Paper

Microcredit: Fulfilling or Belying the Universalist Morality of Globalizing Markets?

Microcredit, its structures, practices, economic logic, and moral sensibility
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This paper examines microcredit and its attitudes toward the market. The article considers the relationship of the world’s poor and very poor with the emerging global market system.

The paper states that the distinguishing feature and fundamental appeal of microcredit is that it explicitly uses market incentives to create credit market for the poor. However, there is an ambivalence regarding the role of microcredit organizations in the global market. Microcredit organizations can be viewed either as:

  • An extension of global markets into poor communities, designed to draw the poor permanently into the global economy;
  • An efficient mechanism for providing aid to compensate the poor for their exclusion from the market.

The paper argues that microcredit organizations need to clarify their relationship with the global market as it would help them structure their lending program. It discusses microcredit and its practices, and in particular, the way in which microcredit draws upon market principle as its organizing logic:

  • Microcredit allows us to understand the tensions generated by economic globalization by providing a social space shared by both rich and poor;
  • One the one hand, microcredit acts as a tool for mediating the relationship between the poor and global markets, and on other hand, as a tool for relieving the impact of global markets on the poor.

The author remarks that microcredit can be seen either as means to include everyone or as a subsidizer of faux markets to provide a remedy for failure by the real markets.