There is a gigantic, but silent, economic crisis in the world today, one that adversely effects 1/3 of the world's population. A lack of solutions to basic human needs causes millions of deaths every year. In the other two thirds of the world, there are countless products, solutions and services that serve as perfect solutions. There's a demand and a supply, but for some reason, the transaction isn't happening. This is not a problem of technology or medicine. It's an economic crisis that demands a design response.The microloan, first developed by Nobel Laureate Muhammad Yunus, is the world's first attempt and, to no surprise, is already overwhelmingly successful. The concept is to give small loans to individuals and groups not based on any financial assets or credit ratings, but based on their social assets.
On the surface, this seems like a very bad idea. The loans rely on an entrereneurial spirit surfacing in situations where dispair is prevalent. It depends on the poorest in the world reliably paying back at a high interest rate. But once again, the phenomenon of social networks has shown its power. Microlenders have developed a strong reputation for high payback rates, some of them higher than 95%, with most paying back in under three months.
I'm grossly oversimplifying, but will get into great depth on this later. For now, what's important to understand is that we can always create new economies if we just focus on what is abundant. And today, in this world, with so much of the economy centered around scarce resources, social capital is abundant. If we can learn to design in ways that monetize social capital, we will begin making giant strides, just as microfinance has, in preserving humanity.
