Grameen Social Business Model

Grameen Social Business Model: A Manifesto for Proletariat Revolution is a biography of Muhammad Yunus written by Rashidul Bari. The book details how Yunus developed the idea of microcredit and social business and places them within the context of economic theory and provides a scientific underpinning for why he believes these two concepts can change the course of economic, and human development.
Synopsis
Following a crisp overview of economic theories and theorists throughout the modern era, the book first provides descriptions of global poverty. Beyond being a scourge in all societies, poverty is often politicized, poorly understood, and vulnerable to inconsistencies in definition. For those working on poverty or simply trying to comprehend it, such problems can be insurmountable obstacles. But this book provides a statistically-based approach toward poverty. The categories, definitions, and numbers it provides are at once sobering but hopeful in the sense that they give us substance with which to work, and ideas for how to develop innovative responses.
Taking us to that next level of innovation, this book then provides a guide through the concept and practice of microcredit, one of the most powerful and all-encompassing ideas to be applied to the question of poverty. Every human problem, from climate change to conflict, often comes down to the individual and local level: How do people use resources, view their neighbors, and teach their children? Unlike nearly every other policy, microcredit has been able to apply those questions to billions of people through a simple, workable plan that allows them to begin escaping from centuries of impoverishment. This book helps us understand core truths about the endlessly complex and workings of capital.
The book then situates microcredit with the larger context of social business. On the forefront of the burgeoning scholarship on social entrepreneurship, the book describes the social dynamics that make microcredit work even in the poorest of societies. In an era when both free-market capitalism and state control appear spent of their utility, the Social Business Model promises to be a workable alternative that draws on the natural strengths of both communities and individuals. In this way, the book shows us a path of hope amid continuing distress.

Such hope is further buoyed by the book’s next main theme of empowerment. The book focuses on the plight of women, who constitute over half of humanity but, from any perspective, face endemic and smothering discrimination. Women earn less than men in nearly every country, face more hazardous working conditions, and are concentrated in the exploitatively instable secondary and informal markets. In a world where most poor people are dependent on subsistence agriculture, perhaps most revealingly, women are estimated to carry out 70% of farming work but own less than 1% of arable land. Through microcredit and social business, this book shows us a route to dignity, stability, and even prosperity for even the most destitute of women and their communities. The book demonstrates the links between economic and political power: when women and other groups grow more financially independent, they are able to assert their rights in the political arena as well.
The final chapter of this book tells the story of how Prime Minister Sheikh Hasina put Yunus on trial in 2010 and ultimately removed him from Grameen Bank, citing that he was too old to run the Bank which he founded in 1983. The book claim that this of trial against Yunus has puzzled billions of people around the world, from the 8.3 million underprivileged women of Grameen Bank to U.S. President Barack Obama. Likening Hasina's political vendetta against Yunus to a modern-day replay of the conflict between Archimedes and General Marcellus, the book predicts that the “banker to the poor” may face a fate similar to the father of mathematics for asking Hasina not to disturb the Grameen Bank. Bari writes:
Prime Minister Hasina's political vendetta against Yunus could be understood as a modern-day replay of the famous conflict between Archimedes and General Marcellus. Roman soldiers killed Archimedes because, instead of meeting with General Marcellus, he said, "Don't disturb my circle." In a similar reactionary spirit, Hasina, who labeled Yunus as a "blood sucker of poor people," unleashed her entire regime to destroy Yunus just because he asked her not to disturb his Grameen Bank.
Proposals
This book claims that Grameen Bank (GB), founded by Nobel Prize winner Muhammad Yunus, provides developmental tools to poor people, especially women. The work proposes two theories to explain the influence of Grameen Bank. Firstly, microcredit spurs entrepreneurship in people living in poverty and secondly Social Business (SB), offers a new dimension for capitalism. Bari suggests that microcredit and income have a positive linear relationship because income tends to increase when the poor have been granted access to social business organizations like the Grameen Bank. This book shows how these two concepts have gone from being theory to inspiring practices adopted internationally by universities (such as Glasgow University), entrepreneurs (such as Franck Riboud) and corporations (such as Danone). Yunus claims to demonstrate that the Grameen Bank and social business can harness the entrepreneurial spirit to empower poor women and alleviate their poverty.
Placing social business as economics theory
The book applies views of economists such as Adam Smith, Thomas Malthus, Davis Ricardo, Karl Marx, John Keynes and Milton Friedman to place the Social Business concept in the context of economic theory. Believing that government intervention in goods and services causes poverty, Smith held that poverty could be eradicated by promoting market-based systems because free markets generate increasingly more entrepreneurs. In fact, the main argument of the Wealth of Nation (1776) was that entrepreneurs behave in rational ways that improve the total utility of a society. Smith, with his principle of laissez-faire economy, indicated that “entrepreneurs should be free to run their business in the way that will bring them most profit because what is good for entrepreneurs good for everyone". He believed in the power of bubble-up economics, which argues that more profit almost always leads to business expansion, thus eventually alleviating poverty by creating more jobs for poor people. The book claim that Yunus used the essence of Wealth of Nation to create a new type of person—the social entrepreneur—a person who has a two sources of motivation: maximizing profit and doing good for people and the world.
Thomas Malthus, Smith’s most famous student, clarified that not only government intervention but also population growth contributes to poverty, because unchecked population increases in geometric ratio. "...effect of population growth is that the supply of workers becomes greater than the demand—this results unemployment, low wages—and unending poverty". The British scholar saw this as the problem of the pressure of population on the means of production. He declared fully alleviation of poverty was impossible due to rapid population growth. He believed that population always grows faster than the food supply. Based on this assumption, he predicted that the humanity will never be far from starvation. The book claim that Yunus applied the essence of An Essay on the Principle of Population (1798) through Grameen Bank in order to alleviate population pressure in Bangladesh, the home of 145 million people in a land area the size of New York. The result is worth noting: "...the number of children per mother has fallen from 6.3 in 1975 to 3.3 in 1999, and the declines continues"
David Ricardo, who was only 6 years later than Malthus, also pointed as patent a picture as his predecessors. In a book On the Principles of Political Economy and Taxation (1817), Ricardo put forward his idea about the real causes of poverty. His model argues that the charity is not a solution to poverty. Ricardo's qualitative reasoning was that charity destroys poor people’s motivation and makes them lazy in the long run. The book claim that Yunus applied the essence of Ricardian ideology to SB, recognizing that charity takes away initiative and responsibility from people. "People given handouts tend to spend energy obtaining free things rather than learning skills for self-help and self-confidence".
Karl Marx thought that pressure of the ‘means of production’ on the population is the main cause of poverty. Marx blamed the capitalist system, claiming that it exploits the working class; hence, the poor become poorer and the rich become richer. Marx thought that poverty exists because poor people do not have access to resources.The book claim that Yunus applied the essence of Das Kapital (1867) into Social business: socialism gives young people, who dream to create a more perfect world, hope in their fight. The book also claims that Yunus implemented the main idea of Marx into Social Business by giving Grameen’s 8 million borrowers full ownership of the bank. Hence, the control of means of production lay in the hands of poor people.
John Maynard Keynes, who came after Marx, led a revolution by overturning Smithian ideas that the free market is the solution to poverty. “Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone. His basic idea was simple: Government intervention is necessary to create jobs. He asked the government to keep people fully employed even in the midst of recession by bailing out big corporations. Keynes did not want to create perfect economic balance at the cost of high unemployment because that would increase poverty, which leads to social disorder. In his book The Economic Consequences of the Peace (1919), Keynes suggested that poverty and economic disorder had laid the foundation for the rise of Joseph Stalin. THe book claims that Yunus applied the technique of bailout into Social Business by helping those borrowers who are in danger of failing as they attempt to pay the weekly installment. "If someone was experiencing difficulties due to illness or poor management or bad luck, Grameen would be obliged to pull her through"
The father of Monetarism, Milton Friedman, who was 29 years later than Keynes, tried to reduce poverty through practical steps. In his book Capitalism and Freedom (1962), he suggested a model famously known as negative income tax. It is designed to help poor people whose income falls under the poverty line. Instead of paying taxes to the government, these poor people receive supplemental money from the government (Friedman, 1962). The book claims that Yunus applied Friedman's idea to the Social Business concept by sizing the rules and regulations to poorest members such as beggars. "Beggars borrowers, for example, do not have to pay loan interest and they can pay whenever they wish"
Main objective of social business
One of the objectives of social business is to provide microcredit rather than charity for poor people. Grameen Bank does not even give charity to beggars. Seven years ago, for example, Grameen started a new program to help beggars to break the cycle of begging. It gave them interest free loans and gave them ideas to carry candy and household items during the time they beg from house to house. The program now involves 85,000 beggars and 5,000 of these have stopped begging. The power of Social Business is that it can even help to transform beggars into businessman.
Drawbacks
The book also acknowledges that microcredit is not the perfect remedy to end all poverty. It suggests that microcredit is just an economic theory that does not work unless one tries hard enough. In the manner of education, one can succeed only if one puts in the extra effort. Bari writes:

Building more schools, for example, in remote villages does not educate everyone, although it does increase the chances of that happening. By the same token, Grameen does not turn everyone into a successful person like Taslima Begum, for example; however, the microcredit loan it dispenses increases an individual’s chances of rising out of poverty. For example, Taslima, who lives in Shibganj upazila, took a loan worth Tk 1,500 from the Grameen in 1991 to help her husband Abu Hanif run a mechanic’s shop, and the two are now self-reliant. When Grameen was awarded the Nobel Peace Prize in 2006, the Bank randomly chose Taslima Begum to represent the bank at the Nobel Prize ceremony in Oslo. In fact, Taslima received the Nobel medal and award on behalf of Grameen from the chairman of the Norwegian Nobel Peace Prize Committee, Ole Danbolt Mjoes, at Oslo City Hall on December 10, 2006. If we multiply Taslima by 8.3 million borrowers, we get a sense of how Grameen successfully empowers women.

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