Nobel for Class Peace

- Arindam Sen

Not a few eyebrows were raised when the 2006 Nobel Prize for peace went to microcredit messiah  Muhammad Yunus and his Grameen Bank (GB) rather than to the more likely candidates like the parties to the agreement between the Indonesian government and rebels in the Aceh region.  But the choice comes as a natural sequel to the celebration of 2005 as the international year of microcredit and reflects the Nobel Committee's growing concern for rewarding those who work for the amelioration of the devastating social and environmental effects of neoliberal globalisation.  After the 1998 economics Nobel to Amartya Sen, the 2004 peace prize went to the Kenyan environmentalist Wangari Maathai, who fought resolutely against deforestation in Africa , for her contribution to “promoting democracy and human rights”, as the Nobel Committee put it. To be sure, a degree of democracy, poverty alleviation and things like that have always been considered essential for maintaining social stability and class peace, and the Nobel peace prizes to personalities like Mother Teresa and Muhammad Yunus are intelligent moves to promote just that.

Professor Yunus' project of microcredit to poor women's groups without conventional collateral is well-known.  Conceptually, what he seeks to popularise is “social-consciousness-driven entrepreneurs" and "home-based production by the self-employed masses" as the best available means for poverty alleviation.  On the face of it, the achievements of his GB would appear quite impressive. The Bank has over six million members, 96 per cent of them women. It lends to nearly a million micro-enterprises in the face of strong opposition from the fundamentalists who believe the bank is anti-Islamic. Arguably, this might have contributed, in some measure, to Bangladesh 's progress on the human development front (as per the UNDP's Human Development Report 2005, Bangladesh   is now ahead of India in health, education, and gender equality). According to the 2005 State of the Microcredit Summit Campaign Report, 92 million families worldwide accessed microcredit by the end of 2004, including in countries like the USA and France . Of these, 73 per cent were extremely poor at the time of their first loan.

Micro-credit: ‘empowering' women?

- Kalpana Wilson

Micro-enterprise – the promotion of small-scale income-generating activities through the provision of institutional credit to poor people, and in particular poor women, who have little or no collateral – has for more than a decade been regarded by development institutions and aid donors as a key strategy for achieving both poverty reduction and women's ‘empowerment'.

However, as a number of writers have argued, a feminist assessment of micro-enterprise requires an examination of the impact of such loans on intra-household gender relations . Clearly, questions such as who actually controls the household's expenditure of the loans, how women's already heavy work burdens are affected by their involvement in micro-enterprise, and how the ‘feminisation of debt' affects relationships within the household need to be answered before a micro-enterprise project can be considered ‘empowering'. (In fact, several studies have found that pressure on credit circles to maintain repayments is such that the poorest women are excluded.) But from the perspective of women's empowerment, what is perhaps most striking is the uncritical assumption that empowerment operates at the level of individual rather than social change, and must be directed towards ‘moving up' existing hierarchies of power, not demolishing them. Thus micro-enterprise , as Linda Mayoux notes, is ‘ widely seen as a viable and less socially and politically disruptive alternative to more focused feminist organizational strategies' .

Within neo-liberal discourse, the empowerment of poor women has been increasingly conceptualised in terms of the withdrawal of the state from social provision . In the context of the drastic reduction in social service provision as a result of the World Bank and IMF directed neo-liberal reforms of the 1980s and 1990s, individual women and women's NGOs in Africa, Asia and Latin America were argued to be ‘freed' to exercise their ‘agency' as they took over a variety of roles in community service provision in areas like health, education, and sanitation, activities which were often reflections and extensions of women's prescribed roles in dominant gender ideologies.

Both of these policies – the promotion of micro-enterprise and the shifting of responsibility for service provision from state to ‘community' – involve a strategy of intensified exploitation of women's labour to provide a ‘safety net' for the effects of neo-liberal economic reforms. As Savitri Bisnath points out, ‘within mainstream development discourse of the 1990s, (empowerment) was often used by organizations focused on enlarging the choices and productivity levels of individual women, for the most part, in isolation from a feminist agenda; and in the context of a withdrawal of state responsibility for broad-based economic and social support'.

The experiences of micro-credit are also frequently cited in neo-liberal literature as an example of women's greater ‘efficiency'. The proponents of the Grameen Bank in Bangladesh argued early on that firstly women ‘have better repayment rates and are therefore better credit risks than men' and secondly that the benefits of additional income earned by women are more likely to enhance ‘family welfare' and particularly the welfare of children, than that earned by men. But we need to question the conditions – both material and ideological – which ensure that women take primary responsibility for meeting children's needs, and which rule out the option, presumably available to men, of defaulting on loans, thus making them more ‘efficient' and creditworthy as micro-entrepreneurs.

Having appreciated all this, one should also be mindful of the serious limitations of this ' model'. One frequent criticism is that the GB charges too much interest – initially 16 per cent and for the last four years 20 per cent.  Studies of microcredit programs have found that Grameen's  high repayment rate does not reflect the number of women who are repeat borrowers, and have become dependent on loans for household expenditures rather than capital investments. Moreover, women often act merely as collection agents for their husbands and sons, such that the men spend the money themselves while women are saddled with the credit risk. According to a recent survey conducted by Anne Marie Goetz and Rina Sen Gupta, after 8 years of borrowing, 55% of Grameen households are still not able to meet their basic nutritional needs; so many women are using their loans to buy food rather than invest in business. As regards its overall impact on the rural economy, Grameen loans to women have remained a mere 5% of the total amount lent in the Bangladeshi countryside since the 1980s. No wonder, then, that the Vanderbilt-educated economist was rewarded not for any theoretical or practical contribution to bourgeois economics -- call it development economics or whatever -- but for his strategy of poverty alleviation without disturbing the existing property relations in the slightest way.  

To look beyond the specifics of the Bangladesh project, the microcredit concept as such has been criticised as a privatization of public safety-net programs which allows governments to go in for cuts in public health, welfare, and education spending.  In other words, such initiatives pave the way for selective 'retreat' of the State -- retreat from social responsibilities coupled with growing intervention in the promotion of the liberalisation agenda.

No one should grudge Professor Yunus the honour of being an innovator and a man with a mission.  His 1998 tie-up with Monsanto, which he cancelled rather quickly in the face of well-grounded criticism, remains a grim pointer to the pitfalls a well-meaning but ideologically disoriented individual or institution is prone to fall into, but even that may perhaps be condoned as an aberration.  The more important point is that his mission can pass from the realm of illusion to that of reality only when his concept of "collective responsibility" in matters of entrepreneurship and loan repayment is matched with and placed on a firm foundation of collective ownership of land and other means of production.  Till then, all such poverty alleviation programmes will be sponsored, encouraged and utilised by the ruling classes as a means for keeping the downtrodden away from the path of revolt and thereby perpetuating the structures of exploitation and domination.