We live in a world in which a few are blessed with power and wealth and many others are crippled by poverty and powerlessness. This state of affairs is, without doubt, morally objectionable and in need of urgent remedy. Entrenched power asymmetries and global market forces, however, give the privileged both a vested interest in keeping things as they are and the ability to resist change. What is more, even when there is a will to initiate change, the road to eradicating poverty and institutional failures is paved with traps and vicious circles. Effective remedies must, therefore, be sensitive to real-world political and economic constraints. A remedy seemingly satisfying this condition, which has gained popularity among political leaders and the wider public alike, is "microfinance." Offering financial services (particularly loans) to those who are too poor to access the traditional banking system looks like an excellent strategy for responding to world poverty in a way that is both empowering for the poor and economically efficient. Microfinance, that is, appears to promote development by exploiting, rather than countering, existing market mechanisms. According to critics, however, microfinance institutions (MFIs) also have a "dark side:" they are ineffective at best, and exploitative at worst (Hulme 2000). Their purported ineffectiveness stems from their inability to reach the poorest of the * We thank the reviewers of this piece, as well as Kimberley Brownlee, Luis Cabrera and Tom Sorell for helpful comments and suggestions. If microfinance projects are well designed, and if sufficient resources are regularly and reliably channelled towards them, they might contribute to the formation of a mid-level, economically active social group in developing countries-a group with a vested interest in making political institutions more "inclusive" and accountable, and with some power to do so. 1 This, of course, requires significant changes to existing MFIs. The conclusion we reach is therefore tentative: Our claim is that the shortfalls of existing MFIs do not constitute a devastating blow to microfinance in principle. The potential of microfinance deserves to be explored further-particularly in connection with democratization, large-scale empowerment, and political justice. Whether existing shortfalls can be realistically overcome is, of course, a largely empirical matter that we cannot settle in the present paper. Our argument is structured as follows. In Section 2, we offer a very brief overview of the history and workings of microfinance. In Section 3, we present three different perspectives from which the predicament of the poor can be addressed: humanity, distributive justice, and political justice. In Section 4, we consider whether microfinance represents a good response to humanitarian and distributivejustice concerns and answer in the negative. In Section 5, we turn to microfinance in relation to political injustice and argue-with caution and caveats-that, suitably reformed, it may constitute a helpful instrumen...
