Fatema Begun does not spin theories on poverty. It's her constant companion and foe. Fatema was born into a poor family in Dhaluarchar, Bangladesh, a country with an annual per capita income of $300. She was married at the age of 12 and had given birth to two children by the time she was 15. Her husband had no skilled trade, work was scarce, so Fatema wove palm-leaf mats to keep her own family afloat.
In 1986, Fatema made her first deposit of 30 cents in the Grameen Bank, whose mission is to offer credit to "the poorest of the poor." Its clients are 94 percent women; its repayment rate is 95 percent. Using the collateral of her deposit, Fatema was able to borrow $80, which she promptly invested in a neighbor's business. Twelve years later she had made enough money on her investment to open a shop in her own home. In 1998, Fatema took out an additional loan for $400 to buy a cellular phone from GrameenPhone, a spin-off of the bank. Fatema now runs a mobile phone service in Dhaluarchar, and her income exceeds $700 a year.
Fatema's story does not fit neatly into either the conservative or liberal set of ideologies that dominate political thinking at the turn of the century. Liberals, or so-called progressives, typically distrust market mechanisms to lead poor people out of economic bondage. Here's their logic: Since capitalism intrinsically breeds poverty, groups or individuals who do prosper by leveraging capital, however small, must be winning at the expense of their neighbors. Call it an economy of limited good.
Conservatives surely would cheer the private initiative that drives a Fatema to claw her way out of poverty. They trust the market to distribute economic rewards to individuals who show initiative and effort. But that's only part of Fatema's story. She had access to capital only because of the existence of an institution, Grameen Bank, that operates beyond the bottom line to benefit those at the bottom of the line. GrameenPhone "is not a charity," says co-founder Iqbal Quadir, "but a business that's trying to do a good thing."
For nearly a decade—essentially the 1990s—I started and ran an economic development group in Central America. My colleagues and I began the work with high ideals of communalism. Mirroring strategies of social service in our own country, we developed "projects." A village would progress only by working in tandem with each other. We set up village leaders to run the projects on behalf of the whole.
Looking back, I have to admit that nearly all of our projects failed to achieve sustainable village economies. Ironically, we best helped individuals, the village leaders, achieve a kind of class mobility by virtue of their increased social status. Our most successful project turned out to be an experimental farm where we taught peasant farmers how to use innovative farming practices to overcome lousy terrain. With time, we offered individual farmers seed capital once they had completed the training course.
The 21st centry calls out for fresh economic thinking and creative social action. I know I'm not the only one who feels frustrated by our frozen ideologies. All the same, I am encouraged by a small movement of entrepreneurs who are using their access to capital and business savvy for the benefit of the common good. It is a movement that seeks to democratize capital, giving the poor a chance to help themselves. It works against concentrations of capital that monopolize markets and engage in unfair competition.
Over lunch with a highly successful Silicon Valley venture capitalist recently, I described the goals of this new breed of economic activist. His response: "But doesn't all investment bring about new jobs and more wealth, which are for the social good?"
I retorted that relying on the kind will of other people's capital leads to dependency and vulnerability. Owning one's own capital—"everyone with their own vine and fig tree," as a Hebrew prophet once called it—breeds independence and dignity.
I wonder how different America would look today if over a century ago freed slaves really had gotten their 40 acres and a mule?
David Batstone, a founding editor of Business 2.0 magazine, is executive editor of Sojourners.