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) .,
Profits, Populism, and Patriarchy
Ananya Roy's Poverty Capital is an imaginative book tracing the diverse and powerful practices swirling around financialized development. The analysis connects circuits of capital and “truth-making” through Bangladesh, Egypt, Lebanon and Washington DC and focuses attention on how the poor are being framed as an opportunity for profit-making. The book poses critical questions about the links between the geographical and institutional sites through which microfinance operates and its social and political effects. Most centrally, Roy argues that to the degree that microfinance has become an asset class sought after by Wall Street investors its promises of financial inclusion, on fair and just terms, for the world's poor should be questioned. Roy also investigates whether development-finance institutions based in the global South, including organizations as varied as Grameen and Hezbollah, can continue to forge different models of microfinance from the profit-making one promulgated by Wall Street. Her analysis asks whether such forms have the traction to provide robust alternatives to dominant paradigms, and what ethics of development they might entail in the context of globalized neoliberalism.
Three themes emerge from my reading of Poverty Capital. First, contrary to all the talk of post-development, Roy offers critical scholars a crucial new object of study: millennial development. Her book reminds us that in the last 50 years, development has continually reinvented itself and that academics, practitioners and activists must continue to engage with its power and practices. Second, Roy argues that millennial development is a form of neoliberal populism which promises democratized access to capital at the same time as it raises diverse ethical concerns about the capitalization of development by micro-financialization. Democratization, in this view, is a complex and messy terrain, and Roy's writing invites her readers to interrogate what possibilities and limits are unleashed and for whom? Third, amongst the possibilities and problems that are unleashed, microfinance rearticulates gender politics in ways that reaffirm hierarchical orderings of economy and the social that have crucial implications for reinforcement of gendered hierarchies of power.
For Roy millennial development is a complex of ideas and practices that circulate through international development institutions now focusing on poverty alleviation and empowerment for individuals rather than national modernization. These institutions include: for-profit financial institutions; a proliferation of non-governmental organizations (NGOs) of all sizes and stripes; global philanthropic organizations; and social movements focused on social justice engaging diverse political mobilizations. Because of this broad terrain, millennial development simultaneously entails monopolistic power and new political openings. It also invokes a newly globalized ethical order framed as a global conscience about poverty and the urgent need to alleviate the poverty of the bottom billion. The rise of millennial development therefore also reminds us that we are not post-development as was proclaimed in the 1990s (Escobar 1995; Esteva and Prakash 1998; Rahnema and Bawtree 1997). Rather, it marks again how development is a restless and constantly remade project.
Post-development focused on the material and discursive limits and exclusions of Western Developmentalism and instead foregrounded diverse scholars and activists who challenge hegemonic formulations and articulate alternative meanings, politics and practices (Illich 1997; Marchand and Parpart 1995; Sachs 1992). Refusing the easy invocation of the “post” in post development, and avoiding the insinuation that we can simply change the power relations of global political economy by changing the terms, Poverty Capital is less optimistic in its identification of millennial development. Tracing the capitalization of micro-credit is salutary in this regard: a project initially conceived in Bangladesh, Central America and Lebanon as a socially inclusive alternative to usury, it has been taken up, struggled over, and turned back into usury with the shift to globalized microfinance. Roy's book traces the multidirectional entanglements of power that accompany the appropriation of this socially inclusive idea into international financial institutions and into development discourse. We come to see how finance capital opens up new frontiers of profitability through the rhetoric of democratizing capital/development and how this rests on particular forms of individualized, entrepreneurial subjectivity.
In focusing on these entanglements of institutions, subjects and structures of finance capitalism Roy displaces the category “poor” from the center of our academic obsessions and focuses us instead on poverty capital as a central feature of millennial development. She calls attention to the financialization of development which involves the conversion of the micro-capital of the poor into new global financial flows which create opportunities for profitability in major financial institutions. Roy notes that in the current conjuncture of financial crisis, microfinance “is an asset class, a circuit of accumulation, speculation and profit” (Roy 2010:221). Poverty capital is also a form of cultural capital carried by development experts, carried as the undeniable truth they promulgate about how to solve poverty.
In foregrounding poverty capital, Roy traces how microfinance reaffirms an ontological project through which global poverty is still framed within the “poverty paradigm”. Poverty is understood to be a separate category of people—the bottom billion (Collier 2007)—defined by static benchmarks such as dollars per day. Millennial development promises that poverty can be eradicated by targeting people who are in “extreme poverty” and that this can be accomplished by mobilizing credit markets. Adherents of the poverty paradigm frame poverty as a paradox; something we must solve through altruism, rather than analyzing poverty as a structural feature of capitalism. Roy's book instead contributes to work which views poverty as a feature of affluence—in this case a feature of the machinations of the financial services and development industries. As such, Roy analyses poverty as a social and political, rather than a mere technical question (O'Connor 2001).
What are the political implications of this ontological framing of poverty and its solution? Privileged millennials in rich countries are exhorted to “solve” global poverty through benevolent individualism and altruism such as charitable giving or through investing in private microfinance markets. Responses to poverty are framed as a moral imperative to respond to the bottom billion—rather than a structural responsibility arising from the connections between privilege and exploitation (Massey 2004). In these ways, Roy refocuses our analysis not on the behaviors of “the poor” but rather on knowledge construction and on the practices of bankers, development institutions and NGOs. Roy identifies poverty capital as a vital focus of analysis precisely because it produces new subjects of development and opens up new terrain for accumulation and dispossession. And she shows that the resulting financialization of development is contradictory: promising that the “bottom billion” will gain access to the instruments of capitalism, but simultaneously converting the micro-capital of the poor into global financial flows under the cover of a populist but nevertheless neoliberal ethics of inclusion.
Questions about the possibilities and limits of ethical capitalism and development run right through Poverty Capital. Roy argues that millennial development is an “ethicalized” development framed around a global consciousness about the urgent need to address poverty. Microfinance becomes a key answer to this imperative, offering to “…eradicate poverty through profits” (Roy 2010:5 from Prahalad 2004). But what are the limits of ethics framed within the neoliberal populism of microfinance? Roy briefly notes that members of CGAP (the Consultative Group to Assist the Poor), Deutsche Bank and the Boulder Institute are taking up questions of ethics in microfinance to avoid “reputational risk” (http://www.bouldermicrofinance.org/POCANTICO/index.htm last accessed 15 June 2010). Their Pocantico Declaration, issued in 2008, expresses the need for a code of ethics for microfinance and articulates concerns about high interest rates, over-indebtedness of clients, lack of transparency and about the social responsibilities that accrue to lenders who accept public funds. At the same time, the Declaration reaffirms the importance of free market competition and limited regulation as central to the continuing success of microfinance.
While Roy does not draw out the implications of this move, literature on geo-economic governance points to the political work done by codes of ethics as they frame a geographically encompassing image of a united and concerned global community of microfinanciers (in this case) who self-regulate. In what ways do the limited ethics of millennial development depoliticize poverty and elide progressive politics? We don't get full answers to these questions from Poverty Capital. In work on the garment industry's Fair Labor Association, Sparke and Lawson (2003) trace how an industry code of ethics was a political response to counter a labor-centered movement organizing against sweatshop conditions in the garment industry (Workers Rights Consortium). In the same way, the current move towards a microfinance code of ethics may also serve to mute criticisms about the exploitation of poor clients by rich country microfinance agencies. By adopting a language of ethical concern, microfinanciers thereby counter their critics and work to avoid state regulation in the countries where they operate. Ultimately, I would have liked a deeper engagement with how the limited ethics of millennial development elide political economy, obscure long distance structural power relations of exploitation, turn ethics into a management problem and thereby work to depoliticize free-market led development yet again.
Roy points to the implications of microfinance recasting economic vulnerability as opportunity (220). The “global transcript” of microfinance focuses on the figure of the “plucky entrepreneur” who only needs finance, delivered by markets (and not a redistributive state, nor an alternative framing of needs—rather capital will set you free). This framing by microfinance boosters obscures and denies political economy: control of wealth and assets, class struggle, exploitation and dispossession and the redistributive role of the state. What are the political effects of an ethicalized development that focuses on individual actions and free credit markets and that erases political economy? For instance, what kinds of cultural capital and social imaginaries among the non-poor are mobilized by microfinance practices? Of course, these grounded practices and framings will be immensely diverse and Roy does attend to various architects of microfinance (within CGAP at the World Bank; Yunus and the Grameen Bank; John Hatch of Finca, inter alia). But I am curious about what sorts of engagements with microfinance set up what sorts of cultural politics among “privileged millennials” (students, charity givers, travelers, tourists, kiva website consumers)? Early on the book focuses our attention on the construction of modern subjects who are animated through diverse articulations of moral awareness, ethical action and of social responsibility—and I wanted to learn more about these forms of subjectivity and the politics they entail. How are they protagonists in the story? For example, Roy discusses her poverty class in which incisive critiques of the structures of development collide with cynicism or even despair about the possibility of change as well as with the hubris of benevolence about “doing good”. The positions and understandings of these subjects allow us to access the contradictory seductions of development. But these students and privileged global citizens of social movements and philanthropic organizations fall away as the book unfolds.
Similarly in the final chapter, Roy points to global South professionals within the World Bank who are working for poverty alleviation from within the Washington Consensus on poverty. Roy usefully discusses the ways in which double agents are implicated in cultural projects that solidify their middle class identities and position the poor in moralistic discourses. This resonates with other work on middle class discourses about the poor (Schram 2000; Lawson, Jarosz and Bonds 2008) and suggests the powerful intertwining of development knowledge projects, finance capitalism, cultural productions of poverty and the making of middle class privilege. Roy also points out that double agents are contradictory figures who are critical and self-aware even as they populate the hegemonic halls of the World Bank. But what are the limits of dissent produced by these double agents who only have power if the legitimacy of the institutions from which they speak is preserved?
While Roy is clear that her book is not focused on credit recipients, it nonetheless raises many questions about the politics of microfinance. Questions such as: what avenues for collective agency are emerging or disappearing across places? How are new development truths taken up by those being represented, those who are receiving loans? How does microfinance mobilize particular social imaginaries among recipients themselves? What are the maps of dispossession and repossession that are being made from these centralities and multiplicities of microfinance? Does the focus on microfinance serve to mobilize particular kinds of class politics, a particular kind of cultural struggle that valorizes small businesses over working class solidarity? In what ways is microfinance quite conservative in this sense, in the kinds of subjects and political imaginaries that it sets in motion among recipients? And in what ways is it not?
At first blush, Roy's discussion of dissent at the margins might be expected to focus on these sorts of political questions about the contradictory effects of microfinance on class and gender “empowerment”. Instead, this chapter addresses the globalization and centralization of Bangladeshi developments of microfinance ideas and institutions. Within that discussion Roy does discuss critiques of microfinance as a patriarchal ideal that claims to empower women while turning them into instruments of financialized development. However, Roy could extend her arguments about how institutional framings at the heart of microfinance position women recipients within an ontological project that reinscribes gender hierarchies.
Roy does note the paradoxical ways in which women in Bangladesh experience microfinance: noting issues such as women's loss of managerial control of loans; patriarchal discipline enacted to collect on loans; and the ways in which loans can be an arena for renegotiating power and hierarchy within homes and beyond. However, she misses an opportunity to explore how microfinance re-inscribes another hierarchical social ontology of gender relations that privilege economy, stigmatize poverty and subordinate care. Specifically, microfinance defines the fundamental need in development as access to capital. In this frame, success is the attainment of entrepreneurial, individualized, freedom (aka “empowerment”). As such, even a contested consensus on microfinance identifies legitimate needs as bounded by “economy”, meanwhile other sorts of needs (for people who are aging or ill; for collective agency; for public services and social supports, inter alia) are excluded. While the Bangladesh Consensus does push against this narrow framing, the pushback is itself framed by an entrepreneurial logic. To the extent that the Bangladesh Consensus broadens the frame of development, it does so in terms of infrastructure and social supports that allow people to get to a point where they can enter into entrepreneurship. As such, millennial development with its central emphasis on finance, entrepreneurship, the technical limits of securing credit (repayment rules, size of loans, access issues), does nothing to challenge narrow constructions of subjectivity, needs and framings of the social in terms of hierarchical relations of autonomy/dependency; and an economy/social binary.
Microfinance as neoliberal populism once again re-inscribes constructions of the ideal development subject as an autonomous, productive individual, even as these very discourses rely on domesticated, gendered subjects. The “global transcript” of microfinance as eliminating poverty by facilitating access to the tools of capitalism and unleashing entrepreneurship is enabled by the domestication of care relations. What I mean here is that the very structure of many programs rests on women's dependent relations to household heads, to community members and financial institutions. Married women are selected as ideal recipients precisely because of their gendered relations of responsibility to households, communities and needy others. The argument is that married women will care about their families and communities, will generate profits by commodifying low-paid care work (child care, sewing, cooking and so on). But this very model of profitability and the loan repayment it supports both rest on, and reproduce vertical relations of control, dependency and gender ascription, even as the rhetoric obscures these relations and espouses the entrepreneurial individual and women's empowerment.
Global transcripts of millennial development and microfinance actively relegate need and dependency to the domestic sphere and in the process elide the depth and scope of needs that they cannot address. These sorts of needs include poverty and dispossession that are not solved by microfinance but are produced by it—through financial crisis, high charges on loans, borrowers defaulting, profit-taking by lenders, inter alia. Nancy Fraser (1988) terms these runaway needs. They are interesting precisely because they leak out of the social categories and institutions set up to contain them (family structures of care; state social provisions; development's claims to solve poverty). What is interesting about the global transcript of microfinance is how it seeks to recontain poverty and need through gendered practices and representations of women as responsible as domestic (and domesticated) agents of care. In defining the ideal borrower, microfinance therefore re-inscribes gender normativity. At the same time, these microloans generate profits as women commodify devalued care work for private investors in the name of democratized development. The parallels between justifications for microfinance and US welfare reform and Temporary Assistance to Needy Families (TANF) are instructive. Roy quotes the Republican Chair of House Committee on International Relations: “Microenterprise institutions not only reduce poverty, but they also reduce dependency and enhance self worth … This investment rather than a handout, makes good sense” (94).
TANF has been framed in precisely this way, as a mechanism to reduce dependency. TANF benefits are conditional upon recipients making choices that will prepare them to move back across the care/economy boundary. Specifically, in order to receive benefits single parents, even in the absence of child care, are required to attend vocational training programs, to actively seek work, and to take any, even poorly paid jobs, identified by welfare officials. In the process, TANF reconstitutes people as cheap workers and creates “docile economic bodies” that ironically, are framed as rehabilitated, self-reliant individuals. In effect, TANF policies deepen the domestication of care by situating welfare recipients in dependent relations to government and families or social networks such that the care/economy boundary is reproduced, public responsibility for poverty is minimized and cheap labor is reproduced for capital. Microfinance operates similarly, becoming the hero that delivers development even as it rests on the domestication of care, and the construction of dependency as women's responsibility and as a social stigma to be avoided through responsible repayment.
In the process, “economy” is disembedded from the social and absolved of responsibility for social harms. In both US policy and millennial development, care is simultaneously domesticated—the poor are framed as needy and flawed and care is commodified. At the same time, the role of the figure of “poor woman” in millennial development again reveals how individuals are simultaneously “responsibilized” through a focus on autonomous individuals exercising choice in financial markets. More broadly, Roy's argument forms a foundation for understanding how millennial development reifies economic subjects and markets and, in the process, obscures alternative social ontologies of care, connection and interdependence that could otherwise provide radical alternatives from which to frame development (Green and Lawson, 2010).
Thanks to Ananya Roy for writing this provocative book that incites us to continue our critical engagements with new invocations of development. I thank Matt Sparke for organizing the initial panel at the AAG meetings, and subsequently, for his invaluable editorial comments on this essay. All errors are mine.