Home Opinion Muhammad Yunus takes on outdated (and greedy) capitalism

Muhammad Yunus takes on outdated (and greedy) capitalism

by Yossi Mekelberg

In a world short of innovative and creative social-political ideas, Prof. Muhammad Yunus is a breath of fresh air. This godfather of microcredit, social businesses and start-ups, long before these terms became familiar, is fearless in exposing and shaming 21st-century capitalism, which is ruled by underhand greed rather than Adam Smith’s free-market “invisible hand.”

At 77, this soft-spoken and personable Nobel Peace Prize laureate is filling halls with the stalwarts of the very social-economic-political system he denounces with great analytical skill and passion, a system that benefits a minute proportion of humanity at the expense of billions who live in poverty or just above it.

The figures of wealth distribution do not lie, and as he states in his new, must-read book “A World of Three Zeroes,” eight individuals now own more wealth than 50 percent of the global population. Most of the world’s wealth is concentrated in the hands of the richest 1 percent, who own more than the other 99 percent put together.

Such a high level of wealth concentration reflects not business acumen, but the unethical and immoral nature of modern capitalism, which manipulates politics in favor of the few.

Corporate bosses and their top executives are getting away with squeezing down wages, while using elaborate tax-dodging schemes to ensure ever-increasing returns for themselves.

Until the economic crisis of 2008, these debased practices were concealed or ignored because wider segments of society were benefiting from them too. When this came to an abrupt end, those at the very top maintained their hold on wealth and privilege, while others were sent on a downward economic spiral.

The main victims were the middle class; the poor were poor before this, and remained poor afterward. But the crisis made more transparent the accumulation of wealth in the hands of the few, and the lack of opportunities for the poor to escape the poverty trap.

Yunus’ main concern, which dates back to the mid-1970s, has been the poor, first in his home country of Bangladesh and later elsewhere. In 1976, he founded the Grameen Bank in order to make capital available to poor villagers, especially women.

His vision of microcredit has been underpinned by the notion that every person harbors entrepreneurial capabilities that, given the right conditions and support, can be released, and in Yunus’ own words, help “to break the chains of poverty and exploitation that have enslaved them.”

Although some might mistake his views for socialism, this is more Yunusism than Marxism. He does not challenge the basic creed of capitalism, but he has a vision of it serving the masses, not the few. His version of the free market is led by guiding and supporting hands rather than invisible ones. It sees the boundless but wasted potential in poor people and especially women.

Grameen Bank was able to harness this potential when it began to provide credit, even in modest amounts, to the poorest of the poor across Bangladesh, most importantly without any collateral.

Whereas the normal banking system would not even contemplate lending to this segment of society, most definitely not without guarantors, Grameen Bank’s experience, based on mutual trust, has consistently shown a repayment rate of about 98 percent.

His version of the free market is led by guiding and supporting hands rather than invisible ones. It sees the boundless but wasted potential in poor people and especially women.

Yossi Mekelberg

By mainly lending to women, including illiterate ones, this model empowered those who need it most to climb out of poverty. It proved that it is not the poor who are to blame for their poverty, but the system that fails them and deprives them of the opportunities and tools to succeed.

Yunus’ ideas are as much evolutionary as revolutionary, and correspond with the exponential growth of global civil society. NGOs, social enterprises and his newer social business venture have all been attempts to plug the gaps in the increasingly leaky capitalist system, under which neither the public nor the private sector serves the needs of many millions of people, especially — though not exclusively — in the developing world.

While NGOs, as valuable as they are, cannot be self-sustaining due to their constant reliance on funds from donors, social enterprises and social businesses are sustainable companies with social missions such as health care, clean water and clean energy. In the case of Yunus’ social business model, the company’s entire profits are reinvested in continuing its mission.

From yogurt fortified with micronutrients to reduce malnutrition in children — produced with clean energy and served in environmentally friendly packaging — to electrification via solar panels for rural areas not connected to the grid, such enterprises have been creating jobs and changing the lives of millions.

Yunus, in his philosophy as much as in his deeds, is presenting the case for a paradigm shift that fully supports the UN’s Sustainable Development Goals. It is a shift from an economic structure and approach based on selfishness and voracity, to one that serves self-interest through selflessness by developing businesses that serve the wider community and the good of humanity.

The “Three Zeros” goal of zero unemployment, zero poverty and zero carbon emissions may sound like a pipedream to some, but when hearing it directly from Yunus, and bearing in mind his 40-year record, it is hard not to subscribe to his vision. It promises a more sustainable, fair and moral world, and deserves all the support we can give it.

• Yossi Mekelberg is professor of international relations at Regent’s University London, where he is head of the International Relations and Social Sciences Program. He is also an associate fellow of the MENA Program at Chatham House. Twitter: @YMekelberg