Is Micro-Finance Related to Labouring?

2 Theoretical Frameworks;

3 Case Studies to Illustrate.

Paper for Conference of the Association for Heterodox

Economics, June, 2000

Wendy Olsen, w.k.olsen@bradford.ac.uk

Visiting lecturer in IDPM, Room 2.20 Oct-Dec. 2000;

REFS ON: www.brad.ac.uk/staff/wkolsen

Lecturer in Quantitative Development Economics, University of Bradford

Defining Micro-Finance

• (note ontological claim embedded in the act of definition; see Lawson, 1997, against conflating the conceptual world with the real world)

• Micro = small-scale; Finance = both lending and savings; both informal and ‘formal’;

• MF occurs both as individual acts and as group acts, such as joint liability groups and household savings decisions.

Theorising Micro-Finance

=Abstract explanatory statements aimed at facilitating improved

interventions;

testing is of limited value when it lies within preconceived boundaries.

Hence my interest in theoretical closures (Chick & Dow, CJE,

forthcoming)

Modelling as Theorising

• New Institutional Economics

• Transactions Cost Economics

• ‘Theory’ of the Advantages of Deeper Financial Markets

• Purposes. . . Closure I and II . . . Ontology of Methodological Individualism and Positivist Causal Laws with Empirical Regularities to ‘Prove’ Them

How Closure is ‘Obtained’ by Neoclassical Theorists

• 1. Isolating the money market from other markets (e.g. Besley’s individuals who engage in chit funds or other collective money arrangements, AER 1993)

• 2. Isolating money-relations from social-relations, esp. gender

• 3. Isolating market equilibria from the surrounding social and environmental resources, many of which are collectively managed

• 4. Seeing the market phenomena -- informal and formal together -- “separately” from non-market. ?Inseparable?

Some Neoclassical Theorists

• Besley, Timothy, and Stephen Coate (1991) “Group Lending, Repayment Incentives and Social Collateral”, Journal of Development Economics, 46:1, pp. 1-18.

• Besley, Timothy, Stephen Coate, and Glenn Loury (1993) “The Economics of Rotating Savings and Credit Associations”, American Economic Review, 83:4, pp. 792-810.

• Ghatak, Maitreesh and Timothy W. Guinnane (1999) “The Economics of Lending with Joint Liability: Theory and Practice”, Journal of Development Economics, 60, pp. 195-228.

• Chaudhuri, Sarbajit, and Manash Ranjan Gupta (1996) “Delayed Formal Credit, Bribing and the Informal Credit Market in Agriculture: A Theoretical Analysis”, Journal of Development Economics, 51, pp. 433-449.

Social-Relations Theories

• (see Porpora, D. in Archer, et al., eds., Critical Realism: Essential Readings, 1998)

• Two feminist dual-systems theorists, Kabeer & Kalpagam, illustrate the framework. (Mayoux also uses it; so does GAD, the Gender & Development approach)

• Purposes. . . Closure I and II?

• Dialectical, open, as in Kalpagam (1994) book

• Human activities cannot be explained by recourse to theoretical absolutes, but need to be examined within their particular contexts. Brohman, 1995: 299.

• neoliberals ignore the state, and as a result under-theorise it;

• they have simplistic approaches to power relations;

• they thus ignore the complexity and richness of social conflict;

• they neglect factors that differentiate markets;

• they disregard culture and history;

• they tend to stress disciplinary divisions and thus to fragment social science;

• they tend to be positivists seeking laws;

• they take seriously only positivist science.

Aspects of Neoliberal Theorisations:

Strengths (Foci)

• Transactions Costs

• Screening

• Evolution of Institutions

• Bribery

• Information

• Supervision of Borrowers

Social-Historical Approaches

• Mies, Maria, and V. Shiva (1993) Ecofeminism, London: Zed Books.

• Kabeer, Naila (1994) Reversed Realities: Gender Hierarchies in Development Thought, Delhi: Kali for Women. (and other works)

• Kalpagam, U. (1994) Labour and Gender: Survival in Urban India, Sage, Delhi and London and Thousand Oaks.

• Lawson, Tony. (1997) Economics and Reality. Routledge: London.

Closure in social-relations approaches?

• Closure I: examining gender relations whilst assuming a static capitalist framework of class relations surrounding them;

• Closure II: backward-looking analyses with closure in the time dimension; this closure rationalises Closure I by ignoring the need for an altered macro framework in future

• (Kalpagam avoids both closures)

Structure-Agency Interactions

(or are they dualisms? Dialectically linked? Institutions fit in . . . How?)

Case Studies

• Micro-Credit in Bangladesh

• Debate Over Whether Credit Exacerbates or Causes More Domestic Violence!

• Debate Over Whether Women’s Increased Autonomy from Hhold is Desirable

• Women’s Unions in Andhra Pradesh

• WID Strategy Makes Poor Women Even Busier; (pulls them out of group activities)

• WID Strategy among less poor households also entrenches K’ist social-class relations

3rd case study

• Ghana Susu Groups• Collective Savings

(also found elsewhere) often overlap with social groups and labour gangs -- often seasonal -- and cloth-buying groups who sing & celebrate together

• A new neoliberal interpretation is ‘Susu Banker’, modelled as an individual who takes savings and makes loans to other individuals;

• Development economists now advocate integrating formal and informal mkts

The causal structure of the argument is interesting. According to one approach, patriarchy can be

described sweepingly over the relevant time period. According to the other approach, changes in some

women's lives lead to changes in household situations which create changes in the patriarchal

structure. Over time, the latter is changing. In the micro-credit literature there is clear evidence of

attempts to challenge and change patriarchy both in

private (as shown above) and in public places

Man Woman

Couple

Household

Enterprise Family Group

DivorceCooperation

DebateDomestic Violence

•labouring

•informing

•deciding

•taking responsibility

•sharing skills

•strategy-setting

Emergence of Institutions

Emergence of Phenomena

Trust

Conclusions

• Concepts from critical realism have a lot to offer (structure/agency; transitive existence of collectively-acting groups; complexity of such cooperation; holistic connectedness instead of closure in the real world);

• Theoretical closures generally tend to limit the wholesomeness of conclusions;

• Money innovations presently tend to cut off cooperation and to exploit natural resources because they are seen (a) separately from labour and nature, (b) as if inevitably embedded in CAPITALISM, and (c) as linked primarily to individual autonomy and individual empowerment rather than as creating opportunities for shared autonomy and shared empowerment -- Mayoux’s power-with others.

Additional References– Mayoux, L. (1998a) ‘Women’s Empowerment and Micro-Finance

Programs: Approaches, Evidence, and Ways Forward’, Open University DPP Working Paper No. 41, Milton Keynes.

– Mayoux, L. (1998b) ‘Participatory Learning for Women's Empowerment in Micro-Finance Programmes: Negotiating Complexity, Conflict, and Change’, Bulletin of the Institute of Development Studies, 29:4, pp. 39-50.

– Moser, Caroline (1993) Gender Planning and Development: Theory, Practice and Training, Routledge, London.

– Kabeer, Naila (1998) “’Money Can’t Buy Me Love’? Re-Evaluating Gender, Credit and Empowerment in Rural Bangladesh”, IDS Discussion Paper No. 363, Institute of Development Studies, Univ. of Sussex.

– Olsen W K (2000) The Limits to Conditionality: Grassroots Evidence from Rural India, WorldView Press, Oxford (PO Box 595, Oxford, UK).

Stratified Realities

• Physics & Physical• Biology & Biological• Social and Economy

• Adapted from Lacey, 1998; adapted in turn from Bhaskar, 1979/89/99.

• Natural World• Social World• Cash Economy

• Adapted from Hutchinson, Mellor and Olsen, forthcoming.