While micro-finance has proved successful in lifting families out of poverty it is politically problematic for two major reasons: it perpetuates capitalist social relations, thereby masking the root cause of poverty and the system is susceptible to manipulation by larger financial entities which charge interest and run counter to the socially conscious vision of Muhammed Yunus.

Yunus’ vision, while admirable, ultimately falls short because in the end it relies on a belief in “capitalism with a human face.”  His vision asserts that the periodic crises in global capitalism are the result of greed and mismanagement as opposed to a systemic problem.  The system of micro-finance that he pioneered gives people the impression that global poverty can be significantly reduced by small actions and that even the most basic economic exchanges should be formalized in the capitalist market.  Furthermore, the valid sense of hope generated through his model’s successes potentially negate any hope for concerted political action that would demand jobs and services (such as healthcare) that should be treated as rights in the first place.  The ideological implications of belief in such a system may outweigh the on-the-ground benefits in the long run.

Poverty is not accidental and such assertions that globalization can be transformed to include the Global South as a beneficiary are naïve at best.  The systemic issues of global capitalism and its symptoms of hunger and poverty cannot be adequately addressed through micro-finance.  The international working class is thoroughly productive and yet poverty and chronic unemployment are a result of mismanaged distribution at the hands of the owning class.

While it is obviously good to lift families out of poverty, and micro-finance has proven successful in many instances, the political implications of such a reliance may in fact maintain extreme levels of income inequality and power across the world.  If the solution were as easy as giving every poor family a small sum of money, global poverty would have been history years ago.  The system of micro-finance enshrines bourgeois social relations and provides a false sense of hope for the class that in reality produces the world’s wealth through its labor.

1. Dr Toh Han Chong,  Interview with Professor Muhammad Yunus, SMA News, Volume 40 No. 12 December 2008.