Wednesday, October 28, 2015

Social Collateral: Women and Microfinance in Paraguay’s Smuggling Economy

First cohort, IMTFI fellow Caroline Schuster is publishing a new book this month, Social Collateral: Women and Microfinance in Paraguay’s Smuggling Economy by UC Press (October 2015).  In this post, Carly shares and reflects on the process of writing the book, and how it grew out of her IMTFI research.

I first began research on this book about microfinance in Paraguay in 2006. It was a time when consumer and housing credit in the United States appeared to be a mainstay of the economy: cheap, ubiquitous, and seemingly endless. I returned to Paraguay for sustained fieldwork supported in part by the IMTFI in February of 2009 until August of 2010. It was a moment when big banks as well as microcredit borrowers in Paraguay were all grappling with how to understand a profoundly changed credit market. As such, my book is about global finance, just not from the dominant perspective of Wall Street. I tell the story of how microfinance loans are made, sold, and managed — their life cycle from creditworthiness, to repayment, to renewal — as a window into the on-the-ground workings of financial tools. This was crucial also because at that very moment those very tools were being hotly debated in the midst of the global financial crisis.

Social Collateral places microfinance within a wider suite of financial practices in Paraguay, which are especially vibrant in the “triple-frontera” or Tri-Border Area (TBA) with Argentina and Brazil. The zone is notorious as a regional commercial hub and for widespread smuggling. It is also an area awash in credit. My book rethinks the role of microcredit within social development financial inclusion policies in the TBA. Leveraging debt is crucial to transborder trade with activities ranging from buying on installment plans, credit from wholesalers, and borrowing from finance companies. While the group-borrowing and joint liability of microcredit is especially visible in the highly regulated world of non-profit development lending, I found that Paraguayans actually manage many forms of collective debt in the wider commercial context of the border. Ethnographic study of everyday financial practices helped me to see how “too big to fail” notions of overly dense financial entanglements among the biggest banks in the global financial system share remarkable similarities with “too small to fail” logic of microfinance and their intimate economic ties of social collateral. In the book I argue that this is an important context for considering new forms of collectivity and cohesion bound up in shared debts, as well as their potential futures. In her review, anthropologist Karen Ho (author of Liquidated: An Ethnography of Wall Street) remarked that Social Collateral “demonstrates how microcredit programs depend on social density and help produce the very social collateral upon which they depend.”

My account of social collateral is necessarily an interwoven account about the feminization of solidarity lending. At its core is an economy of gender—from pink-collar financial work, to men’s committees, to women smugglers. In the book, I track how microfinance reshapes notions of what it means to be both a woman and a borrower. What emerges from these accounts are interdependencies that bind borrowers and lenders, financial technologies, and Paraguayan development in ways that structure both global inequality and global opportunity.

Pick up a copy of Social Collateral from University of California Press today!

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