Inquiring the Conditions under which the Loan Contributes "Well-being"
Presentation at the International Conference “Chatastrophe and Justice” (2012)
It has been almost 8 years since the Grameen Bank in Bangladesh and its president, Muhammad Yunus, were awarded the Nobel Peace Prize in 2006. Since then NPOs that loan to the indigents or multiple debtors have attracted attention in Japan, too, and as a result, Living Welfare Fund System, a loan system for well-being organized by Council for Social Welfare in prefectures, set new records both in the number of uses and in the loan amount in 2009. With the increase of the number of the public assistance-receiving-households, such loan systems are taken notice as one of “the second safety net” that exists between social insurance system and public assistance system on the one hand.
However, on the other hand, there is a deep-rooted apprehension–loaning to the poor or the indigents would destabilize their lives due to repayment troubles, which might lead to further financial difficulties in their living. In recent years, it has been pointed out that high interest rates and forcible debt-collections of microfinances in developing countries might drive the poor to further financial difficulties in living or even to suicide[Hugh Sinclair (2012) Confession of a Microfinance Heretic] In Japan, it emerges as social problems that student loans by Japan Student Services Organization are a burden on university students and graduate students and the Organization collects too rigidly from the debtor. Today, behind the boom of the loans systems for the poor and the indigents, a question is posed whether the loan itself really contributes to improvement of their lives.
A Book Co-edtited by the Author, His Superviser and Colleague, titled Histories of Regimes (2013 Rakuhoku Shuppan)
It was expected that the loan systems for the poor and the indigents enabled them to have the fundamentals of divert freedom and stable life by starting businesses for livelihood, receiving educations, buying houses. If we consider that well-being relates to the real freedom of leading “the kind of life he or she have reason to value”, the loan systems, which offer such opportunities and basis, should contribute their well-being[c,f, Amartya Sen (1999) Development as Freedom]. In spite of that, if the loan systems make the life of the poor and the indigent worse, what are its reasons?
Borrowing money is to compensate for current money deficiency by counting on a future self who would have money to spare.
As Maurizio Lazzarato points out by referring Friedrich Wilhelm Nietzsche, borrowing money is the promise of repayment in the future even though the “future” is unpredictable in the current. Or the debtor needs to get into danger of putting himself/herself in the uncertainty of time [Maurizio Lazzarato (2011) La Fabique De L'Homme Endetté].
What we need to confirm here is the fact that it is not the lender but the debtor that exposes himself/herself in such a danger. For example, a debtor starts a new business by loaning money from a lender that both of them thought would succeed. However, even if the business does not produce benefit because of an unexpected influence of a world economic crisis, or if a serious natural disaster prevents the debtor to continue the business, the debtor has few chances to evade his/her obligation of repaying funds to the lender under the originally defined conditions. On the other hand, the lender has a claim to receive repayments in spite of such situations.
It is not difficult to imagine that the loan system, which makes only the debtor put himself/herself in the uncertainty of time, may have negative effects on the lives of the poor and the indigent whose economic and social basis has been precarious before loaning money and their resilience with dangers that will have been actualized in the future is low.
The Building where the Office of Consumers Financial Cooperation Is Located
Still, with my research question, “Can the loan system only be such a system?”, I have conducted research not only on some loan systems for the poor and the indigent but on activities of financial NPOs in Japan. For example, I have once visited Consumers Financial Cooperation (hereafter CFC) which actively loans to the multiple debtors and persons who was bankrupt in Iwate and Aomori prefectures. CFC consults and supports their livelihood, and reschedules original repayment conditions (reduction of monthly installment or interest) , or loans additional money when they find situations that may overturn the debtor's prospect, including loss of his/her job, serious diseases of his/her family, accidents, divorce and so on.
Some not-for-profit organizations such as CFC do not only burden the debtor with responsibility for dealing with matters of uncertainty, but work with the debtor to deal with such matters. The characteristic of this kind of approach is its flexibility on repayment schedule which enables the lender, as supporter of the debtor, to keep step with the progress of the debtor's life plan without sticking to the originally promised repayment schedule for lender's profit. I think this kind of approach is necessary so that the loan systems for the poor and the indigent can contribute well-being of the debtor without pushing the debtor to further financial difficulties. Moreover, I even think that cooperative activities between the lender and the debtor to deal with uncertainty of the future give us a clue of how to design an alternative market society that is tolerant with failures and overly optimistic thinking toward the future.
Of course, only cooperative activities between the lender and the debtor to cope with uncertainty of the time do not actualize well-being of the poor and the indigents. We need various policies to dissolve economic inequality and social exclusion other than loan. In addition to keeping step with the debtor's life plan, we also need more concrete plans with various supports.
In order to contribute such policies and plans, I myself need to gain more knowledge and deepen my analysis on loan practices. Now I not only join a Kakenhi-research project on loan systems for the poor and the indigents in Japan, the United States, and France which is chaired by Ms. Junko SATO in Bukkyo University, but I conduct my Kakenhi-research project on analyzing relationships between the reverse mortgage system for the aged indigents and the public assistance system. By visiting various NPOs and Counciles for Social Welfare, I am developing my research of how the loan system should be designed to contribute the freedom and well-being of the debtor, especially the poor and the indigents whose economic and social basis is fragile.
