Creating a World Without Poverty
Muhammad Yunus
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Buy *Creating a World Without Poverty: Social Business and the Future of Capitalism* by Muhammad Yunus online

Creating a World Without Poverty: Social Business and the Future of Capitalism
Muhammad Yunus
PublicAffairs
Hardcover
261 pages
December 2007
rated 3 1/2 of 5 possible stars

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Researchers have known for quite a while that poor people are not located uniformly in the world. In particular, there are regions of extreme poverty and destitution in the world. South Asia - made up of India, Pakistan, Bangladesh, Sri Lanka, Nepal, and Bhutan - is one such region. Within South Asia, Bangladesh is home to large numbers of poor people; hence the question of adopting apposite policies that might lift these poor people out of poverty has been and continues to be a question of utmost importance.

In the early 1970s, Muhammad Yunus completed his doctorate in economics at Vanderbilt University. Rather than pursue an academic career in the United States, Dr. Yunus decided to return to his native Bangladesh to pursue a career there. He joined the economics department at Chittagong University and embarked on what he thought would be a serene life in academia. However, the extreme poverty all around him and a devastating famine in 1974-1975 jolted him. He determined that he could not "teach elegant theories of economics and the supposedly perfect workings of the free market in the university classroom while needless death was ravaging Bangladesh." Dr. Yunus decided to inquire into the causes of the ubiquitous poverty plaguing Bangladesh.

The many outcomes of his detailed inquiries constitute the basic subject matter of this book. As Dr. Yunus helpfully points out, the key causal factor responsible for the widespread poverty around him was that his poverty-stricken fellow Bangladeshis experienced great difficulty in accessing even small amounts of capital. Consequently, after first failing to convince banks that they ought to lend small amounts of money to the poor, Dr. Yunus decided to begin lending these small amounts himself. Thus began what was later to become the world renowned Grameen Bank. He does a good job of pointing out that most current banking operations are set up to hinder even incremental progress by the poor. The poor, in Bangladesh or anywhere else, he contends, are as entrepreneurial as anyone else; when they are given suitable opportunities to help themselves they take full advantage of such opportunities. Therefore, Dr. Yunus and his colleagues helped set up several Grameen organizations that were "designed to provide part of the business infrastructure that is needed to let people grow out of poverty."

Dr. Yunus goes on to criticize two salient aspects of modern economic theory. First, he rightly notes that humans are not uni-dimensional actors, as modern economic theory would have us believe. In the real world, humans have a variety of emotions, attributes, and values; therefore they rarely - if ever - focus exclusively on the optimization of a single objective. Second, he points out that profit maximization ought not to be the sine qua non of firm existence. He contends, with considerable passion, that the exclusive focus on profit maximization has resulted in the progressive marginalization of the world's poor, who are unable to consume constantly and who are, more generally, incapable of "playing the game" according to the rules laid down by the word's orotund multinational corporations.

Given this unsavory state of affairs, Dr. Yunus calls for the creation of more "social businesses" in the world. A social business is one that does not make losses and that does not pay dividends to investors. Therefore, the enterprise one creates with a social business is not only self-sustaining but also results in investors eventually recouping their investment. In addition, more social businesses are needed in today's world because, unlike businesses that focus solely on profit maximization, the raison d'etre of social businesses is to help society in concrete ways. To show that a social business can be effectively created in a practical setting, Dr. Yunus discusses the partnership between his Grameen Bank and the French multinational corporation Groupe Danone at some length. This partnership resulted in the creation of a social business named "Grameen Danone Foods." According to Dr. Yunus, Grameen Danone has been a resounding success, and this success story teaches us that when "it is carefully planned, a social business can be very sound business. Just as the business helps the community, the community helps the business."

This book is passionate about helping the world's poor - particularly the world's poor women - by altering not only our mindset but also the ways in which the world economy operates. In his criticism of modern economic theory, the author is not as clear as he could have been, and he occasionally conflates the objectives of consumers and firms. In addition, the causal link he makes between poverty and terrorism is neither clear nor credible. Finally, some of his ideas for changing the way in which our world works are positively utopian. However, these are relatively small blemishes in an idealistic book that offers a thought-provoking glimpse into what a future world in which poverty exists only in museums might look like.



Originally published on Curled Up With A Good Book at www.curledup.com. Amitrajeet A. Batabyal, 2008

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