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Midas for the poor

Midas for the poor
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First Published: Sat, Jul 07 2007. 12 30 AM IST
Updated: Sat, Jul 07 2007. 12 30 AM IST
Not many would dispute that poverty—not AIDS, terrorism or climate change—is the greatest problem before mankind today. After all, more than one billion people, or one-sixth of humanity, still live below the poverty line. But unlike those other issues, poverty has always been around with humanity, and so we are all to some extent inured to it—it is a fact of life.
And, perhaps, even that opening proposition leads to a misleading conclusion, for it suggests then that it is the responsibility of mankind, or at least the richer sections of mankind, to “solve” the problem of poverty through redistribution, charity, employment schemes or development aid.
And who should know about this propensity better than Indians? We are, after all, home to one-third of the world’s poor, and our politicians routinely come to power speaking the rhetoric of poverty alleviation. Indira Gandhi’s rousing slogan, Garibi hatao, which swept her to power in 1971, still resounds through the corridors of government today and informs our policymaking.
The salutary argument of Banker to the Poor, the autobiography of the 2006 Nobel Peace Prize laureate Muhammad Yunus that has just released in India, is that to emerge from the shackles of poverty, the poor need access not as much to development aid or social welfare or skills training as capital.
As Yunus has demonstrated in three decades of work in Bangladesh with his Grameen Bank, the idea that the poor are not creditworthy because they have neither skills nor collateral is fallacious. The extent to which Yunus has been successful is disputed by sceptics, but the fact that he has ushered in nothing short of an economic and social revolution is indisputable. His autobiography recounts the steps by which he arrived at his thinking; the progress of the microcredit movement from a $27 (Rs1,099) loan made in 1976 to disbursements worth more than $600 million (Rs2,520 crore) in 2005; and programmes replicating the Grameen model, which are in place now the world over. Yunus’ philosophy of “grass roots capitalism”, and the specifics of how it involves both the individual and the community in a comprehensive vision, is one of the most essential advances made in our times on economic issues that have been debated for hundreds of years.
Returning to Bangladesh to teach economics after his Ph.D in America, Yunus noted that the elegant theories of his education that he himself propagated in the classroom seemed not to be working on the ground. Many of the desperately poor in his village, although capable of productive work, were caught up in the clutches of moneylenders, or else working for minuscule wages because, as Yunus points out, “profit is unashamedly biased towards capital.”
These facts have confronted many an economist, but Yunus’ achievement, backed by hundreds of committed workers of Bangladesh, was to convince the poorest of the poor (many of them illiterate women in a society which treated them like second-class citizens) that they could be independent economic actors by borrowing small amounts of capital, and then to get them to pay back these debts.
He shows that he managed this, paradoxically, by making it hard for the poor to borrow from Grameen. Each individual desirous of a loan had to approach the bank after forming a group, the members of which then acted as a peer-support system. Further, the repayment of the loans was not on a yearly, but?a?weekly, basis, a continuous rather than a deferred activity.
The poor are often overawed by money (many of the women to which Grameen issued loans had never handled money in their lives), so Yunus went down to a scale at which even they could be comfortable. Grameen was also unusual in that it sanctioned loans without collateral, and that it gave no great importance to skills training. In Yunus’ view, the poorest of the poor already have skills which they can utilize to break the stranglehold of absolute poverty. In a table of activities supported by Grameen loans, among the most popular are paddy cultivation and paddy husking, cow rearing, weaving and cane-making and the purchase of rickshaws and sewing machines.
The poor are poor not because they are untrained or illiterate, but because “they cannot retain the return of their labour,” argues Yunus. “It is not work which saves the poor, but capital linked to work.” Microcredit, in his view, uses the power of cash capital to liberate the potential of human capital.
He emerges in these pages not just as a strong proponent of self-employment, which he sees as being given short shrift in traditional theories of economics, but also a critic of development aid and the welfare state, which inculcate in the individual a sense of dependence or natural entitlement. “Charity, like love, can be a prison,” he declares. This incisive and clear-headed autobiography is part of the essential literature on poverty.
Many roads to world peace
Unbowed by Wangari Maathai (2006)
Maathai, a Kenyan feminist and environmentalist who won the 2004 Prize, recounts her work with the pan-African Green Belt Movement which, often in the face of violent political opposition, helped restore indigenous forests while also focusing on community development. “What people see as fearlessness is really persistence,” writes Maathai.“Because I am focused on the solution, I don’t see the danger.”
Palestine: Peace Not Apartheid by Jimmy Carter (2006)
This recent book by Carter, who won the Nobel in 2002, recounts his efforts as American president to arbitrate in the Arab-Israeli peace process in the late 1970s. Carter’s use of the word “apartheid” in his title and his adoption of what many see as an anti-Israel stance stirred huge controversy when his book hit the stands last year.
Long Walk to Freedom by Nelson Mandela (1994)
Mandela, winner of the 1993 Prize, tells the story of his long decades of unflagging opposition to the apartheid regime of South Africa, which he finally saw dismantled. Much of his book was written secretly during his 27 years in prison.
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First Published: Sat, Jul 07 2007. 12 30 AM IST
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