Kiva and the nature of money

Listened to a very engaging conversation between Premal Shah and John Grant at NESTA last week. At one level it was an inspiring point of view from a successful entrepreneur, but I was left feeling that a lot of Kiva’s promise was going unrealized because of the way they constructed money and credit relations on the site.

Kiva’s aim was to transform the relationship between the ‘rich’ countries and ‘poor’ both in terms of economic injustice (which modestly Premal claimed to have had little real impact on at this stage) and in terms of the social relations between ‘rich’ and ‘poor’ countries. John Grant was very sympathetic on this point, citing his own experience of working with disaster relief charities which have the effect of painting all Africa "south of Tunisia" as victims and needy individuals.

Even this picture from my local Starbucks demonstrates everything I personally find abhorrent about the way we construct ‘need’ in Africa – the down turned headed, pleading eyes, lack of adults, lack of context (always need is personal and close up) – which may well be effective at picking the purses of consumers but also serves to distance us from the individuals (objectifying them as problems rather than encouraging a more productive, risk based assessment of potential – or capability). Why do marketers feel the need to justify their cause by quoting numbers? Is it particularly effective to reduce humans to statistics?

Back to Kiva. Premal Shah characterized Kiva as consumption rather than capitalist/productive experience. His illustration of why we feel ok buying things we don’t need when there is need elsewhere (i.e. it is literally distant), a distance which the stories and requests on the Kiva site eradicates and brings into our living rooms and laptops in a very personal and interactive way. His users display ‘addictive’ behaviours (checking status of loans at 2am) and seem to get a buzz from both the act of giving and getting the feedback of a successful loan application. This perhaps explains why people are so angry about the fact that there is little real connection in terms of money with the people you loan to in reality (the loan money is pooled rather than being supplied directly). However, this positions Kiva as just a more internet savvy, internet 2.0 charity experience rather than a ‘social lending’ site (I, and other zopaites in attendance, kept politely quiet when it was trailed as the ‘world’s first….’). Kiva is not channeling money as "investment", but rather encouraging us to consume for moral purpose (giving to another in need). Nothing wrong with this in itself, but I am not sure that it transforms the relationship between rich and poor – just makes the perception of inferiority personal.

For me, Kiva has missed a trick in encouraging people to take risks on others, driven by SEC regulatory fears rather than any philosophical bias, as this meant they had to make the loans interest free to avoid their being defined as ‘securities’ (which have sunk the aspirations of many social lending sites in the US). The problem is that this interest free status has the effect of transforming the loan to a simple donation. Now as Premal quoted, there are plenty of examples where loans exist without interest payments, but such systems are not without reciprocal obligation. As I have noted on this blog before, Athens had such a system of loans between family, friends and fellow demesmen called ‘koinonia’ finance; but in that case, there was an implicit ‘favour’ which could be called upon for a similar loan at a later date. There is no such obligation implied on Kiva. In essence, by writing off any sense of ‘return’ – beyond the return of the money which is then recycled into another loan – I am avoiding making any risk assessment on the loans instead judging them on their emotional pull or potential social value. I can do much the same thing through Oxfam (‘choosing’ what my money is spent on - although such choice is illusory).

Perhaps if Kiva was more creative about the way it characterizes the concept of return (and made into something which the recipients of the loans can return to their backers) then it could get around the regulatory issues. It would require them to deal with the distribution issues they have faced from their local lending partners in each country but surely it would be more in keeping with their overall philosophy.

Comments

[Thomas Barker]

demesmen ?

[Bruce Davis]

Fair point - quick precis below:
Deme (demos) was the basic unit of political participation in ancient athens. It was brought in to replace the aristo dominated tribal groups and formed the basis of 'democracy' - i.e. the myth that the word demos = common people is a later mis-translation; demos merely refers to the organisation of power through districts rather than family ties. A deme provided citizens for government office by lottery - and you tended to stand with your 'deme' on the Pnyx while voting at the Assembly. Parish council doesn't quite do it as a translation - it is a community which is yours from birth and formed the basis of who you were linked to and the people you would fight with. And lend to/from.