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“All human beings have unlimited potential, unlimited capacity, unlimited creative energy”
MUHAMMAD YUNUS in conversation with Piotr Dutkiewicz
Muhammad Yunus is a Nobel Prize winner (2006) for combating poverty via the microcredit system that he developed in Bangladesh and spread to other countries in Asia. He previously was a professor of economics, where he developed the concepts of microPhoto by Spencer Platt/ iStockPhoto.
credit and microfinance. These loans are given to entrepreneurs too poor to qualify for traditional bank loans. Presently he is chancellor of Glasgow Caledonian University.
uhammad Yunus is famous as an economist and a philanthropist, but he takes issue with both labels and with the way that mainstream economics and philanthropy are practiced.* He sees poverty, an issue he has sought to tackle in his writing and through his business endeavors, as a systemic problem that robs individuals of their capacity for self-realization. He argues that only in a system that values money above all else and sees humans as atomized, selfish actors can ills like poverty and unemployment be seen as natural or even desirable. He argues that most economics excludes the possibility of humans
* All headnotes written by Piotr Dutkiewicz.
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being selfless and seeking nonfinancial gain from business and, conversely, that charitable work, by ignoring financial gain, can lack sustainability or create dependency among its recipients. He proposes instead a model of social business that uses the market system to deliver solutions to social ills. His is a political perspective that sees potential in the poor, the disenfranchised, and migrants and an economic approach that focuses on human selflessness. Yunus’s field-tested theories suggest a new way to think about emerging from our current crises.
PD: What is poverty? MY: We can approach poverty in many different ways. It can mean lack of opportunities, lack of income, lack of a future, lack of a dream for a future. This is one way to look at it. Another way poverty can be considered is as a denial of all human rights, in that a poor person lacks access to what we see as human rights: right to food, shelter, and so on. Poverty can be looked at as a situation where you leave creative human beings in a total waste, in the sense that they are not being useful to society or themselves. Poverty can be looked at as a blockage of the energy that all these people have to contribute to society. This is related to a belief that I have that all human beings have unlimited potential, unlimited capacity, unlimited creative energy. Simply, some have the opportunity to unleash that potential, be it a fraction or all of it, and others are denied the chance to even explore these capacities that exist within them. The other thing I should mention is that poverty is not created by poor people. Poverty is not in a person; it is something that is imposed on the person. PD: It’s an externality? MY: Yes, in the sense that it is not in the person, but is imposed by external forces, which I see as the system as it prevails. The system creates poverty. PD: Poverty is universal?
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MY: As long as the system is universal, poverty is also universal. PD: Is poverty in Bangladesh the same as poverty in the United States or elsewhere? MY: Yes, everywhere. It is caused by the same process and the same system and the same faults in institutions, and the same faults in the basic conceptual framework in the economy. Think of poor people as a bonsai tree. You can take the best seed of the tallest, best tree, but you put it in a small flower pot and it will only grow so big. It cannot hope to grow as big as it would in the forest. And you ask the question “What is wrong with this tree?” And you think that maybe the seed is at fault. But it’s not, as we picked the best seed. So what is it? The real reason is that we didn’t give it the soil in which to grow, so it can only grow in a limited way. So we have the tree we see in the forest, but only in a miniature version. So I see poor people as bonsai people. There is nothing wrong with the seed; simply, society never gives them the space to grow. PD: Can we change part of the system through reform strategies, or do we need more radical changes or even a new system? MY: All of the above. It depends on what you want to achieve. For example, you can retain the system and reform it a little here and there so that some slight improvement takes place. So you have a little bonsai; you make its pot a bit bigger, and it will grow bigger, but it will still not grow to the potential of the seed. So I think you have to correct the whole platform, the whole pot, so that everyone has the same soil conditions. PD: Is this environment mainly rooted in economics, politics, or the relationship between economics and politics? MY: I am looking at the list of people you will be interviewing for this book, who focus on the environment, food security, capital markets,
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and other questions. And each one is a problem. But my point is that these are not separate issues. These are manifestations of the basic problem in the structure we have built. And these manifestations branch out in many directions. The environment is deteriorating, global warming is occurring, the planet is becoming threatened, health care is missing, people don’t have the health they deserve, unnecessary deaths are caused, food security is in danger and we probably will run out of food for the billions of people who live on this planet. These are not separate issues. Only we are looking through our own glasses, and each one of us sees only what their glasses allow them to see. So they see only food, or only the environment. And this is the fundamental flaw in the way we have conceptualized the world itself. Moreover the basic flaw I see in the whole structure is misinterpretation of the human being. We now have only one kind of human being: a human being who is dedicated to making money. So we create a structure where money is central. We are all chasing money because in this world business means making money, maximizing profit, accumulating value. So the central focus of everything we do in the world is about chasing money. When money plays a facilitating role, it is fine, but instead money itself has become central. PD: So money-cum-capital has become a pillar. MY: Not just a pillar: the key. Everything we do is decided by it. Money has become a habit, an obsession, an addiction. So once we do that, every human being is interpreted as a money-maker. And we are desperately trying to make money because that’s how our success is measured. The more money you make, the more successful you are. So we train our students, we train our young people to go out and make more money. If you were to look at the world from outside, it would look as if human beings were nothing more than money-making robots. Everybody is so busy because all they are thinking, all their commitment, all their initiatives are about making money. I see this as a fundamental flaw in interpreting the human being. Human beings are not single-dimensional; they are multidimensional. But the economists who theorize this system interpret
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human beings in a very narrow way. And because they conceptualized this and because we believed them, we become such animals—singleminded robots making money, pushing each other to make money—and in the process we create all these problems. Because we have no time to look at the environment, we have no time to look at the poor, we have no time to do anything else. And that is the fundamental flaw in the whole system. We have to rediscover human being and interpret it in the real sense of human being. We have a system now where money is a means and an end. I understand a system where money is a means, but I don’t understand why money-making should be an end. Money-making as an end is unacceptable. The real question of ends, of “Why am I here on this planet?,” is not raised in our textbooks or our theories. What is the purpose of our lives on this planet? The system should be consistent with our purpose. I’m not saying the purpose is defined by somebody else. You define your own purpose. But when you leave, what is it that you want to see that you have achieved? Money cannot be the purpose. It cannot be the only thing we achieve. PD: Why should we care? Some people will say, “If we make people a bit less impoverished, they will demand more, and we simply cannot afford more, financially or as a planet.” MY: Right, and this goes back to a single-dimensional interpretation of human beings. The single dimension that economists focus on, and focus on exhaustively, is the selfishness of human beings. So out of selfishness we have developed all these theories. And it looks very nice. Selfishness works out, the economy works out. PD: This is the principle of the market. MY: Precisely. I think human beings are selfish. There is no doubt about it. And this came out of self-protection. This was the origin of selfishness. I want to protect myself, my family, and so on. But it has been overblown in economic interpretation. There is a fundamental difference between
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selfishness, in the sense of not caring if you damage others, and selfishness as self-protection. Moreover all human beings are equally endowed with something called selflessness. And that was completely forgotten. When I raise this question about selflessness, economists answer, “Well, why don’t you step outside of the economic world? Be a philanthropist. Work in charity. Give away your money.” And I say that I’m not talking about giving away my money, but about selflessness in the economic world. How can we create a business on the basis of selflessness? What would that look like? How might I create a business to solve certain problems rather than simply to create financial benefit for myself? PD: Solve different problems at different scales? MY: Right. Like the problems in this book. How might we try to solve them in a “business way”? So what’s the difference between the business way and the charity way? In the charity way, when I give money away, it goes out and never comes back. If you want to multiply it, you need fresh money for every action, so charity is a wonderful concept, but it has very limited application because you can do it only once with your own money. But what if, somehow, I can transform this project into a business, and so keep the charity objective but do it in a business way? So I send the money, it does its work, and then it comes back. And then I can achieve much more with that money. I can make changes, make it more efficient, bring in technology. I have created many such companies. I don’t make money out of them. That was not the intention. The intention was solving problems. And I call these social businesses. They are non-dividend companies created to solve the problems we see around us. The human mind is so creative that it can come up with business ideas, self-sustaining ideas to solve these problems. So you create an engine that works and never stops. It’s a self-fueling engine. PD: Are you drawing on any philosophical foundations here? Is there a relation between social business and Muslim interest-free banking, for instance?
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MY: Not at all. This is a very secular idea. The principle is that you can create a business, for instance, to find decent jobs for five unemployed people. That is my business. I have created this business not to make money for myself but to employ five people, give them a decent income, and cover its own costs. It goes on running, but this is a social business because it is cause-driven. So this is not banking. PD: On what scale can this be done? Is it possible to eradicate poverty this way through individual action? Or could this be institutionalized into state action? MY: If I can create five jobs in a business way, I have shown the way. Then maybe you can create five jobs too. If I have shown you can have a social business that costs you nothing to run and eventually will give the initial investment back, I have sown the seed, which now can be planted to solve the problem of unemployment. I also raise the question of why there should be unemployment. What’s wrong? Is there something wrong with human beings that make them unemployed? Young people who have done everything possible, are energetic, creative, educated, but are not employed—Is it their fault or the fault of the system? I say it’s the fault of the system. If the system cannot take care of the able-bodied human beings that belong to it, throw out the system because it doesn’t work. We have to design a new system where the word unemployment will be totally unknown. So you need to redesign. First, you need to reinterpret the human being as both a selfish and a selfless being. Second, recognize that selflessness can also be expressed through business. Problems are caused by selfishness, but we have no methodology to solve them other than giving charity. I don’t want to leave this to the government. Governments don’t have the power to do all this because the way we create problems—the speed and the energy with which we create them—governments cannot match that energy and those resources to solve the problems. So problems accumulate. Problems become massive.
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PD: If we are talking about the eradication of poverty, there is the social business approach you presented. But there is also the so-called Chinese way, government-led programs that have lifted 500 million people out of poverty in the past fifteen years. MY: My question is whether the government approached this in a charitable way in the sense of giving people food, housing, and so on, or if it created jobs. And if it is the former, then I say there is a better way. PD: But if governments stimulate job creation or undertake social business, you accept that? MY: Absolutely. PD: So the distinction is not between these initiatives being government-led or private, but rather it’s a question about the concept. MY: Exactly. So governments can have social businesses and governments can learn from the private sector to do social business (and the private sector could learn from the government). So instead of segmenting things and saying problems need to be taken care of by the government, and we citizens only create problems, I am saying we citizens are as good at creating problems as we are at solving problems. Similarly, government should also continue to solve problems. They are not excluded from that. But I do not feel comfortable when I see governments giving charity only as welfare. Welfare for a temporary period is fine, especially when people are in distress. But to say I should take care of people forever is unacceptable. When you do that you have destroyed that human being. I have seen people who are in third-generation unemployment, fourth-generation unemployment. This is a gross failure of the system. How can human beings be kept in a sort of zoo where you feed them, house them, but don’t allow them to perform basic human activity, in the sense of not allowing them to perform activities and take pleasure in what they have done?
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PD: Your ideas have recently started being taken on board not only by emerging economies but also by developed countries that were hit by the crisis. MY: My approach does not discriminate between developing and developed countries. You can have your social business in Brooklyn or Dhaka or Rome. If you have a problem, you can try to design a business to solve that problem. PD: Let me switch angles a little bit here. Can we say that poverty is dangerous? And by this I mean, does it threaten stability? MY: First of all, let me say that poverty is unacceptable. It doesn’t make sense. Why should anybody be poor? If that person has the same capacity as anybody else, who gave anyone the capacity to destroy that person? You have to believe that poverty is not caused by that person, as I have said. So the idea is to create a system that allows people to take care of themselves. PD: You sound like a revolutionary when you say we need to create the antisystem. Are you a revolutionary? MY: I don’t play around with words. If I say I am doing something antisystem, that’s what I’ll do. And that’s what I did with microcredit. PD: But that was in a sense done within the existing market system. MY: But ask yourself: What is microcredit? What is Grameen Bank? Everything the conventional banking system does, I do the opposite. The conventional banking system goes to the rich; I go to the poor. They go to men; I go to women. They go to the city center; I go to the village. They say people have to come to their office; I say no, the bank should go to the people. This is a system that works and solves problems that the conventional system doesn’t. Similarly for
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employment, I think you can create a reverse system where everybody’s employed. PD: What is interesting about your approach is not only the alternative model itself but an alternative reason for why we should create it. MY: Look, I am not saying poverty is a threat because “they” are approaching “us,” taking over our countries, jobs, and so on. I am saying these are creative people and it’s an enormous capacity they are bringing to you. Celebrate it. That’s what the USA historically did. They took people in. And that’s the basis for their economy. A guy who was totally poor in his own country could go to the USA, start at the bottom, and work to create a business. The environment in their home country was not conducive to that, but in a new environment they flourished. I often give the example of a child born in the streets and another born in a palace. By some magic you switch these two children. Wait twenty years. The child who was born in the streets but grew up in the palace becomes a prince, behaves like a prince, and nobody suspects anything. The child who grew up in the streets is a criminal. So is what you become in the person or in the environment? Poverty to me is that simple. With migration, for example, you are afraid because “they” are bringing poverty to you. But you have contributed to making those people be the way they are. So you have to correct the system. You can’t look at whether the person is from inside or outside. You have to look at their capabilities. PD: You have become a worldwide symbol of success for many people. But can you tell me about some of the challenges you have faced? MY: When you do something new, there is always some opposition. But that is part of the game and nothing to be upset about. You challenge some people and they challenge you. It takes time. All I am trying to do now is address the young people. Their minds are not set. If I can explain to them about the two kinds of businesses and ask them which kind of business they’d like to work in—would they like to create a
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social business or a for-profit business? And you can do both. This is not either/or. You can be selfish and selfless. Money-making is a means, and you can use money to fulfill your ends. Money-making can lead to happiness, but economists never let us explore the possibility that making others happy can also bring us happiness. This is not something I do for nothing. I make myself very happy when I see that I have solved someone else’s problem. PD: Why, then, is there persistent criticism of microcredit? MY: Because microcredit the way we designed it was created as a social business. But there are others who want to make money out of it. We thought all the benefits should go to poor people. But others picked up the idea, saw it worked and could make money, so they started microcredit banks to make money off the poor people. I spoke out against this, telling them they were taking the very route we opposed, doing loan-sharking and misusing our objective. And of course people complained about this. With Grameen, our purpose was not to bring people additional misery. If we are increasing their misery, they don’t need us. We wanted simply to reduce people’s misery. But those who are in it to make money couldn’t care less, as long as they made money. So they used microcredit in a conventional sense, and that’s where things went wrong. Many people have been critical of this. I have been very vocal about this, saying those approaches are not microcredit. PD: It could be argued that by taking only some people out of poverty, you can create or exacerbate inequalities between those who are now out of poverty and those who are still in poverty. Do you see these tensions? MY: If microcredit is done in a business way, everybody’s welcome and the sky is the limit. If you do things in a charity way, there are limits and there may be problems of inequality. There can be transitional
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problems. You cannot help everybody at once. So it depends on your perspective. But this is not a permanent thing, where some will always be left out. Our system is designed to help anyone it can. We do not discriminate, expecting you to bring your own capital, your credit score. If you are a human being, that is good enough for us. PD: What is it about you as a person that draws you to these issues and drives you to create these projects? MY: That is for others on the outside to study. But I will tell you this: I feel that things can be done. And whenever I see a problem, my mind starts working. I ask myself, “Why don’t I design a business to address this problem?” As a result I have created more than fifty companies. And each time it’s been all about addressing a problem. At first I was not conscious of this. I simply saw a problem and designed a business to solve the problem. I never had any intention of making money out of it. People started asking me why I created companies if I don’t want to make money. I said that the idea of making money never entered my mind. I was always looking at the problems, solving them, and I felt happy with that. Even owning a share of these companies never entered my mind. I still do not own any shares. So this was not something at the time that I designed and then did. Now I am reflecting on it and realizing why I did it. And I’m realizing that this is a space on which most people are missing out. Because economists have denied that this window of opportunity exists. I am now addressing big companies, and I tell them, “You are doing fine making money, but would you like to create a social business?” So now I have joint ventures—for instance, with the Danone milk products company—and they are excited, and I tell them that the more they do it, the more they will get excited, the more excited their employees will get, because this is an opportunity you never knew you had. Moreover these companies have access to so much technology, and I tell them there is no reason why this planet should have any of the problems it has, and that’s because of the power of technology. But all the technology we
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have in the world belongs to the business world. And what do they do with the technology? They want to make more money. But if we could use this technology to approach problems, the problems would disappear. Human creativity is far superior to our problems. But we never connected human creativity to problem solving in a business way. PD: I believe your ideas are even more important today than previously because poverty has now visibly hit—or at least become more visible— in those countries that are perceived as rich. MY: Exactly. The crisis has come to a point now that we see the inadequacies of the present structure. There is not only poverty but also unemployment, which hits people politically. Look at the situation in Europe right now. There is no way they can figure out how to address this problem. They can work on it so that maybe next year it might be 10 percent less or 1 percent less. But why should there be unemployment? PD: In your view the market exists so that people can be employed rather than generate money? MY: The market should do both. When I sell my yoghurt, it is sold in the market, but its purpose is to solve malnutrition. I am not denying the market, but I am saying that today’s market is a restrictive market. The only players in the market are the money-makers. What I’m saying is that the problem-solvers can also join the market and solve problems. And the same people who want to make money often also want to solve problems. For instance, why not create an alternative stock market? Rather than seeing what shares you can buy and sell to make a dollar, why not invest in companies that are solving problems, not to make dividends but to help? PD: But, you know, sometimes politics interferes in the economy. MY: But with investment it is my individual decision. In that sense politics cannot interfere with me. I want to create a company to solve a
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problem. And politics cannot tell me creating a company to solve problems is illegal. Not taking profit out of my company is a personal decision. I am not asking that new laws be created for me. I am also not suggesting the creation of special privileges for social businesses, like tax benefits. The reason I say that is because if you give them privileges, then fake social businesses will be created. So I say there should be a level playing field for everybody. And that’s your choice. But you still run it like a business. And you still love doing it. When people ask you what you do, you say you run a social business and you love it.