The Nobel Peace Prize for a banker: Business is help, credit a human right

The Norwegian parliament, which awards the world’s most important peace prize in memory of one of the biggest weapons manufacturers and war profiteers, has made a worthy choice, like always. Since a warlord who had just finished his job and made peace simply couldn’t be found, a different sort of benefactor of mankind has been honored: Mohammed Junus from Bangladesh, banker. The man got himself talked about by founding a kind of cooperative banking association that lends tiny and even tinier amounts of money to the poorest of the poor by doing without the collateral assets they would never be able to provide anyway. Instead of securities, his Grameen Bank (Bengali, “bank of the villages”) substitutes close supervision and social control of the debtor, a technique that garnishes a gigantic payback rate of over 98% of its loans. The bank takes 20% in interest per year — reportedly way below the rate of the usurers thereby being squeezed out. With its interest payments and steady returns, with savings deposits and the sale of cooperative share certificates to their clients, the village bank is steadily increasing its financial power, expanding its business to new villages and villagers, and in this way growing in entirely new directions. The bank, together with Telenor, the privatized Norwegian national telecommunications company, is meanwhile owner of the biggest mobile phone service provider in the country — and due to its success is being imitated by a growing number of globally active private banks, which don’t want to miss out on this newly opened-up field of business. The interest taken by bona fide finance capital in this noble development project — far from discrediting it — conclusively ennobles it as a banking business with a firm hold on reality.

The prize established by the Swedish dynamite producer is of course not granted for a financial innovation that allows money to be made in new, previously neglected fields, but for services to the highest ideals of modern imperialism: peace and development. The prize committee found this Bengali business idea worth the money due to its contribution to “development from below,” namely that “the banker of the poor” has “lifted millions of people out of poverty” (Handelsblatt, October 16, 2006). This might be a little overstated. But one can surely say that Junus, with his microloans, has turned idle, unfit, and useless paupers into hard-working, bargaining, service-providing, and interest-paying paupers. And it is not a lie, but a cynical truth about the economic conditions of survival in the so-called Third World, too, that the enlistment of the struggle for survival of the poor to the benefit of financial capital takes on the character of help, in fact the only realistic and effective help.

Where credit is aid, even indispensable for an individual to take up his absolutely necessary work, all traditional forms of cooperation, division of labor, and social bonds have been broken up and destroyed by the power of private property. But this property does not belong to the poor, as their name already says. They, too, exist in an economy in which everything revolves around money, are completely dependent on earning money — but have none. For them, even the most primitive means of labor and production — seeds, sewing machines, water pumps — are out of reach. In such a situation, where all the conditions are assembled, where nothing but an advance of money is lacking for a destitute pauper to throw himself into some business and by toiling for his livelihood even yield interest, there a bank can help. Once capitalism has taken hold, nothing is possible anymore without capital — even if only in homeopathic amounts. Now, microscale entrepreneurs provided with some start-up money have the chance to stand up with their offerings to industrial products imported from the developed countries and to the fierce business acumen of their own kind, as well as to satisfy the claims of their charitable creditors — before their work sustains them.

Professor Junus is especially proud of the fact that his development project does not amount to charity, like umpteen others before, but rather translates into a real business — “a business like any other” (Handelsblatt) — that first of all finances itself and grows, and secondly ensures “that even the poorest of the poor can work to bring about their own development” (Norwegian Nobel Committee, press release, 2006). Thus Junus has, in the view of the Nobel Committee, “contributed more to development from the bottom up than the many billions in foreign development aid.”

“Charity doesn’t work!” — the philanthropic economist understands this tried and tested truth not in the sense that one-time gifts and emergency assistance don’t alter the situation of the people affected, and that something more would be needed — like, for instance, a collective organization of necessary work — to make life bearable in their part of the world. No, he understands this sentence pedagogically, rejecting nonrepayable grants and development aid, not because they don’t help, but because they spoil the recipients, spare them the compulsion to toil, and always only increase their dependence on the next handout, just like junkies. Capitalism as a means of education, in contrast, is exactly what the wretched need. Their energy, in which Junus has great faith — “every human has the potential to provide for himself” — is given a helping hand by the closely supervised obligation to service their debt. With that, the economic educator of the masses certainly stands the real relationship between ends and means in the banking business on its head: as if the purpose of money lending were not the receiving of interest, but rather a sophisticated method to urge the debtor to regular work and accustom him to the severity of personal responsibility. But this is simply an idealism worthy of economics; and as long as repayment functions, one can of course pretend that both goals amount to the same thing: the compulsion to work for the bank for part of one’s working time as the best education for work for oneself.

Actually, the prize winner and his supporters confess that they’re even more concerned with raising the morals of the poorest than with raising their standard of living: “With his idea to help the poor through microloans, he has restored the dignity of many people” (Nürnberger Nachrichten, October 14, 2006). Poor people who pay their bills and service their debts have dignity — exactly the sort of autonomy and respectability that makes up the freedom of capitalistic characters. Their contractual dependence on their microcreditor is independence, the fulfilling of their duty to pay interest freedom. Accepting help, in contrast, would be lack of independence, misery, and rightly grounds for contempt.

Thus Mohammad Junus has really performed an outstanding service, first of all to the constantly endangered reputation of global capitalism. With his innovation being especially morally credible because it doesn’t in the least renounce financial materialist motives, he has furnished proof that even the truly poor can somehow be fit into capitalism; in other words, even for them — at least for some of them — the equation of working for one’s living and working for capital can be set up, in this case for bank capital. Secondly, he has performed a great service by having firmly established a capitalism of poverty adapted to regions of the world that have long since been subjected to the capitalist mode of calculating without the capitalists having really known what to do with the human and natural conditions for production there.