Muhammad Yunus: Don’t plan for economic ‘recovery’ post-Covid. Redesign it from scratch

If we don’t make a socially and environmentally conscious plan post-Covid, a bigger catastrophe awaits us, writes Nobel Peace Prize winner Yunus.

File photo | Nobel laureate Muhammad Yunus | Wikimedia Commons

The coronavirus pandemic offers us an unparalleled opportunity, and we need to start by asking the right questions. Do we take the world back to where it was before the crisis or do we redesign the world? It is entirely for us to decide, and it should not be only about how to get the economy running again.

Needless to say that the pre-coronavirus world was a huge challenge, and many in the world were worried about the terrible price we would pay if we do not change our ways. We were literally counting days to when the whole planet would become unfit for human existence, especially because of the effects of climate change.

We were under serious threat of massive unemployment created by the new disrupted world, especially with artificial intelligence. Our major wealth concentration was, and still is, in the hands of the few. Income inequality gap was rising to dangerous levels.

We were reminding each other that the current decade is the decade of last chance, and our efforts after this will bring only marginal results, inadequate to save our planet.

Should we go back to that world? The choice is ours.

A fresh start

Coronavirus has suddenly changed the context and calculus of the world. It has opened up audacious possibilities that never existed before, and suddenly we have a tabula rasa. We have unbelievable freedom of choice and we can choose to walk in any direction.

Before we restart the economy, we must agree on what kind of economy we want. First and foremost, we have to agree that the economy is a means to facilitate us to reach the goals set by us. It should not behave like a death trap designed by some divine power to punish us. We should not forget for a moment that it is a tool made by us. We must keep on designing and redesigning it until we arrive at the highest collective happiness.

If at any point, we feel that it is not taking us where we want to go, we must immediately know that there is something wrong and fix it. We cannot excuse ourselves by saying, ‘Sorry we cannot achieve our goals because our software or hardware will not let us do that’.

If we want to create a world of zero net carbon emission, we build the right hardware and software for it. If we want a world of zero unemployment, we do the same. If we want a world where there will be no concentration of wealth, we do the same.  It is all about building the right hardware and the right software. The power is in us. When human beings set their minds on something, they get it done. Nothing is impossible.

Coronavirus crisis gives us a fresh start — to design our hardware and software with a clean slate.

Redesigning based on social and environmental consciousness

One simple unanimous global decision will help us tremendously. A clear instruction that we don’t want to go back to where we came from. We don’t want to jump into the same frying pan in the name of jump-starting the so-called ‘recovery’ process.

We should not even call it a ‘recovery’ programme. To make our purpose clear, we may call it a ‘reconstruction’ programme. Businesses will be made to play the key role to make it happen. The point of departure for post-coronavirus reconstruction programme must be to put social and environmental consciousness firmly at the centre stage for all decisions.

Governments must guarantee that not a single dollar would be offered to anyone, especially for a bailout, unless they are sure that it will bring maximum social and environmental benefit to society, compared to other options.

All the reconstruction-related actions must lead to creation of a socially, economically, and environmentally conscious economy for the country, as well as for the world.

Time is NOW

We start with ‘reconstruction’ packages for socially conscious plans and actions. We must design our plans right now when we are in the thick of the crisis. When the crisis will be over, there will be a stampede of old ideas and old examples of bailout. Strong cases will be made to derail the new initiatives by saying these are untested policies.

When we proposed that the Olympic Games can be designed as social businesses, opponents made the same arguments. Now Paris Olympic 2024 is being designed that way with increasing excitement. We’ll have to get ready before the stampede begins. Time is NOW.

Social business

In this comprehensive reconstruction plan, one of the tectonic shifts, I propose, is to give the central role to a new form of business called social business. It is a business created solely for solving people’s problems, without any personal profit for the investors, except to recoup the original investment. After the original investment comes back, all subsequent profits are ploughed back into the business.

Governments will have many opportunities to encourage, prioritise, open up space for social businesses to undertake major redesigning responsibilities. At the same time, governments should not expect social businesses to show up everywhere they are needed.

Governments must launch their programmes, such as taking care of the destitute and the unemployed through traditional welfare programmes, offering healthcare, reviving all essential services, and supporting all types of businesses where social business options won’t be immediately feasible.

To speed up the entry of social businesses, governments or individuals can create Social Business Venture Capital Funds, centrally and locally, and encourage private sector, foundations, financial institutions, investment funds, to fund them.

Governments must encourage traditional companies to become social businesses, or at the very least, be socially responsible businesses by encouraging them to create joint venture social businesses.

Under the rebuilding programme, governments can finance social businesses to buy companies, and tie-up with needy companies. Central banks can allow social businesses, like other businesses, to receive financing and invest in stock market.

There will be many opportunities arising during the rebuilding process and governments should involve as many social business actors as possible.

Social business investors 

Who are social business investors and where do we find them?

They are everywhere. We don’t see them because our existing economic textbooks don’t recognise their existence. Only recently economics courses are including some discussions on topics like social business, social entrepreneurship, impact investment, non-profit organisations as side issues inspired by the global admiration for Grameen Bank and microcredit.

As long as economics remains a science for profit maximisation, we cannot rely entirely on it for the reconstruction programme, which is based on social and environmental consciousness. The whole strategy would be to enlarge the proportion of social business in the total economy.

Success of social business will be visible when it will not only grow into a larger percentage of the economy, but also when there will be rapid growth in the number of entrepreneurs, where the same entrepreneurs will do both types of businesses. This will signal the beginning of a social and environmental-consciousness driven economy.

As soon as government policy starts recognising the social business entrepreneurs and investors, they will come forward enthusiastically to play the important social role demanded by this historical opportunity. Social business entrepreneurs are not members of a small do-gooder community. This is a significant global eco-system that includes multinational companies, big social business funds, many talented CEOs, corporate bodies, foundations, trusts, with many years of experience in financing and running global and local social businesses.

When the concept and the experiences of social businesses start receiving government attention, many hardcore personal profit makers will be happy to bring out the unexplored part of their talent to become successful social business entrepreneurs and play very valuable social roles at a time of crisis.

People are born entrepreneurs, not job-seekers

Reconstruction programmes must break the traditional division of work between citizens and the government.

It is taken for granted that the citizens’ role is to take care of their families and pay taxes. It is the responsibility of the government, and to a limited extent of the non-profit sector, to take care of all collective problems, like climate, jobs, healthcare, education, water, and so on.

Reconstruction programmes should encourage all citizens to come forward and show their talent as problem-solvers by creating social businesses. Their strength is not in the size of their initiatives, but in their number. Each small initiative multiplied by a big number turns out to be a significant national action.

One problem that the social business entrepreneurs can immediately address is the problem of unemployment created by the collapse of the economy. Social businesses can create jobs for the unemployed. They can also open up the option of transforming the unemployed into entrepreneurs, and demonstrating that human beings are born as entrepreneurs, not as job-seekers. Social businesses can engage themselves in creating a robust health system in collaboration with the government system.

A social business investor doesn’t necessarily have to be an individual. They can be institutions, such as investment funds, foundations, trusts, social business management companies. Many of these institutions know very well how to work in friendly ways with the traditional owners of the companies.

Out of the desperation and urgency of the post-Covid-19 situation, a right call from a government can create a surge of activities that were never known before. This will be the test of leadership to show how a world can be inspired to be re-born in completely unknown ways, coming from the youth, middle-aged, and the old, men and women.

We will have no place to hide

If we fail to undertake a socially and environmentally conscious programme post the pandemic, we will be heading for a catastrophe that is many times worse than what the coronavirus brought in.

We can hide in our homes from coronavirus, but if we fail to address the deteriorating global issues, we will not have any place to hide from the angry Mother Nature and angry citizens all around the world.

The author is a Nobel Laureate, economist and founder of the Grameen Bank, pioneering the concept and launch of several social businesses. He is fuelled by the belief that credit and social business is a fundamental human right. Views are personal.