AI-illustration: There is no one to fire.
For years now the same argument has kept finding my table. It arrives with friends, over food or over social media, and it always starts as a question: which system actually works, communism, socialism, libertarianism, capitalism? Nobody asks it idly. People feel locked out of the system they were told to believe in. Populism is rising on both flanks of it, and young people in the richest country on earth are embracing socialism in numbers their parents would not recognise. Sooner or later someone says it: capitalism has failed. My answer has been consistent for years, and I should have written this reflection long ago. Capitalism has not failed. What has been running in its name is crony capitalism.
I should declare where I stand. I call myself a disciplined libertarian communitarian. I believe in the individual, in enterprise, and in market prices as the most effective decentralised allocation mechanism humanity has found. I hold markets sacred but not sovereign, built to serve people rather than master them. I believe people in communities locked out for generations deserve honest, deliberate pathways to skills, capital and opportunity, not outcomes awarded by identity but access through which effort and merit can operate. Those pathways must be time-bound and audited, so that repair never calcifies into dependency. And I believe the state belongs in markets chiefly as their engineer and their referee, not as their permanent allocator. It lays the rails and keeps the registers; it polices the evidence and enforces the contracts. Where sovereignty demands that it do more than lay the rails, its intervention must be temporary, measurable and accountable, and then it must withdraw, because a state that lingers as a competitor becomes a parasite.
Crony capitalism is usually described from the top: the tender that finds the president’s friend, the bailout that finds the connected bank. All real. But that description misses where the mechanism lives for most people, which is not in State House. It lives in the plumbing, in the ordinary prudential machinery of finance, and it lives there without anyone intending it. The forms differ by country; the rule inside them does not, and it reads the same at a counter in Nairobi as it does in New York. Before any institution lends to you, or even banks you, it must answer two questions: who are you, and can you be trusted with money. The machinery built to answer them is KYC and risk assessment. Both exist for unimpeachable reasons. Laundering and terrorist financing are real, and so are credit losses. And both allocate access by network.
Take account opening first, because it is the door to everything else. Within living memory, and in some places still, opening an account required references: existing customers of the bank writing to vouch for you. Some countries have retired the rule. The rule never asked who you are; it asked who will stand for you. Those are different questions with different losers. Identity can be established by anyone with a document and a face. Sponsorship can only be produced by the already banked. And the rule’s quieter descendants are still on the forms. Proof of address wants a utility bill, a lease or a bank statement, and the circle closes: a bank statement proves an address for someone who already banks. The bill assumes a meter in your own name, which the settlement and the homestead never had. A wife whose lights run in her husband’s name can bridge the gap with a marriage certificate, one more paper that formal membership prints. The woman in a come-we-stay union has no such paper; the wedding that would have papered her was never held, often because it could not be afforded. Her home is real in every way except the one the form can read.
Source of funds asks a fair question, where does your money come from, then accepts only the answers formal income can print: payslips, contracts, sale agreements. The trader who earns honestly in cash every day is not unbanked; his phone holds an account, and the wall stands where the amounts grow. Bank surveys keep recording his rejection as incomplete financial records, which is exact in the cruellest way: the records are complete for his life and incomplete for the form. Some banks bridge it honestly, sending a loan officer to the stall to count stock and watch the till, the institution paying the verification cost itself instead of billing it to his paperwork. The visit is expensive per customer, so it stays the exception; the paper list stays the rule. None of these requirements is a price. There is no amount the unsponsored, the unaddressed or the undocumented can hand across the counter to satisfy them. A price rations by willingness to pay. These rules ration by prior membership. Whatever we call that, we should stop calling it a market mechanism. Screening itself is a market’s honest answer to being lied to; the indictment is narrower. When every admissible proof is manufactured by prior membership, screening stops sorting risk and starts sorting insiders.
The credit side repeats the shape at every gate. A loan wants a guarantor, and the guarantor must himself be creditworthy. Collateral must carry title, wealth you must already hold before capital will reach you. A credit history can only be built with credit, the one thing the applicant came to get. Payslips and statements assume formal employment and the account whose door we just examined. And before any of it, a risk rating has often scored the applicant’s occupation, postcode and cash habits as reasons for caution. None of these rules was written to exclude. I know this from the drafting side of the table, where every one of them is written, sincerely, as prudence. I also know that my own accounts open on a phone call or an email, because the network already knows me, and that the corridor has never once slowed me down. Walked end to end, the rules compound into something no one designed: a corridor where capital flows cheapest to those nearest it, and money grows dearer with every step of distance from the network. The same rule runs upward: the network that prices the distant out lets the connected default and refinance, cronyism at the top and exclusion at the bottom being one rule applied to different people. Underneath all of it runs one law. The questions are fair. Who are you, where does your money come from, can you repay: every institution is entitled to ask them. The gate is never the question. The gate is the list of admissible evidence, because every list is written so that only the already-inside can produce what is on it.
Communism won. I mean something narrow and checkable by won. The ideology lost, and the planned economy lost with it; what survived is the technology communism ran openly, sponsorship. The method is older than both ideologies: the letter of introduction was opening bank doors long before the Soviet Union existed. Communist systems made it an organising practice of everyday access, the party member who vouched for you, the character letter from a cadre in good standing. And the system that defeated communism kept the method running quietly, wearing prudence, while claiming price had won. The front of the house takes money; the door is opened by names. Crony capitalism sits one mirror away from the capitalism we keep defending in those debates, and the glass hangs in the back office, not in State House. This is cronyism without a crony, and that is the harder kind, because there is no one to fire.
Even the writers of the global rulebook now concede the effect. The Financial Action Task Force, the global standard-setter for bank compliance, has acknowledged since 2011 that overcautious application of its own safeguards shuts legitimate customers out of the formal system. It has spent this decade rewriting its guidance to say so. The scale is not small: the World Bank’s newest count still finds 1.3 billion adults holding no account anywhere, the mobile wallet counted, and missing documents remain among the barriers they name. The serious defender of the current rules deserves an answer on their strongest ground. Cash-intensive, undocumented customers are scored as higher laundering risk as a class, and the system’s concession is the simplified tier, lawful because it is capped. But a class score is the cheap proxy this machinery reaches for wherever individual verification is dear, and the caps hold access at token amounts, so the corridor reappears at every tier boundary. So the honest question is how to verify without handing the door to the network, because the losses and the laundering are real. And the world has already run the experiments.
The oldest is the exam number. Universities learned hard lessons about examiners and surnames, and answered by making the candidate a number, so that the script is judged and the person is invisible. A script at least contains everything the grade requires. Even there the person leaked: an examiner could still hear, in the fluency of the prose, which schooling had trained the hand. The number hides the name; the writing keeps speaking. Then the harder lesson. In 1997 a computer scientist named Latanya Sweeney took a supposedly anonymised release of medical records and re-identified the sitting governor of Massachusetts from three innocent facts, postal code, date of birth and sex. She went on to estimate that up to 87 per cent of the population of the United States is unique in those three facts. Strip the name and the person remains legible. An index has to be far cleverer than a deleted field, and any counter that promises to judge the record while blind to the person inherits that burden. Then the hardest lesson. France took the experiment national: its employment service anonymised CVs to strip origin and neighbourhood from hiring. Among the firms that took part, minority candidates did worse under anonymity, interviewed less and hired less, because blindness had also deleted the context that let a fair reader weigh a thin CV honestly. The state abandoned the policy. Hiding identity is not enough, and done naively it runs backwards.
The design built from all three lessons is disclosure of claims without disclosure of identity. Prove the repayment record, the income, the standing; keep the name, the tribe and the address out of the underwriting room. The design escapes France’s mistake by substitution: France subtracted information and added none, while this design trades a thinner identity for a thicker record, so the fair reader is given more to weigh, not less. That design confines identity rather than abolishing it: the compliance desk verifies the person, the underwriting desk receives the verified claims, and the pedigree crosses into neither decision. The split answers for the person and the history; it does not claim to trace every shilling’s pedigree. And the design leaves a dependency standing: someone must write the first record for the person the system has never met.
Proof that such evidence can be manufactured outside the formal system exists at scale. Grameen lent to Bangladesh’s poorest women on joint liability, the group standing for each member, local knowledge doing the underwriting, and repayment held. In 2002 the bank dropped the group guarantee, though the groups kept meeting. My reading: years of repayment had given each member a record of her own, and the record had become evidence enough. On that reading, the group was never only a loan scheme; it was a factory for admissible evidence, and its members graduated out of needing it. Once the record can travel, identity can stay home. The village knows everything; the formal counter needs only what the record proves. The SACCO, the chama and the village bank do the same work here. The community stakes its own money on its member, which is more than any reference letter ever risked, and every cycle writes another line of record.
Banks have noticed the chamas, and they have incorporated exactly the wrong half. They court the group’s deposits and lend against its pooled cash or a multiple of it, money anchored in money. The member’s ledger is the half our evidence lists do not admit. Five faithful years in a banked chama count for nothing when she stands at the counter alone. The group’s money crossed; her record did not.
The proposal is the record’s own crossing, into her file, travelling with her. It has two doors, sight and word. Sight is the door India began opening nationwide, and it formalised nothing to do it. Group lending there had begun to sour, and the repair India chose was the record itself. Since 2016 its banks must file the borrowers of the larger group loans with the bureaus member by member, each woman’s name and her share of the debt written into a file of her own. The groups stayed informal by design; the lender’s own eyes make that record. And the same circular drew the boundary the chama already showed us: lending among members from their own savings was left out expressly, and each member’s own repayments were deferred to a later phase. The door is real, and it is half open. India’s microloans have carried bureau records since a crisis first forced them, and crisis has still returned where lenders raced past what the file showed. A record disciplines only the lender bound to read it.
Kenya’s mobile rail is the same door, the observer reporting what it sees. Sight is even being carried into the group itself, and Zambia shows it plainly. Its banks court village banking by name, and group platforms trade openly there, member statements, automated share-outs, the whole cycle running where the host can see each member. It is still sight: the record lives on the observer’s own rails. The host already files any loan it makes to her, because lenders must report what they lend. But the cycle itself, the saving and internal repaying the platform merely watches, is not the host’s loan, so no mandate files it. That record stays inside the host’s walls until a rule makes the observer file what it sees, the rule India wrote for the loan and deferred for the cycle. It reaches only the groups that move their books in; the notebooks that stay home need the second door.
Word is the second door, for the ledger only the group sees, and a word must be answerable. The formal worker has always had this door; the employer’s letter is testimony the counter accepts, a letter that stakes nothing, admitted on formal membership alone. Even Kenya’s licensed SACCOs, when they report what they lend, are sight, the lender filing its own loans. The group’s word, its testimony to the saving and standing only it sees, has no such door: no due-diligence or bureau rule I can find treats the unlent cycle as the employer’s letter is treated. Some markets already file what she pays the power company and the landlord; what she pays her circle is filed by no one.
The proposal writes the collective the letterhead the employer has always held. The group that testifies keeps books and accountable trustees on a registry, and it stakes what it signs: answerable for the truth of the record, never for a member’s future debts. The registry reads the collective’s books, capital and stake; it does not march its trustees back through the old paperwork, because who they are was always the easy half of the question. Formalisation is asked only at this door, priced to the attesting function: a toll, not the point, because the point is admissibility. And at the word door the toll pays the group back: once its word is admissible, registering is what turns the five faithful years only it could see into years that count. Warehouse-receipt statutes, established across this continent, turn a farmer’s stored maize into bankable collateral instead of invisible wealth. The same principle holds at every scale: do not lower the standard, widen what counts. The two doors do not reach everyone; they reach the millions the current gate pretends do not exist.
The admissible record has a second buyer waiting behind the first. A loan book with a filed loss history can be rated and sold: Bangladesh securitised micro-loans two decades ago, and India’s joint-liability paper now trades at scale. This continent can already securitise a recorded book; it cannot securitise an unrecorded circle, because capital markets cannot price what no record shows. The debts themselves are the asset; the record is what lets a buyer price them. Open the record, and the same five faithful years underwrite twice, evidence at the counter now and, in time, the loss history beneath paper an investor can hold. From admissible evidence to investable asset, the record is the precondition, and the rest is machinery markets know how to build.
A design that replaces a gate must be tested harder than the gate it replaces. It can fail five ways, each visible from here, and each needs engineering against from the first day. The first failure is that the cooperative is also a network. The same intimacy that makes its information good can blackball the newcomer, the wrong clan or the unmarried woman. So the group’s word enters as one admissible route among several, never the only door. The second is fraud. The moment standing counts, standing will be manufactured: repayment rings farmed for records, pyramids in cooperative clothing. Kenya has met both. Against them stands the design’s one law: testimony counts only where the testifier stakes money or licence on its truth. The referee’s letter cost the referee nothing, which is how we got here. The guarantor stakes money but is network-gated. The regulated cooperative stakes both and is reachable.
The third failure is surveillance. A lender that may read everything is a new gate wearing a friendlier face. So the record travels by consent, and no wider than the decision needs. The fourth is France’s lesson: removing information can move bias instead of removing it. So the design is judged on results named in advance, who came in and what the losses did, never on its intentions. The fifth failure is the scaffold that never lets go, and here my own politics turns on my own prescription. Pathways built for repair must be built to expire, but the clock is the record, not the calendar. A pathway ends for each person on the day her own file can answer the question it answered for her, the way the group guarantee ended in the Grameen reading above. The pathway itself stays open, because new people arrive at the counter every day. The evidence rules face a different discipline: no expiry, periodic review, the regulator that wrote them returning to ask who they actually let in and what it cost.
Nothing above waits on an invention. Credentials that prove a claim while withholding the rest run today. The mobile driving licence in more than twenty American states can show a bartender that its holder is of age without showing the address on the card. National registers are learning to answer who you are in seconds. Kenya’s rail, met above as sight, turned millions of daily transactions into scorable evidence and wrote repayment records at national scale, no referee and no collateral anywhere. Kenya also ran the failures first, blacklist-only reporting that punished without accrediting, and apps that harvested contacts and messages instead of indexing, and the corrections to both were admissibility rules. The cooperatives are manufacturing the records, and registries for movable collateral are statute across the continent. What is missing is admissibility: rule changes of exactly the kind parliaments and regulators pass every year, a line amended in a prudential guideline, an evidence list widened.
The evidence list has survived for a reason worth naming: the officer who admits one mule is punished, and the officer who refuses a hundred traders is not. So every desk rationally over-verifies, and the caution hardens into the forms. It stays hardened until the scoring changes. The evaluation that punishes the missed mule must also score the refused trader. Then the gate opens the way Kenya’s payments gate opened. One regulated entrant discovers the excluded are a market. Once its book is proven, the incumbents follow it in. But the entrant must sit inside the same penalty regime. Otherwise the incumbents will applaud the pilot and keep the old list. That is what makes this practical rather than utopian. It is also what makes the failure to do it a choice.
Financial exclusion has been filed for decades under charity, a welfare problem, someone else’s department. It belongs under the corruption of capitalism, a competition problem, owed a fix by everyone who claims to defend markets. A system that allocates capital by network while calling itself a market is not free; it is captured, and it is corrupting itself. And the first amendments are known. One is the due-diligence paragraph listing acceptable proof of address and source, opened to the regulated cooperative’s attestation. The other is the filing rule, so that the cycle a platform watches or a group attests writes into her own file and travels into underwriting. That is financing architecture Africans can enter at the level of the person, and not only at the level of the sovereign. The rescue of capitalism from its crony twin begins at the counter, not in State House. It ends in those two paragraphs, on the day the forms ask who you are and what your record shows, instead of who you know.