What’s missing in international capitalism?

Maybe you’ve heard of this innovation in economic development, but I hadn’t until I read:

China’s “Taobao Villages” offer compelling counterevidence that digital financial services, when combined with comprehensive support ecosystems, can fundamentally transform rural economies. From a modest beginning in 2009 with just three pilot villages, the phenomenon has expanded exponentially. By 2022, it had encompassed 7,780 rural communities across 28 Chinese provinces (Chu et al. 2023; Komatsu and Suzuki 2025). These villages, officially defined as localities where at least 10% of households engage in e-commerce and generate combined annual revenues exceeding RMB 10 million, produced over RMB 1.3 trillion (approximately USD 180 billion) in sales by 2021 (Qi, Zheng, and Guo 2019; Lin and Tao 2024; Wang 2022). Their evolution from isolated agricultural communities into dynamic participants in global supply chains represents a profound transformation in their economic landscape. https://www.cigionline.org/publications/from-rural-villages-to-global-markets-policy-lessons-from-chinas-taobao-villages-for-digital-finance/

“Wow,” I thought. The numbers are impressive. A “profound transformation” is what we’re looking for. But then there’s the “global supply chains” reference. Critics of international capital aren’t going to like that.

My suspicions were reinforced as I read further. At the heart of the policy brief is this description of the key innovation:

Central to the Taobao ecosystem’s ability to drive inclusive growth is its alternative approach to finance, which transforms behavioural data into a new form of collateral. This innovation has unlocked access to credit for millions of entrepreneurs who were previously considered “unbankable” by the traditional financial system.

The engine of this transformation is MYbank, a digital bank launched by Ant Group in 2015. MYbank operates on a fully automated “3-1-0” lending model: loan applications are completed online in 3 minutes, an approval decision is rendered in 1 second, and the entire process involves 0 human intervention (Chataing and Kushnir 2018; Huang et al. 2020). The core innovation lies in how MYbank assesses creditworthiness. Instead of relying on physical collateral or formal credit histories, its proprietary algorithms analyze a multidimensional array of real-time behavioural data generated within the Alibaba ecosystem. This includes transaction volumes, customer satisfaction ratings, payment patterns, and supply chain relationships. This data-rich environment enables the system to create a highly accurate and dynamic picture of a small business’s health and repayment capacity. Therefore, a merchant’s digital reputation and transaction history become a form of “digital collateral.”

The impact of this model has been profound. By the end of 2023, MYbank had served over 53 million small and micro-enterprises (Business Wire 2024). The average loan size, approximately RMB 72,000 (USD 10,000), is tailored specifically to the working capital needs of these micro-enterprises (Luo 2019).

Perhaps the most compelling evidence of the model’s effectiveness is its ability to de-risk a population that conventional banks deemed too risky to serve. MYbank has consistently maintained a non-performing loan (NPL) ratio of around 1 – 2%. This performance is significantly better than the NPL ratios often associated with traditional SME lending, which have historically been much higher in China (Business Wire 2020). This success reveals a fundamental truth: rural SMEs were not inherently “unbankable”; they were simply “undatafiable” by the old financial system. The problem was not the borrowers’ creditworthiness but the lenders’ inability to see it. The Taobao model effectively created a new asset class (reputational capital) and, in doing so, solved one of the most intractable problems in development finance.

Oops, don’t the brief’s authors know about the universal criticism of platform capitalism, of financialization, assetization and datification, all of which is worse than the old-time Fordist commodification. . . Talk about embedding poor people into international capital!

But then I take a deep breath and look to the invariably missing piece in these critiques–the granularity of agency, the particularity of being.

Put yourself in the shoes of someone researching these transactions years from now. You know like the researchers who find that money loaned is not all debt, that this provides resources for building and keeping social networks, that some people who get credit are very creative about what they do with these multi-valent resources, that financialization, assetization and datafication are not one-way only, that more than 7,500 communities over 25 provinces are not a homogenous population, and that big numbers like these have wide distributions and variation that has to be explained precisely because they matter for really-existing policy and management.

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Suggested reading: C. Velasco and J. Willis (2024). “Saving, inheritance and future-making in 1940s Kenya.” Past & Present 267(1): 211–241. https://doi.org/10.1093/pastj/gtae013