Sunday, February 25, 2007

Whole Foods, Capitalism, and Freedom

I've referenced this speech in comments before, but it's time to give it its own post. The speaker is John Mackey, founder of Whole Foods. You owe it to yourself to read it in its entirety, but here is the condensed version:

My search for meaning and purpose led me into the counter-culture movement of the late 1960s and 1970s. I studied eastern philosophy and religion at the time, and still practice both yoga and meditation. I studied ecology. I became a vegetarian (I am currently a vegan), I lived in a commune, and I grew my hair and beard long. I'm one of those crunchy-granola types. Politically, I drifted to the Left and embraced the ideology that business and corporations were essentially evil because they selfishly sought profits. I believed that government was "good" (if the "right" people had control of it) because it altruistically worked for the public interest...

At the time I started my business, the Left had taught me that business and capitalism were based on exploitation: exploitation of consumers, workers, society, and the environment. I believed that "profit" was a necessary evil at best, and certainly not a desirable goal for society as a whole. However, becoming an entrepreneur completely changed my life. Everything I believed about business was proven to be wrong.

The most important thing I learned about business in my first year was that business wasn't based on exploitation or coercion at all. Instead I realized that business is based on voluntary cooperation. No one is forced to trade with a business; customers have competitive alternatives in the market place; employees have competitive alternatives for their labor; investors have different alternatives and places to invest their capital. Investors, labor, management, suppliers — they all need to cooperate to create value for their customers. If they do, then any realized profit can be divided amongst the creators of the value through competitive market dynamics.

In other words, business is not a zero-sum game with a winner and loser. It is a win, win, win, win game — and I really like that. However, I discovered despite my idealism that our customers thought our prices were too high, our employees thought they were underpaid, the vendors would not give us large discounts, the community was forever clamoring for donations, and the government was slapping us with endless fees, licenses, fines, and taxes.


He then discusses the Freedom Movement.

I hope to do two things tonight. First, I will critique the freedom movement and highlight mistakes that have greatly lessened its impact and influence in the world. Second, I will challenge the movement to re-think its purpose and values. We need to evolve our paradigm along with the brand that we offer the world. As a businessman who knows something about marketing and branding, I can tell you the freedom movement is branding itself very poorly...

How many people in the audience believe that the only social responsibility that business has is to maximize profits? Before I make my next point, let me boast about Whole Foods Market for a moment. In 2005, we did $4.7 billion in sales and realized $136 million in net profits. With our current growth rates, by 2010 we should do over $12 billion in sales. On a percentage basis Whole Foods Market is the most profitable public food retailing business in the United States, with the highest net profit percentage, sales growth, and sales per square foot. I make this boast to prove that (a) I believe in profit and (b) I am quite competent in producing it.

I love profit. Profit is good and it is socially necessary. However, some people in the freedom movement have long argued that the only social responsibility that business has is to maximize profits. I believe that profits are an essential purpose of business, but I would argue that they are not the sole, or even most important, purpose of business. Profit is the most important purpose to the business owners. But owners do not exist in a vacuum. I believe the best way to think about business is as an interdependent system of constituencies connected together in a "harmony of interests..."

I believe that business has a much greater purpose. Business, working through free markets, is possibly the greatest force for good on the planet today. When executed well, business increases prosperity, ends poverty, improves the quality of life, and promotes the health and longevity of the world population at an unprecedented rate. This audience understands these truths, but how many people in our greater society comprehend it? The freedom movement has also poorly defended the social legitimacy of both business and free markets. A new paradigm for business and the free market is necessary — one that accepts the importance of profits, of course, but also one that recognizes that business has legitimate social responsibilities that go far beyond merely maximizing profits...

I believe, however, that all four of these issues are far less critical for improving our society than creating educational choice, privatizing Social Security, deregulating health care, and enacting meaningful tort reform. The legalization of drugs, pornography, prostitution, and guns, as issues, are all too closely associated with the freedom movement. Aligning ourselves with these issues has hurt our brand tremendously, by associating the freedom movement with cultural decadence. Parents don't want their children's lives ruined by drug experimentation, or their innocence prematurely lost to pornography and prostitution, or their lives ended with a bullet...

When I was a naive (some people in the audience by this time probably think I'm still naive) and idealistic young man, I migrated to the Left for my value system. Why did I do that? Because the Left provided an idealistic vision of the way the world could be. However, the reality of the Left's vision proved to be terribly flawed. Its socialist economic system not only didn't work very well, but in its communist manifestation it justified monstrous governments directly responsible for the murders of over 100 million people in the 20th century. Despite the horrible track record of leftist ideology, millions of young Americans continue to migrate to an intellectually bankrupt Left because the Left still seems to be idealistic, and idealism is magnetic to the young. Idealism will always be magnetic to the intelligent and sensitive young people of the world.

How sad that the freedom movement often refuses to be idealistic. We usually don't even attempt to compete. We simply forfeit the field to the Left because we pride ourselves on our "realism" and "tough-mindedness." We talk about freedom and prosperity — and that is about it. We have no real theory of either the good life or the good society except the fundamental belief that if people have sufficient personal and economic liberties (as in Friedrich Hayek's spontaneous order) we will create a prosperous society...

The freedom movement, in my opinion, needs to embrace the ideal, not just of economic growth, but also of personal growth. If we use Maslow's hierarchy of needs as our criterion for evaluating the freedom movement, we see that it is primarily focused on the lower need levels: meeting the physical needs and safety needs through increased prosperity. To be perfectly blunt about it: the freedom movement is largely materialistic in its approach to life, stuck in the lower levels of Maslow's hierarchy. The higher need levels — love, self-esteem, the good, the true and the beautiful, and self-actualization — are either taken for granted or simply ignored...

That is the secret of the success of the Left, despite its bankrupt economic philosophy. The Left entices the young with promises of community, love, purpose, peace, health, compassion, caring, and environmental sustainability. The Left's vision of how to meet these higher needs in people is fundamentally flawed. But the idealism and the call to the higher need levels is magnetic and seductive, nonetheless. The irony of the situation, as I see it, is that the Left has idealistic visions of higher human potential and social responsibility but has no effective strategies to realize its vision. The freedom movement has strategies that could meet higher human potential and social responsibility but lacks the idealism and vision to implement these strategies. I assert that the freedom movement can become a successful mass movement today if it will consciously adopt a more idealistic approach to its marketing, branding, and overall vision, and embrace a vision of meeting higher human potentials and greater social responsibility...

The freedom movement must first advocate the ideal of self-responsibility for health. We own our own bodies, don't we? This is no minor thing, because the Left, by supporting socialized medicine, demonstrates a belief that common citizens are too stupid to take responsibility for our own health and therefore need the "experts" to step in and control things for our own good...

Peace. Why should the Left own the peace ideal? Why should the idealistic young turn to the Left to find peace?...

The freedom movement should own the peace ideal; we do not own it now. Let us retrieve the peace ideal, because we know the truth: democracy + free markets = peace between nations who share these social, economic, and governmental structures...

Most Americans know that socialism doesn't work as an economic system. We allow competitive markets to produce our food, our housing, our clothing, our transportation, and most of the goods and services that we consume. Why then do so many people embrace socialism in health care and education? Because we have not created an idealistic vision of the way things could be if they were grounded in freedom instead of governmental control...

Who among you has read Bjørn Lomborg's book, "The Skeptical Environmentalist"? I cannot recommend this great book to you more highly. It convincingly demonstrates that the doom-and-gloom, apocalyptic crowd has greatly exaggerated the decline of the global environment in many important areas such as air and water quality and the decline in natural resources. With that qualifier said, I still believe the freedom movement has erred strategically by letting the Left own the ideal of environmental sustainability...

Maintaining environmental sustainability is in the collective best interest of everyone. No one will argue that premise. The real question is, "What are the best ways to do it?" What are the trade-offs we need to make? When the freedom movement ignores the issue of environmental sustainability, the Left will dominate the discussion of the issues.

Remember that the Left's goal remains either to cripple or to destroy capitalism. The freedom movement must embrace the ideal of environmental sustainability but must bring to the debate its commitment to property rights, markets, and proper incentives to effectively resist the inevitable leftist arguments for more bureaucratic controls and regulations. Why should the Left own the ideals (and it does own them right now) of love, caring, and compassion — especially with its track record?..

Freedom belongs with love. Prosperity belongs with compassion. This is the vision I hold for the future; this is the world I strive to create. I urge you to join me. Together we can create a world where people have lives full of purpose, love, adventure, a world of freedom, prosperity, and compassion.


This may seem kind of jumpy, but I had to cut out something or else I wouldn't be providing the condensed version. But like I said before, you owe it to yourself to go read the whole thing.

7 comments:

KauaiMark said...

"...Everything I believed about business was proven to be wrong."


Says it all!

Mike said...

Much with which to agree here, but equating a constitutional right (the right to keep and bear arms) with drug use, porn, etc. sounds as though he hasn't totally shed his leftist sympathies.

Ellen K said...

Interesting speech. Dallas had one of the earlier versions of this store. While I go there rarely, it does offer something in the way of upscale food for special occassions. What I find appalling is that many of the same folks who would actually oppose and demonstrate to stop a Walmart from being built, would not think half a minute about allowing a WholeFoods. In that way, Whole Foods has marketed itself to the upper class liberal as the place to shop. Unfortunately, I can't afford to shop their on a regular basis. And I can't imagine how someone on a limited budget would be able to access any of that bounty. I used to work for one of his good friends that runs another liberal company that is the delight of the upper class-The Container Store. While it consistently gets marked as one of the best places to work, my experience was the opposite. They made claims of creating a positive environment, but it was only so if you followed lockstep with their philosophy. And God help you if someone outed you as a conservative. A friend of mine's daughter 20 years after my experience, had almost identical history. In short, liberals claim to hate the system that makes them rich, but have little problem using that system all the same. I wonder what would happen if the media targeted Whole Foods workplace and scrutinized their labor practices and whether they are hiring people who are not in this country legally. But then again, it's okay to pick on Walmart and K-mart and even fastfood because the powerful don't use those services. I appreciate that the man has learned something, but it would be much more meaningful if he would speak publicly about his policies.

Darren said...

EllenK, we know liberals don't practice what they preach. That's why one of my labels on this blog is "hypocrisy".

As for his business practices--I can't speak to those. It would be nice if he were as conservative in practice as he speaks, but I don't know.

Ellen K said...

A long time ago, when everyone was slurping up the Harvard Business School models, my Dad-a career sales professional, predicted that the use of testing rather than training to predict results would end up in the downfall of personal responsibility and ethics. I think when you look at corporate ethics across the board there's been a slew of folks who take jobs with the idea of getting rich rather than doing a good job. It's permeated our schools. The kids who were business majors when I was in college are engineering majors today-not because they love the job, but simply to make a lot of money. I would like to think there should be more to life than that.

Doug said...

Hey Darren-slightly off-topic here but related-have you seen the book "Crunchy Cons"? Sounds like it would be up your alley. The idea is basically how eating real, organic food and living a "greener" lifestyle is in line with political conservatism. As the author says, "When did eating organic become a left wing issue?"

Anyway, I love the concept and if I ever get well, it's the lifestyle I'll choose.

Darren said...

I haven't heard of the book.

I don't know why eating organic and being green has to represent any particular political philosophy. It became leftie when the true purpose became anti-American and anti-capitalism.

And it's not just me who says that. Patrick Moore, co-founder of Greenpeace, believes so as well.

I say, eat however you like! But don't compel others to eat the way you do. It's that whole "free market" thing.