Capitalism 2013

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Capitalism, once lauded as the proud foundation of America's success, has had a bad rap lately. Free-market capitalism has been blamed for everything from the collapse of real estate and the stock market to the widening gap between haves and have-nots and even the onslaught of terrorism. Capitalists are the bad guys in nearly every movie, every classroom, and at least half the political speeches — or so it seems.

But there is nothing free about American markets today. Government intervention has led to a Bizarro world of crony capitalism that mimics free enterprise while tying its hands. John Mackey calls it "the intellectual hijacking of capitalism." Regulations intended to protect the consumer and the employer create unintended imbalances that limit competition and inadvertently encourage unfair practices. Capitalism gets the black eye, while government goes in for the sucker punch. But it's the consumer and the employee who end up on the canvas, knocked out.

Mackey, founder of Whole Foods Markets, and Raj Sisodia have written a book, due to come out on January 12, to counter this false impression of the business person. With the subtitle "Liberating the Heroic Spirit of Business," Conscious Capitalism is a handbook of great business practices told through the anecdotes of highly successful and highly conscientious business people. Mackey and Sisodia demonstrate that business owners can be compassionate and successful. In fact, the "conscious capitalist" will be more successful by following the leadership advice outlined in this book.

What is a conscious capitalist? One who is fully aware. Conscious capitalists make deliberate decisions based on the longterm consequences of their actions. They are aware of the impact their actions have on customers, suppliers, shareholders, the community, and the environment. They recognize that when they consider the needs of others and act fairly, others will probably do the same, and everyone will benefit.

Government intervention has led to a Bizarro world of crony capitalism that mimics free enterprise while tying its hands.

Mackey is the ideal person to write a book like this, because he has himself embarked on a philosophical journey that allows him to see the problems from one perspective and the solutions from another, uniting philosophies in what he sees as a "win-win" relationship. He describes the "progressive political philosophy" he espoused in young adulthood, when he saw problems in the world and believed that "both business and capitalism were fundamentally based on greed, selfishness, and exploitation." His personal life is grounded in the kinds of causes usually embraced by anti-capitalists, including his vegan diet, his Eastern meditation techniques, and his deep concern for animals and the planet. He is a gentle man in every way. But he has also become a fierce defender of free market capitalism. Through his experience as an entrepreneur he discovered "that business isn't based on exploitation or coercion at all. Instead . . . business is based on cooperation and voluntary exchange . . . for mutual gain." Bringing the spirit of cooperation and caring to the forefront of business management is the purpose of this book.

Throughout the book, Mackey and Sisodia return to the theme that "business is not a zero-sum game with a winner and a loser. It is a win-win-win game." They demonstrate how the conscious capitalist creates a symbiotic relationship among several stakeholders, including the business owner, the workers (or "team members," as Mackey prefers to call them), the consumers, the shareholders, the suppliers, and the community. Working together for their own betterment, they make each other's lives richer as well.

One of my favorite sections of the book focuses on worker motivation. The authors identify three main principles of motivation: job, career, and calling. A "job" is a transaction: if you put in a certain number of hours, you go home with a certain amount of money. A "career" can be more satisfying: it requires a certain amount of training and skill, and it brings a greater sense of responsibility, as well as respect and money. A "calling," on the other hand, "offers value and satisfaction beyond the paycheck." Work that feels like a calling may be time-consuming and even exhausting, but there is seldom a distinction between being "at home" and being "at work," because it is simply who we are. Many people devote their lives to a calling and earn no money for it at all.

Since, on a normal day, most people spend more waking hours at their place of employment than they do at home, a sense of purpose is essential for satisfaction and happiness. One way to instill the sense of calling, according to this book, is to broaden that sense of purpose for the people who earn a paycheck. A team member at Whole Foods, for example, is not just a grocery clerk; as Mackey sees her,she is part of a team that provides nutritious and delicious food to people who live in the community. She is proud of the charitable work provided by Whole Planet (a charitable organization sponsored by Whole Foods) and enjoys the employee benefits that she herself participated in selecting, including a health plan that should be a model for the nation. She also enjoys the trust that management exhibits toward her; Whole Foods has a policy of encouraging team members to "use their best judgment" when something unusual occurs or a particular rule or practice seems not to fit a particular incident.

Conscious capitalists exhibit this attitude of partnership and respect toward the suppliers of their companies. Negotiations with suppliers can often turn into adversarial relationships whereby one side ends up with a disproportionate amount of the benefit, and the other with a disproportionate amount of resentment. Mackey and Sisodia recommend treating suppliers as one would treat consumers. Treat them fairly, pay them on time, understand their needs, and recognize that they have to make a profit while doing business with you. In so doing, you will create an atmosphere of loyalty and favored status that could be very important when supplies are limited. And it's good karma, too.

Conscious Capitalism is full of anecdotes not only about Whole Foods but also about such successful companies as The Container Store, Southwest Airlines, Walmart, POSCO (formerly Pohang Iron and Steel Company), 3M, UPS, and many others. A lot of them adhere to one or more of the four "categories of great purpose" described in the book. The great purposes include:

  • The Good: services to others that include improving health, education, communication, and quality of life
  • The True: discovery and furthering human knowledge
  • The Beautiful: excellence and the creation of beauty
  • The Heroic: courage to do what is right to change and improve the world

These stories about modern businesses that are providing goods and services that are good, true, beautiful, or heroic in a conscientious manner bring the book to life and give the reader a buoyancy of spirit. Capitalism is good. Entrepreneurship is honorable. Businesses do contribute to the overall good. Managers do not have to demean or mistrust those whom they supervise. In fact, everyone benefits when workers are trained and trusted to "use their best judgment." Conscious Capitalism is a book you will want to share with every business owner, manager, and worker you know.


Editor's Note: Review of "Conscious Capitalism: Liberating the Heroic Spirit of Business," by John Mackey and Raj Sisodia. Harvard Business Review Press, 2013, 322 pages.



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Comments

Jon Harrison

Ad hominem? I wasn't making a personal attack on J.M. Rather, I simply stated that his views do not match up well with some of the basic realities of the American economy of today. Surely, that's not an ad hominem attack. Barack Obama doesn't understand particularly well how a capitalist economy works. His statements and known views indicate as much. That's just a statement of fact on my part (or my opinion, depending on my reader's point of view); it's not an ad hominem attack on the man.

Anyone can feel free to disagree with my take on Mackey's views. But I plead innocent to indulging in an ad hominem attack on him here.

Johnimo

Au contraire, a proper understanding of capitalism and John Mackey's implementation of it is the ONLY thing that stands a chance of lifting the 47% up, up and out of their hardscrabble lives.

For far too long, we've pretended to help people by cannibalizing the infrastructure of wealth: investment capital, factories, new technologies, and entrepreneurial spirit, all of which succeeded so spectacularly in the late 1800s and throughout the 20th century in raising everyone's standard of living.

Suggest, if you will, an alternative. We see all of Europe stuck in the malaise of nanny-state socialism. China and India can provide human labor for a fraction of what the west can, and we've dribbled our wealth away on wars, social security, medicare, food stamps, and college educations for which there remains precious little productive employment. Folks better awaken to the realization that the best safety net is a job and another one to go to if you lose it. Without the creation of new wealth through hard work, the 47% have little to which they can look forward.

But there's a bright side. We do have a huge manufacturing head start on everyone else. We have a freight transportation system that's topnotch. We have lots of energy and lots of people that still want to work. However, as they say, "Time's a wasting."

Jon Harrison

Gee, if you actually read (or re-read) my comment, you'll see that I believe that there are no answers to the problems I mention. It's my belief that Western civilization is on the way out (not in my lifetime, or yours, but fairly soon in historical terms), and capitalism with it.

It's amusing to see how many people believe certain things -- verities, in their eyes -- will persist forever (or until judgement day, etc.). An historical perspective on such matters reveals the opposite. Things that some of us feel are "forever" -- like capitalism, or Christianity -- will disappear without a trace in the fullness of time.

Many Americans believe that a solution exists for every problem. Whether I'm right or you are will remain in suspense, I'm afraid
-- we'll both gone from this earth when the truth is revealed. But I feel pretty confident that my view will be vindicated by events (and no doubt you do, too).

Russell Hasan

Mr. Jon Harrison,
Based on your reply, I don't understand why you think of yourself as a libertarian. I have not read the Whole Foods book either, but the review described it as espousing the standard, normal libertarian view that crony capitalism hurts the poor and classical liberal free market capitalism would help the poor. What could be a less controversial proposition for a libertarian to endorse? Why say what you said, unless it is from a desire to darken everyone's mood with pessimism and a whiny complaining feeling of helplessness as if the poor are helpless victims? Libertarianism believes that freedom will help people, and even a determinist who does not believe in free will can assert that freedom will result in greater prosperity. I am truly confused by your comment. I pride myself on being more practical and pragmatic than most libertarians, and unlike many libertarians I believe that policy should care about the poor and not about the rich, but I disagree with you strongly.

Jon Harrison

To be quite frank, I'm not unhappy that you disagree strongly with me.

I come to wonder more and more what would happen if libertarians of a certain stripe actually took over the world. Given your criticism of my failure to espouse the "standard, normal libertarian view", I fear I might end up in a re-education camp for those who fail to toe the party line. Or would I simply be excommunicated?

I am, if necessary, a party of one; I don't trim my views in order to remain part of a group. Remaining bound by ideological ties, despite the evidence all around you, is the mark of (to be charitable) a conformist.

Jo Ann

Regardless of your political or ideological preconceptions, I still think it's unfair to attack a book you haven't read simply because you think its author charges too much for tomatoes. And by the way, it's the "Conscious Capitalism" book, not "the Whole Foods book." And it's sensational.

Jon Harrison

I made the point of saying that I was basing my comment on your review. From there I went off on my own little riff about Mackey's known views which, pleasing though they are in theory, don't have much practical application in the current political economy. I rather enjoy going off on little riffs -- they seem to provoke so many people!

Was your review not reflective of the book? (By the way, I did note the title, and nowhere did I refer to it as the "Whole Foods Book". The fact that half the population can't afford to shop at Whole Foods only took up one sentence in my comment.)

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