Ananya Roy , Poverty Capital: Microfinance and the Making of Development , London : Routledge , 2010 . ISBN 978-0-415-87673-5 (paper), ISBN 978-0-415-87672-8 (cloth)

The Praxis of Critical Development Studies

  1. Top of page
  2. The Praxis of Critical Development Studies
  3. References

Ananya Roy's Poverty Capital comes along at a significant moment for scholarship on microfinance and market-led approaches to development. It arrives in the wake of more than a decade of feminist analysis critiquing the ways in which the poor are enlisted in such approaches; the representations of poverty and productivity that are wielded; and the complicities in the dynamics of neocolonialism and uneven development. Roy takes up these critiques at the interface of knowledge production and capital circuits and rearticulates them in a way that might speak to new audiences. The timing could not be better. The popular appeal of microfinance is at an all-time high: we've had the UN Year of Microfinance, a Nobel Peace Prize awarded in its name, the consolidation of a powerful ideology of “bottom of the pyramid” capitalism, and an explosion of the institutions and technologies of microfinance (including secondary and securities markets, and the requisite global benchmarking and rating technologies). In the context of a global financial crisis and the “war on terror”, microfinance and attendant claims about the resilience of the poor are now deployed in the name of speculative arbitrage and the pacification of suicide bombers. Clearly, the critiques have not had enough traction in the realm of development practice.

The promise of this book lies in its capacity to find resonance with two key constituencies of development—undergraduate students of global poverty who are grappling with the allure and the contradictions of liberal benevolence, and the well intentioned practitioners and policy-makers who would seek to make good on the promise to humanize finance and democratize capital. Most of us cynics have failed to properly engage these agents of development. Roy, however, gives due credence to their aspirations. She lingers on the transformative power of the idea of microfinance. She scans the political possibilities at both the heart of empire and its margins—possibilities for subversive modes of complicity and for more accountable engagements with the beneficiaries of development largesse. Crucially, she does so with jargon-free prose, compelling images, and an eclectic theoretical ambit—not exactly hallmarks of academic writing in geography and planning. Thus I anticipate this book will travel widely—building a formidable platform from which to disseminate a powerful critique of “millennial development” in a way that might actually make a difference.

The critique Roy articulates is worth repeating, not least because of the potent analytical categories it furnishes along the way. Roy locates microfinance at the cutting edge of “millennial development”—a paradigm of poverty alleviation rooted in self-help strategies that empower poor individuals and communities. At the global centers of knowledge production, millennial development manifests in metrics of progress featuring human aspects of development that take stock of inequality and distribution. These “pro-poor” priorities are commonly understood to reflect a shift in policy norms, from deregulation and austerity, to “good governance”, social capital and poverty reduction. Some of the core proponents of millennial development (eg Sachs 2005; Stiglitz 2002, 2006) were among the most powerful architects of the 1980s structural adjustment programs. Having confronted the dire social costs, they narrate millennial development as a radical transition in global governance from the orthodoxies of neoclassical economics to more heterodox genealogies that accommodate Keynesian principles of market regulation, welfare and managed trade.

Roy instead narrates the continuities (see also Sheppard and Leitner 2010). Microfinance—icon of millennial development—may be populist in the sense that it celebrates the “people's economy” and expands access to credit. But it is also neoliberal in the sense that it trumpets free market ideology and aims to recast the economic vulnerability of the poor as an opportunity for investment. Microfinance produces “poverty capital”—“a subprime frontier where development capital and finance capital merge and collaborate such that new subjects of development are identified and new territories of investment are opened up and consolidated” (30). As a form of “neoliberal populism”, then, microfinance trucks in the promise of the “bottom billion” (Collier 2007; Prahalad 2004) gaining access to the instruments of finance capital, and the expectation that the democratization of capital can in turn become the basis for a “new generation of global capital” (221). Such “poverty truths” are produced and disseminated in powerful development and finance institutions located in Washington DC; they constitute the “Washington consensus on poverty”—a term no doubt intended to refute widespread understandings that a post-neoliberal, “post-Washington consensus” is upon us.

Poverty Capital traces the entanglements of poverty, neoliberal populism and violence. At the core of neoliberal populism is the violence entailed in targeting poor women as the primary agents of entrepreneurial self-help and the primary security against the perceived risks of poverty lending (see also Rankin 2001). Even as microfinance promises empowerment for women, it relies on technologies of risk management that reproduce hierarchical and gendered relations of responsibility and social reproduction (Lawson 2012). As a paradigmatic mode of millennial development, microfinance obscures the “brutal political economies” (73) of domination, toil and dispossession that confront the world's poor, and their articulation with ideologies of gender.

These entanglements, Roy points out, are amplified in the context of the global financial crisis. As finance capital seeks a spatial fix for the present crisis of overaccumulation, poverty lending presents new possibilities for speculative arbitrage—based on a “calculation about the habits of the poor and guarantees of financial discipline provided by MFIs” (213). Once bundled, securitized, and traded, microfinance becomes an “asset class”. As such, it requires technologies of ranking and benchmarking that threaten to redraw the redline that microfinance first set out to mitigate; from an investment perspective, that is, profit trumps financial democracy and markets favor high-growth and high-performing institutions trading in the debt of the “bankable” and “economically active” poor. Moreover, the subprime frontier also becomes empire's frontier in places like the Middle East; there, microfinance works iteratively with military exploits to secure American dominance through a neocolonial will to improve. Roy tracks the role of microfinance as humanitarianism in the occupation of Afghanistan, the functional role of “Islamic microfinance” in waging the “war on terror” in Egypt, and induced self-exploitation through microfinance in Palestinian refugee camps of Lebanon.

These dynamics of neocolonialism and violence are not the end of the story for Roy, however. Her analysis is animated as much by the multiplicities, contestations and struggles of millennial development, as it is by the hegemonic centralities. In this sense Poverty Capital aligns with an expanding body of work in critical development and urban studies that emphasizes the contingency of actually existing neoliberalism (Ferguson 2010; Larner 2009; Leitner, Peck and Sheppard 2007; Li 2006; McCann and Ward 2010; Ward and England 2007; Wilson 2004; Young 2010). Much of this scholarship engages poststructuralist epistemologies to probe neoliberal governmentalities as practices of assemblage—aiming to achieve coherent political rationalities, on the one hand, but also straining and fragmenting as enlisted actors, knowledges and norms come to serve other, coevolving strategies of rule on the other hand. In “market socialist” Vietnam, for example, microfinance has been harnessed to an ideologically contrary project of expanding the state banking system (Rankin 2008).

Roy explores the multiplicities in three distinctive sites encountered in the circuits of poverty truth she traverses while researching the book: the “Bangladesh consensus on poverty” (encompassing renowned Grameen Bank and BRAC as well as other agents of knowledge production located in Bangladesh), Hezbollah (the largest microfinance provider in Lebanon and possibly the Middle East) and a scattered array of experts, “double agents,” who manage to “practice critique” at the heart of the Washington consensus (191). Interlocutors in each of these sites seek to narrate alternative poverty truths—rooted in principles of human development or Islamic finance, for example—that rival and parochialize the Washington consensus on poverty. Roy's purpose here is to expand political geographic imaginaries—by at once underscoring the multiple, spatially diffuse sovereignties of development and probing the political openings associated with each of these alternative frameworks of ethical economics.

Roy attaches particular significance to the subversive capacity of the double agent. She profiles a senior World Bank economist, a Bangladeshi with a poster of Gramsci on his office wall, who sees microfinance as a site of “class conflict”. This double agent seeks to crack the monopoly in the production of ideas about poverty within the Bank and forge an alternative common sense that aligns with the Bangladesh consensus on poverty. For Roy, excavating variegation within the machine is both a political and pedagogical act. It furnishes “ideas that are weapons” against the hegemony of neoliberal populism. Clearly, Roy also intends these practices of casting doubt and making dissent to strike a chord with the “millennials” we all encounter in our university classrooms, many of whom want to do good in the world, maybe even understand the structural constraints, but don't want to “wait for the revolution”, as they say, and are pragmatically oriented to finding a place within existing institutional configurations of planning and development. Poverty Capital speaks with a tenderness for the complicity of liberal benevolence as a form of “belonging, not betrayal” (192), and offers up the double agent as a subjectivity to be emulated.

I do not disagree with Roy's tactics here and have nothing but admiration for her skill at engaging scholarship as praxis. Still, I would like to conclude with a few points related precisely to the role of critical scholarship in identifying possibilities for transformative praxis (Mitchell 2008; Oslender 2007; Rankin 2010; Silvey and Rankin 2011). The first point relates to the distinction Roy makes between research on those living under conditions of poverty and research on the production of knowledge about poverty. Roy herself is already an accomplished scholar of “poverty at the ground zero of lived experience” (xi; see Roy 2003, 2004). With Poverty Capital, she aims to enhance her own understanding of development by redirecting her critique to the terrain of governmentality, where poverty truths are generated and deliberated. From the perspective of praxis, however, I would suggest that Roy is setting up a false distinction. Poor people, after all, bring their own poverty truths to bear on their practice as beneficiaries of development largesse; these truths and practices may also be sites of subversion, pregnant with their own counter-hegemonic possibilities (Shakya and Rankin 2008).

Sustained, on the ground research (call it ethnography, or case studies), of course, affords an opportunity to probe these possibilities. As suggested by much of the scholarship that Roy herself cites (eg Elyachar 2005; Rankin 2001, 2008; Shakya and Rankin 2008; Weber, 2006; see also Young 2010), this kind of research on the experience of poverty need not be limited to an “impact studies” modality (Hart 2001); an epistemology privileging “impact” as a central category of analysis does invariably reproduce prevailing (neocolonial) spatial imaginaries that treat development as a unidirectional force radiating out from a dominant core (Lawson 2007). When the emphasis shifts instead to conjunctural articulations of development ideology with situated material processes, as critical ethnography has shown, it becomes possible to conduct immanent critique, to track topographies of social groups sharing a common experience (with various degrees of collective consciousness and capacities to organize for change), and to specify the multiple and occasionally contradictory projects to which development technologies get enlisted in practice (eg Hart 2004; Katz 2004; Li 2006). Attending to these conjunctural specificities not only challenges understandings of neoliberal development as unfolding teleology. It also broaches the concrete historical possibilities and constituencies for transformation (Rankin forthcoming).

In fact, I would argue that in the few moments where it undertakes this kind of conjunctural analysis, Poverty Capital furnishes some of its most politically potent insights. Roy's methods in Poverty Capital are geared more toward tracing connective flows than developing grounded accounts of articulation, but she lingers longest on the Bangladesh case. She points out that in Bangladesh a poverty truth privileging human development over profit consolidated iteratively in relation to a war of independence, the state sector, and an non-governmental organization sector that developed in tension with the political Left. Roy identifies a hidden—essentially socialist—transcript of that poverty truth, which can be detected in a series of choices by microfinance institutions to link the promotion of micro-enterprise with an accessible human development infrastructure (education, transportation, information, and so on) and an organizing strategy that would build power at the grassroots level. This hidden transcript is silenced in the public transcript about the entrepreneurship and empowerment of the poor, and it is the latter (a version of the Horatio Alger story) which has travelled globally and ultimately implicated itself in the production of increasingly disintermediated forms of poverty capital. Crucially, the hidden transcript is made possible through (hidden) donor and state subsidies to microfinance institutions in Bangladesh, and the implication, as Roy herself suggests, is that the resulting social protections can create a “demonstration effect”, as well as a political constituency, “putting pressure on the state [ever absent in millennial development approaches]… to provide infrastructure and serve the poor” (120). This observation corroborates my own research in Vietnam that suggests some form of socialism may indeed be a necessary pre-condition for microfinance to succeed on its own terms as a vehicle of poverty alleviation (Rankin 2008).

What is curious to me, however, is that the hidden transcript remains somewhat hidden in Poverty Capital itself, at the very junctures when Roy muses about the political openings inherent in the multiplicities of neoliberal populism. At these junctures, Roy hedges. She concludes implicitly that microfinance—and by extension millennial development—has failed to fulfill its promise to democratize finance (monopolies persist in the “permission to narrate” poverty truths and market-led development ultimately reinscribes a red line). But she refrains from offering any explicit insights about the conditions of possibility for fundamental transformation. Possibilities for more ambitious thinking about economic democracy rest, to be sure, on building constituencies for critical analysis and subversive practice among prospective and practicing agents of development. But they also hinge on critical scholarship such as Roy's to help animate such thinking substantively.

At UC Berkeley, an institution which is today pursuing many of the same priorities as the Washington consensus on poverty, Roy, along with other colleagues, has engaged her own double agency to articulate a powerful critique and advocate publicly for high-quality, post-secondary public education. Their advocacy has no doubt informed critical analysis and mobilization elsewhere. The insights of Poverty Capital, too, present an opportunity to connect an analysis of violence and counter-hegemony with practical and normative commitments to more politically potent articulations and practices of economic democracy. There is an important but not yet explicit argument to be made here—that the (much-maligned) “hidden transcript” of social protection and subsidy is what ought to inform political imaginaries in the realm of market governance and poverty alleviation.


  1. Top of page
  2. The Praxis of Critical Development Studies
  3. References
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