A Critical History of Poverty Finance: Colonial Roots and Neoliberal Failures

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A much-needed book that should be read by anyone interested in the expansion of finance into everyday life. Rich with empirical details and comprehensive in its theoretical engagement with the interrelationship between finance and social justice, it throws into sharp relief how impoverished the conception of poverty reduction is when it relies on financial inclusion to improve welfare of people' The result is that millions of small businesses in the Global South are one accident away from failure. A broken piece of equipment or unexpected weather can sink many of them. The microcredit industry says ‘give them a loan’ which simply leaves such businesses as exposed as they were before, but with more debt as well. This book takes a hard look at several such stories, notably about microfinance, microinsurance and fintech banking. It chronicles their ballyhooed rises, their unmasking, re-branding or substitution by yet other tonics for the poor. Intriguing are the accounts of futile efforts by the cure-all salespeople, the “professional associations, consultants, academics, philanthropies, and international organisations” to get global finance on board, “to coax capital into doing things it’s not particularly interested in doing.”

It reduces costs, it’s much more efficient, it can be scaled up… It does come with risks as well because, you know, you really don’t want to hurt those that are most vulnerable, so we have to be careful. But I think it is really remarkable. (Politi 2019) While Bernards says little about women, Meyerowitz foregrounds the significance of gendered notions of uplift and empowerment in remaking international aid. Andrew Leyshon, Emeritus Professor of Economic Geography at the University of Nottingham, author of Reformatted: Code, Networks and Latent" surplus populations and colonial histories of drought, groundnuts, and finance in Senegal Link opens in a new window', Geoforum 126: 441-450.Finance, mobile and digital technologies - or 'fintech' - are being heralded in the world of development by the likes of the IMF and World Bank as a silver bullet in the fight against poverty. But should we believe the hype? Thanks to all at Pluto for their work bringing this book into production. I’m especially indebted to Jakob Horstman for his excellent editorial work, his close reading of the manuscript, and generally for his support throughout the development of this book. Thanks also to Miri Davidson for copy-editing the finished manuscript. I’m equally grateful to the four anonymous reviewers who provided very helpful comments at proposal stage which helped to give the project a much clearer direction.

The World Bank, agricultural credit, and the rise of neoliberalism in global development Link opens in a new window', New Political Economy 27 (1): 116-131. Child labour, cobalt and the London Metal Exchange: Fixing, fetish, and the limits of financialization Link opens in a new window', Economy and Society 50 (4): 542-564.

Authors

States, money, and the persistence of colonial financial hierarchies in British West Africa Link opens in a new window', Development and Change, 54 (1): 64-86. Relative surplus populations and the crises of contemporary capitalism: reviving, revisiting, recasting Link opens in a new window', Geoforum 126: 412-419. [with Susanne Soederberg]

The changing technological infrastructures of global finance Link opens in a new window', special issue of Review of International Political Economy, 26 (5). [co-edited with Malcolm Campbell-Verduyn] Yet, without diminishing the horrific nature of these crises, they are also outliers. When we look at the longer history of poverty finance, we see a tendency for finance capital to pile into a few places (like Andhra Pradesh, or more recently Kenya), while skipping over the vast majority of people and places in the global south. This has taken place in the face of the prompting and prodding of the Bank and national governments seeking to promote wider ‘access’ to finance across the board. I welcome inquiries from prospective PhD students interested in topics which intersect with any of my research interests.

This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. Logging, pulping and manufacturing processes are expected to conform to the environmental standards of the country of origin. I have published on a range of issues around labour, finance, and governance including colonial histories, agrarian finance, informal economies, technological change, and international labour regulation. The simultaneous allure and anxiety that characterizes microfinance has spurred two new histories of the industry. The books—Bernards’s A Critical History of Poverty Finance: Colonial Roots and Neoliberal Failures (2022) and Joanne Meyerowitz’s A War on Global Poverty: The Lost Promise of Redistribution and the Rise of Microcredit (2021)—depart from the optimism of 1997 and 2006. They instead view microfinance as rooted in colonial and neoliberal models for the governing of workers, the extraction of value, and the maintenance of inequality. Through attention to the ideas and instruments of microfinanciers, these scholars offer important critiques. Yet in attending mostly to the archives of development practitioners, they offer fewer insights into what borrowers want and how they challenge hegemonic finance. Moreover, seeing the history of microfinance as an ongoing repetition of exploitation means the authors cannot offer a vision in which finance—whether socialized, decommodified, or democratized—might play a role in improving the lives of the global majority. In the seventies, attention shifted to prioritizing the “basic needs” of the world’s poor, and away from calls for redistributing economic power and resources to poor countries.

Poverty finance and the durable contradictions of colonial capitalism: Placing 'financial inclusion' in the long run in Ghana Link opens in a new window', Geoforum 123: 89-98. This optimistic consensus about fintech is rather fragile, however, if we look any closer. There are an increasing number of critical studies looking at the development of fintech in relation to ‘financial inclusion’ (see Aitken 2017; Bernards 2019a; Clarke 2019; Frimpong Boahmah and Murshid 2019; Gabor and Brooks 2017; Jain and Gabor 2020; Langevin 2019; Langley and Leyshon 2020; Natile 2020). These studies have provided badly-needed critical perspectives on the rise of fintech – criticising the developmental claims of fintech advocates (Bernards 2019b; Langevin 2019), highlighting tendencies towards pervasive surveillance and discipline enacted through new modes of credit scoring (Aitken 2017; Gabor and Brooks 2017), and analysing the dynamics of consolidation and monopolisation in emergent platforms (Clarke 2019; Langley and Leyshon 2020). Critics have equally noted a disconnect between what can be measured through, for example, mobile phone data or psychometric tests and the underlying patterns of economic activity necessary to repay loans. Big data credit scoring, Langevin (2019) notes, is ‘dangerously hermetic’ to real productive activity. And, again, while fintech is being touted by the G20, the World Bank, and the IMF as a solution to many of the practical challenges encountered in promoting financial inclusion, evidence is emerging that claims about the power of fintech to achieve greater ‘access’ to financial services, and more importantly to reduce poverty in doing so, are suspect (see Bateman et al. 2019; Bernards 2019a; 2019b). Today’s critics of poverty capital must come to terms with the reasons people desire credit, and this demands attention to particular fiduciary cultures and shifting ethics. Debtors cannot be defined solely as victims of circumstance. Understanding borrowers’ worlds and how they have pursued, challenged, or accommodated poverty capital is a necessary part of the history of microfinance, and it is critical to reduce poverty and transform finance.

The Global Governance of Precarity: Primitive Accumulation and the Politics of Irregular Work Link opens in a new window, Routledge/RIPE Series in Global Political Economy. A Critical History of Poverty Finance: Colonial Roots and Neoliberal Failures Link opens in a new window, Pluto Press -- Available open access here Link opens in a new window.