Re-looking Capitalism, With A Bottom-Up Approach

“I hear babies crying, I watch them grow,

They’ll learn much more than I’ll never know,

And I think to myself what a wonderful world,

Yes I think to myself what a wonderful world.”

— Louis Armstrong

Muhammad Yunus has dedicated this book to “the young generation, who will build a new civilisation.” What are these three zeroes? To Yunus, this wonderful world of the future will be built on new economic principles that will produce zero poverty, zero unemployment and zero net carbon emissions.

Yunus received his PhD in economics from Vanderbilt University in the US in 1971. Thereafter, he taught economics at Middle Tennessee State University in Murfreesboro. After the liberation of Bangladesh, he decided that it was time to change the world instead of teaching economics in a foreign land.

He set up the pioneering micro-finance institution Grameen, which was at first a social movement of poor rural women. Over stages of evolution, it morphed into the very successful Grameen Bank. Thereafter, Yunus set up one social business after another, often in collaboration with multinational corporations to solve big problems in his country.

He established Grameen Phone in partnership with Telenor of Norway, declining to compromise on either the quality of customer service, or state-of-the-art mobile technology. With Danone of France, he created the joint venture Grameen Danone, which produces yogurt. It is a social business that aims to provide opportunities for street vendors, and improve child nutrition with nutrient fortification.

Yunus is not a Soviet-style socialist bureaucrat, nor is he a fire-breathing revolutionary. He received his Nobel Prize in 2006 (along with Grameen Bank), not for Economics but for Peace “for their efforts to create economic and social development”.

Yunus believes that it is time to save capitalism from greedy capitalists. He believes the capitalist locomotive is broken in its present shape and form. If we do not course correct now, it will inevitably lead to sharp inequality, massive unemployment and the destruction of our environment, all at the same time.

He thinks the answer lies in a radically different humane form of the capitalist system. The edifice of the new, reformed framework of capitalism will stand on three pillars. The first will be what he calls “a social business”, not based on government subsidies or financing. It will produce surpluses, which will be ploughed back. A social business is not driven by the goal of profit maximisation, but on the human virtue of giving back. The second pillar will be a rethinking of the concept of employment generation. The new thinking is based on the premise that human beings are by instinct entrepreneurs. The new generation will start up social businesses and not be job-seekers. The third pillar is a redesign of our financial system so that it works for the people at the “bottom of the pyramid”, and not for concentration of economic wealth and income at the 1 per cent tip.

The experiment of social business has now been extended to both developed and developing countries outside the original test bed of Bangladesh. Yunus picked seven countries to set up Yunus Social Business (YSB). One of the unlikely candidate countries was Uganda.

The social business which has become a globally successful enterprise in Uganda is called Golden Bees. Its mission is to spread bee-keeping, and build an ecosystem that creates value for all stakeholders, and is scalable. Golden Bees sells bee-keeping goods and services to Ugandan farmers, trains them and then collects, processes and markets their products. Profits are ploughed back to scale up the business. As of 2016, almost 1,200 farmers were producing honey and beewax. A chain of 80 supermarkets sell the products, using the common brand of Golden Bees. Now, beewax is being exported to pharmaceutical companies in China, Japan and Denmark. The concept of social business has created livelihoods for thousands of Ugandans.

Another example that Yunus provides is Grameen Shakti. It is one of the world’s largest suppliers of solar home systems. The number of homes that Grameen Shakti serves has now surpassed 1.8 million. It serves the goal of zero net carbon emission, eradication of poverty, and creation of employment. As part of the renewable energy offering, Grameen Shakti encourages bio-gas plants, which turns cowdung and other bio-mass material into methane fuel for cooking. It also designs, makes and sells about half a million improved stoves to minimise fuel consumption and mitigate indoor pollution.

But entrepreneurship, a zeal to change the world, and incubation of social businesses are not enough to engender a new ecosystem. Yunus, the pragmatic business leader, suggests a new financial architecture and regulatory regime, that will avoid “crib deaths” of newborn social businesses.

Availability of finance is, in itself, not the problem. According to Yunus, “global financial markets are currently awash in an estimated $210 trillion in investment money”. Yunus believes that there must be a radical shift in the mindset of donor countries. Instead of designing aid packages, donor countries should invest in high-impact social businesses. Large businesses, instead of donating to charity and CSR (corporate social responsibility), should set up social business funds.

Yunus dreams of this wonderful world of three zeroes, which is free from poverty, unemployment and pollution. Here is what he says: “The purpose of human life on this planet is not merely to survive but to live on it with grace, beauty and happiness. It is up to us to make it happen. We can create a new civilisation based not on greed but on the full range of human values. Let’s begin today.”

Yunus is not an ivory-tower academic, dabbling with theories in the laboratories of Boston or Paris or London. He is a frontline soldier against poverty. He is not in the business of interpreting the world, his metier is to change it. The book offers many practical examples of social businesses that are pursuing the holy trinity of zero poverty, unemployment and pollution — examples that can be applied across the planet, including India.

Creation of employment is at the front and centre of India’s economic policy making. But creating nine-to-five jobs for every Indian is not an achievable goal. Creating entrepreneurs is clearly going to be an important part of the economic jigsaw puzzle. Yunus’s vision of social businesses is certainly relevant to India, and NITI Aayog should seriously review his recommendations. We are accustomed to search for wisdom across the oceans in our fight against poverty. It is a pity that we do not look across the river to Dhaka, where such brilliant experiments are changing lives and social entrepreneurs are working for a better planet.