The poor will always be with you is the saying. History is a long testament to the truth of that. When someone claims to have a way to put an end to poverty, the first impulse is to challenge that notion. Show me! In Creating a World Without Poverty, Muhammed Yunus does an interesting job of showing exactly how he believes he can do it — he calls it “social business”.
The book goes into great detail about what a social business is and isn’t. It is a business run for profit with the purpose of maximizing a social impact. Investors get their money back, but no interest. Unlike a commercial business, profit takes second place. Unlike a non-profit, it is self-sustaining. Unlike governments, or organizations like the World Bank, a social business takes not the top-down approach, but bottom-up — where help is needed the most.
The chapter that describes how the Grameen Bank got started is fascinating. The book enumerates the system that denies poor people credit. The monetary system is not used to making loans at fair rates to people with no collateral, which leaves them vulnerable to loan sharks and lenders who impose predatory terms. It’s startling how little money is needed, by Western standards, to help people: just $27 to break a cycle of debt dependence in a whole village. However, when Junus tried to get existing banks to lend to the poor, he ran into so many obstacles and objections, he ended up founding the Grameen Bank.
In order to measure their success, they devised their own definition of poverty. The short version is the family is supporting themselves with basic food, shelter, and healthcare, and sending their children to school. When they paid attention to their borrowers as people, they saw that most men spend money on themselves, and most women spend money on their families. So loaning to women tends to benefit more people.
It’s all very hopeful and promising, but there are aspects of this book that creep me out. First off it seems a contradiction that the book spends so much time discusses the Grameen Danone project, which pays a dividend to its investor.
But what really bugs me is, how much everything has to be under their control. The first warning sign is the sixteen promises they ask of their borrowers. The next is the two page chart, filled with the multitudinous Grameen ventures. The third is the implication no one else might be able to implement social business in the “right” way; when discussing the spread of microcredit around the world, the book warns of organizations that call themselves microcredit, but they are still charging high rates.
In short everything seems to look like a nail for the hammer the author has invented, it turns out that he has an empire of hammers at his command, and nobody else is using the right kind of hammer. That’s even before the last third of the book, which is serious philosopher-king territory. The book offers prospects for microcredit and/or social business helping countries develop, solve the healthcare crisis, and exploit information technology. It concludes with three pages listing dreams for a future utopia. Interesting dreams, but though.
Those dreams might be why some are trying to to create B-corps in the U.S., which would be something like social corporations. Websites like MIX market and mftransparency try to give you a fighting chance to figure out who else is worthy. Kiva and Microplace make it possible for the individuals to be microcredit lenders. Or you can donate to the Grameen Foundation.
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