The Financial Express

Book Review

An ambitious outline of new economics

| Updated: July 11, 2019 15:54:06

An ambitious outline of new economics

Flaws and vulnerabilities of the current model of capitalism are well exposed. Nevertheless, a large number of mainstream economists and capitalists are yet to recognise the fact. They are rather pursuing the policymakers to uphold the current system of capitalism with some small tinkering to address the poverty, inequality and hunger. All of them also believe that crisis is inevitable in market-based profit-motive capitalism, but there is little need and scope to change the existing system. Instead, they prefer to fix the crisis when it takes place while ignoring socio-politico-economic cost of such crisis.

A number of economists, thinkers, policymakers and even capitalists are, however, not convinced that there is no alternative to the current system.  They are trying to explore better options with new ideas to fix the flaws and vulnerabilities of the capitalism. For them, as a matter of fact for the whole world, Nobel Laureate Professor Muhammad Yunus has offered a creative solution. His book titled 'A World of Three Zeros' outlines a brave path to turn the world free from poverty, unemployment and environmental pollution.

The book is divided into four parts. The first part briefly discussed the failure of the current structure of capitalism with a dream to create a new economics and new civilisation. The Noble Laureate in Peace strongly believes that the problem lies on the way capitalist theory interprets human nature -- selfish and profit-driven money machine. That is why capitalist engine is doing more damage than providing solutions to overcome yawing socio-economic inequality and persisting poverty. He asserts: "For too long, we've tolerated the persistence of poverty, unemployment and environmental destruction, as if these are natural calamities completely out of human control, or at best, unavoidable costs of economic growth. They are not. They are failures of our economic system - and since the economic system was created by human beings, these failures can be corrected if human beings choose to replace that economic system with a new system that more accurately reflects human nature, human needs, and human desire." (Page-39)

Yunus doesn't rule out the role of market but argues for change in overall functioning system of market-oriented economy. He also argues that old ways of addressing poverty and inequality through income redistribution and charity cannot solve the problem. He stresses on breaking away from the traditional capitalist mindset where business designed with the goal of 'selfish pursuit of individual profit' is recognised. He asserts that business needs to be redesigned with goals to eliminate poverty, reduce unemployment and contain environmental degradation. But is there any such business design?

Yunus replies affirmative to the question adding that social business is the solution. He says: "Social business offers advantages that are available neither to profit-maximising companies nor to traditional charities. The freedom from profit pressures and from demands of profit-seeking investors helps make social businesses viable even in circumstances where current capitalist markets fail-where the rate of return on an investment is near zero but where the social return is high." (Page-42)

The concept of social business is interesting and an upward transformation of micro-credit model of which Yunus is the pioneer. In this business, the investors can get their original investment money back over a period, but not the profit. The objective of the business is to address any social problem, not profit-maximisation. It needs to be financially viable so that profit could be reinvested to run the business. Above all, investors or entrepreneurs need to 'do it with joy' indicates that by contributing to fix any social problem they will feel good. (In an earlier book titled 'Building Social Business: The New Kind of Capitalism that Serves Humanity's Most Pressing Needs' in 2010, Yunus explained the model in detail.) As a matter of fact, over the years increasing number of academics, entrepreneurs, executives, students and political leaders have been joining the social business effort which is now turns to a global movement. The Ninth Social Business Day, now taking place in Bangkok (June 28-29, 2019), reflects the reality.

In the book under review, Yunus illustrates real-life examples of social business initiatives in different countries of Asia and Africa. Though most of the initiatives are small in size, the Nobel Laureate argues that these have already started to play the role of change makers. He also mentions that Yunus Social Business (YSB) is now functioning as the pioneer to spread the theory across the world and also as a startup incubator to promote different initiatives. For instance, Golden Bee in Uganda approached YSB for advice, support and fund for its operation. The company is providing full-fledged beekeeping products and services in the African country. More than 2,000 smallholder beekeepers, living in remote areas in Uganda, are now availing the service. In Bangladesh, Yunus himself launched Grameen Danone Foods Ltd, a joint venture with French multinational food giant, in 2006. By launching the company, Yunus tested his social business concept which he formally theorised later.

The book further argues that instead of job-seekers, people need to be encouraged to become job-creators. Yunus shows that the current capitalist system backs the job-seeking attitude and ignores the reality that job creation is not confined within a handful of people with wealth and power.  He argues that both job-seeking and job-creating options should be open to all and young people will make their choice.

'We are not job seekers, we are job creators'- the slogan promoted by Yunus is bold and challenging. He believes: "Rather than seeing 40 million young people waiting in line to fill out job applications, I see 40 million new entrepreneurs entering the global market, creating new businesses, solving problems, rejuvenating and reshaping communities, and giving the economy a big boost." (page-94) He, thus, places job-creation at the centre of new economics and argues that the emergence of millions of micro entrepreneurs will ultimately reduce the flow of resources toward the top one or 10 per cent.

Regarding environment, Yunus rules out the developed countries perception that developing countries like China, India, Indonesia and Brazil are now following the path of 'heedless, reckless economic growth with no concern for environmental consequences.' The path was earlier followed by today's developed nation when they were in developing phase. Yunus opines: "Today's developing nations are in many ways better positioned than the older industrialised nations to enjoy clean growth. They are not saddled with old legacy technologies." (Page-99) The Nobel Laureate argues that modern clean-green technologies are instrumental to contain environmental pollution. In this connection, he also expresses concern on Bangladesh government's move to build coal-fired thermal power plant at Rampal near Sundarban, the world's largest mangrove forest and nuclear power plant at Ruppoor. He terms both the projects "...something with potential for mass destruction in the middle of the plant's most concentrated human population." (P-100). Acknowledging the dire need of power for sustainable economic growth, he offers solutions to produce hydro power in Nepal and bring it to Bangladesh which will be a green solution.

Yunus also acknowledges that social business alone can't solve the environmental crisis the world is facing and so stress on addressing the issue from all side. It is a realistic approach, no doubt. Thus the second part of the book explains the 'three zeros' which actually indicates that it is possible to significantly reduce the poverty, unemployment and pollution as discussed above. 

In the third part of the book, Yunus sketches four mega-powers for transforming the world. These are: youth, technology, good governance and human rights. Here the author enthusiastically explain the strength and potential of the energy of youth and link it with the technological advancement. He eventually argues that without these, it is not possible to attain the desired goals of 'three zeros.' Again, strong backup support is needed in the form of good governance which is ultimately reflected in human rights situation. Yunus argues: "Economic freedom and growth are inextricably bound up with human rights and respect to all people. If you want an economic system that liberates human creativity, reduces inequality and enables everyone to pursue their dream of a better world, you must defend the rights of all against those who would limit them." (P-222).

In the final chapter Yunus calls for redesigning the current legal and financial infrastructures as a prerequisite to initiate the new economic order.  Here he shows that money is not the problem as world is already flooded with money. "We need to channel a portion of the vast flows of money that already exist throughout the world in new direction- towards businesses designed to solve the biggest problem of the world including helping the poor to make more productive use of their innate talents and resources." (Page-243) 

Yunus is not a socialist visionary and ultimately believes that capitalism is not replaceable. But he doesn't believe that greed-driven profit-oriented market-based capitalism is the ultimate destination. He thus strongly advocates that capitalism be fully redefined unlike many others who are in favour of small restructuring in capitalism without comprehensive overhauling of the system. True that the roadmap Yunus draws and the destination he dreams are highly ambitious and even to some extent sounds like a fantasy. Notwithstanding the limitation, he is successful to stir the thoughts of many people across the globe. Many of them now believe that it is not mission impossible. 


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