Muhammad Yunus was recently elected to head the caretaker government of Bangladesh amid an ongoing popular revolt in the country that ousted Prime Minister Sheikh Hasina, who fled by helicopter to India. The trigger for the clashes was a quota policy in government jobs: one-third of vacancies were to be reserved for relatives of veterans of the country’s 1971 war of independence against Pakistan. This was considered a privilege for the country’s military within a government already reputed for corruption. The protagonists of these struggles are mainly students, demanding radical changes in the government. In this article, we will introduce you to Muhammad Yunus, the banker who was appointed to take power to quell the heroic revolution in Bangladesh, and explain how the absence of a Marxist party led him to receive the support of the fighters.
This enthusiasm is related to Yunus’ own trajectory. While he is recognized worldwide for his role in the fight against poverty in the 1970s, his current role in maintaining the exploitation of the working class is often obscured, as is how his efforts have been instrumental in enriching the imperialist multinationals operating in the country. Born on June 28, 1940, in the port city of Chittagong, Bangladesh, Muhammad Yunus graduated with a degree in economics from Dhaka University and pursued graduate studies in the United States. He returned to Bangladesh in 1972 to head the Department of Economics at the University of Chittagong, shortly after the country’s independence in 1971.
Political and Economic Background
Bangladesh suffered from the legacy of British colonization: a heavily populated, primarily agrarian country with a proletariat formed without adequate job creation. This resulted in immense poverty, hunger, and other indicators of social ills, such as illiteracy and infant mortality. Additionally, the military staged a coup d’état in 1975, establishing a dictatorial regime that lasted until 1990.
This internal context unfolded during the Cold War. Imperialist countries, especially the United States, were exporting capital and supporting coups and dictatorships worldwide. In Bangladesh, this was the ideal scenario for the establishment of the textile industry, as it found a population skilled in this task (given the cultural tradition of garment and textile production) and living in misery, willing to accept even higher levels of exploitation than American workers.
The Grameen Bank’s Microcredit Experience
In this context, the Grameen Bank (Village Bank) began its experience with small loans in the late 1970s and was officially incorporated in 1983. It is considered the first financial institution to offer microcredit to low-income people, especially women, without requiring collateral, something unheard of at the time. Until then, the main form of microcredit was consumer credit, particularly credit cards, which started to become popular at that time, especially in rich countries.
The Grameen Bank offered loans at 8% annual interest for the construction of houses, which was especially important in a country where floods destroy homes almost every year. In addition to housing, these new homes also had space for workshops, turning each home into an extension of the factories. To make work viable, such as purchasing machinery and inputs, loans were also offered at 20% annual interest.
Loans were made primarily to women, who to this day represent more than 90% of the bank’s “clients,” prioritizing sewing workshops. On average, the bank had a profit rate of 15% per annum, within the average profitability of the country’s capital. Despite this, the bank was known for offering cheap loans, as other banks charged workers exorbitant amounts, pushing them into default. Additionally, the bank had two other peculiarities: it granted loans to groups of five women, so they could work together as a productive unit, and it implemented weekly collections, where the bank maintained permanent face-to-face contact with these women.
An Economic Empire
Over time, 22 other Grameen group companies were created, both for-profit and not-for-profit. In addition to the financial companies that indebt Bangladeshi families, they are also involved in education and private communications and energy infrastructures, taking on roles that could belong to the state. They also have partnerships with branches of imperialist multinationals, such as food processing with Danone and agribusiness. They also offer other forms of outsourced and precarious employment, such as software development and telemarketing. This does not mean that Grameen Bank has lost its relevance. Today, it serves more than 9.3 million “clients,” 97% of whom are women, and has already disbursed nearly $39 billion in loans.
In general, Grameen Industries seeks to offer products and services for resale so that the Bangladeshi population can “generate their own jobs.” Through these initiatives, Yunus advocates two central pillars: eradicating poverty through zero unemployment and combating climate change through private investment in new sources of green energy. It is worth mentioning that this is especially impactful in Bangladesh, which already has millions of climate refugees and is considered by experts to be the country with the greatest potential for displacement in human history due to climate change.
The policy of self-employment has been effective. Millions of families have been lifted out of poverty in the country. Social impact indices showed a disparity between Grameen’s “client” families and the general population: improvements in food, education, health, housing, infant mortality, etc. However, an improvement does not necessarily mean that they are well off today. The biggest example of this is the discontent generated by the revolutionary process of 2024, which we will discuss later.
From a general perspective, the country also seems to have improved. The families of the seamstresses fueled local trade with their purchasing power, generating a domestic market and increasing imports. GDP began to grow at a “Chinese rate” of 5.6% per year on average between 1990 and 2022. The textile industry became the country’s leading industry, responsible for three-quarters of domestic exports in 2005 and ranking Bangladesh as the world’s second-largest exporter in 2014. The country has become an exporter of primary products (including food, which the population still lacks) and low value-added products and has failed to develop its own domestic industry.
Yunus and the Nobel Peace Prize
The crumbs that fall from the table of imperialism for the poor and working people of Bangladesh were enough for Yunus to obtain worldwide recognition from the main international institutions. As the creator of the productive microcredit banking service and the public face of the Grameen Bank, Yunus is recognized internally and externally as the main person responsible for all these results. This earned him the Nobel Peace Prize in 2006.
This experience inspired a whole new policy agenda for the creation of “social enterprises,” “sector 2.5,” and entrepreneurship in general. These policies have been implemented worldwide by capitalist states, whether by right-wing or left-wing governments, in both rich and poor countries. The discourse that it is possible for workers to generate their own employment has been used to shift the blame for unemployment onto the workers themselves, who are accused of not undertaking enough. It also helps to demobilize struggles demanding public policies from the state, as any social problem could potentially be solved by entrepreneurship.
What Explains This Popularity?
At the time, microcredit for production sounded unprecedented, as banks only offered microcredit for consumption through credit cards. However, microcredit for production was already common in credit unions since the 19th century, and the only innovation was the fact that this service was offered by a bank. So, what actually happened was a good personal marketing move for a new banking service that allowed the entry of foreign capital.
This situation is similar to that experienced in several other poor countries during the second half of the 20th century. Dozens of dictators are considered populist, popular, or even communist because of their similar rhetoric. They forge a reputation of being “good for the poor” or “nationalist” or even “developmentalist” because they act in partnership with foreign capital. The difference is that this reputation usually goes to dictators, and in the case of Bangladesh, it went to a businessman who did not directly hold political office.
This is not an entirely unprecedented phenomenon, but why is it happening? Money is perceived as the great engine of human productive activity under capitalism. Without advanced capital, no enterprise is born, and no new jobs are created. Capital in its Money form is always the first perception we have of this appreciating Value process. No matter how many hundreds or thousands of cycles pass, and even if all the invested Capital has already been returned to the first investor, he is still seen as the first agent, the owner, and the one responsible.
The inflow of foreign capital is essentially the beginning of capitalist cycles in these countries. But the politicians manage to convince the population that it is thanks to them that this Capital was able to enter the country, which is corroborated by the fact that the State is the holder of the national monetary standard. Moreover, Yunus continues to present himself as the one responsible for microcredits, which in practice seem to be “micro-capitals” that enter people’s homes and allow them to work.
An Old Economic Theory
Yunus’ theory is that offering microcredits makes work possible because it allows the purchase of machinery and raw materials. From this work, goods are generated, which are sold and generate more money. This income makes it possible to replenish the raw materials for a new cycle of work, pay the interest on the loans, and, what little is left over, use it as income for the personal consumption of these families. This income would circulate in the domestic consumer goods market, stimulating the country’s market. On the other hand, the money that is transferred to suppliers and banks is used in part to expand production and invest in new branches.
In practice, this process generates a very low income for these families, among the lowest in the world. So, even if it worked, it would be quite insufficient to sustain the thesis of a humanitarian cause. Hence, hunger in Bangladesh remains immense. But there is another flaw in this theory: there is no guarantee that it will work forever. Infrastructure problems, such as weather catastrophes, can disrupt the production process. Moreover, imperialist companies can move their purchasing centers to other countries, leaving the population with unsold goods that cannot reach the domestic market.
This economic theory, which presupposes the functioning of the market in order to conclude that the market works, is not new. It is the old law of market equilibrium, defended since the seventeenth and eighteenth centuries, and it was espoused by liberal economists such as Jean-Baptiste Say, James Mill, and Adam Smith. It is a dogma of the liberal economic currents that justify the market as perfect and rational, adapted to the situation of a country in a state of hardship, exploited by international capital in partnership with local entrepreneurs.
Yunus, Junior Partner of Imperialist Capital
If we include international capital in the equation, we see that it is the main agent that sets in motion the millions of women workers in the textile industry. Of all the work they do, most of the value goes to these companies and only a fraction to the workers. These companies have no humanitarian interests, only economic interests in exploiting these millions of families.
The Grameen Bank, therefore, is not the initiator of the production process, but a necessary intermediary. If the multinationals take the lion’s share of the workers’ unpaid labor, the bank takes a smaller share. In other words, the “humanitarian cause” is nothing more than marketing rhetoric. All the more so when it is recognized that these are not even subsidized loans, which are below average market profitability. The financial interests of the multinationals are decisive at the beginning of the process, and the bank is only a minor partner.
But this begs the question: why does the international textile industry buy these products? The aim is to reduce labor costs. The economic struggle of workers in the core countries has provided them with a much higher average wage. The migration of these jobs to Southeast Asia was a way to reduce production costs drastically by lowering wages. There is no humanitarian interest on the part of these companies, only the ruthless exploitation of Bengali women workers.
Overexploitation of Women Workers
The dispute for the leading role in the productive process between foreign and national investment is part of the logic of the emergence of Money-Capital as the engine of Capital. But the maintenance of the cycles is only possible thanks to the hard work of the workers, who are truly responsible for the economic prosperity of Bangladesh, and who cannot enjoy even the smallest share of the wealth produced, let alone influence decisions on how the surplus value they produce will be reinvested. This leads us to investigate the conditions under which this work takes place.
The working and living conditions of these workers, their children, and their entire families are best observed by studying the fast fashion industry, not by Yunus’ populist speeches. Sweatshops are places where the sweatshop system is developed, an exploitative model where employees work under extreme pressure, and workplaces are mistaken for homes and lack health and safety conditions. The homes become an extension of the factory, without the control and protection afforded by industrial plants.
Also called “atelier de misère” in French, they are workplaces in very precarious and socially unacceptable conditions for workers in imperialist countries. The work can be difficult, dangerous, climatically unsuitable, or poorly paid. Sweatshop workers may have to work long hours for low pay, regardless of laws requiring overtime pay or a minimum wage; laws against child labor may also be violated. Products typically produced in these factories include shoes, clothing, toys, chocolate, and coffee.
Multinationals that have been accused of using this form of labor include Levi’s, Nike, Tommy Hilfiger, Calvin Klein, Ralph Lauren, Zara, Armani, Gucci, Prada, Dolce & Gabbana, Burberry, among others.
In partnership with these companies, Grameen Bank extracts even more income from these families, charging 20% annual interest to make the work viable and 8% annual interest when they find themselves homeless due to the destruction of their homes. Additionally, the Grameen group as a whole allows new forms of exploitation in other branches of production.
Capitalism brought misery to Bangladesh, first with colonization, and second, with super-exploitation through sweatshops. It is true that this form of labor appears in the statistics as better than starving, but it is not true that this comes close to freedom or any level of emancipation. It just goes to show that capitalism is the system that traps the majority of the population in a trap: the only thing worse than being exploited is not being exploited. It is a prison disguised as freedom.
Is There Exploitation in Entrepreneurship?
At first glance, it all looks as if workers produce goods and sell them. So how can this be exploitation? Some might even think that the profit of multinationals lies in the cunning of the entrepreneur who decided to take advantage of the price difference between countries to become a simple wholesaler, and no longer a producer. But this is not the case, and we will explain why.
The first clue that this is another form of contracting, and not a business activity, is that this same activity coexists in a monthly wage contracting mode. In such a way that the salary received by these workers is per piece produced, and not per time. The market chooses one modality or the other according to which is more favorable for capitalist development.
But the difference in value of the goods sold between countries is not due to simple inflationary indices in each place. In the countries where they are to be consumed, they respect the law of the value of these commodities, in which their price is defined according to the labor time socially necessary for their production. On the other hand, the price paid to the workers for each piece reflects the cost of living and reproduction of these commodities, the same calculation that is made to determine the price of labor power.
So yes, there is exploitation in entrepreneurship. Not because entrepreneurs are exploited, but because this legal (and ideological) form has been re-signified to express piece-rate contracting. In other words, the time wage is fractioned to be expressed in each piece produced, given the average productivity of that society. To better understand the piecework wage, we recommend reading chapter 19 of the first book of Capital. The debate on the law of market equilibrium is present throughout the second book.
Placing Yunus in the Class Struggle
With a discourse strongly focused on the social, it is common to identify Yunus as a leftist figure. However, being left-wing does not necessarily mean being on the side of the workers in all their struggles. On the contrary, several of these struggles were against him and the Grameen group.
In 2006, tens of thousands of workers mobilized in one of the largest strike movements in the country, affecting almost all 4,000 factories. The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) used police forces to suppress it, resulting in three workers being killed and hundreds more being shot or arrested. In 2010, following a new strike movement, almost a thousand workers were injured due to the repression.
His role in production, on the other hand, consisted of idealizing, implementing, and justifying a system of exploitation of the Bengali population by the imperialist multinationals. In doing so, he built a real national empire as a junior partner of this foreign capital. Moreover, he presented it to the world as a humanitarian action and took credit for the labor of the millions of workers who build the Bangladeshi economy.
The perception of Yunus’ role in the class struggle is exactly the perception of the appearances of Capital described by Marx in Capital. This is why it is necessary to build a Marxist party in the country, to construct a socialist program to break with this system of super-exploitation, and to arm the revolutionary vanguard of the country with the understanding of who their enemies are in their struggle for liberation. It is also important to understand that having a banker at the head of the government of Bangladesh will mean one more frustration for the aspirations of the workers and youth of the country.
