Alternative Currency and Banking - Worldwide ?

In 2008 the Google 10base100 Campaign in cooperation with Changemaker hit upon this thrilling sentence:

Create a single world bank or supra-national currency, uniform rules and transparent public accounting

It was the last sentence of the campaign suggestion "Build better banking tools for everyone". Next time it could be the first because the old - obsolete in it’s concept - monetary system is drowning the world in devastating ecological, social and economical Problems.

The trap of an "impossible" profit rate

Wolfram Elsner
“Financial Capitalism – at Odds With Democracy: The trap of an "impossible" profit rate”
real-world economics review, issue no. 62, 15 December 2012, pp. 132-159
You may post and read comments on this paper at WordpressForum

Got the picture ?

A rather tall graphical approach to understanding economics. I get the feeling it would look pretty similar if the same thing would be done for England or France or Germany....

Why Bangladesh's Grameen Bank is under threat

The Grameen Bank is a micro-credit lending institution located in Bangladesh, and the only business corporation in the world to have won a Nobel Prize for its work. However, two recent documentaries about the bank have stirred up trouble. In addition, the bank has come under attack by the government of Bangladesh (known for its extreme corruption), which has been able to push out its founder Muhammed Yunus from the bank’s leadership position.

The latest crisis facing the bank is that Bangladesh’s Prime Minister Sheikh Hasina Wazed has overturned a 29-year law governing the bank, allowing the government to choose Yunus’s successor without consulting Grameen’s Board of Directors, according to the New York Times. What makes this so unfortunate is that the bank’s ownership (97 percent) lies in the hands of poor women, who have their life savings wrapped up in the bank.

Grameen Bank and its working model

While the Grameen Bank has not been without controversy (notably the accusations of tax evasion by the Norwegian documentary “Caught in Micro Debt” and the Spanish documentary “Microcredit”), the basic principles on which the bank was founded are what has made the bank so powerful.

The bank’s origins go back to a study by the Fulbright Scholar Muhammed Yunus in 1976, when he did a study about lending credit to the poor of Bangladesh in rural communities. By 1983, the Grameen Bank Project (named for the Bengali word “gram” or “village“) became a real bank, extending micro-loans to the poor without requiring collateral.

Today, the bank serves 8.4 million villagers in Bangladesh, whose collective savings of $1.4 billion finances the bank, according to the “New York Times”. More than 95 percent of its members are women, as studies have demonstrated that women were better able to “fight” poverty, particularly when their destiny is in their own hands. The board of directors governing the bank contains 12 members. Nine of those seats are held by elected village women, and three by the government.

Recognition by the Nobel Prize Committee

In 1994 the bank was awarded the Independence Day Award in Bangladesh, its most prestigious in-country recognition. In 2006, the Nobel Peace Prize was awarded to the bank and its founder Mohammed Yunus for their work in social development. Of course, it was met with jubilation within Bangladesh, but not everyone was happy.

In 1993 Imam Maulana Ibrahim blasted the bank for its “un-Islamic ways”, which included women defying their husbands and taking a vow not to be poor. This criticism is leveled at the pledge bank members take to adopt the “16 decisions” to advance four basic principles: hard work, discipline, unity, and courage.

Government’s actions against Grameen Bank

It appears that the actions taken by the Prime Minister may be specifically targeted at Yunus, who has been critical of the government. In removing him from the bank’s leadership position, the government suggested that he was beyond the official retirement age. Now they are suggesting that the women who serve on the bank’s Board of Directors are not educated enough to hold these positions.

Yet the educated lawmakers who are likely to replace them are likely to be rife with corruption. In June 2012, the World Bank canceled a $1.2 billion project due to its lack of confidence in the country’s economic leadership.

And so, Grameen Bank and millions of impoverished Bengali families remain under threat from their own government. A loss of participation by the members who compose the bank, and who have built it up throughout the years with their own hard work and energy would truly be a tragedy of epic proportions.

The Failure of Capitalism

Clear and vivid. Recorded 8.06.2010 in London
We need limits to wealth an profit and a new monetary system which is not profit- or power driven, but helps to reach ecological and social aims.

OccupyEconomics

We are the 99%. We need to develop postcapitalistic economics aiming at an economy bringing us justice, sustainability, true efficiency and true democracy. Most economists are mislead by the mainstream of this science, therefore we cannot leave it up to them.
To start this all up, we have to get some things straight around the dominant money theme...



This blog works closely togeather with "Ökonomie für Alle", a forum in german language. We would like to serve an international audience. We welcome everybody interested in joining our work.

Social Business

Presently, the dominant business form is the profit-maximizing business (PMB). Yunus proposes an alternative, and its promotion is the main goal of the book: the social business. A social business is a business, it is not a charity, it is not a non-profit. It operates on business principles and aims to cover its own costs, rather than rely on other funding as charities do. The difference between a social business and PMB is that the explicit goal of a social business is to solve a social problem, meet a social need and provide a social benefit. The product or service offered by a social business is not free. It charges a fee (and it can be extremely low fees) in order to cover its costs in order to be self-sustaining and to potentially grow and expand (much as Grameen Bank has done).

The major difference here is that the principle of profit maximization is replaced with the principle of social benefit. The success of a social business will not be measured by the size of its profits or the dividends distributed to its investors but how much of a positive impact it has had in solving, or at least alleviating, the social problem it was created to solve.

Another major difference between a PMB and a social business is that investors in a social business are entitled to recover the amount of their investment but the social business does NOT distribute dividends. Money made gets reinvested in the business itself. As Yunus puts it, a social business is a "non-loss, non-dividend business". The point is to generate profits to better serve the poor of the planet. So, a social business is

• self-sustaining
• self-propelling
• self-perpetuating
• self-expanding

Investors get their money back or remain owners of the company. But no dividends. Otherwise, then, social businesses will compete on the same terms as PMBs, against PMBs. Social businesses will target socially minded investors who are not in it for the money. Ideally, Yunus wants to have a social stock market where people could invest based on the success of various social businesses.

Two Types of Social Businesses

Yunus distinguishes two types of social businesses:

Type I: Companies that focus on providing social benefits rather than making a profit. The nature of the goods and services they provide is geared toward social benefit (food, housing, health care, education, etc.). These benefits can be social or environmental and they would be provided while covering the business's costs through the sale of goods and services, with no dividends.

Type II: PMBs that are owned by the poor. Here, the social benefit comes from the generation of profit and dividends distributed to the poor who own the company. The main goal then is the reduction of poverty through profit maximizing. The goods and services provided are not necessarily social benefits. The social benefit is the very ownership of the company. Grameen Bank is a Type II business.

And it is possible to have social businesses combining I and II. What is not possible, and Yunus is adamant about this, is to have hybrids of PMBs and social businesses. Overtime the PMB side would always take over the social side.