Interview with Muhammad Yunus (Excerpts)
Managing Director, Grameen Bank
January 23, 2008

This interview was conducted and originally published by www.BigThink.com. View the full interview here.

Capitalism’s Strengths and Weaknesses

“I criticized capitalism for what is lacking in it, but I’m not saying that abundant capitalism . . . There is an alternative here. That’s not what I said. I said capitalism can be improved. I am not asked in my argument that you closed on something as a profit maximizing business, or philanthropy, or free market. I said everything is very positive, but some things missing in the whole structure; and that missing piece has to be installed. That way capitalism will be complete, and it can be a balanced theory fitting to the human nature. And it will address all the problems which is left behind by the incomplete capitalism. So I’m kind of moving from incomplete capitalism to the complete capitalism, or towards completion. Maybe there are other pieces missing. Other people will find it out. But I’m saying a big piece missing because of which we created a lot of problems. We created problems. Not only we created, we don’t have the ability to solve them. So if we complete the capitalism, at least to this stage – the second stage of completion – I will say we will not ___________ them. And existing ones can be addressed and removed.”

Social Business

“There is only one kind of business in the world that we all know about, because in economic theory, the way business is presented, business means business to make money. Profit maximization is the mission of the business, so you continue to focus on that. So anybody who comes into business, that’s what he or she does. And to me it is kind of a very narrow interpretation of a human being. I see that as human beings as a money making machine; as a kind of robot-like performance that you . . . the only thing you do is to maximize money; not that you . . . you have no other thoughts. But in real life a human being is much bigger than that. You want to make money. You want to do good to people. You want to make a difference in the world. You want to solve the problems that you see around yourself. But those things are not included in the business world. So I’m saying that in order to justify the totality of the human being, you need to create one more kind of business besides the existing type of business of making money.

The other type . . . The second type of business would be business to do good to people without any idea of having benefit for yourself. The first type of business – profit maximizing business – that business is all about you. You want to make money and everything has to come to you. You are the center of everything – all your activity in the business. The second type of business – the social business – is business where you don’t feature at all. Everything is about others. Everything is to help somebody other than yourself. So these are the two types of business, and people have all these elements into yourself . . . into himself. The human being is a multidimensional being. It’s not a single dimensional being, like make money and that’s the only thing you do. But multidimensional aspect can be accommodated by creating that type of business, the social business. And it’s a non-loss, non-dividend company with a social objective. So that’s a case I’m presenting – that this is what is missing in the political framework of capitalism. So that is why we have created so much of a problem around us, because these issues about environment, about poverty, about diseases, about healthcare, about nutrition – all these are ignored because the type of business we are involved with do not pay attention to that. By its very nature, by its very definition it doesn’t pay attention. So we need to have another type of business which will address these issues.”

Commercialization of Microfinance
“Commercialization is a kind of code word. In plain, simple English it means “make money” by doing that. My position has always been microcredit should be an area for social business where you want to help poor people get out of poverty by doing business. You don’t lose money. You get your money back, but you don’t make profit out of it. Because with that money you want to give to the poor people so that they get out of poverty faster. That’s where the interest is. So I look at microcredit in that direction. The other direction is this is an interesting, new, emerging area of business. If you put money . . . If you invest your money, you make a lot of money. I don’t see that is the right kind of approach, because loan sharks have been doing this for years and generations and for ages. They lend money to the poor people and make a lot of money by exploiting them. So microcredit is not a new tool for exploitation. Microcredit is a tool to help people get out of poverty. So if commercialization means you make money, I will say I’m not in support of that. I would rather discourage that thing to happen. But if you want to do in a business way . . . make some profit, I would still allow or admit up to a certain amount. And their interest rate issue comes in – how much you take back. Say my definition of reasonable interest rate is cost to fund at the market price, plus 10 percent maximum. So that should be the maximum of interest rate that you can charge, and you’ll be a proper microcredit program. If you go beyond that, I tell you, you are going into a risky area where you are getting too high. And after a while if my cost to fund at market price plus 15 percent and above . . . If that is the interest rate, then I’ll say you are in the red area of lending to the poor because now you are moving into the loan shark zone. So this is the kind of ground rules that I try to promote.”

What Rich Countries, Especially the U.S., Should Do About Poverty

“…Pay attention to the innovative activities which can be used for helping poor people get out of poverty. Ideas like social businesses; ideas like microcredit; ideas like technology . . . information technology, particularly bringing to the poorest people. This is the country which is at the top of the technology world. So if their attention is paid; if a nation can keep on designing one after another ____________ gadgets – iPods and iPhones and . . . If the same attention is given to the poor people, tremendous kinds of gadgets can be created. Information technology will make the lives of the poor people absolutely easy and absolutely easy to get out of poverty. It’s a question of where we direct your mind. The moment you direct your mind to this poverty issue, the whole world will benefit from that. The poor and the number of poor will decline very sharply. And if young people in this county can be encouraged that this is an issue that we can play a very important role, and these are the areas that we can play an important role in designing that kind of social businesses; wherever we see a problem, what kind of social business can be designed? What kind of technology we can bring to the poorest person so that he and she is empowered to use her talent, her creativity to take . . . to change her life. What kind of resources can flow? If the United States wants to put money . . . individual money, not government money . . . Government foreign aid is important, but that’s a different kind of . . . important private money, individuals’ money can come. It can change the participation completely if that money is used properly in terms of microcredit, in terms of social business. That would be a tremendous help in terms of technology, design; in terms of holding competitions to bring newer and newer designs; involving the whole world to participate into it. The United States can play a tremendous amount of leadership role. Particularly young people in this country can play a very vital role in providing that leadership.”