Muhammad Yunus: The Missing Link in Capitalism

Muhammad Yunus is a Bangladeshi economist who founded the Grameen Bank in 1983 to provide credit to the poor. Access to credit, he believes, is a fundamental human right. Grameen Bank has 1,084 branches in Bangladesh and serves 2.1 million borrowers in 37,000 villages. On any working day, it collects an average of $1.5 million in weekly instalments. Over 94 percent of the borrowers are women and 98 percent of the loans are paid back. He was awarded the Nobel Prize for Peace in 2006.


The single most important action that will change the world is the complete eradication of poverty. As I have often said, poverty is the absence of human rights. Over 3 billion of the world’s 6.5 billion human beings live below the poverty line. These individuals do not have access to safe drinking water, food, shelter and clothing. Change comes in different forms, but the world can only change for the better once every single human is given the opportunity to survive.

The biggest flaw in the conceptual design of the existing theory lies in its misrepresentation of the human being. In traditional profit-maximising capitalism, human beings are treated as one-dimensional creatures whose only mission in life is to make as much money as possible. Fortunately, human beings are not money-making robots. The truth of the matter is that human beings are actually multi-dimensional beings: All beings have a selfish side. Their happiness comes from many directions, not just from making money. Human beings are selfish beings, but they are selfless beings too. This selfless dimension of human beings has no role in economics. We can easily include the selfless dimension into the theory, without disrupting any part of the existing theory, except a reinterpretation of the Homo Economicus.

Social business is a complement to traditional profit-maximising business. Social business takes into account the multidimensional nature of human beings and uses business principles to achieve one or more social goals. I define social business as a non-loss, non-dividend company dedicated entirely to achieve a social goal. All profits, or “surplus revenue” is ploughed back into the venture for expansion and improvement. In social business, the investor gets his or her investment money back over time, but never receives dividend beyond that amount. Where would social businesses find their start-up investments? An excellent, and probably most sensible, source would be philanthrpy money that
traditionally goes towards charities.

The primary problem with charity programmes is that they remain perpetually dependent on donations. They cannot stand on their feet. Charity money goes out to do good things, but that money never comes back. It is a one-way route. However, if a charity can be converted into a social business it becomes a powerful undertaking because now the money invested is recycled endlessly: A charity dollar has one life; a social business dollar has endless lives! That’s the power of social business. A social business is a business where an investor aims to help others without taking any financial gain himself, while generating enough income to cover costs.

Each level of government — international, national, state, and city — can create social business funds. These can encourage citizens and companies to create social businesses designed to address specific problems (unemployment, health, sanitation, pollution, old age, drugs, crime, disadvantaged groups such as the disabled, and so on). Bilateral and multilateral donors can also create social business funds. Foundations can earmark a percentage of their funds to support social businesses, and businesses can use their social responsibility budgets to fund social businesses.

Besides diversion of philanthropy money into social business, there will be plenty of other money coming as investments just to share the joy of making a difference in other people’s lives. People will not only come up with money, they will come up with their creativity, networking skill, technology, experience, and everything else they’ve got, once the theory accommodates the concept of social business in its structure. Once that happens, students will learn in their schools and colleges that there are two kinds of businesses: Business to make money and business to make a difference in other people’s lives. As they grow up they’ll start thinking what kind of company he or she will invest in, what kind of company he or she will work for, what kind of social business he or she would like to create.

The wonderful promise of social business makes it all the more important that we redefine and broaden our present economic framework to create the world that we all want. We don’t want to see our economic framework continue to pull us backwards. We need a new architecture of economics that will free us once and for all from the crises that surround us. Now is the time for bold and creative action — and we need to move fast, because the world is changing fast. The first piece of this new framework must be to accommodate social business as an integral part of the economic structure. In just a few short years, social business has developed from a mere idea into a living, rapidly growing reality. It is already bringing improvements into the lives of many people and is now on the verge of exploding into one of the world’s most important social and economic trends.

Everyone deserves an opportunity; where could the world be if those poor kids are given the chance to learn, to grow, to be all that they can be? Everyone on this planet suffers personally when anyone’s life is wasted. After all, the life that is wasted might have the potential to become the doctor who saves the life of my own family member, or the scientist who invents a device that will save the planet from global warming, or the artist who creates a magnificent work of art that will enrich the lives of all of us. Why should we waste that opportunity?

The time is right. The technology is right. The climate is right. Let’s take action, and replicate social businesses the world over. After all, what good is a beautiful seed if it is not scattered to the four winds?