Muhammad Yunus and Creating a World Without Poverty

Gently belying Jesus' pungent observation that "the poor you always have with you," 2006 Nobel Peace Prize winner Muhammad Yunus has authored a book, released on the last day of 2007, entited Creating a World Without Poverty, in which he argues that by implementing his theory of the "social business" we can eventually consign poverty to a museum rather than let it continue to occupy a central place in the life of billions of the world's people. The fundamental concept of his book, the creation of social businesses, is so simple and clearly explained that even if it doesn't eradicate human poverty it creates a compellingly different way of conceptualizing the world of business today. If Yunus were a freshly-minted Ph. D. in economics or, even worse, a business consultant living off corporate largesse, one might dismiss his work as a soporific drug to buy off liberals and throw a few crumbs to the world's poor while corporations continue their quest for world-dominance.

But Yunus has a track record and philosophy that makes him hard to pigeonhole. On the one hand he favors free markets and open borders for goods but, on the other hand, he favors non-collateralized loans to poor people to help them begin a business. On the one hand he says he has does not want to end the corporate money-making model of business, but on the other hand he states unequivocally that his commitment is to the world's two billion poor people. He doesn't favor one of the favorite corporate devices of left-leaning people--encouraging corporate social responsibility (because he says it that such "responsibility" always will take second place to the corporate "bottom line"), yet he favors the creation of businesses which seek investors who will make no profit on their investment, though they will get their original investment returned to them. His experience arises from more than 30 years of working with poor people in his home country (Bangladesh), first by creating a bank (the Grameen Bank) to loan them money for their business ideas, and then by spawning what he calls the Grameen family of businesses--more than 20 specific businesses ranging from selling cell phone minutes to development of IT solutions for businesses.

His major point is not only that the poor make good "loan-risks," but they have the creative insight and energy not only to come up with business ideas but to make them profitable. Especially in the case of Bangladesh Yunus has focused on the work of women, women who have never had any experience with handling money, but who have a desire to help themselves and their families step out of the devastating cycle of poverty. By eliminating the rapacious middle man, who often offered loans at such high interest rates that it assured that a woman remained in poverty, Yunus has not only helped women escape poverty but has created a financial institution (the Grameen Bank) that now is the most significant financial player in that country. This offering of small loans to women, which was dubbed "microcredit" by the mid-1980s, was the idea that vaulted Yunus to world-recognition. Now, in this book, he has extended his thinking to suggest that individuals and corporations might want to explore the notion of investing in companies, with no hope for return beyond their original investment, whose sole goal is the betterment of human life in some specific way.

Thinking About Social Business

Just as his his microcredit loan idea emerged from a simple principle (eliminate the middle man; award non-collateralized loans to the poor to start their businesses), so the notion of social business arises from a strikingly simple principle: the multi-dimensional nature of humanity. Though wealth-creation is certainly one strong impulse in life, we also, he believes, want to help others' lives. We want to 'do well and do good,' so to speak. The social business model allows us to do this much better tha investing in "green companies" (whose actual claims are difficult to monitor and who, in fact, have to be responsible to shareholders who want to maximize their dollars), because people know from the outset that they will never receive anything monetarily from the company except their original investment in it. But the company will be different from a charity in two ways. First, the contributors/investors receive back their investment and second, the company itself only will exist if it makes a profit--and so it will not need to make time-consuming appeals for contributions each year, as is the case with charities.

The social business concept got off the ground for Yunus in a big way in 2005-2006 through a joint venture between Grameen Bank and Danone, Inc. of France (the makers of Dannon yogurt). Yunus challenged the CEO of Danone, Franck Riboud, to engage in a social business, and Danone responded by producing a fortified and slightly sweetened yogurt that would be sold for much less than other yogurts in Bangladesh (thus making it accessible to the poor) and would have the result of making children healthy. Though this partnership is just getting off the ground, it can provide the model of how social business might not only transform the face of poverty but, just as important, transform the for-profit business which engages in social business. In addition, his idea is so clear and compelling that it will immediately have appeal to millions of young people who are looking for alternatives to the corporate life-style and manner of thinking (get rich now; make sure your pensions are fully funded; donate a few hours here and there for others).

Comments and Questions

Yunus is not only a clear spokesman for his cause, but he has a most engaging and handsome presence. Last Sunday in Portland, OR he kept a crowd of more than 600 spellbound for more than an hour as he gently, lucidly, and insistently laid out the case for social businesses. Indeed, in my judgment, his ideas are timely because he truly believes in the dignity of the poor and the value of pouring oneself into causes that help poor people. That is not a message we hear very often today; indeed, I wonder why the conservative talk-show hosts and reviewers haven't tried to skewer Yunus more than they have. It seems to me he is vulnerable on a number of fronts--especially what his work has done to the family structure in Bangladesh (he never mentions men in his talks) or how much his work, rather than government policies of that poor country, has in fact contributed to the diminution of poverty in his land. Criticisms probably are coming--but his voice is so clear, so gently insistent, so optimistic and hopeful, that it will be heard in our day.

Two other quick points. After the "Yunus-event" in Portland last week, I talked for a moment with the representative for Powell's Books, which sponsored the event. He was with Yunus for two hours while he was signing books before the event. He told me that rarely had he met an author of such personal humility and easy accessibility as Yunus. It seems that he is a genuine soul, whose commitment to the poor is fundamental for him. While his personal presence reinforces this message, this book will spread it yet further.

But, alas, the book isn't very well-written. There are chapters which are told with clarity and insight, such as the story of the partnership with Danone, but a lot of the book is bullet-pointed observations about his work. Much more powerful in my mind would have been some "stories" of people who escaped from poverty. Then again, he is an economist....

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