WH E N B U S I N ES S B EC O M ES S O CI A L
T H E M I N D - B L OWI N G C A SE O F
M U H A M M A D Y U N U S
"Poverty is the absence of all human rights.
The frustrations, hostility and anger generated
by abject poverty cannot sustain peace in any
society. Once poverty is gone, we’ll need to
build museums to display its horrors to future
generations. They’ll wonder why poverty
continued so long in human society"
Don’t you ever wonder why a few individuals'
personal net worth is almost as big as a national
GDP while billions dwell in deprivation? How
come that food-insecure people still exist in the
21st century? The rules of our contemporary
era’s economic game are totally one-sided, as
wealth is accumulated and is not fairly
reallocated. Poverty exists insofar structural
issues exist, not due to people’s choices. Nobel
Peace Prize and microcredit pioneer
Muhammad Yunus points out, at Ca’ Foscari
university’s lectio magistralis: “Poor people are
like bonsai trees, there is nothing wrong with
the seeds, but by planting them in a flower pot
they find rejection in every corner so they are
doomed to be small”. Microfinance is the
innovation the world might need. It consists in
supplying small-scale banking services to those
who are rejected by conventional banks
because they are too poor, aiming at
developing small businesses in return.
It is a huge reform, if not a clear denunciation of
our egoism-based economic system, remarking
that the provision of credit at a high interest rate
to those in need is totally unreasonable.
Microfinance institutions assign loans to
individuals, but a cooperating group has to be
held jointly liable if repayment difficulties happen
to emerge. The crucial strength of this specially
designed system is social support because
through the process of earning and saving in a
community, a firm relation is set, with discipline
and mutual awareness, without pressure for
restitution and interest. The borrowing institutions
are part of such foundation and benefit from
social unity, trust grows with investment and new
businesses advance, with national prosperity, at a
pace that would otherwise not occur in the norm
of an impoverished setting. The poor become
small business owners and autonomously achieve
financial reliability.
In 1974 Muhammad Yunus, head of the
economics department in Chittagong
University, Bangladesh, went to his village
during the famine; witnessing disaster and
people left dying of hunger activated in him an
eagerness to see what he could do to help.
Wars, floods, droughts and monsoons
aggravated the social inequality and chaos.
Poverty reigned and the "loan sharks" did not
care. In such circumstance, to borrow 7 cents
there was a cruel interest rate and the
moneylender basically got free stuff, while
families suffered becoming virtual slaves and
had no hope to escape from their miserable
situation. Yunus paid off the terribly inflated
debts the whole village had. But charity was
not enough, it is not a solution, it is a good
gesture with one short life. Therefore, he went
on to look for a way not only to lend money
fairly but most importantly to support efforts to
expand business. Investment was key to
gradually get out of poverty. And surprisingly to
a patriarchal society, women were in the lead.
He observed the strength of women managing
the house and their craft-based skills;
their hard work was encouraged and paid back,
transforming them into the new “breadwinners”.
That’s how Grameen Bank was founded and now
it lends out over $100 million a month in
collateral-free loans. Beggars disappeared slowly,
becoming small CEOs of products they could
make, 50,000+ students are pursuing higher
education, more employment and renewable
energy are provided thanks to such financing.
They worked with dairy company Danone to
distribute affordable yogurt too, with additional
nutrients for children. Muhammad Yunus got,
then, the Nobel Peace Prize in 2006, for "the very
high contribution to the development of social
innovation and to the creation of value thanks to
an innovative management of microcredit that
has institutionalized small loans for entrepreneurs
who do not have access, due to a too low income,
to traditional banking circuits. The result was a
profound social revolution in the direction of a
more modern and tolerant society with an
increased role of women in communities".
His attempts reinvented furthermore what is
considered “homo economicus”, a self-interested
rational animal achieving optimal and
maximized profit, to a “homo reciprocans”, a
cooperative social human seeking order and
equality first and from that, a personal gain
which might have even more than just a
material value. Altruism must be peculiar to us
otherwise duality and paradoxes counterposing
social responsibility will bring our capitalistic
system into turmoil. “The world is of the people”
must be applied to banking, inasmuch as
financial services are economic oxygen for the
people: if only a few can breathe what will be
left of humanity? Capitalism was born just to be
about free market, not to hinder investment and
enormously enrich a few privileged.
Conventional business is purely egoist and
generates centrifugal forces that increase
inequalities, it only aims at endless maximization
of profit with too much focus on stock market
instead of shifting the gaze to incumbent
tragedies and evident social injustice. Corporate
social responsibility programs are not enough,
investment and 100% trust are the fundamental
fuel to success, development and peace. “Social
goals can replace greed as a powerful
motivational force. Social-consciousness-driven
enterprises can be formidable competitors for
the greed-based enterprises”, he stresses. When
the employee is a supported small entrepreneur
and solves social embroilment, generating an
economy based on altruism that gives back
everything as the profit is completely allocated
to social responsibility venture, peace is surely
better achieved.
Selfishness becomes selflessness to a justice
ever-demanding society. Moreover, Muhammad
Yunus’s projects are taken as a great example for
the Sustainable Development goals of UN. He also
mentions global trade: “it is like a hundred-lane
highway criss-crossing the world. If it is a free-for-
all highway, with no stoplights, speed limits, size
restrictions, or even lane markers, its surface will
be taken over by the giant trucks from the world’s
most powerful economies. Small vehicles -a
farmer’s pickup truck or Bangladesh’s bullock
carts and human-powered rickshaws- will be
forced off the highway. In order to have win-win
globalization, we must have fair traffic laws, traffic
signals, and traffic police. The rule of the fact that
the strongest takes all must be replaced by rules
that ensure that the poorest have a place on the
highway. Otherwise the global free market falls
under the control of financial imperialism, so it’s
not free anymore”.
He has been discouraged many times and his
model of microfinance might have a few
opportunity costs, economists cast doubts on the
concept of group lending and foresee a collapse.
Dr. Yunus is taken as a great example for UN
Sustainable development goals
Even the media is not helping. For instance, a
presumptuous journalist asked him in a haughty
way if he would have been the World Bank
president how he would have managed it. He
replied with an honest "I do not know but for
sure I know I would move the headquarters in
Dhaka, where the World Bank would be
surrounded by human suffering and destitution.
By living in close proximity to the problem, I
believe the Bank would solve the problem much
faster and more realistically. Dhaka is not a
choice spot for a World banker to raise children,
or to have an exciting social life, so many would
voluntarily retire or change jobs. This would help
achieve two things: on the one hand, it would
allow me to ease out those who are not
completely dedicated to fighting poverty and in
their stead, I could hire people who are
committed and who understand the problem.
And the cost of living is for sure less than that of
Washington DC”.
Education teaches to fly high like birds to those
who get to work there so they can see everything.
But it’s blurry. Yunus states that it is better to see
it worm-angle, clearly and detailed. Problems
and solutions live together. The bird, distancing
itself from the problem will never come up with
a fix. “At school, not a paragraph taught me how
to get out of a famine and protect poor people
and mindsets play strange tricks on us. We see
things the way our minds have instructed our
eyes to see. I just went out and learned about it
by myself, my simple formula is to look at what
is conventional and do the opposite. I never took
a course in banking at university and I’m in some
sort glad becaused I'm not biased”.
"...Youngsters must go back to their mothers and
learn... She might be illiterate but she does know
how to run a business, go back to her and clean
up your mind. You won’t be job ready but life
ready". In addition, work should be outdated, it is
an obsolete idea, he explains, youth must be
trained to be “creator, not seeker”; we are creative,
imaginative beings and we have entered into an
age when dreams have the best chance of coming
true and soon jobs will cease to exist for people
because AI will work for us. So we need to learn
from our mothers and let out the creativity which
resides in all of us so that everyone will be able to
do what makes them happy. The future is a world
of happy entrepreneurs.
But we undoubtedly have to roll up our sleeves, "It
is tempting to simply dump our world’s social
problems into the lap of government and say,
“Here, fix this.”But if this approach were effective,
the problems would have been solved long ago.
Their persistence makes it clear that government
alone does not provide the answer and we just
do not need charity from them. We must
cooperate for peace, happiness and wealth if we
really want this world to be ours".
Professor Yunus's words are an incentive for a lot
of experts to reflect on morality, international
policy, the Keynesian bancor and, for example, if
the citizens basic income is handled like charity or
as a true investment for growth.
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