At present, the crisis of the international financial system and the slump in the global economy are considered to have been overcome, although the problem has only shifted to public finances. In recent weeks, however, a supposedly successful model of deficit capitalism has once again come under fire.
The flagship project of microcredit in the impoverished regions of the world and in many so-called emerging countries was not only considered crisis-resistant, but also proof of the elemental power of free-market thinking. Under the sign of neoliberal “self-responsibility,” poor women in particular were to be mutated into small entrepreneurs in the service sector with the help of tiny loans of the equivalent of 100 to 500 euros, enabling them to take their capitalist destiny into their own hands.
Significantly, Muhammad Yunus from Bangladesh, the inventor of the model, was awarded the Nobel Peace Prize in 2006, not the Economics Prize. The enthusiasm of the elites was great, because the idea seemed to kill several birds with one stone and to combine a strictly market-based fight against poverty with an equally strictly market-based emancipation of women, i.e. to initiate a social pacification that was entirely in line with the system. Donations from philanthropic capitalists, such as Bill Gates’ foundation, poured in.
Starting in Bangladesh and India, a new financial market for predominantly “female” microcredit in Asia, Africa and Latin America, worth billions, was created within a short period of time. Major Asian banks, as well as financial institutions such as Deutsche Bank, created relevant investment companies. In the course of this expansion, the first microbanks have already gone public. What started out as ethical image cultivation has turned into a hard-hitting business. Every little bit helps. Officially, most microloans go to women’s self-help groups and their business projects. But the same applies to microloans as to large loans: they are an anticipation of future real income and must be “serviced,” i.e., repaid in full with interest.
However, the women’s small businesses financed with these loans hang on by a thread and can quickly fail due to external circumstances. Even the illness of a family member or one of the increasingly frequent floods in the wake of capitalist-induced climate change can cause the microcredit to disappear into “unproductive” (in market terms) costs. As microcredit markets exploded, the microenterprises they supported became increasingly illusory. It became a matter of being in on the growth at all costs. In India, self-help groups increasingly became mere formal shells, while the money was simply used to buy food.
After the crisis of the big financial markets, the crisis of microcredit is now due. However, the situation is much more brutal than in the halls of high finance. Debt rescheduling at the microbanks increases the weekly interest burden. Many women are forced into prostitution in order to stay solvent. In India, suicides are on the rise among debtors who can no longer afford the 5 or 6 euro installments. So much for free-market philanthropy and women’s liberation. The bursting of this particular financial bubble, which is no longer so small, will not only have repercussions on the economies of many emerging countries, but is also a warning sign for the credit crisis as a whole, which has by no means been overcome.
Originally published in Neues Deutschland on 12/13/2010
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