The committee that gave Henry Kissinger the Nobel Peace Prize has given it this year to Muhammad Yunus, the economist who put the word “microloan” on the map with the Grameen Bank in his native land of Bangladesh. That’s progress of a sort. But in terms of hot air, any sentences linking “peace” with “Henry Kissinger” aren’t immeasurably more vacuous than the notion that microloans can help–to use the language of the Nobel Committee’s citation–“large population groups find ways in which to break out of poverty.”
Throughout the late 1980s and ’90s, in the verbal currency of First World do-gooders, “microloans” became one of those magically fungible words, embedded in a thousand foundation and NGO annual reports, like “sustainable.” What could be more virtuous in terms of prudent philanthropy than giving very small loans to very poor women? Microloans breathe healthful uplift, as divorced from the sordid world of megaloans as are microbrews from Budweiser.
The trouble is that microloans don’t make any sort of a macro-difference. They have helped some poor women, no doubt about it. But in their own way they’re a register of defeat. Back in the early 1970s there were huge plans afoot to change the entire relationship of the Third to the First World, to speed Third World economies toward decent living standards for the many, not just the few. At the United Nations radical economists were hard at work drafting plans for a New World Economic Order. All that went out the window, and here are the caring classes thirty years later, hailing microloans.
Microloans are micro-Band-Aids in a scale of things where–to take the example of India–well over 100,000 farmers, including a large number of women, have killed themselves because their federal and state governments, plus large international institutions, have promoted the savage priorities of neoliberalism.
As economist Robert Pollin of UMass-Amherst put it pithily when I asked him what he thought of the award to Yunus, “Bangladesh and Bolivia are two countries widely recognized for having the most successful microcredit programs in the world. They also remain two of the poorest countries in the world.”
In the 2005 development stats Bangladesh ranked 139th, worse than India, with 49.8 percent of its population of 137 million below the official poverty line. In the homeland of the Grameen Bank, about 80 percent of the people live on less than $2 a day. A UN Development Program study in the early 1990s showed that the total microcredits in Bangladesh constituted 0.6 percent of total credit in the country. Hardly a transformation.
Against this backdrop, what have microloans achieved, I asked P. Sainath, India’s most outstanding journalist on rural destitution and the consequences of economic policy. Yes, he said, microloans can be a legitimate tool in certain conditions, as long as you don’t elevate the tool into a gigantic weapon. No one was ever liberated by being placed in debt. That said, a lot of poor women have eased their lives by using microloans, bypassing bank bureaucracies and moneylenders.