In a village in Sri Lanka, a small group of women meets regularly to do the work of the global finance industry, for free. They are all clients of a major bank that has, at an interest rate of over 25% per annum, loaned back to them their own money. Welcome to the world of microfinance.
The women gather every other week in order to hold each group member accountable for making her weekly loan payments. The group leader recites their loan balances and the record of their payments, making every detail of their finances into an object lesson in financial discipline.
The women also encourage anyone who hasn’t yet got a loan to keep on saving whatever they can out of their weekly household budget. For it’s only by making regular deposits into a savings account that they can demonstrate their bankability. Only bankable women get loans to start a microbusiness.
This self-policing is very effective for the bank, because the women are all friends and neighbours, sisters, mothers and daughters. Who after all would want to disappoint her sister or embarrass herself before her neighbours, by not being able to make a required loan repayment?
The fact that the women all know each other means that the lessons of the meeting continue informally throughout the village on a daily basis. The reality of their debt permeates their conversations. Every moment of leisure, every purchase they make for their families, means less money to make their loan payments or savings deposits. In every interaction, the women are reminded that they are accountable for working and banking properly. And tangibly so. Because if they default on a loan, the other members of the group have to repay it. A woman who let that happen would never live it down.
This diffusion of formal accountability into informal daily interactions is what my co-authors, Chandana Alawattage, Danture Wickramasinghe and I have called microaccountability. It’s how the global finance industry permeates everyday life, harnessing personal relationships to maximize its profits. The microfinance industry depends explicitly on this, but our theory is that this is a much broader phenomenon. For instance, we think this is a good way of understanding what makes Facebook so profitable. Facebook doesn’t just depend on us liking what our friends post. It depends on us feeling obliged to respond to them. By making our responses (or non-responses) visible to our network of friends, and by allowing them to respond in kind to our posts, Facebook creates a mechanism of mutual accountability that operates at the micro level to shape our behaviours. Corporations that figure out how to monetize this microaccountability are able to generate a lot of profit.
In the series that follows, I’ll take you through what we learned in Sri Lanka. To get the most out of this, let’s make sure we understand what we mean by the notion that underlies “microaccountability,” accountability itself.
When we say that the women in this Sri Lankan village are “accountable to each other,” what we’re talking about is a horizontal kind of accountability, peer to peer. This is different from the accountability that an employee feels towards a boss. Accounting scholar John Roberts drew this distinction in 1990, using the terms hierarchical accountability (employee—>boss) and social accountability (peer<—>peer).
Roberts argues that hierarchical accountability emphasizes our individuality. Social accountability emphasizes our interdependence. Both accountabilities work together to shape how we see ourselves and how we understand our responsibilities.
Martin Messner, in 2009, extended the work of Roberts by incorporating Teri Shearer’s argument that our identity is rooted in our obligation to account for ourselves to others, an obligation we feel even before anyone demands it of us. This is an insight that owes much to gender theorist Judith Butler. Shearer and Butler both argue that in giving an account of ourselves, we must move beyond self-justification and understand our obligation to others.
Messner applies this ethical insight to Roberts’s idea of social accountability. Messner emphasizes the importance of informal face-to-face accountability to others, where the obligation to others is experienced without any prescribed rules or specific formats for reporting. Informal accountability, he argues, happens without the “rush to a specific result” that characterizes formal accounting. Messner notes the importance of emotion and affection in informal accountability. These are what drive socially acceptable behaviours home, and change us.
But this has limits, says Messner. Our ability to give an account of ourselves is always limited by our ability to know ourselves and our ability to communicate that knowledge. Though we try to provide an acceptable account, it can never convey exactly what we want to say about ourselves. This is even more of a problem in formal accountability situations, such as those involving money. Financial calculations and reports provide but a dim reflection of our actions and our selves.
Messner argues that this creates an ethical gap that can only be bridged with limited success. Organizations can, for instance, define accountability very narrowly, so that their employees can check off a finite list of items they are accountable for. They can limit the number of people to whom an employee is accountable, so that one need only address a very specific audience. They can try to align everyone’s interests in order to reward acceptable behaviour, or make decision-making more participatory so that responsibility is shared. However, Messner argues, these attempts to bridge the ethical gap will always be incomplete, because conflicts of interest will always arise, and the complexity of human life will exceed our capacity to calculate and master it.
Our study of microfinance in Sri Lanka looks at a specific attempt to overcome these limits of accountability. In the exploration that follows, we will see how microfinance embeds financial accountability into the daily lives of local women, who have been organized into microborrowing groups to maximize social accountability. We will also see how these groups are arranged into a new hierarchical village system that connects the women to the global financial system, showing that hierarchical accountability is also very much a feature of microfinance.
These local arrangements are the result of a massive effort by the for-profit microfinance industry in Sri Lanka to transform rural village life, in order to earn a profit from poor people who previously had no interactions with banks. In this effort, the microfinance banks have been assisted from the start by the Sri Lankan government and by transnational institutions such as the World Bank and the Asian Development Bank. Our study suggests that despite the high level interventions of these institutions, the key to the microfinance industry’s success is actually microaccountability, the small daily interactions that ensure the borrowers don’t let down their group when it comes to saving and borrowing.
This reorganization of village life in order to harness the energy of personal relationships is an example of biopolitics, the extension of neoliberalism beyond institutions, across the population and down to the level of the individual. You can read more about this in my previous post on biopolitics. It’s all about getting individuals to be more entrepreneurial, to take more economic risks. As if the poor aren’t living precariously enough.
Our study of microfinance in Sri Lanka shows clearly the contradictions in this way of organizing people’s lives. Remember Thatcher’s infamous remark about there being no such thing as society. Neoliberalism is predicated on thinking of people as individuals, not as a society. Yet implementing neoliberalism depends completely on taking advantage of existing social relationships. It’s why cutting funding to education, for instance, doesn’t make the school system collapse completely: teachers have been socialized to care about their students, and so they find a way to keep on teaching even if they have to buy school supplies out of their own pockets.
But biopolitics doesn’t just use social relationships as they are found. It reorganizes society to make human relationships prescriptive, directive and purposeful. Society must be refashioned to create a new way of living: Women who used to work together must now each operate their own individual businesses, which will never scale up to allow them to become capitalists. They must consume loans, which will never be paid off without taking on another loan.
This is a new mode for the production of wealth, where labour is immersed in the social world rather than being confined to the corporate world. Microfinance is the global finance industry operating at the most local and intimate level, in the relationships between sisters and friends.
In this system of production, the poor are an indispensable presence. They are central to the global order, not simply marginalized. Though excluded from wealth, they are integral to its production. In our study of microfinance in Sri Lanka, which I will describe in more detail in the posts that follow, we will see precisely how the global finance industry monetizes the microaccountability of one woman to another, under the guise of poverty alleviation.
Photo of borrowing group in Parakatawella © 2012-2013 Wickramasinghe. (I mistakenly dated the photos as 2007 when this was first posted, having misread the timestamp information. This still makes the point that it takes a long time to do and publish field research. We began work on this in 2012. The paper has now been published online, but at the end of 2018 we are still waiting for it to appear in print.)
Alawattage, C., Graham, C., & Wickramasinghe, D. (2018). Microaccountability and biopolitics: Microfinance in a Sri Lankan village. Accounting, Organizations and Society.
Butler, J. (2005). Giving an Account of Oneself. New York: Fordham Univ Press.
Deleuze, G. (1992). Postscript on the Societies of Control. October, 59 (Winter), 3-7.
McKernan, J. F., & Kosmala MacLullich, K. (2004). Accounting, love and justice. Accounting, Auditing & Accountability Journal, 17(3), 327-360.
Messner, M. (2009). The limits of accountability. Accounting, Organizations and Society, 34(8), 918-938.
Roberts, J. (1991). The possibilities of accountability. Accounting, Organizations and Society, 16(4), 355-368.
Roberts, J. (2009). No one is perfect: The limits of transparency and an ethic for ‘intelligent’ accountability. Accounting, Organizations and Society, 34(8), 957-970.
Shearer, T. (2002). Ethics and accountability: from the for-itself to the for-the-other. Accounting, Organizations and Society, 27(6), 541-573.