Social Business: A Proven Tool to Implement Fundamental Principles of State Policy

Introduction:

Social business, as defined by Prof Muhammad Yunus, is a “non-loss, non-dividend company”, dedicated entirely to achieving a social goal. Fundamental principles of state policy, on the other hand, are the programmes of the government.    This essay takes a closer look at social business from the perspective of fundamental principles of state policy. It highlights the value of social business to implement the fundamental principles of state policy.  

The Concept of Social Business:

A social business is a new idea of business. It is quite distinct from either a traditional profit-maximizing business or a not-for-profit organization. It is outside the profit-seeking world. Its goal is to solve a social problem by using business methods, including the creation and sale of products or services.  It is a tool for handling different social problems relating to education, healthcare, water, poverty, disease, unemployment, abandoned children, drugs, housing, pollution, environment and so on. Most countries are now facing these problems, but it is not possible to address all these problems only by the government. Social businesses can play a significant role in this regard as it works for social causes along with the government.

In his book Building Social Business: The New Kind of Capitalism that Serves Humanity’s Most Pressing Needs, Professor Yunus pointed out seven principles to define and categorize a business as Social:

1. Business objective will be to overcome poverty, or one or more problems (such as education, health, technology access, and environment) which threaten people and society; not profit maximization.

2. Financial and economic sustainability.

3. Investors get back their investment amount only. No dividend is given beyond investment money.

4. When investment amount is paid back, company profit stays with the company for expansion and improvement.

5. Environmentally conscious.

6. Workforce gets market wage with better working conditions.

7. Do it with joy!!!

There are two kinds of social business as proposed by Professor Yunus in his book Creating a World without Poverty - Social Business and the Future of Capitalism.  One is non-loss, non-dividend company devoted to solving a social problem and owned by investors who reinvests all profits in expanding and improving the business. It is a Type I social business. It focuses on providing a product and/or service with a specific social, ethical or environmental goal. A well-known example of Type I social business is Grameen Danone. The second kind is a profit-making company owned by poor people, either directly or through a trust that is dedicated to a social cause. It is a Type II social business. It is a profit-oriented business that is owned by the poor or other underprivileged parts of the society, who can gain through receiving direct dividends or by indirect benefits. A well-known example of Type II social business is Grameen Bank.

 The Concept of Fundamental Principles of State Policy:

According to Article 8(1) of Part II of the Constitution of Bangladesh, the principles of nationalism, socialism, democracy and secularism, together with the principles derived from those as set out in this Part, shall constitute the fundamental principles of state policy.  These principles are described as a manifesto of aims and aspirations of the government for they are all principles relating to economic, social and cultural rights which are not a matter of immediate achievement. They are also called the programmes of the government. Keeping in line with the socio-economic progress, the state will implement these programmes step by step because implementation of these programmes requires resources, technical know-how and many other things including mass-education.

Implementing Fundamental Principles of State Policy through Social Business:

Government is primarily responsible for the implementation of the fundamental principles of state policy. But our government is burdened with numerous problems. So, government efforts often fall short. In this case, social business can help government.

Social businesses have already addressed some social problems like child malnutrition  & poverty (addressed by Grameen Danone Foods), arsenic contaminated water in rural areas (addressed by Grameen Veolia Water), risk of malaria in parts of the country (addressed by BASF Grameen), insufficient use of fertilizers (by Grameen Intel Social Business), poverty and underemployment (addressed by Grameen Yukiguni Maitake and Grameen Fabrics and Fashions), limited  access to speciality eye treatment for the poor (addressed by Grameen GC Eye Care Hospital), shortage of nurses and lack of access to medical care among poor and rural communities (addressed by Grameen Caledonian College of Nursing), lack of electricity and unhealthy living environment (addressed by Grameen Shakti), lack of access to basic products in rural areas (addressed by Grameen Distribution) etc [BCG Report 2013, The power of social business]. These problems which have been addressed through social businesses are not out of the periphery of the fundamental principles of state policy. So, most of the fundamental principles of state policy can be implemented through social business.   Some of the fundamental principles of state policy under the Constitution of Bangladesh which can be implemented through social business are (a) establishment of a socialist economic system free from the exploitation of man by man (Art. 10), (b) guarantee of human rights and freedoms (Art. 11), (c) principles of ownership (Art. 13) (d) emancipation of peasants and workers (Art. 14), (e) provision of basic necessities (Art. 15), (f) rural development and agricultural revolution (Art. 16), (g) establishment of a uniform, mass-oriented and universal system of education (Art. 17), (h) raising the level of nutrition and improvement of public health and morality (Art. 18), (i) protection and improvement of environment and biodiversity (Art. 18A), (j) equality of opportunity  of work and removal of social and economic inequality (Art. 19), (k) payment for work on the basis of the principle ‘from each according to his abilities to each according his work’ (Art. 20),  (l) conservation of the  cultural traditions and heritage of the people (Art. 23), (m) protection and development of the culture of tribes, minor races, ethnic sects and communities (Art. 23A) and (n) promotion of international peace, security and solidarity (Art. 25).

Many of the country’s most pressing social problems are so ingrained and widespread that they cannot be addressed solely by governments and traditional socio-sector organizations. Solving these problems requires a variety of approaches from the private and public sector alike. In this regard, social business can greatly help the government to address all kinds of social problems. In the words of Professor Muhammad Yunus, “Social business helps citizens to undertake activities which traditionally were considered the responsibility of the government. As a result, government’s burden is lightened, its efforts complemented by those of civil society. Governments can collaborate with social businesses run by civil society and businesses, since social businesses are not run by profit-takers, and at the same time governments can create their own social businesses. ...In a society where social business is a vibrant economic force, people will no longer have to wait for the government to address such issues as poverty, hunger, homelessness, and diseases because they themselves can find ways to address them by forming their own enterprises, first on a small scale and eventually on a large scale. ...Social business recognizes that the responsibility for solving a society’s problems is shared between the government and the citizen.” [Building Social Business: The New Kind of Capitalism that Serves Humanity’s Most Pressing Needs].

Conclusion:

To conclude, social business is an excellent way to address the social problems stemming from unemployment, lack of healthcare and education for the poor and even environmental degradation. It has the potential to change the condition of the poor people. Through access to credit, improved health service, better nutrition, high-quality education, and modern information technology, poor people will become more productive.