Attacking poverty through capitalism: Enlist companies with missions to change the world

Muhammad Yunus has already changed the world once, which is why he was awarded the Nobel Peace Prize. By creating the Grameen Bank and using microfinance to improve the lives of the poorest of the poor in Bangladesh, he demonstrated a transformational model for eliminating poverty.

Now he's playing an even bigger game: Yunus wants to transform capitalism. Of course, he'd never be so confrontational as to come out and say that.

On the one hand, as an economist and, now, a banker, Yunus embraces the discipline of the market. On the other hand, he believes that profit-maximizing companies turn complex human beings into one-dimensional creatures, devoted only to making as much money as possible. Pure-profit maximization is bad for people, for the environment and, ultimately, he argues, for capitalism, since it places unsustainable demands on the system.

But if unfettered capitalism has its shortcomings, so does out-and-out charity. Yunus sees charity as a bad bargain for both those who give it and those who get it. Rather than providing a path to self-improvement, charity relieves recipients of the responsibility for their own betterment.

Finally, Yunus takes a hard look at corporate social responsibility and finds little to love there, either. In fact, it is the worst of both worlds. It gives companies permission to operate as pure-profit maximization enterprises, then allows them to feel a little better about themselves by writing checks for charity. Nothing fundamental happens to improve the lives of billions of people who are doomed to living in poverty.

A brilliant solution as proposed and already tested by Yunus: Create a new hybrid option: the social business. A social business must operate in the marketplace and earn the support of real customers who pay real money to buy a real product. At the same time, a social business has a social cause, not just a financial goal.

[Excerpt of an editorial by Alan M. Webber, USA Today]

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