Yunus

english version

Two business leaders have received spontaneous standing ovations as they walked down the middle aisle of the Conference Center in Folkets Hus (The People’s House) in Stockholm. A couple of years ago it was IKEA’s Ingvar Kamprad, a couple of days ago it was Grameen Bank’s Muhammad Yunus.

The two business leaders have great value-laden similarities. They are both exceptionally successful. One has become the world’s richest man; the other received the Nobel Peace Prize. Both are loved by the people. Both personify hope and the future but they represent two different models that work with and through the market economy.

Yunus makes a razor-sharp difference between social business and the kind of enterprise that seeks to maximize profit and stock value. In the Yunus model borrowers/customers are also owners. Grameen Bank is a social business in Bangladesh with seven million women as the owners. In the conventional market economy company the enterprise is owned by a few though it may have millions of customers. The profits go to the owners. Ingvar Kamprad represents an intermediate form – a family company – but with the vision to work for “the many people.” To them IKEA delivers quality, the lowest price and function.

By social business Yunus means that the business operation is owned by and developed for the customer’s benefit. Dividends go back to the customers; the classic cooperative model. The important distinction between different forms of ownership and entrepreneurial enterprise has not been reported by the Swedish media. Editorial writers and business representatives would rather shine in Yunus’ limelight and point to Grameen Bank as evidence of the total superiority of the Western liberal market economy. However, Yunus points to the fact that this has led to 94% of the world’s income going to 40% of the world’s population, those already very well off. Only six percent goes to the remaining 60%. Conventional business models do not reach down there. They cannot reach there.

Grameen Bank gets to represent the many thousands of new kinds businesses and business models that take as their starting point in the unusual market anthropology and cultural conditions of poverty. All people are enterprising, but upon whose conditions and for whose welfare will the power of the enterprise be used are the most important issues.

It is therefore also important to underline that micro-credit and many other growing social enterprises need, without exception, in their formation and early development, financial support that comes from sources that do not take over control once the business can stand on its own legs. This is the reason that it is foremost aid and development agencies, foundations, churches and philanthropic funds which put in the risk capital. This is of course also the reason that micro-credit and similar enterprises are not initiated by the big banks. They received only passing interest during the Yunus visit.

The liberal market economy’s principled celebration of Grameen Bank’s Nobel Prize and success would have rung truer if it had actually been the market economy that had the creativity and capacity to bring forth these new business models known as social enterprising. But this seldom occurs. The social economy appears to be a great hope for millions of people. Therein lies the importance of the prize.

That the conventional market economy sticks to its knitting is confirmed by Michael Treschow of the Confederation of Swedish Enterprise when he makes his argument for higher fees for board directors and chief executives in stock-listed companies.

Bo Ekman