Stripped of the realities of human selfishness and incompetence, microfinance seems a perfect model. Include the poor in the financial sector, give them small loans to invest in their business or purchase property, and they’ll slowly raise themselves out of poverty, becoming asset-owning, self-reliant citizens. There is no shortage of research and articles showing just how badly this has gone in Cambodia. The latest addition, by a researcher at the National University of Singapore, was published in June. Read David Whitehouse’s write-up of that in The Diplomat.
One might argue that it’s no different from other utopian theories that run aground because of human nature. Or, again like all utopianists, the microfinance theory is sound but it has only ever been imperfectly implemented. That, or you can also look at Cambodia’s history and see how the French colonists and the Sihanouk regime (1953-1970) attempted to create “agrarian capitalism” by developing a cash system in the countryside and modernizing land ownership, yet instead created mass indebtedness. A recent book on Cambodian famines, by James A. Tyner, noted that “Sihanouk’s limited efforts to address land reform often led smallholders to contract unpayable debts and to suffer subsequent landlessness,” which rose from 16 percent in 1962 to 20 percent eight years later. Plus ça change.