I’ve been there, so the things that John Mackey, CEO of Whole
Foods Market, says in the June 2006 issue of Liberty
magazine essentially ring true.
Whole Foods is big now, one of the nation’s fastest growing mass
retailers, with sales last year exceeding $5 billion and a gross
profit of more than $1.6 billion — not a bad return in the grocery
business.
It didn’t start that way. Coming out of the counterculture
movement of the 1960s and 1970s, Mackey, a vegetarian, a former
long-haired and bearded commune resident, a student of ecology,
yoga, and eastern philosophy, writes that he idealistically opened
a small food store in 1978 with his girlfriend, with a total
capital outlay of $45,000. The store lost $23,000 in its first
year.
His philosophy at the time, he explains, wasn’t exactly
pro-profit or pro-capitalist: “Politically, I drifted to the Left
and embraced the ideology that business and corporations were
essentially ‘evil’ because they sought profits. I believed that
government was ‘good’ (if the ‘right’ people had control of it)
because it altruistically worked for the public interest.”
He’d been taught, Mackey explains, that “business and capitalism
were based on exploitation: exploitation of consumers, workers,
society and the environment.” After a year in business, he saw a
reality that didn’t mesh with his decades of anti-business
indoctrination.
“I believed that ‘profit’ was a necessary evil at best and
certainly not a desirable goal for society as a whole,” he writes.
“However, becoming an entrepreneur completely changed my life.
Everything I believed about business was proven to be wrong.”
Rather than seeing a milieu of “exploitation” and coercion in
his store, Mackey saw a system of freedom and “voluntary
cooperation” at work and a new realism: “No one is forced to trade
with a business; customers have competitive alternatives in the
marketplace; 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.”
In short, an entrepreneur like Harvard dropout and Microsoft
founder Bill Gates (or John Mackey) got his money first and
foremost by creating a new pie, by launching an innovative
enterprise with new products that created new wealth and income
that spread to investors, labor, management, suppliers — and
spread to the public at large by way of increased tax revenues.
“In other words, business is not a zero-sum game with a winner
and a loser,” says Mackey. “It is a win, win, win, win game.”
That’s not the way Mackey’s customers and employees saw it.
Despite losing half his initial investment in the first year of
business, Mackey was nevertheless accused of greed and
exploitation. “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.”
Mackey has voted straight libertarian since those early days in
1980. Still, he says he’s had little success in converting people
to the concept of economic freedom or to an understanding of how
the world really works, to the concept of how freedom, prosperity,
human progress, spontaneous order and overall well-being are
inherently channeled through a system of voluntary cooperation,
private property, business competition and individual
incentives.
“The freedom movement remains a small, relatively unimportant
movement in the United States today,” he writes. “As a businessman
who knows something about marketing and branding, I can tell you
the freedom movement is branding itself very poorly.”
By incorrect branding, Mackey means that too much emphasis about
individual freedom has been focused on side issues, such as the
legalization of drugs, and not enough on the big picture. Instead,
he maintains, if it’s to have any chance of having a mass appeal,
the freedom movement will have to consciously create a broad and
inspiring vision, an idealism that addresses the direct correlation
between economic freedom and societal progress.
The freedom movement, libertarians, and free market economists,
he writes, have done a poor job of defending the social legitimacy
of business, economic freedom, capitalism, individualism and free
markets. The message should be that business, working through free
markets, has arguably been the world’s greatest force for human
progress and our collective well-being, delivering increased
prosperity, less poverty, extended longevity and democratic
freedoms.
