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Hassan H

Yunus Social Business

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Is Social Business the future of capitalism ?

Social business, as the term is commonly used, was first defined by Nobel Peace Prize laureate Prof. Muhammad Yunus and is described in his books Creating a world without poverty—Social Business and the future of capitalism and Building Social Business—The new kind of capitalism that serves humanity's most pressing needs.

In Yunus' definition, a social business is a non-loss, non-dividend company designed to address a social objective within the highly regulated marketplace of today. It is distinct from a non-profit because the business should seek to generate a modest profit but this will be used to expand the company’s reach, improve the product or service or in other ways to subsidise the social mission.

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  • May 16 2012: I think this is the best approach to our economies at this time in our history. I coined the term socio-capitalism a few years ago to describe this phenomenon. To me it combines the best of both worlds. A person works for a fair salary and profit re-invested into the community. Status would come from working with the company that was able to leverage the most positive social and environmental change, rather than from being a shareholder or money trader concerned only with profit and the quarterly return as a dividend to gold plate the toilet fixtures in the yacht, or some of the other useless and opulent shenanigans the not-so-creative ultra-rich get up to.

    And as for work and production, I'd have to say those are extremely over-rated and almost always involve exploitation of labour or resources if you trace it far enough. No one ever lay on their death-bed wishing they had worked more. A return to frugality and a reluctance to indebtedness allows much more free time for some of the finer things in life like art, music, conversation, philosophy, bio-remediation, cleaning up beaches, reading, dancing, play, exercise, family and friends; all those things you do when not coerced into participating in the crazy hierarchical game of monopoly we've gotten ourselves into. Work less, consume less, live more is my motto. Material possessions require responsibility and have hidden costs of maintenance, protection, energy, etc. I am reminded of the old Sanskrit saying that applies to all material possessions. "Does the man own the cow, or does the cow own the man?"

    So yes I am on board with the idea of Social Business!
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      May 16 2012: Hi Mike,

      Nicely said!

      I am more into social capital than socail business - one without the other does not work.

      I have had "jobs" in numerous fortune 500 companies where the majority convert existing social capital into money at t return rate of 10 to 1 - in ohter words, corporations mine the advances of humanity for a 10% return on what they destroy in the process.

      On the other hand, I have been engaged in social capital works where it costs 1 to 10 in voluntary labour to reinstate what was already ours, but hidden from us from those who seek to charge us for what we already do.

      Humanity at its default creates value - it is all commons. At its worst, there are thieves - there is a word for these thieves - "psychopath".
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      May 16 2012: capitalism with added state-control in order to increase "social" value is as old as 50 years, and called social democracy. practiced in all europe, and US and many other parts of the world. it does not work for several reasons.

      first, mises already described in 1920's that socialism is an all-or-nothing kind of system. if you implement partial socialism, you need to add more and more to fix the problems it causes. the resulting red tape chokes our lives.

      second, as the socialist part grows, the economy stops progressing, and starts shrinking.

      third, as the decisions getting more detached from people's every day lives, demagogy takes over, and the result is crazy credit expansion, national debt, impossible promises and all that stuff. all this accompanied by outrageous reduction of personal liberties (war on drugs, fda, patriot act, sopa, etc)
      • May 16 2012: But the social democracy in Europe is working! All the quality of life indexes prove that assertion. Your personal preference is irrelevant in the bigger picture. The trouble with the idea that capitalism can solve our problems is that it relies on unlimited growth, an idea that is not credible.
        I will use the example of sealing (hunting seals) as an example of how profiteers will not stop exploitation until a government stops them. When sperm whales became too scarce to hunt profitably men turned to elephant seals and within 15 years had decimated the population to about 100 individuals. Only the Mexican government's protection allowed this magnificent animal to survive.
        Greed blinds men to their narrow self-interests. If we don't have a holistic worldview that values the complexity and inter-connectedness of life we will continue to make grievous mistakes related to economic growth.
        We are in the middle of a crisis but because it is taking hundreds of years to play out it is difficult to see in our daily lives. But in the same way that over-zealous fishing destroyed the cod stocks, our daily actions have long-term effects that may only affect you grand-children. Until we can accept responsibility for our actions and their effects leading forward we cannot consider ourselves as legitimate stewards of this planet.
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          May 16 2012: quality of life in europe is high because the great economic progress of the 19th century and before. we are eating the fruits of their hard labor. if we continued that path, we would be in much better shape today.

          i have no idea how did we end up at seals. we were talking about economic progress and socialism. what that's got to do with seals? but okay, lets talk about seals. today, government is supposed to take care of the environment. how good they are at it? not very, i must say. the free market solution would be private ownership. if i own the fishing rights or a particular area, i'm not going to kill that zone in a decade. i destroy my own property.

          also. how would social democracy solve the problem of greed? do you think socialist politicians are not greedy? do you think voters are not greedy? greed can be best combated by private ownership. if i own a forest, i can be greedy, but then i will not own a forest. greedy people soon get poor people, if they are also dumb. but if a greedy person is smart, and takes good care of his property, why would i care if he is greedy? look at greece. do you think it is not greed that's going on there? they stockpiled huge debt. they lived beyond their means for decades. and now they are about to vote people into power that denies this, and want to continue spending more than they have. do you think all this is not motivated by greed? states don't moderate greed. states unleash it.
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          May 17 2012: Hi Mike
          Reading thru your posts (that enjoyed) it seems you need to re-coin your term socio-capitalism to environmento-socio-capitalism..:) I liked it....

          Good discussion going on between you and other friends......let me share a story which I shared sometime back here in some other post......that may shed some light in to the topic.....

          Once a BIG shot business consultant (we can imagine say from Wall Street) after successfully concluding a few hundred million dollars consulatncy deal.....wanted to have some break from his high flying high earning job for a few days.....

          So he had chosen an exotic remote not so popular island as his vacation destination.....he could rent a very natural bamboo house there as that's not a popular destination for travellers there were Star studded hotel....and he has conciously chosen it to have some rest in pure natural environment.....

          After a couple days of good time when he also observed a poor fisherman every day....& got confused how lazy or dumb this poor guy is !!!

          He saw everyday this guy goes into sea with his small boat for fishing....but he is not utilizing his full potential... some day the guy catch fishes for 3-4 hours some other day he just comes back after half an hour.

          So consultant wanted to do some "social work" by giving free consultancy to that "lazy / dumb" poor fisherman

          He called that guy and asked why his fishing is so erratic in terms of timing?
          Fisherman : whenever I have enough fish I come back , what so erratic in it ?
          Consultant : You see that's why you are so poor....you are wasting potential like a fool.
          F'man: What should I do then?
          Consul: Catch fish as long as you can
          F'man: But I don't need so much
          Consul: You will sell rest to others
          F'man: Ok, then
          Consul: After doing such for sometime you will have enough money to buy bigger boats , better fishing gears so you can catch more fish
          F'man : But my island people don't need so many fishes altogether what I will do with those ?

          Cond..part 2
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          May 17 2012: Part-2

          Consul: Look I am big consultant , I am giving you free consultancy....you will open a small company and start selling fish to other island..
          F'man: Then
          Consul : you will have more and more money, but you have to be careful about other fishermen so that they can't be a threat to your business...and I am here to give advise how to do tha
          tF'man: Then
          Consul : By this time your life will be improved , you will have nice modern villa , better costly food, your kids will go to very good schools..
          F'man: There is no school here or no material to build a villa..
          Consul : You have money , you will bring those from any place...send kids to any school you like anywhere....but be aware you will not stop fishing business , well after sometime you need not to fish yourself , rather you will hire fishermen for you

          F'man: That means I can't stop, but I ...so what I will do

          Consul : You will expand your business from islands to countries to continents...no worry I will still give you advise but that time you need to pay..
          F'man : Ok , then how big will be my comapny
          Consul: Sky is limit..you can grow into huge fishing giant listed in a great place named Wall Street
          F'man : But I am uneducated man how I will run that?
          Consul : Come on , you have money ...so you will hire Best Graduates from Top universities they will work for you
          F'man: What I will do then
          Consul : Well you need not work much as you already worked too much by this time & have lot of money by now....so you can start some social work..

          F'man: What does that mean
          Consul : That means you will strat giving a small part of your profit to some poor people so that they can have minmum livlihood....time to time you can come to such exotic place like this with full family to spend leisure in natural way....

          F'man : Ok you are telling me I will end up here for few days only , why should I need to do all those trouble to come for fews days to live in a bamboo house , when I am here all the time ?
          Cond.. Part-3
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          May 17 2012: Part-3
          Consul : That's why you are poor , I spent my valuable time to improve your life and you came up with a dumb question

          F'man : Let me tell my view to you......why I need to give a small part of what I have after so many years of enormous work & earning of amount that I don't need? Am I not doing that every day ?
          Consul : What do you mean?
          F'man: Now everday I catch fishes just what I need and keep rest fishes for others who need those ......am I not doing social work everyday ?

          Consul : What about your leisure & quality time spent?
          F'man: Now as I work only for what me and my family need so I have plenty time to spend with my kids , wife, friends playing & roaming around

          Consul : What about education of your kids ?
          F'man : I saw everyday for last couple of days , you lying in beach staring at stars I don't know what you think that time...but that I have been doing same for years with my kids....telling which star means what...how they can understand when the strom or rain will come...how to live a good life....is not that what a person need ?

          Consul : You live in a mere bamboo house
          F'man : But you are telling me to come only for couple of days like you to stay in bamboo house...that means it's good and you like it ......so when for year long I am enjoying bamboo house with my family , why I need to do such huge kind of unnecessary for years to spent only couple days like you in a bamboo house in an heavenly island like this where all the time I am here now......

          Consul: There is no point giving free consultancy...because anything comes free people don't understand it's value.....I am leaving you...

          F'man : Sir , have a nice stay in my heavenly island, whenever you need anything I can do for you please call me, I will be happy to do that for you....and many thanks for your advise...
      • May 16 2012: You don't really believe that ultra-right wing nonsense about owning nature do you Krisztian? Who gets to own the fishing rights for example? The ones with the most money? Perhaps the ones who used the resource for generations? Do "4th world" people have a say in this? They tend not to have capital. Who would an entrepreneur buy a forest from? The government? What would the government do with the money? But the biggest flaw in your argument is that I (presumably a profit-oriented business person) would protect my assets for the long-term. Doesn't it make more sense from a purely capitalistic perspective to use the profits from my over-exploitation to simply buy the next patch of productive fishing grounds from the moron who saw value in it's existence as an intact eco-system sequestering carbon and providing habitat, and continue to profit at the expense of those people or animals that can't claim ownership? Or I could ask, "If you own a forest how can you not be greedy?" What gave you the right? Ownership is so human centric. Ostensibly indigenous populations "own" their land but I haven't witnessed much support for their legitimacy. Especially from business interests that would profit from the lands riches. You are advocating a race to the bottom, for a "benefit" of the few. As the corporate charter is inherently sociopathic (see Joel Bakian's The Corporation) with legal mandates to maximize profit it is hard to see how a truly sustainable capitalist model could exist for the long term. But to play your way I guess I want to own the air and charge people for breathing it. Would you accept my claim? Why should I accept the claim of a person who says they own the water or the fish? In my opinion there is no ethical ground to stand on with your argument , though I recognize that you are as interested has I in seeing the world become a better place.
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          May 16 2012: it is not a good way to start a debate if you call the opposing position nonsense. but let's just overlook that for now.

          all these problems are practical problems. originally, the first to arrive would have the fishing rights. but since we had this statist nightmare for hundreds of years, natural development was stalled, and now we have to figure out a way to transition to a free society. probably some sort of fishing guild would have fishing rights. but if i told it, wouldn't it be entirely self-defeating? i'm not condemning the central planning to then step up and be the new central planner. i don't have to tell how each and every business would operate without a state.

          i saw the corporation movie, and i have no objection to the conclusions. however, in that sense, a crocodile or even a deer is also psychopath. we don't want companies to be conscious responsible individuals. companies are just tools, like a hammer. they don't have consciousness. responsibility must be present in the owners, customers, workers and so on. that argument is nothing but a denial of responsibility. we blame companies of being irresponsible, while continue to buy their products. what is this if not hypocrisy? the real "bad guy" of course are people that prefers a cheaper pair of shoes and just don't care. the company is the scapegoat.

          you can't own the air, i'm already using it. homesteading only possible for unused objects. so sorry, but you are late.
        • May 20 2012: Krisztian, I am not convinced of your assertion that people are the real "bad guy" since the reason MANY companies can operate irresponsibly is because people (their customers) need tools to exist in a society that has been constructed to require such tools. The tools within classical capitalism amount to a buy-sell spiral that makes no mind of the actual effect on people.
          Corporations are made from people and are designed to serve their interests. The reason you blame people is the same reason one might blame companies: if neither care about consumption/production effects on society than the default effect is the one that is built into the system - people seen to merely exist as a trade unit.

          Are you nothing more than a commodity for someone to buy and sell?
          If you don't believe that then are you the real "bad guy"?

          As a tool, we need corporations to reflect the optimal standard of human interest rather than some minimal standard otherwise their operations will serve to demean humanity. Do you use a knife or a spoon to cut your food: using the wrong tool for a given purpose seems foolish.

          I suspect that were everyone to live in abject poverty, even only briefly, then the argument trying to generally blame people would reflect on more relevant means.
      • May 16 2012: I do apologize for getting a bit worked up by your perspectives! Thanks for that. You help me sharpen and clarify my opinion, and allow me to better understand the paradigms of those who see the world differently than I. I think we are both Idealists in that neither of our "best practices for convivial existence" will ever come to be; we can never truly know what is best or consider all the variables.

        I am a conservationist by employ, so I have a tendency to see the world as a whole. My concerns are the long-term well-being of the animals and eco-systems around me. Because I view humans as animals first and foremost, I fret about the risks that a materialistic and consumer society places on future generations. This could be from the squandering of non-renewable resources, pollution, loss of biodiversity, etc. Maybe Natural Capitalism where we respect the triple bottom line could be a point of commonality for the two of us...

        It is true too that you are using the air, so I can't own it all because presumably you own the air that you are using, or are we sharing? Can we share the water and fish and forests too? If I can own a river but not the air, what are we going to do about clouds and rain?
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          May 17 2012: i'm not a conservationist. i certainly don't support mindless destruction of the environment, nor rapid exhaustion of some natural resource. but i think nature itself is not conservative, so why would i? but i doubt that it is the source of our disagreement.

          our disagreement stems in the way we want to achieve goals. you seem to follow the engineer approach. that is, you want to design what everyone have to do in order to achieve something. while i believe in some sort of swarm intelligence, a cooperative self organizing structure of freely interacting individuals. i believe if people care, we don't need central planning. if people don't care, no central planning will help.

          ownership is a complex problem. in modern libertarian theory, you don't own objects. you own uses of objects. if you own a hammer, you own the usage rights of that hammer, all known and unknown, at any time. but if i can do something with it, through magic or quantum whatnot theory, i can do it as long as i don't disturb your use of it. it is a difficult question whether i homesteaded the "backpacking" rights of a nearby forest just by going there backpacking every now and then. it is quite logical to say yes. an even more difficult problem is the atmosphere. i'm using it for many reasons. what if a company emits some pollutant? in what degree they damaged my atmosphere using? should they ask for a permit? should they pay compensation? we need solutions to these answers. but i claim solutions can be found.

          as a side note, as i'm told, it worked like that in the past. of course, things were a lot simpler back then. but for example if you wanted to pour waste water in a river, you had to get a permit from everyone living downriver. i would like that concept modernized. do you want to build deepwater horizon? cool. get a permit from each and every fisher and beach owner in the gulf.
      • May 17 2012: Salim your story reflects both the fallacious circular reasoning of your average free enterprise profiteer, and illustrates that when we honestly reflect on the things that give us the most satisfaction in life it turns out that wealth, status and production are not that important. The average male, if given the choice, would favour a life spent pursuing the things we like to do when we aren't working for money. Sport, music, art, hobbies, playing with one's kids, hunting and fishing, messing about in boats, romancing our lady friends, appreciating nature, helping out a neighbour, etc. Industrial productivity is not our default setting; it is a response to a paradigm or set of values manufactured by the economic model. As Senge writes, "Structure dictates behaviour". If we create better structures/models to live with our behaviour will change to reflect those values and goals.... I am listening to some fisherman on the VHF. One just said, "Lousy fishing today but it sure beats working!"

        You are absolutely right about my philosophy having "environmento" in its title. I can't see how we can ignore the most fundamental building block of our entire existence. Economists have been ignoring the intrinsic value of an intact eco-system for as long as people have practiced that form of religion or pseudo-science.

        Krisztian you are right that I think an engineered approach is better, but there are lots of caveats that need to be applied. I am a bit of a technocrat in that I think we should elect or ask people who are qualified to apply their skills towards a more just and sustainable society, rather than allow political parties to nominate lawyers or salesmen... I exaggerate of course...

        You are right also that people need to care for societies to work. Capitalism says: If I prosper, society will benefit." Socialism says, "If society does well, the individual will thrive." Neither will work in the 21st century without consideration of the planet's carrying capacity.
      • May 19 2012: I encourage you or anyone reading to consider how the biological wealth of the planet contributes directly to our quality of life and our economies. There is a direct link between prosperity and ecological health. As we impoverish the natural world we diminish the natural capitol laid down by 3.8 billion years of evolution. Stable ecosystems are fragile and loss of keystone species can cause catastrophic cascades ( http://en.wikipedia.org/wiki/Cascade_effect_(ecology) ). Nature is a system and doesn't operate purely on cause and effect.

        Also Krisztian you mention the wealth of Europe and America in the19th, "quality of life in europe is high because the great economic progress of the 19th century and before. we are eating the fruits of their hard labor." I would argue that the wealth of Europe came primarily from pillaging or being "subsidized" by the New World and Africa. Slavery (free labour) is great for the bottom line, and if those slaves can be forced to strip their own nations of resources to send back to Europe it is extra-great, if your moral paradigm allows it. Without guns, ships and germs, Europe would be a backward, environmentally impoverished corner of the planet.

        A quote for you to ponder: "Today we have a temporary aberration called “industrial capitalism” which is inadvertently liquidating its two most important sources of capital.. the natural world and properly functioning societies. No sensible capitalist would do that." Amory Lovins
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          May 19 2012: mankind is dependent on nature, that is granted. but some believe that the effects of humans are greatly exaggerated. but it does not follow from it that the state is the right organization to defend natural resources. i would not trust such an important issue on such a cumbersome, rigid and slow institution.

          the fact is that the wealth of 18th and 19th century europe has nothing to do with the rest of the world. you can see many evidence for it. goods didn't travel, only luxury goods. not until the late 20th century, world trade was significant. it was easier to move people than food. slavery didn't really exist in europe. in the US, you can see that the northern states that didn't allow slavery were economically more advanced. every evidence, and logic too, tells that the wealth of europe came from the inside. and it was the factor that allowed them to conquer the world, not vice versa.
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        May 28 2012: Comment: Hi Krisztian,

        I respect all you say .. and I respect all others who have spoken.

        It has occured to me that there is a missing factor in the whole socialist/capitalist continuum.

        Look, I'm going to have to read every word presented in this thread .. this will take a while, and I hope you (and others) will add to my analysis to advance our mutual understanding.

        OK - I'll start with the obvious - Australia, as a social democratic system is making the rest of the world look like loosers at this point in history. THis is a process of social adaptation to economic and political reality - we ride the waves as a people .. most other nations seem to prefer plunging into the drowning depths of outdated ideology before they realise their perril .. too slow is the same as dead.

        OK - next. If you are trapped by a job, you are giving your whole life-force to a thing called "money" at the expense of your family and community. I do NOT subscribe to a central social controler - that is as obscene as giving your life up to money - all human life has its root and expression in family and community. We are defined by communication - all the etamological variants of "comm" apply - this is prime in the species "homo sapiens".

        Please consider. I see you have the capacity to give more.
    • May 17 2012: You sir, are a legend. Couldn't agree with you more.
    • May 20 2012: I totaly agree with your comment,because you hit the point on the right spot.
      The world became global and we have to change our way of thinking in a concern for everyone on this planet and have to look what we really need instead a exploitative behavour.with all our desire for more and more luxury we destroy this planet from their sources and in about 30 years we are running out of clean water,oil,steel and so on.
      I think the current crisis shows us that we have to be aware that the world becomes every day more interconnected and that we have to become world citizens.
      A new kind of education is needed for our children.To foster understanding the integral system we live in, our role in this new global society of which we are all members and learn how to educate ourselves and our youth to better be in balance with our integral world.Think another mindset will change everything for the benefit of everyone......

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