“Poor people are like bonsai plants. If you take the seed of the tallest tree in the forest and put it in a flowerpot, that tree will only grow one metre high. You wonder, why does this tree not grow as tall as the one you saw in the forest? It simply doesn’t have a proper base to grow. Society never gives poor people the space, the base on which to grow tall.”
Muhammad Yunus has transformed the lives of millions of the poorest people around the world. In the 1970s he was working as a professor at the University of Chittagong in his native Bangladesh when he realised how small loans could make a disproportionately massive impact on people stuck in poverty. He lent $42 of his own money to craft workers, pioneering the concept of microcredit. The Grameen Bank (meaning village bank) was established to provide investment to people who mainstream banks traditionally avoid, basically spreading a little more soil for seeds to grow in. Most remarkably, loans are given entirely based on trust, with an almost 100 per cent repayment rate.
“We don’t have any lawyers,” Yunus explains. “Trust begets trust. If you trust them, they will trust you. Lawyers come when you distrust each other.”
And although microcredit is by definition small scale, together it all adds up. Today Grameen Bank lends over $2.5bn a year to nine million borrowers, approving between 1,000-2,000 business proposals each month, while the microcredit movement has grown and spread throughout the world, operating in the UK and also with over $1bn invested in the US, with plans to double that in the next few years.
Look at the United States, the election in Germany… people at the bottom are very unhappy
In 2006 Yunus’ work lifting millions out of poverty won him the Nobel Peace Prize. He continues to challenge the financial system he believes is designed for wealth monopoly rather than wealth distribution and which prioritises banks that were too big to fail while ignoring billions who are too small to matter. With ever-rising inequality he fears we are reaching a global tipping point.
“We are heading for massive disruption, an explosive situation – socially, politically, economically – because of wealth concentration,” he tells The Big Issue from New York, where he has been spreading his message at the United Nations.
“Concentration of wealth also means concentration of power, so you have a world which is controlled by a handful of people. That is not a tenable situation. Brexit may be an expression of that dissatisfaction at the bottom. And look at the United States, the election in Germany, people at the bottom are very unhappy, they are frustrated.
You have to make people who are living in poverty active so they can take care of themselves.
“The real issue is how to make sure wealth does not flow in a one-way direction. How to reverse that so wealth starts coming from the top to be distributed so everybody has a share.”
A world with zero poverty
Yunus has a plan to redesign the world’s economic engine, ambitiously proposing a world with zero poverty and zero unemployment. All we have to do, he says, is redefine the notion of “self-interest” and the way we view our roles in the jobs market.
“Economic theory is fundamentally wrong because it is based on the assumption that human beings are selfish people,” Yunus explains. “In Adam Smith’s language, ‘self-interest’ means ‘selfish’ so all businesses in the world became selfish businesses, to make money.
“That is a misinterpretation of human beings. Real human beings are both selfish and selfless together at the same time.
“If you can have a selfish business, you can also have a business based on selflessness where you are not interested in personal benefit but a collective benefit for the world. That is a social business. A non-dividend company to solve problems.”
This echoes the philosophy of The Big Issue, which since it was founded in 1991 has been one of the UK’s leading social enterprises, a founding pillar in the movement. “I’m familiar with The Big Issue,” Yunus enthuses. “The idea behind it is fantastic.”
A hand up, not a hand out
The next part of Yunus’ theory also chimes closely with our model of giving vendors the help to help themselves, but this mindset can go much further so that everybody, instead of seeing themselves as job-seekers, finds ways to create their own opportunities.
“Poor people have skills but they let them be used by the people who have the money and they get the benefit,” Yunus says. “It is assumed human beings have to work for somebody else. That’s absolutely wrong. Historically we are independent people. When we were in caves we were not sending job applications to anybody. We took care of ourselves and did that for hundreds of thousands of years. We have to go back to rediscover ourselves as creative people, entrepreneurs.”
Concentration of wealth also means concentration of power, so you have a world which is controlled by a handful of people.
One of the keys to unlocking the enormous potential of a social revolution is highlighting the difference between social businesses and charity: “A charity dollar can be used only once, while a social business investment dollar is recycled indefinitely.
“People understand it very quickly, money never disappears,” Yunus continues. “People talk about poverty, governments are giving foreign aid, churches are devoted to charity. I wouldn’t say there is not enough attention or resources, but it is not given in the right direction. Charity does not solve a problem, charity only maintains the problem of poverty; it doesn’t let it get worse. Elimination of poverty is about more than keeping people alive, taking care of them. You have to make them active so they can take care of themselves.”
Yunus is involved in countless projects around the world that promote responsible economics and works with 45 universities that teach courses on social business. He is confident young people will steer the world in a different direction.
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“The difference between older generations and this generation is that they have the tremendous power of technology at their fingertips. But the system doesn’t tell them what to do with that, it only tells you to find the best job in the best company so your life is done. That’s very unattractive for young people with so much power.
“They are looking for things to do and being an entrepreneur is an option for them. They can create social businesses too. In that case they use their talent, their creative power and technology to solve a problem. They feel they are not future leaders, they are leaders already!”
A World of Three Zeroes by Muhammad Yunus (Scribe, £14.99) is out now.