Microcredit guru says economic system is sick

The man who won the 2006 Nobel Peace Prize for developing the concept of microcredit loans aimed at helping poor people says the economic system is sick.

“I am back in Seattle again,” said Muhammad Yunus, who spoke Sunday at Town Hall on a tour promoting “Social Business,” his mission and the title of his latest book. “I have so many friends here.”

Muhammad Yunus and fans at Town Hall

He does indeed, as two standing ovations indicated. Yunus’ once-radical concept of microcredit has gained some powerful local devotees and spawned a number of local microcredit organizations in Seattle.

The Bangladeshi economist and founder of Grameen Bank, created in 1976 as an experiment aimed at giving the rural poor small loans to develop businesses, told the Seattle crowd that the widely held – and popularly accepted — idea that the marketplace operates best if guided only by self-interest is based on a flawed misunderstanding of economics and human nature.

Most people are self-interested, Yunus said, but most also want to help others as well. Though he didn’t cite Adam Smith, he might as well have done.

Smith, the 18th century philosopher who came up with the idea of a self-correcting free market guided by the “invisible hand” of self-interested profit-making, also expected that the human beings operating in that market would be guided by his earlier work on “The Theory of Moral Sentiments.”

Said Smith: “How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortunes of others, and render their happiness necessary to him, though he derives nothing from it, except the pleasure of seeing it.”

That’s basically what Yunus said Sunday, calling upon his audience to use the current financial crisis to push the politicians, business leaders and others to restore human balance to economics.

“All of these problems we are seeing today are expressions of a sickness in the system,” Yunus said.

Philanthropy, he said, is too often aimed at treating the symptoms of poverty rather than the root cause. The true cause of poor people suffering from disease, lack of education and many other ills of poverty, he said, comes from the distortion of economic purpose.

“Poverty is imposed upon people,” Yunus said. “It is built into the system … the same system that has created this financial crisis.”

Tom

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One response to “Microcredit guru says economic system is sick

  1. terry lawhead

    thank you for the coverage of a great human being doing wonderful work for humanity…

    great piece in the latest new yorker, may 24 issue, page 24 by James Surowiecki “The Age of Political Risk.” worth it.

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