Microfinance is good business

November 10th, 2009

From The Financial Times www.ft.com

Helping the poor just got popular

Sophia Grene. Financial Times. London (UK): Nov 9, 2009. pg. 8

“Microfinance ; Investors are attracted by the sector’s crisis-proof qualities as well as the social aspect, says Sophia Grene

Since Muhammad Yunus won the Nobel prize in 2006 along with the Grameen Bank he founded for the poverty-bound entrepreneurs of Bangladesh, microfinance has entered the consciousness of the investment community.

The concept of lending small amounts to very poor women, each borrower part of a group that is jointly responsible for repayment, has been extended and modified as it moved to different economies with other requirements. The common thread is providing relatively small loans to people who would otherwise not have banking facilities.

While the original concept was all about lending a helping hand to lift people out of poverty, the inevitable result of the structure was that investors would see it as an opportunity.

Grameen Bank itself cannot look for investment from outside Bangladesh for legal reasons, but a myriad of other microfinance institutions are not so bound and globally some $7bn (pound(s)4.2bn, EUR4.7bn) is invested in MFIs. An equivalent amount is committed by donation, but the invested money is expected to be repaid with interest. Read the rest of this entry »

Popular protests against microfinance in Nicaragua

November 10th, 2009

From nacla.org/node/6180

Confronted by the bold protests of the Movimiento de Productores, Comerciantes y Microempresarios de Nueva Segovia, or more colloquially as the No Pago (I Won’t Pay) movement, politicians are growing increasingly nervous that the group’s protests are scaring away international investors and could strike a heavy blow against the country’s shaky economy.

The first signs of unrest appeared more than a year ago, following remarks made by President Daniel Ortega at a political rally in the northwestern province of Jalapa. The region was simmering with tension after a large microfinance corporation had six debtors arrested. Their families chose to barricade the highways for 11 days in protest.

“We need to end this policy of usury,” Ortega told a crowd on July 12. “Instead of protesting on the streets, protest before the offices of usurers and plant yourselves before them. Stand firm, for we support you!”

Ten days later, borrowers behind in their loan payments tried to burn down a microfinance office in the department of Nueva Segovia. Some time afterward, debtors stormed another MFI and refused to let personnel leave the building; the resulting showdown with police left one civilian blinded from a rubber bullet. Read the rest of this entry »

Carbon trading, enclosures and the “green police”

November 9th, 2009

“With the Copenhagen climate summit just a month away, a new investigative series looks at how rural Brazilians are being displaced so their forest can be turned into carbon offsets for some of the world’s biggest polluters, including General Motors and Chevron. With deforestation amounting to a fifth of the world’s emissions, planting and preserving trees are seen as key elements to offset pollution.” Democracy Now speaks to Mark Schapiro of the Center for Investigative Reporting. “After traveling to Brazil, Schapiro writes, ‘People with some of the smallest carbon footprints on earth are being displaced by companies with some of the biggest.’”

“No Pago” Confronts Microfinance in Nicaragua

November 3rd, 2009

From nacla.org/node/6180

Oct 28 2009

Elyssa Pachico

Last January in northern Nicaragua, as a crowd of hundreds blockaded the Panamerican Highway late into the cool Monday night—soaking tires in gasoline before setting them on fire, hurling rocks at police and TV cameramen, bringing traffic to a standstill for 10 miles—the words once again began appearing in news reports and political speeches and inside the National Assembly debate halls: No Pago, No Pago!

In the months that followed, the refrain was hardly absent from the airwaves—not on May 12, when a group of 20 people smashed the windows of a truck belonging to a local microfinance organization, or in early September, when some loan officers were so harassed by protesters barricading their office doors and badgering the clients who attempted to enter that they decided to stop showing up to work altogether.

These incidents are only a few examples of the bad feeling that microfinance institutions (MFIs) have inspired among a section of the rural population in north and central Nicaragua. Confronted by the bold protests of the Movimiento de Productores, Comerciantes y Microempresarios de Nueva Segovia, or more colloquially as the No Pago (I Won’t Pay) movement, politicians are growing increasingly nervous that the group’s protests are scaring away international investors and could strike a heavy blow against the country’s shaky economy. Read the rest of this entry »

The World’s Largest Worker-Owned Cooperative

November 2nd, 2009

The world’s largest worker-owned cooperative, the Basque Mondragon, is slowly becoming a business model. Check this story out Steelworkers Form Collaboration with MONDRAGON, the World’s Largest Worker-Owned Cooperative
] and the following video.

Nobel price, commons and growth

October 18th, 2009

Maybe the “smarter factions of capital” knows that capital is doomed, but if that is the case, why do they insist on finding ways for “growth”, even if only through the oxymoron of “sustainable development”? Their intelligence, demonstrated for example by the awarding of the Nobel price to Elinor Ostrom, is to see the commons as the basis for new capitalist growth . . .yet you cannot have capitalist growth without at the same time capitalist enclosures. Their intelligence thus risks to push us all to be players in a drama of the years to come, the civil war of the XXIth century: capital will need the commons and capital will need enclosures, and the commoners at these two ends of capital will be reshuffled in new planetary hierarchies and divisions.

Elinor Ostrom Nobel price helps giving legitimacy to the discourse of the commons. After decades of neoliberalism this is certainly a victory. Elinor Ostrom gives us in principle all the elements we need for a discoursive counterattack, if we link her stuff to a sharp understanding of capital. Her basic point is that self government in commons is not only a viable solution, but preferable on many accounts to markets and states (sustainability, democracy, justice). Yet she also teaches us that for commons to work, they require basic conditions to happen. When you think about these conditions within broader dynamics of capitalism, you realise that many of these conditions are threatened by the working of global competitive markets, the wealth polarisation they create, the regimes of state intervention to limit in many occasions grassroots empowerment through commons, and the necessary enclosures than any regime of capitalist growth require. There is a strong incompatibility between a regime seeking economic growth and the universal creation of conditions that facilitate the development of commons. This incompatibility must be stressed and debated, and in this debate we cannot avoid to stress the role of capital in undermining the conditions for commons for all.

A nobel price for the commons

October 14th, 2009

Here are the reasons given by the Nobel price committee for the award to Elinor Ostrom. For the general public and for who wants to know about the scientific background of the decision.

Telephone interview with Elinor Ostrom following her award.

National Academy of Science Profile of Dr Ostrom

Here you can find summary of Ostrom’s book Governing the Commons.

Here is an interesting post from a colleague offering his congratulations.

I also find it very interesting that Oliver Williamson shared the price with Elinor Ostrom . . .

Below is an extract from the Nobel committee justifying the award.

“Traditionally, economic theory has by and large been a theory of markets or, more precisely, about market prices. However, there are at least two reasons why economic science should extend beyond price theory. First, markets do not function properly unless suitable contracts can be formulated and enforced. Hence, we need to understand the institutions that support markets. Second, considerable economic activity takes place outside of markets – within households, firms, associations, agencies, and other organizations. Hence, we need theories to explain why these entities exist and how they work. This year’s Laureates have been instrumental in establishing economic governance as a field of research. Elinor Ostrom has provided evidence on the rules and enforcement mechanisms that govern the exploitation of common pools by associations of users. Oliver Williamson has proposed a theory to clarify why some transactions take place inside firms and not in markets. Both scholars have greatly enhanced our understanding of non-market institutions.” (nobelprize.org)

In a nutshel, one author (Ostrom) studies the commons outside capital, while the other (Williamson) studies the rules defining when it is convenient to have firms or markets as a main organisational context for production. Notice that this “convenience” in Williamson argument has to do with the minimisation of the cost of conflict, i.e. with the condition for “efficient conflict resolution”:

“In the early 1970s, Oliver Williamson argued that hierarchical organizations sometimes dominate markets because they provide a cheaper way to resolve conflicts. If two employees quarrel about the allocation of tasks or the distribution of revenues, a chief executive is entitled to
decide. In a market, on the other hand, negotiations have to continue until both parties agree. Haggling costs can be substantial, and there is no guarantee that the final agreement will be either immediate or efficient.” (nobelprize.org/nobel_prizes/economics/laureates/2009/info.pdf)

But firms, i.e. capitalist firms, also rely on some sort of commons. According to Ostrom, “even the best functioning markets are undergirded by an array of collective institutions which order people’s market interactions, and that in the absence of such rules, self interested behaviour will have highly adverse consequences.” (see crookedtimber.org/2009/10/12/the-ostrom-nobel/#more-13312). Thus I wonder whether one could expand Williamson problematic and apply it to commons rather than firms. His theory then would also guide decisions on when it is “economically rational” in terms of “efficient handling of conflict” to rely on markets or when on commons linked to markets, i.e. commons set in competition with one another.
I feel that the two approaches combined or linked in some way could give a workable theoretical framework to advance capital by coopting commons and commons discourse. There are some signs that a “discursive recomposition” of capital is occurring along these lines. As a very minor indication see for example The Economist’s interest in workers co-operatives, especially in moment of crisis and austerity.

Carbon Trading receive a new boost from UN-REDD program.

October 7th, 2009

Below is the “agenda-setter” video on REDD, which was sponsored by the UN-REDD Program, produced by the London based Television Trust for the Environment (www.tve.org/) and shown as a curtain raiser at the United Nations Secretary-Generals High Level Event on REDD held on September 23rd at the United Nations Headquarters in New York. Read also these two short pieces (from CNN and intercontinentalcry) reporting some of the problems with these programmes. In particular what is interesting here is that the REDD programme is a case of distorted commons, i.e. one in which the “sharing” is functional to capitalist growth and therefore it is a locus of frontline contradictions (such as preventing indigenous to self-manage their forest in the name of climate change). Interestingly, if existing (and not only newly planted trees) forests are given monetary value, and these in turn are turned into tradable credits that can be purchased on the market, a carbon credit glut seems inevitable with a consequent fall in price, making the entire carbon credit scheme even more of a farce.

Childcare sharing is a crime in UK

October 7th, 2009

Crazy as it sounds, this is the story of two working mothers. Funny that the women in questions were two policewomen and the one who reported them a colleague of theirs. Also interesting that the pedophile fobia was instrumental in crafting a legislation that dig deep into undermining basic condition of trust. In recent years childcare sharing has risen, as reported here.

China poeple’s hero

October 6th, 2009

A corrupt party official is killed. the young killer becomes people’s hero. . . . set in the context of the recent history of rapid urbanisation and land enclosures. As one man says at the end about 60th anniversary of the People Republic of China the other day: what was that, a celebration or a funeral?

from Channel 4 7pm news on 5 october 2007