those of the middle
strata (such as the stratum of managerial personnels, the stratum of clerks,
and employees of business and service enterprises) show varying levels of
identification within their strata. Its shows that, first, there does not exist
any social mobility between the two extremes of the social hierarchy. State
and social administrators enjoy advantages in terms of occupational status,
institutional support (access to organizational resources), and urban sta-
tus (urban residents, non-rural Hukou holders), whereas agricultural labor-
ers are decidedly disadvantaged in these respects. There exists the highest
degree of social inequality between the two strata; second, the middle strata
March 5, 2013
16:48
Table 36.3. Identification with Objective Social Strata (2001 Strata Survey), %.
Social strata classified according to objective criteria
9in x 6in
Individual Employees
Stratum Consciousness and Stratum Identification in China

Identification State and industrial of business
with one’s social Private Professional/ and and
own adminis- Managerial business technical commercial service Industrial Agricultural

stratum trators personnels owners personnels Clerks households enterprises workers workers
CPC/governmental 64.3 6.9 0.0 4.5 9.3 0.2 0.0 0.2 0.3
cadres
Managerial 4.0 33.7 11.3 0.3 0.7 0.2 0.2 0.2 0.2
personnels
Professional/technical 11.9 15.4 0.6 60.5 6.4 1.9 2.7 3.9 0.1
personnels
Clerks 15.8 18.5 1.6 11.1 31.5 0.6 4.1 1.2 0.1
Private business 0.0 2.3 19.4 0.0 0.0 3.2 1.4 0.0 0.1
owners
Individual operators 0.0 0.8 54.8 3.5 0.7 53.6 17.3 3.0 0.6
Workers 2.0 17.7 4.8 8.7 25.4 4.7 37.9 51.2 0.6
Peasants 0.0 2.3 6.5 4.9 10.2 24.0 12.7 23.4 91.2
Peasant workers 0.0 0.8 0.0 1.0 1.8 2.8 4.8 7.3 2.8
Rural 1.0 0.8 0.0 0.3 9.1 0.8 0.7 0.4 1.0
administrators
The unemployed 0.0 0.0 0.0 0.3 2.7 5.9 11.9 7.3 1.0
Others 1.0 0.0 0.0 3.5 1.1 1.1 4.1 1.1 0.5
Unclear 0.0 0.8 0.0 1.4 0.7 0.8 2.3 0.5 1.3
No answer 0.0 0.0 0.0 0.0 0.4 0.2 0.0 0.4 0.3
Total 100.0 100.0 99.0 100.0 100.0 100.0 100.0 100.0 100.0
Source: Survey of Chinese Social Strata conducted by CASS in 2001, as obtained from Li Chunling, 2004: 270.
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are still undergoing the differentiation. For instance, a larger proportion of

those objectively classified as managerial personnel subjectively perceive
themselves as belonging to the strata of professional/technical personnels,
clerks and workers. A considerable percentage of clerks consider themselves
as belonging to the strata of workers and peasants. These indicate that the
members of the strata at the middle are increasingly separating themselves
from different occupational or status groups, with different identities over-
lapping on them, which quite naturally leads to their conflicting sense of
stratum belonging.
The results of CGSS2006 further indicate the uncertainty of the stratum
identification. From data furnished in Table 36.4, it can be readily observed
Table 36.4. Identification with Objective Social Strata (CGSS2006).
Stratum identified with

Stratum
objectively Peasant Working Middle Entrepreneurial Fail to Sample
classified class class class class choose Total size
State and 12.4 53.7 15.8 0.7 17.4 100.0 89

social
administra-
tors
Business 34.0 23.8 39.5 1.8 1.0 100.0 40
owners
Managerial 5.7 71.5 19.9 1.9 1.0 100.0 119
personnels
Professional/ 15.2 54.7 21.3 1.4 7.4 100.0 514
technical
personnels
Clerks 10.3 73.5 10.9 0.4 4.8 100.0 570
Small 30.9 38.8 25.7 2.2 2.4 100.0 138
employers
Individual 43.3 36.1 12.3 1.2 7.0 100.0 750
operators or
the self-
employed
Business 16.6 68.4 8.3 1.4 5.3 100.0 377
employees
Service 25.9 63.3 6.1 0.3 4.3 100.0 328
enterprise
employees
Industrial 29.0 61.5 4.3 1.0 4.2 100.0 1659
workers
Agricultural 92.5 2.7 1.4 0.4 3.1 100.0 4254
workers
that members of four out of the 11 strata as classified by the occupation

and employment status identify negatively with their strata. Those iden-
tified with the peasant class come from the peasant class, accounting for
92.5%. The majority of those surveyed identify themselves with the working
class. Those classified objectively to the working class (industrial workers,
employees of business and service enterprises) maintain a relatively high
level of identification (61%–68%), and those objectively classified to the
middle strata such as state and social administrators, managerial person-
nels, professional/technical personnels and clerks also opt to identify them-
selves with the working class. Even a majority of small employers who hire
one to seven employees identify themselves with the working class. 39.5%
of private business owners identify themselves with the middle class, the
highest percentage of any stratum, and only a fraction of those surveyed
identify themselves with the entrepreneurial class. Even among the private
business owners, only 1.8% identify themselves with the entrepreneurial
class. The inconsistency in the results of CGSS2006 might be attributed
to the different classification criteria adopted, and it might also indicate
that during the process of market transformation, although occupational
differentiations lay the actual foundation of the social strata in modern
China, people’s perception of stratum is still heavily influenced by political
symbols prevalent under the old regime. Those normally classified as the
“middle strata” by scholars tend to identify themselves more as “working
class”, instead of “middle class”.
2 Stratum-level identification
Another way to conduct the analysis of the self-identification of the stratum
is to examine people’s subjective identification of their positions in the
objective stratification system, i.e., a self-judgement as to which level in
the social hierarchy or socioeconomic status they belong. Based on results
of surveys conducted in China regarding relevant strata over the recent ten
years, we may detect some common characteristics shared by stratum-level
identification among China’s social strata.
(1) Chinese public have shown a tendency to trend downward in terms of

the self identification of stratum level
When considered in a global perspective, the proportion of the Chinese
public that identifies themselves with the medium level of the social strata
never exceeds 50%, which is significantly lower than that of other countries,
while that of those who identify themselves with the medium-to-lower level
742 Li Wei
Table 36.5. A Comparison Between China and Other Countries Around the World in
the Stratum Level Identification.
Subjective stratum identification

Upper Medium-to- Medium Medium-to lower (N of
Country level upper level level lower level level cases)
West Germany 1.8 11.2 62.5 20.0 3.6 (1,127)

The US 1.9 15.7 60.7 17.4 3.6 (987)
France 0.4 10.9 57.7 25.2 5.3 (993)
Italy 0.7 7.0 56.9 22.2 8.0 (1,000)
Australia 1.1 8.6 72.8 10.4 2.7 (1,104)
Canada 1.2 14.2 68.8 11.8 2.2 (1,012)
Brazil 4.4 13.1 57.4 17.2 5.5 (1,000)
Japan 1.1 12.5 56.0 24.4 5.0 (1,042)
Singapore 1.0 3.9 74.2 16.2 3.0 (996)
South Korea 1.1 14.7 51.0 23.7 9.0 —
India 1.2 12.0 57.5 21.7 7.5 (1,020)
Philippine 1.3 7.0 67.1 18.5 5.9 (1,574)
China(1996 0.8 7.2 47.3 31.2 12.6 (754)
Wuhan
survey)
China(2002 1.6 10.4 46.9 26.5 14.6 (10,738)
social outlook
survey)
China 0.3 2.6 24.9 28.5 41.7 (10,151)
(CGSS2006)
China 0.5 6.2 41.0 29.3 23.1 (6,789)
(CSS2006)
China 0.8 6.7 39.7 30.0 21.4 (7,014)
(CSS2008)
Source: The data furnished above was collected from Masao Watanabe’s book Stra-
tum Differences and Institutionalization thereof in Modern Japan (pp. 333–334); China
(2002 social outlook survey) refers to the “survey of the social outlook of Chinese urban
residents” conducted in 2002 by the CASS; The data of China (CSS2006) and China
(CSS2008) came from the “Chinese General Social Survey” conducted by the CASS in
2006 and 2008.
and lower level is far greater than that of other countries. Some researchers
attribute this phenomenon to the fact that there is not a mature, stable inter-
mediate stratum in China (Li Peilin et al., 2005: 57–58) (see Table 36.5).
(ii) There is a link between the objective stratum position and subjective
stratum identification
From the data of CSS2006 and CGSS2006, it can be observed that the
higher the objectively classified strata, the more people among them who
identify themselves g with the medium level and above of the social strata.
In CSS2006, 86% of the government official stratum (state and social

administrators) considered themselves reaching the medium level and above
in the socioeconomic status, the highest percentage in any stratum; that of
the private business owners and managerial personnels is the second highest
at 75%; that of the professional/technical personnels is the third highest at
67%; that of the clerks and individual industrial and commercial households
is the fourth highest, reaching over 50%; and that of the workers, peasants
and employees of business and service enterprises is the lowest (less than
45%). Although the overall scale of those who identify with the medium
socioeconomic level and above in CGSS2006 is lower than that of CSS2006,
they show a similar trend: The government official stratum (state and social
administrators), private business owners and professional/technical person-
nels identify themselves with relatively high levels of socioeconomic status,
followed by the managerial personnels, clerks and individual operators, with
the employees of business and service enterprises, workers and peasants
identifying themselves with the lowest socioeconomic status (see Fig. 36.1)
Other studies have yielded similar results. In the 2002 social outlook
survey, the analysis of the relationship between subjective stratum identifi-
cation and objective stratification showed that compared with other criteria
of the objective stratification, the correlation coefficient between the objec-
tive stratification based on occupation and the subjective stratum identifi-
cation was the highest (zero-order correlation coefficient r = 0.353, Gamma
coefficient = 0.41) (Li Peilin et al., 2005: 70). The study by Liu Jingming
et al. used the data of CGSS2003 and divided social members into five latent
Fig. 36.1. Percentage of the objective social strata identification with the medium level
and above of socioeconomic status.
744 Li Wei
Table 36.6. A Latent Class Analysis of the Objective Stratification and Status and
Group Identification.
Latent Latent Latent Latent Latent

class 1 class 2 class 3 class 4 class 5
Occupation Managerial Technical Manual Manual The unem-

personnel; personnel; workers; workers; ployed
technical Clerks the self-
personnel employed
Level of Junior college High school, Junior high Junior high Junior high
education and above junior school, school and school and
college high below below
school
Income The highest The highest Medium Medium-to- The lowest
20% 40% level and lower 20%
above level
Stratum Medium-to- lower level Medium-to- lower level lower level
identity upper upper
level level
Source: Obtained from Liu Jingming and Li Lulu (2005: 77).
classes by indicators such as occupation, education, income and stratum

identity. Its results showed that there exists a corresponding relationship
between the objective stratum positions and stratum identification (Liu
Jingming and Li Lulu, 2005: 52–81) (see Table 36.6). The results furnished
above indicate that the objective gap in socioeconomic status between
social strata had begun to seep into the subjective consciousness of strata
members.
Consciousness of stratum conflict

Since reform and opening up, with the establishment of the market mech-
anism, the reform of labor regime and the dissolution of the work unit
(danwei) system, the basic social relations among social members have
undergone significant changes. Social members converted from the “unit
men” affiliated to the state and work units into the more independent
“social men”, with the labor relationship turning from those dominated by
the status of “masters of the state” to that of market-based employment.
This shift has brought about interest differentiations among social strata
and certain conflicts of interest. Consciousness of stratum conflicts refers to
the public’s perception of the social relations among different social groups.
1 The majority of Chinese public sense that there exists stratum conflicts
In the 2001 strata survey, 43.8% of the urban and rural residents believed
that “there exists conflict of interests among certain strata and classes”
in the current social structure; and 21.4% maintained that “there exists
conflicts of interest among all strata and classes”. The combined percentage
of the two reached as high as 75% (Li Chunling, 2005: 277–279) In the
2002 social outlook survey, 66.5% of the urban residents believed that there
existed conflicts of interest between each social stratum and class (including
“certain conflicts”, “numerous conflicts” and “severe conflicts”) (Li Peilin
et al., 2005: 90–92). In CSS2006 and CSS2008, 68.6% and 64.8% of the
urban and rural residents respectively believed that there existed conflict of
interests among social groups (including “a few conflicts”, “major conflicts”
and “severe conflicts”) (see Table 36.7). These results sufficiently showed
that the majority of Chinese public held a clear perception of the conflict
of interests among strata and classes.
2 Occupational groups with “white-collar” characteristics and those

self-identified with the lower social strata have the most intense
consciousness of conflicts of interest among social groups
Different social strata hold different perceptions of conflicts of interest
among social groups. The results of CSS2006 show that the consciousness
of each occupational stratum regarding conflicts of interest among social
groups can be divided into four categories in the decreasing degree of inten-
sity: The first category includes such three strata as managerial personnels,
Table 36.7. Chinese Public’s Consciousness of Stratum Conflicts.
2002 Social outlook survey CSS 2006 CSS 2008

Choices Percentage Choices Percentage Percentage
No conflict 3.7 No conflict 5.0 4.8

Few conflicts 8.8 — — —
Certain conflicts 40.8 A few conflicts 18.7 15.3
Numerous conflicts 17.6 Major conflicts 44.9 44.7
Severe conflicts 8.1 Severe conflicts 15.9 17.4
Omission or other 21.1 Not sure 15.5 17.8
Total 100.0 Total 100.0 100.0
Sample size 11,094 Sample size 7,069 7,139
Source: CSS 2006 and CSS and 2008.

746 Li Wei
professional/technical personnels and clerks; 37%–42% of them believe that

there exists major conflict of interests, at least 15% higher than the over-
all percentage; the second category includes four strata such as state and
social administrators, employees of business and service enterprises, the
unemployed and semi-unemployed, and individual industrial and commer-
cial households, 26%–31% of whom believe major conflict of interests exists;
the third category includes workers (23.98%) and private business owners
(22.35%); the fourth category includes agricultural workers, only 16.32% of
whom sense there are major conflict of interests.
In terms of the prediction over the intensification of conflict of inter-
ests among social groups, occupational strata can also be divided into
four categories: the first category includes managerial personnels, profes-
sional/technical personnels and clerks, 52%–55% of whom believe that
conflicts of interest among social groups might intensify; the second cat-
egory includes employees of business and service enterprises, state and
social administrators, and workers and individual industrial and commer-
cial households, 40%–48% of whom hold such belief that conflict of interests
would intensify; the third category includes agricultural workers, 31.3% of
whom hold such belief; the fourth category includes private business own-
ers, only 23.88% of whom maintain the belief, nearly 15% lower than the
overall average. If we combine the two measures, we can clearly observe
that professional/technical personnels, managerial personnels and clerks —
occupational groups with striking “white-collar” characteristics — maintain
a high level of the realistic perception of conflicts of social interest and pre-
diction about the intensification of the conflicts, and they constitute the
groups that possess the most intense consciousness of conflict of interests
among social groups.
In terms of the subjective identification with socioeconomic status,
those self-identified as belonging to the lower strata tend to be more per-
ceptive of the intensity of the conflict of interests among social groups. In
the 2002 social outlook survey, different subjectively-identified strata were
shown to hold different perceptions of the degree of severity of seven types
of social conflicts. It can be readily observed that those identified with the
highest stratum and the lowest stratum of the social hierarchy tended to
be more perceptive of all types of social conflicts than those identified with
the middle strata (see Fig. 36.2).
Although the data of CGSS2006 differs from the results of the 2002
social outlook survey, they all generally lend some credence to the view
that those identified with lower strata tend to be more intensely conscious
March 5, 2013
16:48
9in x 6in
Stratum Consciousness and Stratum Identification in China
Table 36.8. A Comparison Between Perceptions and Predictions of Different Social Strata Regarding Conflict of Interests, %.
Realistic perception of conflict of Prediction regarding the future trend of

interests among social groups conflict of interests among social groups
Major Small Sample Might Won’t Sample
Social stratum conflicts conflicts Unclear size intensify intensify Unclear size
State and social administrators 30.48 67.71 1.81 69 43.06 51.06 5.87 69
Managerial personnels 41.45 54.04 4.51 65 52.31 40.02 7.67 65
Private business owners 22.35 65.95 11.70 30 23.88 54.82 21.30 29
Professional/technical personnels 37.50 54.21 8.29 334 54.87 31.89 13.24 333
Clerks 37.49 55.75 6.75 379 52.77 36.35 10.88 379
Individual industrial and 26.53 60.98 12.49 596 40.43 39.71 19.86 596
commercial households
Employees of business and service 28.91 59.69 11.40 470 47.80 32.69 19.52 471
enterprises
Workers 23.98 61.43 14.59 952 42.44 37.09 20.47 952
Agricultural workers 16.32 63.59 20.09 3, 416 31.30 41.44 27.26 3, 416
The unemployed and 27.43 56.81 15.76 613 43.39 36.76 19.85 613
semi-unemployed
Overall 22.67 61.28 16.04 6,924 38.40 39.09 22.52 6,923
Source: CSS 2006.
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748 Li Wei
Fig. 36.2. Perceptions of different subjectively identified strata regarding the degree of
severity of all types of conflicts (%).
Source: 2002 social outlook survey.
of social conflicts. As indicated in Table 36.9, those identified with the lower
socioeconomic status tend to interpret almost all types of social conflicts
as more severe than any other group does. This finding indicates that the
biggest threat to the social stability might not necessarily come from the
objectively classified low strata, but rather, those who subjectively identify
with the low strata (Li Peilin et al., 2005: 160).
3 Conflicts of interest among social groups are mainly embodied by the

rich-poor divide, industrial conflict, and the strained relationship between
cadres and the masses
Since the public generally perceived differentiations and conflict of inter-
ests among social groups, then what are their perceptions in these respects
mainly focusing on in reality? Previous studies mainly focused on the fol-
lowing two questions: who are those that benefit the most since reform and
opening up? And which groups are prone to conflict of interests?
(1) Power elite, economic elite and cultural elite constitute the group that
has benefited the most since China’s reform and opening up
The 2001 strata survey inquired about the public’s views on “in current
Chinese society who are most likely to earn a high level of income?”
and “who do you think should earn a high level of income?” The survey
results showed that people generally believed that “government officials”
were most likely to earn the high income (67.4%). Other popular choices
included “technical specialists”, “those who are well-educated or boast high
degrees”, “those who own assets”, and “those who are well-connected”.
Table 36.9. Perceptions of Different Subjectively Identified Strata Regarding the

Severity of All Types of Social Conflicts (%).
Subjective perception of the socioeconomic status

Upper Medium-to- Medium Medium-to- lower
level upper level level lower level level
Conflict between rich and 54.0 50.5 54.0 52.8 60.0

poor
Conflict between 24.8 29.6 32.3 30.9 35.8
blue-collar workers and
white-collar workers
Conflict between cadres 35.2 47.0 47.5 50.5 55.2
and people
Conflict between 19.6 40.6 37.8 37.3 40.2
managerial personnels
and non-managerial
personnels
Conflict between bosses 29.3 51.8 51.6 51.2 54.2
and workers
Conflict between upper 52.5 41.2 43.7 42.7 47.5
level and lower level
Average 35.9 43.4 44.5 44.2 48.8
Notes: Percentage in this table refers to the combined percentage of those who consider
the social conflicts “very severe” and “moderately severe”.
Source: CGSS 2006.
Table 36.10. Public’s Perception of Those Who Benefit since China’s

Reform and Opening Up (%).
Earning the Should be

high income earning the
in actuality high income
N = 6396 N = 6397
Government officials 67.4 12.9

Technical specialists 39.1 72.1
Those well educated, degree-holders 38.9 71.2
assets owners 35.0 17.4
Those well-connected 30.4 7.7
Smart people 24.3 33.4
Those from good family background 23.3 4.1
Daring pioneers 16.7 16.8
Hard-workers 12.6 49.4
(see Table 36.10), indicating that it had become a widely accepted view
that power, cultural capital and economic assets were the main factors
affecting the income level, and those who possessed resources in these three
respects were bound to benefit in the social distribution.
750 Li Wei
It is a widely held view that people most deserving of the high

income shall be the possessors of cultural capital (technical specialists, well-
educated, degree holders), while those benefiting on account of power and
economic strength obviously do not deserve the high income they earn. In
other words, the public would disapprove the “unjustified” gains of power
elite and economic elite. This also indicates that other social groups are
inclined to conflict with the stratum of government officials and private
business owners in the interest distribution.
CGSS2006 and CSS2008 yielded similar findings. Both surveys inquired
about “social groups that benefit the most over the recent decade”. Results
of CGSS2006 showed that the public held the view that the group of
people that benefited the most was the state cadres, followed by pri-
vate business owners or overseas investors. And in CSS2008, the public
ranked state cadres the highest, followed by managers/operators of state-
owned and collective enterprises and private business owners, and then
professional/technical personnels and intellectuals (see Table 36.11).
Table 36.11. Social Groups that Benefit the Most in Public Opinion.
CGSS2006 CSS2008
Those who benefit Those who benefit
the most over the the most over the
recent decade Percentage recent decade Percentage
State cadres 37.6 State cadres 68.7

Private business owners 25.3 Private business owners 52.3
Foreign businessmen, 12.8 —
overseas investors
Managers/operators of 7.7 Managers/operators of 59.9
state-owned enterprises state-owned/collective
enterprises
Individual industrial and 4.5 Individual industrial and 18.0
commercial households commercial households
Intellectuals, 4.3 Professional/technical 43.4
professional/technical personnels
personnels
Managerial personnels 2.7 —
with private and
foreign-funded
enterprises
Operators/managers of 2.4 —
collective enterprises
— Peasant workers 6.7
Peasants 0.7 Peasants 16.2
Workers 0.3 Workers 7.1
Source: CGSS 2006 and CSS 2008.

(2) Conflicts of interest between the rich and the poor, cadres and masses,
and labor and capital, are the main forms of conflicts of interest in the
current social structure
The public’s perception of conflicts among the social strata is mainly
reflected in the perception of conflict of interests among a few social groups.
According to relevant data from CGSS2006, we can readily observe that the
public generally believe that the conflict of interests among social strata are
mainly concentrated in the conflict between the rich and the poor as brought
about by the gap in wealth distribution (56.1%), the conflict between labor
and capital as caused by the employment relationship (52.6%), and the con-
flict between the public power and the masses (52.1%) (see Table 36.12).
From Table 36.12, we can observe that different social strata hold differ-
ent perceptions of the severity of conflict of interests among social groups.
As far as the conflict between the rich and the poor is concerned, the strata
of the managerial personnels, clerks, workers and employees of business
and service enterprises consider it more severe, while the stratum of pri-
vate business owners tend to play down this conflict. It is the same story
of conflict between labor and capital. Business owners’ perception of the
severity of this conflict is nearly 10% lower than that of the strata of the
managerial personnels, professional/technical personnels, clerks, workers,
and employees of business and service enterprises. In terms of the conflict
between cadres and masses, the stratum of state and social administrators
maintain a lower perception of the severity of the conflict than those of
other social strata. We are able to detect a pattern here: between opposing
social groups, the advantaged or dominant side always “downplays” the
possibility of conflict of interests; conversely, the disadvantaged or submis-
sive side always tries to “entrench” the differences and conflicts between
them. In other words, the weak side in the conflict of interests tends to
intensely feel conflict and inequality.
The Uniqueness of the Formation of Chinese Social

Strata Consciousness
Social strata centered around the occupational system possess different
political resources, economic resources and cultural resources, leading to
unique interests of each grouping. Stratum consciousness refers to people’s
perception regarding the stratum they belong to, and their claim to the
legitimate interest of their stratum. This kind of discourse conforms to
the shift toward industrialization in mode of production, labor relations
March 5, 2013
16:48
Table 36.12. Public’s Perception of the Severity of Conflicts Among Social Groups, %.
752
State and Employees
social Professional/ of business
9in x 6in
adminis- Business Managerial technical Individual and service Agricultural
Overall trators owners personnels personnels Clerks operators enterprises Workers workers
Conflict between 56.1 57.6 49.8 61.1 54.6 62.1 56.4 57.1 58.4 54.3
the rich and
the poor

bosses and
workers
cadres and
people
the upper
level and the
Li Wei
lower level
the
managerial
personnels
and non-
managerial
personnels
blue-collar
workers and
white-collar
workers
Average 46.3 46.4 44.1 49.8 48.0 50.8 44.5 49.0 49.2 44.2
Note: Percentage in this table refers to the combined percentage of those who consider the social conflicts “very severe” and “moderately
severe”.
Source: CGSS 2006.
b1344-ch36
and lifestyle, which further leads to the ordinary logic of the shift of the
relationship between social groups, which has been generally recognized
by researchers. However, the class theory from the Western society lacks
the empirical foundation of the society that undergoes the market trans-
formation, while the rich and varied vistas of Chinese society during the
social transformation offer refreshing insights into the formation of class
and stratum consciousness, which has triggered new rounds of theoretical
interpretations and discussions.
One of the major contributions made by Thompson to the research
of class is that in the theoretical interpretation of the formation of the
working class, he breaks away from the traditional structural reduction-
ism and introduces the most innovative concept of the “class experience”.
The class happens only when some men, as a result of common experiences
(inherited or shared), feel and articulate the identity of their interests as
between themselves, and as against other men whose interests are differ-
ent from (and usually opposed to) theirs (Thompson, 2001). To examine
the changes that took place in China over the past 30 years from this per-
spective of historicism will enable us to perceive the formation of social
classes and strata, and even the uniqueness and diversity of the stratum
consciousness.
In the study of the formation of the modern working class, Shen Yuan
identified the two approaches for the formation of the working class: work-
ers who used to work for SOEs turn to the working class under the market
system; and migrant peasant workers merge into the working class. The for-
mer approach is closely related to the process of marketization promoted by
the state, with the working classes gradually forming their class conscious-
ness after they leave or are forced to leave their posts, i.e. retreating from
the production sector and stepping into community life, and the latter to
“become the working class along the road provided by Marx” (Shen Yuan,
2006: 30–31). In his case study of SOE workers, Wu Qingjun also found that
“the group identification and consciousness of SOE workers aren’t formed
within the process of production, but without”. Unlike workers who rebel
against those disciplinary rules that control and exploit them, SOE work-
ers see their group identification formed when they experience the gradual
stripping of their institutional status and associated rights and benefits dur-
ing the process of SOE reform, with their sense of inequality arising outside
the production process. (Wu Qingjun, 2008: 71–72). In his study, Li Peilin
found that peasant workers as a low social group in the socioeconomic sta-
tus nonetheless have a rather upbeat social attitude, one of the reasons for
754 Li Wei
which is that their social attitude and behavior orientation are historicist,
whereby they always compare their current conditions with the previous,
worse ones, or with their otherwise quite unpleasant conditions if they had
never migrated out of their hometowns. In this case, “past” becomes the
background for peasant workers to form their stratum consciousness (Li
Peilin and Li Wei, 2007). The different approaches for the formation of
stratum mean that different class experience will mold class consciousness
with different connotations.
The formation process and stratum consciousness of China’s private
business owners stratum are also affected by historical factors. Given the
sensitive classification of strata, China’s private business owners would
rather identify themselves as the “middle class”, or even “working class” or
“peasant class”, than consider themselves as the “business owner stratum”.
This is a peculiar phenomenon never found in the Western class analysis
theory.
This historical uniqueness will permeate throughout the formation pro-
cess of each and every social stratum in China, and will also affect the basic
orientation of the stratum consciousness, which is worth further attention
and research.
March 6, 2013 8:51 9in x 6in Handbook on Social Stratification in The BRIC Countries:. . . b1344-list˙tab˙fig
List of Tables and Figures
Figures
Figure 1.1 Brazilian population in rural and urban areas by decade.
Figure 1.2 Economic sectors by year.
Figure 1.3 Evolution of the Gini Index for Brazil (1995–2005).
Figure 1.4 Number of people below the poverty line in Brazil by year
(in millions).
Figure 1.5 Percentage of people living below and above the poverty line by
region in 2009.
Figure 1.6 Urban and rural populations by region.
Figure 1.7 Real domestic income per capita, values in Brazilian Reals in
2009, using the INPC to measure deflation.
Figure 2.1 The number of different social groups in Russian society
(2009, %).
Figure 4.1 China’s social stratum structure in 2005.
Figure 4.2 The change in Gini coefficient of China’s income distribution
from 1982–2006.
Figure 8.1 Change of the number of nationwide employees by the nature of
employers.
Figure 8.2 Urban unemployment rate in 1986–2008.
Figure 8.3 Numbers and proportion of urban workers in secondary and
tertiary Industries in 1978–2008.
Figure 8.4 Comparison of the educational levels of manufacturing workers
in 1989 and 2008.
Figure 8.5 Number of qualification certificates of all skill levels issued in
1996–2008.
Figure 8.6 Comparison of the 2008 incomes of the urban workers and rural
migrant workers with different skill levels.
Figure 8.7 Change of incomes of workers in major industries in 1978–2008.
755
756 List of Tables and Figures

Figure 8.10 Change of employment in township enterprises in 1978–2008.
Figure 8.11 Change of the scale of rural migrant workers in 1987–2007 (Unit:
10,000 people).
Figure 8.12 2008 Comparison of the incomes of urban workers and rural
migrant workers by education level.
Figure 8.13 Number of labor dispute cases in 1996–2008.
Figure 10.1 The distribution of land and workers in the three main types
of agricultural enterprises (million hectares and million people).
Figure 12.1 Growth trend of per capita net income of rural households in
China, 1978–2009.
Figure 12.2 Composition (%) of the per capita net household income of
Chinese peasants, 1985–2009.
Figure 12.3 The change in proportion of agriculture-generated income and
non-agriculture-generated income among per capita net household
income of peasants (%), 1978–2009.
Figure 12.4 The change in proportion of property income and transfer
income among per capita net household income of peasants (%),
1993–2009.
Figure 12.5 The decreasing trend of impoverished rural population in China:
1978–2007.
Figure 12.6 Growth of per capita living consumption of rural households,
1985–2009.
Figure 12.7 Changes on Engle coefficient of per capita living consumption
of rural households: 1978–2009.
Figure 12.8 Living consumption gap between urban and rural residents in
China: 1978–2009.
Figure 12.9 Change in employment structure of rural labor force (%):
1978-2009.
Figure 14.1 Nascent entrepreneurs and those who discontinued a business
(any reason) in Russia in 2006–2009, % of APS samples.
Figure 17.1 Non-property owning middle class within the economically
active population during 1872–2000 (%).
Figure 17.2 Male population distribution between 24 and 60 years old, by
income levels in Brazil *, 2002 and 2009 (%).
Figure 18.1 Dynamics of share of different social groups, %.
Figure 18.2 Answer to the question: “Where did you live when you entered
school” among representatives of different social groups in the year
of 2010, % of the group.
Figure 18.3 The level of parents education in different social groups in
2010, %.
Figure 18.4 Sector of employment where representatives of different groups
earn their general income in 2010, % (for working population).
Figure 18.5 Evaluation of the degree of influence on the decision-making
process at work among respondents from the different population
groups in 2010, % (for working population).
Figure 18.6 Change of working status of the Russians from different popu-
lation groups during 2005–2010, % (for working population).
Figure 18.7 Dynamics of using some of the paid services by the representa-
tives of the middle class, years 2003, 2008, 2010, %.
Figure 21.1 Gini rate for domestic income in 19 Latin American
Countries — 2000–2010.
Figure 21.2 Domestic income per capita — urban/rural ratio.
Figure 24.1 Trend of the gap between China’s urban and rural income
during 1978–2008.
Figure 25.1 Percentage of population enrolled in basic education — per age
group.
Figure 25.2 Net enrollment rates for each educational level.
Figure 25.3 Fundamental and middle level education conclusion rate.
Figure 25.4 Enrollment and completion in higher education (in millions).
Figure 25.5 Percentage of students at or above the adequate level in reading
Brazil.
Figure 25.6 Percentage of students at or above the adequate level in maths
Brazil.
Figure 25.7 Direct public investment per student (R$).
Figure 25.8 School performance and socioeconomic status — SAEB
2001.
Figure 25.9 School performance and socioeconomic status — ProvaBrasil
2005 [Brazil Exam].
Figure 25.10 Mean proficiency per administrative unit.
Figure 25.11 Percentage of students at the higher education, according to
the deciles of household income per capita.
Figure 25.12 Percentage of non-white students by school level.
Figure 26.1 Social structure dynamics of upper-grade students in a daytime
secondary schools (%), Novosibirsk Region.
Figure 26.2 Decrease in the number of school students from the seventh to
the eighth and from the eighth to the ninth grades (difference in the
number of students at the beginning of an academic year).
Figure 26.3 Percentage of parents with higher education in 2006.
Figure 26.4 Territorial barrier percentage of schools situated in regional
centers in 2006.
Figure 26.5 Economic barrier: Percentage of schools providing free educa-
tion in 2006.
Figure 26.6 Structure of upper-grade students’ personal plans (Novosibirsk
Region, 2004).
Figure 26.7 Structure of school graduates’ personal life plans (Novosibirsk
Region, 1998).
Figure 26.8 Choices of graduates after secondary school (Novosibirsk
Region, 2004).
Figure 26.9 Choices of graduates after secondary school for girls from
Administrators’ families (Novosibirsk).
Figure 26.10 School graduates’ real behavior dynamics (% of the group).
Peasants’ children, girls, villages of Novosibirsk Region.
Figure 28.1 Education funding and enrollment rates of each level of
education.
Figure 28.2 Trend of growth of China’s higher education (1990–2007).
Figure 28.3 Inter-stratum inequality in education.
Figure 28.4 Inter-stratum differentiation in the inequality of higher educa-
tion opportunities.
Figure 28.5 1977–2006 College student body and gender distribution.
Figure 28.6 Rate of return of education in China’s urban areas over the
years and the comparison with international standard.
Figure 29.1 Perceptions on the state of personal finances in the last six
months.
Figure 29.2 Savings as a percentage of income.
Figure 30.1 Structure of expenditures: food and non-food products (%).
Figure 30.2 Total expenditures of urban and rural households.
Figure 32.1 Consumption and household assets of each social stratum.
Figure 32.2 Housing Assets of Each Social Stratum.
Figure 33.1 Evolution of the urban EAP, of the number of work registry
books expedited by the Ministry of Labor, and of the number of
formal Jobs created (in thousands): Brazil, 1940–1976.
Figure 34.1 Correspondence analysis of two variables — class position and
party choice.
Figure 36.1 Percentage of the objectively classified social strata identifica-

tion with the medium level and above of socio-economic status.
Figure 36.2 Perceptions of different subjectively identified strata regarding
the degree of severity of all types of conflicts (%).
Tables
Table 1.1 Distribution of EGP classes by year.
Table 1.2 Per capita household income distribution by EGP classes.
Table 1.3 Distribution of EGP classes by gender.
Table 1.4 Distribution of EGP classes by race.
Table 2.1 Class composition of the population of the USSR, % (The eco-
nomics of USSR, 1975: 38).
Table 3.1 Different castes and groups fared.
Table 4.1 Birth cohort distribution by the occupational stratum (%).
Table 6.1 Percentage of workers in the structure of employed population
(%).
Table 6.2 Unemployment rate among workers (%).
Table 6.3 Percentage of workers with part-time jobs (%).
Table 6.4 Percentage of workers at different educational levels by year (%).
Table 6.5 Percentage of workers at different educational levels by year (%).
Table 7.1 Class structure in India (%).
Table 10.1 Costs of agricultural production by country.
Table 10.2 Change of number of rural population in the Russian Federation.
Table 10.3 Structure of rural population (gender and age classification).
Table 10.4 Size and structure of the rural population by economic activity
(February–November).
Table 10.5. Distribution of agricultural land among the land users.
Table 10.6 The structure of the main types of agricultural production in
Russia by farm in 2009 (% of total production in the farms of all
categories).
Table 10.7 Distribution of acreage of agricultural structures by types of
ownership in households in Krasnodar region in 2009. (hectare).
Table 10.8 The number of peasant (farmer) households on 1 January,
according to statistics.
Table 10.9 Causes of premature mortality.
Table 11.1 Size-class definition.
Table 11.2 Landownership structure in rural India by ownership size-class.
Table 11.3 Composition of agricultural labor and farmer households in

terms of size-classes.
Table 11.4 Share of debt from various sources for cultivator house-
holds (%).
Table 11.5 Cultivators and agricultural workers in rural India (2001).
Table 11.6 Changing structure of landholdings during the post-
independence period.
Table 11.7 Large landholding states: Share of area awned by ownership
size-class.
Table 11.8 Small landholding states: Share of the area owned by ownership
size-class.
Table 12.1 Types of population flow and changes in population flow scale.
Table 12.2 Composition of per capita net income of Chinese peasants:
1985–2009.
Table 12.3 Comparison of a selection of indicators between urban and rural
population development, 2005.
Table 12.4 Comparison among provinces in China on per capita living con-
sumption of rural households in 2009.
Table 12.5 Comparison of average living consumption of rural residents in
the three areas of China (Unit: yuan).
Table 12.6 Comparison of per capita consumption of rural households as
grouped by income level (Unit: yuan).
Table 14.1 Main economic indicators of SME sector in Russian Federation
in 2008.
Table 14.2 Dynamics of main indicators of early entrepreneurial activity
according to GEM (2006–2010), %.
Table 14.3 Compared to one year ago, starting your business now is. . . , (%
of population, 18–64 age).
Table 14.4 What impact has the global economic slowdown had on the
business opportunities for any new start up. . . , (% of population,
18–64 age).
Table 14.5 Compared to one year ago, now your expectations for growth
are . . . , (% of population, 18–64 age).
Table 14.6 Which of the following sentences best describes the impact
of the global economic slowdown on your willingness to start up?
(% of population, 18–64 age).
Table 14.7 Top 3 most important reasons for selling, closing, quitting or
discontinuing a business during the last 12 months (2006–2009).
Table 14.8 What was the most important reason for selling, closing, quitting
or discontinuing a business during the last 12 months?
Table 14.9 Did the global economic crisis have no impact, some impact or
a large impact on your decision to sell, close, quit or discontinue a
business during the last 12 months?
Table 14.10 You mentioned that you have sold, closed, quit or discontinued
a business you owned and managed. Did the business continue its
business activities after you quit?
Table 14.11 Age and gender structure of adults with past entrepreneurial
experience, 2009.
Table 14.12 Educational structure of adults with past entrepreneurial expe-
rience, 2009.
Table 14.13 Do you have any experience of an unsuccessful attempt to start
up a business in the past, and if yes, which were the most important
reasons of it? (2009).
Table 14.14 Group-average values of indicators describing the level of small
entrepreneurship development in the constituent territories of the
Russian Federation.
Table 15.1 Economic power by religion and community, 1995–1996.
Table 16.1 The development of China’s private enterprises since 1989.
Table 16.2 State policies and institutions concerning developing non-state-
owned economy issued during the period 1979–2008.
Table 16.3 The educational degrees of private entrepreneurs based on sam-
ple survey.
Table 16.4 Last jobs held by private business owners before starting
businesses.
Table 16.5 Statistical analysis of initial capital invested by surveyed private
entrepreneurs.
Table 16.6 Trends of changes of Chinese private entrepreneurs’ identification
with their economic status.
with their social status.
with their political status.
Table 16.9 Analysis of consistency among self-evaluations by private busi-
ness owners in terms of status.
Table 16.10 Political participation of China’s private entrepreneurs.
Table 17.1 Converting EGP 11 to EGP 6.
Table 17.2 Relative and absolute presence of males between 24–60 years old
of EGP classes in Brazil, 2002–2009.
Table 17.3 Composition of the Brazilian middle class, 2002–2009 — for
males between 24 and 60 years old.
Table 17.4 Average Income * by EGP classes in Brazil, 2002–2009 — for
males between 24 and 60.
Table 17.5 Years of schooling by EGP classes in Brazil, 2002–2009 — for
males between 24 and 60.
Table 17.6 Color or race by EGP classes in Brazil, 2002–2009 — for males
between 24 and 60 years old.
Table 17.7 Percentage of households with specific consumer goods, by EGP
class of head of household, Brazil, 2002–2009 — for heads of house-
hold from 24–60 years of age.
Table 17.8 Socio-occupational composition (EGP) by income levels in
Brazil, 2002–2009 — for males aged between 24 and 60.
Table 18.1 Using of information technologies by the middle class and other
population groups in 2010, %.
Table 18.2 Consent with alternative values in different groups of society in
2010, %.
Table 18.3 The middle class representatives attitude to different aspects of
ideal political system in 2010, %.
Table 20.1 Goldthorpe’s class categories juxtaposed with China’s six class
categories.
Table 20.2 Proportion (%) of urban middle class to 16–60 years old urban
population, 1982–2006.
Table 20.3 Urban middle class composition by sector, profession and gender.
Table 20.4 Education level and age composition of urban middle class.
Table 20.5 Gender composition of urban middle class (2006, %).
Table 20.6 Family background and initial profession of middle class
(2001, %).
Table 20.7 Average annual income of the middle class and proportion of
the high-income middle class (2006).
Table 20.8 Proportion of high-incomers and high-income families (%).
Table 20.9 Income growth of middle class (city/town).
Table 20.10 Proportion of private property owners during various years (%).
Table 20.11 Private car ownership rate (%) during various years.
Table 21.1 Average per capita domestic income in Brazil.
Table 21.2 Domestic income classes in Brazil.
Table 21.3 Average domestic income using household reference and sex in
Brazil.
Table 21.4 Quintile income using household reference and sex in Brazil.
Table 21.5 Average per capita domestic income per region in urban Brazil.
Table 21.6 Average per capita domestic income per region in rural Brazil.
Table 21.7 Average per capita domestic income per occupational group
(EGP) in Brazil.
Table 21.8 Linear Regression — domestic income log.
Table 22.1 Gini and Theil indices as well as decile coefficient of differen-
tiation.
Table 22.2 Distribution of per capita income in quintile groups, %.
Table 22.3 Variation coefficient, %.
Table 22.4 The structure of income sources, %.
Table 22.5 The proportion of households living off only one income
source, %.
Table 22.6 The structure of the per capita income of Russian house-
holds, %.
Table 22.7 The results of the decomposition of the Theil index by sources
of income.
Table 22.8 Distribution of per capital income by settlement type.
Table 23.1 Categories of People.
Table 23.2 Land area belonging to each group as percent of total area.
Table 23.3 Incidence of poverty by caste shown in Uttar Pradesh.
Table 23.4 Karnataka NSS.
Table 23.5 Worker-population ratios in poor and non-poor households
by gender and rural–urban location: All-India, 1993–1994 (worker-
population ratios per 1,000).
Table 23.6 Comparison of actual expenditure around poverty line against
normative expenditure.
Table 23.7 Characteristics of households by alternative poverty lines.
Table 23.8 National poverty: Head count ratio.
Table 23.9 Change in poverty rate between 1993–1994 and 2004–2005.
Table 23.10 State-specific poverty lines for 2004–2005 (Rs/month).
Table 23.11 Pattern of regular and casual wage (In Rs.) of 15–59 Groups
at 1993–1994 prices.
Table 23.12 Trend of rural agricultural and non-agricultural wage (in Rs) of
regular and casual workers of 15–59 age groups at 1993–1994 prices.
Table 23.13 Pattern of urban sectoral wage (in Rs) of regular workers of
15–59 age groups at 1993–1994 prices.
Table 23.14 Population share of the poorest and richest states in the all-
India percentile classes (rural).
Table 23.15 Population share of the poorest and richest states in the all-
India percentile classes (urban).
Table 23.16 Year-wise population below poverty line.
Table 23.17 Number and percentage of population below poverty line.
Table 24.1 Trend of distribution inequality in per capita income of house-
hold in China during 1988–2007.
Table 24.2 Distribution of Gini coefficient of countries (regions) worldwide
by groups.
Table 24.3 Income shares and changes of the groups by quintile grouping
method.
Table 24.4 Change in population distribution of groups based on the median
relative distribution method approach (%).
Table 24.5 Trend of inequality of urban-rural per capita disposable income
in the Eat, the Central, and the West regions of China.
Table 24.6 Analysis of intra-stratum income inequalities of China at present.
Table 24.7 Analysis of asset inequalities of each social stratum of China at
present.
Table 24.8 Analysis of intra-stratum asset inequalities of each social stratum
in China at present.
Table 25.1 Mean years of schooling of residents in Urban and Rural areas.
Table 25.2 Mean years of schooling by region.
Table 25.3 Mean years of schooling by gender.
Table 25.4 Mean years of schooling by color.
Table 25.5 Means of proficiency in PISA 2009, per country in Latin America.
Table 25.6 Logistical regression estimating the probability of being
occupied.
Table 25.7 Linear Regression — Socioeconomic Index.
Table 26.1 Distribution.
Table 27.1 University level institutions.
Table 27.2 List of institutions opened by the government of India.
Table 27.3 A comparative picture of participation in higher education.
Table 27.4 Faculty-wise women’s enrollment in India (2009–2010).
Table 27.5 Educational attainment indices of states (1990–1991 to
2007–2008).
Table 27.6 Per capita public spending on education (Rs. per annum)
(1990–1991 to 2007–2008).
Table 27.7 Expenditure on education as percent of state domestic product

(1990–1991 to 2007–2008).
Table 27.8 Estimates (crore) of illiterates and literates below primary level
of youth population (15–24 Years).
Table 27.9 Estimates (crore) of educational levels of youth population
(15–24 years).
Table 28.1 Average years of education from urban and rural residents.
Table 28.2 Average years of education from men and women.
Table 28.3 Impact of education level on the probability of unemployment
of the working age population.
Table 28.4 Impact of education level on occupational status.
Table 30.1 Monthly household expenditures.
Table 30.2 Monthly household expenditures by quintiles based on per capita
expenditures for the year 2008.
Table 30.3 Income, expenditures and savings of households. 2008.
Table 30.4 The percentage of owners of different durable goods at the time
of the survey.
Table 30.5 Monthly expenditures of the city and country households by
quintiles based on per capita expenditures in 2008.
Table 30.6 The percentage of the owners of different durable goods in the
city and country at the time of survey.
Table 30.7 The age of durable goods in the city and in the country, 2008.
Table 30.8 Urban rural utilities in the rural and households, 2008 (in %).
Table 30.9 Estimation of affordability of durable goods and services. (in %
to whom it may concern).
Table 30.10 Matrix of rotated components.
Table 31.1 Classification of Indian consumer by NCAER.
Table 32.1 Level of consumption patterns of each social stratum.
Table 32.2 Factor loadings of operational consumption indicators.
Table 32.3 Engel’s coefficient of each social stratum.
Table 32.4 The consumption structure of each social stratum.
Table 32.5 Ownership of consumer durables among each social stratum.
Table 32.6 Lifestyle of each social stratum (%).
Table 32.7 Distribution of each occupation in consumption hierarchy (%).
Table 32.8 Distribution of each income stratum in consumption hierar-
chy (%).
Table 32.9 Distribution of each perceived stratum in consumption hierar-
chy (%).
Table 34.1 Trust in political institutions and state bodies: evaluation on

10-point scale.
Table 34.2 Trust in politicians (with the exception of the president and
prime-minister) and political parties: evaluation on 10-point scale.
Table 34.3 Proximity to political parties (proportion of those who defined
the party as “a close one”).
Table 34.4 Ideological orientation on a scale “right-wing — left-wing” (aver-
age on a 10-point scale).
Table 34.5 Satisfaction with various aspects of life (average on a 10-point
scale).
Table 34.6 Answer to the question: do you feel you are a discriminated part
of society? (in %).
Table 34.7 Answer to the question: who should own assets in agriculture?
(in %).
Table 35.1 Economic power by religion and community, 1995–1996.
Table 35.2 Religion and caste of the owners of the top 10 corporate com-
panies in Punjab.
Table 36.1 Subjective stratification criteria held by Chinese public.
Table 36.2 Top ten occupations in the two surveys of the occupational
prestige.
Table 36.3 Identification with objective social strata (2001 strata survey) %.
Table 36.4 Identification with objective social strata (CGSS2006).
Table 36.5 A comparison between China and other countries around the
world in the stratum level identification.
Table 36.6 A latent class analysis of the objective stratification and status
and group identification.
Table 36.7 Chinese public’s consciousness of stratum conflicts.
Table 36.8 A comparison between perceptions and predictions of different
social strata regarding conflicts of interest (%).
Table 36.9 Perceptions of different subjectively identified strata regarding
the severity of all types of social conflicts (%).
Table 36.10 Public’s perception of those who benefit since China’s reform
and opening up (%).
Table 36.11 Social groups that benefit the most in public opinion.
Table 36.12 Public’s perception of the severity of conflicts among social
groups (%).
March 8, 2013 14:50 9in x 6in Handbook on Social Stratification in The BRIC Countries:. . . b1344-abbrev
List of Abbreviations
AIADMK: All India Anna Dravida Munnetra Kazhagam

BJP: Bharatiya Janata Party
BKU: Bhartiya Kisan Union
BNDES: Brazilian Development Bank
BPL: Below Poverty Line
BSP: Bahujan Samaj Party
CASS: Chinese Academy of Social Sciences
CAT: Autonomous Worker Federation
CGSS: Chinese General Social Survey
CGT: Comando Geral dos Trabalhadores
CGT: General Labor Federation
CGTB: General Federation of Brazilian Workers
CHNS: China National Nutrition and Health Survey
CIS: Commonwealth of Independent States
CLT: Consolidation of Labor Laws
CPC: Communist Party of China
CPI: Communist Party of India
CPPCC: Chinese People’s Political Consultative Conference
CSE: Common State Examination
CTB: Labor Federation of Brazilian Workers
CUT: United Labor Federation
DMC: Denationalized Middle Class
DMK: Drivada Munnetra Kazhagam
EAP: Economically Active Population
EBO: Established Business Ownership Rate
EGP: Erickson, Goldthorpe and Portocarrero
EU: European Union
767
768 List of Abbreviations
FAT: Labor Support Fund (Brazil)

FNT: National Labor Forum
FMCG: Fast-Moving Consumer Goods
FS: Force Sindical (Labor Union Force)
GDP: Gross Domestic Product
GEM: Global Entrepreneurship Monitor
GNP: Gross National Product
GSS: General Social Survey
IBGE: Brazilian Institute of Geography and Statistics
IC: Intermediate Class
ICT: Information and Communication Technology
IIMs: Indian Institutes of Management
IITs: Indian Institutes of Technology
IR: Intermediate Regime
ISEI: International Socio-economic Index of Occupational Status
JDU: Janata Dal United
JNU: Nehru University
MEC: Ministry of Education
MEP: Marxist Educational Praxis
NCAER: National Council of Applied Economic Research
NCP: National Congress Party
NCST: New Labor Union Federation
NEA: New Agricultural Policy of Russia
NET: National Eligibility Test
NGO: Non-government Organization
NKC: National Knowledge Commission
NNS: National Sample Survey
NPC: National People’s Congress
NSB: National Science Board
NSS: National Sample Survey
OBCs: Other Backward Classes
OECD: Organization for Economic Co-operation and Development
PC: Personal Computer
PCB: Brazilian Communist Party
PFL: Liberal Front Party
PLP: Personal Land Plots
PRC: People’s Republic of China
PRONF: Programa Nacional de Fortalecimento da Agricultura Familian
PSDB: Social Democracy Party
List of Abbreviations 769
PT: Workers Party

PTB: Brazilian Labor Party
R&D: Research and Development
RJD: Rashtriya Janata Dal
RLMS: Russia Longitudinal Monitoring Survey
RMB: Ren Min Bi
SAB: Social Assistance Base
SAEB: Basic Education Assessment System
SBS: Brazilian Sociological Society
SCs: Scheduled Castes
SDS: Social Democracy Union
SES: Socio-economic Status
SEWA: Self-Employed Women’s Association
SME: Small and Median-sized Enterprises
SOEs: State-owned enterprises
SP: Samajvadi Party
SSI: Small Scale Industry
STs: Scheduled Tribes
TEA: Early Entreprenurship Index
TISCO: Tata Iron and Steel Company
TV: Television
UK: United Kingdom
UN: United Nations
USA: United States of America
USD: US Dollar
USSR: Union of Socialist Soviet Republics
UGT: General Labor Union
WTO: World Trade Organizations

March 6, 2013 8:52 9in x 6in Handbook on Social Stratification in The BRIC Countries:. . . b1344-ref
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March 6, 2013 8:53 9in x 6in Handbook on Social Stratification in The BRIC Countries:. . . b1344-index
Index
agrarian classes, 721–723 consumption stratification, 651–653,

agrarian distress, 212, 213 656, 668, 670, 673, 674
agriculture, 181, 182, 185–189, consumption types, 657
192–196, 198, 199
distribution, 442, 443, 451–453
Brazil, 87, 89, 92, 94–96, 99, 104,
253–257, 259–262, 264, 265, 267 economic growth, 340
Brazilian educational policies, 501 economic reform, 61, 65
Brazilian family farms, 174, 175 economic reforms, 301
Brazilian peasantry, 163 education, 422, 427, 435–437,
business discontinuation, 282, 283, 525–541, 543–547
285, 287, 290 education and unemployment, 519
educational expansion, 569
caste, 389
educational inequality, 569, 577, 578
caste system, 45
educational opportunities, 501, 502,
China’s middle class, 395, 398, 403,
511, 512, 515, 523
404, 409
educational reform, 569
Chinese peasantry, 227
educational reforms and expansion,
class consciousness, 703–708
551
class formation, 677
class policies, 59, 60 educational system, 553, 561–563
class structure, 3, 13–15, 17, 18 emerging consumption stratification,
consumerism, 639, 640, 642, 644 643
consumption, 339, 344, 349, 353–355, employment structure, 143
357, 595–598, 600, 604, 606, 607, expenditure, 612–619, 622–626
609, 611, 612, 615, 617, 619,
621–623, 628–635 farmers, 181, 187, 188, 192–196
consumption differences, 656, 657, 659 free entrepreneurship, 275
consumption growth and inequality,
234 gender, 422, 435
consumption habits, 396, 401, 409 gender inequality, 574, 578, 580,
consumption patterns, 649, 651–655, 591
662, 664 group consciousness, 703, 705, 716
819
820 Index
household, 612–624, 626, 628, 629, practices, 595, 597–599, 605–609

631–634 private entrepreneurs, 315, 322–324,
human capital, 360, 361, 366, 373–376 327–332, 334, 335
income, 421–437, 612, 615, 617–619, quality of education, 504–506, 508

622, 623, 626, 629, 631, 634, 635
income gap, 59, 72–75, 77 race, 422, 435–437
income inequality, 439, 442, regional inequalities, 431, 433
449–451, 454–457, 460, 462, 465, rural development, 169, 171, 175
469, 481, 482, 484, 487, 490–493, rural population, 183–185, 192, 194,
496 199, 221, 222, 224–226, 232, 233,
income sources, 439, 445–447, 454 236, 240, 241, 245
Indian private entrepreneurs, 299
inequality, 9, 10, 339, 525, social-class connection, class
526, 535, 536, 539, 540, formation, class consciousness, 717,
543, 544, 546 718
innovation, 253–258, 262–271 social attitudes, 753, 754
innovative entrepreneurship, 253–255 social groups, 21–23, 25–28, 34, 112,
113, 115, 116, 120, 127
labor, 87–109 social mobility, 526, 527, 535, 545, 546
labor market, 122, 124–127, 422, 424, social stratification, 23, 25–27, 30, 31,
426, 678–680, 684, 688, 693, 698, 340
700, 701 social stratification in India, 37, 43,
labor movement, 677, 681, 684, 685, 44
687, 689, 690, 692, 694, 695, 701 social structure, 59, 61, 62, 80, 81, 83
land reforms, 202, 204, 205, 208, 218, social transformation, 3, 14
219 status identification, 315, 328
strata, 22, 23, 25–28, 31–33
middle class, 339–353, 355–357, stratification, 3, 13, 16, 18, 19, 595,
359–377 596, 598–600, 609
middle class in India, 379, 380, 386, stratum consciousness, 733, 734, 751,
390, 392 753, 754
modernization, 361, 375–377 stratum identification, 733, 738, 740,
742–744
non-state-owned economy, 317, structural characteristics, 481, 484,
319–321 487, 496
systematic inequality, 549
peasantry in India, 201, 209
perceived opportunities to start a unions, 87, 88, 90–94, 99–105, 107,
venture, 279 108
politic, 100
political participation, 315, 328, vargas’ era, 678, 679, 695, 696, 700
331–335
poverty and inequality, 455, 456, work, 91, 93, 94, 98, 102, 108
459–461, 466 workers, 87–97, 99, 100, 102–108,
poverty lines, 462, 464, 472, 474 112–127
Index 821
workers’ party, 690, 695 working class in India, 129, 130,

working class, 111–113, 121, 122 132–134, 138
working class in contemporary China, working relations, 153, 154, 158
139

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British Library Cataloguing-in-Publication Data

HANDBOOK ON SOCIAL STRATIFICATION IN THE BRIC COUNTRIES

In-house Editors: Tang Yu/Zheng Danjun

Typeset by Stallion Press

Danjun - Hdbk on Social Stratification.pmd 1 3/1/2013, 2:55 PM

List of Contributors xxvii

Part One: Changes in Social Stratification 1

2. Changes in the Social Structure of Russian Society

3. Social Stratiﬁcation and Change in Contemporary India 37

4. Changes in China’s Social Stratiﬁcation Since 1978 59

Part Two: The Working Class 85

6. The Working Class in a Transitional Society:

8. The Status Quo and Change to the Working Class

Part Three: Peasants 161

10. The Transformation of the Social Structure

12. Rural Society and Peasants in China 221

Part Four: Enterprises and Entrepreneurship 251

15. Tradition and Entrepreneurship of Indian Private

16. China’s Fledgling Private Entrepreneurs

Part Five: The Middle Class 337

18. The Middle Class in Russian Society: Homogeneity

20. The Heterogeneous Composition and Multiple Identities

Part Six: Income Inequality 419

22. Income Inequality in Russia 439

23. Poverty and Income Inequality in India’s Urban

24. Structural Characteristics and Trends of Income

Part Seven: Educational Inequality 499

26. Inequality in Education: The Case of Russia 525

28. Educational Inequality and Educational Expansion in China 569

Part Eight: Consumption 593

30. Consumption and Lifestyle in Russia 611

Part Nine: Class Consciousness and Values 675

34. The Research of Class and Group Consciousness

35. Social-Class Connection and Class Identity

List of Tables and Figures 755

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After an initial contact, Tom invited me to attend the annual conference of

The collaboration among sociologists of BRIC countries turned out to

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It is by chance as well as a historical inevitability that the term BRICs (or

development of transition countries. New institutionalism is the leading

reading Russian literature. As the world’s largest country by both land

sociological studies of Indian social stratiﬁcation. According to one of the

been transformed into a complex class structure composed of diverse inter-

single-parent problem, mental disorders, disability and intergenerational

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A. A. Hagurov is a leading scholar at the Institute of Sociology in the

xxviii List of Contributors

and Dean of the Faculty of Sociology at the National Research University —

List of Contributors xxix

inequality and stratiﬁcation, as well as sociology of education and gender

xxx List of Contributors

committee, as well as the national coordinator of the graduate education

List of Contributors xxxi

Tian Feng is an Associate Professor at the Institute of Sociology, Chinese

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Changes in Social Stratification

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Inequality and Stratification

Fig. 1.1. Brazilian population in rural and urban areas by decade.

It is therefore crucial that we take a better look at the structural