Wednesday, December 13, 2006

Muhammad Yunus's Vision

Here's a link to Muhammad Yunus's Nobel Peace Prize acceptance speech. It is short and well worth reading in its entirety, but for those with lazy trigger fingers, here are a couple of choice excerpts.

I became involved in the poverty issue not as a policymaker or a researcher. I became involved because poverty was all around me, and I could not turn away from it. In 1974, I found it difficult to teach elegant theories of economics in the university classroom, in the backdrop of a terrible famine in Bangladesh. Suddenly, I felt the emptiness of those theories in the face of crushing hunger and poverty. I wanted to do something immediate to help people around me, even if it was just one human being, to get through another day with a little more ease. That brought me face to face with poor people's struggle to find the tiniest amounts of money to support their efforts to eke out a living. I was shocked to discover a woman in the village, borrowing less than a dollar from the money-lender, on the condition that he would have the exclusive right to buy all she produces at the price he decides. This, to me, was a way of recruiting slave labor.

I decided to make a list of the victims of this money-lending "business" in the village next door to our campus.

When my list was done, it had the names of 42 victims who borrowed a total amount of US $27. I offered US $27 from my own pocket to get these victims out of the clutches of those money-lenders. The excitement that was created among the people by this small action got me further involved in it. If I could make so many people so happy with such a tiny amount of money, why not do more of it?

That is what I have been trying to do ever since.


Capitalism centers on the free market. It is claimed that the freer the market, the better is the result of capitalism in solving the questions of what, how, and for whom. It is also claimed that the individual search for personal gains brings collective optimal result.

I am in favor of strengthening the freedom of the market. At the same time, I am very unhappy about the conceptual restrictions imposed on the players in the market. This originates from the assumption that entrepreneurs are one-dimensional human beings, who are dedicated to one mission in their business lives--to maximize profit. This interpretation of capitalism insulates the entrepreneurs from all political, emotional, social, spiritual, environmental dimensions of their lives. This was done perhaps as a reasonable simplification, but it stripped away the very essentials of human life.

Human beings are a wonderful creation embodied with limitless human qualities and capabilities. Our theoretical constructs should make room for the blossoming of those qualities, not assume them away.

Many of the world's problems exist because of this restriction on the players of free-market. The world has not resolved the problem of crushing poverty that half of its population suffers. Healthcare remains out of the reach of the majority of the world population. The country with the richest and freest market fails to provide healthcare for one-fifth of its population.

We have remained so impressed by the success of the free-market that we never dared to express any doubt about our basic assumption. To make it worse, we worked extra hard to transform ourselves, as closely as possible, into the one-dimensional human beings as conceptualized in the theory, to allow smooth functioning of free market mechanism.

By defining "entrepreneur" in a broader way we can change the character of capitalism radically, and solve many of the unresolved social and economic problems within the scope of the free market.


I support globalization and believe it can bring more benefits to the poor than its alternative. But it must be the right kind of globalization. To me, globalization is like a hundred-lane highway criss-crossing the world. If it is a free-for-all highway, its lanes will be taken over by the giant trucks from powerful economies. Bangladeshi rickshaw will be thrown off the highway. In order to have a win-win globalization we must have traffic rules, traffic police, and traffic authority for this global highway. Rule of "strongest takes it all" must be replaced by rules that ensure that the poorest have a place and piece of the action, without being elbowed out by the strong. Globalization must not become financial imperialism.
As these excerpts perhaps suggest, Yunus is a very interesting thinker, quite difficult to pigeonhole. Conservatives might appreciate his emphasis on self-help and his scorn for most government interventions in the economy. (In my conversations with him, he expresses impatience and disdain whenever the idea of relying on government to alleviate poverty is mentioned.) Conservatives would also respect his appreciation for the role of cultural factors in perpetuating poverty. The Grameen Bank's "Sixteen Decisions" are a set of personal and social commitments that Yunus sees as being vital to helping individuals and communities become self-sufficient. They represent values (including Discipline, Unity, Courage, and Hard Work) that most conservatives would probably be happy to endorse.

But many economic conservatives would be uneasy with his emphasis on the limitations of the free market. That is why they write silly articles like this one, claiming that Yunus's vision of microcredit is doomed to failure because it fails to pay sufficient obeisance to the profit motive. (For the record, Andrew Curry is wrong when he says that Grameen Bank relies on NGO grants to remain in business. Grameen is financially self-sufficient and has not depended on grant money since 1995. This factual error demolishes Curry's argument that Grameen Bank is a "subsidized" competitor that unfairly undercuts the work of for-profit institutions.)

Yunus has no problem with multinational corporations like Citibank getting into the microcredit business, but he thinks they'd be misguided to expect to make significant profits from it. He likes to say, "There will be plenty of time to make money off the poor in the future--when they are no longer poor."

Yunus's vision of "social business" as a third form of enterprise--self-sustaining, like a traditional business, but focused on building a better world, like a traditional NGO--is still in its formative stage. He used the Nobel speech to introduce that vision to the world, and the new book that I am helping him with will explore it in much more detail.

Does that vision have the potential to eliminate global poverty altogether, as Yunus believes? It's too soon to tell. The goal is incredibly ambitious. But given the enormous positive impact of Grameen Bank in Bangladesh, and of the other microcredit institutions that have sprung up around the world in emulation of Grameen, it would be foolish to dismiss Yunus's vision as a mere pipe dream. Yunus is that rare thing--an idealist with a gift for building institutions that work. We need to pay attention to such people.

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