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Excerpt from “The Political Economy of Microfinance: Financializing Poverty”, Chapter 3, The Financialization of Poverty. (see other excerpts here)
Microfinance … performs both financial intermediation and financial innovation … it intermediates across time and space by creating entitlement relationships that reach from now into the future and from capital providers to borrowers. It innovates in generating new financial technologies which bring fresh borrowers into connection with capital-providing actors who can pursue not only financial goals, such as rapid turnover and growth of capital via above-market interest rates, but even quasi-charitable ideals.
The microfinance industry has developed (and continues to develop) technical means for channelling substantial quanta of capital directly to people living without collateral or assets at the bottom of the global income scale, technologies including group lending, social collateral, standardization and computerization, ratings of MFIs, and securitization of loan portfolios. The growth and stability of global microlending, at between 17 and 78 per cent annually during 2002–2009, and 10 per cent on average since then, both demonstrates the resulting system’s efficacy and indicates that capital-owners expect it to be durable.
Surplus extraction through microfinance, 1995–2012
Another witty animation by the RSA, this time featuring everyone’s favourite misanthrope. Slavoj Žižek’s provocative thesis is that attempts to weave ethics into consumption – for instance with the Fairtrade label – merely serve to make the inbuilt injustices more durable: “The proper aim is to try and reconstruct society on such a basis that poverty will be impossible, and the altruistic virtues have really prevented the carrying out of this aim.”
We can buy exploitative and corporate items, and the anti-exploitative anti-corporate antidote is already included in the product, like ethical coffee at Starbucks. We can increase our wealth while pursuing sustainability or equity, like SRI. We can lend money for profit and promote virtues like entrepreneurship or “financial inclusion”, as in microfinance.
CRESC, the Centre for Research on Socio-Cultural Change, is a well-known institution for many working on finance in sociology and political science, as well as researchers in cultural and media politics. By uniquely bringing together researchers from these fields, its annual conference in Manchester is an inspirational forum for unorthodox interdisciplinary exchange, without the numbing genericity of academic mega-conferences.
The theme chosen for this year’s conference (5-7 September) proved an excellent basis for taking stock of economies and societies in crisis: “Promises“. One striking feature of this conference was the presence of journalists, NGO representatives, and professionals like asset managers (as spectators and presenters) alongside academics, which added diverse perspectives and precluded overly technical/theoretical debates. (Other conferences may follow this good example.) Being spoiled for choice among the many panels, I mostly attended the ones on finance, missing the more culture-heavy sessions. Therefore, the three observations which impressed themselves upon me relate to the more political-economic questions in coming to grips with the present state of capitalism. Three insights from Manchester:
1. Financialisation is so pervasive and wide, many facets are only now being explored. Read the rest of this entry »
governancexborders.com 