• Home
  • About Mark Skousen
    • Catalog
    • Mark Skousen Biography
    • Commonly Asked Questions
    • Jo Ann Skousen Biography
    • Mark Skousen’s Family and Famous Relatives
    • Books Recommended by Mark Skousen
    • Personal and Miscellaneous
  • Books
    • Economics Books
      • Economic Logic
      • EconoPower: How a New Generation of Economists Is Transforming the World
      • The Big Three in Economics: Adam Smith, Karl Marx and John Maynard Keynes
      • The Making of Modern Economics
      • The Structure of Production
      • Vienna & Chicago, Friends or Foes?
    • Finance and Investing Books
      • Maxims of Wall Street
      • A Viennese Waltz Down Wall Street: Austrian Economics for Investors
      • Investing In One Lesson
      • High Finance on a Low Budget
      • The New Scrooge Investing
  • Interviews
  • Appearances
  • Online Press Kit
    • Contact Information
    • Biographical Information
    • Headshots
    • List of Current Books
    • Forecasts & Strategies, Trading Services and Weekly Blog
  • FreedomFest
  • Persuasion vs. Force

MSKOUSEN.COM

Mark Skousen's Personal Website for the Best of Money & Economics

  • News
  • Economics
  • Personal Finance
  • Investing & Markets
  • Forecasts & Strategies
  • Politics & Liberty

Second Review of John Mackey’s Revolutionary “Conscious Capitalism”

April 18, 2013 By Mark Skousen Leave a Comment

Whole Foods’ Better Business

Conscious Capitalism: Liberating the Heroic Spirit of Business, John Mackey and Raj Sisodia, Harvard Business Review Press, 368 pages

By Mark Skousen • April 10, 2013

Ever since the robber barons stalked the earth and Balzac expostulated that “behind every great fortune is a crime,” the media has attacked Wall Street, Madison Avenue, and anything to do with corporations. In the latest Gallup poll on the trustworthiness of various professions, business executives come out little better than lawyers and used-car salesmen, far below the ethical standings of medical doctors, engineers, and police officers.

Even as the global marketplace has raised the standard of living a hundredfold in the past century, the accusations keep pouring in—that capitalism promotes inequality, materialism, greed, environmental degradation, and short-termism on Wall Street, and that fraud, deception, and corporate welfarism would run rampant if it weren’t for Sarbanes-Oxley, Dodd-Frank, and a host of government regulatory agencies.

But corporate management has come a long way since the dark days of Carnegie, Morgan, Gould, and Rockefeller. The first glimmer of hope came when Henry Ford instituted the $5-a-day wage in 1913 and recognized that workers deserved to participate in the company’s fortunes. Ford’s decision to more than double their daily pay allowed employees for the first time to buy the cars they were making and helped toward dispelling the Marxist charge of exploitation and alienation.

Still, battle lines have been drawn between labor and capital, and between consumers and producers, into the 21st century. Workers live in constant fear of being underpaid, overworked, or unemployed thanks to the upper hand of management, while consumers are deceived by “hidden persuaders” into buying “bads” rather than “goods.” All this despite the Herculean efforts by such management gurus as Frederick Taylor, Alfred Sloan, Edward Deming, Louis Kelso, Peter Drucker, Steve Covey, and Jim Collins. Big government and non-profit organizations seem a necessary countervailing power to a deeply flawed private enterprise system.

In response, utopian visionaries have sought to transform capitalism into a system that is “humane,” “social,” “enlightened,” “good,” and even “better.” But after countless how-to books and MBA courses on business ethics, leadership, and corporate culture, the question remains: can the business world develop a system beneficial to all the stakeholders in a firm—owners, consumers, workers, investors, suppliers, and the community at large?

Enter John Mackey, cofounder and co-CEO of Whole Foods Market.  He and his co-author, Raj Sisodia, a professor at Bentley University, have created solutions they call “conscious capitalism” and “firms of endearment.” The authors offer a balanced score card, with chapters on “loyal, trusting customers”; “passionate, inspired team members”; “patient, purposeful investors”; “collaborative, innovative suppliers”; “flourishing, welcoming communities”; and “a healthy, vibrant environment.” Mackey and Sisodia conclude that business is not a sporting event, “a zero-sum game with a winner and a loser. It’s a win, win, win, win game.”

Yet skepticism abounds. Capitalism may be cooperative, but it can also be ruthlessly competitive. How can one avoid being labeled a “selfish and greedy businessman,” exploiting customers with high prices and misleading advertising and employees with low wages and high turnover?

Having read dozens of business books over the years, I can say with considerable authority that Conscious Capitalism is the most ambitious management model ever conceived, and if implemented it could catapult the world of business to what Adam Smith described eloquently as the “highest degree of opulence.” Indeed, if Mackey’s application of higher consciousness had been in the boardroom a generation ago, I like to think that we could have avoided the suffocating regulations of Sarbanes-Oxley and Dodd-Frank and the dire straits of companies like GM, Sears, and Citibank (even Enron).

Mackey wants firms to stop focusing exclusively on the bottom line—he would replace the traditional “shareholder” philosophy with a “stakeholder” philosophy. “Business is not about making as much money as possible,” he asserts. “It’s about creating value for stakeholders.” Companies must develop sterling reputations to attract loyal customers, employees, and suppliers and to generate community goodwill. If they do, superior returns can be achieved in earnings and the stock price, but as a byproduct, not as a primary goal.

Conscious capitalism is not just high theory: the book contains numerous case studies, starting with the $16 billion grocery-store chain that Mackey has been directing since the early 1980s. In the grocery business, traditionally known for its low margins, Whole Foods has achieved high margins and does so with little advertising: customers are the stores’ best advocates. Despite volatility, its stock has handily outperformed every index, has a return on equity of 13.7 percent, and is near an all-time high.

Whole Foods has been listed on the Fortune 100 Best Companies to Work For rankings since 1998. Employees—“team members”—receive above-average wages and benefits, including medical savings accounts and “wellness centers.” There are lots of built-in incentives to improve performance and earn more.

Whole Foods has created some of the most innovative labor policies anywhere, including a.) a cap on total compensation, including bonuses, for any employee at 19 times the average pay of all workers; b.) total transparency in salaries and wages; and c.) the same benefits, including stock options, for all full-time employees. This radical approach seems to be working: the company has a turnover rate of less than 10 percent a year.

Throughout the book, Mackey and Sisodia highlight other companies with a similar philosophy and equal success, such as Starbucks, The Container Store, the Tata Group, Costco, Google, Southwest Airlines, Panera Bread, Twitter, Trader Joe’s, and Waste Management.

Mackey and Sisodia don’t pull any punches. They are critical of Wall Street’s short-term quantitative metrics. They express reservations about Jim Collins’s list of “good to great” companies, such as Circuit City, Fannie Mae, and Altria (formerly Philip Morris), all of which Mackey says have embraced “unconscious” policies. Under his definition of good capitalism, some companies might have to change their product line or their corporate culture, or simply disappear. Mackey is critical of big pharma for its unethical and aggressive promotion of drugs with dangerous side effects.  And he rejects out of hand GE’s policy under Jack Welch of firing the bottom 10 percent of its workforce each year.

Although he calls free enterprise and entrepreneurship the source of “unprecedented prosperity for humanity,” Mackey challenges the philosophical vanguards of capitalism, Ayn Rand and Milton Friedman. He rejects the Randian notion that “selfishness” and “greed” are virtues and denies Friedman’s view that the only responsibility of capitalist firms is to maximize profits to their shareholders.

If there’s one undeveloped section in the book, it’s how to deal with failure. How do owners, workers, and suppliers respond to the creative-destructive nature of global capitalism—downturns in the economy, failed product selection, heavily unionized industries, foreign competition, and sectors in secular decline? Most companies go through tough times where they must downsize, turn around, or go bankrupt, leaving workers unemployed and bills unpaid. How would conscious capitalism apply to their situation?

The authors only briefly address this. Are they suggesting that if business leaders follow the tenets of conscious capitalism they will never fail, that they can always adjust to the new demands of fickle customers, obsolete technology, and government regulations, that firms will seldom if ever have to lay off workers in mass or close stores? The authors seem uncomfortable with the idea of firing anyone. How would they advise a company going bankrupt like Hostess, which faced entrenched union demands? Most importantly, how do companies avoid the danger of stakeholder imbalance, giving too much control to executives, team members, or the wider community?

In an appendix, Mackey and Sisodia compare their model with other philosophies of capitalism, such as Bill Gates’s “creative” capitalism. They distance themselves from the “corporate social responsibility” plan adopted by many companies—they claim it is often more PR than an integrated model—and warn against “charismatic” leadership. Unfortunately, they don’t discuss Charles Koch’s market-based management (MBM), which has catapulted Koch Industries into being the second largest private company in the world, or John Allison’s Objectivist model that transformed BB&T into the fastest growing regional bank in the country. It would be fun to have Koch, Allison, and Mackey compare notes in a public forum, especially with regard to whether a successful company should be public or private. (Koch Industries is private.)

March/April 2013Mackey’s conscious capitalism faces an uphill battle to satisfy everyone, including union bosses—Whole Foods workers remain non-union—environmentalists, and animal-rights activists (despite Whole Foods’ advanced policies). His ideal manager can’t completely avoid such troubles as store closings, layoffs, and other inevitable effects of a dynamic global economy. But he’s gone further than anyone to build a better world: as Benjamin Franklin once wrote, “it is incredible the quantity of good that may be done in a country by a single man who will make a business out of it.”

In sum, Mackey appears to have discovered how business can achieve the goal that Peter Drucker described as the “ideal non-revolutionary social welfare institution.” For Mackey, it’s not the state, church, alma mater, or nonprofit organization but the place most people spend most of their waking hours working and developing their closest relationships—the private company. Mackey cites a Gallup world poll indicating that the number one determinant of happiness is “a good job.” He steadfastly believes that business, the voluntary shared passion of individuals, “can create a world in which all people live lives full of purpose, love, and creativity—a world of compassion, freedom, and prosperity.”

That’s a rather an ingenious discovery for a kid who never took a business class in college.

Mark Skousen is the editor of Forecasts & Strategies and the producer of Freedom Fest.

See the original American Conservative article: http://www.theamericanconservative.com/articles/whole-foods-better-business/

Filed Under: Capitalism, Free Markets, News, Philosophers and Businessmen

About Mark Skousen

Mark Skousen is a professional economist, university professor, best-selling author, editor of the award-winning Forecasts & Strategies financial newsletter, and producer of FreedomFest, the largest annual gathering of free minds about liberty and freedom in the world. Skousen has been married to wife Jo Ann for 42 years, and has five children and five grandchildren.

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Connect with Mark Skousen

  • Email
  • Facebook
  • LinkedIn
  • Twitter

Mark Skousen’s Top Ten

Top Ten

Recent Posts

FreedomFest 2023 Memphis

My Schedule at FreedomFest Memphis 2023, Renasant Convention Center.

Dear freedom lovers, I’m excited about this year’s big show in Memphis.  … [Read More...]

ChatGPT

GPT4 Gets it Right about Mark Skousen!

Tyler Cowen, GMU professor and host of the popular website … [Read More...]

Robert E. Lucas Jr.

Robert Lucas, Jr., Nobel Prize Winner, R.I.P.

Dear friends,   Another free-market economist has passed away.  Robert Lucas, … [Read More...]

Stanley Engerman

Stanley Engerman, Co-Author of “Time on the Cross,” R. I. P.

Stanley Engerman, economic historian at the University of Rochester, died on May … [Read More...]

FreedomFest 2019: Mark Skousen & Jo Ann Skousen – Investing for Two: How Couples Can Successfully Manage Their Finances Breakfast

… [Read More...]

Three Nobel Prize Winners Endorse New Macro Statistic

by Mark Skousen I now have three Nobel prize winners who are encouraging my … [Read More...]

Gross Output

Supply Chain Business Still Growing: Recession Fears May Not Pass GO

Washington, DC (Thursday, September 29, 2022): Today, the federal government … [Read More...]

Are economists the slowest learners?

Dear friends of freedom, Peter Drucker once said, "Economists are the slowest … [Read More...]

FreedomFest Agenda – Here’s a preview:

Dear friends of FreedomFest, The excitement is building for our July 13-16 … [Read More...]

Making of Modern Economics

Richard Rahn Reviews “The Making of Modern Economics” by Mark Skousen

Richard W. Rahn — economist, syndicated columnist and entrepreneur — reviewed … [Read More...]

Making of Modern Economics

“The Making of Modern Economics” – The book the New Socialists fear the most

Good news! The brand-new fourth edition of “The Making of Modern Economics” has … [Read More...]

Franklin

Why Ben Franklin Matters

Today is the 316th anniversary of the birth of founding father extraordinaire … [Read More...]

Economy

Economy Slows, But the Outlook is Still Positive

Washington, DC (Wednesday, December 22, 2021): Today, the federal government … [Read More...]

Samuelson vs Friedman, Match of the Century

By: Mark Skousen First published in the March 1999 issue of Liberty … [Read More...]

Gross Output

Despite Higher Inflation, the U.S. Economy Continues to Boom: Gross Output (GO) Hits $50 Trillion!

Washington, DC (Thursday, September 30, 2021): For the first time in history, … [Read More...]

Are we Rome?

Are We Rome?

By Mark Skousen Talk delivered on Saturday, September 11, 2021, Kimber … [Read More...]

Economy

While Inflation Threatens, the U.S. Economy is Firing on All Cylinders

  Washington, DC (Thursday, June 24, 2021): On June 24, 2021, the federal Bureau … [Read More...]

FreedomFest

Fun Things to Do at FreedomFest This July

We already have more than 2,000 registered attendees for FreedomFest next month. … [Read More...]

Walter Lippmann

Where’s Walter Lippmann when we need him?

Columnist and author Walter Lippmann (1889-1974) was considered the most … [Read More...]

Gross Output

Gross Output (GO) Growth Outpaces GDP Again to Suggest Robust Recovery

Washington, DC (Thursday, March 25, 2021): On March 25, 2021, the federal Bureau … [Read More...]

Gross Output

Business-to-Business (B2B) Spending Grows Faster Than GDP!

Washington, DC (Tuesday, December 22, 2020): On December 22, 2020, the federal … [Read More...]

Maxims

Ideal Holiday Gift! New 10th Anniversary Release of “The Maxims of Wall Street”

Dear friends, A hundred years ago, in 1920, the great author and poet Rudyard … [Read More...]

Ezra Taft Benson

Ezra Taft Benson’s Remarks at FEE Headquarters in New York, May 1977

In 2001-02, I served as president of the Foundation for Economic Education … [Read More...]

Ezra Taft Benson in Russia

Elder Ezra Taft Benson Speaks in Communist Russia

    “It was the most heart-rending and most inspiring scene … [Read More...]

lessons

10 LESSONS FOR 10-10-2020

This article was originally published on the FreedomFest Forum on October 10, … [Read More...]

GO-Day Celebration

Dear friends, Good news!  For the first time, the federal government (BEA) … [Read More...]

Gross Output

Macroeconomics on the GO: How Wall Street Economic Analysts Use Gross Output (GO)

Here are two examples of how private economic research firms are using gross … [Read More...]

Gross Output

Despite First Decline in More Than a Decade for Q1, Gross Output (GO) Might Still Offer Hope for a Robust Recovery in Late 2020

Washington, DC (Tuesday, July 7, 2020):  On July 6, 2020, the federal Bureau of … [Read More...]

FreedomFest

My Schedule at FreedomFest 2020

by Mark Skousen Editor, Forecasts & Strategies   Dear … [Read More...]

Forecasts & Strategies

40 Year of Forecasts & Strategies

Dear friends, My publisher, Salem Eagle, has just posted my special 40th … [Read More...]

GO

U.S. Economy on the GO: Total Spending Accelerates

Washington, DC (Thursday, January 9, 2020):  On January 9, 2020, the Bureau of … [Read More...]

MODERN MONETARY THEORY

THERE’S MUCH RUIN IN A NATION: MODERN MONETARY THEORY

By Mark Skousen Chapman University [email protected] “Today, as in the … [Read More...]

Forbes

Steve Forbes on the GO: I Make the Forbes 400 Richest Issue!

I’m mentioned on page 22 for my gross output (GO) model. (Sorry, I may be worth … [Read More...]

MY INTELLECTUAL ANCESTORS

BY MARK SKOUSEN Presidential Fellow, Chapman University "If I have seen a … [Read More...]

Trade

Trade War Threatens Recession

Washington, DC (Monday, July 29, 2019): On July 19, 2019, the federal … [Read More...]

FreedomFest

MY SCHEDULE AT FREEDOMFEST 2019

by Mark Skousen Editor, Forecasts & Strategies   Dear FreedomFest … [Read More...]

Austrian

AUSTRIAN VS. CHICAGO ECONOMISTS: RESPONSE TO THE 2008 FINANCIAL CRISIS

By Mark Skousen Updated in 2019  “Blessed paper credit! Last and best … [Read More...]

Gross Output

GO Confirms a Slow-Growth Economy as We Enter 2019

Washington, DC (Friday, April 19, 2019): Today the federal government released … [Read More...]

Gross Output

The US Economy is NOT Slowing Down. Business Spending Soars!

By Mark Skousen Editor, Forecasts & Strategies Washington, DC (Thursday, … [Read More...]

Making of Modern Economics

The Economist Publishes New Ad for “Making of Modern Economics”

The November 24th issue of The Economist, page 73, is running a new full-page … [Read More...]

Gross Output

Gross Output Indicates Continued Boom in the U.S. Economy as Business Spending Expands Rapidly in Q2

Washington, DC (Thursday, November 1, 2018):  Gross output (GO), the top line of … [Read More...]

Adam Smith

ADAM SMITH AND THE MAKING OF MODERN ECONOMICS

By Mark Skousen Presidential Fellow, Chapman … [Read More...]

Gross output

US Economy Continues to Expand, but Business Spending Slows Temporarily

Washington, DC (Friday, July 20, 2018):  Gross output (GO), the top line of … [Read More...]

Steve Forbes

Full Remarks by Steve Forbes On the Presentation of a Triple Crown in Economics to Mark Skousen

The following are Mr. Forbes remarks following Skousen’s session on “Adam Smith, … [Read More...]

Steve Forbes

STEVE FORBES AWARDS MARK SKOUSEN A TRIPLE CROWN IN ECONOMICS

For Immediate Release July 18, 2018 Washington, DC:  Steve Forbes, chairman … [Read More...]

Mark Skousen’s article on Revista Procesos de Mercado (Review of Market Processes)

Revista Procesos de Mercado (Review of Market Processes) has just published Mark … [Read More...]

If GDP Lags, Watch the Economy GO

‘Gross output’ reflects the full value of the supply chain, and it portends much … [Read More...]

Away We GO: Business Spending Accelerates in 4th quarter 2017

Washington, DC (Thursday, April 19, 2018) Gross output (GO), the top line of … [Read More...]

GO

GO Slow: New Leading Indicator Predicted Slowdown in GDP

by Mark Skousen Presidential Fellow, Chapman University Editor, Forecasts … [Read More...]

gross output

THIRD QUARTER GROSS OUTPUT AND B2B SPENDING GAIN MOMENTUM

Washington, DC (Friday, January 19, 2018): Gross output (GO), the top line of … [Read More...]

2ND QUARTER GROSS OUTPUT SHOWS SURPRISE SLOWDOWN IN ECONOMY

Washington, DC (Thursday, November 2, 2017): Gross output (GO), the top line of … [Read More...]

Economic Logic

ANNOUNCING A NEW EDITION BREAKTHROUGH COURSE IN FREE-MARKET CAPITALISM

“Mark Skousen is America’s leading economic author because he roots his luminous … [Read More...]

Gross Output

RAPID GROWTH IN 1ST QUARTER GO: ECONOMY IS NOT SLOWING DOWN

By: MARK SKOUSEN Washington, DC (Wednesday, July 26, 2017): Gross output … [Read More...]

GROSS OUTPUT AND B2B INDEX ADVANCE SHARPLY AFTER ELECTION

Washington, DC (Friday, April 21, 2017): Gross output (GO), the top line of … [Read More...]

SECOND QUARTER GROSS OUTPUT AND B2B INDEX INCREASE, STILL NO SIGNIFICANT GROWTH OF THE U.S. ECONOMY.

By Mark Skousen Washington, DC (Thursday, November 3, 2016):  Gross output, … [Read More...]

FIRST QUARTER GROSS OUTPUT AND B2B INDEX POINT TO NEGLIGIBLE GROWTH OF THE U.S. ECONOMY

Washington, DC (Thursday, July 21, 2016):  U. S. economic activity is still … [Read More...]

HOW BEN FRANKLIN SAVED THE POST OFFICE AND HELPED UNIFY AMERICA

By Mark Skousen Special to the Franklin Prosperity Report July 4, … [Read More...]

FreedomFest Fun Activities

In addition to all the great debates, presentation and hundreds of vendors in … [Read More...]

Big news: the Bureau of Economic Analysis (BEA) has changed its definition of GDP that starts with Gross Output.

This is a significant breakthrough, which I have encouraged them to do for some … [Read More...]

FOURTH QUARTER GROSS OUTPUT AND B2B INDEX POINT TO BUSINESS RECESSION

By Mark Skousen April 21, 2016 Washington, DC (Thursday, April 21, 2016):  … [Read More...]

CATO INSTITUTE POLICY FORUM: “GO Beyond GDP: What Really Drives the Economy?”

We hear constantly that consumer spending is 70% of GDP and that consumer … [Read More...]

ANNOUNCING THE NEW THIRD EDITION OF “THE MAKING OF MODERN ECONOMICS” BY MARK SKOUSEN

March 9, 2016: Today marks the 240th anniversary of the publication of “The … [Read More...]

Announcing the New Third Edition of “The Structure of Production”

Federal Government Introduces a New Macro Statistic: A Triumph in Supply-side … [Read More...]

My Friendly Fights with Dr. Friedman

The Rational, The Relentless - Liberty Magazine - September 2007 by Mark … [Read More...]

The Making of Modern Economics

Recent Comments

  • Homepage on Atlas Shrugged – 50 Years Later
  • Sal on Forecasts & Strategies
  • Gary Brown on Me and William F. Buckley: A True Story
  • Missy on Gary North, R. I. P.
  • Valerie on 10 LESSONS FOR 10-10-2020

Contact Mark Skousen

Personal Email

Forecasts & Strategies Email

FreedomFest Email

Social Media:
Facebook
LinkedIn
Twitter

Websites:
mskousen.com
markskousen.com
freedomfest.com

Mark Skousen Newsletters

 Mark Skousen Investment Newsletters

Since 1980, Skousen has been editor in chief of Forecasts & Strategies, a popular award-winning investment newsletter. He also is editor of three trading services, Skousen Private Equity Trader; Skousen High-Income Alert and Fast Money Alert.

Jo Ann Skousen’s Odds & Trends

Jo Ann Skousen

Movie reviews, theater reviews, and commentaries by Jo Ann Skousen, author, editor, professor and Mark's wife of 41 years. She is the Festival Director for the Anthem Libertarian Film Festival and the entertainment editor for Liberty Magazine.

Mark Skousen’s Investor’s CAFE

Mark Skousen Investors CAFE

Skousen Investor CAFÉ is a weekly electronic newsletter written by Dr. Mark Skousen. Mark offers commentary on the markets, the economy, politics and other topics of interest and what they mean to individual investors. Sign up for FREE here.

FreedomFest Conference


FreedomFest is an annual festival in Las Vegas where free minds meet to celebrate “great books, great ideas, and great thinkers” in an open-minded society. It is independent, non-partisan, and not affiliated with any organization or think tank.

Anthem Film Festival

Anthem Libertarian Film Festival

Anthem is the only film festival in the country devoted to promoting libertarian ideals. Anthem shows films and documentaries that celebrate self-reliance, innovation, commerce, individual rights, and the power of persuasion over force. We are looking for the year's best films about personal and civil liberty.

Copyright © 2023 · Mark Skousen · Log in

✖

Cancel reply

Cancel