The economics of class. A dual approach

The aim of this paper is to present a novel proposal to define social classes from the economic perspective. This paper draws on a previous working paper (Muñoz de Bustillo and Esteve, 2022) that discusses the demise of the concept of social classes in economic analysis derived from the triumph of Neoclassical Theory, its substitution in recent times by the definition of social classes based on ad-hoc aggregation of deciles of people in the income distribution, and the convenience to explore new ways of defining social classes from an economic perspective. The proposal presented in this paper regarding social classes is based on two different elements. The first one is the participation or exclusion of a given person from the economic surplus. The second one is its position, both in terms of income and consumption, in relation to the necessary consumption, C*, and average income, Y. These concepts allow defining three different social classes: Low, Middle and High, that can be further divided in subclasses up to a total of seven. A second, and less developed part of the paper reviews the role of economic power in explaining the allocation of different people in the above-mentioned social classes.