In a Creating a World Without Poverty, the economist Muhammad Yunus explores the idea of social business. "Social business" simply defined is a business with a social benefit as the driving force rather than a profit. If a profit is made, the funds are either reinvested into the company, or into a new social business.
How the Grameen Bank Challenges Traditional Banking
As a young economics professor at Chittagong University in Bangladesh in 1976, Yunus lent $27 from his own pocket to craft women who made bamboo furniture. The women made a net profit and became excited entrepreneurs. Instead of paying their profits to moneylenders they could expand their small businesses. The idea that small loans can make a huge difference to a poor person, led Yunus to found the Grameen Bank. Credit given by Grameen is not based on any collateral, but it is based on 'trust'. The Grameen Bank put basic banking principles upside down by promoting credit as a human right.
Social Businesses Transform Capitalism
Creating a World Without Poverty describes how Yunus launches social businesses in partnership with some of the world's most visionary business leaders. He collaborated with the French food giant Danone to produce affordable yogurt for malnourished children in Bangladesh. Grameen Danone Foods Ltd. produces a special yogurt called "Shakti Doi" (it means 'power yogurt') that contains protein, vitamins and micronutrients to fulfill the nutritional needs of children.
Eyecare Clinics as Social Business
Grameen Eyecare Hospital is located right next to Grameen Danone in the town of Bogra, Bangladesh. The hospital performs eye care exams and eyeglass fittings, but its primary business is cataract surgery. For the destitute cataract surgery is provided for free. The clinic uses a sliding scale for richer people. Its reputation is so good that the facility is operating at 100% capacity and added a new building within two years after starting operations.
Questioning the Future of Capitalism
"Today's world is so mesmerized by the success of capitalism it does not dare doubt that system's underlying economic theory", Muhammad Yunus writes in Creating a World Without Poverty. After the banking crisis and the collapse of the U.S. housing market in 2008, Yunus' words ring differently. Revelations about the mechanisms of the world's inter-connected finance systems that led to the current economic downturn make even advocates of the unregulated free market question its principles.
Young people, particularly in rich countries, will find the concept of social business very appealing. "Many young people today feel frustrated because they cannot recognize any worthy challenge that excites them within the present capitalist system. When you have grown up with ready access to the consumer goods of the world, earning a lot of money isn't a particularly inspiring goal. Social business can fill this void" (Creating a World Without Poverty, p.39).
Social Entrepreneurs Envision Social Change
Priya Haji, CEO and co-founder of World of Good, gathered experience as a social entrepreneur in high school when she helped her father establish a free health clinic in her Texas home town. After receiving an MBA from UC Berkeley's Haas School of Business, she was not satisfied to pursue a traditional career in business. Her company World of Good.com tries to direct its profits towards creating positive social change supporting artisans around the world. The more the business grows, the more good it can do.
Giving Power to the Poor
"By giving poor people the power to help themselves, Dr. Yunus has offered them something far more valuable than a plate of food--security in its most fundamental form", says former President Jimmy Carter. Social businesses have a true mission beyond simple profit, and this is why the concept provides young entrepreneurs with a challenge beyond greed, speculation and the accumulation of personal wealth. In Creating a World Without Poverty Muhammad Yunus inspires a debate beyond the tired argument that the rich should donate to those less privileged, and demonstrates that the free market can be used to empower the poor.
Further reading about the success of microlending throughout the year 2008.
One of the most exciting non-profits using microloans is Kiva, a person-to-person lending website.
A collection of video documentaries about Muhammad Yunus and the Grameen Bank.
Muhammad Yunus: Creating a World Without Poverty: Social Business and the Future of Capitalism. Public Affairs. 2008 (Hardcover)
The paperback edition will be available in January 2009.
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