Learning from the Poor: Muhammad Yunus

Currently, I am seeking work. This period of time between my life in the Congregation of Holy Cross and a new labor has also afforded the opportunity to read. I have long been interested in micro-lending and the work of Muhammad Yunus. I had time this week to read two of his books: Banker to the Poor (BTTP), written in 2003, and 2007's Creating a World Without Poverty (CWWP). Reading chronologically, I began with Banker to the Poor.

Briefly, Muhammad Yunus, a Muslim from near Chittagong in what was then the British Raj, earned a Ph.D. at Vanderbuilt University, taught in the U.S. early in his career, and returned to teach at Chittagong University after Bangladesh achieved independence. He rose to be chair of the economics department. Amid an enormous famine in 1974, Yunus "kept trying to bring the academic world and the village together" (BTTP, 37). Eventually, he discover micro-lending as a means to improve the plight of actual poor people he met.

Muhammad Yunus - Flickr: Univ. of Salford

Banker to the Poor tells the story of Yunus' early life, his initial forays into microlending and founding Grameen Bank, the learnings along the way, and concludes with a hopeful vision of "The Future." It is an amazing story.

After 26 years with the Congregation of Holy Cross, I have heard a lot of stories about Bangladesh. I have known men who left the U.S. and have given their lives to build a better future in that country. Taking on the mission in Bengal was essential to Holy Cross receiving Papal approbation at its founding. The priest, brothers, and sisters of Holy Cross are rightfully proud of their work in Bangladesh. (For more information, visit here.) The story Yunus weaves brings detail to stories that I have heard from American missionaries and native Bangladeshis.

A fascinating element in Banker to the Poor is Yunus sharing his understanding of Islam. To launch Grameen, with its priority on empowering women, he had to be very conscious of his Islamic culture (109-110) and, specifically, purdah, "the range of practices that uphold the Koranic injunction to guard women's modesty and purity" (74). In an age of a "War on Terror," we could do well to learn more about Islamic culture.

Banker to the Poor also highlights the evolution of micro-lending. Yunus needed to refine a definition of poverty (40-41). Yunus describes briefly the revisions in involved in Grameen II (235-243). Readers may even notice changes in the "16 Decisions" from the time of BTTP (135-137) to CWWP (58-59). A new world in economics and development emerges with micro-lending and the Grameen Bank, and Yunus provides insight into its inception.

In BTTP, Yunus also describes in rich detail the operations of Grameen Bank and its microcredits. The groups and centers, the lenders and borrowers, all engage in interactions that are highly relational. He writes, "Grameen would succeed or fail depending on the strength of our personal relationships" (BTTP 70). While not using the term "social capital," the methodology intentionally builds social capital among the poor. It should not surprise in the slightest that one result is increased political participation (195-196).

Yunus also delves into economic theory. His work was an effort to move from "the elegant economic theories" (viii) of his classroom to learn directly from the poor. Yunus writes, "The poor taught me an entirely new economics" (ix). That "new economics" finds then that capitalism has an "incomplete" view of human beings, seeing people only as labor or consumers (150). Yunus explains that "Without the human side, economics is just as hard and dry as stone" (203). Yunus embraces a more robust anthropology than traditional capitalism. Entrepreneurship is not the gift of a few; for Yunus, "all human beings are potential entrepreneurs" (207). Yunus view makes the poor active agents, full of genius and potential:

These decisions are a demonstration that the poor, once economically empowered, are the most determined fighters in the battle to solve the population problem, end illiteracy, and live healthier, better lives. When policy makers finally realize that the poor are their partners, rather than bystanders or enemies, we will progress much faster than we do today. (137)

The hindrance to the active engagement of the poor, according to Yunus, is that:

the poor are poor not because they are untrained or illiterate but because they cannot retain the returns of their labor. They have no control over capital, and it is the ability to control capital that gives people the power to rise out of poverty. Profit is unashamedly biased toward capital. (141)

That the poor are "banking untouchables" (57), with no control of capital, results in "financial apartheid" (150). In the experience of the Grameen Bank, giving credit to the poor upends this structure and allows for a new future.

In Creating a World Without Poverty, Yunus now writes as the third Bangladeshi to have won a Nobel Prize: preceded by Rabindranath Tagore (Literature, 1913) and Amartya Sen (Economic Sciences, 1998). His tone is much more confident, and, as the title suggests, he dreams much more broadly. At the time of writing CWWP, Grameen has expanded from a bank to 25 organizations in the Grameen family of companies, stretching from textiles to fisheries, from cell phones to yogurt (CWWP, 78-79). Grameen ushered in a new way of doing business, and Yunus acknowledges that the regulatory structures of government need reworking.

In CWWP, Yunus describes a "social business" as:

a business that pays no dividends. It sells products at prices that make it self-sustaining. The owners of the company can get back the amount they've invested in the company over a period of time, but no profit is paid to investors in the form of dividends. Instead, any profit made stays in the business-- to finance expansion, to create new products or services, and to do more good for the world. (xvi)

Yunus argues rightly that a social business can be very competitive in the market place. It may have highly motivated employees, it may have lower costs (without the burden of maximizing profits), and it may have a desirable product for consumers with social change as an output. He proposes social businesses of all kinds and in all fields as well as a social business stock exchange.

In CWWP, Yunus has refined his argument with capitalism, which he describes as "a half-developed structure" built upon "a narrow view of the human being," a "one-dimensional human being," that fails "to capture the essence of what it is to be human" (18). Seeing a human being simply as a laborer or consumer is an "economic blindspot," like "the assumption that the solution to poverty lies in creating employment for all-- that the only way to help the poor is by giving them jobs" (52). This view fails to see the informal economy. A third blindspot is "the assumption that 'entrepreneurship' is a rare quality" (53). Yunus argues that  "entrepreneurial ability is practically universal" (54). Drawing on the image of a bonsai tree, he writes, "the poor are like bonsai trees," growing according to their containment. A bigger tree needs deeper, richer soil (54). Also, economics has a blindness around gender and children (54-55) as well as "another major blindspot" with regard to "the focus, in development strategy, on material accumulation achievement. This focus needs to be shifted to human beings, their intiative and enterprise" (55-56).

Yunus won the Nobel Prize for Peace, not Economic Sciences, an acknowledgement that reducing poverty is a component of building peace. Yunus also argues forcefully that social business is a necessary alternative, a "parallel voice" to profit-maximizing business. Citing global climate change, modern practices of industry and agriculture are unsustainable, and social business gives voice to another way of doing things (214-215). In the end, Yunus wants to put "poverty in museums." (223-233). Not a new aim for him, Yunus concludes Banker to the Poor with these words:

We have created a slavery-free world, a small-pox-free world, an apartheid-free world. Creating a poverty free world would be greater than all these accomplishments while at the same time reinforcing them. This would be a world that we could all be proud to live in. (BTTP, 262)

Both works, Banker to the Poor and Creating a World Without Poverty convey Muhammad Yunus' hopeful view of all human beings, especially the poor. Both works are born of the interplay of his mind, well-trained in economics, his heart, moved by the suffering of the poor, and his experience working intimately with the poor. Yunus is absolutely right that geography is important and being near the poor is essential (BTTP, 147). I have no doubt that the best development work is done "to," "with," "for," and "by" the poor, all at once. Work to the poor, for the poor, is done best with and by the poor. If it is not, to borrow a phrase from Bob McCarty, we're just hitting them "with a 2 x 4."

While I value the hopefulness of Yunus, human frailty also creates chains of bondage difficult to break. For example, I do not recall reading of an addict in either book. Some situations will not be resolved with providing credit. While he has powerful friends like Bill and Hillary Clinton, Yunus has battled publicly with powerful institutions like the World Bank. Yunus' critics are many. I found a few articles: here, here, and here. As is often the case, it does not seem to me to be an either/or choice. Yunus and the Grameen Bank and the institutions that they have inspired have changed many lives. While not the only solution, micro-lending is an important tool for fighting poverty.

Yesterday, I also discovered an article written by a Notre Dame undergraduate: Should We Give Up On Microfinance?