The relationship between the middle class and the democratic system is a perennial subject of argument. The general thought is that a strong middle class is conducive to the establishment of democracy. The democratic systems of developed Western countries tend to support this theory. However, this theory has constantly been questioned and challenged, especially after the 2008 financial crisis.

This thesis is basically correct - a stronger middle class is conductive to promoting democracy. In essence, this is the path of "common prosperity" proposed during the recently concluded 18th National Congress of the Communist Party of China. However, in practice, this theory has thus far failed to be completely implemented, due in part to institutional defects of the capitalist system.

Western-style democracy and the monopoly of wealth

When we talk about democracy, we should differentiate between the various meanings of the word. In the context of public opinion, "democracy" often refers to the political definition of democracy, or more plainly, the "one person, one vote" democratic election system which is thought to bring social fairness and justice. Such understanding is essentially a political fantasy - it is too idealistic to be true.

The main reason that Western democratic systems often have been criticized is that the seriously uneven distribution of wealth has undermined them. Elections become competitions of economic strength rather than political ability or talent. In other words, a serious lack of economic equality is becoming a severe detriment to political rights.

Why has this occurred? Because the West has failed to clearly reflect the essence of its version of democracy: that political democracy is only a means, not an end. The biggest flaw of the Western democratic system is that it regards achieving political democracy as its main directive.

The Western capitalist system fails to address the problem of the unequal distribution of wealth, thus making the romantic ideal of political democracy a mask covering the face of the cold reality of the monopoly of wealth by a small group of elites.

The real purpose of democracy, instead, is to achieve common prosperity. Economic democracy and political democracy are interrelated. In this sense, the public ownership and absolute equal distribution of wealth envisioned by the communist system is an institutional design towards true democracy.

"Virtualization" of middle-class assets

In Western society, the main components of middle class assets are real estate, cars, and securities, while the main component of the property of the middle class of the Chinese peasant economy in ancient times was land. Land is a means of production that can create real wealth. Meanwhile, a car is a consumer good, and cannot hedge against inflation. Securities such as stocks, in their original sense, are a form of distribution of the means of production. However, in the Western economic system, securities are becoming less and less tangible. The financial sector, in that sense, has monopolized a majority of the assets of the middle class. A small number of people have the ability to make those assets disappear, thus seriously impacting the so-called democratic system. As long as this monopoly exists, the middle class will continue to be trapped.

Although an agrarian economy was once the most successful pattern for middle-class society in China, it is no longer the major economic form now. Nevertheless, this historical precedent holds theoretical significance. On the road of modernization, China should explore its own democratic system through absorbing the essence of the middle class concept found in its ancient peasant economy, combining it with the characteristics of the modern economy, and drawing lessons from the failures of the Western capitalist system.

As it continues to reform its own economic institutions, China should not allow the financial sector to gain the dominant position it has achieved in the West. Instead, the financial sector should serve the real economy. China should use its historical experience to establish a system where the state economy can develop along with the private economy and become an important pillar to guarantee socioeconomic equality for the whole of society. It should also improve the Western stock market system to prevent private monopolies from occurring. Meanwhile, appropriate measures should be taken to work towards a common prosperity.

Liu Yang is a co-author of the book Unhappy China.

(This article was first published in Chinese and translated by Li Huiru.)

Opinion articles reflect the views of their authors, not necessarily those of China.org.cn.

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