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Category Archives: Nobel Prize

When the national rate of unemployment stands to reach startling heights and the national poverty rate—1 in 7 Americans —is at its’ highest since 1994, one might think there exist no goods or services of economic value.  Yet evidence of pressing environmental concerns suggests that there is meaningful—if not valuable—work and gainful employment to be had.  How, then, do we value goods and services?  Inquiring minds might question whether our current economic framework satisfies our basic social and environmental.  Our system uses prices to incentivize production of social valuable services but the inept response to the oil spill in the Gulf of Mexico would suggest that the current economic system does not value our nations’ ecosystems—our natural environment—more than processed raw mineral deposits.  
Mohammed Yunus’book, “Building Social Business”, details the personal beliefs that represent innovative addendum to Global Capitalist economies. This plan to revolutionize the way multinationals conduct business began rather humbly.  In 1976 with $27 in his pocket, Yunus started Grameen Bank, a bank whose major clientele and shareholders are the same set of people: the poor.  Where many banks refused to loan money to the poor, Yunus’Grameen Bank has accepted the challenge and has become the global example for micro-financiers.  Since 1967, 8.29 million borrowers have received over 9.54 billion dollars.  As a testament to his unique contributions Yunus received a Nobel Prize in 2006 and the United States Presidential Medal of Freedom in 2009.
Through his experience, Yunus has come to treat social plagues like poverty as external forces created by “the system” and not the poor.  He believes that capitalism incentivizes a greed that is the natural enemy to social justice. In response, Yunus created an enterprise model that facilitates the same selfless motives that create and sustain charitable causes, fundraisers, churches, museums and public parks. 
Don’t mistake the former economics professor: the purpose of any business is still to generate profit.  If a social business does not generate profit then it, like a for-profit business, is not offering a sustainably valuable good or service.  But in a social business, the profits are exclusively and directly devoted to expanding the quality of social benefits.  However, in a for profit business the profit directly benefits the company executives and shareholders.  Fundamentally, a social business uses capitalist principles to maximize social benefits to the exclusion of any return on shareholder investment.  For profit business are concerned primarily with generating profit for the shareholders—even to the exclusion of their customers, like BP.
For example, Jack invests $100 in a social business. By capitalist marketing, production and distribution mechanisms, efficiency generates a profit, or a “return”on the $100 investment. Where a Social Business will use the returns to buy soccer shoes for a school in Afghanistan, or improve marketing strategies, the for-profit business would distribute some of those returns to the shareholders.  The profit of the social business contributes to the expansion of the social business.  There are no huge bonuses, severance packages, outrageous salaries or ‘golden parachutes’of any kind.
In a current partnership with Group Danone, producers of Dannon yogurt focus on promoting child nutrition in India by selling affordable yogurt to traditional malnourished children.  Group Danone raised the capital and received no return, while the approach the business was still rooted in capitalist marketing, development and production strategies.  Unlike charities, a social business empowers the target customer with tools to improve their life. Not only are the production plants eco-friendly and children eating the yogurt at a sustainable rate, but poor Bangladeshi women generate complementary income from the sales of the healthy yogurt.
Yunus imagines a future in which museums preserve the trappings of poverty, for it will be totally foreign to the future world and “Building Social Business”encourages readers to contribute creatively to the movement.  Hopefully, the application of this exclusively social enterprise will advance those integral environmental initiatives ignored by profit-driven capitalists.  Do you wish we could save water costs?  Try creating a business that promotes cooperative clothes washing and drying!