Muhammad Yunus on the Arab Spring, Global Change, and the Real Opportunity at the Bottom of the PyramidPublished May 29, 2012 in Arabic Knowledge@Wharton
A Nobel Peace Prize winner and the founder of Grameen Bank, Muhammad Yunus has dedicated much of his life to helping the poorest in developing countries. The former economist is now traveling the world, promoting an idea for a new economic model that he calls social business.
The emphasis of social business, Yunus says, is not on making money, but rather unleashing human capability and valuing human creativity. Of all the natural resources, he argues, the most underutilized are humans themselves -- specifically the millions who are unemployed and living below the poverty line. But the real opportunities at bottom of the pyramid are not just to sell products, he adds.
In Abu Dhabi, Yunus spoke with Arabic Knowledge@Wharton about the Arab Spring, and how it reflects a transition of knowledge among generations. Optimistic about the change it represents, Yunus says a coming shift of influence from the West to the East is an opportunity to develop a new economic model for societies, and a chance to better utilize the collective ingenuity and abilities of people at the bottom of the economic pyramid.
An edited transcript of the conversation follows.
Arabic Knowledge@Wharton: The Arab Spring sought change in the Middle East. But the movement seems to have faltered because civil institutions in the region weren't strong enough.
Muhammad Yunus: I'm not diminishing the responsibility of politics. But even if you had a good political system, you still would have the problems. Europe is a good case. We cannot say our politics are better than Europe's. I can't say that Europe is perfect, but they've been doing it for many years. I'm not saying politics [in our countries] are good; our politics are totally rotten. People don't even know how their administration is supposed to run. We are in the 21st century, but there are still societies in the way back. This is our problem.
That's why young people are way ahead in that transition, because of the technology. Suddenly with that technology -- they are no longer in the 20th century. We still are in the 20th century, and have carried ourselves into the 21st century without changing anything. The young people they see solutions are possible, they see a new life is possible. The old generation is still looking at the traditional way of handling everything. And that is the mismatch that will cause more problems. In 20 years from now the world will be completely different, because of that wave of technology, because of that wave of regeneration coming in. The generation that is demonstrating in Tahrir Square and elsewhere were born in the 90s and the late 80s. Imagine [what] the children who are born today [will do].
Arabic Knowledge@Wharton: What would you say to these young demonstrators right now, who are upset that traditionalists and maybe new military regimes are coming to power in the end? So many thought there would be immediate change.
Yunus: My only advice to young people everywhere -- in Egypt, the U.S., Europe, Bangladesh: You are ready, take over. Don't leave it to the older people. They do not understand what this world is; they absolutely have no idea. They will give you all the old talks, feeling that you don't know yet. I can tell you that you know much more than they do, because you have direct access to information. They give you second-hand, third-hand information. So, don't worry about what they stand for. Just go ahead, take responsibility and make it happen. They will appreciate you for it. They're not your enemies. Simply they don't feel you are mature enough to handle that. Show them you are. It's like any parent and their kids; they'll treat them that way even if they are grown up. Not only have you grown up, you have much more experience and ideas than they do, in this short time, because your speed is much faster than theirs.
So get over and take over, because this world is changing so fast. Unless you do that, you'll be left behind. What will the world be like in 20 years? In 2016, China will become the largest economy in the world, and the U.S. will become second. Japan has moved into third. This is the reality. In 20 years from now, China will not only be the main economy, it will be two-and-a-half times larger than the U.S. economy. India will be the second largest economy. Indonesia will be one of the top ten economies, along with Brazil and others. So all these countries will be calling the shots in the world. So, we're not preparing for that world. Europe will go down. The only countries that will remain on the list of the largest economies will be Germany and the U.K.; the others will disappear from the list. Putting China and India's economies together, they will be larger than all the economies in the rest of the world. In 20 years' time.
Arabic Knowledge@Wharton: What is the impact, then, of that shift from the West to the East? What results do you forecast?
Yunus: One is, we will easily move out of Western motivation and domination. Europe is already in trouble. The U.S. is in trouble, in terms of the financial crisis, unemployment, and other issues. So those old ideas which made them at the top, and we followed them blindly. They were successful, so we didn't need to reinvent the wheel. Now we have to invent the wheel. We have a chance to do that. If we don't do that, again the world will fall into problems.
Arabic Knowledge@Wharton: What do you think needs to happen?
Yunus: I always come back to a conceptual framework. Our conceptual framework is wrong. I cannot imagine a system that makes people incapable of working. The system is supposed to help me do things I am capable of doing, but now the same system tells half the working population in the world, you have nothing to do, stay out. And we are glorifying that system? We wanted to go to Mars and back, without ever having to leave. We put down our objective, and we designed a system. Why can't we build a system for us? Simply we are mesmerized by the current system. We learned from our business schools that this is the greatest system. That is what went wrong. This is the worst system that humans have ever invented. It doesn't work for me. What I will bring will still be capitalism, but designed for people.
It's about the free market. It's about competition. That's what capitalism is. But you don't have many options, as far are businesses are concerned. The only thing you can do is make money. Capitalism is about options. So I ask, where are the options? The entire interpretation of capitalism is one way. That's why it's so unpredictable. That's why there are problems every day. We keep on creating problems after problems, even if you fix them, because it's fundamentally wrong. There is a profit-making business and then there is a social business. Social business brings other aspects of the human being. It creates stability, and you are able to stand on two legs. It's an improvement of capitalism, not a denial of capitalism. Socialism is something else -- that's when the government decides. But government is not creative. Government can only fund the bureaucratic process. But the world is moving in a creative dimension, and innovation is the essence of changing the world. Social business will make it happen. Then the individual can become active in solving problems.
Arabic Knowledge@Wharton: Yet in developing countries, don't you see a repeat of the progress that Western countries followed?
Yunus: Because we are following the old system. We are mesmerized. 'Look at the West!' So we follow them. What did Japan do? It jumped right in. What happened now? Japan has one of the highest suicide rates in the world. Not ordinary people, top people are committing suicide.
Arabic Knowledge@Wharton: Yes, but following the West worked for Japan after WWII. If it can work for 10 years, 20 years, 50 years, that's a bankable system.
Yunus: It's possible for a temporary thing. But the test of a system is that it grows with us. It's organic. If the system works for a few years, but we grow up and the system hasn't, it's a mismatch; it collapses. It should grow with the people and emphasize human creativity.
Arabic Knowledge@Wharton: Is that in line with C.K. Prahalad's idea of a bottom-of-the-pyramid approach?
Yunus: The problem with C.K. Prahalad's idea was he brought traditional capitalism to the grassroots level. Almost saying, there's an opportunity to make money there. I don't want to say that. I say there's a responsibility of ours to change that world, to bring it up. If you say here's an opportunity, you're seeing them as a subject of your own intentions.
Arabic Knowledge@Wharton: But that's what's driving this shift from the West to the East. Everyone is realizing there is enormous opportunity in those markets.
Yunus: Same old idea, you're just extending the boundary of it. And I'm not saying it's doing good. It's doing worse. You have to see those young people at the bottom as a resource, as people who can change the world with their creativity, rather than as an opportunity to sell your shampoo and your toothpaste. That's what bottom of the pyramid is all about. You're not seeing them as human beings, who can change the whole world.
Arabic Knowledge@Wharton: One idea that's gained popularity though is that of leapfrogging, where people at the bottom of the pyramid are given technologies and come up with innovative solutions that everyone can benefit from. So there are some benefits to that strategy.
Yunus: Some of this may be a byproduct, but it was not an intention. You want to make money, so you brought mobile phones into the villages. But it changed something. You want to make money, that's why you have a bus system. People are benefiting from it, but still you want to make money. So turn it around. I want to bring mobile phones to bring you the things that you never got. I have no intention of making money from that. Suddenly, a whole new world emerges. Then I ask, how do I bring healthcare to you? How do I bring banking services to you, education? All on the same thing; this mobile phone, this is the future in your hand. Everything will be done through this. This is a communications center. That's it -- the world is going to change totally. This is a great invention, I'm so proud of my iPhone. But for how many years, before it becomes obsolete? That's the speed at which this world is changing.
Arabic Knowledge@Wharton: There is great wealth being generated in these economies with the West to East shift you've discussed. But there's been little impetus to give back among this new class of global wealth.
Yunus: Bill Gates is retired. He's made enough, and he's continuing to make enough. He's thinking, 'What do I do with my money?' They are creating foundations. They don't know what to do with their money. Do they carry it with them to their graves? But these other millionaires you're referring to, this is the first time they are doing this. Wait until they come to that stage. Either they will figure out what to do with their money, or their sons will be fighting over it, like the Ambani family. The people like Gates, their children already have so many billions, they think even this money will be extra for them, so why not create a foundation. But what I am suggesting will be a lifelong thing. Making money is a means. But the economic theory, the way it is interpreted today: Making money is a means and making money is an end. That's my objection. I accept the means, but I don't accept the end. Human life has meaning. In every classroom, we have to explain why we are here. I'm not coming from religion -- I have to decide for myself, what is it that I want out of my life? And then work for it.
I don't think any young person will say, 'All I want to do is make US$100 billion and then die.' Young people want to say, 'I want to leave my signature on this planet. That's my goal.' So let's help them. Make it happen. Build a life where you make money as a means, and then use the money to change the world as an end. That's what the world is all about, that's what I'm here for. Otherwise, making money like you're some kind of animal that procures things, like a honeybee for example. It's just collecting but it's not enjoying that honey. Are we like that, out of compulsion we do that? Economic theory made us do that, made us into robots. Human beings are a much bigger entity.
Arabic Knowledge@Wharton: We've been talking a lot about money, but in the near future the focus will likely be on natural resources. When there is water rationing in New York City, for instance, will people then take the resource issue seriously?
Yunus: Of all the resources, the most important that is wasted away is the human resource. Once we get the human resource issue fixed, other resources will get fixed. We're wasting that human resource. How can you let a well-capacitated person with unlimited possibility waste himself away, because your system has not developed the way to use him? And not just one or two or even 10; half the working population of the planet does not have opportunity. I even make a joke: Have you ever heard of any animal being unemployed? How come we call ourselves human beings, with all the glory of our technologies, and yet half of us cannot work? So we cannot waste that human resource. It is unlimited if we unleash it. It can solve every problem. But we are not putting the creativity of human ingenuity towards our problems.