We interrupt our gloom for a bit of hope, part 1

2005 is the UN International Year of Microcredit, intended to promote and bring attention to the idea and practice of microcredit.

Microcredit involves loans and other financial services made available to the poor to help them to escape poverty by providing them with the thing they usually lack: a way to get started. Dealing in loans as small as $100, savings accounts without minimums, micro-insurance, and other locally-focused services, it's meant to facilitate self-employment, development of cooperatives, and job creation rather than the more traditional goal of profit accumulation.

It's still a market-oriented program: These are loans, not grants, and recipients are expected to repay them. For that reason, it has its critics, who say that all it does is integrate the poor into the world economic system instead of developing independence from it. To an extent, that is a valid criticism. At the same time, even very local economies can be and almost invariably are market economies; even the socialist, communitarian societies of our dreams would have some market elements to them (unless we want to ban people from ever exchanging one thing for another privately). My point here is not that markets per se are good but rather that they are not inherently bad so long as people control the market and not the other way around. What microfinance can do is provide access to credit for people for who the wall between desperation and debt bondage on the one hand and self-sufficiency and work on the other is labeled "initial capital."

The International Labor Organization (ILO), which has been working on developing concepts and programs relating to microfinance since 1991, noted in an emailing on November 18 that one of the purposes of microfinance is to deal with what it rightly calls "the considerable impact that financial markets have on decent work in a globalized world."

Over the past decade, the ILO has pioneered several microfinance applications: linking worker remittances to microfinance, post-conflict microfinance, micro-leasing, micro-insurance and micro-equity.

This work has been carried out with ILO constituents - for example with trade unions to improve the conditions of bonded home-workers, worker banks and other such initiatives, and with employer organizations on issues such as start-up financing for new entrepreneurs, property rights and collateral.

Still, the ILO says there is much improvement to be made:

For microfinance to make an effective contribution to the attainment of the Millennium Development Goals, a number of challenges will need to be met over the next ten years: improve the access for the working poor to affordable financial services and the performance of microfinance institutions, help microfinance scale up and tap the international capital markets to support microfinance institutions, and improve policies in support of social finance.

So yes, has problems, it's small-scale compared to the size of the world economy, and it is a market-oriented program that too easily accepts a totally globalized economy as more or less a fait accompli. But it exists, it has helped people, its goal is jobs for the many rather than profit for the few, and it works with poor individuals, labor unions, worker-owned businesses, cooperatives, and community-level organizations. Not a bad place to stand.