The current financial crisis makes it very clear that our current financial system is not sustainable. This is the opportune time to re-imagine and re-design it using a new set of objectives.
The global financial crisis has demonstrated serious shortcomings with our banking system. It has converted the marketplace into a casino. It's no longer business; it's outright gambling, excessive greed and irresponsible capitalism. It has encouraged irresponsible behaviour among individuals who influence the marketplace. This is where social business comes in. Social business offers ethical guidelines: non-dividend companies that address social goals -- taking care of the basic deficiency of present day version of capitalism.
Credit markets were originally created to serve human needs; to provide businesses and individuals with capital to start or expand businesses or fulfill other financial needs. In recent years, however, the credit market has been distorted by a handful of people and companies with a different goal in mind -- to earn unreasonable financial returns through clever feats of financial engineering. With the collapse of the housing market in the United States, this house of cards has fallen. Millions of people around the world, who invested in good faith and played no active part in these dealings, are now suffering. As it is most often, the poor are the ones who must bear the most of the harsh consequences.
But the deeper the crisis the bigger the opportunity to correct the mistakes. Present crisis offers us an excellent opportunity to redesign our financial system in a fundamental way. If we miss this opportunity we'll be going the road of repeating the history.
Good economic theory must give the people the chance to use their talents to build their own lives. We must get away from the traditional route where the rich will do the business and the poor will depend on private or public charity. In my experience, poor people are the world's greatest entrepreneurs. Every day, they must innovate in order to survive. They remain poor because they do not have the opportunities to turn their creativity into sustainable income.
This is where the idea of social business comes in; investors supporting social businesses, which have social missions instead that of maximizing profit. I have witnessed it many times that companies investing in social businesses ultimately benefit from social business by making the world a better place. In the short-run they turn out to be more competitive because of positive effects with regard to the motivation of employees and enhancing innovation potential.
What we need is to think strategically about development, analyzing a country's potential role in its region and the world in search of opportunities for growth. Platforms like the Global Social Business Summit can facilitate the process on bringing about change. They offer space to establish connections across industry to build a global network for social business and social investment. I have been promoting and establishing social businesses for many years now to fight poverty and other social problems. I see enormous interest being generated throughout the world on this new way of doing business. Let us move forward to make this change and let us create the world we dream of. It is in our capacity to do so.
Prof. Muhammad Yunus is a founding member of The Grameen Creative Lab, which is organizing the Global Social Business Summit.
Save the Date: We invite you to mark your calendar for the Global Social Business Summit 2012, which will be held from 08-10 November 2012 in Vienna, Austria. For more information please visit www.gsbs2012.com