Putting it generally, successful businesses create value. The beautiful thing about capitalism is that it’s ultimately based on voluntary exchange for mutual benefit. Take a business like Whole Foods Market, for example: we create value for our customers through the goods and services we provide for them. They don’t have to trade with us; they do it because they want to, because they think it’s in their interest to do so. So we’re creating value for them. We create value for the people that work for us: our team members. None of them are slaves. They are all voluntarily working because they feel like it’s a job they want to do; the pay is satisfactory; they derive many benefits from working at Whole Foods, psychic as well as monetary.
So we’re creating value for them. We’re creating value for our investors, because, well, our market cap’s over $10 billion dollars and we started at nothing! So we’ve created over $10 billion dollars’ worth of value for our investors over the past thirty-plus years. None of our stockholders are forced to own our stock. They all do so voluntarily because they believe we’re creating value for them. We’re creating value for our suppliers, who trade with our business. I’ve watched them over the years, watched their businesses grow, watched them flourish—and that’s all proceeded voluntarily. They help make Whole Foods better and we help make them better.
We have a very clear definition of conscious capitalism, based on four principles. The first principle is that business has the potential to have a higher purpose that may include making money, but is not restricted to it. So every business has the potential for a higher purpose. And if you think about it, all the other professions in our society are motivated by purpose, beyond a narrow interpretation of purpose as restricted to maximizing profits… Teachers try to educate people and architects design buildings and lawyers—once you’ve taken all the lawyer jokes out of the equation—are attempting to promote justice and fairness in our society. Every profession has a purpose beyond maximizing profits and so does business. Whole Foods is a grocer, so we’re selling high-quality natural and organic foods for people and helping them to live healthier and longer lives.
The second principle of conscious capitalism is the stakeholder principle… which is that you should think about the different stakeholders for which a business creates value and who can impact a business. You should think about the complexity of your business in the attempt to create value for all of these interdependent stakeholders—customers, employees, suppliers, investors, and communities.
The third principle is that a business needs leaders who are highly ethical and who put the purpose of the business first. They attempt to serve that purpose and they attempt to follow the stakeholder principle. So they have to walk the talk of the business. And the fourth principle of conscious capitalism is that you have to create a culture that supports purpose, stakeholders, and leadership, so that it all fits together. The world is becoming richer. People are moving out of poverty. Humanity really is advancing. Our culture is advancing.
Our intelligence is advancing. We are on an upward spiral, if we manage not to destroy ourselves, which is of course a risk, because people can be warlike at times, too. And that, by the way, is one of the reasons we should work to promote business and enterprise and wealth creation, as a healthier outlet for energy than militarism, political conflict, and wealth destruction. But that’s another big topic. So does that increase inequality? I suppose it’s not so much that capitalism creates inequality, as it helps people to become more prosperous, and inevitably that means that not everybody is going to rise at the same rate, but everybody ultimately rises over time. We’ve seen that happen, particularly in the past twenty years as we’ve seen literally hundreds of millions of people lift ed out of poverty in China and India as they have embraced more capitalism.
The reality is that some people are simply escaping poverty and becoming prosperous sooner than other people are. Now that’s not causing poverty—it is ending poverty. It’s not causing inequality in the way most people think of the term. Capitalism enables people to escape from poverty and become more prosperous and wealthy and that is very good. That’s the issue that we should focus on.
The big gap in the world is between those countries that have adopted free-market capitalism, and became rich, and those that haven’t, and stayed poor. The problem is not that some became rich, but that others stayed poor. And that doesn’t have to be! Capitalism is a source of value. It’s the most amazing vehicle for social cooperation that has ever existed. And that’s the story we need to tell. We need to change the narrative. From an ethical standpoint, we need to change the narrative of capitalism, to show that it’s about creating shared value, not for the few, but for everyone. If people could see that the way I see it, people would love capitalism in the way I love it.