I do not know if anyone was paying attention to the development debates of the late nineties and new millennium. The mainstream went whole hog on the idea of development from below via entrepreneurializing peasantries and urban slum-dwellers.
Indeed so illuminated by the idea of petty capitalism the Nobel committee gave one of its real Noble prizes, the Peace Prize for 2006, to Prof. Muhammad Yunus & Grameen Bank.
Of course in good time capitalistas with a social conscience, like George Soros, would get behind the idea and start financing large micro-credit investment houses. Of course capitalism being what is and regulations being what they are in India it appears the whole thing is turning into a giant Ponzi scheme which is fleecing the poorest of the poor.
But here is the twist, in India politicians and state officials are not suffering from ideological capture as they are elsewhere and have told their public to stop paying their loans. The New York Times reports that in one state over 90% of people have stopped servicing their micro-loans.
Here is what I take to be money quote from the NYT on globalized micro-finance:
“The money lender lives in the community,” he said. “At least you can burn down his house. With these companies, it is loot and scoot.”
Indeed, some of the anger appears to have been fuelled by the recent initial public offering of shares by SKS Microfinance, India’s largest for-profit microlender, backed by famous investors like George Soros and Vinod Khosla, a co-founder of Sun Microsystems.
Notice that the “he” in the above quote is a senior public official with the State government. Burning down the house of the money lender as a form of implicit social regulation. What a novel idea.