The first far-reaching force was essentially a restricting one. It came from the fifty years of colonial rule under the Japanese from 1895 to 1945. The Japanese slogan "Industrial Japan, Agricultural Taiwan" clearly indicated their development strategy, and for almost the entire colonial period Taiwan was limited to an agricultural economy primarily to support the early stages of Japan's industrialization.
In line with this policy, the colonial government effectively discouraged any systematic development of local industries in Taiwan. There was virtually no promotion of the industrial sector until the mid-1930s, and then it was to support Japan's war preparations. It came too late, and was too insignificant, to have much influence on the emergence of any indigenous social class related to industries.
Throughout colonial rule, bureaucratic and economic power was predominately concentrated in the bureaucratic and corporate hands of colonial Japanese capitalists. It left almost no room for the rise of any new class that would stand between the relatively few Japanese colonial rulers and the vast majority, the Taiwanese agrarian population. The local landlords were the only "protected" and "fostered" indigenous class, and were supported by the Japanese as part of their successful plan to promote Taiwan's agricultural growth. But the landlord class was in no way a newly emerging intermediate class in colonial Taiwan, and the growth of a non-agricultural middle class in the contemporary sense was to come only after the Japanese left the island.
When Taiwan was retroceded to China in 1945, Taiwan's social structure remained an agrarian one with the land tenure system as the primary source of class divisions. The landlord and gentry class dominated the traditional local leadership in the countryside with some limited commercial interests extended to township and cities, while tenant farmers as share-croppers possessed almost no political or economic power. It was an essentially unstable social structure from the time of the surrender of Japan to the time the central government of China moved to Taiwan in 1949.
Prior to the central government's move to the island, a second historical event with long-term unfortunate consequences took place in February 1947. Known as the "2-28 Incident," the tragedy had its roots in urban unrest that began initially in Taipei, but eventually spread to other parts of the island. While the disturbances began as unorganized spontaneous violence in the cities and townships in protest against the administration of the provincial governor, they soon developed into more extensive demands.
The local official response to the challenge to its authority was not conciliatory. Troops were used to put down what was seen by local leaders as a potential revolution, and large numbers of local residents were killed in the process. This incident is not remembered with happiness by either local Taiwanese or those who moved to Taiwan from the mainland. The legacy of the incident has been two-fold. It not only caused embittered Taiwanese-Mainlander relations that have been largely overcome only in relatively recent times, it also had an immediate negative impact on the formation of a local middle class after the restoration of Taiwan to the Chinese motherland.
Local merchants, professionals, and intellectuals were some of the main groups to suffer during the incident, and the elimination of so many of these individuals from the social and political scene once again deprived Taiwan of a homegrown middle class. It is not known how many potential members of a middle class were victims in the tragic affair, but what is crucial from the viewpoint of social development is that the incident not only reduced the size of a very important segment that could have turned into the "backbone" middle class of post-colonial Taiwanese society, it also demoralized the remaining local Taiwanese elites, who thereafter withdrew from political activism and became essentially quiescent. Their response in effect helped further restrict the early formation of a middle class on Taiwan's soil.
A third event with considerable impact on the growth of the middle class occurred in late 1949, when the central government moved to Taiwan. Among the masses of people crossing the Taiwan Straits were a large number of civilian bureaucrats and professionals, Shanghai and Shantung capitalists, and of course military forces. The result was a transplanted middle class from the mainland composed of civilian bureaucrats and other managerial professionals, who immediately began performing most of the functional roles in both government and public enterprises.
One positive result of this influx of personnel was that they filled the administrative vacuum formed by the departure of Japanese colonial bureaucrats. Although the local Taiwanese were recruited largely for less important and lower positions in the restored central and provincial bureaucracies as well as those business enterprises taken over by the government, the expansion of the state bureaucracy, which in effect combined the central and provincial levels in one island society, did create new opportunities for Taiwanese by adding a class of lower-ranking, white-collar workers.
The fourth historical force that helped shape the eventual rise of the middle class was the land reform program, implemented from 1949 to 1953, which radically changed Taiwan's agrarian structure. In addition to an immediately significant growth in the size of the small landowner class, the elimination of the class of large landlords forced its members to shift their interests to non-agricultural sectors. Moreover, the second generation of former landlords was thereby forced to concentrate in other urban and industrial class locations in the social structure, for all intents and purposes entering the middle class.
The small landlords, who actually were the major part of the landlord class even before the land reform, completely lost their local influence, both politically and economically. They also had a difficult time keeping their government enterprise bonds (part of the government reform program compensation) because of temptations to sell them off to stock speculators for far below their par values. Their future was either to stay in the countryside like the rest of the small landowners, or to look for something else in the cities, and their children were certainly inclined to seek interests other than agricultural.
Those landlords who had the largest land holdings prior to reform experienced greater overall benefit from the land reform program. They were more successful in transferring their interests into urban-industrial accumulations, partly by questionable manipulation of the various stock prices. The former large landowners eventually emerged as the first generation of post-war Taiwanese capitalists. They and their descendants began enjoying the status of a rising new class, with many succeeding in becoming the next generation of local capitalists and entering various other upper-middle class positions.
To sum up the roles that these four historical forces played in setting the scene for the rise of a local middle class, the Japanese colonial strategy and the "2-28 Incident" served to retard its development, while the central government's move to Taiwan and its land reform program had more positive results. But even after the land reform had been carried out by the mid-1950s, the rest of the decade and that of the 1960s can be seen only as very primitive stages in the development of a middle class. There was still no assurance that a middle class in the modern industrial sense would eventually arise in Taiwan. Its actual appearance in substantial form did not occur until the 1970s, when the post-land reform industrialization finally brought about further class transformations. Integral to these changes was the birth of a true, broad-based middle class.
Industrialization and the "Manufacturing" of the Middle Class
After the completion of land reform, the central government started implementing its first four-year economic plan.
Extending from 1953 to 1956, the plan promoted a policy of "import substitution industrialization" (ISI) as the best approach to the island's economic development.
The ISI strategy continued through the second four-year plan until 1960. It was geared to create an indigenous industrial sector that would produce products needed domestically, thereby displacing expensive imports of basic necessities. A protectionist trade policy was also introduced to help facilitate local industrial development. Domestic industrial and entrepreneurial capabilities were in fact enhanced during the ISI phase, but for both political and practical reasons the creation and cultivation of a genuine private sector in Taiwan was slowly and reluctantly undertaken by the government.
The ideological emphasis on state enterprises as advocated by Dr. Sun Yat-sen was still influential in the minds of state bureaucrats, who at first were reluctant to be flexible in their interpretations of the guidelines. In addition, the very limited capacity of the private sector in post-war Taiwan certainly did not present itself as an immediately attractive and viable target for the government's attention. As a result, the state-owned enterprises and the mainlander-owned private industries were the leading beneficiaries under the ISI strategy, although the first generation of local Taiwanese industrialists also emerged. Of the latter, those who made the quickest and most favorable response to the state-initiated ISI projects were the large landlords, plus a few self-made entrepreneurs, who had turned to capitalist enterprises.
Another by-product of the ISI strategy was the creation of the first generation of an urban industrial working class in both state and private industries. At the same time, the small farmer class began to show signs of declining size, as did the self-employed and unpaid family workers. Simultaneously, the number of white collar workers in the private sector began increasing, joining the more established growth patterns of white collar workers in both the government bureaucracy and the state-owned enterprises.
The overall result of ISI and the expansion of the state enterprises and state administrative bureaucracy was the rise of something new: a broad middle class. This class became an intermediate stratum, slowly emerging between the upper class and the rapidly growing working class.
Beginning in the early 1960s, the ROC began facing increased domestic market constraints and growing pressures from the U.S. on economic issues. The central government shifted its ISI strategy to one that emphasized "export-oriented industrialization" (EOI) to help solve the emerging economic problems.
The EOI approach, beginning as a trial and error effort with few definite and clear expectations, stressed expansion of the manufacturing industries that could boost exports, particularly to the U.S. The new economic phase started with the third four-year plan (1961-1964) and extended to the end of the fifth plan (1969-1972). It was successful in fostering rapid expansion of the private sector and a great increase in the number of local entrepreneurs. There was a significant expansion of small and medium enterprises existing side by side with those larger—and also expanding-industries that had secured an economic foothold during the previous ISI phase.
The crucial shift in state development strategies from ISI to EOI not only brought about further economic growth and achievement, but also led to even greater transformation of Taiwan's social structure. The urban industrial working class grew even faster than before, concentrating in the private sector, and a viable and energetic entrepreneurial class was generated. Moreover, during the 1970s, there was a clear rise of the new middle class characterized by the concentration of managerial and professionals in the modern industrial and commercial sectors. The expansion of state bureaucracy at both central and local levels also gave rise to more white collar workers.
In a nutshell, the state-guided ISI and EOI development strategies during the past three decades radically transformed Taiwan's social structure following land reform. The state development strategies successfully forced the small landowner class into the industrial urban working class, or into the middle class, via the promotion and expansion of the public and private sectors. The small landowner class gave way sharply to the emerging working class and the middle classes as the mainstay of Taiwan's newly industrialized capitalist society. By 1980 only 18 percent of the island's employed population engaged in farming activities, of which over 90 percent were actually part-time farmers.
At the same time, the emerging working class and the expanding middle class have achieved more visibility and are making their views and interests throw more weight in class-government relationships. In the past three decades, the working class increased from less than 15 percent to more than 40 percent of the population, while the middle class rose from about 20 percent to more than 30 percent.
The middle class itself can be seen as composed of two major parts: the old middle class, composed of small shop and property owners, has been in place for decades and has remained stable with but few fluctuations in size; the new middle class, as indicated above, has experienced more recent growth, and at an accelerating pace. In the 1980s the new middle class and the old middle class totals about 20 percent and 10 percent of the population respectively. The overall persistence of the old middle class in Taiwan reflects the very nature of the island's industrialization pattern, which leaves considerable room for small, private entrepreneurs. It also provides alternatives for incremental upward or downward social mobility, giving added stability to the social order.
It should be pointed out that the majority of the middle class, both old and new, has been recruited from people of formerly lower status and class. They are therefore the beneficiaries of the tremendous trend toward upward mobility that has characterized Taiwan's post-war economic growth and social change. As a result, they have experienced new social horizons, and have substantially different visions about their future possibilities.
Nowadays, members of the lower classes can aspire to middle class positions with some degree of hope for successful attainment. This leads to increased drive for achievement, and even a feeling among individuals themselves that they have to some measure already succeeded. It is therefore not surprising to learn that in a number of recent social surveys, more than 50 percent of those sampled identified themselves as the "middle class" or "middle strata."
The Formative Stage of the Middle Class
As an essentially new class still in its formative stage, the character of Taiwan's middle class has not yet become fully apparent, but some common traits have emerged.
To begin with, people in the middle class want to "secure" what they have already gained. They are generally very security conscious, and tend to be anxious and sensitive when compared with other social classes. Although satisfied with what they have achieved, they are also nervous about maintaining the status quo, or possibly enhancing their own position. They generally aspire to higher positions on the social and economic ladder, but they are not certain as how to go about it. To "play safe" is the most prevailing motto that characterizes the mental condition and behavioral tendency of the emerging middle class, be they in the upper, mid, or lower segments of the middle class.
Politically, the middle class tends to be "pragmatic" in expressing stands on various political issues. But they should not be seen as apathetic in any measure. They support political reform and democratization, but largely from behind the scenes, as they rarely stand at the forefront to voice political demands. While reform-oriented, they are by no means susceptible to radical appeals. In the past, some of them have supported the opposition movement not because they wish to have a drastic political change, but simply because they welcome the possibility of alternatives. Their support of the opposition should be viewed more as a sign of their dissatisfaction with certain policies of the government than as an expression of a wholly different political ideology.
In recent years, there has been an increase in various social reform movements backed primarily by members of the middle class. The most important include movements focusing on consumer rights, the environment, women's rights, and human rights. All demand social changes in a rather ad hoc fashion, and are primarily depoliticized in approach. They have garnered considerable public support in recent years, perhaps due in part to the highly pragmatic approach taken by the members of the various movements.
Economically, members of the middle class in Taiwan work hard and tend to be "consumption-oriented." The latter trait they see as a way to show their newly achieved economic status. They are also goal-oriented, and material gains are viewed as major objectives in the drive for success. They stress a "self-made" spirit, yet they envy those who have been blessed by their parents with economic support and financial power. Generally speaking, they still rely very much on mobilizing family and kin resources to reach their own economic goals. They do not disapprove of conspicuous consumption, and no small measure of "vulgarity" in their economic behavior is often evident. Because they now have stronger consumptive power, they often opt for any new material fashion, but are less frequently supporters of or participators in cultural activities.
Being the first generation to experience middle class life styles, they are often both socially and culturally uneasy. The result of quick "manufacturing" during rapid economic growth, they do not yet know how to act like members of the middle class. They have in effect become a new generation without parental guidelines; no one has taught them the expected social skills. Even the conception of middle class is not very clear, making their identification with the term middle class superficial.
But there is a growing realization that there are quite a number of individuals like themselves in society, which is leading to greater participation in various types of so-called "obviously middle class civic organizations." Such participation helps comfort their status anxiety and uncertainty. By joining these "we are alike" groups, members of the middle class can create and conform to certain social and cultural norms. The inclination toward such forms of association indicates the search for social and cultural identity common to the new middle class. The formative nature of the middle class certainly poses the question as to how and when the current "association membership" will eventually transform into genuine "class consciousness."
Turning to the question of relations among classes, the middle class in Taiwan has not yet shown definite signs of political and social coalitions with either the dominant capitalist class or the working class. While quite ambivalent toward the rich and the powerful, they are sympathetic to the lower classes. They support an egalitarian ideal for society, but they are not prepared to forge any clear alliance with the working class or the farmers. They believe, however, that the rich and the powerful should do much more in making society a better place for all.
One of the structural reasons for these attitudes toward other classes could be that most middle class people are in fact living in a "multi-class family" environment. Their parents may be the old landlords, workers, or tenant farmers, and they may also have some brothers or sisters who are working on assembly lines while others are in the ranks of successful and rich businessmen. Because of these close, emotional ties with people of other classes, it is more difficult to think in terms of specific class interests. Despite the current form of class structure, there is now a trend toward a greater division of classes along clearer lines, a process that will increase the importance of the middle class in the dynamics of Taiwan's socio-political coalitions.
Implications for the Future
The rise of the middle class in the 1970s did not at first attract much attention from either the government or the public. By the early 1980s this changed, with the term frequently occurring in the media, and with the business sector and politicians both seeking to appeal to this section of the population through commercial or political campaigns. The ruling party as well as the opposition started specific courting of the middle class, especially through appeals to popular reform topics. In the last national election, for example, candidates from the ruling KMT tried to present themselves as "reformers from the inside" in order to win support and votes, especially in the cities, the opposition candidates also tried to portray themselves as "progressive forces from the outside." Many opposition candidates were anxious not to appear as restless radicals, but to show the public, particularly the middle class, that they stood for reasonable and desired reforms, not a revolution.
It is interesting to note that both the KMT and the opposition candidates claim unity with all parts of the middle class while also trying to appeal to the working class and small farmers. It may not be that significant to learn that all politicians are alike, trying to please all concerned as long as they can obtain votes, but it is important to see the general political trend of cultivating middle class support, especially in the 19805. The most recent national election, held in December 1986, did show the rationality of such class-oriented campaigning; on both sides of the political spectrum, those who were elected were in fact the candidates who themselves were members of the middle class and who appeared as being strongly oriented toward middle class interests. It is quite clear that the rising middle class mentality with its reform consciousness has become a powerful force that is reshaping Taiwan's political climate.
Middle class emphasis on reform does not ignore the political challenges in Taiwan's future. These are taken, however, as facts of life that must be faced, made the best of, and even tolerated. At least two general strategies are taken by the middle class to deal with such uncertainty. One is to become more involved in domestic reform activities, both political and social, by openly supporting further steps toward a fully democratic and fair society. They see these moves as ways to strengthen Taiwan's position vis-a-vis the threats of aggression from mainland China.
There is a certain optimism in the mood of the middle class, an altitude they encourage in the ruling party as much as the opposition. In the last election, some liberal intellectuals even openly endorsed the candidates from the opposition" Democratic Progressive Party." The support from professors for the still technically-illegal party eased doubts in the minds of some middle class voters who originally thought the opposition candidates were not credible enough. Last year's lifting of the Emergency Decree that implemented martial law, plus moves to legalize the formation of new parties, further contributed to the acceleration of open middle class support for additional political reform.
The second strategy used by the middle class to cope with the externally produced uncertainty, be it economic, political, or military, is to plan for escape, a way out just in case. In this respect they resemble the Hong Kong middle class. They would rather not leave Taiwan completely, for they are attached to the land itself where they have built relatively good lives, but they do not want to be caught by a sudden breakdown in political stability. They have too much to lose and therefore seek options.
This attitude can be termed the "looking for a back road" approach, which is especially popular among those members of the upper middle class who try to emigrate to "safer" places like the U.S., or who shift their capital or investments outside Taiwan. It is important to mention that middle class people are not physically moving out; rather, they are "standing on two boats," with one foot firmly in Taiwan and the other somewhere else.
Of greatest concern to the middle class—as all other classes—in Taiwan is the question of the relationship with mainland China (a concern as well of Hong Kong Chinese who look to 1997 with growing tension). What will the future hold? Currently three alternatives are frequently discussed: first, unification of China under the control of the Republic of China; second, unification on Communist terms, with Taiwan as a local government under the so-called "one country, two systems" plan; and, third, Taiwan declaring independence from mainland China completely, a "Republic of Taiwan" sort of idea.
The first alternative is the ideal, but may take years or even generations to complete. The second alternative is much more worrisome and is seen as a social and political dead end. The middle class has no confidence in the pronouncements of the mainland regime, especially as they watch the string of broken promises and hardening attitudes already occurring in Hong Kong. The claim that Taiwan can retain its current political and economic systems under the "one country, two systems" model is just not attractive. The future under the shadow of Communist rule is seen as a totally alien thing that any sane person would avoid.
The middle class does not support the third alternative either. Here their tendency toward pragmatism is especially evident, for they fully understand the benefits they have reaped from the established economic and political system For the past 40 years, Taiwan has essentially functioned as if de facto independent. There are too many solid reasons against making formal moves in this direction; the reaction, therefore, to independence arguments is negative. Such talk is seen as a drastic change which could only destabilize the domestic and international situation.
Since none of the three alternatives is embraced by the middle class, what then is left to them? Pragmatism is again the answer. The middle class is actually not that anxious to solve this "problem." They live in the present, not the past or future, and do not think it is necessary to make themselves miserable worrying about something over which they have no control. Such worry would only detract from their efforts to get ahead in what has actually become a dynamic and promising society. As a result, they desire an essentially undisturbed status quo and hold long-range hopes that the mainland China-Taiwan problem will solve itself in the long run without departing from general stability. At present, however, there is no hurry to address this issue, and to do so would be a mistake for the time is not ripe for a solution.
But the time is ripe for addressing domestic issues, as local changes in social and political structure are now major concerns for the middle class. They will be ever more involved in all aspects of domestic transformation, reforms that will also have impact on the changes taking place on the other side of the Taiwan Straits. In this process, the guiding philosophy can be expected to remain a Chinese form of pragmatism, essentially Confucian in action and Taoist in spirit, that holds to already proved forms of action while believing that in the future "the boat will be straight when it eventually approaches the bridge," as an old Chinese proverb puts it, and uncertainties will be solved in due course. —(Dr. Hsin-huang Michael Hsiao is a research fellow at the Institute of Ethnology, Academia Sinica, Taipei.)