My last blog addressed Branko Milanovic’s evidence-based statement that the ruling class in countries like the USA has taken on a new look – a fusion of the professional-managerial class and the top capitalists (see his ‘The Great Global Transformation’).
In this second effort to draw on Milanovic’s thesis, I sketch his analysis of the elite phenomenon in China. It is an analysis comprising several interlinked findings.
Together with others, Milanovic has shown that the composition of the Chinese elite – that is, the richest 5% of the population – changed between 1988 and 2018. In 1988 two-thirds of the elite were dependent on the state for their income (whether through employment in various government and CPC organisations at different administrative levels or by being employed by the state-owned enterprises). By 2018, however, more than one-half of the elite was composed of people whose income was made in the private sector: they were the owners of large or small capitalist enterprises and the professional-management class employed in private companies.
In other words, by 2018 almost a third of the elite were capitalists (a group which was wholly marginal back in 1988 (2%) and 1992 (5%); and a quarter of today’s elite belonged to the professional-managerial class. Thus, together with the capitalists, they account for more than half the elite (32% + 25% = 57%).
CPC membership is generally useful: the average premium from the membership as opposed to non-membership is about 5%. But once a person is within the top income groups, CPC membership no longer provides additional gain except in the case of large-scale capitalists, for whom that advantage varies between 29% and 34%.
Milanovic summarises:
‘The ranking of those who are members of the top 1% is then as follows: the richest are capitalists with CPC membership, the second richest are non-CPC members, and the least rich (among that very elite group) are CPC members from other (non-capitalist) social classes. One can therefore conclude that CPC members who are very rich are now fewer in number (their participation in the top group is less than in the past); they are also, at the very top, equally rich to their non-Party peers except when they combine CPC membership with private sector ownership, and the larger that ownership, the more valuable the membership’ (p.130/131).
Milanovic again:
‘ … CPC membership is a credential. But it does not help one to do better equally, irrespective of one’s social groups. The value of the credential is particularly high for the individuals who own businesses. This is the essence of the new ruling class in China: CPC membership provides a (political) credential, akin to educational achievement in the West, and that credential is particularly valuable when combined with one’s own capitalist or entrepreneurial position’ (p.131).
He usefully adds:
‘For the people who live in a world of concepts, and not reality, the fact that membership of the Communist Party of China is especially valuable for capitalists might seem like a contradiction in terms. But in a de facto one-party system of state capitalism, membership of that one party (whatever its name) is important or business.
Milanovic concludes that the elite in China as well as that in the US has changed (for the US see my previous blog entitled ‘Milanovic, Homoploutia and Credentialism’ at: www.grahamscambler.com). Both reflect the advent of ‘the new capitalism’. The elites in the US and China are both ‘new elites’. Moreover the new capitalism is more elitist than traditional Western capitalism, and more elitist too than the Communist Party nomenklatura of the Maoist era that ‘went through many perturbations’. In both countries ‘high incomes go together with credentialism: educational status in the United States, membership of the CPC in China’. Additionally, hard work is no longer looked down upon. In both countries ‘they work hard, boast of working hard, believe they could work even harder, and find in work both pleasure and a sign of having been chosen’ (I must include a qualification here: the thesis that they really work ‘harder’ than the likes of manual labourers is open to dispute).
Reference
Milanovic,B (2026) The Great Global Transformation. London; Allen Lane.