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Whole Foods CEO John Mackey Believes in Free Markets and Free Minds

November 15, 2010, 12:00 AM

John Mackey, co-founder and CEO of Whole Foods says that starting a business transformed him from "sort of a democratic socialist" to a free market capitalist: "The belief system that I had going into operating that business was inadequate to explain the experiences that I was having in business," he says.  So, to find something closer to his experience, he read books by free-market thinkers Milton Friedman, Friedrich Hayek and Ludwig von Mises.

Mackey says his reading turned him into a libertarian, and his political ideology grew with his company. Over the past few decades, Whole Foods has evolved from a single health food store to a major-market player competing with food industry giants such as Kroger. As well, the company spearheaded a movement to make healthy food and source consciousness mainstream. 

Mackey says his libertarian beliefs stem from the idea that "free markets and free minds lead to the greatest human flourishing." This flourishing, he says, comes from the innate human need to be free and creative, which can be exercised through entrepreneurship. In fact, Mackey has emerged as a leading voice calling for a new direction in business—one centered on free markets and entrepreneurship that is also tapped into a caring and value-generating higher purpose. He is seeking to create, he says, a more "conscious capitalism."

"From a macro perspective conscious capitalism is becoming conscious of the framework that capitalism has to exist in, in order to be successful, in order to flourish," Mackey says. To this end, he outlines four principles around which a company should organize its mission. The first principle is "business has the potential for higher purpose."  Purpose, he says, must extend beyond the crass, quick and careless pursuit of profits in the short term that have plagues so many other businesses. Yes, he says, profit matters, and is necessary to sustain and to grow a company, but it’s not the end game. "I have known literally hundreds of entrepreneurs in my life and with very few exceptions very few of them actually created their businesses to try to maximize profits," he says.

The second principle is that customers, employees, suppliers, investors are a network of stakeholders whose own interests should trump the pure-profit interests of investors and shareholders. Moreover, the interactions among these groups should be optimized, since they are the backbone of the company. Mackey’s third principle is that leadership must be removed of ego and should be beholden to the larger mission of the company. And the fourth principle, Mackey says, “is that to realize these first three principles you have to create a culture, a conscious culture that has strategies, structures and processes.”

Mackey says that most companies haven't taken these steps already because of ingrained and incorrect beliefs about the marketplace: “I think the zero-sum worldview is the predominant one. I think it’s something we’ve evolved with, this idea that there is a limited, fixed pie and we have to distribute that pie in an equal fair way; that no one should get unfair large pieces of that pie and if someone is getting a bigger piece necessarily someone else may be getting a smaller piece since there is a finite amount of pie to go around.”

"I don’t think there is a necessarily a fixed pie," Mackey says. “The beauty of conscious capitalism is the realization that the pie can grow, that through voluntary exchange and through the value creation that happens when the stakeholders voluntarily cooperate and voluntarily exchange with each other is that the pie grows larger and so there is more to distribute and that distribution takes place through the market processes.”


Whole Foods CEO John Mackey...

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