Jim O’Neill (see the review of his book The Growth Map by Bill Hayes ), chairman of Goldman Sachs Asset Management, theorizes that developed countries have entered a second Gilded Age, while emerging markets are simultaneously living through their first. Equally perceptive is his observation that the middle class of the developed nations is squeezed between the representatives of the Gilded Age—their own robber barons, and the “intelligent proletariat” workers of the emerging markets who compete with them for jobs but who have a much lower cost of living.
We are made to believe that this scenario is a necessary outcome of a modern capitalist society. Adam Smith’s notion of the capitalist—the entrepreneur investing (i.e., risking) his own money by organizing production and hiring workers—is all but forgotten, however applicable it was to eighteenth- and nineteenth-century England. In the England of the 1700s, most if not all people in the upper income brackets were noble landowners, bankers, merchants, and industrialists, in about that order; we can be fairly certain that the upper classes did not include journalists, dancers, and actors. For example, Nell Gwynne—famous actress, mistress of King Charles II, and a mother of his children—received an annual pension of 1,500 pounds, which was supposed to make her retirement comfortable but was well below of an income typical of a great lord.