Conscious Capitalism

Most of my blogs have addressed individual ethical decision making with particular attention paid to behavioral ethics.  This is natural, because Ethics Unwrapped’s initial videos have largely concerned these new concepts.

However, the ethical decision making and actions of business entities are also very important.  In most business ethics courses, the topic of corporate social responsibility (CSR) is given great attention, as it should be.

On January 15, I attended two events celebrating the publication of a new book titled “Conscious Capitalism: Liberating the Heroic Spirit of Business,” by John Mackey, founder of Whole Foods Markets, Inc., and Raj Sisodia, a professor of marketing at Bentley College and coauthor of “Firms of Endearment,” a classic CSR book published in 2007.

CSR is controversial in some circles.  I don’t think it should be.  To me, it seems a no-brainer.  Although I often fail to live up to my own aspirations, I believe that I should try to make my family a little better, rather than a little worse.  I should try to make my employer a little better, rather than a little worse.  I should try to make my community a little better, rather than a little worse.  And I want to work for, buy from, and invest in businesses that have that same commitment.

I have hopes that people who resist CSR, who believe in the Milton Friedman view that  shareholder value maximization is the only legitimate goal for business firms, will give “Conscious Capitalism” a read.  I think they might be persuaded to change their minds, for John Mackey is an unreconstructed capitalist.  He is a strong critic of government, labor unions, and intellectuals.  He has much to say about the business world that conservatives who have automatic adverse reactions when they hear the term “CSR” will identify with.

Yet Mackey and Sisodia build an extremely interesting (and, in my mind, persuasive) argument for their version of CSR, which is a very broad one.  Indeed, Mackey and Sisodia do not like the typical notion of CSR, which they view as based on the fallacy that businesses are tainted and need to make up for their bad acts by tacking onto their corporate structure philanthropy or other good acts.  They believe that “[r]ather than being bolted on with a CSR mind-set, an orientation toward citizenship and society needs to be built in to the core of [every] business.”

The core idea of conscious capitalism is not that companies should make profits and then do some good with them.  Rather, it is that firms should “operate with a sense of higher purpose, integrate the interests of all stakeholders, develop and elevate conscious leaders, and build a culture of trust, accountability, and sharing.”  If these things are done, Mackey and Sisodia believe that profits will usually follow.  So will a host of benefits that will make the world a better place.

You can’t be happy just by pursuing happiness, wrote Viktor Frankl.  Rather, happiness ensues from living a life of meaning and purpose.  Similarly, believe Mackey and Sisodia, profits are best achieved not by making them the primary goal of the business but by doing business with a sense of purpose based on love and caring rather than fear and stress.  If the interests of all stakeholders—investors, team members (employees), customers, suppliers, and communities—are considered, the authors believe a “virtuous circle” can arise where win-win strategies can be pursued in preference to the normal approach of trading off the interests of these various constituencies against one another.

Mackey and Sisodia compare conscious capitalism (favorably) with other socially-conscious approaches to business (Appendix B), answer various objections to running a business with a social conscience (Appendix C), and make the argument that over the long run firms that act as conscious capitalists financially outperform firms that do not (Appendix A).  The academic debate over this last point, which is obviously critical, is heated and unsettled, but the performance of Whole Foods, Southwest Airlines, Trader Joe’s, the Container Store, and several other firms Mackey and Sisodia describe as conscious capitalists, bolsters their case, at least anecdotally.

I recommend this book.  In the interests of full disclosure, however, I should note that although I had not previously met John Mackey, I live three doors down from his home, just a couple of blocks from the original Whole Foods site that was flooded in 1980, and just a 15-minute walk from the flagship store in Austin where I love to shop.  Also, the book’s message meshes well with my preexisting beliefs and I watched my wife successfully run a business consonant with these principles for 30 year.  Therefore, I am unlikely to have read the book with a particularly critical eye.  Check it out to see if you have a different opinion!

 

John Mackey & Raj Sisodia, CONSCIOUS CAPITALISM: LIBERATING THE HEROIC SPIRIT OF BUSINESS (2013)

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