My faith in the possibility of having very few at the top, and very few at the bottom, is as strong as ever.
03/04/2017 1:27 PM AEST
Professor Muhammad Yunus
Nobel Peace Prize Laureate and Founder of Grameen Bank
winkelair via Getty Images
"Rapid concentration of wealth poses serious threats to political and social stability."
We are going through an unprecedented time around the world -- a deep sense of injustice is creating havoc through challenging established political and social cohesion and even stability. There is a tendency to see the current volatility as a mere development of populism, but the problem is grounded in generations of a flawed economic system.
We should overcome our obsession of looking for a quick solution. While keeping the faulty economic system unchanged, we cannot achieve meaningful stability. Rapid concentration of wealth also poses serious threats to political and social stability.
As the economy grows, the concentration of private wealth gets worse. The faster the rate of growth, the faster the rate of concentration of wealth. This disaster is dangerous because it destroys peace and harmony. It threatens human rights and democracy. It pushes the world towards social explosions, each worse than the previous one. It triggers armed conflicts among nations.
According to Oxfam, the eight richest people own more wealth than is owned by bottom half of the world population. According to their reports, in 2015 the 80 richest people, and in 2014 the 85 richest people owned more wealth than was owned by the bottom half of world population. In 2010, six years ago, it was the 388 richest people who had the pleasure of owning similar wealth.
They also told us that the wealth of the 80 richest people doubled in five years, between 2009 and 2014. This simply is not economically sustainable. How we can hope for stability if this trend continues?
Is the trend irreversible?
No, I do not believe that. My faith in the possibility of transforming a wealth-pyramid gradually into a new shape, a wealth-diamond -- very few at the top, and very few at the bottom, the bulk of the people in the middle, is as strong as ever.
First of all it is not an unalterable fate that mankind was born with. Since it is our own creation, we can solve it through our own efforts. Our efforts should be directed to unblock our minds.
The usual political agenda to reduce the problem focuses on the income-gap, not on the wealth-gap. It is done through a program of income redistribution, though I don't think addressing income inequality is a real answer. We will have to address the cause, not the manifestation of it. If we keep the wealth base unchanged, any reduction in the income gap will be ineffective.
Working with the poor has led me to realize many other problems of the poor. I tried to address some of them. I always tried to solve each problem by creating a new business. Over time it became a habit with me. They gradually started displaying some common features. They are created as sustainable businesses, but no one is allowed to take any personal profit out of it. Investors get back the investment money, nothing more. The company's profit is ploughed back into the company for improvement and expansion.
I called this new type of business a Social Business, defined as a non-dividend company to solve human problems. I was amazed how easy it was to solve human problems if we designed it as a business with the sole mission of solving a problem, and with no intention to benefit personally from the business.
A successful story of a social business is that of Grameen Danone Foods Ltd. Grameen and Group Danone went into a joint venture to create a yogurt fortified with micro-nutrients to decrease malnutrition for the children of Bangladesh.
The yogurt is produced with solar and bio gas energy and is served in environmentally friendly packaging. The first plant started production in late 2006. The long-term plan is to establish 50+ plants, create several hundred distribution jobs and self-degradable packaging.
Both joint venture partners have by agreement stated that they will not take any dividends out of the company. Their sole aim is the social objective of reducing malnutrition.
Professor Yunus will be on the panel of Q&A this evening, and will be speaking at the Australasian Social Business Forum in Melbourne on April 6, 2017.