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14 October

The finance-related peace prize

[World Social Forum] 

The choice of the winners of the Nobel Peace Prize for 2006 is a natural continuation of the vaguely progressive line that Norwegian Nobel Committee is following since many years.

Still it is news of some sort that the peace prize is being awarded to a bank, that is Grameen Bank, and to its founder Mohammed Yunus. Would it not have been more appropriate to give them the Nobel prize in economics?

It certainly would. We can congratulate dr Yunus and Grameen nevertheless.

Some seem to start from the assumption that Grameen is taking Capitalism to the poor. That is a somewhat superficial analysis. Surely, Capitalism has been plaguing the poor long before the coming of the microfinance industry.

In the context of the grotesque financial system (or lack of system) that the whole world suffers under today, Grameen is a wonderfully exceptional capitalist business bank.

The efforts by Grameen to combine the microcredits with the microchips are extremely interesting. The mobile phones and/or the computers (which can be one and the same) are replacing the money, or rather, they are the new money. Will the world's finances become more transparent and public? Could the banks become more like the libraries - institutions that serve the citizens with information and information technology?


Former president of Finland Martti Ahtisaari had been one of the favourite candidates of the mainstream press for the Nobel Peace prize 2006. Here in Finland, however, many citizens were drawing a sigh of relief when the winners were announced. While dr Yunus is an example of a banker and an economist who became a true social democrat, former president of the republic Ahtisaari is yet one social democrat turned into a true capitalist.

I am probably not alone with this opinion. In the webforum of the daily newspaper Helsingin Sanomat, one of the first comments to the topic "Where you disappointed on behalf of Ahtisaari?" , said: "This man supported the war in Iraq, and only two days ago it became known that more than 600.000 Iraqis have died because of the aggression of the USA".

Yours in peace.

Om vissa inskränkningar i yttrandefriheten (1)| Paradsidan | Montesquieu, Estates and Liberty

Re: The finance-related peace prize

"You cannot eliminate terrorism with war. You can bring a country on its knees, but it does not solve the problems. It is only counterproductive. People feel that a great injustice has been done, and that is the source of the terrorism" (Muhammad Yunus, Nobel Peace Prize 2006 in "Hufvudstadsbladet" 14.10.2006, p 10, transl. MB).


"[Grameen ](a) is not as good as it claims. It conceals its repayment rate
to make it look good, (b) Grameen's accounting system, the procedure for
determining the overdues, and making provisions for them does not follow
industry standard, (c) And predicts that Grameen's future will be worse
because of it is "delaying inevitable defaults and hiding problem loans"."
( Muhammad Yunus: "Grameen Bank, Micro-Credit and
the Wall Street Journal" (2001), http://www.grameen-info.org/wallstreetjournal/)

Dr Yunus admits that the accounting system of Grameen might not meet
"industry standards", but he defends the system they use nevertheless:
"We always argued that as long as we are generating all the information to
produce every single table, index or ratio familiar in the conventional
banking world anybody can translate our information into their
information. We do what we need to do. It works fine with us", Yunus

I think that the point to be developed here concerns *the accountability
of all the banks*, Grameen as well as the others.

Accountability is, of course, much more than a question of "industry
standards". For instance, I suppose the KPMG is following "industry
standards", but how about the accountability of KPMG itself? It was
severely challenged in the Enron scandal, as we remember. (Here is a
quotation, if somebody needs to freshen his memory: "The firm [KPMG]
agreed to fork over less than a year's profit in return for not being
indicted on a zillion counts of cheating the government by peddling
sleazy, dishonest tax shelters for six years" (quoted from Allan Sloan:
"KPMG Partners Lucked Out -- Thanks to Enron and Arthur Andersen", The
Washington Post, Sept 6, 2005)

That Grameen has been innovative, is obvious. It is perhaps not so
difficult to see how it could also become more of an emancipatory force.

A bank like Grameen, or like certain cooperative banks and savings banks
of the past, has more or less explicit social goals, and is deeply
embedded in the society where it functions (the villages of Bangla
Desh, in Grameen's case). Clearly, such banks can be part of a
historical bloc of emancipatory forces.

Dr Yunus writes: "We consider credit as a human right". This surprising
statement is worth attention and analysis. In these words, I can even hear
a faint echo of the famous principle: "From each according to his
abilities, to each according to his needs".

The interesting and innovative - and perhaps emancipatory - aspects will
open up if we take as our starting point the convergence of money and
information. Money has become a question of computer programming and
computer networking. Banks, nowadays, are information archives, or
libraries, if you want.(1) Up til today, however, they are acting in the
dark, and by armed proxies.

Try to think of *the bank* of the (near) future as an information service,
a public library that is globally available via the internet. Could
Grameen, and Grameen Phone (2), be the heralds of a new kind of bank like

Like what? Well, that is for us to figure out and experiment with.


(1) The centralised clearing of currency and banking transactions via
SWIFT, Clearstream and the like, presupposes and generates massive global
data banks. No money is needed here, only mass data storage and computers.
Plus a lot of political and military power, as illustrated by
the news about the mining of the databank of the SWIFT system by the Bush
administration (see, for instance:

Historically, we can constate the closing of a circle. Long before
anybody started to use "money" the Sumerians created the first archives or
libraries. Those archives or libraries were first and foremostly keepers
of the economical "books" : "The Sumerian economy was based on cultivating
grain... Much of this economic activity was managed by the temples... The
temple administrators needed to record the details of their landholdings
and harvests... the temples needed a more permament way to keep rack of
what they owed and what they owned... The temples did not discard their
old business records, but deposited them in storerooms... Within these
rooms, tablets were kept in wooden boxes, reed baskets, or brick
receptacles. Attached to each container was a clay tablet serving as a
label, listing the contents of the tablets within each container and the
dates they covered... Besides business records, the temples preserved the
text of hymns, prayers and incantations.." (Quoted from Fred Lerner's The
Story of Libraries from the Invention of Writing to the Computer Age,
Continuum, New York 2002, pp 13-14)

(2) See http://www.grameenphone.com/

Postad av: Mikael Böök 15 Oct 2006 20:20

Re: The finance-related peace prize

Patrick Bond has written a critique of Yunus and Grameen for the ZNet. It is called "A Nobel loan shark? "

I consider this essay by Patrick Bond + other critiques of microfinance, such as "Hype and Hope: The Worrisome State of the Microcredit Movement" by Thomas Dichter, and "My Comments on the Nobel Peace Prize for Dr Yunus and Grameen Bank of Bangladesh" by Taj Hashmi, to be highly interesting and essential reading.

However, even if I do not believe for a minute that there can really be a capitalism with a human face, I must say that I prefer the capitalists with good intentions to the Enronesque crooks. So I am still willing to congratulate dr Yunus for his good will and personal engagement. I do not see the enemy in him.

If we had an old-style Revolution, and I were the one keeping the list of the oppressors to be hanged, then I would delete Dr Yunus' name from it.

In a comment to my reaction on the announcement of dr Yunus and Grameen as the winners of the Nobel Peace prize,
long-time labor movement researcher Peter Waterman said (in a message to the Debate list at Kabissa):

"I would have thought that emancipatory political-economists should be concerning themselves with not simply a critique, far less a dismissal, of the Grameen Bank, than an alternative to such."

I agree with Waterman that this is the question we must pose. What alternatives have we come up with?

Thomas Dichter, in his piece, speaks about the need for
"a far larger, more coordinated effort [than microcredits], such as organised efforts to train farmers, buy their produce, and certify, package and find export customers for it."

Does this mean that, if microcredits were combined with that "larger, more coordinated effort", then it would work?

Who would / will do that effort? Some kind of Social Democratic government of the national state in question?

Or, should we try to design a kind of bank that is more like "the rights-based social movements which have demanded ‘rights’ in terms of free lifeline access to healthcare, education, housing, land, water, electricity and the like" (Patrick Bond), as contrasted with the "right to credit" which is propagated by dr Yunus?

We have to take these questions seriously. I for one do not believe that Social Democratic governments of the national states will be able to solve the problem: How to construct a new global financial system, which is better and more just than the non-system we have today?

To begin with, we must rethink our concepts of bank and money.(It is clear that we will need different banks and different money.) It is not difficult to understand that this problem is closely linked to the development of the digital information technology. As I wrote earlier (and as numerous others have said), money and information are converging -- or at least converging in new ways. At one point in the nineties, some people believed that we would get Digicash. We didn't, but that does not necessarily mean that Digicash is a totally wrong idea. Keynes wanted a sytem with 'bancor', an international currency that would be used by a world bank in order to balance the trade deficits. The time has come to revive the idea of an international currency. The USD is bound to collapse in an overseeable future (Gabriel Kolko, in his recent essay in Monde diplomatique says as much).

The new system of world finances has to be a public system, in fact, a public service. Once more, we encounter the 'information', because 'public' means, among other things, open to public scrutiny. I repeat: the banks must become more like the public libraries which, ideally, try to make all information available without delay to all people.

Postad av: Mikael Böök 20 Oct 2006 13:23

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