2006 Nobel Peace Prize and Muhammad Yunus

For once in my life, I seem to understand instinctively and precisely the nature of a Nobel Prize winner's contribution to his or her society. This year's Peace Prize seems at first to fit better under the Economics Prize category, but I think that its potential "countercultural" message convinced the Nobel Foundation that his idea is really one that could affect the power relations in the world. And that, in fact, is what making peace is all about--altering the relationships of power between instiutions and nations in the world. What is so striking about this year's recipient, Muhammad Yunus, and the bank he founded, Grameen Bank, is that he introduced an idea ("Grameen microcredit") which is so simple to understand, so easy to embrace and so potentially radical that it makes you stop and say, "Why wasn't this idea invented/embraced all over the world well before the 1970s?" This essay explores the basic philosophy and underlying principles of Grameen Microcredit.

Yunus' Philosophy

Twin ideas consitute the basic philosophy of Grameen Microcredit. The first is that credit is a human right. I think we need to stop right there and take a deep breath. In the US we are not even to the point where quality health care is a human right. But credit? I go to my bank frequently, and the last thing in the world US Bank would embrace would be the notion of credit as a human right, for this idea means that you get "it" (whatever the human right is) just by virtue of your being human, not by virtue of your ability to lay down collateral to pay back a loan. But here is where an observation about Bangladeshi culture is appropriate. Yunus began the program of small, collateral-free loans in villages around Dhaka. He decided that the loans should go to women (96% of the borrowers) because they would be more reliable in repayment. Thus, even though he might adopt the principle of microcredit as human right, he doesn't just stand on the corner distributing money to people. Bangladeshi women are more conscientious than their husbands in repaying loans; thus, work with them. I don't fully know the effects of this approach on the social structure of the family, but I could imagine that everything is not "good." Men, in general, want to rule the roost without being threatened, and sometimes a woman who is making things "work" economically is perceived by a man as a threat.

The second principle of importance in Grameen's operation is the belief that poor people have a lot to offer economically and by way of ideas in order to climb out of the poverty that entraps them. In America we tend to have a fairly simplistic notion of poverty, even though everyone will say that the causes are "complex." In general, we tend to believe that hard work will bring you out of poverty and that, therefore, if you are poor, it is because you bascially lack the work ethic that (we) richer people have. It is a terrible philosophy, untrue as it is demeaning of the basic worth of people, but it is probably the dominant philosophy of poverty (even if not often publicly spoken) in America. One can tell, however, that Yunus' philosophy is fully different. He looks at poor people and sees potential, rather than seeing them as "blight" or "backward."

And the ideas that he has put into effect are disarmingly simple. One of his enterprises is Grameen Phone, which consists of thousands of "telephone ladies" throughout Bangladesh. These ladies take cell phones, go to places where there are no phone lines (how do the cell phones get a "signal"?) and, for a fee, allow local villagers to place calls to gather information they need. Sometimes a farmer needs to be able to figure out the most lucrative place in the market for his goods. On one occasion a man, working in Saudi Arabia, recited his marital vows over the phone to a Bangladeshi woman. As we have learned in the past decade or so in America, the speeding up of communications adds immensely to national wealth because deals can be "turned around" so much more quickly.

Conclusion

Grameen Bank's collateral-free loans, as low as $10, are meant to help a person get started in a business. Loan recipients must form groups of like people, perhaps as a means of applying social pressure both to succeed and eventually pay back the loans. In more than 20 years of operation the bank has made $6 billion in loans; they claim a repayment rate exceeding 98%. Whether the model is fully transferable to other countries is uncertain, but the philosophy behind Grameen ought to make us all, in a country which supposedly emphasizes "Christian" values, recognize how shallow our commitments really are to helping people build better lives. Our inherited moral categor ies with respect to poverty act as blinders on our eyes. It is nice to see a person from a Muslim country, without the limitations of our own philosophy about the poor, taking action to address poverty.

Of course, the task is too huge. Those who make contributions often take on problems so huge that they feel their contribution is merely a drop in the ocean. But it is people of this kind of ambition that at least get things off the ground and challenge us in our complacency. I think Muhammad Yunus and the Grameen Bank has the potential to do that. If, that is, we have ears to hear.

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