Financial Inclusion: Bridging the Gap or Capitalism as Usual?
An excerpt from my research paper for the New Economies class.
Most financial inclusion definitions are heavily associated with access to formal institutions. The World Bank defines financial inclusion as “access” to useful and affordable financial products, that allow people to store, send, and receive payments. They believe transactions also empower people to improve their quality of life. As a matter of fact, both private and public institutions are interested in working towards financial inclusion goals because it seems like a viable solution to reduce poverty, improve financial stability and, of course, a new niche for commercial banks to expand its business.
Nevertheless, when it comes to the other side of the coin which is exclusion, it’s important to understand that the exclusion didn’t create itself and the same system that created it, is now using mechanisms as financial inclusion to recruit the lower layers of society and secure the supremacy of capital itself, as Marx said. It’s also important to acknowledge that exclusion isn’t a contemporary problem, it’s deeply rooted in colonial society structures that were created to protect the rights of a few.
Why is this problematic? Because the capitalist narrative behind the financial inclusion mainstream speech is that people is being told that financial hardship is an individual responsibility that can be overcome by education and access to formal institutions. Financialization becomes then a form of storytelling that preaches freedom and possibility, erasing all traces of oppression and exploitation and failing to acknowledge a history of colonialism, racism, classism and gender inequality (Haiven, 2017). It contributes to create “a normalized reality where the working poor can no longer afford to live without expensive credit” (Soederberg, 2014) and operates behind a business model logic where social problems can be addressed while making profits, approaching problems related to poverty as entrepreneurial business opportunities rather than through politics of redistribution (Natile, 2020).
Taking a look at Peru as a case study, we find that 70% of the population persist in informal employment and that the main barrier for financial inclusion is insufficient income. While under the eyes of capitalism, informality can be seen as a potential market for the private sector, it is also highly probable that most people working informal jobs are the ones that perceive their income as insufficient, intermittent, or non-existent, which constitutes an important barrier for accessing formal banking. The case of Peru exemplifies the problem of an approach that focuses on providing people “opportunities to be architects of their own development” (Natile, 2020) without first addressing the social and historical causes that created the exclusion in the first place.