Whole Foods CEO John Mackey delivered the opening keynote address for the International Students for Liberty Conference this weekend. Mackey stressed that capitalism has the power to eradicate poverty in the next century, expressed concern over capitalism’s “branding problem”, and maintained that “self-interest” alone is an insufficient moral foundation for the system. The themes presented by Mackey closely followed the premises of his new book, Conscious Capitalism.
Mackey’s analysis re-framed the issue of income inequality. Proponents of government control often point to wealth disparity as a social evil resulting from capitalism. However, Mackey noted that since capitalism’s development just over 200 years ago, overall global per capita prosperity has increased 10x. In nations which have embraced capitalism, the jump in prosperity is even more fantastic–35x in Japan, 100x in the United States, and 200x in South Korea. As Mackey stated, “Capitalism is ending poverty on planet earth. The problem is not that there is an unequal distribution of wealth in the world. The problem is that there is an unequal distribution of capitalism.”
Tangential to the booming economies across Asia, is the issue of Western economic exploitation. Mackey emphatically stated that “the myth that the West got rich by exploiting others has been destroyed by the rise of the Asian tigers.” Of course, this does not mean that Western powers have done no wrong. However, to suggest that Western prosperity is due to exploitation rather than through capitalism ignores the reality of economic transformation brought about through capitalism across Asia.
According to Mackey, “capitalism has a serious branding problem…the recent recession was…blamed on greedy financial corporations, deregulation, and capitalism—market failures–rather than on bad government regulations and monetary policies–government failures.” And, Mackey doesn’t believe we can count on the media and educators to address this misperception. As he states, “Business has been hated by the intellectuals and elites for all time.” Mackey’s PowerPoint presentation provided a compelling reason for this hatred: “Intellectuals resent having less money than ‘less intelligent’ businesspeople, and their status is much lower in a capitalistic society.”
Mackey proceeded to explain how to counter this distortion of reality and how to ensure the public supports capitalism. Rather than solely relying on Adam Smith’s “Invisible Hand” theory, which Mackey believes concedes the moral high ground, free market proponents must defend capitalism in a more articulate manner. As Mackey states, “Business is good because it creates value for many. It is ethical because it is based on voluntary exchange.”
Many defenders of capitalism simplistically state that the primary role of business is to “make money.” Mackey attempts to broaden the view on business. While medical professionals also “make money”, we understand the higher purpose is to provide health care. Builders also “make money”, but the higher purpose is to construct. Likewise, business in general has a higher purpose. According to Mackey, “Business is the biggest value in the creator in the world…That is the purpose of business; business creates value…Business needs to shift from profit maximization to purpose maximization.” Mackey listed Southwest Airlines, Google, and REI as successful businesses which also employed a “higher purpose” in their business strategy.
Of course, “higher purpose” does not impugn profit! Mackey stated, “Profits ultimately create all growth, capital, and prosperity…Profits are created through voluntary exchange, not through the exploitation of people.”
The message of “conscious capitalism” is already providing a fuller understanding of how capitalism is lifting people out of poverty, providing choices, and generating value for all of society. In addition, understanding the concept of a “higher purpose” expands capitalism beyond simply economic laws; instead, it allows businesses to strive to be one of the following ideals mentioned by Mackey: the good, the true, the beautiful, the heroic.