30 Aug 2017 19:19 IST

‘Profit cannot be the only incentive for businesses’

They should solve specific problems, Muhammad Yunus said. He addressed students of IIM-C and XLRI

Businesses should be created with a purpose of solving specific problems, and not just to earn profit. According to Nobel Laureate Muhammad Yunus, while making money was an incentive, making other people happy by solving their problems was a ‘bigger incentive’.

“It is not right to say that if you take away profit from a business, then it cannot survive. Profit cannot be the only incentive,” Yunus said while delivering the Arijit Mukherji Memorial Lecture at the Indian Institute of Management, Calcutta on Tuesday.

Speaking on ‘The World of Three Zeros: Zero Poverty, Zero Unemployment, and Zero Carbon Emissions’, Yunus felt it was time to admit that the capitalist engine is broken. That in its current form, it inevitably leads to rampant inequality, massive unemployment, and environmental destruction.

There is a need for a new economic system that is based on a more realistic vision of human nature — one that recognises altruism and generosity as driving forces, which are just as fundamental and powerful as self-interest. Driving home his point further, he illustrated the progress that societies can make through entrepreneurship by citing real examples from different parts of the world.

Meeting at XLRI

Meanwhile, in an interactive session with the students of Xavier School of Management, Jamshedpur on Monday, Yunus talked about businesses as a medium for solving problems and reducing the disparity between the various economic sections of the society.

Talking about his own journey, he drew attention to the problems he encountered in his crusade against loan-sharks and his commitment to serve the destitute who lacked access to basic financial services. “There is a difference between helping through charity and helping through businesses which make money, and ensure sustainable progress of the downtrodden sections of the society,” he said, advocating a need for the latter.

Yunus held the current financial institutions responsible for the poverty prevalent in the world today. According to him, banks are mainly for the rich, privileged class of people. “The seed of poverty prevails and we have to break it by reversing the system,” he said, asking future managers to build a road to reach the destination.

“I always did the just the opposite of what banks do — what they did was for the rich. I reversed the system to make it work for the poor. The best part is that I never studied banking. I faced things as they came and had no guarantees for the credit we gave. Luckily, it worked,” he said.

The session was conducted by Prof Madhukar Shukla and was attended by Fr E Abraham SJ, Director and Dr Ashis K Pani, Dean (Academics) besides other professors and the students of XLRI.