Muhammad Yunus
The interview was published in Brazilian newspaper ‘Estado de Sao Paulo’ on 18 December 2020
Q. You wrote that we were on the brink of the abyss before Covid 19. Why do you think like this? How and why did we get to this point?
A: I am trying to point out the situation of the world as it existed in the pre-pandemic time. The pandemic has stopped the economic machine. So, the world has slid behind economically since pre-pandemic time. Now a strong effort is being made by all governments and businesses to go back to the pre-pandemic situation, to catch up to the same speed of growth as before. I am urging instead that our policy should be one of ‘No Going Back’ to that world because it was heading towards the end of human existence on this planet — as a result of global warming, process of extreme concentration of wealth in a few hands, and invasion of artificial intelligence to make human beings redundant in the world. Scientists have been warning us that global warming does not allow us much time on this planet. The countdown has begun. Human beings have become one of the most endangered species on the planet right now. Going back to the pre-pandemic world would be suicidal. So why go back to resume the journey only to reach the finishing line? Now that the economy has stopped, we can reorient it in a completely different direction. The pandemic has created an opportunity to abandon this suicidal path and create a new path which will lead us to a new world— a world of three zeros: zero net carbon emission, zero wealth concentration, zero unemployment. We know how to get there. All we need to do is to take a bold decision to abandon the old path.
Q. You argue that the system should be redesigned, starting with social and environmental awareness. Do you see any country thinking about it and trying to develop something like this?
A: We have no option but to redesign the system. The old system is taking us to the final disaster. We are living in a burning house. But the system keeps us unconcerned about it. We are keeping ourselves busy having a big party inside the burning house. We are celebrating our economic growth and our technological miracles, singing songs of prosperity, completely ignoring that our party itself is adding fuel to the fire to our burning house.
Young people in all countries are realizing this and trying to disengage themselves from the party. Teenagers are marching on the street with the message of a new future under the banner of “Fridays for future”. They are accusing their parents for stealing their future. Governments are showing awareness by announcing their goals of net zero carbon. Businesses are signing on to the Sustainable Development Goals. But we are not sure how much of it is real, how much is for the consumption of the media. We need to take outrageously bold decisions to change our economic thinking of pursuing GDP growth. This thinking has no room for paying any attention to the fact that it has already created a dangerous world where all the wealth gets densely accumulated at the tip of the North Pole, while people are densely being pushed to the tip of the South Pole. All the growth takes place at the North Pole, while people in the South Pole are asked to celebrate. The system successfully keeps on widening the distance between the wealth and the people.
Artificial intelligence keeps pushing people away from work. It is used to take jobs away from the people to maximise profits for companies. In a few decades human beings will become garbage on this planet; they will have no use left.
Governments are following their usual ‘politically safe path’. They are announcing environmental goals. But not much urgency is visible from most of the countries. None of the countries are showing any concern about wealth concentration or artificial intelligence.
People, particularly young people, have to mobilize themselves to replace the existing system by creating a new system to build the world of three zeros.
Q. You also say that, in this redesign of the world, business must be created exclusively to solve people’s problems and without obtaining profits. Does this mean breaking with capitalism?
A. Capitalism is based on the assumption that human beings are driven by self-interest. I reformulated that assumption to bring it closer to what real human beings like. According to my new formulation human beings are driven partly by self-interest but mostly by collective interest. The assumption that the exclusive driving force is self-interest led economists to the creation of business driven by profit-maximization.
Once collective interest becomes a part of human motive then we have to find an appropriate business format which will ensure solving collective problems. Collective interest driven business doesn’t need personal profit. It needs solutions of collective problems in a financially sustainable way. That’s what I created, and call them ‘social business’ — business to solve collective problems without making any personal profit. Profit is ploughed back into the business.
Is this capitalism? In this new version of the theory, profit maximizing businesses still function side by side with zero personal profit businesses. It is left to the individual’s free choices. So, this new version of the theory gives three basic choices of businesses. A person can choose to engage in profit maximizing business, or in social business, or own and create both types of businesses. Both types of businesses participate in the same market place, under the same regulatory authorities.
Q. In this reconstruction of the world, what would make people invest in business, since it would not be profit?
A. If you think personal profit is the only reason why people want to give out their money then you are wrong. People use their money for many reasons, including the case of giving away money for ‘charity’.
If you define ‘investment’ as using money for maximizing personal profit, then I can agree that whatever money people put in to buy shares of social business will not be ‘investment’. If you accept the definition of investment as money used for buying shares of companies then money which buys shares of social business will fall into the category of ‘investment’.
Q, Why should any person buy a share in social business if it is not aiming at maximizing profit?
A. I would put it this way— people invest in social business because to them making money may be happiness, but making other people happy is super happiness. If that is so, people will actually prefer to invest in social business. Ultimately all is rooted in our mind, where our mind finds happiness, what it recognizes as happiness.
I can find many uses of my money. I can donate my money, I can keep it under the bed, I can buy lottery tickets, I can invest in social business or invest in profit maximizing business, and do many other things too. Our life is about maximization of happiness, not maximization of profit. Capitalist theory has fooled us on many levels. Worst of all, it made us believe that happiness can be measured by the amount of money we have.
Q. You also said that the New Recovery Programme should break the division of labour between citizens and governments, with citizens trying to come up with social solutions. Does this mean a reduction of the size of the state?
A. Capitalist economic theory assumed that the citizens should remain busy in maximizing profit and pay taxes. With the tax revenue government should solve whatever common problems nation has.
The degree of involvement of government in solving social problems led to political polarization. Some argued that government should tax the minimum amount and stay out of solving social problems. Social issues should be left to market forces. Other argued that government must take the responsibility to solve social problems, and tax people to find the money.
I am arguing that under no circumstances individuals should remain as spectators of social problems. Individuals must bring out their creativity for solving social problems. Once citizens get active in addressing the problems of people, it will not take much time to get the result. Smart governments must create space and incentives for citizens to get active in addressing social issues. Government role will be to inspire people, recognize them, and applaud their achievements, make appropriate legal and administrative structures to support the citizens’ initiatives. Government can create social business funds, social business venture capital, legal structure for encouraging setting up of Social Business Micro Entrepreneurs Banks and other such structures.
I am not arguing to diminish the importance of government. Rather, it is about activating the government in its organizing role to mobilize every citizen to get engaged. Government’s capacity should not be judged by its tax revenue, government’s biggest power is the people. Guiding and inspiring people can achieve things that are far away from what revenue can accomplish.
I am proposing a new role for government, one in which the government gets the whole nation involved by appropriate legal framework, policies and inspiration to create social businesses.
Q. What should be the role of the State in this transformation?
A. Government has the authority to lead the people. Any transformation process becomes easier, and faster if government comes with appropriate leadership. We are talking about building new roads to go to a new destination. If government becomes enthusiastically involved in it, it becomes so easy to building the new roads. Building new institutions will be the core of this process. New financial institutions have to be built to make sure that every young person can believe that he or she doesn’t have to wait in line for a job — he or she can become an entrepreneur. Government can encourage the citizens to create social business venture capital funds, investment funds, insurance companies to make it possible for young people to become entrepreneurs. Government can inspire, give incentives to all businesses to create social businesses parallel to their conventional businesses.
Government can encourage social businesses to take care of health needs of the low-income people, people in remote places. There are so many things to do for the government to set the process of steady transformation.
Q. You always say that entrepreneurship can be a solution to unemployment. In Brazil sometimes entrepreneurship is understood like informal jobs. I mean: a person loses their job and starts work as an informal seller. So people say this person is an entrepreneur, when actually they are in a precarious situation. Can the real entrepreneurship substitute all the formal jobs that have been destroyed? How?
A. I agree completely about the precarious situation of the person you described. He is in this situation because he cannot sustain his business. There is no financing arrangement for his business. He runs his business with money borrowed from loan sharks. Entrepreneurship needs financing. Finance is the fuel of entrepreneurship. For the micro entrepreneurs we need specialized banks, such as, social business micro entrepreneurs’ banks. It is needed everywhere, including in remote and isolated places. These banks will be available wherever people live. They will become an integral part of people’s lives.
The person who started selling shirts on the street in your story, he may now be selling five shirts per day. But he has the capacity sell ten times as many. He doesn’t have money for expanding his business. He gives up. He gets a job. If money is available, he would have many choices: give up the job permanently and continue to grow with the business; or take a job, and continue to sell shirts on the side, or take the job, forget about business, or wait for a good time to get back to business.
I believe that all human beings are born as entrepreneurs, but the system totally disorients them to believe that job is the destiny for everyone.
Q. You also always mention the risk of artificial intelligence replacing jobs. In the pandemic, the digital transformation was accelerated. Do you think that technology and artificial intelligence are damaging the society? What is the best way to solve this problem?
A. Any technology will have two applications. It can be a blessing or it can be a curse. All depends on which direction we want to take it to. It can be directed both ways simultaneously. Artificial Intelligence can bring endless benefits to people. I support that use. But I oppose when it is used to replace human beings in the work place in a massive way.
When a new technology is created, we must decide where to use it, where to restrict it. Medicine was invented to cure people. But they can use the same technology to produce chemicals to kill.
I argue that artificial intelligence is now going in the wrong direction. AI is now used to increase profit for the profit makers by reducing the number of people they employ. We must stop it before it gets too late. Unlike other technologies this technology can not only reproduce itself, it can produce enormously improved versions of itself each time it reproduces. It has no limit.
Q. Besides entrepreneurship, what measures should be adopted to redesign the world?
A. To begin with we aim at creating a world of three zeros: zero net carbon emissions, zero wealth concentration to achieve zero poverty, and zero unemployment.
Obviously, we have to get rid of fossil fuel, bring renewable energy in its place, give up eating beef, stop plastic products, build and preserve forests and trees; redesign the banking system to make it accessible even to homeless people, stop all channels which pushes all the wealth to be concentrated in a few hands, stop artificial intelligence that turns humans into ‘garbage’ on this planet, bring social business method of business to solve all the above problems.
Q. How do you see the future of the planet if we do not redesign the world?
A. Human beings are already one of the most endangered species in the world right now. If we continue to pursue the same path that we have taken in the past, human beings will become extinct on the planet. It may happen soon, depending on what efforts we are putting in to survive.
Q. You say that microcredit can help to reduce inequality. How to boost it? Should the government do this?
A. Government should not operate any microcredit programme because there is a very good chance that it will get politicized almost immediately. It will soon turn into a charity programme, in most cases it attracts corruption.
Government should create laws to give licences to enable people to create Social Business Micro Entrepreneur Banks with full power to mobilize deposits. These licences must not be given to create personal profit-making banks. If that is allowed, they will soon turn it into loan sharking banks.
Source: https://www.estadao.com.br/infograficos/economia,estamos-em-uma-grande-festa-dentro-de-uma-casa-em-chamas-diz-nobel-da-paz,1140941
