Whole Foods:  The Way Forward for Capitalism?

By Shlomo Maital      

Whole Foods  

   John Mackey is co-chief executive officer and co-founder of a great company called Whole Foods Market.  Whole Foods was founded 32 years ago, and today has a market cap of $18 b., with a market-leading position in the retailing of organic and health foods in the U.S.  The gross margin of 35 per cent is unheard of in this line of business. So when Mackey speaks, we should listen.   And he has now spoken, in his new book Conscious Capitalism:  Liberating the Heroic Spirit of Business.

    The book is reviewed by Luke Johnson in the Financial Times.  Johnson recalls that Mackey was investigated by the Securities Exchange Commission for “anonymous posting on bulletin boards”).

     What are the key points in the book?   Small government, free markets are great, unions aren’t, Hayek and von Mises are heroes.  But, don’t give up yet.

   Mackey says that “happier and better-trained staffs are more productive”.  No surprise there.  “A constructive corporate culture helps generate innovation and growth”.  Hmmm.    “A pay ratio of no more than 19 between top and bottom is wise.”    Question is, bottom of what?  The management pay scale?  The cleaning staff?  Mackey’s pay is irrelevant, since he owns billions of dollars worth of stock. 

     Everyone knows we need to re-evaluate capitalism. But few capitalists have tried.  So kudos to Mackey for trying. But apparently, he offers little that is original or deep.  In a book review in The Huffington Post, the reviewer notes:   

   Surprisingly, the book ignores two specific actions by Whole Foods that demonstrate how a company can do good with its market power. Last year, Whole Foods removed Scharffen Berger chocolate from its shelves following concerns about child labor in its supply chain. The move prompted Hershey’s, which owns Scharffen Berger, to commit to third-party audits of 100 percent of its farms. In 2008, Whole Foods partnered with the Coalition of Immokalee Workers to address exploitation of tomato pickers in Florida.

   No, Conscious Capitalism is not the way forward for capitalism.  We’re still waiting for a really thoughtful capitalist to innovate the way free markets work.