Social enterprise: The future of capitalism
By Arunabh Mishra, photos by Mellissa Ang
For Professor Muhammad Yunus, social enterprise is the future of capitalism. The Nobel Laureate and founder of the Grameen Bank coined the term social business – a business created in order to solve social problems – that has sparked a wave of socially conscious entrepreneurs today.
The Grameen Bank, which the social economist started up in his native Bangladesh, provides small loans to poor people with no collateral, allowing them to use the money for small businesses and eventually become financially self-sufficient.
Campus had the chance to speak with Mr Yunus at the recently concluded Social Business Week 2012, which was jointly organized by Grameen Creative labs and the National University of Singapore.
Where do you see South East Asia going in future with all these social reforms taking place?
The world today can be broadly classified under two heads – The emerging powers of China, Singapore and India, and the old powers of Europe and the United States. The present system is in turmoil due to the US financial crisis and the European sovereign debt crisis. Everyone there is trying to fix things.
With new powers, it is about creating a new system. I think the current capitalism system is inadequate and we need to design a new system which embarks on social entrepreneurship and protests against old capitalism.
You champion a new system of capitalism based on social enterprise. How will we protect it from the basic human nature of exploiting resources at its disposal?
We usually think that human nature is a selfish one, but I believe that human are benign by nature. Human beings have both greed and selflessness in them, and which quality dominates is ruled by the system they are placed. In the old system the emphasis was laid on greed. Money became the king, it became intoxicating, and it became an obsession.
Hence I advocate establishing a new system based on selflessness. Only the future will tell us whether this ideology is good, or if humans have just not evolved beyond animals, which take care of themselves and are dominated by self-preservation.
What is the difference between charity and social business?
Charity is a one-way street, you put money in and do not expect a return on that. On the other hand, a social business is a way to recycle money. I will give you an example.
Recently, Grameen bank liaised with Danone to sell yogurt at a low prices to the poor, as Grameen-Danone Foods. It runs on a ‘no loss, no dividend” principle. The idea was to sell yogurt, so we asked Danone to invest 0.5m Euros and the rest 0.5m Euros was invested by Grameen Bank. The problem was that Danone, being a company listed in the stock market, could not put in the amount, as its investors expected dividends on their money.
So Danone sent an email to their stockholders, asking if they were interested in investing in this social enterprise in Bangladesh. Consequently, they were able to garner a staggering 35m Euros. Now Danone has a social enterprise based fund, and is working all across the globe in different developing nations.
Does this new capitalism need a complete overhaul of present teaching methodology?
Oh yes, the whole economics system needs to be overhauled. Take up any Economics 101 book, and it says things about ‘perfect competition in market’ and ‘maximization of profits’. In the old system, everything runs because of profit, hence we have all become money chasers. Bring in the new system along with the existing one, and let students know that there are two types of businesses – one business to get dollars and other to solve problems of the society. Let students choose which path they want to take in life.