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Muhammad Yunus: 'Economists have misunderstood human beings'

Economist Muhammad Yunus suggests how businesses can put the creativity and innovation of capitalism to uses other than making money. He talks about how his model of social business has worked in Bangladesh and looks forward to a world where no one will be known as 'an unemployed person'

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19 March 2012 9:10AM This comment was removed by a moderator because it didn't abide by our community standards. Replies may also be deleted. For more detail see our FAQs.

BlueEverAfter 19 March 2012 9:19AM

This comment was removed by a moderator because it didn't abide by our community standards. Replies may also be deleted. For more detail see our FAQs.

Prolierthanthou 19 March 2012 10:25AM

Economists have, particularly lefty ones, a fundamental problem, they see people as rational and systems as operating within logical constraints.

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Amateurtheatrics 19 March 2012 10:48AM

Economists have to solve 'The Problem' of scarece resouces and unlimited wants.

To do that they have to predict the behaviour of a large group of people. this is generally what any socils scientist has to do

Economist assume generally people will do what is best for themselves (this can also include immediate social groups). This does not mean that everyone is evil and self serving but in group of many millions at the end of that day people will do what is best for them rather than what is best for everyone. In general this understanding has proven better at predicting behaviour than any other field of social science.

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RayNoble 19 March 2012 11:43AM

I think the problem with modern economies, and thus with modern economics, is that there is an incongruence between monetary value added and real value added. Real value is when activity adds something, a part or service, to the product which is then market valued by the relationship between supply and demand. It results from real need. Monetary value alone does not do this because much of it is speculative value; when an economy relies too much on speculative value then it has an inherent instability and depend on confidence in that value. When confidence and trust in that value collapses so too does the economy.

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splat64 19 March 2012 12:02PM

No again missing the point...the basic problems is that the actions of individual capitalists and people are irrelevent...capitalism as a system is flawed...unless that is you are prepared to accept periodic global crises, uneven geographical development, accumulation by dispossesion and massive inequalities in distribution of resources,...oh and the ecological destruction of the planet by a methodology that demands and needs constant expansion and growth for its health.....if youlovecapitalismthen just wait untilevery chinaman, african and indian has a car or two, three fridges, two of this threemore of that....what aworld that will be.

Mind you blueeverafter is probably happy to consider welt untergang, starvation war and social inequality...just so he can get a new ipod every three months

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jaapdenhaan 19 March 2012 12:07PM

No one or everyone is a big word. When it is about the economy, it is always about big projects. Unemployment may be seen as a stigma, that is by of an elitist attitude of the ordinary labourer, whose mind does not develop anymore. Unemployment will be gone when employment will be gone. Attitudes aside of creating stigmas, they are the result of a lack of culture that on the one hand is found irrelevant to work, on the other hand is essential to it.

We are looking to the facts now without any idealism.

The existing idealism is focused in your husband or wife, family, or banality and exclusion. And the technological miracles, the concept economy follows in line.

This is true for all workers, these concepts are their church. And they are its knights of the Cross.

Someone wondered why it seems there are only terrorists and non-terrorists left, this is an immediate result of the dividing line between work and unemployment. Recommend? (11) Responses (0) Report | Link

LesterJones 19 March 2012 12:10PM

Muhammad Yunus has his heart in the right place at least...but like most economists he's still unable to face up to the terrifying truths of capitalism...

For example...he's right to say that capitalism has made us more 'money-centered' (or that capitalism creates and then defines social relationships) but he's wrong to say this is it's basic problem...it's a consequence....

...capitalisms basic problem is twofold...

...firstly...the accumulation problem which leads to insurmountable growth (the current chronic crisis is illustrative of capitalisms having reached the end-zone of expansion and consequently the need to squeeze profit from the creators of surplus ie: anyone with a job)...this problem is systemic and cannot be tweeked away...

...and secondly...(and this is where BlueEverAfter accidentally touches on a fundamental)...capitalism is actually not an economic system but a social system that is primarily concerned with portioning and applying power...

Consequently social business as Muhammad Yunus describes it is the old idea of responsible capitalism...and unfortunately for Mr Yunus that leads only to the place he wants to escape...

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jaapdenhaan 19 March 2012 12:14PM

People who have a job are increasingly too lousy to stick out a finger for anyone who may need it, and in a cultural sense have promoted plain heartlessness. In a mental perspective there is nothing left, except the bill. Or the holiday. Or the mistress, if their wife has got too boring, if only an imaginary one on TV. For the cowards.

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jaapdenhaan 19 March 2012 12:17PM I deny the positive use of nearly half the official jobs that have been fabricated. Recommend? (2) Responses (0) Report | Link

UncleVanya 19 March 2012 1:06PM

Ah, yes. Certain nameless Ex-UK Politicians have chased the 'Money God' Mammon to create their own little worlds of mediocrity. Some have even committed Fiscal Sodomy by stuffing their wealth into off-shored 'Holes in the Wall' away from the scrutiny of the Taxman.

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BlueEverAfter 19 March 2012 2:05PM Response to bilbocroft, 19 March 2012 1:25PM Hoist with your own petard. ? Recommend? (1) Responses (1) Report | Link

futurehuman 19 March 2012 3:29PM

'businesses can put the creativity and innovation of capitalism to uses other than making money.'

It can do what this Professor has done; bring back medieval usury and surfdom!! Recommend? (4) Responses (0) Report | Link

estebanrey 19 March 2012 3:41PM Speaking of dirty capitalists, how is that annoying Paddy McGuiness getting through my adblock? Recommend? (1) Responses (0) Report | Link

estebanrey 19 March 2012 3:46PM Response to BlueEverAfter, 19 March 2012 2:05PM Hoist with your own petard. ? http://en.wikipedia.org/wiki/Petard#.22Hoist_with_his_own_petard.22 Recommend? (4) Responses (0) Report | Link

centerlane 19 March 2012 5:27PM Our current Capitalism is nothing more that trickle down feudalism. The majority is still working to disproportionally enrich a minority. This same minority has corrupted a political system that while maintaining the illusion of a democracy, does little more than to maintain an environment that insures the financial well being of the few. One good example is privatization of public services. What does it accomplishes other than create another profit center for the manor house. What a wonderful system, get the surfs to pay the same taxes to the government, additional fees for the same services plus a profit margin for the lord. To add insult to injury “our” government while maintaining or increasing taxes on the surfs, lowers those for the Manor. Recommend? (8) Responses (1) Report | Link

JezJez 19 March 2012 5:57PM Response to centerlane, 19 March 2012 5:27PM Serfs Recommend? (0) Responses (1) Report | Link

Usignolo 19 March 2012 6:05PM The bloke probably has a point about the worst effects of capitalism. That said, his distinction between 'economists' and 'human beings' is one that a long heritage. The contests between them was, according to Arnold Toynbee in the 1880s, being won by the human beings. But that distinction itself is one that has a genealogy which goes back through William Morris, John Ruskin, Thomas Carlyle, William Wordsworth, Samuel Taylor Coleridge and Robert Southey, most of whom wished for some sort of uberstate with a 'clerisy' of some sort to guard over the traditions of human beings. Personally, for all its defects, I'm with Adam Smith's basic approval of self interest in the context of a tolerable system of justice. I guess that puts me in the camp of the economists. Recommend? (2) Responses (0) Report | Link

centerlane 19 March 2012 6:12PM Response to JezJez, 19 March 2012 5:57PM Thanks, cannot even say my mind was at the ocean. Recommend? (0) Responses (0) Report | Link

imipak 19 March 2012 6:25PM

The 20:80 rule is pretty much guaranteed to hold true in any unbiased economic system. (20% of the population will have 80% of any given resource.) It is evidence of bias that in many modern economies, a far smaller percentage of the population has a far larger percentage of the wealth. That's not a natural state.

Now, I'm not saying natural states are good, although they're obviously far better than the US system where 1% of the population controls 80% of the wealth. For example, talent will be randomly scattered throughout society. You don't know in advance who will have a talent or what that talent will be.

But nothing can advance without talent, and a stagnant society is a dead society. You need to nurture as much of that talent as you possibly can, to as great a degree as you possibly can. This means violating the 20:80 rule, since a strict 20:80 division means you nurture only a fifth of the ability that is out there, bring it to its true potential.

To put it in simpler terms, it takes around fifty years for any technology to go from the drawing board to becoming a household item because of the steep learning curve, the trial-and-error and the lack of people willing to learn or try. So what happens when five times as many people have the skills and raw ability to do both?

The law of diminishing returns says we can't quite get to that point. It is the job of economists to tell us how far we CAN get and how to redistribute wealth to the point of getting there.

That's talent, but what else can be improved? We know that the US ranks around 50th in the world for life expectancy and that virtually all of the top 10 have greater equality in wealth and greater equality in healthcare. Sure, the difference is around 5 years rather than many decades, but that's still a sizable difference.

Parts of the US are actually worse, health-wise, than parts of Africa. That is illogical and irrational for the world's richest nation with the world's most advanced biotech industry.

The UK has nothing to smirk about. Yes, it has half the heart disease, it has greater life expectancy, but the NHS cutbacks over the years have worsened its ranking in the world. If it wants to retain any semblance of respect, it has to reverse that trend.

Better distribution of money, education and health should raise the nation's GDP, raise the nation's life expectancy and - by virtue of doing both - raise the nation's self-esteem, lower the nation's unemployment and improve the nation's stability.

You can't reach utopia, but you can ALWAYS reach a better place than the one you were at. But only if you know how. Since the challenge is ultimately one of how to optimize the division of resource, the challenge is an economic one and therefore economists should be the ones describing how to get there. They are not doing so. Quite the reverse. And that is why we've declining GDP, rising unemployment, declining standards of living and declining morale.

The economists have only solved the problem of money, and have only done so for the benefit of the elect clients, not for anyone else. Wrong problem, wrong solution, total wipeout of a decade as a result.

Never send an economist to do an economist's job. They're not up to it.

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centerlane 19 March 2012 7:49PM These are wonderful goals. But I must be missing something? Capitalism is the production of goods and services for, income, profit and the accumulation of capital. Is he really not talking about redistribution of income and profits to meet these goals? Excessive accumulation (capital) is a luxury and maybe an addiction of the few but to the ever expanding majority it is requirement of survival, pretty hard to “redefine “this basic this human need. If he is talking about redistribution of excessive income/ profits (capital) this only requires a change from capitalism to socialism. Recommend? (3) Responses (0) Report | Link

ontheotherhand2010 19 March 2012 11:39PM A case of not knowing the difference between capitalism and market economy perhaps? Recommend? (0) Responses (0) Report | Link

moonlightninja 19 March 2012 11:56PM

put the creativity and innovation of capitalism to uses other than making money

Capitalism provides the world's food, housing, cars, clothes and everything else needed. Being paid for this - or being 'money-centric' - is the reason these products are made in the first place. Capitalism is in fact the best system ever devised for human co-operation.

Also since you can't tax a loss, successful businesses also pay for every NHS operation, every school teacher and every soldier.

The failure of many clever and powerful people to understand this simple truth is why socialism and communism caused tens of millions of people to starve to death in the last century.

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manicich 20 March 2012 12:01AM The speaker is NOT talking about redistribution of wealth. We become so used to hearing the same rhetoric over and over again we do not know how to respond to a brand new idea. He is only saying that humans are infinitely capable of solving the economic problems plaguing us. Capitalism does not work anymore. Money is not the panacea we have been taught to believe. Humans want to work for higher goals and want to help each other. We can create a different social system where there are no employers and no unemployment. He is talking about a whole new way of working. Recommend? (4) Responses (0) Report | Link

slothanja 20 March 2012 1:23AM Sounds like a description of 'The Economics of Happiness' movement - www.economicsofhappiness.org - revealing, inspiring and uplifting... Recommend? (1) Responses (0) Report | Link

Mujtaba 20 March 2012 5:06PM

Truly, he reduced the distance between impossible and possible in his own life time. In my opinion ,that is an accurate description of the true legacy of Dr Yunus .

During early nineties, I remember reading his interview in the News week. The caption was one of Yunus's quote : ' Mother Knows Money Best'. Indeed, being a child among other 10 children, while growing up he saw his mother as a skillful Budget Manager or an Economic Manager of the house who within the limited means managed the affair with scarce resources of the family so well . He had braced an impossible mission early on to lend money only to Women rather than Men, despite skeptics' sarcastic warnings.

I think it is appropriate to quote here from his book: THE BANKER TO THE POOR published in 1998 -'The more I got involved, the more I realized that credit given to woman brought about changes faster than when given to men. Relatively speaking,hunger and poverty in much more intense ways than men. If one of the family members has to starve,it is an unwritten law that it has to be the mother'.

In fact, Dr Yunus saw that happening in his own life with his own mother.

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Bandini2012 20 March 2012 7:34PM

Dr Yunus once again propounds a simple, practical and workable model for conducting our lives balancing economic and other needs. Social businesses deserve the time and attention of the private sector, governments and international development actors as they hold the potential to revolutionise the aid debate and reset the agenda to self managed outcomes. In this regard, the next step would be to look at the expansion of social business on social stock exchanges as a liquid capital market for this model develops. We hope that this distance between the possible and impossible continues to shrink to make this dream into reality! Bandini Chhichhia Recommend? (0) Responses (0) Report | Link

Bandini2012 20 March 2012 7:38PM Dr Yunus once again propounds a simple, practical and workable model for conducting our lives balancing economic and other needs. Social businesses deserve the time and attention of the private sector, governments and international development actors as they hold the potential to revolutionise the aid debate and reset the agenda to self managed outcomes. In this regard, the next step would be to look at the expansion of social business on social stock exchanges as a liquid capital market for this model develops. We hope that this distance between the possible and impossible continues to shrink to make this dream into reality! Bandini Chhichhia http://www.devex.com/en/news/77593/print Recommend? (0) Responses (0) Report | Link Daxyl2 20 March 2012 11:47PM The girl in the polar bear coat: Is Emmeline Fortescue Shoat: She wastes all her days Reciting Shaw plays, And simply does nothing of note. Recommend? (0) Responses (0) Report | Link balanna 21 March 2012 6:48AM Human beings should not have to depend upon a richman's whim for right to live Recommend? (0) Responses (0) Report | Link Bertxin 21 March 2012 12:14PM You can't really make capitalism softer and friendlier and less self-centred and egotistical; these are fundamental side-effects of capitalism. Wanting to have a nicer friendlier capitalism is like wanting to stuff one’s face with donuts and cream buns and not put on weight. In addition, the linguistic contortions people make in distinguishing between capitalism and another capitalism termed market economy is painful, this is the neoliberal mantra of social democracy, a failed “softer friendlier” form of neoliberalism that suckers people in even more than the right-wing neoliberal parties. If people want a just world then capitalism AND largescale market economies have to go. This isn't going to happen any time soon because there are just too many greedy, confused and egotistical people in the world. Recommend? (2) Responses (1) Report | Link futurehuman 22 March 2012 1:53AM Response to Bertxin, 21 March 2012 12:14PM Right on! This man was being promoted by the political representatives of monopoly capitalism, particularly former US President Bill Clinton for the globalization of (usurious) loan driven consumer economy in the Third World countries. Mr. Clinton also lobbied for a Nobel Award for this man This charlatan promised to “put poverty in the museum” in one of the poorest countries of the world; imposing an interest rate of anywhere from 20 to 30%, on individual entrepreneurs, who have absolutely no chance to compete with corporate capitalism; other than be condemned to serve it as a serf, at less than required minimum subsistence for survival. This surpasses even barbaric medieval surfdom. Recommend? (4) Responses (0) Report | Link

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