restricted access Conclusion: It’s the Politics, Stupid
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297 Conclusion It’s the Politics, Stupid Milford Bateman and Kate Maclean Economics is a political argument. It is not—and can never be— a science; there are no objective truths in economics that can be established independently of political, and frequently moral, judgements. Therefore, when faced with an economic argument, you must ask the age-­ old question “Cui bono?” (Who benefits?) —Ha-­Joon Chang, Economics: The User’s Guide, 2014 Economics is not a science. Instead, as Ha-­ Joon Chang concludes, along with many others from Adam Smith to Karl Marx, John Maynard Keynes, John Kenneth Galbraith, and recent Nobel Prize in Economics winners Amartya Sen, Paul Krugman, and Joseph Stiglitz, economics is intimately connected to the politics and ideologies of particular groups in society, groups that ultimately seek to benefit from the economic policies that they promote and help to sustain. We recently saw this connection exposed with stunning clarity after 2008 in the reaction to the Great Recession that began on Wall Street thanks to monumental levels of greed, fraud, insider dealing, speculation, and other antisocial and criminal forms of behavior. Rather than denounce and agree to prohibit such actions, many economists, politicians, and commentators continued to support the neoclassical economic models, neoliberal political theories , and “efficient market” nostrums that had just piloted the global economy into a brick wall (Mirowski 2012). The overwhelming evidence showing that these theories, models, and beliefs were patently false did not lead to any real concession of error, but actually served to make the dogma stronger, effectively creating what John Quiggin (2010) has called a “zombie policy”—a policy that remains stubbornly alive and popular in elite circles even after the evidence overwhelmingly shows that it has failed the vast majority of the population. 298 Milford Bateman and Kate Maclean Perhaps nowhere is the power of doctrine and ideology over reality more apparent than in relation to the contemporary microfinance movement. The chapters in this book have traversed many areas of inquiry, interrogated numerous possibilities relating to the role and impact of the microfinance model, and explored multiple varieties of microfinance in order to assess its long-­term contribution to development. If there is a common message in all of them, it is that one can only explain the contemporary microfinance phenomenon if one refers back to the politics and ideology of microfinance.The notion that microfinance emerged and was subsequently promoted because it is an intervention that can successfully address poverty and underdevelopment is not just simplistic, as even most microfinance advocates now accept, it is largely false. The rationale for the microfinance industry was built on far-­ reaching claims of poverty reduction and “bottom of the pyramid” development models, an approach to development that attracted widespread critique from the outset. After recent demonstrations of the inadequacies of the evidential bases that microfinance constituted a development panacea, one might have expected that the intervention would be phased out. But despite evidence, critique, and even scandal, the microfinance movement has continued to occupy a prominent place on the international development agenda, albeit increasingly hidden under the banner of “financial inclusion.” The continued enthusiasm for microfinance confirms what many critics have argued for decades: it is a political intervention, not a technical fix. Its “success” in policy terms is a product of its support from the world’s international financial institutions and governments interested in promoting neoliberalism around the world. What may have started as a community intervention in the 1970s, has been co-­ opted by institutions with goals far removed from those first enunciated by its pioneers. Microfinance has effectively been exposed, we would argue, as the zombie development policy par excellence. The contributors to this volume have drawn on economic, social, and political data and experiences to examine the contemporary microfinance phenomenon and expose it to critical reflection, with a view to explaining its remarkable resilience. What has been demonstrated is that far from unequivocally improving the lives of the poor, the contemporary market-­ driven microfinance model has disadvantaged and exploited the poor on a number of levels. The chapters in this book have rehearsed this unpalatable fact across a number of important metrics and locations and have provided abundant evidence of ineffectiveness and dead-­ end trajectories. Microfinance’s initial popularity was wrapped up in Conclusion 299 its ability to provide an affordable, self-­ help-­ driven way of addressing poverty and underdevelopment. The initial claims that the provision of small loans on the basis of a group guarantee could help...


Subject Headings

  • Rural development -- Developing countries.
  • Microfinance -- Developing countries.
  • Small business -- Developing countries -- Finance.
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