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January 24, 2013

My Exclusive Interview with Whole Foods Co-CEO John Mackey - Part 1

I live across the street from a Whole Foods Market store. When Whole Foods opened for business there a dozen or so years ago, the neighborhood wasn’t all that great – not many businesses were around and it wasn’t very safe. After the store opened, there was a remarkable economic and social transformation. It’s now one of the most livable, fun, and commercially active neighborhoods in Washington, D.C. People were shopping; there was a huge uptick in pedestrian activity; other businesses soon opened; condominiums rose. Whole Foods Market was the key to the area’s revitalization.

It reminds me that the impact of Whole Foods is felt far beyond the check-out counters on its properties. There are many ways in which its supply chains snake throughout the country, and indeed the world. With its wide range of vegetarian and vegan options, it has helped grow such companies as Tofurky, Field Roast, Gardein, Silk, and Daiya. Consumers looking for meatless or dairy-free alternatives are provided with fantastic options never before available. In 2005, Whole Foods decided it would sell only cage-free eggs. Subsequent to that, it adopted a five-tier rating system for the animal products sold in its stores, under a certification program called the Global Animal Partnership. As with the vegetarian and vegan products, providing shelf space to more humanely produced animal products gives consumers options they’ve never had, and it provides markets for farmers who do not confine animals in cages or crates, changing the way agriculture is conducted throughout the U.S. and putting pressure on other major food retailers to adapt when it comes to animal welfare. Conscious_Capitalism332E17

John Mackey is the co-CEO of Whole Foods Market, and he co-founded the company more than a quarter century ago. By any measure it’s a remarkable company, with $12 billion in sales, more than 73,000 employees and 350 stores. Its presence in the marketplace has been transformational – in terms of the look and in-store atmosphere, the products it sells, and its commitment to organic products, sustainability, and animal welfare.

I’ve known John for many years, and he serves on the board of The Humane Society of the United States. We also serve together on the board of the Global Animal Partnership. He has written a tremendously compelling and insightful book that was released a week and a half ago called “Conscious Capitalism,” and you’ll soon see it on best-seller lists, based on the attention it’s received and the sales numbers I’ve seen on Amazon.

I sat down with John, and asked him about the book and the ideas in it. I’m publishing our interview in two parts for blog readers, and part one is below.

Wayne Pacelle: The thesis of your book is that capitalism is heroic and made the world a better place. Share with us some of the highlights of your argument that supports that claim.

John Mackey: Two hundred years ago, the average income for 85 percent of the people on the planet was less than a dollar a day. Today it’s only 16 percent, and that’s changed because of economic progress and growth. One day, in the 21st century, we’ll probably end abject poverty across the planet. Two hundred years ago, 90 percent of the people were illiterate, and now it’s only about 13 percent. For most of history, until late in the 19th century, the average life span was only 30, now it is 68 across the world, and it’s 78 and gradually climbing in the U.S. There are still wars, still diseases that kill us, but we are making remarkable progress because of capitalism and vibrant economic activity lifting everyone up. It used to be that poor people used to be very skinny, but now they are obese. A smaller percentage of people than ever lack for adequate calories.

WP: The name of your new book differentiates your brand of capitalism from the standard version.  What’s distinctive or different about your view of capitalism? In other words, what’s wrong with unconscious capitalism?

JM: Today we are no longer truly practicing free enterprise capitalism. It is government-controlled and regulated – a type of crony capitalism. There are too many regulations and special tax breaks. To avoid the fiscal cliff, they passed taxes on just one or two percent of the public, but they retained the tax breaks given to a lot of politically connected people and created some new ones that didn't exist before. Even in its distorted version, it is still freer in the U.S. than most other places, but we've fallen from a No. 3 ranking in the Economic Freedom Index in the year 2000 down to only a No. 18 ranking today, and our collective prosperity is now contracting. When people can freely produce and trade, widespread prosperity is the result, when that freedom decreases so does our prosperity.

Conscious capitalism says that every business has a higher potential beyond just making money. Doctors make a lot of money but their true purpose is to heal. Teachers don’t teach to just make money. The HSUS has a higher purpose – celebrating animals, confronting cruelty. The first principle of conscious capitalism is to discover what your higher purpose is. Every enterprise can have a higher purpose. Business cannot run without making a profit; without making money, it cannot renew itself. My body cannot exist if it doesn’t produce red blood cells, but my purpose is not to make red blood cells.

The second principle is that business has a broader responsibility than to just shareholders. Customers, workers, suppliers, and others matter. When you have happy employees, you have happy customers, who in turn make happy investors. A conscious business recognizes interdependency and creates value for everybody involved.

Business has always done this, but it’s been more unconscious. Business is the greatest value creator in the world for all stakeholders. No one is coerced to trade and it is ultimately based on voluntary exchange for mutual benefit. It isn't a zero sum game with winners and losers like sports. Rather it is a win-win-win system of mutual value creation.

WP: For companies only concerned about profit and the bottom line, how can conscious capitalism compete against them? I assume it’s because consumers will value these products more because they reflect their core beliefs about animal welfare, the environment, worker protection, and other social subjects.

JM: More energy is unleashed by a conscious business. It will have greater loyalty among workers and customers, it will treat its suppliers differently, and it will have more creative employees and suppliers. Conscious businesses have outperformed the S&P by a staggering 1000 percent over the last 15 years! The 100 Best Companies to Work For also easily outperform the S&P.

There is a myth that once you go against a ruthless competitor, you’ll get slaughtered. This isn't true. A conscious company doesn’t mean it’s perfect, but it has so many strengths and many fewer vulnerabilities than a less conscious business. They are very successful at competing with less conscious businesses. You can find faults at WFM, but we are working hard to constantly get better. You can find fault with anyone. You can find fault with The HSUS.

WP: It’s difficult to build a discussion around a single factor, since there are so many interrelated forces that shape our world, but I am quite sure that capitalism has not made the world better for animals. So many people and businesses view animals as property and treat them like things, whether it’s in factory farming, the fur trade, the wildlife trade, or so many other sectors of the animal economy.

JM: The economic system reflects the consciousness of the people who are in it. Unfortunately the free enterprise capitalist system has allowed us to exploit animals more thoroughly than ever before. Animals didn't have any rights, any value in the era of industrialism. But as people’s consciousness evolves, conscious capitalism has the potential to radically improve conditions for animals. Communications tools for The HSUS are dramatically superior to those 25 years ago. Now we can link together with people throughout the world, and this has enabled people to learn about our issues and pass on information faster. There is more transparency. Bad things cannot be hidden away. Great progress can be made, perhaps not as fast as we would like, but I see great evolution occurring. It’s the fault of the consciousness of human beings and as that consciousness evolves higher, so will our treatment of animals.



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