The Principled Agent

Thoughts on development economics and impact measurement

Catalytic Class: More than Just Capitalism

with 6 comments

After CGD’s Nancy Birdsall pointed to an emerging bourgeoisie middle class as an understudied ally for poverty alleviation (i.e., the “catalytic class”), Ranil Dissanayake rejoined:

I’m afraid that the catalytic class may already be studied under a different name [ed note: capitalists!]. In fact, this guy might argue that this research might be coming some 144 years after the definitive study of this group. I’ve been talking for a while about how they’re a crucial but neglected part of the development process.

This is a curious riposte. Yes, the emergent bourgeoise are capitalists, just as they are humans, and doubtlessly countless other things, but what makes them (potentially) a special ally of the poor is that they economically support a new set of public interests to compete with those of the existing elite.

To the extent this new class’ power benefits from public goods that benefit the poor, the emergent bourgeoisie may indeed catalyze positive change that would not otherwise occur.

Mr Dissanayake might object that entrenched economic elites and their progeny don’t qualify as capitalists, and therefore the catalytic class is no different than capitalist.

Yet I’d object once more. The catalytic class are a special subset of bourgeoisie: bourgeoisie that happen to have interests that align with the poor. It is a happy accident that they benefit from the same public goods. It is a happy accident that their source of wealth increases demand for labor from the poor. To call them simply capitalists is to lump them with the bourgeoisie that make a fine living virtually detached from the poor. It is not even sufficient that the emergent bourgeoisie are emergent to guarantee that their interests align with the poor in any meaningful way.

Still it may be that we acknowledge the catalyst class as distinct from capitalists,  or even the emergent bourgeoisie, but find that we can’t target assistance to the catalytic class. We might not know who they are ahead of time. Or we might not be able to help them outside of more general support for capitalism, in which case, Mr Dissanayake’s conflation of the catalytic and capitalist terms is operationally correct.

Indeed the challenge of identifying the catalytic class is complicated by the fact that there is no single catalytic type of enterprise or group of people. Catalysts aren’t universal. There is no law to be found that dictates a new agricultural producer  association always creates catalytic change. It would be folly to think that a study of catalytic classes would produce a formula for industrial policy.

At the same time, there’s no reason to suppose that catalysts are entirely idiosyncratic. It’s not naivete to suggest that certain types of enterprises might increase demand for the labor of the poor more than others, or require well-maintained roads that connect rural areas to urban hubs, or create a large amount of wealth in the hands of a few new tycoons who might see profit in the liberalization of the airwaves and have the independent power to demand it. These are different types of catalytic change, and they are more or less likely to emanate from enterprises with different dependencies on capital, land, and labor, and which produce different distributions of wealth.

While we should not suppose that there is a magic catalyst class or industry, we should be eager to study how entrepreneur/enterprise characteristics make them more or less likely to create different kinds of catalytic change in different environments. As international organizations are already subsidizing capitalism in developing economies, they might as well incorporate an estimate of the positive externalities for the poor, rather than simply supposing that financial results in non-functioning markets are adequate signals of societal value.


Written by Chris Prottas

March 22, 2011 at 3:10 am

Posted in Uncategorized

6 Responses

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  1. Hi Chris, I was just pointed out this post by a friend. Nice piece. I think we disagree on the definition of capitalist, as I hope would be made clear by some of my previous writing on this. I don’t at all equate the bourgeoisie and capitalists; much of the former have accumulated wealth from pre-capitalist modes of accumulation. I’m going to write a post looking in detail at the distinction between middle class, bourgeois and capitalist.

    For me, the incentives and structures of a capitalist class are necessarily economically dynamic, and long term are very good for the poor in absolute terms.

    Good point about public goods though, stimulation of public goods may well be generalised across much more of the middle class than simply the subset that would constitute capitalists. I wasn’t considering that aspect.

    Ranil Dissanayake

    March 30, 2011 at 12:09 pm

  2. […] about when I say ‘middle classes’ and ‘capitalists’. After my first post, a really good response came up from Chris Prottas. He’s quite critical of my initial shot at the CGD, arguing that the […]

  3. […] about when I say ‘middle classes’ and ‘capitalists’. After my first post, a really good response came up from Chris Prottas. He’s quite critical of my initial shot at the CGD, arguing that the […]

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