Capitalism and Community: The Decline of Tanzeemat

By Zehra Munir.

I conducted this research while part of the Laajverd Visiting School in 2017. The names of all interviewees have been anonymised, in line with their requests.

Many have made the argument that capitalism and community are not the best of bedfellows. Joseph Stiglitz put it most succinctly when he wrote that “rugged individualism and market fundamentalism have eroded any sense of community,” (The Telegraph, 2010). Critics of this view may point to the rise of virtual communities, as free market incentives have allowed social media to flourish. However, ‘community’ in the sense of physical relationships and reliance has certainly suffered in the face of the forces Stiglitz identifies. I saw this happening in a context where the transition is ongoing, recent and, thus, visible. In the summer of 2017, I conducted an intensive ethnographic study in the Gojal Valley in Pakistan centred on the money-loaning systems of the Gulmitic people. Through my days in the village of Gulmit, one thing became evident: the rise of large scale money-lending agencies and the loss of trust in relationships are closely linked

To understand what is happening in Gulmit, contextualisation is needed. Without romanticising, it is necessary to understand that, until recently, community bonds were strong in Gulmit. Even now, there exists a sort of closeness which most of us in the West would fail to understand. There is the sort of security which allows young women to grow up and walk around without fear of being catcalled, because the entire village is like family; the kind of communal feeling which means that when there is a wedding, every household cooks for the wedding feast, so that the burden does not fall on the two families directly involved. The type of care for each other which means that when the infirm cannot attend local festivals, a delivery service is organised to bring the festival meals to them. This society is far from perfect, but their community relations are stronger than many of us can conceptualise. 

Similarly, schools are run with local input, and figures such as the headteacher are treated with great respect throughout the community. Perhaps two of the greatest community-based institutions in Gulmit are the two types of Tanzeemat. One local Tanzeem is run by and exists for local women, the other by and for local men. Until recently, these two organisations represented the main money loaning service available to Gulmitic people. With all members of a Tanzeem required to deposit some money, be it 5 or 5000 rupees, every Friday and an incredibly efficient application review system, you are almost guaranteed to obtain a loan from your Tanzeem within a few days. Rejections are rare, and you know that the people judging your application are your own; they understand your situation. Be it an emergency loan to pay for your child’s university tuition fees, or any other small amount required, the committee understands your circumstances. Even when money is leaving the village economy (such as when tuition fees are paid), it is given in good faith, for the people evaluating your request have watched your son or daughter grow up alongside their own children. The system works incredibly well to finance the needs of a small but dynamic village in the mountainous areas of Pakistan. Moreover, it is not unique to Gulmit – all neighbouring villages have similar banking systems. Crucially, a Tanzeem is free of links to any bigger bank, thus making it immune to the perils of a national or global financial crisis. That is, until recently.  

Gulmit is being encouraged to become more economically successful, in the modern sense of the word, to move away from subsistence farming and to engage in market activity. Above all, it is being pushed to expand its tourist industry, by both the local and the national government. However, any expansion of the tourist industry has its costs, quite literally. Building new hotels to expand the hospitality industry is not cheap. One local hotel owner told me, in no uncertain terms, that “if the tourist industry is to expand in Gulmit, bigger loans will be needed, loans on a scale which the current Tanzeemat cannot begin to provide”. Thus, as Gojal Valley becomes a tourist hotspot, as the Gulmitic people begin to open hotels, to drive taxis, to build rooms for rent in their homes, a more long-lasting change has to occur. The large loans required to finance this new infrastructure will have to be obtained from bigger institutions, namely commercial banks, including the Al-Rahim building society and the Government of Pakistan Bank. The result: the collapse of the Tanzeemat. Community-based money loaning is all well and good until the funds of the community cannot suffice, at which point it becomes irrelevant.

After all, when the maximum loan you can obtain from a Tanzeem is but a small proportion of what you need to start up your business, it is no longer viable to stick with your local Tanzeem. Moreover, Tanzeemat cannot function if they are only used by those who need money immediately. There has to be a mix of people with different time horizons for their needs. As businesses spring up and reliance on commercial loans grows, the funds available to a Tanzeem begin to shrink. More and more people will be depositing money and obtaining loan money from commercial banks. And though its lifespan could be prolonged with investments and a greater credit ratio, how can a village kitty compete against the likes of the Bank of Punjab and, potentially in the near future, Standard Chartered? With every loan a villager obtains from Akhuwat or the National Bank, the Tanzeemat begin to be eroded. Sooner or later, free market development will have killed community-based funding.

Moreover, some of the new money loaning systems being introduced kill community links in a more fundamental, and sudden, way. These systems are those within the realm of microfinance. The experience of Gulmitic villagers confirms the results of previous studies into microfinance. Group-based lending systems, whether they are within the Islamic microfinance model of Akhuwat or the normal models of banks like the Agha Khani First Microfinance Bank, alienate those who default on their deposit. When someone in the community takes out a loan from a microfinance institution, they are grouped with other community members. The group members are all responsible for making sure that their fellow members pay back their respective loans. Time and time again, I was told of friendships broken and frustration caused when a member of the group defaulted. One man told me how he and others had to visit their defaulting friend repeatedly to try and salvage their joint loan. When the friend could not cobble together the funds to pay his share, the rest of the group had to step up. The loan may now have been paid off, but the relationship was fractured. By making social capital the collateral in this system, these banks ensure the rapid dissolution of community relationships when someone defaults. Thus, the new microfinance lending systems serve only to exacerbate the corrosion of a community, already occurring at a rapid pace as its money lending institutions begin to collapse.

In a 2008 interview, Stephen Marglin, Professor of Economics at Harvard University, stated that “markets have undermined all that is good about community”. Based on my interview-centred research, it is impossible to disagree. Although my time in Gulmit was relatively short, and I would love to go back to carry out further research, my findings present a clear trend. The development of the tourism industry in the Gojal Valley comes at the expense of the local, community-based banking system, one that is now fading into non-existence. I am sure of this also because the Gulmitic village elders supported my prediction about the weakening of the Tanzeemat as the tourism industry expands. More than that, they fit within a wider pattern that can be seen worldwide. Marglin points to the way in which the North American Free Trade Agreement opened up the Mexican market to cheap imports, and thus made it difficult for Mexican peasants to compete. This encouraged the flow of people from rural Mexico to large urban spaces, as well as to the USA, thus breaking up rural communities. Similarly, as Gulmit becomes commercialised, there is no space left either for its people to remain interdependent at a community level or for local financial organisations. I don’t want to poeticize Gulmitic society as if there was nothing wrong with it before it began to modernise, and as if it should be preserved in a timeless state. However, one thing is for sure. When globalisation encroaches and marketisation begins in earnest, it is the community that suffers.

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