E M Forster once wrote, “We are not concerned with the very poor. They are unthinkable, and only to be approached by the statistician or the poet.”

While I am of the opinion that capitalism works well for most of society, can it really touch the very poor and destitute? To be sure, there are books like C K Prahalad’s The Fortune at the Bottom of the Pyramid (2004), which discuss how firms and corporations can reach out to address the needs of the poor and reap profits for themselves but that didn’t seem to be the complete answer.

Here I wish to talk about a handful of people who have looked at the face of poverty unflinchingly and come up with answers to whether capitalism actually works at the lowest rungs of society.

The first is Muhammad Yunus, a PhD in economics from Vanderbilt University, who, after the formation of Bangladesh in 1971, settled down as the head of the economics department at Chittagong University. Did he really settle down? In his autobiography Banker to the Poor (1998), Yunus talks of the 1974 famine in Bangladesh in which a million people died and which changed him from an academic to a man of action.

As he says in his book: “I now focused on the task of unlearning theory, and on learning instead from the real world. It was just outside the doors of the classroom.

“It was everywhere except inside the classroom.”

Looking around, Yunus found that many of the poor were caught in a poverty trap laid by usurious moneylenders. Of course, there were poverty alleviation programmes, but Yunus observed:

“Like good old Gresham’s law, it is wise to remember that in the world of development, if one mixes the poor and the non-poor within a programme, the non-poor will always drive out the poor, and the less poor will drive out the more poor, and this may continue ad infinitum unless one takes protective measures right at the beginning.

“And what will happen is that in the name of the poor, the non-poor will reap the benefits.”

Yunus found that these poor were bonded to the moneylenders for paltry sums – something like 20 to 50 US cents per day. Hence he decided to give $27 as loans to 42 people to relieve them of their misery.

Next, he approached the local government bank hoping to persuade the branch manager to lend to the poor. The branch manager laughed him off saying he couldn’t give loans to the poor as they had no collateral.

This was the first occasion when Yunus came face to face with the “cliches and myths” about the poor: the poor cannot save or invest; the poor cannot work together; poor women have no skills; the poor are too hungry and desperate to make rational judgements; the poor enjoy serving their masters rather than taking care of themselves, and so on.

Yunus went against each and every one of these cherished beliefs in founding his for-profit Grameen Bank in 1983 to lend to the poor.

In founding his bank, Yunus sought plain old capitalistic principles in which micro-credit would enable the poor to set up small village enterprises to pull themselves out of poverty. Indeed, in his book, Yunus is all for grassroots capitalism rather than government programmes or protectionist policies.

Yunus upholds the importance of education among the poor. The poor want “to be able to keep accounts, read information about businesses, about health, about poultry-raising, about cattle-raising, about new ways of planting, storing, processing.” Moreover, education “delays marriage and children, and better-educated women are likely to use contraceptives. They also have more options open to them in life than child-rearing, in particular the ability to earn a livelihood.”

At present, the Grameen project has been replicated worldwide (the poor are the same everywhere, observes Yunus) with impressive loan recovery rates and about 200 million people have benefited from it.

Yunus and the Grameen Bank received the Nobel Peace Prize in 2006.