Mr. MUHAMMAD YUNUS (Nobel Peace Prize Winner; Banker; Economist): Lasting peace cannot be achieved unless large population groups find ways in which to break out of poverty.
ANDREA SEABROOK, host:
With those words, the Nobel Committee awarded the 2006 Peace Prize to Muhammad Yunus. His ideas on microlending had changed lives in his native country Bangladesh and beyond.
Now, Muhammad Yunus has written about his next big idea in a new book called "Creating a World without Poverty: Social Business and the Future of Capitalism." Muhammad Yunus joins me now.
Thank you very much for coming in to our studio.
Mr. YUNUS: Well, thank you very much for inviting me.
SEABROOK: We know you for your work on microfinance. You share the Nobel Peace Prize with the Grameen bank. What is this next idea of yours? What is a social business?
Mr. YUNUS: If you'll look at the business world, you always imagine people being some kind of a money-making machine - all they do in the world of business is make money for themselves. Well, the human being to me is much bigger than that. Human being is also a caring human being, sharing human being who wants to make a difference in the world. That thing is not considered within the framework of economic theory of business. So I'm saying this is something missing and it created a lot of problems for us in the society. So I want to put it back, have the whole human being included into the economic theory.
So I am saying there should be at least two kinds of businesses: business as usual to make money and the business to do good without any personal benefit out of it, and I'm calling it the social business. Social business is a non-loss, non-dividend company with a social objective.
SEABROOK: How is it different from a non-profit organization which does make money but just plows it back into business?
Mr. YUNUS: Non-profit by definition is a charity organization. In a non-profit, you can give your money, and you can't take it back. So I'm talking about a business where I own it. It's my business and I'm the investor. But I don't want to take any profit out of it. And so the bottom line in social business is how much impact I have made on the society by doing that, not how much money I made because I've decided the money I'll make is zero. I can take back my investment money. If I put a million dollar into my business, I can gradually take my million dollar back - not any more.
SEABROOK: It sounds like it requires the investors to value those social goals as much as or more than making a profit. What makes you think that that's as much of an incentive for investors as making a profit on their money?
Mr. YUNUS: We do it all the time but we don't notice it. When you are in politics, you dedicate yourself. In religion, you do it all the time. You want to do good. You want to do so many good to other things, and nobody questions that. But why suddenly economics is different? It's not different.
SEABROOK: Let's talk about your experiment with the yogurt company known globally as Danone, but here in the United Sates Dannon.
Mr. YUNUS: Yes.
SEABROOK: Tell me about this experiment with Grameen and Danone.
Mr. YUNUS: We tried to create a social business. With a chance meeting, I had a discussion with the chairman of Danone and I proposed to him, why don't we create a Grameen-Danone Company in Bangladesh which will produce yogurt. But this will be a very special kind of yogurt. There are millions of children who are malnourished in Bangladesh, so we take the missing micronutrients in these children and put it into the yogurt and let the children eat those yogurts and Danone agrees right away.
SEABROOK: One of the adjustments you've made to the business side is that Danone is now paying a dividend on the investment that investors have put into Grameen-Danone. That is completely counter to your original idea of social business.
Mr. YUNUS: A shareholder can say why are you using our money into your project which doesn't produce any dividend for us? So they went ahead and circulated this resolution. Then, whenever the Danone Company gives you a dividend, would you care to put a little money into a tiny little fund here where you'll promise that you are not interested in getting dividend.
SEABROOK: I see. Another social business that you have worked to set up is Grameen Telecom. This is the joint venture between Grameen bank...
Mr. YUNUS: Telenorth.
SEABROOK: ...and Telenorth, the Norwegian phone company. It seems like there's been a hitch.
Mr. YUNUS: Yeah.
SEABROOK: Tell me about what's happened with Telenorth.
Mr. YUNUS: We had a joint venture with Telenorth and a company that we created called Grameen Telecom, to create a cell phone called Grameen phone. So at that point when we're making the joint venture agreement, we put a clause that after the company is born and operation has started, after six years Telenorth will sell the shares to Grameen Telecom so that Grameen Telecom become the majority shareholders of Grameen phone.
So we talk this very safely, very nicely done. But our intention was Grameen phone will ultimately become a social business, meaning that majority shareholders will be the poor women in Bangladesh like Grameen borrowers.
SEABROOK: What happened?
Mr. YUNUS: After the six years were gone, when we asked Telenorth to sell the shares, they said no we are not going to sell the share. In the meantime Grameen phone become a big company and they're making lots of profit...
SEABROOK: Hundred of millions of dollars.
Mr. YUNUS: That's right. And they became very interested in keeping it.
SEABROOK: It seems like here, again, it comes down to once the company was making profits the shareholders' interests rule the day.
Mr. YUNUS: It's not that - it's a mechanism by which shareholders' opinions have reflected in the company policy. That's we're at fault. Shareholders are not doing that. They don't want to hang onto something which is supposed to go to the poor people. They feel embarrassed about that. But somehow the company doesn't feel that way. The company feels that we have to show our result. This is something that we want to maintain.
SEABROOK: Well - my larger question - the bigger picture seems to be it's a beautiful idea, this idea of social business. The Grameen-Danone and in the Grameen Telecom case - they've been both been very much affected by traditional capitalist market forces…
Mr. YUNUS: Sure, absolutely.
SEABROOK: …meaning the investors - the shareholders in the end.
Mr. YUNUS: Absolutely, because we live in the world where all these rules and procedures made for one type of company. Once you said that this is a good idea then all the rules will come in this direction. The new legal framework will develop.
SEABROOK: I wonder if you think profit-motive business in specifically China, Taiwan, these places, haven't they done as much or more as your groups for the cause of poverty?
Mr. YUNUS: These are not separate issues. Micro-credit doesn't say you stop the economy, we'll take care of everything else, no. If you didn't have the people at the bottom hitched into the economy they will be staying where they are. So the gap between the people who are moving at a high speed and the people who are at the zero speed will be widened. So micro-credit brings in that kind of hitching mechanism.
SEABROOK: Muhammad Yunus, I want to read something from your book. It says, perhaps to some, the idea of social business sounds purely fanciful - a fantasy of a world that can never be. But why? Who has given the ultimate verdict that people are motivated only by money; that the desire to do great things for the world can't be just as powerful a driving force than human behavior?
Do you have any indication that this dream of a social business could actually be a reality in our markets?
Mr. YUNUS: I know for sure it will be the reality because the urge is very strong among people. They want to do things for other people who want to feel that they are significant; they made a contribution in the world. So as long as that urge will be in the persons, this will be happening because today I cannot express that urge into business world. I have to take that urge either to politics, or to charity, or to something else. So, I said, this is a kind of a shortcoming, a lapse in our theoretical framework. So I'm just trying to correct by bringing this piece into the picture and making it closer to the reality than what it was been.
SEABROOK: Muhammad Yunus, the 2006 Nobel Peace Prize winner. His new book is called "Creating a World Without Poverty: Social Business and the Future of Capitalism."
Sir, thank you very much.
Mr. YUNUS: Thank you.
SEABROOK: And there's an excerpt from Muhammad Yunus' book about a surprising meeting he had with a multinational company at npr.org/books.
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