Comment on Microbanking by Arthur Warmoth, Ph.D.:

Yunus' Nobel Peace Prize for his innovative approach to banking is mainstreaming the conversation about the need for innovative economic institutions created outside the box of the conventional wisdom of classical economics. There are two missing pieces in Yunus' account, one is underreported, the other is unrecognized. The underreported piece is the character of the cultural and educational support system that makes investment in the poor so productive. The unrecognized piece is the failure to recognize the interaction between the two distinct functions of money, as a medium of exchange and as a store of value, in the Grameen bank model.

In Yunus' interview, he discusses the culture of trust that he has created, using what psychologists call "operant conditioning" based on reward rather than on punishment. But it is also important to recognize that the investors' circles&endash;groups of women who support each other in developing profitable businesses that enable them to repay the loans&endash;are a key feature of the success of the Grameen Bank. In effect, Yunus creates a peer mentor structure that teaches his borrowers how to construct business plans that generate real economic growth.

The fact that real economic growth occurs would justify a return to investors. If the average economic growth rate is 6%, and it is shared between micro entrepreneurs and investors, an interest rate of less than 6% would be reasonable. Investment in real economic growth is necessary if savings is to occur. The critical point is to invest in real economic growth, and not in speculation (Robert Reich's "paper entrepreneurialism"), which only transfers real wealth and is therefore a form of exploitation or colonialism.

However, it is probably also true that there are cases in which microcredit is simply providing the liquidity that is needed in order to facilitate exchange transactions that are awaiting an appropriate medium of exchange in order to happen. If the increased economic activity is a result of adequate liquidity, rather than entrepreneurial creativity, then a more appropriate model would be a complementary currency system based on a service charge rather than interest. There are a number of models of such systems that create currency based on underutilized productive capacity in a community, a situation that requires liquidity rather than entrepreneurial investment. (Bernard Lietaer, Thomas H. Greco, Jr.)

In short, there is no reason why entrepreneurs who run successful microbanking operations that provide both liquidity and investment capital should not enjoy a middle class income during their working life, as well as a comfortable retirement. And there is no reason these principles should not be applied to creating sustainable regional economies in the developed, as well as in the developing, world. (Michael Shuman)

Yunus also raises the critical issue of the role of ethics in the design of economic and financial services systems. We have entered an era in which information management technology gives us even more power over nature than we enjoyed during the Industrial Revolution. Since the scope of this power is huge, if not almost infinite, it requires a moral compass in order to use it wisely. (This is the same point Al Gore was making in An Inconvenient Truth.) Yunus finds this compass in a view of human nature as inclined to honesty and creativity. It is the design of economic systems, especially the banking system, that leads to selfishness and greed.

Yunus' work lays the foundation for a public conversation about the urgency of moving toward economic democracy. It owes much of his success to the intuitive recognition of the fact, established by the research of the great behaviorist B. F. Skinner, that consistent reward is more effective than punishment in shaping behavior. Reward contains positive information about the parameters of positive behavior, while punishment only temporarily suppresses undesirable behavior unless it is accompanied by rewarding positive alternatives.

The political values of the move toward economic democracy are the basic democratic values of transparency, mutual understanding and compassion, and inclusion. (These are the political analogs of Carl Rogers' personal psychotherapeutic values of integrity, empathy, and unconditional positive regard.) The relevant economic values include expanding the horizons of the ownership of assets and the stewardship of the commons (Peter Barnes), as well as sustainable monetary systems and implementing more reliable forms of economic security that strengthen broad civic engagement.