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Is microcredit an alternative?


Mohammad Yunus was in Rome this weekend at a Nobel Prize Winner’s forum.

At the same time the Festival of Alternative Economy was on in the recently created space of the City of Other Economy (Città dell’altraeconomia).

The organisers of the festival were quick to invite Yunus for a talk on poverty and what are the alternatives to eradicate it.

If it weren’t for the fact that his presence at the talk was being used as a sort of promoting event for the festival, I probably wouldn’t have even thought about microcredit and its relationship with an economy alternative to capitalism.

What exactly is microcredit doing? From what I gather, it is providing the poor with capital, albeit really small, to help them get going. Isn’t that extending the credit market to the poor?

What do the poor do with that money? They use it for some activity that will be productive in the market. Isn’t that promoting markets to the poor?

How do the poor pay back the money? In part out of profits from the activity they undertook. Isn’t that promoting profit-based activities? And in part they must be applying some sort of  "structural adjustment program" within their homes. Isn’t that extending the IMF strategy to the poor individuals? Apparently Yunus’s bank, the Grameen, has a very high rate of debit restitution. Hasn’t he somehow done the same to the individuals as the IMF has done to the poor countries: transforming them into perfect debit payment machines?

That is obviously all from the point of view of systems alternative to capitalism. From what I can see, microcredit is certainly not an alternative economy. It has the merit of helping out those poor who are totally cut off from the exisiting institutions, but we’d probably be fooling ourselves thinking it has a place in the struggle for economies alternative to capitalism.

 

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