The importance of having a “prosperous middle class”

In contemporary economies, the mercantilist model (export-led growth) is giving way to a model of production close to the final buyers of goods. If companies invest where there is strong demand from the final buyers of goods , then a prosperous middle class capable of sustaining vigorous demand is needed to attract investment . This “ prosperous middle class ” model runs counter to the prevailing “labour market polarisation” model in OECD countries, where jobs concentrate at either end : a small number of sophisticated high-income jobs , and un sophisticated low-income jobs. In this model of labour market polarisation, the middle class gradually shrinks; moreover, its incomes hardly grow, which , in contemporary economies , discourages investment . To keep a country or region attractive for corporate investment, the prevailing model of labour market polarisation must therefore be discarded, as the wealthy alone are unable to generate sufficient demand for goods and services, in favour of a model of middle class prosperity - in other words, a “Fordist model”.