Creating a World without Poverty: Social Business and the Future of Capitalism By Muhammad Yunus

A Book Corner Review

By Rick Hesse, DSc

Creating A World Without Poverty

By Muhammad Yunus
Public Affairs, 2008

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Creating A World Without Poverty details the compelling, personal journey of author Dr. Muhammad Yunus of Bangladesh. Yunus, a former economics professor, received the Nobel Peace Prize along with the Grameen Bank, which he founded, in 2006. He has developed a concept called, “social business,” the goal of which is the operation of self-sustained businesses owned by and of service to the poor.

A social business pays no dividends; it sells products at self-sustaining prices and the profits are used for expansion into new products, services, or members, so that the business furthers its service to the poor. Social businesses are owned by the people they set out to help, giving them a direct stake in improving their own lives and communities.

Yunus first explains why traditional sources of funds for world poverty, such as the World Bank and the International Monetary Fund, have limited abilities to help the poor, and offers suggestions on how to make these organizations more effective. He also explains why other economic models fail to reach the poor.

For example, while the very popular corporate social responsibility (CSR) movement focuses on the triple bottom line of profits, people, and planet (learn more here), after a while, profit always emerges as the main focus. If a company devotes a penny to CSR, it then uses 99 cents to make society worse, Yunus writes. He also discusses the flaws of socially involved, profit-maximizing businesses, co-ops or cooperative businesses, non-profits, and charities.

Yunus then explains how the Grameen Bank (Grameen means “village” in Bangla) got started and spawned many other social businesses. Grameen Bank makes micro loans to the poor at reasonable costs (as low as $15) without the need for collateral. Grameen started a grassroots movement that empowered families to become self-sufficient and to contribute to society. So far, loans have aided in the construction of over 650,000 houses that would not have qualified at regular banks. Since 1983, Grameen has granted micro loans worth six billion dollars to over seven million people. The repayment rate has been an astounding 98.6 percent.

Yunus spends the rest of the book defining what a social business is and what it is not. Capitalism is a half-formed, one-dimensional idea in need of the multi-dimensional goal fulfilled by social businesses, according to Yunus. He lays out a plan for any country or community to develop their own social businesses. “If we are not achieving something, it is because we haven’t put our minds to it,” he writes.

Necessity and creativity keep the concept of social businesses growing and changing. From small loans to women for buying cell phones and selling talk time came loans for houses, health care, and a micro-factory to produce yogurt for the poor, supported by surrounding micro-farms. This last initiative was a hybrid effort with Danone, the first multinational social business, and it provides a model for how for-profit businesses can devote a portion of their resources to a social business.

Even though there are 30 MBA programs in social entrepreneurship in the United States, there are no programs for social businesses. For a good, quick review of the book’s highlights, read Yunus’ Nobel Prize acceptance speech at the end. I highly recommend Creating a World Without Poverty for anyone interested in helping this world become a better place through business.

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About the Author(s)

Rick Hesse, DSc, is currently a professor and Chair of Decision Sciences and Marketing at Pepperdine University's Graziadio's Graduate School of Business and Management. He has taught management science using spreadsheets since 1982 in both engineering and business schools at both the graduate and undergraduate levels. Since 1982 he has been writing a quarterly column in Decision Line, "In the Classroom." Dr. Hesse has won numerous teaching awards, including the national Decision Sciences Innovative Instructional Award, the Outstanding Civilian Service Medal from the Department of the Army, and Teacher of the Year award at the San Diego State School of Business. He has been involved as a consultant on management science problems with such companies as Semtech, YouBet.com, ITT, Pratt, Whitney, Brown, Williamson, Piedmont Airlines, GEICO, UPS, and Bluebird.