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Bank Loans for the Poor: Will Capitalism Save The World?

15:06 / 09.07.07

I came across this article in a discussion about libertarianism and feminism, and I would like to discuss this topic more specifically.

It sounds like a fool-proof system, but then there are always ways to mess things up in this world...

What I like about the idea behind the Grameen Foundation is that it is a combination of good will and capitalism that might actually work. The banks that operate under the Foundation clearly have profits to gain, but their profits come from helping the world's poorest people thrive in capitalist systems. Rather than profiting from globalization, banks are profiting from localization.

Is this a turn in the right direction? Is this a turn away from economic colonization, or is it simply a different kind of economic colonization? Can capitalism save the world?

Phex: Dorset Doom

21:21 / 09.07.07

I can see this working in many parts of the world, but the biggest obstacle is security: a loan of any amount is no good in places like Sub-Saharan Africa, Afganistan, Iraq and Columbia where groups like Sudan's Janjaweed militia, Afghanistan's Taliban, Columbia's FARC and Iraq's cornucopia of factions would rather enjoy that the people they regularly brutalize now have money to be extorted. All it would take is for the current powers-that-be (the IMF, WTO etc.) to find that some of the money is being used to pay for roadside bombs to kill American soldiers and support for micro-loans will dry up. The right-wing media will portray them as another bleeding-heart-liberal fantasy that only serves to advance the real liberal agenda of supporting TEH TERRISTS OMG. You can imagine how popular they'll be then. The focus on helping women is of course admirable, but, as above, it only gives the people who exploit them already more reason to do so- see the part about Sebastina in the article Xenoglaux linked to.
Then you've got the problem of how to pay for not-for-profit things like schools, water treatment, hospitals- things which are absolutely necessary but cost more than a micro-loan would cover and don't turn a profit.
The upshot that I could see would be the creation of something like a global lower-middle-class or Petite bourgeoisie. That's middle-class in the Marxist sense- people who don't sell their labor another but still create their own capital- shop owners for instance. These would be people from countries such as Mexico which are neither affluent Western nations nor lawless hellholes, where people have some security (the narcos aside, Mexico isn't in a perpetual state of civil war or inter-tribal conflict) so the problems above wouldn't occur. Money wouldn't be able to reach the poorest of the poor so they would stay where they are economically until conditions change.

22:34 / 09.07.07

[There's an old headshop thread covering some of this stuff here.]

01:45 / 11.07.07

I would imagine that things like schools would come naturally out of a community adjusting to a capitalist system of trade. Once people are able to afford what they must buy to feed their families and themselves and their self-esteem is boosted from the success of their entrepreneurial ventures, communities could have a better chance of setting up schools, water treatment centers, and hospitals. I suppose it's a case of the chicken or the egg coming first.

At the risk of sounding essentialist, certainly it is even more important for women to benefit from these bank loans than it is for men, since women are historically more likely than men to show an interest in improving the types of things mentioned above in their own communities.

It is not clear to me in what way Sebastiana was a victim of patriarchy in the instance mentioned in the article. The way I saw it was that Sebastiana had gone against the rules of the bank by lending her loan money to someone else and was experiencing the consequences of her actions (not being able to make her payment). It seemed pretty clear to me that her inability to pay back her loan on time was due to her own actions, not those of a man outside her relationship with the bank. Of course, I'm sure that one could argue about the patriarchal nature of everything leading up to her lending out her loan money, but it doesn't occur to me to go too deeply into it, if we're just talking about the bank here.

Disco is My Class War

10:53 / 11.07.07

Can capitalism save the world?

No.

More later. If you're interested, there was a pretty insightful debate about Grameen on the Sarai Reader List last year. The link is to the initial critique of Dr Yunus winning the Nobel Prize' discussion continues throughout October I think. (Sarai is an email list run by a left/autonomous media arts project in Delhi.)

All Acting Regiment

15:40 / 11.07.07

I would imagine that things like schools would come naturally out of a community adjusting to a capitalist system of trade.

Except there currently aren't enough schools in, say, Africa, and Africa was forced to adapt to a capitalist system of trade...

23:39 / 11.07.07

Except there currently aren't enough schools in, say, Africa, and Africa was forced to adapt to a capitalist system of trade...

But we're not talking about force here. We're talking about an entrepreneurial venture (the Grameen bank) offering the option to poor communities to embrace capitalism, and rewarding them for it. If you could find an argument that this is a forceful procedure, I would appreciate the insight.

Also, could you specify to what areas in Africa you are referring? And are you saying that capitalism in Africa has failed to lead to the construction of schools? Many places in Africa are run under the auspices of capitalism, but really are run by gangs. Are they not?

All Acting Regiment

20:32 / 12.07.07

Rest of board to thread, please: my anger is rising, and my ability to argue logically and usefully dissipating.

03:35 / 13.07.07

Allecto, my goal is not to make you angry. I want you to prove me wrong; I want you to show me the flaws in my argument. If someone else can do that better, then please let them be my guest! I want to understand the flaws in my thinking, and I want to understand the problem better in general. I apologize for anything you've taken personally.

03:05 / 15.07.07

"But we're not talking about force here. We're talking about an entrepreneurial venture (the Grameen bank) offering the option to poor communities to embrace capitalism, and rewarding them for it. If you could find an argument that this is a forceful procedure, I would appreciate the insight."

Hmm. Well, I don't think ze was trying to say this it was a forceful venture -- instead to say, perhaps, that a forced implementation of capitalism, while nasty, is probably a more or less "complete" implementation thereof. So, if such a "complete" implementation doesn't facilitate these services, why would we believe that banks coaxing smaller communities into capitalism would necessarily lead to these positive ends? After all, one would think that the parties pushing for capitalism in countries like Africa have more to prove than ostensibly altruistic bankers, no? Give more of their hearts to the capitalist cause with hope that benefits would trickle down to the lower classes in the end?

"Also, could you specify to what areas in Africa you are referring? And are you saying that capitalism in Africa has failed to lead to the construction of schools? Many places in Africa are run under the auspices of capitalism, but really are run by gangs. Are they not?

The latter is sort of an interesting point. This seems to me like the line of reason that ascribes any good things that happen Iraq, for instance, to the generous gift of "democracy", while the bad things are surely caused by factions and "insurgents".

One could easily turn the point around to say that it is exactly capitalism that allows things in some areas of Africa to be run by gangs, yes?

07:20 / 15.07.07

instead to say, perhaps, that a forced implementation of capitalism, while nasty, is probably a more or less "complete" implementation thereof. So, if such a "complete" implementation doesn't facilitate these services, why would we believe that banks coaxing smaller communities into capitalism would necessarily lead to these positive ends?

I don't understand what you're saying here. Would you please clarify? I think I got lost when you began referring to "complete" implementation.

This seems to me like the line of reason that ascribes any good things that happen Iraq, for instance, to the generous gift of "democracy", while the bad things are surely caused by factions and "insurgents".

In fact, my line of reason is the opposite. I understand and appreciate your presenting this analogy, but I believe the implementation of capitalist economic systems and the spread of "democracy" to non-western countries are two very different things. Certainly one could argue that both are imperialistic processes that are indeed forced onto Third World nations as a means of catering to the West's insatiable desire for world domination.

However, I mean to present capitalism not as the U.S. experiences it, but as it is meant to be. The U.S. operates under a system of socialist capitalism in which neither political endeavor can truly thrive. Thus it is inevitable that the aforementioned gang violence in parts of Africa is tied up not specifically with capitalism but also with the intricacies of a mixed economy.

Keep in mind, also, that the Grameen Foundation is the brainchild of a Bangladeshi economist, not an American one.

Phex: Dorset Doom

12:54 / 15.07.07

Honestly I think the issue of capitalism being forced upon third world countries is a non-point, as there are very few nations in the world, developing or otherwise, that don't have the same kinda-capitalist-kinda-socialist system as the developed nations, though many lack the internal security and infrastructure to have any kind of success with this system. The women the micro-lending project helped in Mexico in all likelihood already lived a 'capitalist' life, perhaps selling their labor to a massive American-owned factory made possible by NAFTA (the article doesn't say), but they lacked the raw material (capital) to be successful in the system in which they lived.

Frances: I too am a little unsure on what the first paragraph in your post was saying, though I think I have a fairly good idea. Forgive me if I'm misunderstanding you, but what micro-lending advocates propose is the exact opposite of trickle-down economics and is not based on 'pushing for capitalism' (for reasons stated above). Who benefits from doing so in real terms? What do the vague coterie of 'Parties Pushing for Capitalism' care if Ms. Garcie can run a single room Taco shop, or if a million Ms. Garcie's can run a million Taco shops? Capitalism is not a religion, and capitalists don't get to use the express line to capitalist Heaven if they convert the heathens. In fact in the long term large multinational companies who rely on cheap third-world labor stand to lose out if potential sweatshop staff are self-employed. I know the micro-lending has its problems- I was first to point some out- but being opposed to a system which seems to offer genuine hope to some (perhaps not all) of the world's poorest people from a general distaste for the free exchange of goods and services hardly seems productive, particularly when every other idea has failed.

All Acting Regiment

21:51 / 15.07.07

Apologies for my less than useful statement above. Will return to form and to the thread shortly.

05:18 / 16.07.07

Ah, I didn't mean to be unclear -- I think I've used some loaded and nonspecific language, so let me see if I can clean this up.

The question posed seems to be "can capitalism save the world after all", in the context of "grass roots" capitalism -- that is to say loans being granted to individuals instead of states, and so on. The issue of contention seems to be whether or not a plethora of Mr. Garcia's taco stands will lead to better health care and education instead of encouraging from an early stage in the game a large degree of privatization, which arguably doesn't do much to help distribute needed services to those who need them most. I think (perhaps wrongly) that Regina was expressing skepticism about this. I extrapolated (again, perhaps wrongly) that the allusion to the African example was to say that the poster's belief was that there was perhaps more at stake on the part of those who implemented what capitalist policies do exist in said countries than you might find in those distributing the micro-loans. So, to conclude that the micro-loan proposal would have more likelihood of bringing the much lauded benefits of capitalism about in less privileged parts of the world would certainly require additional unpacking.

I hope that clears things up, and I apologize for muddying the discussion. Also, I'm glad to hear Regina will be returning, as I only meant to volunteer my reading of the short statement above, not to frame anything around it or to speak for the original poster.