Microcredit: “A political economy of shame”

by Guest Contributor Tanglad, originally published at Tanglad

It’s easy to understand the appeal of microcredit. Poor women from the Global South use loans as small as $20 to start businesses and lift themselves from poverty. The creditors make a profit when the loans are repaid. Win-win.

What do they say about things that look too good to be true?

A whopping 90 to 99 percent of these loans are paid back with interest, another shining indicator of microcredit’s success. But there is an ugly side to ensuring repayment, where poor women are made to police one another and punish defaulters with collective acts of aggression.

In her study of Grameen Bank microcredit programs in rural Bangladesh,* Leila Karim finds that the focus on the 98 percent loan recovery rate hides how beneficiaries are co-opted into “a political economy of shame.”

Microcredit works by appropriating the only social capital poor women possess — their virtue and family honor. Among the Ifugao women in the northern Philippines,** microcredit beneficiaries are grouped into cohorts of five to fifteen members. They are given clear instructions: “You are all responsible for the loan and have to make sure that no one defaults.”

This lays the foundation of a very effective surveillance system, wherein poor women monitor other poor women. And the poorest women, the ones who need loans the most, are evicted from the group to minimize the risk of default.

Given the surprising lack of entrepreneurial or job skills training in microcredit schemes, it’s not unusual for a member to default on her loan. This is when things get even uglier, as the other women in the cohort are forced to extract payment.

In Bangladesh, for example, women march off together to publicly scold a member who falls behind on her loan payments. The cohort would also scold her husband in public. If she could not produce the money, the other women in her cohort would take anything that could be sold for loan payments — her cows and chicks, grain from her family’s pantry, uprooted trees and plants from her yard. Even her gold nose-ring, an important symbol of marital status for rural women.

When even these repossessions were not enough to repay the loan, the cohort could instigate the ultimate dishonor of ghar bhanga (literally, “house-breaking”), where the defaulting member’s house is sold off to pay for the microloan.

The institution of microcredit has thus forged social relations based on shared debt, undermining previous ones based on shared labor and trust. Women informed on potential defaulters or members who used the capital for unauthorized purposes, such as buying food. Women who defaulted on loans have been taken to police stations and locked with criminals until their families made payments. The resulting shame from all these actions cause wives to lose their honor and virtue, and have led husbands to file for divorce.

Small wonder then that women go to great lengths to make their loan payments. Ifugao women reported an increase in their workhours, taking on additional income activities selling homemade foodstuffs. Other women have reported cutting back on family expenses like food and children’s school items.

In emergencies, women who have diverted loans to subsistence purposes have turned to moneylenders. Women who took on microloans to achieve self-sufficiency instead found themselves even more baon sa utang.

These difficulties illustrate a failure that microcredit programs share with other top-down antipoverty strategies. Aid workers from Manila dictate the development programs’ strong emphasis on microcredit and entrepreneurship, instead of the healthcare and education programs that Ifugao representatives have requested. Instead of addressing the roots of poverty among rural and indigenous women, microcredit schemes have generated credit-related strife.

Also among the Ifugaos, microcredit programs are undermining existing local arrangements. Governed by the principle of innabuyog (“sharing the good”), Ifugao women have long organized themselves into reciprocal labor collectives to cultivate rice and raise livestock. These collective also provide members with short-term loans when needed. These organic and vibrant arrangements are being supplanted with the homogenous, competing entrepreneurial projects championed by microcreditors.

I do not doubt that individual microcredit workers mean well, and that people like Prof. Mohammed Yunus have good intentions. But microcredit has been turned into a panacea, the star of antipoverty programs around the world, to the exclusion of more responsive strategies. That’s very problematic.

The supposed success of “compassionate capitalism” strategies obscures the enormous social costs behind statistics such as amazing loan repayment rates. Social costs that are ultimately borne by women who are already marginalized by their socioeconomic and indigenous status.

————

* Data from Bangladesh is from Lamia Karim, “Demystifying Credit: The Grameen Bank, NGOs, and Neoliberalism in Bangladesh,” Cultural Dynamics, Vol. 20, No. 1, 5-29 (2008)

** Data for the Philippines are from Lynn B. Milgram, “Operationalizing microfinance: Women and craftwork in Ifugao, Upland Philippines,” Human Organization, Vol. 60, No. 3 (2001)

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Comments

Minotaar wrote:

What I want to know is if microcredit is allowing these people to get out of poverty, or if it is doing any good. Starting a business is all well and good, but if you constantly need microcredit loans, then you never lift yourself out of poverty.

This is really relevant to the social costs of the microcredit repayment. If 98% of the loans are repaid, and those individuals who are using the credit are becoming independent of microcredit and becoming independent businesspeople, then this is great. If microcredit is simply creating situations where people are unable to create a business profitable enough to become independent, then microcredit is simply taking money from poor people, and making them fight amongst themselves, too.

Posted 16 Dec 2008 at 6:22 am ¶
Erik wrote:

Wow, Grameen always seemed to me like such a conscientious organization. Thank you for this report!

Posted 16 Dec 2008 at 8:13 am ¶
gatamala wrote:

Our lending/debt system and dressed it up in a way that fits the local mores. Political economy of shame is an apt descriptor. As weak as the social safety net is here, the lack of safety there is catastrophic.

All that is personal is the collateral.

Policing one another + collective acts of aggression to minimize default+ excluding those more likely to default = underwriting/risk assessment

cows, grain, jewelry, house = seized assets that will pay off loans to build wealth (subsistence) for those left standing (to the victor goes the spoils)

Women locked up, how Dickensian.

From Wall Street to Main Street. Clever, now if only there were a way to bundle those microloans and sell them to another group.

Posted 16 Dec 2008 at 10:07 am ¶
Iyapo wrote:

Wow that is so depressing. Does anyone know what other groups currently are out there assisting rural communities and people who want to escape poverty in ways that are not exploitive? I don’t know very much about international issues or organizations and I have only heard of micro-credit in passing, so I was curious if there are any better programs/methods out there.

Posted 16 Dec 2008 at 10:29 am ¶
CVT wrote:

Thank you for this article. I’ve often wondered about the micro-lending system (as I’ve worked abroad and seen how inept other forms of “humanitarian aid” truly are), and it doesn’t surprise me that this one creates more problems than it (likely) takes away. It’s pretty depressing, though – because I’d like to believe there is a real way to help . . . but so far, staying out of the way is the best idea I can come up with.

Posted 16 Dec 2008 at 10:45 am ¶
Ike wrote:

I heard about this program and never liked it from the get go. Anything involving “credit” and the general population gives me bad vibes. I also don’t see how this will “end poverty.” What kind of businesses can $20 start?

Posted 16 Dec 2008 at 10:59 am ¶
Monie wrote:

I suppose I’ll have to be the contrarian. I think this article is a bit condescending. The writer seems to take pity on the poor people of the under-developed world; he seems to think they don’t have the ability to determine whether to enter into these micro-loans.

They obviously know what will happen to them once they take the loans. I agree that the loans may not have the best terms but that’s pretty much always the case for the poor, i.e. payday loans.

No matter where you live in the world a certain amount of shaming is apart of defaulting on a loan. Don’t you think people who lose their homes here in the U.S. through foreclosure are shamed? When you lose your car, have your lights turned off, have your credit cards declined: isn’t that the way the West shames? How is that so different from what happens to micro-loan recipients?

Posted 16 Dec 2008 at 11:58 am ¶
Rchoud wrote:

The microcredit system is just an example at an individual level of the huge loans given out to poor countries by the World Bank/IMF. It’s been known how difficult poor countries have it obtaining loans from such international institutions (they have to first restructure their economy by privatizing almost everything and also not spend much on providing social services to their populations). What’s worse is that alot of times the countries easily fall into debt and thus have years worth of backed up loans to pay off to the World Bank/IMF, as well as private lenders anddeveloped countries. I’m always leery of banks claiming to provide social relief and/or easier standard of living through access to loans. It just spells disaster in the end because banks are always there to make money not to provide relief to the poor and needy. That should be a government’s job.

Posted 16 Dec 2008 at 12:06 pm ¶
tanglad wrote:

Hi Monie: I’m a she It’s really not pity that I feel, more a general outrage over how the emphasis on an export-based economic development destroys communities, with an extra “fuck-you” aimed at the most marginalized groups. As I said in the article, microcredit is a stopgap, and should at the most be part of short-term strategies.

Thanks for the discussion, everyone. Like Iyapo, I’m wondering about different programs to address poverty in communities such as indigenous groups. Especially programs that emphasize community-building. Please let us know if you’re aware of any such efforts.

Posted 16 Dec 2008 at 1:46 pm ¶
Bagelsan wrote:

Do you happen to know how much the micro-loan organizations depend on getting the loans back? (Like, is a significant amount of money passing through, which needs to be recouped to keep the program afloat?) Or with such small loan amounts, would a gift of $20 be equally effective for starting a business but not pressure the recipient to pay it back?

Posted 16 Dec 2008 at 2:36 pm ¶
gatamala wrote:

Monie, that’s a good point. It isn’t easy here. However, we have a legal infrastructure that gives some protection to those in trouble/ serves as an intermediary between creditor/debtor.

e.g., When someone is evicted, the sheriff does it, not the landlord.

Posted 16 Dec 2008 at 3:05 pm ¶
ersatz wrote:

monie-
When you take a Western capitalist model, where ideas such a credit, debt consolidation, and individual accountability (purely a Western constructed value system), and bring it into an indigenous environment where community-building is at the core, no one is always going to be on the same page.

Posted 16 Dec 2008 at 3:32 pm ¶
Some Guy wrote:

So the ONLY viable solution to poverty is the one that no one — with money — will ever embrace: Give to people who have needs, without expecting anything in return.

It’s that simple. Because any other system involving payback ends up turning to s**t.

Posted 16 Dec 2008 at 4:22 pm ¶
Lisa J wrote:

@Monie, sure it is embarrasing to have your credit card declined, or have your lights turned off (though no one but the people in your house really have to know) but when you are in such circumstances here in the west they are often temporary, can be fixed and it isn’t like everyone you’ve ever known will know about it. So the level shame and the long term ramifications are not really the same. Besides, the credit card thing can happen to anyone, if you don’t pay a bill on time, you reach your credit limit (especially now when card companies are lowering people’s credit limits without telling them even when they have a good payment history), or if the card has expired and you didn’t realize it and hadn’t opened the envelope from the credit card company with your new card etc. Even President-Elect Obama said he his credit card was declined in 2000 when he tried to rent a car in LA for the Democratic Convention because he had reached his limit and obviously it didn’t hold him back.

Even with losing your home which is the most embarrasing, you don’t go to jail or get beaten up or have your wedding ring taken away. Actually, no one outside of your family and future creditors have to know, and it is wiped from your credit report in 7 years. Plus even if all of your neighbors saw you getting kicked out, in the west it is much easier to go somewhere else where you don’t have to interact with those people anymore , and given how isolated we often are from our neighbors these days, they may not have known you in the first place. In the instances highlighted in the esaay, these are the people you’ve known your entire life and will continue to know.

Posted 16 Dec 2008 at 5:15 pm ¶
Manju wrote:

“When you take a Western capitalist model, where ideas such a credit, debt consolidation, and individual accountability (purely a Western constructed value system), and bring it into an indigenous environment where community-building is at the core, no one is always going to be on the same page.”

But yet you take an even more “purely…western constructed value system”, ie cultural relativism, and apply it to another culture. See the contradiction.

This is where anti-racism aften devolves into a new form of patronizing racism, denying POC the full diversity of opinion and humanity that whites take for granted. As if individualism and free markets are alien to the non-western world.

Posted 16 Dec 2008 at 7:13 pm ¶
jsb16 wrote:

Heifer Project is a group that gives, rather than lending, and that focuses on community-building, rather than community responsibility alone.

$20 can be useless, but it can also buy a dozen cheap hammers in town, allowing a poor person to sell ten to rural neighbors, use 1 to fix a broken roof, and keep one for when the first breaks. $1000 (which still counts as micro-credit as a business loan) can buy inventory for a small market. Big projects tend to be ones that can’t be locally maintained, which keeps the poor reliant on others to maintain everything they rely on. Small projects that fill needs that the poor see for themselves and that the poor can maintain work better.

Of course, I wouldn’t want the World Bank administering anything that works best on a small scale, just as I wouldn’t try to maneuver an elephant in a rat maze. For-profit lenders don’t belong in the micro-credit market, either. The profit margin is tiny and cannot be humanely increased for all the reasons cited above.

And micro-credit is not for the destitute and uneducated. It’s for the working poor with an idea. The idea that any approach will work everywhere and for everyone is… beyond ridiculous. “Magic bullet” thinking is the problem, not micro-credit.

Posted 16 Dec 2008 at 7:37 pm ¶
sujal wrote:

Is there any way to read the studies cited? I’ve donated to these kinds of programs through Kiva and notice that there are a number of different non-profits that administer the programs.

It would be good, before writing off the entire microcredit idea, to understand how pervasive the kinds of social shaming and disruption is. Also, whether these sorts of programs work better in Eastern Europe or in cultures that are more similar to Western Europe or the U.S.

Sujal

Posted 16 Dec 2008 at 7:51 pm ¶
sujal wrote:

ah, never mind – I missed the link to the abstract for the one paper, will see if I can get access to it at a library.

Posted 16 Dec 2008 at 7:53 pm ¶
stone wrote:

thanks for the link. I was unaware that folks thought that microcredit was the end all be all and not part of a larger process. One thing I am curious about is what are the consequences of not doing “shared labor”. Some places I’ve been (within the US and abroad), even in the context of community consequences for not being able to produce or participate or otherwise get the desired results has harsh consequences, not unlike those mentioned in the post.

And actually, I thought some of the use of the model came from some cultures that have done pooling of funds or set up other systems where “western” style interest loans are a religious prohibition. That would actually make it an a possibly “eastern” concept that would go back quite a ways.

And Rchod the IMF does not always make countries privatize – i point it out because what they have done in the past is suggest restructing of certain type of economic policies (evertyhing from interest rates, propping up of a local currency,) that don’t necessarily have anything to do with privatization, but would consequently destabilize a government. Like if the US wanted a loan we needed we would go back on the gold standard and every other currency would not be pegged to the dollar. Talk about some destabilizing…One of the good things to come out of this crisis that is only intermittenly coming up in the news is that many of the non-Bretton Woods countries are calling for restructuring of the systems that were set up at Bretton Woods (creating the World Bank, IMF, etc.) that they were not originally a part of or allowed to participate in.

Posted 16 Dec 2008 at 11:08 pm ¶
CVT wrote:

@ Lisa J. -
Let’s not understate poverty in the U.S. Those growing up in (and living in) true poverty in the U.S. can’t just “up and leave” any more than those in impoverished nations. They are just as tied in to the family and community around them – as well as employment possibilities (try to just go and find a job when you have no high school diploma, or can’t afford to pay rent for a place in a new city where you don’t know anybody). That’s why gangs are still an issue – trust me, if it was so easy to just “go somewhere else where you don’t have to interact with those people anymore,” the vast majority of young urban youth would have nothing to do with gangs.

@jsb16 – Heifer International isn’t so sweet a deal as it sounds – sure, they give folks big old cows and dairy goats and chickens, but not the means to feed them and keep them healthy. So when these big old cows and dairy goats get sick (which they tend to do – at least the ones that give enough milk to make a profit), these rural farmers end up paying for drugs and special feed and all sorts of other things that they can’t really afford. I actually saw a family become POORER because of the cow they received. Now – that’s not the case every time, but there’s always a price, and nothing is “free” when you’re living in poverty.

Posted 17 Dec 2008 at 12:28 am ¶
Fatemeh wrote:

This are great points you bring up. Thanks for bringing the honor angle, which carries so much weight in certain cultures, to the forefront.

Posted 17 Dec 2008 at 2:25 am ¶
Pololly wrote:

I’m on the fence with this article. I understand the author’s role is to illuminate a problem, but what exactly is the solution here? Earlier commentators blithely advocate ‘giving without strings’ – aid in other words. Fine, but just as we cannot advocate ‘micro credit’ as some abstract principle without taking the social costs into account, we cannot advocate ‘aid’ (which has a much more checkered history, believe me) without some skepticism. I see pointing fingers, I see no answers, or even possibilities.

It’s a pity because I cannot access the academic paper without payment so I can’t really substantiate that the claims made in this article are as strongly backed by the evidence in the study. I cannot shake the suspicion that the source materials were much more nuanced and careful about their conclusions than the author. It’s just that this article’s conclusion seems to be – micro credit is bad. That seems incomplete and I would expect the author of the original study to at least suggest some direction for moving forward or ground this in a larger debate. The fact that this post does not do that makes me suspect that the author is picking and choosing a little bit with the source materials.

Also, the other ‘critique’ of microcredit linked to in the article is completely unrelated to this piece. The author states that micro credit is the ’star of antipoverty programs around the world, to the exclusion of more responsive strategies’ – the link from ‘exclusive strategies’ seems to list no other strategies, only arguing that the benefits of micro credit are limited in who they help. It doesn’t argue or even mention other strategies being excluded. This makes me very suspicious for the article I cannot see.

So I’m unsure of where this is coming from and I’m unsure of where it is going. Also, can someone find me a mass intervention which doesn’t transform social structures (usually negatively)? I would have expected at least a throwaway acknowledgment that even ’strings free’ aid giving NGOs (yeah right!) generally by their very presence wield undemocratic power and weaken local grassroots movements.

My point is that this article is incredibly black and white in an incredibly grey area and it makes me think that the author is adding 2 and 2 and making 15.

Posted 17 Dec 2008 at 9:35 am ¶
theboxman wrote:

> I see pointing fingers, I see no answers, or even possibilities.

Here’s a possibility: What about the unconditional elimination of all “third-world” debt (which has been paid back many times over in servicing) and the payment of reparations by colonial powers to all formerly (and presently) colonized nations?

Posted 17 Dec 2008 at 11:02 am ¶
Pololly wrote:

>Here’s a possibility: What about the unconditional elimination of all “third-world” debt (which has been paid back many times over in servicing) and the payment of reparations by colonial powers to all formerly (and presently) colonized nations?<

That is your response? God help us.

But lets put that within the realm of possibility, how would you implement ‘reparations’ effectively? You come back to the same problem – how do you distribute any wealth fairly and transparently when the power imbalance means that any the act of distribution contains some level of coercion?

Posted 17 Dec 2008 at 11:38 am ¶
Persia wrote:

Boxman, I think debt reduction/elimination is the greater goal, or should be. And I can work toward that politically. But what is it I can do now? One of the reasons microcredit is so damn appealing to donors– especially in situations like kiva.org, which shows recipients and tells us their stories– is that there’s a real, concrete result. I can write my congressman, and support political causes– but if I give twenty bucks to that craftsperson, now, she’ll be able to improve her situation, and maybe send her kids to school. She considers that to be worth the risk; maybe I should just take her word for it.

But at the same time, I can see the clear downsides of an ‘economy of shame.’ Are some microcredit lenders ‘better’ than others? Is there a ‘good’ or at least less harmful way to help in the short term, while we work toward long-term solutions?

Posted 17 Dec 2008 at 12:03 pm ¶
CVT wrote:

Unconditional handouts don’t solve anything, either. Because then we just create a whole economy dependent on handouts. That’s what we have already in most impoverished nations – folks dependent on genetically-modified foods, non-profit-built schools, whole nations built on World Bank loans where half lines the pockets of those at the top, and the rest go to building.

In the end, nobody is developing their OWN wealth or comfort.

I truly, honestly believe that the only way to really make a difference is to just pull out all the way. Just GET OUT OF THE WAY. The people of those nations are not stupid. They are not incompetent. They are plenty resourceful. But as long as we do what we do (constantly pushing our way in and telling them how to handle problems we have NO IDEA about, making them reliant on our handouts), we are taking away their ability to DO anything.

If it could actually happen (and I realize it never will in today’s “global” world), it would take the majority of these nations about 50 – 100 years to get back on track (because we’ve set them so far behind), but at least they’d end up on track. The way we keep f-ing them around? We’re intentionally making it so that they NEVER get on track. Never.

Posted 17 Dec 2008 at 12:46 pm ¶
The Cruel Secretary wrote:

@Pololly–

Okay, now that you’ve critiqued the post–and even called upon deities to witness the hopelessness of unconditionally eliminating “third world” debt as boxman suggested–what’s your solution to dealing with what Tanglad is discussing? I myself am still thinking through what Tanglad wrote and other commenters wrote as solutions. But I’m also sussing you seem to have thought this out and have a possible solution…

Posted 17 Dec 2008 at 1:27 pm ¶
theboxman wrote:

>But lets put that within the realm of possibility

How do you implement the necessary structural changes that aren’t mere band-aids to a fundamentally unjust and unequal global structure if such options that are arguably minimal and ultimately only first steps are ruled out from the onset?

> Unconditional handouts don’t solve anything, either.

I wouldn’t necessarily thing of them in terms of handouts, but as issues of justice. Much of Europe and North America developed (and continue to maintain a standard of living) precisely through the overexploitation of the colonial periphery. This is not about aid, but about returning the fair share of the wealth to those from whom it was expropriated.

That said, I agree that just getting out of the way is important, with the only caveat that this needs to be coupled with a working towards the building of solidarity and support from those who are in a position of benefiting from the unevenness of the global capitalist economy.

Posted 17 Dec 2008 at 1:36 pm ¶
stone wrote:

The writing down or elimination of debt has been done before by the US in particular has been done before. Lech Walesa came to the United States to ask for forgiveness of Polish debt – it was done. Violetta Chamorro of Nicaragua came later and asked the same thing – it was not done.
In our current financial crisis of lot of debt will be written down or written off entirely, so it is not outside the realm of possibility. The problem, as folks from other countries have identified, are the structures in place and the strings that go with the debt. The idea of leaving people alone is a bit naive we are interdependent. The US owes China tons of debt service, while we have not “raised” taxes, we take out a lot more loans to fuel the economy and war that we have to pay back. It could one day be US asking for debt forgiveness and write downs and I bet we will get it.

Posted 17 Dec 2008 at 1:42 pm ¶
Pololly wrote:

Cruel Secretary

Please read my critique a little closer. Firstly, I have no problem with elimination of debt as goal. The debt servicing obligations of many developing countries are structured in a way that they can never be repaid. The thing is, elimination of much debt has been taking place and it is not the panacea that it is being made out to be, no more than (apparently) micro loans is. My issue with Boxman’s post is that I think, personally, that the likelihood of ‘reparations’ being paid for colonialism is pretty slim. So I think as fun as it is (and as smug as it makes us feel) to structure a comprehensive, realistic solution around it would probably not move the conversation forward very much.

And you completely read my post backwards. My issue is not that I have all the solutions but that the author has NONE. The author just gives evidence to discredit micro loans but gives no directions, advice, context or hope. This is where it loses some credibility for me. The author seems to be suggesting that we stop micro loans – is that the case? And replace them with what? I’m not being facetious! I’d like to know! What are the conclusions of the study she read? Where is the conversation moving? Reading this post is frustrating because it once again displays the magnitude of the problem and the difficulty of any solution. It leads you nowhere but to vague protestations and slogan type jargon. I think the idea that any one ‘fix’ will somehow cure global economic and social inequality painlessly is dangerous. I’m sure this thread will generate tons of them – many have been tried , many will never happen in a million years because they would require actual justice and the pursuit of justice on a global scale, instead of the mealy mouthed self interested lies that are so often used as justification for doing nothing. The author purportedly is holding micro loans up against an impossible standard and they are failing. But honestly I have no idea what standard she holding micro loans up against because she didn’t say. I have no idea if this applies to the alternatives? I have no idea if there are any alternatives? Is this standard across all micro credit NGOs? What can we do now?

I’m sorry, cruel secretary, that I’m not willing to settle for hand wringing and cheap sentiment but I finished the article genuinely perplexed about what response the author wanted to provoke.

Posted 17 Dec 2008 at 2:31 pm ¶
Pololly wrote:

>But lets put that within the realm of possibility

How do you implement the necessary structural changes that aren’t mere band-aids to a fundamentally unjust and unequal global structure if such options that are arguably minimal and ultimately only first steps are ruled out from the onset? <

Sorry, just read this and thought it was worth responding to. I completely agree with you. But the answer is, I believe, is not to try to make every possible solution do everything. 100′000 targeted bottom up solutions that target different parts of the system may be more useful and doable than holding out for the ONE BIG IDEA to bring down the system.

This means criticizing harshly but with our eyes on the goal. Can the implementation of micro loans be changed to minimize these negative externalities? Is there a way to bring this out into the open?

I’m sorry but as a European African, I need solutions. I can’t do the misery anymore, the hopelessness, the fetishization of the poor – I’m not gonna wring my hands about how terrible it all is. It’s not terrible in a vacuum – people have caused it and people can change it. Let’s make every conversation useful and that means pointing towards some action.

Posted 17 Dec 2008 at 2:52 pm ¶
The Cruel Secretary wrote:

@ Pololly–

No, I think I read your comment just about right. And you’re not answering my direct question, but chose to critique my comment. So I will be clear: I did not say you had *all* the answers, but you seem to have an answer. What is it?

Posted 17 Dec 2008 at 3:24 pm ¶
Jess wrote:

I’d have to side with Pololly on this. Not only is there a blanket condemnation of micro-loans, but a bit of a blank space on the history of credit in the west and the function it serves.

The economies of shame Tanglad shows aren’t that dissimilar from the ones that existed with the old farmer’s credit unions in the midwest, though the collective aspect of repayment was a little more muted (it wasn’t geared exclusively to women, though women were often beneficiaries, for one). But if too many farmers in the credit union defaulted the credit union failed, and there was a lot of incentive to make sure everybody paid up.

Credit is basically necessary for any capitalistic — or even semi-fuedal — economy to work. Small farmers, even 100 years ago, didn’t grow all their own food. In fact, it’s almost impossible to grow everything you need by yourself, even if you have the land. The different food crops have too many different requirements to grow much variety on <1 acre plots.

So people need money to buy food. The famine in Bangladesh in the 70s had nothing to do with the food supply — it had to do with the money supply. Since you needed money to buy food, and nobody had any, nobody could buy it. During the Depression in the US people ran into the same problem. Ditto for the Irish famine of 1847. Even if everyone grew food-only crops, the situation would be the same.

(This is because you can’t address the shortage of food without anything to barter, and many folks would have nothing if they didn’t have more than enough food to start with).

One consequence, by the way, is that money was worth a whole lot more, because there was so little of it. In the 1930s you could rent a three-room in NYC for $18 a month, and poor families on the Lower East Side earned $1,300 or less per year.

So people need a flow of money. And for farmers especially, credit of some kind provides that. It doesn’t have to be currency, but barter is even harder to manage effectively and less flexible.

Microloans won’t work for the poorest people. But they aren’t designed or the poorest people. Complaining that micro credit doesn’t do anything for the poorest of the poor is like complaining that antibiotics don’t cure cancer. Simply put, that isn’t what it is for.

What micro-credit does attempt to do (not always successfully) is a kind of pump-priming. If you can get money flowing through the local economy in some fashion then you have the basis for something more sustainable than hoping your crop doesn’t fail and trying to scratch out a living that way. It ain’t perfect, but purely agricultural economies aren’t the best thing all the time either. They depend on having lots of children (for labor), only a few of whom will live, and an ever-expanding supply of land, which there isn’t. There is a reason that the poorest countries with the lowest human development indices are primarily agricultural economies.

I’d argue that shifting people out of agricultural production has so many side benefits that it’s an important goal in its own right.

This is not to say that issues of health care, for example, or the effect on social systems of global capital. But a certain amount of market activity is necessary for the health care to work, for instance. There isn’t going to be any going back to some ur-state where people operated in some kind of communal utopia. And even those systems were dependent on conditions that in most cases no longer exist.

There’s also a little misunderstanding of the way international debts work. It isn’t in the interest of the lender to never get paid back. The problem is that through a combination of mismanagement, war, and outside interference, the lender and debtor are in a kind of death-embrace.

For example, the financial crisis in Argentina was caused by the government setting a peg to the dollar (not a bad thing in itself) and suddenly removing that peg right at a time when many Argentines had their debts denominated in dollars. Well, the peso fell, so everyone was caught flat-footed because all of as sudden they owed more in pesos than before. (One reason people took out the loans was favorable interest rates in dollars, a consequence of a strong currency. That would not be the case now).

Now, the international bondholders do not want the peso to fall. If you are owed money in pesos, the last thing you want is for that peso to be worth less. So you are going to tell the Argentine government to do things to raise the value of the peso. That means higher interest rates at home and printing fewer pesos. Remember the above point about money being worth more when nobody has any?

That’s why policymakers in many countries do “austerity” programs whenever crisis hits.

Now, the smart thing to do would be to cut expenditures on things like local militaries, which rarely put any money back int he local economy (you just buy stuff from abroad most of the time). If there was a domestic arms industry in most developing nations, the situation would be different. But there isn’t. Kenya isn’t producing any tanks.

Better yet, build “value added” industries locally. Saudi Arabia, for instance, produces tons of oil, but they refine very little. The latter is where the money really is. Or take any country that produces cash crops. Usually those crops (such as cotton) aren’t made into anything on site, they are sent somewhere else.

These relationships don’t lend themselves to magic bullet thinking. Micro-credit is often touted as a magic bullet, and that’s wrong. But it is equally wrong to condemn Grameen outright for attempting to use local social structures and mores to make credit accessible and workable. Mohammed Yunus set the thing up precisely because he knew that the “western” practice of credit was an important factor in growing economies. But he also figured out that western practices weren’t going to fly in Bangladesh. So he tried to come up with something a little better.

Perfect? No. Better than nothing? Yes. Possibly beneficial? Also yes, both short and long-term.

Posted 17 Dec 2008 at 4:35 pm ¶
Minx wrote:

Oh god,

the last think I would give these ppl is credit. They are poor for christ sake! Americans can’t even buckle down and spend wisely, and we dont ( at least not yet) live in wide and desperate poverty. This scam in every way can enslave poor, as it is doing in “rich” industrialized countries.

There are loan programs that only give a loan and NO INTEREST. All one does is pay back the loan.

sigh…..

Posted 17 Dec 2008 at 6:27 pm ¶
Pololly wrote:

>No, I think I read your comment just about right. And you’re not answering my direct question, but chose to critique my comment. So I will be clear: I did not say you had *all* the answers, but you seem to have an answer. What is it?<

Cruel Secretary

Sorry, nope, either I’m still not getting it or you’re not. I have plenty of things which I will improve poverty and inequality on a global scale, sure. But my underlying belief (already mentioned) is for targeted solutions for each problem. So I’m asking the author what the alternative *on this issue*? The author provides no alternative and no context. I can’t even answer you until the author tells me what the question is!!!

Posted 17 Dec 2008 at 6:50 pm ¶
Lisa J wrote:

@ CVT. You make a good point. With regards to being foreclosed on maybe I was thinking more of the recent ranks of the foreclosed upon (many of whom are middle class, I know some) who have more ability or are more likely to move. But there are people who are poor who are very transient and who do move a lot and aren’t in just one place all of the time. Yes some people are trapped in one place but not all. I still don’t think there are that many instances of neighbors beating you up, taking your stuff etc just b/c you default on a loan unless you are dealing with loan sharks and then it is usually just the loan shark and their people and not your neighbors ganging up on you. So I stand by my statement that the level of shaming around not paying a debt is not equal in the West as what is outlined in the essay.

Posted 17 Dec 2008 at 6:53 pm ¶
Latoya Peterson wrote:

I’m really about to shut down this conversation because I am annoyed.

There are generally two reasons to post about a topic here – (1) to raise awareness and (2) to provide an action item of something to do.

This is the third post we have had on global economics on this site, so this is still introducing the issue. Kiva.org and other microcredit agencies have received a lot of press for being a global solution to poverty – Tanglad’s piece offers a glimpse at the downside of these programs.

Does this mean these programs are all bad? No. But Tanglad also writes about the fucked up conditions of women in export zones – does that mean she is advocating for the end of exports?

Presenting an alternative side does not equate to calling for the dismantling of an entire system. And as most commenters have surmised, there isn’t going to be one solution that fits every single developing nation. The key is listening to people who are pointing out these issues and figuring out the best way too move forward.

Pololly –

I linked to Tanglad’s blog at the top of her post for a reason. You can read her body of work at her blog where she has addressed a lot of what you ask, and even engage with her directly. I suggest you do that.

Posted 17 Dec 2008 at 6:56 pm ¶
tanglad wrote:

(Am in the middle of exams, so can’t engage as much, but will check periodically to try to keep up. Pls bear with me if it takes a while to get back to your specific questions.)

@everyone interested in the articles — If you’re anywhere near a public or a college library, you should be able to access these articles via academic databases. I use research articles in a lot of my writing, part of a commitment to bridge academia and community.

@those who wrote abt the contexts where microcredit works, or at least where these programs don’t appear to be the work of satan — Thanks for the input, I will think about microcredit in this context as well.

@Bagelsan, who asked “Do you happen to know how much the micro-loan organizations depend on getting the loans back?”: Great question. I do not know the answer to this and am looking into it. Will write more when I know, and would appreciate if any one who does know can weigh in

@jsb16: You make a great point with, “And micro-credit is not for the destitute and uneducated. It’s for the working poor with an idea.” It’s effective within a limited context, but that’s not how it’s being applied and market.

@CVT, who said “We’re intentionally making it so that they NEVER get on track.”: That’s my frustration with these pseudo-solutions. I may not necessarily agree with the “get out of the way” part, at least during my more hopeful moments. I think we need to start with coalition-building, which means we listen to what the community members need and support them in these struggles

@Pololly — Hi! I was worried that asking people to read my other blog entries was poor form, so thanks Latoya for doing it for me. If you want to talk abt the Karim and Milgram articles’ content after you’re able to read them, pls feel free to continue this discussion on my blog. Karim’s focus is presenting rich ethnographic data on the various failures of microcredit, which does not get discussed in other accounts of microcredit. One of her radical recommendations is that western donors should talk to the community people themselves, or at least read the vernacular press, which have rich critiques of the microcredit models. Of course, that’s hard to do, and potential donors who do that may actually learn shit they don’t want to know. It’s far easier to get your info from NGOs who extol the miracle of microcredit, and who conduct “consultation” meetings with the target population in English as opposed to vernacular language.

I’m not hand-wringing with this article. In case it’s not clear, my message is that microcredit does not work the way it’s marketed to work. My solution is to stop this shit. To work with the communities, to listen when they say things like: “Don’t let that foreign mining concession into our ancestral lands, because that will displace us from our communities and expose us to violence.” In the community I’m working with, the response was to send in the military to violently evict the indigenous peoples and to protect the mining companies from protesters and saboteurs. Then the displaced population was resettled where the land isn’t arable, where women can’t cultivate their seedlings and are taken out of their roles as knowledge-producers. And then, they’re put into microcredit programs and told that setting up a handicraft business for the tourists and export is the way out of poverty.

Or, when a community says: “We need a health clinic here, because the nearest city is a six-hour hike away.” “We need some govt assistance to purchase seeds/school supplies for kids/carabaos/etc.” Due to Structural Adjustment Programs mandating privatization (thanks, IMF!), there’s little govt funding for this kind of community expenses. But there are microcredit programs, and community members are told that setting up a handicraft business…

So I’m working with these communities, trying to support their struggles, and trying to get the info out here. I won’t presume to tell you or anyone what you should do, because our paths are most likely different. Except maybe to ask that you listen to these voices that do not get a lot of airtime, and to consider them as you work through your own struggles.

Posted 17 Dec 2008 at 9:52 pm ¶
Jess wrote:

Latoya–

I’m sorry you feel that way — annoyed, I mean, and I don’t mean to say that in the way that the customer service guy says he’s sorry you feel pissed when the airline loses your luggage. I think the kind of discussion here can be fruitful, and can lead people to think about action items, even if they disagree with the OP.

I’d say that the conditions of women in export zones have less to do with micro credit and more to do with the way elites in the developing world structure their economies. And that has to do with a combination of outside interference from the developed world, internal conflict, and let’s face it, plain old mismanagement and corruption. (Not every country is going to produce a Nelson Mandela every generation, and not every potential Nelson Mandela is going to be a political leader. More often you get Tom DeLay).

I think the issue Pololly had — and that I do, to a lesser extent — is that the discussion of the down side of microcredit feels incomplete maybe? Or a bit like focusing on the wrong end, perhaps? Any discussion like that kind of does beg the question of what would you do.

It’s something I’ve been thinking about a lot lately, some of it catalyzed by reading this site. Even if I don’t agree with everything, I at least feel like I thought about it in a way I might not have otherwise.

Posted 17 Dec 2008 at 10:20 pm ¶
theboxman wrote:

> Credit is basically necessary for any capitalistic — or even semi-fuedal — economy to work.

There’s the rub I guess. I’m not convinced you can have a capitalistic solution that does not exacerbate the problem. After all, creditors don’t offer loans for the purpose of helping people, but to make a profit for themselves — i.e., to expropriate wealth. Does it help sometimes? Sure. But that’s not what credit is designed to do.

Posted 17 Dec 2008 at 10:42 pm ¶
tanglad wrote:

Hi Jess@39 — I can understand how one can feel about incompleteness. Because that’s how I feel about all those “hallelujah, microcredit will save us” accounts. Since you can find those in a lot of other places, I wanted to focus on the marginalized voices.

Also theboxman — Just co-signing your point abt capitalistic solutions. I can’t see how they can be long-term solutions to problems spawned by capitalism in the first place

Posted 18 Dec 2008 at 2:14 am ¶
Viviti wrote:

CVT #16 : Cosign!

Apologies for ranting in advance:

As and African woman working in development in Africa, I’ve come to the conclusion that what people really want is the opportunity to access education in order to sort themselves out ON THEIR OWN. That and actually listening to the voices of those who live “underdevelopment” on a daily basis.
I am concerned about the whole “duty of interference” attitute that seems prevalent in the West and the idea that the “solution” will come from good-willed people in the First-world hand in hand with Mandela-type charismatic and honest leaders. Well intentioned but how condescending! Mismanagement and corruption are not prerogatives of the Third World last time i checked, and so many “good” wersterners have paved the way for the truly evil one to step in (priest before colons anyone?).
Purely rhetorical question but why is is so difficult for the West to relinquish control and effectively support the agency of people in the Third World?

Jess: don’t take it personal but
- are you seriously separating outside interference and internal conflicts?
- still on the Mandela thing..,. your statement is disrepectful to all the political activists killed, tortures or in jail throughout the developing world, and God knows they are in numbers
- and the people you want to shift “out of agricultural production [because it]has so many side benefits that it’s an important goal in its own right” : these people are in their vast majority women and that is how their family actually are still alive albeit poor instead plain dead. Out of agriculture in to what? sex work in an urban centre or trafficked abroad or domestic servitude? Beacuse what option will they have in countries where unemployment rates are so high and the thought of women in the “real” labour market makes people laugh?

Getting out of people’s business won’t be as bad as the stream of dodgy interventions taking place: DR Congo would make a brilliant case study…

Posted 18 Dec 2008 at 9:04 am ¶
Jess wrote:

boxman–

the thing is, you’re thinking of credit in terms of the people who provide it — not a bad analysis for certain things.

But there’s another function it serves if you think of credit in terms of flow of money. In that sense, credit is necessary for any kind of system that involves money at all, even socialistic ones. Thus far, nobody has made a modern economy work without money of some sort.

Anyhow, the point is, even if you eliminated capitalism somehow, you would still need money to place a value on goods exchanged. The only other way to do it is to have every human settlement be self-sufficient, and there are too many people in the world for that to work at all anymore – you’d have to reduce the population by 80% or more. When you take over a whole planet, there’s nowhere to go “away.”

Any transaction is “expropriating” wealth, after all. If I give you money for food, you have my wealth, but I have the food. If I promise to help you raise your barn in exchange for help in a field, it’s the same thing. Nobody ever has an “equal” transaction — the world isn’t populated with clones, so I am not sure such things are even possible.

But that’s sort of a higher-level discussion.

Posted 18 Dec 2008 at 9:24 am ¶
theboxman wrote:

Jess:

I don’t think we’re working from the same understanding of the concept of money here, and hence we’d probably just end up talking past one another. But you’re right, this is probably not the space for such a discussion.

Posted 18 Dec 2008 at 9:41 am ¶
Jess wrote:

@Viviti–

Yes, I am separating those things — outside interference and internal conflict — because they aren’t always the same.

Many societies had their own conflicts, their own wars, their own hierarchies before the Europeans showed up, right? I’m not saying outside interference has nothing to do with exacerbating internal conflicts, but they aren’t always seamlessly linked either.

Blaming the colonialists for every local civil war is what Napoleon Chagnon called the “bad breath” theory of history. “All was utopia until the white folks came.” That position is as insulting as saying colonized peoples had no history or civilization beforehand, because it’s dressed-up “noble savage.” That’s the point — they have histories that matter.

The Mandela thing was just an example. Yes, there are loads of political activists out there doing wonderful work — I know a number of them. But I also recognize that it takes a hell of a lot of work and great leadership to make a nation function. Not every country has that.

I might defer here to Franz Fanon (IIRC) as well as many of the leaders of the early independence movements, who all said that part of the problem was that the colonized (or newly de-colonized) nations were trying to build in 20 years what it took England and France 100 years at least to build.

There’s also a certain amount of blind luck involved. George Washington didn’t have to give up the presidency. He could have been president for life if he wanted. He didn’t. Andrew Johnson could have taken far greater revenge on the South and we’d have had an American version of Belfast. Think of how the US would be if either one of those went differently.

In Latin America — long before the US was in a position to interfere in a serious way — many nations got their independence from Spain. Only one or two became anything like a democracy that lasted more than one presidential term. Leaders make decisions, for good or ill. Not everybody can be Gandhi, or Mandela, or Nyerere. Most people aren’t. What are the odds you get the right person? The one who makes the right decision? Not good, I think. In healthy countries, having one bad president matters less because the institutions are in place to limit the damage. But most developing nations don’t have that.

As to getting people out of agricultural production, I am talking about what works.

Remember, most farming economies aren’t subsistence anyway — not in the sense that most people think of it. To eat the food you farm you need 1) labor and 2) land

If your family gets bigger you get the labor, but you need more land as well. That is simply not available to most of these women and isn’t available to most people in developing nations anyway, even if you allowed them to farm every inch. Then there’s the weather as an other X-factor in your day. This is why people in agricultural societies that are “self sufficient” don’t eat well a lot of the time.

I might add that the land-labor equation is also present in the US — the traditional farmer has his kids work the farm (this is why even now US family farms are exempt from many child labor and minimum wage laws and why school is out during the summer). The difference is that mechanized and industrial scale farming has changed the equation here over the last 100 years or so.

In any case, whenever people move into cities (as happens when countries industrialize) a few things happen:

1. People have fewer children. This is because on a farm you need lots of kids to help out. In a city that is no longer the case — in fact, kids are an economic liability. More importantly, you expect more of them to live. One reason rural people have lots of kids is to get the 2 workers you need you have to have 4 kids because 2 could die before they are five. When you think about it, much of the structure of patriarchal farming societies is based on the premise that most of your kids won’t grow up to take care of you when you are old. (You can even work out the assumed infant mortality rate. It’s bloody high).

It takes a generation or two for birth rates to drop because people don’t de-acquire children and old habits take a while to change. But this happens every time, across cultures. Think of Italy or Portugal. One reason the birth rate went from one of the highest in Europe to the lowest was that 99% of the population is no longer farming, whereas in 1900 most people were farmers. The same pattern is making itself felt in India (see the WHO numbers).

2. Fewer children means more opportunity for women to work and get educations. You do notice that the literacy rates for women — again, in country after country — are higher for urban than for rural women. That’s because to get city jobs you need to be able to read at least. The traditional role of women imposed in rural societies just doesn’t work in a city.

Take Iran. There’s a patriarchal society for you. Yet women are in the workforce at higher rates than ever before, and growing. The sexists will laugh at women in the “real” workforce, but they stop when they see they need people. Think of who staffs call centers — a lot of women. Most women in cities are working — even when they have families.

3. Higher incomes. When people move to cities, their incomes rise (they don’t get rich, but the situation usually gets better over time). Again, this pattern manifests in many countries over and over. Weber documented it in Europe back when Slavs were the colonized people. The same thing is happening now in India, China, and Brazil. There’s a reason people migrate to the city from the farm and not the other way.

None of this is to say it’s always good. Unemployment is a huge problem in part because many countries’ political leadership decided that export-oriented economies were the way to go. It’s not a bad decision on its face, but in order to provide jobs in a sustainable way you need to get beyond raw materials — going “up the value chain” in economic-speak. Exploitation of women in the workforce is a huge problem. There is a whole other discussion to be had there.

And yes, you have to do things to maintain rural economies and make them workable. Again, a whole other discussion.

But maintaining a society in which 90% of the people are farming in the face of growing populations, changing work patterns (which is why so many of these women are on their own in the first place) and the necessity of expanding opportunity (so that more of the population can reach its potential) is probably not going to work. It hasn’t yet, anyway.

Posted 18 Dec 2008 at 10:40 am ¶
Viviti wrote:

Hi Jess
links between outisde interference and internal conflict are far from being “seamless”, and in this globalized world I find it very hard to make clear cut distinctions. Case in point: Kenya doesn’t produce tanks as you wrote but I’m pretty sure that Kenya (and many developing countries) has licences from the UK, the US or wherever to produce arms parts or smaller weapons which tip the scale and the extent of local conflicts.
Same story when it comes to the lack of good leadership: I come from a place where elections are regularly rigged with the blessings and financial support of the “international community”. We know all about outside meddling in our affairs.

I don’t think i made sweeping generalisations in my comment so I’m not sure where the pristine savage thing is coming from, but as most of the time when WE talk about History or try to allude to the lasting effect of colonisation we are accused of using the same old trump card. In that regard, your example of Latin America is quite weak: the Spanish left but the poor people didn’t manage to get it right and the US hadn’t even intervened yet! Silly me I had just forgotten how trivial the mass extermination of native peoples and the slave trade were in the great scheme of things. Ah! sometime we, the locals, find it hard to let go!

I’m not convinced at all by the parallels many try to draw between Europe or America’s past and the future of the developing world to try predict the future and sell us brilliant ideas like the de-agrarianisation of the work force or even micro-credit. The underlying message deeply Western-centric, is that the Western capitalist model is the right one: the only one that “really” works and we should try to emulate. Maybe the current global financial crisis we’ll make us stop and think and dream of alternatives. I’ll let you when I come up with something

Incidentally, I have a colleague who quit his job in a micro-financing programme in Africa. Reason: they saw an increase of violence against women following the implementation of the programme as women would not relinquish control of the money to husbands and men felt threatened by this sudden “empowerment”. Of course this fact could not be included into reports…

Posted 18 Dec 2008 at 2:50 pm ¶
tanglad wrote:

Bagelsan way back@10 — “Do you happen to know how much the micro-loan organizations depend on getting the loans back?”

Aminur Rahman’s book “Woman and Microcredit in Rural Bangladesh” draws a strong link b/w the programmatic success of Grameen Bank and extending credit to women, who are, accdng to author, chosen because of their sociocultural vulnerability. There is debt cycling among borrowers, so previous loans need to be paid off with new ones. This means bank workers are also pressured to increase loan disbursement and to keep up the high recovery rate. This therefore becomes the emphasis, rather than borrower empowerment, which is what the Grameen promises.

@Viviti — Salamat for sharing your insights on microcredit in African countries. In the Philippines, many women shifted from agriculture are being exported as domestic laborers. Many others are trafficked. And I haven’t even touched on the increased violence in indigenous communities following the pseudo-empowerment of microcredit. I’m still stunned at the information that get left out of official reports.

Posted 18 Dec 2008 at 3:37 pm ¶
Jess wrote:

Viviti —

The example of latin America was just to show that interference from a more powerful country isn’t the only thing that can screw things up. In the Spanish colonies, you had so many internal conflicts — the settlers with the native population (as you point out) was just one. History and development are full of contingencies.

To me, what’s fascinating is the similarities between many Latin American countries and the early US. In 1820 or so, Argentina and the US were on pretty equal footing — both had similar rates of economic output, for instance. Both had slavery — in fact the Latin American countries did a better job of getting rid of it. Populations were comparable — the skills people had weren’t much different. Both traded extensively with other nations. Both had a policy of displacing the natives.

Yet the people in the English/Dutch colonies managed to create a stable set of systems and the Argentinians did not (and they had a hell of a lot more success than some). What happened?

I’d say some of it is not having any group of people akin to the Founders. Having that was a lot of luck — I mean, the English and Dutch colonies attracted a lot of smart people from many backgrounds (the diversity of the Founders is often overlooked — people forget that the idea of getting people who spoke three different languages and a half-dozen religions in one room to hash out a common future was unusual then).

Some of it was the political culture and systems bequeathed by the Spanish. Some of it was decisions made by elites on how to run the local economy. Later on it was interference from the US. The point is that all these things play a role.

In many places, the internal conflicts are exacerbated by effects from outside, but even if the colonialists never came they would still be there.

None of this is to let colonization off the hook. The destruction of whole societies doesn’t help anybody build stable institutions.

But I think it’s important to remember that there’s reasons we don’t expect to get shaken down by a US customs official the way we expect to get shaken down in Russia at the airport. One of those is a political decision on the part of locals.

It takes a lot of really top-notch leadership combined with local political organization to make a nation. And if you don’t have the “fail safe” systems in place, you will get places where corruption is rife, nobody has any faith in the system, and it’s every person saying “I got mine.” That takes time to build.

Which gets us to development.

In say, Bangladesh, a huge chunk of the population works in agriculture. Bangladesh is a finite area. Therefore there is a strict upper limit on the population if you do subsistence farming. And it’s a lot less than what we have there now.

But the system that people lived by in agricultural societies is often based on the premise that there will always be more land (remember the point I made about the labor necessary to run a farm? What do you do when you have 4 kids who all need land to grow food on? Eight grandkids?). But we know that isn’t the case. There are 6 billion people and all the good land is essentially taken and it’s overworked as it is.

(It’s interesting to note that in the pre-conquest Philippines, which were islands, that notion didn’t take hold, I’d hypothesize that people see pretty quick that an island is a certain size and act accordingly. Of course, the societies that don’t adapt all die out, so I suppose there’s some self-selection here).

You can try to preserve a system that can’t work or you can go with one that may not be perfect, but offers a better chance. I don’t love capitalism either, but since it won’t disappear tomorrow I’d rather do something that will at least buy us all some time. And I see no advantage in keeping people — women especially — on the farm when there’s an alternative.

And the model I outlined isn’t only western-centric in one sense — Japan did it. Didn’t you ever wonder how 100 million people could live on land the size of California? China did it under various imperial dynasties (not all of which were Chinese — the Mongols knew how to run a place, if nothing else).

Micro-credit isn’t a complete solution — nothing is by itself. But for any country to get beyond having subsistence peasants and rulers, there are certain things that seem to work consistently. It won’t be the same in every country, but I can’t see how shifting production from cash crops and minerals to manufactured goods is a bad thing for anyone, since the former two are the most unprofitable thing to produce. (If you don’t believe it, ask what gets you bigger profits: a ton of steel or a car made of steel that weighs the same?)

Posted 19 Dec 2008 at 11:40 am ¶
shah8 wrote:

Hey Jess…
ok, um…
I don’t know if you’re doing this intentionally, but you’re not actually responsive to the meaning of what Viviti or tanglad wrote. You are also marshalling a ton of evidence and statements in a way that makes me doubt you understand what you are saying–leading to a Chewbaca defense for all intents and purposes.

Viviti and tanglad are saying that microcredit are pushed onto poor people in the third world inappropriately. You are replying suggesting for the most part that the lack of third world development is fault of the third world leaders who won’t imitate first world institutions (or something like that). Almost all of your arguments are developed from the tangental issues of the thread and not actually germane to the point.

You lose. Simple as that. If you don’t think so, I’d suggest alot more talk about microcredit forming institutions and a lot less talk working your “hero narrative” history. Microcredit isn’t about leaders. What can you say to directly correllate microcredit with new institutions instead of eroding older ones like tanglad and Viviti sez (two people who know what they are talking about!)?

Posted 20 Dec 2008 at 10:09 pm ¶
Jo wrote:

Thanks for this post, Tanglad.

I first heard about micro-credit a WHILE back, before the IMF became quite so invested in it (and I took them latching-on to be something of a foreboding sign – their policies aren’t generally the most responsive to community needs, to say the least), but I really appreciated this perspective being brought into the conversation. I know you’re not the first to bring it up, but I haven’t come across it before now.

So thanks for writing, I really appreciate your commentary and the links.

Posted 26 Dec 2008 at 1:55 pm ¶