"Counting on Change," OAC e-seminar with Erin Taylor (June 22-July 6) is NOW OPEN.

Welcome to the latest installment of the OAC Press working paper series, an e-seminar focused on Erin Taylor's paper "Counting on Change: What can money tell us about inequality in Haiti?" If you haven't read it yet, the paper is available to read online or download as a PDF here. The seminar will be open for comments from June 22 until July 6th. Please feel free to read the paper and share your thoughts with us! Thanks goes out to Erin Taylor for sharing her work with us, and to Justin Shaffner and John McCreery for helping to organize this seminar!

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Thanks for sharing your work and this paper with us Erin! Toward the end of the paper you discuss some of your primary conclusions. You talk about the relationships between money and inequality in terms of production, circulation, and distribution. You argue that money production doesn't seem to be a very promising area (by itself) if we're trying to come up with ways of confronting and dealing with persistent inequality. You also highlight some of the shortcomings of approaches that focus on consumption as the way forward (these kinds of solutions, you note, are often favored by many economic development scholars and practitioners).

The basic argument in favor of consumer-led solutions is that more choices and options will lead to increased use, lower transaction costs, etc. Mobile money is one common, popular form o of this. But you point out that while technologies like mobile money are "useful," they don't actually address the bigger issue of unequal wealth distribution. You provide several great examples that show us how people use money--including mobile money--but also how and why sometimes they don't or can't actually use those systems. I find it fascinating, for example, that some people (for various reasons) still prefer to send cash via boat or ground transport. I think these kinds of examples might confound some economic development scholars who might assume that people will automatically switch to newer systems and technologies. Often, as you demonstrate, they don't, they can't, or in some cases they don't want to. So this supports your wider point that financial inclusion is definitely not enough. This is not just a matter of creating more choices, or introducing new, supposedly better products that will solve the problem of inequality.

It's a structural issue. You make this point very clear when you write: "For all the recent enthusiasm about the democratization of money creation and tools for its circulation, inequality is a structural issue, not a household or individual one." And this means we have to look at the production, circulation, and distribution of money in order to address the wider problem. NGOs and private companies aren't the solution to this either--both have their own interests, limited obligations to actually stay, and often aren't all that good at working together to provide broader solutions. The weak state seems to be the real issue here. This is where I think it's important that you highlight the historical conditions that brought us to this point--these are the kinds of factors that sometimes get left out of the equation when it comes to Haiti (not to mention other countries that face serious economic challenges).

I still remember the David Brooks column after Haiti's earthquake in which he argued that it's all a "cultural" problem and the people of Haiti are to blame for poverty. Various strains of that sort of argument are pretty common, and they often completely elide questions of history, not to mention power. Your paper pushes back against that quite powerfully. You end the paper with this: "Mobile money and other technologically-mediated forms of transacting enter the logic of this financial ecology more than they change it. They lower some transaction costs, but are ultimately just one more tool in people's repertoires. In Haiti, then, the inequalities generated through money tend to emanate from the macro level, but solutions are founded in everyday socioeconomic practices."

I appreciate the idea that solutions to macro level problems can be found in everyday practices, but I'm still not sure how this would look. Do you see hints of a way forward, for example, when you discuss Haiti's imaginary currency? What other everyday practices, for you, provide hope for addressing the broader issue of inequality? Finally, on the ground, what kinds of changes--in practice or even how economists, developers, etc think about these issues--would be necessary to actually start addressing this massive issue?

Focusing in on the question of why people might prefer use of boat or ground transport for crash, I discovered a Wikipedia article on Informal Value Transport Systems (IVTS) [https://en.m.wikipedia.org/wiki/Informal_value_transfer_system]. A transfer within Haiti is not a cross-border transaction but I wonder how many of the reasons described below might still apply.

"IVTS are used by a variety of individuals, businesses, organisations, and even governments to remit funds domestically and abroad. Expatriates and immigrants often use IVTS to send money back to their families and friends in their home countries (for workers who worked abroad) or foreign countries (for merchants who need extra money to start a business). IVTS operations are also used by legitimate companies, traders, organisations, and government agencies needing to conduct business in countries with basic or no formal financial systems.

In some countries, IVTS-type networks operate in parallel with formal financial institutions or as a substitute or alternative for them or. Besides citizens of the host country, people (legally or illegally) residing in the host country from foreign countries may prefer or need to use IVTS in lieu of formal financial institutions for various reasons as described below:

-the host country and the receiving country have no diplomatic ties or the host country actively discourage the sending of money to the receiving country.
-the constant change in the world political environments, unsatisfiable payment systems, and/or a rapid continuously changing financial sector;
-a lack of easily accessible formal financial institutions in remote areas of some countries;
transfers that are more efficient, reliable, and cheaper than formal financial institutions. (For example, a wire transfer of funds using banks involves fees charged to the sender and receiver, may take from two to seven days to complete, and may be delayed or lost. Funds moved through IVTS are usually available within 24 hours, with minimal or no fees charged to the participants);
-to avoid paying higher foreign exchange rates. (Funds sent through traditional transfers are converted to the currency of the recipient’s country; the fee charged for exchange rate conversion is set by the institution. IVTS operators, who speculate in currency exchange rates, charge lower fees);
-to avoid paying transfer taxes;
-to ensure anonymity since there may be minimal or no records maintained; or
to avoid mandatory reporting of large transactions from financial institutions to governments.
Because IVTS provides security, anonymity, and versatility to the user, the systems can be also used for supplying resources for doing illegal activities. Following the September 11, 2001 attacks on the United States, IVTS have come under increased scrutiny and regulation in many countries as a result of pressure from the United States."

Thanks for the paper and seminar, Erin. I want to start small. The 'Haitian dollar' is a unit of account with no physical presence. Do you think its net effect is to push distribution in any particular direction and does it alter what we think of as 'money' in Haiti?

Thanks, Erin. You point to the need to recognise the 'structural' character of inequality as opposed to putting great weight on the creative power of money to open up new possibilities. You also noted the significantly disruptive role of NGOs at present in a country that has been occupied by foreign troops repeatedly in its recent past.

Clearly as elsewhere in the region the problem of building more than the simplest person-to-person economic linkages is connected to the issue of local sovereignty (the flipside of Keith's famous two-faced coin--one side represents the denominator the other the sovereign power that backs it up). So, I would like to ask how you figure the connection between sovereignty and popular everyday economics.

And, on a more general point I was reminded of Raoul Peck's caustic take-down of the work of foreign aid agencies in Haiti, Assistance Mortelle / Fatal Assistance:

Thanks Erin, a pleasure in readability and point making.

If I understand correctly you have problematised the notion that 'financial inclusion' relieves poverty. You have answered by saying that in reality there are multiple other things that also need addressing at the same time for financial inclusion to be a successful part of poverty alleviation. By implication you are suggesting that these other things aught to also be addressed in tandem. I think your paper does a great job at this and more besides. (that is how i read this anyhow)

My question: who is being included in whose finances? Small example, are the NGOs using new technologies to be able to include Haitians in their work? How can we ask how can Haitians not simply be included in some greater powers finances, but also vica-versa.

I guess this was always going to be the point as the underlying assumption here is that Haitians need to be moved into some form of market-state to alleviate poverty or fuck-off with their poverty. I mention this because I feel its relevant to challenge big 'structures' like the assumed developmental stage of the market-state in the vicinity of Haiti where they successfully challenged another big structure: formal slavery.

Dear all,

Ryan, thanks for your introduction, and thanks to everyone else for your comments on my paper. It is really interesting to see the material through other people’s eyes.

You are right that I am arguing strongly that inequality and poverty are structural issues that cannot be addressed through “financial democratization”. I want to be clear that this is not an argument against markets. What I’m arguing is that market-based approaches hold potential, but only if they are backed up by strong state institutions that work in the national interest and provide effective mechanisms of redistribution.

In Haiti, market based “products for the poor” are actually better than most NGO programs. Mobile money may not have proved a resounding success, but it is at least politically neutral, useful, and non-disruptive. Moreover, it’s affordable. However, it isn’t transformative. It doesn’t increase or redistribute wealth.

Is there a market-based solution that could decrease poverty and potentially also inequality? Perhaps. A major problem in Haiti is that there are too many sellers and not enough buyers. Everyone is trying to sell the same things to everyone else. This is a major reason why “microfinance” is not generally successful at alleviating poverty. After the 2010 earthquake there were various efforts to assist Haitians to open up grassroots export opportunities. One foreigner I met had won a contract with Macy’s in NYC to sell jewellery made by the members of a small community.

These kinds of initiatives are a promising start, but for them to be successful on a large scale, two things are needed: 1) proper national coordination to organize producers and procure good export conditions; and 2) for foreign organizations to stop flooding Haiti with products they produce themselves (such as peanut butter) and wiping out local production.

The message is clear, to me at least. Markets can absolutely be useful in increasing GDP and employment in Haiti, reducing poverty, and potentially also inequality. But for these markets to function in the national interest, there need to be strong national institutions to institute policy and regulation, oversight, consumer protection, etc. There also needs to be a state-centred distribution of resources (e.g., welfare, infrastructure, education, etc) to permit more Haitians to be able to participate in these markets. In other words, strong state institutions are necessary for economic development, the reduction of poverty, and the reduction of inequality.

Ryan, you ask about a phrase at the end of my paper, in which I say, “In Haiti, then, the inequalities generated through money tend to emanate from the macro level, but solutions are founded in everyday socioeconomic practices.” I have to apologize for not being clearer. I didn’t mean to suggest that these practices are solutions to poverty and inequality: they’re not. What I meant was that, given the circumstances, Haitians find workarounds in their everyday economic practices. Sending money via a mobile phone or a boat are ways to work with a limited resource. Sidney Mintz’s work on standards of value and units of measure in a Haitian market is a great example of this, how people find sophisticated ways to solve problems that are both calculative and relational.

Ryan, you’re probably right that development economists would be confounded by things like people choosing to send money via boat when there’s mobile money available. But of course people usually have very good reasons for their choices. The article that John quotes shows that the range of reasons why people make certain choices can be wide indeed. People rarely follow the process flows that are designed for them!

Huon, the question of sovereignty in Haiti is very tricky for two reasons: one, the constant presence of foreign interests throughout the country’s history; two, stark national divisions. Overall Haitians tend to be united in how they view their early history, e.g., the revolution; it provides a strong foundation for the “story” of Haitian nationalism. Apart from that, there are wide socioeconomic differences across the country, and it sometimes seems to me that the main institution joining up the disparate parts of the country is actually the domestic market system. So, in a sense, you could say that the grassroots economic system is the basis of national unity.

Keith, I am not sure whether the Haitian dollar pushes distribution in any particular direction. My gut feeling is that it would have little to no effect. It is more of a kind of “code switching” than anything agentive. As a result, I don’t really think it affects what we think of as “money,” since it does not carry its own, independent value (let alone a material presence). It is a unit of account, yes, but not a measure or store of value. So its presence is more linguistic than anything else.

Abraham, you ask “who is being included in whose finances?” Good question. Mobile money and microfinance both incorporate Haitians into financial globalization. With mobile money, Digicel administers the accounts, but the money is held in a formal bank. With microfinance, much of the funding comes from overseas investors. So “financial inclusion” is really a process of financial globalization. I published a chapter in the Money Lab Reader in which I discuss this. I think the only way to achieve the reverse, for Haitians to “domesticize” (c.f. Joe Deville) finance, is for them to have more financial power in the first place.

Hope this all helps shed some light on my reasoning. Looking forward to more questions!

Hi Erin,

Thanks very much for sharing your paper. I was particularly sympathetic to your conclusions:

Overall, at the present point in time it would appear that the sphere of money production is not a particularly promising area through which to redress issues of inequality.

For all the recent enthusiasm about the democratization of money creation and tools for its circulation, inequality is a structural issue, not a household or individual one.

As I was taking notes, those both got big "this this this" next to them. My questions, then, are more clarifying, and are twofold:

First, would you mind telling a little bit more about the nature of your research: where were you, who did you talk to, how did you observe and record different kinds of transactions, etc. I'm just curious to hear what your sample was.

Second, given your identification of inequality as a structural problem, and one of both redistribution (it's inadequate), and wealth creation (it'd be nice if there were more to go around), I was wondering if you had in mind any state systems that do redistribution well, and perhaps more interestingly, if you were aware of non-state systems that do this well? How might they work or not work in the Haitian context?

Thanks again!

Erin,

I am enough of a functionalist to suppose that something with the ubiquity and longevity of the Haitian dollar serves some purposes for Haitian people. Beyond that there is the question of whether people benefit from plural currencies or not. I am in mind here of Federico Neiburg's Mintz lecture of a few years back.

I agree with your emphasis on central institutions if money is to do most people any good. I was recently at a conference of historians who saw Polanyi's all-purpose money as a collection of attributes (the four functions etc). They therefore found APM in many ancient cases. But legal tender or national monopoly currency must be institutionally driven -- central bank and so on.

This leads me to ask whether there is any prospect of an effective state in Haiti and if not, why not?

Hi, all!

Daniel, I'm glad to hear that you received those ideas so favourably. I'm glad to talk more about what we did and how we did it. We knew that mobile money was planned, so we conducted research before its introduction and after.

Location: In 2010, before mobile money was launched, we (Heather Horst, Espelencia Baptiste, myself, and some research assistants) worked in three main sites in Haiti: Port-au-Prince, Cap Haitien (north), and Jacmel / Anse-a-Pitres (south). In 2011, after mobile money was launched, Espelencia and I did fieldwork for three months, and most of it took place in Port-au-Prince as that was where the services were launched. We also did some research on NGOs’ use of mobile money in Saint Marc and Mirebalais. In 2012, Heather, Gawain and I did a few months of fieldwork on the Haiti-DR border (Anse-a-Pitres).

Who and how: Mostly we spoke with people in public spaces, such as marketplaces, shops, street corners, etc. People spoke with us and showed us how they use their phones and the mobile money services. We pretty much let people show us what they thought was important. We also spoke with some officials, such as public servants or people working in telecommunications. We conducted sit-down interviews but a lot of the information we gleaned was from casual conversations and observations (as you’d imagine). In 2012, Heather and I focused far more at looking at how people use their phones, and we had specific questions we’d ask as part of a “portable kit” study (there’s a good description of this in the Consumer Finance Toolkit).

Topics: Before mobile money launch, questions focused on people’s use of mobile phones and financial services (formal/informal), and the context in which they use them (livelihoods, place, family, etc). After mobile money launch, we focused on how people were using the service (2010), and then how mobility was practiced on the Haiti/DR border (2012). This questioning elicited responses on a wide range of different topics, including such as what people use mobile phones for, difficulties in keeping a mobile phone charged, the huge amount of problems involved in using the banking system (even for people with access to it), use of cash, formal and informal remittance services, how people use mobile phones and money together, how people use mobile phones generally to facilitate movement of people and things, and sources of livelihoods.

Now, for your question about state systems that de redistribution well. You are right that it’s absolutely about not only “equality” but also about the amount of resources available. Research shows that countries with lower levels of inequality tend to be happier. But—and this is a big but—there are societies that have a high Gini coefficient but which are fairly poor and/or unstable (e.g., India and Afghanistan). So, a flatter distribution alone doesn’t tell us much, the safety net also matters. I would say that countries like the Netherlands and Norway do a good job of creating a safety net and a structure that feels reasonably flat. However, you really do have to have the right documents in order to access it. And these countries are very wealthy.

How to create a good distribution in a poorer country is a big challenge. The Dominican Republic has actually done a reasonable job in recent years given its circumstances. It’s still very unequal but there is basic health care, a free food program, and some pretty sensible infrastructural development happening. But their economy is much better than that of Haiti, and they have some major advantages, such as a well-developed tourist sector, a history of solid infrastructure development, and a good deal of arable land that stabilizes domestic production and consumption, keeping food prices low and affordable and making them less dependent on exports. They have also built up solid state institutions that are relatively trusted both domestically and internationally. Conversely, Haiti’s tourism died in the 1980s, infrastructure is in a terrible state, nobody trusts anybody, they are highly export-dependent, and becoming even more so due to foreign interests undermining local markets.

I’m afraid that I cannot currently think of any non-state systems that do redistribution well, but maybe other anthropologists will have a better idea. The problem is one of scale, you can’t really protect collective interests on a global scale if you’re a small player.

Keith: I am not too much of a functionalist. I think there are many parts of human culture that exist out of habit, and perhaps enjoyment, more than because you can point to a real function for them. You could argue that even these “functionless” practices are functional because they make people happy and act as a social glue, but then we’d be getting tautological and running the risk of being like economists and saying that everything has a utility. Having said that, the Haitian dollar does have some specific functions: it is an insider language that reproduces group boundaries, and it probably affects how people shape prices, since 5 units essentially acts as one. There may well be more, and Federico is likely better placed than I am to point to them.

Prospects for Haiti: Yes. I am with Paul Farmer on this one, that there is in fact every reason to hope that Haiti will improve. He points out that it’s happened elsewhere and there’s no reason why it can’t happen in Haiti as well. The Dominican Republic used to be quite a mess too. I agree with Farmer that most of the foreign interference doesn’t help and that Haitian state institutions need a chance to stand on their own two feet. It might take a generation or two for them to sort themselves out, but so be it. That is development, it takes time, which is why people look at places like Haiti and complain that “nothing ever changes” (including Haitians). I did my PhD fieldwork in a squatter settlement in Santo Domingo, and people said the same thing, even though it had clearly changed drastically in the few decades before my fieldwork and continued to change in the period leading up to my book (2004-2012).

Happy Sunday :)

Erin,

The pre-launch study was in 2010, the post-launch study in 2012. Do you have any sense of trends since then? I ask because in marketing and advertising, we are familiar with what is called the S curve and division of adopters of new technology into early adopters, early majority, late majority, and laggards. To me this raises the question whether the behavior you were observing in 2012 was that of early adopters or early majority users and how this might have affected individuals' use of their phones. I think, for example, of the man who still sends money by boat. He reminds me of myself when I am making travel arrangements. I know that there are websites where I might get a better deal; but there is a travel agent on whom we have relied for years. It feels easier to me to pick up the phone, tell him our plans, and let him sort out the details than it is to go to the bother of making online comparisons. My daughter thinks I'm nuts, but since my habit works beautifully, I see no need to change it.

John,

The very early adopters tended to fall into two groups: middle class young people, and those who were using the service because they were required to by NGOs (e.g., to receive conditional cash grants). After that, people who adopted it tended to see it as a way to store their money to prevent it from being stolen. At that time, mobile money only really existed in Port-au-Prince so it wasn't useful for remittances.

But the whole thing didn't really take off, and in 2014, Digicel re-launched their serivce with new branding. Unfortunately I don't have anything solid on trends since them, and if someone gave me the numbers, I probably wouldn't trust them anyway, since our research very clearly showed that what was happening on the ground beared no resemblance to the numbers being reported. This is a case where only more qualitative research would actually give you an insight into what is going on. 

I totally agree with your assessment of the ease of sticking with what you know. Any change in consumption processes incurs transaction costs. But it is more than that, as you would well know. Sending money via informal networks reinforces relationships - a phenomenon that I'm sure comes into play with your travel agent.

In Haiti, people depend even more heavily on these kinds of relationships. It can be seen in Mintz's discussion of "pratik", but it extends well beyond trade. One woman I know has a public servant act as her personal travel agent - even though it has nothing whatsoever to do with his job. People allocate certain tasks to people in their networks based on all kind of criteria, not necessarily professional qualifications. This reminds me a bit of Horst and Miller's discussion of "link up" in Jamaica (in The Cell Phone), in which people make extremely short phone calls to each other just to keep the connections alive. It's like pumping blood through the system. Money is a bit like that too!

I have moved to South Africa this week, Erin, hence the spotty participation. Maybe it is worth revisiting what functionalism means.There are two traditions: Malinowski's idea that what people actually do matters and Radcliffe-Brown/Parsons' that what they do is good for the system. The only sense in which I would ever use the word positively, and then only as a partial judgment, is the first. It could be said that 20th century ethnography often threw light on confusing abstractions by showing what is really going on.This in turn was generated by prolonged intensive fieldwork.

I have read your paper several times and it is a useful survey of a rather schematic kind. Conference papers are not suitable vehicles for deep ethnography. Even so it is notable that some of your readers picked up on people moving money by boat. You don't have much room to show what people do, but this is one example and it works.

Then there is the premise that the point of this paper is to explore the relationship between money and inequality. Maybe this too is a bit big for a conference paper. In any case, it seems that your conclusions are that the relationship exists at the 'macro' level, but its structural effects in people's lives are not obvious. I believe that it is possible to examine how the two extremes are connected. Indeed one of money's features is its ability to do so.

But you have provided here a convincing survey of the main features of money and finance relevant to most Haitians today and I learned a lot from your account. Thank you. I wonder if there is room to push the analysis to a more grounded level.

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