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A world without poverty, unemployment or environmental devastation seems like a utopian dream. But it doesn’t have to be. In his new book, Nobel Peace Prize winner Muhammad Yunus shares his vision for a kinder, gentler planet. It starts with recognizing what he describes as the inherent cruelty of capitalism, the need to value the abilities of every human being and understanding that saving the environment must be a collective effort.
Yunus, who won the Nobel for his work in microfinance, encourages us to see the world not through the lens of profit, but of social impact. He spoke about his book, A World of Three Zeroes: The New Economics of Zero Poverty, Zero Unemployment and Zero Net Carbon Emissions on the Knowledge@Wharton show, which airs on Wharton Business Radio on SiriusXM channel 111. (Listen to the complete podcast at the top of this page.)
An edited transcript of the conversation follows.
Knowledge@Wharton: Your life’s work has been looking at ways to lift people out of poverty. Do you believe there is a path to eliminating poverty as much as possible around the globe?
Muhammad Yunus: Yes, indeed. Poverty doesn’t come from the poor people themselves; poverty is imposed from outside. It’s something that we have in the economic system, which creates poverty. If you move those problems, the system, there’s no reason why anybody should be poor.
I give the example of a bonsai tree. If you take the best seed from the tallest tree in the forest and put it in a flowerpot to grow, it grows only 2 feet or 3 feet high, and it looks cute. It’s a replica of the tall tree. You wonder what’s wrong with it. Why doesn’t it grow as tall as the other one? The reason it doesn’t grow is because we didn’t give it the base on which to grow [bigger]. We gave it only a flowerpot. Poor people are bonsai people. There’s nothing wrong with the seeds. Simply, society never gave them the base on which to grow as tall as everybody else.
“Poverty doesn’t come from the poor people themselves; poverty is imposed from outside.”
One struggle that I had all of my life is the banking system doesn’t reach out to them. I kept saying that financing is a kind of economic oxygen for people. If you don’t give this oxygen to people, people get sick, people get weak, people get non-functional. The moment you connect them with the economic oxygen, the financial facility, then suddenly they wake up, suddenly they start working, suddenly they become enterprising. That is the whole thing missing. Almost half of the population of the entire world is not connected with the financing system.
Knowledge@Wharton: How do you start to build out that system?
Yunus: We created a bank for the poor people called Grameen Bank, or Village Bank. We work with the poor people in Bangladesh. It became known globally as microcredit. Today, Grameen Bank has over 9 million borrowers in Bangladesh, and 97% of them are women.
That idea has spread all around the world, including to the United States. There is an organization called Grameen America, which lends money to extremely poor people in the cities of the United States. There are seven branches of Grameen America in New York City, and they total 20 branches all over the United States, including Boston, Houston, Omaha, and so many others.
Nearly 100,000 borrowers are given loans of about $1 billion right now, and they pay back nearly 100%. But we had to create this separate [microcredit] piece. That’s the point I’m making — banks don’t want to come out. We need to address that and the whole problem of wealth concentration, which I focus on in the book.
All of the wealth of the world, all of the wealth of the nations, is concentrated in fewer and fewer hands. Today, eight people in the world own more wealth than the bottom 50% of the people. Tomorrow, it will be less than eight, and the day after that it will still be less, and soon we will have one person owning 99% of the wealth of the entire world because it’s getting faster and faster.
The whole machine, which you call the capitalist system, is sucking up the wealth from the bottom and passing it to the top. That’s a very dangerous system. We have to be aware. I said this is a ticking time bomb, and we have to reverse the process, change the process.
Knowledge@Wharton: Many Americans don’t consider the concentration of wealth and distribution of poverty to be a global problem. You are saying that it is.
Yunus: It is a global problem. It happens in every city, every county, every state, every nation. The system is built that way.
Knowledge@Wharton: Where carbon emissions are concerned, are you disappointed in some of the environmental decisions made by President Trump, especially with pulling out of the Paris Accord?
Yunus: It’s not only disappointing, it’s very shameful that the United States can take an action like that. It took years for the whole world to mobilize the feeling that we have to protect this planet because we are on a most dangerous path. We soon will come to the point of no return. Even if we try, we cannot undo the things that we have done. But we still have a chance. We came all the way from everywhere to Paris to get all of the world’s leaders, all of the nations to sign. And suddenly the United States government withdraws from that. That’s the most shocking thing that could happen.
Luckily, mayors and the governors are saying, “No, we are still on the path. We will continue to do that.” I hope the United States will reconsider that and continue to become the leader of the whole movement of stopping global warming.
“The whole machine, which you call the capitalist system, is sucking up the wealth from the bottom and passing it to the top.”
Knowledge@Wharton: Is it surprising that China has taken the leadership role in this?
Yunus: Yeah, it’s amazing. The assumption was that China and India would say (to the West), “Well, you got your economic development done, so you now are talking about global warming. We have to go through it because we have no alternative. After we reach your level, then we’ll consider that.”
The reality is completely different. Today, China and India are leading the way. They said, “We are on our own making decisions, not because of the pressure of the world. We do it because we feel that we have to protect the planet with our own action.”
Knowledge@Wharton: Let’s talk about your views on zero unemployment. In the United States, most people believe that we are at full employment right now, yet we still have 4% to 5% unemployment. There are still a lot of people that are marginally attached to the workforce. It seems that is a term that you are not fond of at all.
Yunus: That’s right. We are human beings, and we are not born on this planet to work for somebody else. They are an independent person. They are an enterprising person. That’s our history. That’s in our DNA.
When we were in the caves, we were not sending job applications to each other. We were not sending job applications from cave No. 5 to cave No. 10. We went ahead and got things done. That’s what we were known for. We are go-getters. We are problem solvers. But somehow capitalist systems came and they said, “No you have to work for somebody else. That’s the only way you can make a living.”
I say that’s absolutely the wrong idea. We have to go back to our entrepreneurship [roots]. We are all entrepreneurs. The whole problem of unemployment came because of the concept of employment. If we didn’t have the concept of employment, you don’t have the problem of unemployment because everybody can be an entrepreneur. That’s what we do in Bangladesh. We address all the young people from Grameen families. We say, come up with a business idea and we’ll invest in your business. We are a social business investment fund so that you can come with any business idea. We invest in you, and you be successful and return the money that we give you. We don’t want to make money from you. All of the profit belongs to you so that you move on. Thousands and thousands of young people keep coming every month, and we keep on investing in them every month.
Every family, every school will be teaching the young people that they have two options as they grow up. You can be a job seeker or an entrepreneur, so prepare yourself which way you want to go. Today, there is no option. Everybody is told they have to get the best grades and get the best job in the world, as if jobs were the destiny of a human being. That’s belittling human beings. Human beings are not born to end up spending their whole lifetime working for somebody else.
Knowledge@Wharton: Do you see the number of social-impact businesses increasing around the world?
Yunus: I see it every day, every moment, because people really have that feeling inside of them. This my thesis of what I promoted in the book. The capitalist system is based on an interpretation that human beings are driven by self-interest, meaning selfishness. That is absolutely the wrong interpretation of a human being. A real human being is not all about selfishness. A real human being is selfishness and selflessness at the same time.
“We are human beings, and we are not born on this planet to work for somebody else.”
You double up both sides, whatever strength you want to put in each side. That’s up to your upbringing, your schooling and so on. But you have two options, and you can do both. You can create business to make money for yourself — that’s a selfishness — and you can create business to solve problems, make other people happy in the world, protect the world. That’s a selflessness, and that’s a business that we create called social business.
Social business is a non-dividend company [meant] to solve human problems. We completely eliminate the idea of making personal profit in social business. We totally dedicate ourselves to solving problems. Now that the idea of social business is growing, young people are coming with business ideas, big businesses are coming up to create social businesses alongside. I’m very happy about that. Hopefully, schools like Wharton will be teaching social business as a separate subject and also give social MBAs to young people who will be preparing to operate social businesses, manage social business, create social business.
Knowledge@Wharton: Why didn’t we see social businesses 50 years ago?
Yunus: We don’t have to blame ourselves for not seeing it 50 years back, but we must blame ourselves why we are not seeing it now. Why are we delaying? Look at the health care problem. Health care could be done by the businesses to make money, make profit. It’s become more expensive, more complicated, more political because they want to make money.
Health care could become a charity where government gives health care free for everybody. Many countries do that. Or health care can be social businesses — businesses that solve problems, not making money for any owners, so that they can sustain themselves. There is no tax bar on anybody. They want to make sure it becomes cheaper and cheaper every day, instead of becoming more and more expensive every day. We can try it out in one state, in one county, whatever you want to do. This is possible once you take out your glasses with dollar signs in your eyes.
You see everything [and it’s] about dollars, how to make dollars. Why don’t you for a while take the dollar-sign glasses off of your eyes and put on the social business eyes? Suddenly, you see lots of opportunity for people to come up with creative ideas, to solve the problems of the people. If we bring all of our creative energy of the whole world, all of these problems that we see every day will disappear.
Knowledge@Wharton: It almost feels like we’re at a tipping point where we’re going to see more companies decide which direction they want to go in.
“Social business is a non-dividend company [meant] to solve human problems.”
Yunus: Yes, that’s right. There is pressure on businesses to pay attention to the social causes. They are gradually getting a little bit conscious about it. That’s a good sign. But I’m saying that whether they are a mega-business, global business, local business, small business, middle[sized] business — each one of them can create a small business of social business alongside their conventional business. This is not just limited to, one guy will do it and will watch over it. Each one of us can do that and invite all of the creative activity. Once the big businesses and middle businesses get interested, suddenly so many ideas will keep coming. Today, we’ve blocked it out completely from our mind, as if all we have to do in our lives is to make money. That’s the wrong direction completely.
Knowledge@Wharton: A lot of that will rely on the entrepreneurship and the mindset that people have. They have to take the incremental steps and build on it.
Yunus: Absolutely, that’s the whole idea. As I mentioned, the families will be discussing with the young people, and the schools will be teaching them the two options of being an entrepreneur or a job seeker. And when you become an entrepreneur you, have two options. You can run a business to make money for yourself, or you can run a business to solve people’s problems. And you can do both. You can have a money-making business for yourself, and you can have a social business for yourself, and you feel good that you are doing something that touches the lives of so many people around you.
Photo credit: By University of Salford Press Office – Professor Muhammad Yunus: Building Social Business Summit, CC BY 2.0, https://commons.wikimedia.org/w/index.php?curid=38983058
Join The Discussion
4 Comments So Far
John Miraglia
While I eympathize with Mr. Yumas’ thoughts, his characterizations of people and outcomes denies the diversity of people and the complexity of factors leading to poverty or wealth. We are not all entrepreneurs. In fact most of us complain about the lack of job opportunities ( or in the US the lack of good paying jobs).
Anumakonda Jagadeesh
Excellent.
Social entrepreneurship is the use of the techniques by start up companies and other entrepreneurs to develop, fund and implement solutions to social, cultural, or environmental issues. This concept may be applied to a variety of organizations with different sizes, aims, and beliefs. For-profit entrepreneurs typically measure performance using business metrics like profit, revenues and increases in stock prices, but social entrepreneurs are eithernon-profits or blend for-profit goals with generating a positive “return to society” and therefore must use different metrics. Social entrepreneurship typically attempts to further broad social, cultural, and environmental goals often associated with the voluntary sector in areas such as poverty alleviation, health care and community development.
At times, profit-making social enterprises may be established to support the social or cultural goals of the organization but not as an end in itself. For example, an organization that aims to provide housing and employment to thehomeless may operate a restaurant, both to raise money and to provide employment for the homeless.
In the 2010s, social entrepreneurship is facilitated by the use of the Internet, particularly social networking and social media websites. These websites enable social entrepreneurs to reach a large number of people who are not geographically close yet who share the same goals and encourage them to collaborate online, learn about the issues, disseminate information about the group’s events and activities, and raise funds through crowd funding.
Social enterprises can generally be classified by the below categories, though new sectors and areas arise as the field continues to evolve. Currently recognized fields of social enterprise are:
• Animal Rights, Animal Agriculture Reduction & Vegan Enterprise
• Economic Development, Economic Empowerment, Financial Literacy & Poverty Alleviation
• Education
• Environmental Sustainability & Climate Change Mitigation
• Food Access, Sustainable Food Systems, & Hunger Relief
• Health, Public Health, Healthcare Accessibility & Wellness
• Microfinance, Microcredit & Microlending
• Racial Equity & Gender Equity
• Social Justice, Justice & Human Rights
• Women’s Empowerment & Women’s Rights
Organizations such as the Skoll Foundation, the Omidyar Network, the Schwab Foundation for Social Entrepreneurship, Tasamy, Athgo, New Profit Inc., National Social Entrepreneurship Forum, Echoing Green, and the Global Social Benefit Institute among others, promote and providing resources to advance the initiatives of social entrepreneurs.[30] The North American organizations tend to have a strongly individualistic stance focused on a handful of exceptional leaders. For example, The Skoll Foundation, created by eBay’s first president, Jeff Skoll, makes capacity-building “mezzanine level” grants to social entrepreneurial organizations that already have reached a certain level of effectiveness.[43]
The Internet, social networking websites and social media have been pivotal resources for the success and collaboration of many social entrepreneurs.[44] In the 2000s, the Internet has become especially useful in disseminating information to a wide range of like-minded supporters in short amounts of time, even if these individuals are geographically dispersed. In addition, the Internet allows for the pooling of design resources using open source principles. Using wiki models or crowdsourcing approaches, for example, a social entrepreneur organization can get hundreds of people from across a country (or from multiple countries) to collaborate on joint online projects (e.g., developing a business plan or a marketing strategy for a social entrepreneurship venture). These websites help social entrepreneurs to disseminate their ideas to broader audiences, help with the formation and maintenance of networks of like-minded people and help to link up potential investors, donors or volunteers with the organization. This enables social entrepreneurs to achieve their goals with little or no start-up capital and little or no “bricks and mortar” facilities (e.g., rented office space). For example, the rise of open-source appropriate technology as a sustainable development paradigm enables people all over the world to collaborate on solving local problems, just as open source software development leverages collaboration from software experts from around the world(Wikipedia)..
Social business is a cause-driven business that allows investors to receive the same amount of money they had initially invested.All other profits are reinvested into the business to cover any costs. “At the same time, it can achieve the social objective, such as, healthcare for the poor, housing for the poor, financial services for the poor, nutrition for malnourished children, providing safe drinking water, introducing renewable energy, etc. in a business way,” according to Yunus Centre.
Many companies have adopted social businesses to contribute to alleviating global poverty. Muhammad Yunus’ first business is Grameen Danone, a yogurt distributed in Bangladesh, that helps to prevent malnutrition for children. “The 10-year plan is to establish 50+ plants, create several hundred distribution jobs and self-degradable packaging,” says Yunus. Grameen has grown to develop technologies that help farmers grow crops more effectively.
Agricultural technologies include mrittikā, a soil testing software that helps farmers choose better fertilizer. Ankur is a similar software that focuses on seed selection. Healthcare software shumātā helps pregnant women follow up on personal care, and dolnā helps with vaccinations for children. These programs are examples of social businesses focused on helping the world’s poor in a new innovative way.
Other than Yunus’ programs, many companies are investing in social businesses to make a difference in the lives of the world’s poor. Popular social businesses include clothing lines based in developing countries that help to create jobs for people in rural areas. Hand Up Not Handouts is a company that works with artisans in Rwanda to create hand crafted jewelry, providing work for women to provide for their families.
As more social businesses grow, there are more opportunities available for people in developing countries. “Social businesses have created hopes for eliminating poverty from the world by generating employment,”( Kimberly Quitzon, Can Social Business End Poverty?).
““Why should a rich country like the Philippines stay poor?” asked Gawad Kalinga (GK) founder Tony Meloto at the opening of Social Business Summit 2014, at GK’s Enchanted Farm, in Bulacan.
The Philippines experienced 7.2% economic growth in 2013, but that has hardly felt by the country’s poor.
What are the roles of businesses and community organizations in pushing inclusive growth in the Philippines? This question was tackled in the first session of the Summit, “Starting From The Bottom Up,” which focused on bottom up development and how citizens and community groups can end poverty. The summit’s official hashtag is #EndPoverty, and encourages participants to take the conversation on sustainable development and poverty elimination online.
A big part of bottom-up change comes from the business sector, through what is now known as social entrepreneurship.
“It takes courage to be a social entrepreneur. We have to begin from the bottom up,” Meloto said.
Social entrepreneurship is a for-profit business model that pursues innovative solutions to societal problems. But can for-profit businesses help include the poor? Meloto emphasized that social businesses must be profitable and sustainable.
“What is important for a social entreprise is that we build a sustainable enterprise, something that will last,” Meloto explained.
While it may be difficult to think of business as a social enterprise, Meloto believes that it is the way toward more sustainable economic development. “We can’t help the poor if we are poor ourselves,” he added.
Cebu-based social entrepreneur Manny Osmeña, chairman of the Manny O Group of Companies and the Movenpick Hotel, shared how he became a social entrepreneur. “Before, all I would talk about was making money,” Osmeña said.( Social entrepreneurship: Ending poverty from the bottom up, ‘What is important for a social enterprise is that we build a sustainable enterprise, something that will last,’ explains Gawad Kalinga founder Tony Meloto, Ryan Macasero, ,RAPPLER).
“Business has become a dirty word. Doing business with the poor seems taboo, shocking, unthinkable. But what if business could improve the lives of the world’s poorest people?
According to the World Resources Institute, there are 4 billion people worldwide who live below the Western poverty line. 1 billion of them live on less than $1 per day. They are known as the base of the pyramid. Anyone travelling to the developing world has seen slums and shantytowns. The base of the pyramid live in squalid conditions — without access to clean water, toilets or basic medicine. Children play in sewage. Young adults walk around crippled with polio. Older adults, blind from cataracts, are led by hand or sit idly.
The base of the pyramid are not just poor — they are socially and economically excluded. Their lives can be uprooted at any moment, since many lack a formal legal status. They work odd jobs or farm to keep themselves alive, but without steady employment, they can go for weeks or months without work. They have little or no formal education.
One of the biggest injustices at the base of the pyramid is that they pay more for goods than anyone else. In a slum outside Mumbai, a minute of phone time is twice as expensive as higher-income areas. Diarrhea medication is $20.00 in the slum, compared to $2 in a middle class neighborhood. Clean drinking water is 37 times more expensive than it is for the middle class. Loans in the slum have interest rates of up to 1000%.
Loan sharks, gangsters and other local monopolies are making the base of the pyramid even poorer. This is a documented problem throughout the developing world and it has a technical term: the “base of the pyramid penalty.”
Social businesses are finding creative ways to reduce the BoP penalty.
(3 Ways That Business Can Alleviate Poverty, Noa Gafni,THE BLOG,HUFFPOST, Jan 23, 2014).
“How do you profitably sell to a customer who earns less than $2 per day?
It is probably the most daunting business question in the world. As well as the most important, because that’s the earning power of nearly one third of humanity, the 2 billion people at the so-called “base of the pyramid.”
Business can be the great engine that lifts billions out of poverty, but it needs to be a new kind of values-driven business.
The challenge is immense. The typical base-of-pyramid customer lives in a remote rural village, in a cramped hut with no clean running water, electricity, or indoor toilet. The household is typically illiterate, unreachable by traditional marketing channels, has no savings or access to affordable credit, and is dangerously vulnerable at any moment to disease, injury, or natural disaster.
And yet a new kind of entrepreneur is springing up who sees things differently, for whom business is the best way to fight poverty. People such as:
• Sam Goldman, who founded his company d.light design while an engineering student at Stanford. d.light makes low-cost solar lanterns specifically designed for the needs of the $2-a-day customer–their lights have been used by more than 30 million people to date in over 40 countries.
• Jordan Kassalow, whose organization VisionSpring has successfully sold nearly 2 million affordable eye-glasses to poor people in developing countries.
• Prema Gopalan, who has built a network of women entrepreneurs across rural India selling everything from solar chargers for mobile phones to more efficient cook-stoves–all transformational products that can lift a rural household out of extreme poverty.”
These social entrepreneurs view their customers–the world’s poorest people–as collectively comprising the world’s largest under-served market, with an annual purchasing power of over $1 trillion. For them, creating businesses to serve this market is both a massive opportunity as well as a moral duty( Insights From Social Entrepreneurs On How Business Can Lift People Out Of Poverty
Business can be a huge driver of change around the world, but it has to be the right kind of business, run the right way, Mark Cheng, ,FastCompany).
Dr.A.Jagadeesh Nellore(AP),India
Edward Dodson
Unfortunately, Muhammad Yunus fails to identify the primary cause of widespread poverty in any society. This cause was identified centuries ago by political economists, beginning with Richard Cantillon. The American political economist Henry George almost succeeded in jump-starting a global movement to implement changes in the way governments raise revenue that would have stimulated the development of full employment societies.
The key was and is the public capture of the rents of nature. Every parcel or tract of land, as well as land-like assets such as the broadcast spectrum, has a potential annual rental value directly attributable to the aggregate public and private investment in infrastructure and amenities, independent of what any individual does or does not do with land held. This societally-created value rightfully belongs to all but is almost everywhere privately appropriated. The result is a worldwide concentration of control over nature with minimum compensation paid for the privilege. Thus, governments impose taxation on earned incomes, on capital goods and on commerce that are inherently unjust and destructive.
Neither socially motivated investors, cooperative enterprises, public banks, community land trusts nor other such measures will halt the vast redistribution of income and wealth that now occurs from producers to the world’s non-producing “rentier” interests. Thoughtful reformers would do well to study Henry George’s works for answers to the problem of poverty.
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