[Book Review] Free market beats free food in fight against poverty

from the Scotsman

By NATHALIE THOMAS
THE term "social business" may appear an absurd oxymoron. After all, how can business, which is often the cause of social inequality, be used for good purposes?
CREATING A WORLD WITHOUT POVERTY

Muhammad Yunus

But in Creating A World Without Poverty, Nobel Peace Prize winner Muhammad Yunus argues convincingly that social business is an achievable way of exploiting capitalism to help the poor. Yunus moves the debate beyond the tired argument that the rich should simply donate to those less privileged, and demonstrates that the free market can in fact be used to the advantage of the less well off.

His idea is simple: investors who want to do something honourable with their money can be persuaded to invest in businesses which work towards achieving a specific social goal, or which are owned by people trying to work their way out of poverty.

The investors receive no interest on their money, but after a set period of time, when the social business is operating sustainably, their investment is returned. The investor gains a sense that he or she has made a contribution to society while the business has benefited from that investment to build a successful, thriving, socially conscious enterprise.

Yunus has already shown that it can be done. In the Seventies he set up Grameen Bank in Bangladesh – a social bank which gives out small loans to the poor to start their own businesses. Despite the scepticism which initially surrounded the project, Grameen now gives out loans totalling US$6bn. Each year it makes a profit which can be re-invested in the bank and therefore help more people. The repayment rate on loans is an astonishing 98.6%.

Closer to home, businesses such as Café Direct, the Scottish Fair Trade drinks company, and Jamie Oliver's chain of Fifteen restaurants have also proved that capitalism can be used to good end.

Yunus does have some criticisms of the free market, yet accepts that it is unlikely to change, and makes a case for how it can be used to best advantage.

This book is a must-read for policymakers or philanthropists, and its conversational style and straightforward logic also make it appealing to the layperson.