“Socialism has been tried 41 times in the last 100 years … and there are exactly 41 failures,” says Whole Foods CEO John Mackey, author of “Conscious Capitalism.”
In this interview, filmed at the FreedomFest in South Dakota, I sat down with Whole Foods CEO John Mackey to discuss the deceiving allure of socialism, his philosophy of “conscious capitalism,” and why Nordic countries are actually not socialist, contrary to what many may claim.
Jan Jekielek: John Mackey such a pleasure to have you on American Thought Leaders.
John Mackey: Thanks for having me on today, Jan.
Mr. Jekielek: John, you are very well known for being the CEO of Whole Foods. At the same time, you’re also the author of a book called “Conscious Capitalism.” Let’s start with your book Conscious Capitalism and its premise, because a lot of people don’t really get what that means.
Mr. Mackey: Conscious capitalism itself is first of all very pro-capitalism. So people misunderstand that. Conscious capitalism is based simply on four basic pillars. The first pillar is that every business has the potential for a higher purpose besides only making money. And that higher purpose will have something to do with the value creation a business does for its customers and its purpose lies in that.
So Whole Foods’ purpose is to help nourish people and the planet. Google’s higher purpose is to organize the world’s information and make it readily accessible. So these are ways we create value for our customers.
I oftentimes think capitalism is misunderstood as simply being about maximizing profits and that making money is a good thing, but it’s the result of fulfilling its purpose in creating value for other people, other stakeholders, and particularly customers.
Second, there are stakeholders in an organization, and they all are important. They all matter. The primary stakeholders of any business are, first; it’s customers, second; its employees, third; its investors, fourth; its suppliers and fifth; the communities that it’s embedded in. So when you’re doing conscious capitalism, you’re aware that these stakeholders are interdependent.
Whole Foods is a grocery store. Our job at management is to hire the very best people we can find, and make sure they’re well-trained and flourishing and happy in their work, because the team member’s job is to make the customers happy. If they are not happy and flourishing, they will not give as good a service. So happy team members result in happy customers, which results in happy shareholders.
There’s an interdependence, and once you recognize that interdependence, you begin to manage the business differently. You manage it in such a way that you’re seeking win, win, win solutions—solutions and strategies that are good for all the stakeholders. You’re just doing the business more consciously regarding stakeholders.
The third pillar is that we have to create leadership that’s not simply trying to line their own pockets, and maximizing their personal gain, but that is serving the higher purpose of the organization and serving the stakeholders. So we put an emphasis on “servant leadership.” A conscious leader is one who serves purpose and stakeholders.
And fourth, we want to create a culture where people work and they’re flourishing—a culture that allows people to learn and grow and reach their highest potential. So purpose, stakeholders, leadership, and culture, all done in a more conscious way—that’s the essence of conscious capitalism.
Mr. Jekielek: It seems like when a corporation or a company is embedded in a local community, there’s a natural accountability that happens with the community. It has been argued that at various junctures when that relationship is broken somehow because the corporation becomes multinational, it begins operating without that level of accountability.
It seems like some of the biggest corporations are in danger of this situation. So, how do you get conscious capitalism in a situation where there that connection becomes severed?
Mr. Mackey: I can talk, being somewhat well-informed about my own business. Whole Foods has 530 stores and we’re in hundreds of different communities, mostly in the United States, but also Canada and the UK. So we know that we’re embedded in local communities.
All multinationals are embedded in communities. We have an impact on the communities that we’re part of. We don’t live in some cyberworld. We don’t live apart from everyone else. We not only have local communities, but we have a supplier chain, a supplier network that’s all around the world.
We purchase from thousands of different suppliers and growers, mostly in the United States, but also all around the world, because we want to sell the highest quality natural and organic foods, wherever we can find them.
So we feel a special responsibility to be good citizens in the communities that we’re in, to provide our philanthropy, to create jobs for people wherever we go, and make sure that we are seen as good citizens in each community that we’re in. Business has a responsibility to be a good member in the communities that they’re part of, and not stand apart from it.
It’s a huge mistake thinking that somehow their business lives in some other universe. It doesn’t. It lives in the human universe, in communities where they have neighbors and friends.Therefore, they have certain civic responsibilities just like every other citizen does.
Mr. Jekielek: We’re also in this situation now where we have corporations, large and small, being pressured by various special interests to kind of engage in politics. We see businesses actually doing that in a whole variety of examples. Again, I don’t need to go into any particular specifics. Often that is being done in the guise of being responsible to communities. I’m just curious what your thoughts are on this.
Mr. Mackey: I don’t think businesses should take political stands. They should be good citizens in their communities in terms of trying to help solve social problems where they have competence to do so, or where they can make philanthropic contributions that will help their communities.
But taking political positions is, I believe, a mistake. I have not agreed with what I’ve seen happen in the last few years with more and more corporations taking certain advocacy position on political issues.
First of all, it’s going to be the opinion of the leadership that’s running the company. It may not be the opinion of the investors. It may not be the opinion of the employees that work there or the customers or anyone else. It’s just the opinion of the leaders. They’re forcing those opinions on their larger stakeholder group.
They risk alienating the customers who don’t agree with it. Customers may stop doing business with them because they’re mad at them. They may find alternatives. They may just become disgusted and lose their respect for that organization.
The reality is a country like the United States is very politically polarized right now, so taking sides is not in the best interest of your stakeholders. It’s not in the best interest of your shareholders. It’s not in the best interest of your customers.
And yes, Whole Foods tries to stay politically neutral. I know from my own experience, after having written an op-ed piece in the Wall Street Journal about healthcare back in 2007. Whole Foods was viciously attacked by people who didn’t agree with my point of view, even though it wasn’t Whole Foods’ point of view.
I went out of my way to say, “These are not Whole Foods’ ideas, these are my ideas.” They couldn’t distinguish between me and Whole Foods, so they attacked Whole Foods. And that was a huge learning lesson for me.
So I have not taken a political stance personally, ever since, in any kind of public way, because I didn’t want the company to be harmed or hurt. CEOs that are speaking up are actually damaging their businesses in the long run, and I think it’s a mistake.
Mr. Jekielek: You’ve been a fierce critic of what is described as crony capitalism, but the model of capitalism that you’re describing is different from this purist idea where we’re just maximizing shareholder value. That’s all that matters and everything will be wonderful. That’s kind of the traditional view. Your view is different, and what has developed is something really quite different.
Mr. Mackey: Crony capitalism is when government sets certain rules and regulations and business tries to influence the rules and regulations to serve their own self-interest, maybe at the expense of their competitors, at the expense of customers, or at the expense of some other stakeholder. That’s a very much a perversion of what the market should be about and what free market or free enterprise should be about.
Basically, we shouldn’t be sending bribes to politicians to twist the rules and regulations to favor us. That’s unethical, and it’s wrong. Part of the problem is that government wields a lot of power and corporations frequently feel like if they don’t engage in that way, they’re going to be left behind. They’re going to be at a disadvantage. Oftentimes, we get this kind of unholy alliance between business and government, each doing favors for the other one.
That’s crony capitalism. If it gets too bad, historically, it begins to move toward the more fascist direction, where you’ve got the corporation doing favors for a certain government, and the government doing favors for the corporation. It becomes a more and more intertwined in perhaps unhealthy ways that may not be good overall for the economy or good for the society. I do worry about that in the United States. I see more of it happening.
Mr. Jekielek: It must be tempting, because you see others playing this game. Some people would argue that’s a big part of what DC is all about, not just for corporations, but also for other countries and regimes.
Mr. Mackey: It’s not really a problem in food retailing. I’m in a sector that’s not really subject to much crony capitalism. Certainly if you’re in the medical industry in some form or fashion, crony capitalism is quite common there.
It can be quite common, obviously, in the defense industry. Anything that’s very dependent upon the government for business or where the regulations of government really affect it, you have the temptation of crony capitalism and it tends to emerge.
Mr. Jekielek: Some people describe crony capitalism as a kind of socialism. When we were talking offline earlier, you said, “No, it’s not quite like that.”
Mr. Mackey: It’s not really socialism, because in socialism, the government actually owns the means of production. In crony capitalism, the means of production are still privately held, but they are somewhat controlled by the government. It’s slightly different because if the business plays ball, they get to make profits. So it’s not like the profits are necessarily flowing to the government, but that’s the trade-off. That’s how it’s different.
Socialism is just a different type of unhealthy business arrangement. It’s not the ideal of competitive free enterprise, which is innovative and creating new value and where competitors are free to compete. In crony capitalism, in some ways you’re trying to lock your competitors out or make it more difficult for them to compete.
As an example, it can cost up to a billion dollars to bring a pharmaceutical drug to a market. That means not that many get brought to market, because you have to pay back that billion dollar investment, but it eliminates competitors. Not very many drug startups can afford to spend a billion dollars to bring a drug to market. So that’s a type of crony capitalism. That’s not socialism, but it is a type of crony capitalism.
Mr. Jekielek: I was just looking at a recent poll, and we’ve seen variants of this again and again on Morning Consult, talking about how the younger generation of Americans are much more positive towards socialism and these kinds of structures, and government control in general, and they actually have quite a negative perception of capitalism.
Mr. Mackey: It worries me.
Mr. Jekielek: You and me both. Do you have an idea of why it has become this way? What are your thoughts here?
Mr. Mackey: I have a lot of thoughts about it. Intellectuals have never liked commerce. Deirdre McCloskey’s tremendous work on economic history demonstrates that throughout history intellectuals have disliked commerce. They don’t like business people. They don’t like their motives. They’re envious of their wealth.
For most of the time in history it has been kept under the thumb of the aristocrats and intellectuals. With the wealth of nations, the birth of the industrial revolution and the Declaration of Independence in America, the genie got out of the bottle. For about a 50 year period, the intellectuals favored business and they didn’t have the word called capitalism. That came from Karl Marx later.
But after about 50 years, they soured on it. And they have been trying to stick the genie back in the bottle ever since. If you think about it, almost all the peoples of the world that have been great, and very good at commerce, have been persecuted. In the West, it’s the Jews, tremendous business people. They’ve been run out. We’ve been run out of country after country, historically.
Why? Not because they have a different religion, but because they’re so economically successful. It creates envy and people want to confiscate that money and eliminate them as competitors. The same thing has happened to the Chinese in the East.
Chinese have a great business tradition, wherever they go. When they go to Thailand or Indonesia or Singapore or Malaysia, the Chinese create great wealth, and then they’re persecuted. So this has been a historical fact.
Today the intellectuals don’t like business. If you look at the number of academics in our universities, and you look at how many of them are progressive and anti-capitalist versus how many are more conservative and pro-capitalist, it can be 20 to one. Now that’s filtered down into our K-12 school system.
So the message about capitalism and the message about business is fairly negative. The young people that are coming up, that’s all they’ve ever heard, and the other story is being suppressed. The goodness of free enterprise is largely not taught any longer in our schools.
So I see it as an educational problem. Ultimately the solution is to have more competitive schools and more choice in schools. We see the challenge now with critical race theory being taught in the schools—”It’s just a different narrative,” but there’s a battle over that narrative. Capitalism is not loved by the intellectuals and they have control of education. It’s not that all intellectuals hate capitalism, but most of them do.
When I meet professors and if I start talking to them about business and capitalism, they’re just staying quiet. They might say they love Whole Foods, and they shop there all the time. but in general, they don’t like business. They don’t think wealth should be accumulated. That’s somehow unfair. So that all emerges and that’s what is being taught to young people. That is why they favor socialism.
Jan, there’s also an old saying, I don’t remember who said it, maybe Mark Twain might have said i,t or Churchill might’ve said it, but it goes something like this, “If by the time you’re 21, you’re not a socialist, you don’t have any heart. But if you’re still a socialist by the time you’re 30, you don’t have any brains.” Socialism has been tried 41 times in the last 100 years. 41 countries have tried socialism, and there are exactly 41 failures.
It’s not that socialism hasn’t been tried. It’s been tried over and over and over again, and it doesn’t work. It doesn’t create wealth. Economic freedom creates wealth. Economic freedom creates innovation, experimentation, and competition. It raises the standard of living, not for a few people, but for literally billions of people. I don’t think history is being taught well any longer.
If you go back and you look at the historical reality of what it was like 250 years ago, 94 percent of everyone alive on the planet earth lived on less than $2 a day, and that’s adjusted for today’s inflation. 85 percent lived on less than a dollar a day. Illiteracy rates across the world were 88 percent. The average lifespan was 30. It has been capitalism, economic freedom, innovation, creativity, and business people combined with scientific breakthroughs that allowed humanity to begin to lift out of the dirt.
People just don’t understand that when they look around and they see that we’re not living in utopia. They look around and they see some poor people. They look around and they see it doesn’t seem fair that some have so much and others have so little. But they don’t have any historical context for what it used to be like.
That’s why I think every generation has a siren call of socialism. “It will create a better world,” but it doesn’t create a better world. It creates trickle down poverty in the world, and the society gets poorer and poorer.
It’s very interesting we recently saw protests in Cuba, which is always held up as, “People may be poor there, but they’re super happy.” Actually, they’re not happy. They keep trying to get the heck out of Cuba and come over to the United States or get out and go to other countries.
So yes, the intellectuals don’t like capitalism. They like socialism, but socialism doesn’t work and they just believe it hasn’t been done right. “This time we’ll get it right. If we just get the right people in charge this time, it will work.” Only it’s not a question of motives or intentions. It’s a question of whether it can create innovation and progress and it really doesn’t. Economic freedom does, socialism doesn’t.
Mr. Jekielek: You mentioned briefly the education around critical race theory as being something problematic. Can you expand on that a little bit?
Mr. Mackey: I pull to the vision of the American founding that everyone is created equal. We all have dignity, we all have value, and we shouldn’t discriminate against anybody on the basis of race or gender or sexual preference or anything. Everybody deserves dignity and respect, everybody, regardless of their race.
Teaching that some races are inherently exploitative or evil, that’s moving away from Martin Luther King’s great vision, when he was helping lead the civil rights revolution in the 1960s. He said that, “I have a dream that someday my daughters will be judged not by the color of their skin, but by the content of their character.” That’s the vision I believe in.
Mr. Jekielek: Going back to socialism here, when I talk to young people who are interested in socialism and believe that it’s a good system, they often will point to the Scandinavian countries as an example of the great success of socialism. Your thoughts?
Mr. Mackey: They’re not socialistic, the Scandinavian countries. If you look at the economic freedom index at both Heritage Institute, and the Fraser Institute in Canada, you’ll see that Scandinavian countries are very high in economic freedom. Let’s take Sweden, for example, which is often held up as the epitome of what Americans should be doing.
Yes, Sweden’s corporate income taxes are 21 percent. Sweden has no minimum wage. Sweden has vouchers for education for every child in their country so that they can make choices about what schools they go to. There’s competition in schools. Sweden has 0 percent inheritance taxes. So I often say, “So you favor those things for the United States?” If I’m talking to a more progressive person they say, “No, I don’t favor it. That’s what Sweden does.” I say, “Why not? If Sweden does it, why don’t you favor it?”
Obviously the Nordic countries are more racially homogenous, and they’re much smaller with fewer people. They are a better developed welfare state than the United States, but they’re capitalist. The means of production are owned privately, and corporate taxes are low. Competition is powerful, and they also have to compete in the world markets.
Nordic countries, if you ask them, they’ll tell you they’re not socialist. When they were socialist back in the 1950s and 1960s, their economies began to crash. Then, they woke up, and put economic freedom back in, and they’ve created very high standards of living for themselves. So they are bad examples to use.
The examples you should use for socialism are Venezuela and Cuba, or China before it began to liberate itself economically—India, back in the 1960s and 1970s, before it began to create more economic freedom—and the Soviet Union or the Eastern European block.
You could see the comparisons between Eastern Germany and West Germany. West Germany was capitalist and they flourished and East Germany was socialist and their standard of living did not advance. It declined. So we have these historical examples of socialism versus capitalism. Capitalism produces wealth, not for a few, but for larger amounts of people in the society. Socialism takes everybody down.
Mr. Jekielek: You have examples of Scandinavian countries that are quite robust, with social safety nets on the other side. That’s interesting.
Mr. Mackey: Favorite social safety nets, but not for everybody, but for those people who really, really need it. If you look at a place like Switzerland that has universal health care, it’s all privately held. There’s no government healthcare in Switzerland, it’s all private insurance.
There’s a universal mandate. Then the government potentially subsidizes 100 percent if you’re homeless and super poor, to 0 percent if you earn a good income. But they give them lots of choices for what type of private insurance they can purchase.
So is that the perfect system? No. Is it better than what we have in the U.S.? Undoubtedly it is. And there are other good examples. Singapore is another great example that has universal coverage, but through mandated savings programs and health savings accounts. That’s resulted in both privatization of health, and at the same time, a strong safety net. You can do both.
Mr. Jekielek: John, one of the things that I’ve been hearing a lot more of from a variety of people, from a variety of political persuasions, is this idea of universal basic income. Especially in the context of a lot of people having suffered greatly financially, especially with Coronavirus What are your thoughts here with this approach?
Mr. Mackey: There needs to be a safety net that takes care of the poorest people in a society. Other than that, people have got to work. Work creates meaning, work is creating value for other people. In my opinion, it’s fundamentally corrosive to the human soul to not work and create value for other people.
You’re responsible for your own life. Also universal basic income is bottom-up socialism, that’s what it ends up being in the long run. I don’t favor it. I’m against it.
Mr. Jekielek: It’s been almost a year and a half of a really different world due to coronavirus, or perhaps the response to coronavirus. How do you see things having changed fundamentally, or where are things going today?
Mr. Mackey: t’s been very hard. COVID has been a terrible thing. It’s a worldwide pandemic, and it’s caused the death of, it’s beginning to be millions of people now. And it’s ruined a lot of lives. That being said, you can’t hide from a virus. You can hide, but it’s waiting for you when you come out. Humans have co-evolved with viruses for our entire evolutionary history.
The Influenza of 1918 through 1919, that was the worst pandemic of the last 700 years, probably since the Bubonic plague. That’s still with us. Humans just adapted to it. We still get the flu, but it doesn’t kill as many people.
COVID is not going to go away. It’s going to be with us for the rest of our lives. It’s another virus that humans are going to have to co-evolve with. I’m a great believer in vaccination, that the risk of COVID is far higher than the risk of the vaccination, even if there is some risk to the vaccination. We’re just going through a hard time and we’re going to get through it.
But we’re going to have to recognize that you just can’t lock down your whole society and try to hide from a virus. It’s absurd and crazy because the virus doesn’t go away. It’s waiting for you to come out. You lock yourself away for a year and a half. You finally come out, and guess what? The virus is still there. If you’re going to spend the rest of your life hiding, you don’t really have a life at all.
So this has been a terrible thing. I don’t think we necessarily handled it well. We didn’t know what we were doing. We did the best we could, I suppose, but we made a lot of mistakes. We have to just move on. We should get vaccinated. We should live prudently, and do what we think is best. But we have to move on in life and this is going to be with us.
Mr. Jekielek: What does that look like in your mind, in the the positive way that you that you envision?
Mr. Mackey: People should get vaccinated and they should live an incredibly healthy lifestyle, because the secret is to keep your immune system as healthy and strong as possible. The reality about COVID, which the media doesn’t report on, is that in the United States, 80 percent of the people that have died from it were over the age of 65. And almost everyone that’s died from it had an underlying health condition. That’s way in the 90 percentile rates.
America is 70 percent overweight, and 42.5 percent obese. Many of the people that are dying are just not healthy. So we need to take responsibility for our own health, and we need to get our immune system stronger. We do that through healthy diet, minimizing the toxins that we take in, getting enough sleep, managing stress better, and exercising. We have to take responsibility for our own health and our own vitality.
I watched people under COVID go one of two directions. Some people have just said, “You know what? I’m going to get myself so healthy that if I get COVID, I’m going to be sure I can survive it.” I’ve seen other people go exactly the opposite. The average American gained 27 pounds in the last year and a half from COVID. And we were already really overweight.
So I can understand that we were locked away, and we were depressed. We were lonely and so we eat and we don’t get as much exercise. Still, the better strategy is to say, “I’m responsible for my own health. I am going to survive COVID if I get it. I’m going to get my immune system as absolutely healthy and strong as I can.” And then you have to go on with life. There’s risk in life. Death is going to meet us all some day, and there’s no escaping it. We should just take responsibility and do the best that we can.
Mr. Jekielek: I was looking at various statistics under coronavirus. Suicidal ideation, even among young people, is dramatic.
Mr. Mackey: Suicide is way up, particularly for young people. It’s terrible.
Mr. Jekielek: Exactly. People are looking at this political polarization that we were discussing a earlier and people believe there’s a lot of reason to be unhappy.
Mr. Mackey: We’re responsible for our own consciousness. We are responsible for the choices that we make in our lives. We can choose to be grateful, and to see the beauty and wonder in life or we can choose to see what all the problems are. They’re both there. If you want to be happy, you’re optimistic. You choose to be self-responsible. You choose not to be a victim. You choose to be grateful for the blessings that you have and not complain about the things that you don’t have.
And you choose love. You choose to connect with people and help others and serve others. That leads to a productive, happy, and joyful life. Utopia is not one of the options. We have to make choices. We have to act ethically and we have to help each other and do the right thing by everyone we encounter. That doesn’t mean bad things don’t happen.
And it doesn’t mean we can’t get caught by a pandemic. We might get hit by a car. Accidents happen, bad things happen, but life’s an incredible thing. It’s a great gift. We’re not here very long.
The world is extraordinarily beautiful. People are amazing. There’s so much to be grateful for. There’s so much to be happy for. There’s so many people that need love and that we can help, and we should do the best we can to help others. In doing so, we will find that life is a blessing and beautiful and wonderful.
Mr. Jekielek: John Mackey, it’s such a pleasure to have you on.
Mr. Mackey: Thank you for having me on Jan. I hope you have a wonderful day.
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