Gemeinschaft, Neoliberalism within a Modernist Developmental Discourse, and All That (What I'm Reading)

Here are quotes from and a few thoughts on things I'm reading.Thomas Dichter, "Can microcredit make an already slippery slope more slippery? Some lessons from the social meaning of debt," in Dichter and Malcolm Harper, eds., What's Wrong with Microfinance? (2007). Two contributors to this edited volume pointed me to it in response to my announcing this blog. In the opening chapter, Dichter writes:Microfinance today makes a mistake in thinking that it is about financial services, plain and simple, with the main concerns being the technical ones surrounding operating costs, transaction costs...and the like. Those MFIs [microfinance institutions] that work especially close to the poorest borrowers...need to be especially aware of the symbols and layers of what is going on behind the mere transaction. Looking at the deeper social meaning of debt can provide insight, for example, into why joint liability works or does not work, give more depth to the issue of drop-outs, help explain misunderstandings about interest rates, uncover unexpressed hopes about further larger loans, or about what happens when women give their loans to their husbands.

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For the most part, microfinance has failed to see the slippery slope towards consumerism, and the loss of certain values (embodied in indigenous ways of coping based on reciprocity or mutual aid) that may occur as the results of even partly encouraging widespread formal credit use. Historically valuable mechanisms of reciprocity, exchange, and mutual trust constituted what Durkheim called 'gemeinschaft' (community). This was the original 'social capital'. And Durkheim's student, Marcel Mauss, studying gifts and exchange in primitive society, concluded that gift exchange formed the entire basis of solidarity--exchanges held people together.

How new financial services, and the attendant interdependencies and stresses, disrupt the regulating power of long-honed community norms around borrowing and lending is certainly worth thinking about. But real economic development is always disruptive, for both good and bad, and Dichter provides no specifics about the bad, so he does not convince me.Dichter also wrote "A Second Look at Microfinance" for the emphatically conservative Cato Institute. From the opposite political pole comes Lamia Karim, "Demystifying Micro-Credit: The Grameen Bank, NGOs, and Neoliberalism," Cultural Dynamics 20(5): 5--29 (2008) (hat tip to commenter Lindsey):

The developmental NGO [non-governmental organization] is the purveyor of this new economic sovereignty that is represented by corporate capital interests and local institutional interests (NGOs), and is an architect of neoliberalism within a modernist developmental discourse of poor women's empowerment through the market.

Got that? The heavy shibboleths put this reader on guard. But Karim appears to be concurring with Dichter and, to her credit, follows up with fairly jargon-free specifics from her year in Bangladesh:

I saw that credit-related strife amongst members and their families were routine occurrences. Women would march off together to scold the defaulting woman, shame her or her husband in a public place, and when she could not pay the full amount of the installment, go through her possessions and take away whatever they could sell off to recover the defaulted sum. In circumstances when the woman failed to pay the sum, which happened several times a month in the NGOs I studied, the group members would repossess the capital that the woman had built with her loans. This ranged from taking away her gold nose-ring (a symbol of marital status for rural women, and removing it symbolically marks the 'divorcing/widowing' of a woman) to cows and chicks to trees that had been planted to be sold as timber to collecting rice and grains that the family had accumulated as food, very often leaving the family with no food whatsoever. The women who committed these acts did so at the exhortations of NGO officers, but they also considered these acts to be 'protecting their investments', and the defaulting woman as someone who had 'broken faith with the community'. These acts were committed with the full knowledge of NGO officers, but the officers did not participate in these collective acts of aggression. Instead, they threatened to withhold future loans unless the defaulted money was recovered.

In instances where everything had been repossessed because of a large default, members would sell off the defaulting member's house. This is known as house-breaking (ghar bhanga) and has a long history in rural society.

Then, a conversation with a prosperous moneylender and microcredit client:

Jahanara proudly told us that she had broken many houses when members could not pay. 'We know when they cannot pay, so we take a carpenter with us to break the house.' When I asked Jahanara, 'Why do you break the houses of kin?' Jahanara became indignant at first. Her initial comment was 'Why shouldn't we? They have breached their trust with us. If they cannot pay, then we will have to pay. Why should I pay for them?' Then she became quiet and said after a while:

It is not good to break someone's house, but we are forced to do it. This is how we get loans from Grameen Bank and other NGOs. They put pressure on us to recover the money, then we all get together and force the defaulting member to give us the money. We don't care how we do it.

Helen Todd also wrote about microcredit after living a year in Bangladesh, in the mid-1990s. Women at the Center paints powerful and detailed portraits of a handful of women, some of whom had been using microcredit for ten years, some who never used it. The borrowers are clearly better off on average. On page 72, she takes on a major criticism of her approach, that comparing these two types of women is misleading because it weeds out all those who tried microcredit, failed, and dropped out before she arrived:

It could be argued that women like Zarinah and Norjahan did not become economically active and entrepreneurial because they had access to capital through Grameen Bank. On the contrary, they joined Grameen Bank because they were active and entrepreneurial. Therefore we would expect to find Grameen women to be more active economically and more influential within their family circle than women in the control group.

There is some limited truth to this argument. Obviously, a woman like Habibah and a couple like Norjahan and Nurul, who were already engaged in activities that required capital--and were borrowing it from wholesalers or moneylenders--jumped at the chance to join Grameen Bank when it came into their villages. However, there is something unreal about the assumption behind this argument--that women can somehow be classified as "entrepreneurial" or "passive." Here in Ratnogram and Bonopur, at the bottom of the social heap, there are not many "inactive" women....Poor women must hustle to survive. Whatever they can do to bring a few Taka into the household they do and most women are doing several things at once. Some are more astute than others, but the real differences relate to the resources at their disposal.

When we look at a [non-borrowing] woman like Shireen...tending her calf and share-sheep and scratching each day for enough food to feed her family, we see a woman who is hard working and grabs at whatever chance she gets. But she has neither land nor capital. Her own family is too poor to help and as an unwelcome second wife, she has few allies in her husband's gusti. As a result, she can do little to boost the fortunes of her family and is completely dependent on her husband for survival; a fact which is reflected in her subordination.

Contrasting stories of triumph and trauma, like those from Karim and Todd, are what led me to write in chapter 1 that "The truth turns out to be an elusive thing."