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vii Foreword James K. Galbraith Seduced and Betrayed is one of the best books on modern economic development to come along in years. Milford Bateman, Kate Maclean, and colleagues here provide a full review of the single most heavily promoted, widely praised, and widespread novelty in the history of transnational finance: the so-­ called microfinance revolution. The public presentation of microfinance to the Western world was a work of art. Emerging from one of the world’s poorest countries , Muhammad Yunus married a lofty rhetoric of female empowerment to a grubby financial enforcement tool, namely group liability for repayment, and Grameen Bank was born. Grameen made microcredit the model at a moment when older models of development were under siege, when the state was in retreat, and when the deregulation of global banking was at its peak. In this way, highly repetitive loans, at high interest, for marginally viable purposes, free of any need for the backing of public infrastructure investment or worker political organization, could be sold as a pathway out of poverty. Microcredit was a message tailor-­ made for the parlors of the well-­ meaning New York rich. And it was taken up as a cause by some of the most powerful poseurs and political money-­grubbers on the stages of Davos, Aspen, and similar gathering spots.With the miracle of microcredit, the poverty problem could be solved, and the bankers would solve it. No revolutions necessary, thank you very much. From an ideological perspective, what could be better than that? What Bateman, Maclean, and the other authors show is that the microcredit message was crafted—expertly, indeed—to appeal to Western narcissism, with borrowings from feminist tropes, small-­ is-­ beautiful fantasies, and the neo-­ hippie appeal of participatory finance, in which lenders are “introduced” via websites to borrowers and get to share in their evolution toward success as microentrepreneurs. These chapters will be acutely painful, one suspects, to readers who were taken in. The authors also include a long and sad section on the actual results. Bosnia. South Africa. India. Bangladesh. Malawi. Their studies demonstrate a pattern viii James K. Galbraith that is practically everywhere similar. It is a pattern of unpayable loans for transitory projects, resulting in market saturation and debt peonage. It is a pattern of microfinanciers getting rich, personally, while parading before their funders as crusaders against poverty. It is a pattern of bankers and their acolytes, in the wealthy West, resisting and covering up a full presentation of the truth and of protecting the perpetrators with whom they have enjoyed a profitable association . It is a pattern, in short, that ranges from the ill conceived to the fraudulent. The list of cases is long though hardly comprehensive; disasters aplenty are not chronicled here. Finally, Bateman, Maclean, and colleagues pre­ sent a round of clear and simple alternatives.These include credit unions.They include usury limits.They include a traditional approach to the “moral economy” that is rooted in a conception of social justice. There is nothing mysterious here. If you want sustainable finance—experience tells—you have to keep it under control. ...


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