When I did financial work, there was always a tidying up exercise at the financial year-end. But, however much we wrote off or threw away, there was always something called “rollover” – outstanding queries, problems yet to be resolved, refunds yet to be made, payments yet to be collected. This reflected the fact that time is a continuum, calendars are a social construct and financial affairs, like human affairs, are messy.
At the beginning of 2012 “Occupy” protesters were still camped outside St Paul’s demanding radical changes to the governance and practices of international financial institutions; governments demanded action; the press did the same.
Banks, though, have just carried on accepting money from government, using it to cut the interest they pay to depositors and failing to lend to business, although that’s what they were given the money for in the first place.
It was an equally bad year for other kinds of institutions – totalitarian governments, hospitals, churches, the police, the BBC, the press. The response was to investigate, review, report, promise to “learn lessons” and institute reforms.
What we should have been asking is whether we need some of these institutions at all.
Meanwhile, in another part of the forest, some interesting things have been happening.
In the UK, there has been a growth in peer-to-peer lending. This uses the internet to allow large numbers of people to lend small amounts of money to other people (businesses who want to expand, individuals who want to pay off their debts) at fair rates of interest.
Overseas aid, whether by charities or governments, is another institutional activity that came under the magnifying glass in 2012. Government aid has always been a bit suspect as it has too often been tied in to trade, which meant that the main beneficiaries were more likely to live in a marginal West Midlands constituency than some hungry West African village.
But here again, there’s been a shift. One of the most memorable quotes of 2012 was “In the 21st century, the internet will be for Africa what steam was for Europe in the 19th century” (some bloke on Radio 4).
Mobile phone ownership is on the rise and Kenya has a fully functioning broadband network (governments are still good for some things). These allows people to trade directly rather than through intermediaries, to bypass corrupt public officials, to access information and, with even the most basic of PCs, to access education.
Interestingly, technology can also give people in developing countries access to loans from people in wealthy countries, which may prove more effective than the World Bank ever did.
We still need institutions, but probably less than we used to. From where I’m sitting, it looks increasingly as if real change is in the hands of individuals using their own words, their own actions, their own judgement and their own money.Links: Funding Circle (microloans to UK businesses) Zopa (microloans to UK individuals) Lend With Care (microloans to entrepreneurs in developing countries) mfarm (helping farmers sell crops at fair prices) icow (using information to improve farming) one laptop per child (using technology to deliver education)