Can Yunus create a poverty free world?-Daily Star

May 26, 2008

Gaziul Hasan Khan in Daily Star looks at the options in the Nobel laureate’s new book Creating a World Without Poverty by Muhammad Yunus

Nobel Peace laureate Professor Muhammad Yunus, a pioneer of collateral free small credit to poor women, is in quest of harnessing free market power to solve the problems of poverty, hunger and inequality across the world. Grameen Bank, which he founded more than three decades ago to reach collateral free credit to the target group at their doorstep, has been replicated in all the continents to benefit over 100 million families. But he remains far from satisfied as poverty, hunger and inequality continue to trouble the world as well as his native Bangladesh. If the dynamics of capitalism could be applied properly, he believes, poverty, the greatest challenge, facing mankind, could be tackled to a great extent.

This precisely is the subject matter of Creating a World Without Poverty, his much talked about book, published recently. Originally published by the Public Affairs, a New York based publisher, it was reprinted in Dhaka by Subarna in February. According to the publishers, Prof. Yunus, in his book, has gone beyond microcredit, to pioneer the idea of “Social Business”, or use the creative vibrancy of business to tackle problems, ranging from poverty to pollution, inadequate health-care to lack of education. In the 248-page book, the banker to the poor discusses how the concept of social business could be relevant for the ignored in a capitalist global economy, where the lone mantra is to maximize profit.

“To make the structure of capitalism complete,” he stresses, “we need to introduce another kind of business one that recognizes the multidimensional nature of human being. If we describe our existing companies as profit-maximizing businesses (PMBs), the new kind of business might be called social business.” He calls for breaking new grounds, so that, “entrepreneurs will set up social businesses not to achieve limited personal gain but to pursue specific social goals”.

Not a dogmatic free marketeer, the author thinks that no harm would be done if not all businesses were for maximizing profit. Surely, he argues, capitalism is amenable to improvements. The stakes, “are too high,” thinks an apprehensive Yunus, if the world goes on the way it has been going to create a world that “ignores the multidimensional nature of human beings,” and business remains incapable of addressing the social problems.

The emergence of capitalism three centuries ago, he recognizes, made it possible for man to achieve an unprecedented material progress. In the last two decades or so, the free market economy has taken roots in many regions of the world, including China, post-Soviet Russia, Eastern Europe and much of South America. North America and Western Europe achieved many extraordinary things, including unprecedented wealth, using free market and capitalism as tools. But the great success, he thinks, could not keep away a pervasive sense of disillusionment that is setting in, as the existing system of capitalism in no way benefits a vast majority of the world’s population. He does not doubt that global trade is booming and the multinational corporations find good reasons to spread out to every corner of the planet.

But all this cannot ignore the stark reality that ninety-four per cent of the world’s earnings goes to 40 per cent of the people, requiring the other 60 percent to live on 6 percent. The reality that 50 percent of the global population lives on two dollars or less a day and a billion live on less than even one dollar a day gives Yunus reason to think of ‘social business’. Poverty is pervasive across the world, though not distributed evenly, with some regions having more of it. Even in the US, the richest country on earth, social progress has been disappointing. After two decades of slow global progress to reduce poverty, the number of people living in poverty is again on the rise. No wonder, almost a generation after the Cold War came to an end, Yunus has to cry out for an ever elusive “peace dividend” and campaign for cutting defense spending to use the funds for addressing poverty.

Since the year 2000, when world leaders gathered at the UN to set the goal of reducing poverty by half by 2015, the results remain disappointing. Many observers of the global scenario remain sceptical, with half the time gone, that the Millennium Development Goals can at all be achieved. What’s wrong? Yunus thinks that market economy, in its current form, instead of solving social problems, could actually aggravate poverty, inequality, corruption, crime, pollution and diseases.

But instead of losing heart, he thinks globalization, more than any other system, can bring benefits to the poor. But that would require proper oversight and guidelines. Otherwise globalization has the potential to be destructive. He calls for the replacement of the norm, “the strongest takes all”, by more humane rules to ensure that even the poorest can use the highway. Otherwise, the global free market will be a tool to benefit only ‘financial imperialism’. The market, whether it is local, national or regional, also needs to come under reasonable rules and control to protect the interests of the poor. Governments can do much to address social problems. But politics sometimes stands in the way of their efficiency. Despite all difficulties, a government must do its part to alleviate poverty. But no government alone can solve all the problems, he thinks.

Many people who care about the problems of the poor, out of frustration with governments, took the initiative to launch nonprofit organizations, he writes. But he thinks this ‘no profit’ approach alone has proved to be an inadequate response to social problems. Worsening global poverty and the consequent problems, faced by people, prove beyond doubt that charity by itself cannot solve the problem. Multilateral institutions, sponsored and funded by governments to eliminate poverty, have not achieved much either, he observes.

Social business, he suggests, needs to be different in terms of objectives alone, to focus totally on solving social and environment problems. But its organizational structure would be the same as that of other businesses. He predicts that ‘social business’ will be a familiar fixture on the global business stage. Prof Yunus is only seeking to give capitalism a new, humane face.

Multilateral institutions like the World Bank, he points out, consider growth in gross domestic product (GDP) as synonymous to poverty elimination, for which hundreds of billons of dollars they have spent have proved to be counterproductive. Prof. Yunus puts forward a sevenpoint program for a new World Bank approach in funding governments as well as private sector investors, to channelize investment through his model of social business.

Yunus does not hesitate to show how the existing practice of corporate social responsibility, built on good intentions, is misused by corporate leaders as nothing more than window dressing to achieve selfish benefits for their companies. Without “social business”, he argues, existing capitalism will continue to function with its half developed structure, taking a narrow view of human nature, on the erroneous assumption that man is a one-dimensional entity, concerned with nothing other than the pursuit of a maximization of profits.

The concept of the existing system of free market, as generally understood, is based on this single dimension. Yunus also points out that the mainstream free market theory suffers from a “conceptualization failure”, a failure to take into consideration the essence of what it is to be human. Here he has no two opinions with Oscar Wilde — “they know the price of everything and the value of nothing.”

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