Nobel winner Muhammad Yunus explains how so-called social businesses can make everyone an entrepreneur and remedy inequality.
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.
Article by Knowledge@Wharton