WHY

Muhammad Yunus, Creating a World Without Poverty: Social Business and the Future of Capitalism (with Karl Weber) New York, Public Affairs, 2007.

By Peter Mann

Something Muhammad Yunus said in Beijing in 1995 will stay in my mind forever. He was speaking about microenterprise at the Fourth World Conference on Women, and he described a typical Bangladeshi woman emerging from the confinement of her home into the public square to receive her first loan and start her own business. He called her “a hidden diamond.” The diamond – her unique essence, her individuality and potential –had been obscured by lack of status, discrimination, illiteracy, and neglect. Then, as her creativity, energy and enterprise start to unfold, the diamond begins to shine through.

I was continually reminded of the hidden diamond image when reading Yunus’s Creating a World Without Poverty. He unfolds a devastating critique of our economic blind spots that preserve poverty. The refusal of banks to provide credit to the poor is “a massive apartheid system for half the world’s population.” Grameen challenged this financial apartheid by providing loans to more than seven million people, 97 percent of them women, in 78,000 villages in Bangladesh, loans worth US$6 billion, with a repayment rate of 98.6 percent, and 64 percent of the borrowers having crossed the poverty line. The poor are being seen not as social liabilities, but as capable of productive contributions. They are not poor because they lack skills: credit is the capital which allows them to use the skills they have.

Other economic blind spots challenged by Yunus are that all people are motivated by profit and that the solution to poverty is creating jobs. Economists, he writes, only recognize wage employment – firms and farms – whereas self-employment, developing goods and services sold directly to those who need them, is what the poor do everywhere, based on the household as a production unit. Economists see entrepreneurship as a rare quality when in fact it is practically universal. Economic books talk abstractly about labor, not about men and women and children with various capacities and needs. In Grameen’s experience, credit provided to women brings social and economic benefits that credit to men does not. Grameen begins with mothers and thence children: “If poverty is to be reduced or eliminated, the next generation must be our focus. We must prepare them to peel off all the signs and stigmas of poverty, and instill in them a sense of human dignity and hope for the future.”

The Rise of Social Business

Yunus wants the focus of development to shift to human beings, their energy and enterprise, to turn on the engine of creativity inside each person. The key is credit, not handouts or grants, but loans to be repaid through the creative work of the poor. It is here that the book’s other theme of social business and the future of capitalism emerges. A social business is a new kind of business designed to meet social needs, for example that of improving nutrition for the world’s poor, but it does not provide dividends or profits to investors. Yunus sees “business as usual” failing to end poverty. Capitalism may have been booming (at least until recently) but half the world still lives on two dollars a day or less, and one billion live on less than one dollar a day. Yunus goes through the role of business, government, multilateral institutions (such as the World Bank), the voluntary sector, charities and NGOs and sees them unable to solve the problem of poverty.

His critique of capitalism, including forms of corporate social responsibility, is the most interesting. The problem is capitalism’s one-dimensional focus on maximizing profit, on growing investments for shareholders and increasing the value of the company, while ignoring destructive social and environmental effects (overfishing, pollution, energy misuse.) Capitalism has created a world that ignores the multidimensionality of human beings – their religious, social, emotional, and political reality which forms the foundation of social business. Social business, Yunus claims, would be the completion of a reformed capitalism.

In Yunus’s view, social business differs from profit-maximizing business not in its organization (workers, goods and services) but in its objectives (social benefits.) It is cause-driven, not profit-driven, thereby becoming a change agent. Areas of social business would be food, health, energy, recycling, and much else, and Yunus develops the social business concept through the 30 years experience of Grameen as it creates housing loans, educational programs for children and adults, fisheries and livestock, information technology, health clinics , childbirth kiosks, and eyecare hospitals. One of the fascinating stories in Creating a World Without Poverty is Grameen’s alliance with the French company Danone to create the first multinational social business, Grameen Danone, providing nutritious yogurt to the poor in Bangladesh.

Yunus describes the spread of the microcredit movement throughout the world, its various models, its successes and also its challenges. He sees credit not as solving poverty but as the vital foundation for ending poverty since “The unique problem of the poor is that there is no institution to bring money to them.” Since microcredit solves that problem it should be “made an integral part of the mainstream financial system.” Since poverty is multi-dimensional, shaping people’s lives and livelihoods, to free people from poverty “all aspects of their lives need to be addressed, from the personal level to the global level, and from the economic dimension to the political, social, technological and psychological dimensions.”

Peter Mann is co-director of WHY’s Global Movements Program and editor of WHY Speaks