SOAS University of London

Department of Development Studies

From Zorro to Zombie: Explaining the Dramatic Rise and Fall of the Microcredit Model as Development Policy

Dr Milford Bateman (Department of Economics and Tourism, Juraj Dobrila University of Pula, Croatia, and St Mary’s University, Canada)

Date: 17 November 2015Time: 5:00 PM

Finishes: 17 November 2015Time: 7:00 PM

Venue: Russell Square: College Buildings Room: G3

Type of Event: Seminar

Once celebrated as a dashingly cavalier breakthrough in the international development policy field on account of its supposed power to release the global poor from their poverty, exploitation and powerlessness, even long-time advocates now accept that the microcredit model has failed. The tiny handful of success stories routinely paraded by supine media outlets to convince any unbelievers – so-called ‘donna maria stories’ – are in practice swamped by a wall of bad news: mass over-indebtedness, the de-industrialisation, primitivisation and informalisation of local economies, major opportunity costs (higher productivity projects go under-financed, the poor abandon all forms of collective mobilization), and ongoing structural distortions and repeated crises that keep rearing their ugly heads wherever microcredit has reached critical mass.


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From Zorro to Zombie, Milton Bateman

So why then is the international development community so desperate to retain the failed microcredit model, to the point of artificially reinventing it under the facile rubric of what has been called ‘financial inclusion’? In other words, why is it that, as John Quiggin (2010: 1) has caustically remarked “(Zombie ideas) that have proved themselves wrong and dangerous, (.) are very hard to kill. Even after the evidence seems to have killed them, they keep on coming back”. The answer to this vexing question is the point of my talk. Clearly something other than the (failed) economics is important here. I argue that microcredit survives because it continues to deliver up to a narrow stratum of society - the global business, political and intellectual/academic elite - real and very significant benefits, benefits that these elites will do almost anything to hold on to. This lecture will explain this argument by tracing the rise of the microcredit model from Latin America to Bangladesh to global popularity under the neoliberal project, and on to the UN Year of Microcredit and the 2006 Nobel Peace Prize. I will point out why and how microcredit has failed to achieve the goals set for it. I will discuss the role of the leading representatives of a new generation of ‘poverty faith healers’ - individuals like Muhammad Yunus, Hernando de Soto and Jeffrey Sachs - who effectively argue that a mere belief in markets and individual entrepreneurship is enough evidence in itself to confirm that microcredit must ‘work’. I conclude that the microcredit model flourished and very much remains alive today because it has been found in practice to be an innovative and supremely effective method of facilitating the extraction of the remaining wealth, assets, opportunities and solidarity possessed by those surviving at the so-called ‘bottom of the pyramid’, an elite-driven process Harvey (2006) has famously termed ‘accumulation by dispossession’.

Dr Milford Bateman is a freelance consultant on local economic development, Visiting Professor of economics at Juraj Dobrila University of Pula, Croatia, and Adjunct Professor of Development Studies at St Marys University, Halifax, Canada. His work includes edited books on entrepreneurship and SME development, peer-reviewed journal articles and book chapters. He is the author of the 2010 best-selling book Why Doesn’t Microfinance Work? The Destructive Rise of Local Neoliberalism published by Zed Books. His latest co-edited book, with Dr Kate Maclean, Seduced and Betrayed: Exposing the Contemporary Microfinance Phenomenon is due out in 2015.

This seminar is part of the SOAS Department of Development Studies & Bloomsbury DTC for the Social Sciences seminar series for 2015/2016. To see the full event listing click here.


Organiser: Professor Alfredo Saad-Filho & Dr Feyzi Ismail

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Contact Tel: 020 7898 4504 or 020 7898 4723