The Extractive Success of Financial Systems: Microfinance and the Financialisation of Poverty

Microfinance emerged from the sphere of grassroots development, but has fundamentally transformed into a financial sub-sector which today may serve as a key case for studying the mechanisms and effects of financialisation. As a financial market-driven intervention deeply intertwined with transnational processes of financialisation, the expansion and workings of microfinance may be studied on three dimensions, which in turn represent important dimensions of the growth and deepening of financial systems: shifting narratives, growing governmentality and extractive success. First, an analysis of microfinance’s representation in contemporary developmental and financial discourse shows that its appeal is built on positive mobilising narratives which present poverty as a problem of finance, portraying microfinance as a superior solution relative to charity or redistributive alternatives. Second, an analysis of the credit technologies at work in mainstream and non-mainstream microlending shows that, as a financial system, microfinance builds governmentality which generates technologies of the self, employed by disciplinary individuals to uphold regularity in capital flows; this has empirically discernible (yet usually ignored) effects on borrowers’ lives. Third, microfinance makes possible the extraction of surplus value from borrowers at a considerable and quantifiable scale, drawing new labour resources into the capital accumulation circuit through an entreployee-type capital-labour relationship. These three dimensions invite us to reflect upon the operation of capitalist financial systems and the ways in which they expand by demonstrating the normative importance of supportive narratives, the role of specific technologies of governance, and their material effects in terms of surplus accumulation.