Scaling

Scaling Microfinance: Profit

Microfinance is one of the most debated approaches to poverty alleviation in recent times. At one end, it is touted as a successful scaled intervention that has brought social change, and on the other being reviled as an exploiter of poor women’s social capital. Nothing new, possibly can be said about microfinance.

Organizational efficiencies, and womens’ social relationships form the core of this idea. There are social and financial norms which make this possible, and allow for the social relationships to transform into social ‘capital’.

The mechanism of the womens’ Self help Group, has reached epic scale. In Andhra Pradesh there is no village where women are not mobilized into self help groups. These groups are vocal; they have political and social agendas, and hold politicians and bureaucrats accountable. Mainstream banks now offer microfinance; Europe believes it to be a way forward out of poverty, the previous government in Andhra Pradesh was toppled by the women in these groups, when they felt the chief minister had not delivered on his promises to them. Women have joined hands in public private partnerships, in bottom of the pyramid enterprises, to generate incomes for themselves.

Women have become visible, and are seen as having a say on issues important to them. Their identity has changed, to a more pro-active one where they contribute to the finances of the family, through capitalizing their social relationships. The risk is borne in the social space, but the returns are financial. The scale is measured by the number of women recruited, the number and size of the loans given out, and efforts to turn it into livelihood impact are on, but limited by the fact that returns on capital are always more than return on labour.


Scaling Fair trade: People

Fair trade has come of age today, with every supermarket now having a section of produce that is fair trade. The customer pays no premium for being fair, it is now expected that traders and intermediaries will be fair to their producers. The brand successfully adds value to the customer and to the intermediary. Almost all coffee and tea in Europe is fair trade. This is being extended to other sectors using the mechanism of a value chain; locating a producer in a chain, and ensuring he or she gets fair wage.

There are norms, by which fair trade continuously defines itself. Today, having reached scale, the label cannot be monetized, the economics of scale ensure that returns to the producer are fair, but this fair wage is decided by the norm of the organization. Today in India, a domestic label on the same principles as fair trade is being envisioned and invested in, by funding agencies; in order to change the norms in the domestic market. Here, the label is called ‘shop for change’; and attempts to move from fair wage, to better conditions of work, and equal negotiation on terms. Organizations on the field, committed to fair wage to producers use this label to put out their products in the market place, and improve their reach to customers, over competitors who are not committed to the same process.

Producers and customers feel more in touch with each other, with customers feeling that the nature of transaction is more humane, and less consumptive; the customers make a choice on what kind of production they support, and producers get fair wage. Scale in this model, is about reaching more producers who earn fair wage, so the model is about profit and people.We are also trying to reach scale in the mind of the customer, but the model is limited by the number of people who stay in production systems that build value for producer skills.


Scaling Organic produce: Planet

There are thousands of farmers, in villages across Andhra Pradesh, using their traditional farming knowledge and practices, using it to fight the large agriculture machinery, which treats the land as an unending resource. Scale is an issue of geography, farming lands that are continuous in organic practice become more effective; over time. A sustained interest in keeping this process in the customer eye, along with the concern for the resources on our planet, has led to a huge change in the construct of cost of produce. Local, organic, less processed food is at a premium; quite different from a time when resources where seen as unending, and a lifestyle that aspired towards plenty for some; at the cost of less for others.

This idea now is moving towards other products, notably clothes. Starting with baby clothes, moving to young and trendy consumers, who wear their ideology on their purses. Recycling, using less plastic, an understanding of the global, on the local, seems to be part of caring for your planet. The scale is geographic; it includes profit, people and planet; but it is limited by the fact that land and oceans are not inexhaustible, and we are running on borrowed time.

FAQs:

In each of these cases, what was scaled? What got capitalized? What did not? Where are the financial returns made and by whom?

What did not scale? What was unpaid work that the system put in? What norms changed? Did that lead to social change and social returns, and to whom?

What happens when ideas scale? What happens in practice? What happens to the people who participate in scaling? What policies work for scaling?

Is this plurality? How can we ensure self limiting ideas, rather than cancerous growths that lost potency?