A Brief History (Pt 2 of 4)

In order to understand both the rise of microfinance and the criticism of it, a bit of history is in order:

Historically people with absolute power were few and far between (although they’re the people/empires who make the biggest wave across history, so we hear a lot about them and, ironically, assume that they’re somehow normative). Every few hundred years a mighty empire would rise up whose leaders seemed to have absolute power (Egypt, Assyria, Persia, Rome – I would not put the Greek empire into this category). But for the most part authority and loyalty were divided among competing interests.

In Europe, for instance there were kings, landowners, the guilds, businesses, banks, the church, and the community itself. Each had their sphere of influence and when any one sought too much power, the others would step in to bring them into line. Over the centuries the royal families and the church became increasingly powerful as the other institutions slowly lost influence. By the end of the Middle Ages both kings and churches began to imagine that they had divinely given absolute power. The kings seduced the land owners into serving the throne by telling them they were a sort of royalty also, thus consolidating their power.

Eventually European royalty came close to amassing absolute power and became quite corrupt in the process. This set the stage for a series of revolutions (the English re-establishment of a powerful parliament, followed by the American, French, Russian, Haitian, etc. revolutions) which were based on what would eventually become Enlightenment Liberalism (of which all Protestantism – conservative and liberal – and all American politics – both Democrats and Republicans – are a species). [See this essay where I explain this in more depth.]

The core belief that defines the Enlightenment is the autonomy or rights of the individual. Unintentionally or not, Enlightenment thinking (and modern western culture that grew out of it) undermined not only the power of the royalty and the church (the two institutions they were trying to undermine), it also undermined the institution of society itself. Ultimately communities became collections of individuals. Even the church, rooted in a theology of sacramental connectedness, became a volunteer organization in America. In short, the Enlightenment swept nearly all institutions aside in an attempt to put the individual on the throne.

What these philosophers and politicians did not understand was that individuals without the constraints of values and the institutions to maintain these values quickly turn to their more animal characteristics. Altruism is replaced by greed; politeness is replaced by rancor; etc.. The unleashed greed led to the reestablishment of just a handful of institutions. Without the checks and balances of other institutions, they have the ability to be far more authoritarian than any empire previous.

The primary institutions today are big government, big business, and big banking. In response the labor movement came about after the industrial revolution leading to big labor, but big labor was coopted by big government so that for the most part the triumvirate of Bureaucracy, Business, and Banking has an absolute stranglehold on the western world today. Through foreign aid, the “expansion of democracy,” and advertising this absolute stranglehold is moving beyond the western world into the developing world, and even into the formerly communist block and the Islamist block where Western Enlightenment values previously had little or no influence.

And this triumvirate is not friendly to the very individuals that the Enlightenment was supposed to protect. The bureaucracy serves business and banking (not the individual). Banking serves the bureaucracy and business. Business serves … well, you get the picture. And in the process the individual loses actual freedom, liberty, and justice to the self-interest of big business, big banking, and big bureaucracy. Furthermore, because ethical sensibilities lay with institutions that were marginalized by the Enlightenment and were maintained by the social institutions that were largely destroyed by the Enlightenment, the Big Three have no ethical limitations because ethics and morality are now an individual (and thus private) matter.

This is the world in which we live. This is the world that third world countries are terrified of. Radical dehumanizing western values on the one side and radical dehumanizing Islam on the other, both seeking to control the societies in developing countries: what is a developing country supposed to do?

What Mohammad Yunus tried to do was to develop a new institution that could work within the western democratic/capitalist context but was not beholden to either the authority or the values of Big Banking (and thus to the rest of the Triumvirate). Needless to say, such an audacious plan would likely be wildly popular among the people who are largely dehumanized by Western Democratic Capitalism and at the same time strongly resisted by Western Democratic Capitalism because it undermines the power and wealth of the Triumvirate.

This is how Grameen Bank (and other microfinance groups) is trying to change the world in which we live in one small way.

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