Mr Yunus’ endorsement of this widely held position is worth mentioning because unlike many other commentators, Mr Yunus does so without any hint of schadenfreude. He does not call for increased government power, but for an expansion of “social businesses” like the Grameen Bank. This, he argues, would result in a more “balanced” type of economy.
Mr Yunus’ point is not simply that there was a lack of philanthropy. Instead, he implies that most philanthropists see profit-making as their primary occupation and charity as a leisure activity, instead of integrating both into a one-stop enterprise with multiple objectives.
While the enormous merits of the Grameen Bank model are beyond doubt, Mr Yunus’ point that the credit crunch would have been prevented by establishing more Grameen-Bank-style enterprises is not convincing. US mortgage lenders were actually obliged to behave like social businesses by lending money to people with high default risks. This was a key ingredient of the crisis.
What is more, when criticising a disconnect between finance and the “real economy”, it is surprising that Mr Yunus does not mention the one disconnect that probably triggered all others: when interest rates are artificially lowered, the signal that is sent out to market participants is that funds for investment are overabundant. This encourages investment projects which otherwise would not be viable. Mr Yunus criticises “castles built in the sky”, but astonishingly he makes no reference to monetary policy at all. By ignoring this point, Mr Yunus is doing a disservice to the very market order he claims to defend.