Financialisation through Microfinance: Credit Relations and Market Building

Microfinance does not reduce poverty, but it successfully constructs economic relations between owners of capital and borrowers of capital, which allow surplus accumulation through finance to occur. It does so by drawing on the agency of financialised civil society actors who facilitate financialisation through microfinance. Five distinct approaches to financialisation are highlighted, each focused on a different facet. It is shown that money and credit are not unproblematic neutral intermediaries, but possess complex social meanings of their own which allow microfinance to be associated with profound social transformations. However, these transformations are not of the kind usually theorised, but rather they are the establishment of credit-based linkages between owners and borrowers of capital which allow surplus accumulation to take place via the credit relation. Underlying this material relationship there is also a level at which financialisation motivates and pressures civil society actors to bring microfinance to the poor. By becoming financialised agents themselves, civil society organisations act as conduits for an expansion of financial markets and the construction of new market relations for other goods. A case study of microfinance for water and sanitation access in India shows in detail how this construction of markets via civil society works in practice