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Sorry, but I simply have to add my two cents on what Leonhard is writing about. Yeah, I’m blogging a bit out of my depth here, but as an ardent fan of original music and deep skeptic of intellectual property rights, I’ve had a strong opinion on this subject for years.
It comes as no surprise that ABBA are arguing for the preservation of the music industry. Too old or forgotten to sell any new songs, their income depends on the re-selling and licensing of old songs. Björn claims that downloaders are stealing the ideas of “single individuals” who, presumably, should receive income for it.
But the real question is: who needs the music industry? By pitting overproduced, overfinanced pop products against homegrown artists and appropriating the majority of proceeds, does the music industry really encourage creativity? I wonder how many professional musicians actually work for (major) record labels, but beyond any doubt it’s a very small percentage. The rest ekes out an honest and more or less satisfying existence doing what they can’t resist doing: making. good. original. music.
And here’s a link to the current capitalist crisis: As banking practices show, financial incentives just simply do not produce excellence. Read the rest of this entry »
In 2009, many received wisdoms of late capitalism are crumbling. To mention a few disappointments, which it didn’t take a telescope to see from a mile away,
- No – we haven’t overcome the business cycle.
- Sorry – China and India aren’t gonna drag us out of the recession.
- Nope – deregulation doesn’t bring widespread prosperity.
- Too bad – wealth doesn’t grow on trees or in banks or hedge funds.
- Please – add your own favourite here: __________________________
A crisis is a moment in which illusions or expectations fall apart. In the Nigerian novel “Things Fall Apart”, the patriarchal protagonist Okonkwo confronts a world of changing values (colonialism, Christianity) in which he finds he has no leading role left to play. Rather than adapt to these circumstances, he takes his life.
This pessimistic example, however, doesn’t seem to apply to some international organisations in the current crisis. Rather, after years of seeming anachronistic, the World Bank, IMF, NATO and OECD are experiencing something of a revival – notable absentee: the UN.
According to classical (or vulgar?) institutional theory, institutions persist rather statically until some kind of “critical juncture” suddenly occurs, at which point they disappear or reinvent themselves (or are reinvented). As far as critical junctures go, they don’t get much bigger than the 2007 to 20xx? global capitalist crisis. Read the rest of this entry »
Even Karl Marx, who saw Capitalism as a production system governed essentially by inescapable laws, acknowledged the key role of special actors who made it their job to advertise the benefits of the market. The market, a political project, needs these people to create the “right” environment. Marx often called them “sycophants”, an ancient Greek word denoting servile persons who would flatter potentates, and even denounce their own peers, in order to garner favour.
Christoph Deutschmann’s fascinating new book, which analyses Capitalism as equivalent to a modern secular religion, also sees these actors performing an important function. He views many economists and business “experts” as performing for the market a role equivalent to that of priests in the Christian church – to interpret the signs given by the deity and to make predictions based on them.
Be they high priests or sycophants, the PR workers of global Capitalism (those who haven’t, at least temporarily, defected to the pro-government side, so long as it subsidises business) are getting in gear again – they literally have a world to lose. However, in this present crisis, neither the numbers, nor the facts, nor people’s everyday experience, really speak strongly for the priests’ side. So some turn to a rather “liberal” treatment of the facts.
Take for instance the statement that luxury goods are cheaper than ever thanks to mass-production. True. But most people in the world haven’t had much from this, while they are getting a taste of the flipside; the massive rise in grain prices over the past years is literally causing riots and civil wars in the South (Haiti, Sudan, Congo…).
Yesterday’s special business section in the German broadsheet “Frankfurter Allgemeine Zeitung” (FAZ) opened with a bleeding-heart appeal for more faith in the market, based on the view that everything isn’t so bad after all. If Capitalism has served us so well for so long, why rebuke it just because of this crisis? Maybe we can bring out the sun simply by wearing sunglasses? Read the rest of this entry »
“It never got weird enough for me.”
– Hunter S. Thompson
Development and finance are increasingly intertwined, and both fields have over time produced their share of strange but successful, but also many odd and failed ideas. Here are a few recent bits of news from the weird world of finance and development.
# Since February, East African villagers can buy themselves carbon-efficient stoves to replace their tradtional fireplaces, financed via microcredit. This contribution to reducing global warming then pays off for them via carbon-offsetting credits which they can claim via mobile phone SMS.
The father of this brainchild, Carbon Manna Unlimited, estimates that in this way, an African family can save around 3 tonnes of CO2 per year, earning them between 20 and 30 US Dollars worth of carbon credits on European markets…
Carbon efficiency, mobile banking and emissions trading applied to African cooking – it sounds adventurous, to say the least. But I was also wondering whether, sociologically speaking, is this an immense act of pragmatic creativity or rather simply one mimetic behaviour? After all, emissions trading, mobile technology and carbon footprint reduction are recieved wisdom at the moment in the north.
On another sociological note, the project’s name, Carbon Manna (TM) Xchange, has a both distinctly religious and capitalistic ring to it – what would Weber say? Read the rest of this entry »
I hate to say “I said so”, and I know it’s horrible style. But sorry, this issue is too important to be ignored. My fears about the credit crunch and microfinance are being confirmed.
The current economic crisis threatens to set back development and poverty reduction by years. Who coul really be surprised? In a globalised world, when Wall Street sneezes, everyone else catches the Flu. Read the rest of this entry »
Since the beginning, proponents of microcredit have argued that they have found a self-sustaining, profitable route to reducing poverty: borrowers repay loans with enough interest to cover the costs plus an increase in the bank’s capital base, plus a payout for its owners. Sceptics of this story point to the fact that most microcredit programmes are still subsidised by donors. They argue that this is because many borrowers cannot afford to repay so dearly, and that the cost of capital should be lower in order to help more and poorer people.
Welcome to the ‘sustainability versus outreach’ debate. At the core, it is about the question whether incentives or impact matter more. Time to examine the arguments. Read the rest of this entry »
Credit is a useful lever for helping businesses grow. Many poor people in the developing world are self-employed farmers or petty traders, so technically they can be conceived of as businesspeople. But most farmers are actually subsistence farmers, working not for the market but for their own family’s meals, and many traders are simply traders for lack of a better alternative of stable, paid employment. They resiliently eke a meagre living out of their harsh surroundings, and truly deserve admiration by comfortable Westerners. But does that necessarily warrant them being treated as Schumpeterian entrepreneurs, willing and able to “creatively destroy” their traditional economic environments, if only they were lent the necessary finance?
We should keep in mind that people are incredibly diverse, and this must be taken into account and respected when formulating development policies. One-size-fits-all approaches have repeatedly failed in development history, and serve as a warning. Read the rest of this entry »
In the popular literature surrounding microcredit (or microfinance), a number of claims is repeatedly made which deserve a closer look. The mass media are full of heartwarming stories, anecdotes and PR-like representations of MFIs’ work, showing the apparent power of microcredit to improve the lives of the poorer inhabitants of this planet. In fact, many academic productions make similar claims without providing sufficient evidence to back them up.
In this way, the impression is being created that the development industry has found a panacea for poverty; a dangerous insinuation which can only lead to disappointment. Over my next few blog entries I will address and critically illuminate some myths – insufficiently supported claims or untested assumptions – which currently stand in the way of a balanced assessment of the true powers and drawbacks of microcredit as a development tool.
(phil)
Could the economic crisis harm microfinance? It seems possible that high expectations paired with a collapse in funding (archetypical elements of bubbles when bursting) may erode confidence in this development tool, which – for right or wrong reasons – is currently a dominant element of international development governance.
Recently, I got my hands on a publication by Deutsche Bank Research from December 2007, predicting a fantastic acceleration of growth in the microfinance industry over the coming decade. That they would publish such a view is unsurprising, given that DB is the issuer of several microfinance investment funds; in fact, according to this paper, for every Dollar currently invested in microfinance there are a full ten Dollars of untapped demand. DB expect this situation to be remedied until 2015 by a ten-fold increase in investments from the private private-sector, bringing the total volume of investments in microfinance to 20 billion Dollars (about six times the equity value of Commerzbank). Private-sector investments already more than trebled between 2004 and 2006.
Does this kind of prognosis sound familiar, in any way? Certainly, predictions of ever faster growth in a niche market in which most firms have not yet earned a single Dollar, based on wild assumptions about unmet demand, were all too common practice during the dot.com bubble of the late 90s.
Would it be too pessimistic (or just too early) to coin the phrase “microfinance bubble”? Well, maybe it just got coined here, and possibly for good reasons. Read the rest of this entry »
governancexborders.com 