Well your first point is not 100% true. You see if our Artisan is not doing well finiancally then he will have a higher militancy. If he develoves and starts to get luxuries then his militancy will drop slowly. Although if a few hundred artisans develove into a 10,000 man craftsmen pop then the overall militancy increase for that POP will be very small.
As for the second point is precisely how we see them as being, the lower middle classes, trying to be middle class but not quite having the wealth to do so.
Also to process of devolving can be understood as adapting to newer situation, where the former artisan just gives up and stops thinking about the past. He no longer consideres himself as part of middle class and so his demands are lower (being part of some group really influences your demand, so when you are part of different group, you have different demand).
The second point is a big economical and political problem even now. All governments must juggle with three balls in order to to keep the balance. Keeping high GDP mainly by attracting new international firms and keeping the current ones (high chance of private investment), protecting working part of population - preferably the more numerous and more loud blue collars (lowering militancy of labourers, craftsmen and farmers) and finally supporting small or family bussinesses (artisan problem). And the consequences are the same IRL and in the game. Many argue, that small bussiness can't be as effective as big ones and supporting them lowers the overall productivity. But government doesn't want to have militant middle class and most of all, the majority of "artisans" would be forces to move to lower class, which is also something the government doesn't want to (middle class is the best source of tax income, unlike lower class). Yes, the third ball usually has the lowest priority, but if you look at the problem this way, you will find out how well the game is designed in this respect. Just read something about the policy of developing countries to attract big firms by providing various direct and indirect subsidies. They very often lead to struggling "artisans" becoming "craftsmen." The industrialisation in 21st century strikes again.
So I feel like PI now creates something, which can be used even for more modern period without any major change. I even start to think, that it would be very intersting to make modern day mod, since the gameplay basics for it are already present.
