Muhammad Yunus believes entrepreneurs will save the world.
In his new book A World of Three Zeros: The New Economics of Zero Poverty, Zero Unemployment, and Zero Net Carbon Emissions, the Nobel Prize winning economist dramatically reimagines capitalism as a system based on humankind's natural selflessness and creativity. Rather than seek jobs, Yunus urges young people to start "social businesses," supported by the kinds of microloans he pioneered in the 1970s. The goal of such startups is not to generate profit but rather sustain operations while solving the world's problems.
A World of Three Zeros draws on Yunus's experience founding Grameen Bank, which makes collateral-free loans to economically struggling women, and Yunus Social Business, a nonprofit venture fund. Supported by those institutions, entrepreneurs from the humblest origins have raised themselves and whole communities out of poverty, while addressing urgent issues like health care, pollution, and energy.
The following are edited excerpts from a conversation with Yunus.
Inc.: What developments since the global financial crisis have informed your new book?
Yunus: One is the enormous speed at which wealth is getting concentrated at the top. It used to be 64 people owned more wealth than the bottom half. Then it was 30. Then it was 12. Today there are only eight. And I'm told that is outdated. Now it is five people who own more wealth than the bottom 50 percent. This is a ticking time bomb, and we have come to the explosive point. But it can be overcome if we fix the two major flaws in the capitalist system.
What are those flaws?
One is based on the wrong interpretation of the human being: that Capitalist Man is driven by self-interest. That is a profit-maximization principle. It finds greed in everybody. The correct interpretation is that human beings are not only selfish but also selfless. The question becomes, how do you promote the selfless part in the business world?
The second flaw is that everybody is encouraged to become a job seeker. That we say a job is everyone's destiny. That does not fit into human nature. Human beings are creative. We are go-getters. We are problem solvers. So we are encouraging every young person to become an entrepreneur.
Entrepreneurs and social activists have been trying to meld commerce and cause for decades. In the '80s and '90s, it was the social venture movement: companies like Ben & Jerry's and the Body Shop. In the 2000s, John Mackey of Whole Foods popularized the idea of conscious capitalism. What distinguishes what you call "social business" as a way to attack global problems?
Those others are a mixture of social and profit. You can make up your mind how much you want to devote to selflessness and how much to selfishness. You can be 0 percent selfless or 100 percent selfless or anything in between. At the beginning, it is maybe 50 percent social and 50 percent profit. But maybe somewhere the logic for profit is so strong that you will be pushed toward more profit and less social. Maybe 75 percent profit and 25 percent social. Or 99 percent profit and 1 percent social. There is a risk of that. That's OK. I still admire that they are trying.
We separate out completely profit from social. In a social business, you don't have the slightest inkling of profit at all. Not a penny. The entrepreneur can always take for a salary whatever amount he deserves for his service. But all profit is plowed back into the company. Because when you try to mix social and profit, you do less of both. If the logic of profits does not enter into your consideration, then you see things completely differently.
If you are going to be 100 percent selfless, why not just start a nonprofit?
Social business is a business. To qualify as a business, an enterprise has to produce a good or a service, which is marketed to recover the cost and even generate a surplus. A nonprofit is not a business. It is basically a charity. It does not worry about recovering its cost. These two are not comparable.
Charity addresses people's problems. Charity money goes out, but it does not come back. Social business money goes out in a business way, and it comes back. It can be used limitless times. As a result, social business money becomes very powerful in terms of its achievement.
What percentage of entrepreneurs do you think will become social entrepreneurs?
Potentially every human being will be a social business entrepreneur. Because the selflessness is there. You can exert yourself in a much more powerful way if you use money you would give away to charity anyway starting a social business. You get your money back and the company grows and has its own life. And you feel good as more and more problems are solved.
You make the case that global corporations and the policies that support them are a big part of the problem. But you also cite a number of large companies, including Danone Foods and Intel, that are working to find solutions. Given that large corporations are only getting more powerful, is there any way to persuade them to become better actors?
We work with large companies to start a social business and have their first experience of it. And then they go off on their own. Danone has been involved with us in social business and now the company does it in eight countries following the principles we have laid down. We invite businesses of all sizes--small, medium, large--it does not matter. We invite them: Why don't you create a social business on the side? It will not hurt your business. It may improve your business. You learn a lot by doing a social business.
Do social businesses operate differently from traditional businesses in terms of how they treat their people?
We have seven principles of social business. How your employees should be treated. How the environment should be protected. They should be sensitive to gender. Sensitive to human rights, and the labor rights of people who work for them. And if those people want to become entrepreneurs themselves, they should help them. The seventh principle is doing it with joy. The joy you feel because you're changing the world.