Historical Precedent
Essentially, microcredit attempts to boost small economies out of a perpetual bad equilibrium. In this sense, microcredit is definitely not a novelty. History has seen a myriad of attempts to boost economies out of depressed states. A couple of interesting examples include:
George Berkeley During the 18th century depression in Ireland, the philosopher George Berkeley published The Querist, a book composed solely of roughly 600 pointed questions, to demonstrate Ireland’s imminent need for a central bank (Rashid, 39). Berkeley’s queries confront many of the same issues the microcredit movement face today. Indeed, the basic premise of microcredit implicitly assumes Berkeley’s 19th query, “Whether the creating of wants be not the likeliest way to produce industry in a people?” (Rashid, 42).
More generally, The Querist’s crux was a direct response to the perpetual funk in which the Irish economy was stuck. Ireland’s inability to move out of a bad equilibrium mirrors the poverty problem that currently afflicts many countries. Today, nontraditional microcredit banks distribute loans intended to spur on economic activity in small, impoverished communities. In 18th century Ireland, Berkeley’s solution was a central bank that would essentially perform the same task. Indeed, microcredit organizations and central banks share the unique ability to manipulate the supply of money in an economy in order to promote, or, in the case of central banks, to curb, economic activity. Thus, many of the queries posed by Berkeley are dually applicable to microcredit.
Some interesting queries posed by Berkeley include:
• Whether a people can be called poor, where the common sort are well fed clothed, and lodged? (Query 2)
• Whether the drift and aim of every wise State should not be, to encourage industry in its members? (Query 3)
• Whether money be not only so far useful, as it stirreth up industry, enabling men mutually to participate the fruits of each other’s labour? (Query 5)
• Whether any nation ever was in greater want of a Bank than Ireland? (Query 201)
• Whether we may not easily avoid the inconveniences attending the paper money of New England, which were incurred by their issuing too great a quantity of notes? (Query 202)
Patrick Kelly, author of an “insightful account of Berkeley’s thought”, argues that The Querist relays the message in one of its questions that “The Irish can only be made industrious by awakening in them an appetite for a reasonable standard of living” (Rashid, 41). This point is uniquely interesting when applied to poverty in today’s world.
Historical Precedent | Models | Critiques of Microcredit | Benefits of Microcredit | Success Stories | Microcredit Summit Campaign | Conclusion | For More Information
