Economy of Three Zeros: Nobel Laureate Suggests Ways to Solve Global Social Problems

September 11, 2019   |   Econs
Dialogue Chain. Episode 8. Muhammad Yunus, Nobel Peace Prize Laureate of 2006, founder of the Grameen Bank, and Alexey Savatyugin, Aide to the Chairman of the Accounts Chamber of Russia

Savatyugin: Professor Yunus, it’s a great honor for me to interview you. You are a world-famous economist and social entrepreneur.

Yunus: Well, great to see you again. I’m very happy to meet you. You have been to Bangladesh; you have seen all the activities that we are involved in. And now, it’s good to have a chance to have this conversation.

Savatyugin: You recently published a new book entitled A World of Three Zeros. It has been translated into Russian, and I’ve read it. It is a very interesting book. In it, you say that in the future, you would like to see a world of three zeros: zero poverty, zero unemployment, zero net carbon emissions. Why did you focus on these three problems as the most crucial for humanity? When we discuss problems in Russia, we usually talk about GDP growth, investment, or life expectancy. You have named three other problems. Could you explain your thinking?

Yunus: The one thing is that growth and investment, these are very narrow issues. This is moneymaking issue. So, it doesn’t have social dimension to it. Growth doesn’t have social dimension, growth has rather anti-social dimension. That’s where my book comes in. We talk about bringing poverty to zero. So, there’s no reason why anybody should suffer from poverty, because human beings are packed with capacity to take care of themselves. Simply, economics has pushed them out. So, I keep repeating: the poverty is not caused by poor people, poverty is caused by the system that we built, the way system makes us think. And that’s where we went wrong. So, in order to changed poverty or eliminate poverty we need to change the system. So, that’s the issue that I raise in the book: how present system is working against the people and then other issues of unemployment.

Why there’s unemployment at all? I say that employment itself is a very unnatural thing, artificial thing. Real human beings are born with entrepreneurial capacity, with a creative capacity to do things on their own, independently. But job makes us submissive to other people: we have to work for somebody else. So, I address that issue, I keep saying that the whole problem of unemployment, which exists everywhere in the world (even in the richest countries they have the problem of unemployment), it exists because of the concept of employment. If we didn’t have the concept of employment there would be no unemployment because we would all be entrepreneurs. So, we were kind of made to believe that salvation or the destiny of a human being is about getting a job. And I try to bring it to the attention: job is the end of creativity. The moment you accept the job you accept the fact that you have to follow the instructions. If you keep on following the instructions, you have no creative power left in you. So, you lose the most important element in a human being. So, I’m encouraging the young people to think as an entrepreneur, to become entrepreneurs rather than job-seekers.

And the third one is the environment. Environment is again created not by God. Environmental problems are created by businesses. Businesses, out of their eagerness, out of their greed to make money, they destroy the planet. So, unless we change that system, we cannot save this planet. And we have only short time left to protect the world. Maybe 20 years, at best 30 years. Unless we fix everything, all the damages done to the planet, unless we can fix it very quickly, we’ll be done. We will not survive on this planet. So, these are the key issues. I’m sure there’re many other problems in the world. But I’m concentrated on the major issues that I think are very important to pay attention to. We can create a world with zero poverty, zero unemployment, and zero net carbon emission. It’s possible. If we pay attention to it, it will get done. But we are not paying attention to it.

Savatyugin: Professor, I agree with you. Many people – philosophers, economists, and politicians – have written about inequality, and fighting poverty and unemployment. However, you introduce a new concept: “social entrepreneurship”, “social businesses” as opposed to purely capitalist companies that seek profit, or charitable not-for-profit and state-funded organizations. What are the specific features of this social entrepreneurship? Do you believe it has the potential to succeed?

Yunus: When we created Grameen Bank, the village bank to lend money to poor women, we had no intention of personally gaining from it financially. Our intention was to make these loans available, credit available to the people. Particularly, women. So, that she can start income-generation activity. She can take care of herself. So, that was the focus, that is the problem that we wanted to solve with no intention of personally benefitting from them. After we created Grameen Bank, we created many other such companies: health-care companies to bring health-care to the extremely poor people with very poor health condition. So, we said, let’s try this way, try to solve the problem of health care, and in an affordable way, but no intention of making money. But it just needs to be sustainable so that money can be collected back and used again. Recycling of the money itself. And series of these companies we created then we realized that this is a very different kind of business. Conventional business defined by capitalist theory, where you want to maximize profit. We created a business not to make any profit at all. Personally. Company makes profit, but profit is ploughed back into the business. So, people started wondering: “Is it a crazy idea that you can create a business not to make money but to solve problem? Must be, someone has to be really crazy to do that.” Then, I point out, look, people give away money. They don’t expect it back. Here, in social business, I’m not giving away money, I’m only investing the money and I get my investment money back. But after that I don’t seek any dividend for myself. So, which one is more crazy? Giving away is crazy or just investing is crazy? I said: “Between the two…this looks like very same thing to do that.” Then they said: “What was wrong with the charity?” I said: “There was nothing wrong with the charity. Charity is a wonderful idea. It helps people. It has been helping for generations, for centuries. People a benefitting from charity. But charity has a limitation. You try to address a problem by giving money as a charity, as a donation. And a problem gets solved. But the money doesn’t come back. So, you have only one-time use of money. But if you do the same thing as a social business, you create a business model and you solve the problem of the person or the people but the money comes back. Then you use it again.” I said, “Look, this is the difference.”   

Savatyugin: The vast majority of Grameen Bank’s borrowers are women. And you say that female borrowers are good borrowers. However, there are doubts about the applicability of this business model in other cultures and countries. Some also doubt whether this business model will be viable in countries with a different economic structure. For instance, in Bangladesh, there are many small businesses, microbusinesses. And there, of course, microloans are very important. Even the economy of the United States, where Grameen Bank is also successful, is diversified: there are many different types of businesses there. Russia is not like that, its economic structure is different: it is dominated by large corporations, which are mainly state-controlled. Are the principles of your entrepreneurship – focusing on the poor, focusing on women, focusing on microbusiness – universal? Do you think this model can be successful in Russia?

Yunus: Russia is no different than any other country. If you have a problem, you create a social business to solve it. That’s the point I’m saying. This is about the people. People are the same all over the world. Whether you are in Russia, whether you are in Brazil, whether you are in Japan. It doesn’t matter. People are people. They have the same feelings, they have the same attitude to do things, to make things happen. They have the future that they want to build for their children. Today if we leave the world like this our children have no future.

Today, we don’t use this individuals’ capacity because we always say: “Government should do it.” But looking towards government to solve all the problems is a very damaging thing. We are not using our talent, our creativity, rather we criticize the government all the time. I’m not saying we shouldn’t criticize, we definitely should criticize inaction of the government, wrong policy of the government, but at the same time, we should not remain inactive ourselves. So, this is an opportunity: by creating social business and solving each piece of problem. Problem of unemployment, problem of poverty, problem of water, problem of plastic. The whole world is filled with plastic. We can take initiative as an individual to stop plastic: we can avoid plastic, we can discard plastic, we can recycle plastic. Many ways. And you can put pressure on the companies not to use plastic because plastic is going to kill us.

This is our home. Planet is our home, we have to save it. So, this is the way social business can address these issues and give power to your individual capacity to do something. And then government can learn from it. Government can do something with the bureaucracy. Government has no other option but bureaucracy.

Savatyugin: Professor, Bengal has given the world three Nobel Prize winners: Rabindranath Tagore was awarded the Nobel Prize for Literature, Amartya Sen received the Prize for Economics, and you were granted the Nobel Peace Prize. In other words, your homeland has received all of the Prizes awarded for the humanities. You were awarded the Prize in 2006 for your work in combating poverty. Both Grameen Bank itself and your efforts have played a very important role in helping to overcome this problem in Bangladesh. In 2009, my colleagues and I had the honor of visiting you in Bangladesh, and you explained the microfinance system to us in detail, for which I am very grateful. Now, in your recent book A World of Three Zeros, rather than describing microfinance technologies, you raise more global issues, and debate the fundamental principles of economics, the world order, and Adam Smith’s notion of the invisible hand, which economists all over the world study during their first year at university. You propose a new financial order, a new legal order, a new form of entrepreneurship. These ideas are very profound and well founded. Are you ready to receive the Nobel Prize for Economics?

Yunus: No, I’m not doing it for the Nobel prize or anything. Economic theory has been developed and people have accepted it. They follow that part the way it is defined. But there are major flaws in that economic theory. That’s what I’m trying to draw attention to. I keep saying that. Look, sometimes or most of the times, economics is called social science. It doesn’t deserve to be called social science. Because there’s nothing social about economics because it starts with human being which is driven by self-interest. So, the only thing a human being within economics can do (as it’s defined) is to take care of himself. He wants money. He wants to accumulate. He wants to maximize his profit. This is all personal. There’s no social dimension of a human being. But if you compare the real human being versus the human being which is defined in economics they are different. The real human being is a social being. They worry about the world, they worry about their neighbors, they worry about other countries, they worry about the planet, they worry about the future of the world.

We have to build a society which is better than before. That’s the whole aspect of it. At the moment it’s more pressing because everything becomes so serous in the crisis, big crisis. The whole existence of human beings is at stake right now.

Savatyugin: Professor, whom would you like to interview in this dialogue chain?

Yunus: I’m looking forward to meeting Ksenya Yudaeva to have a conversation with her. So, I’d hope that it will go as exciting as it is right now.

Savatyugin: Thank you. I wish you every success.

Yunus: Thank you. Thank you for the wonderful conversation. Thanks a lot.