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Source link: http://archive.mises.org/5179/the-transformation-of-john-mackey/

The Transformation of John Mackey

June 13, 2006 by

Ralph Reiland discusses John Mackey, the CEO of Whole Foods Market, and his ideological transformation from New Left commune promoter to a defender of capitalism and the free market. Now he realizes that business, working through free markets, has arguably been the world’s greatest force for human progress and our collective well-being, delivering increased prosperity, less poverty, extended longevity and political freedom. FULL ARTICLE

{ 37 comments }

Yancey Ward June 13, 2006 at 8:17 am

Well, there is nothing like working to accumulate property and wealth to change one’s opinion on how communal it’s ownership should be.

Paul Marks June 13, 2006 at 9:40 am

A fine article. And I agree that the stress should be on the “big picture” of how people will be able to build a better civil society if government is made smaller in both size and scope.

However, I find it very hard to believe that someone can make even a pretax profit of 1.6 billion on sales of 5 billion.

Especially not in retail.

What is he doing? Going for a niche market like “organic” food?

If not his quality levels must be very high indeed.

People must be paying higher prices for the sake of higher quality, there is no way that he can be competing on price with people like Walmart – and there is no way that his costs can be lower than theirs either.

Roger M June 13, 2006 at 9:56 am

Someone said that a conservative is nothing but a liberal who got mugged. (I know you guys hate conservatives so there’s no need for comment.) Mackey’s mugging by his employees and customers forced his eyes to open to reality. By the way, 60-minutes did an excellent piece on him two weeks ago.

Marxism come naturally to people because they think the pie is limited, as in a poker game. It takes multiple muggings before they can see that it’s not, but some never see it.

I have to agree with Mackey that peripheral issues such as drug legalization and the evils government as an institution keep us from proclaiming a clear and powerful message to the average American.

Yancey Ward June 13, 2006 at 10:04 am

Paul Marks,

Upscale shoppers are the clientele of Whole Foods. Though I would never pay the prices they charge for food, many think the premium worth it. Of course, such margins are bringing in a horde of competitors, but Whole Foods, being the first to get large, has competitive advantages of scale at the moment. The margins will not survive, however.

M E Hoffer June 13, 2006 at 10:08 am
M E Hoffer June 13, 2006 at 10:10 am

http://www.investorguide.com/stock.cgi?ticker=WFMI

http://www.wfmi.org/

Sorry, no editorial commentary intended, formatting error.

iceberg June 13, 2006 at 10:28 am

By coincidence, just yesterday someone next to me on the subway had a shopping bag from Whole Foods, and I was quite suprised by the advertising text that is written on the bag.

Something to the effect that profits create wealth for society and whatnot.

Could somebody be kind enought to please share with us the complete text?

Brad Dexter June 13, 2006 at 10:58 am

It’s nice to see a reformed “non-producer with an abundance of opinions”. It’s funny how those such as Marx and Engels, who didn’t produce anything, were brimming with ideas of how production should be allocated.

I’ve wondered, though, about how Whole Foods certifies the nature of its products. Also, some folks at Mises.org talk of the negative effects of fair trade on overall production, does the same apply here when folks are willing to pay a premium for a product produced more expensively that is really no better than the “non-whole” alternative? Perhaps the quality is truly better, but if people are paying extra for roughly the same product, or inferior, is that not like fair trade?

Certainly people are entitled to buy what they like, but is it effecient to over allocate for a mental figment? Granted a lot of consumption is inwardly driven, but of criticism is offered for over allocating to fair traders, is this not the same?

Tyler Oliphant June 13, 2006 at 11:51 am

Brad,

I think the problem with the fair trade movement is that it’s proponents seem to want to use governments to force people to pay for fair trade products. (Just like minimum wage laws.) If someone chooses to purchase a higher priced item, no matter the reason, that is their choice.

My wife prefers to shop at Target and avoids Wal-Mart as much as she can, and not for political reasons. She just prefers the shopping experience at Target and she is willing to pay a little more for it. Is she “wasting” money or being inefficient? It is her money, and she is the only one who can answer that question but I know she feels the price difference is worth every penny.

Som June 13, 2006 at 1:07 pm

Yup Mackey’s right about the big picture. The glories of the free market could be told like an inspiring story, full of adventure, excitement, opportunity, mystery, and hope. Throw in an underdog who’s the hero of the story, say “a pennyless immigrant who came to (uncharted) american lands, and ends up making 100,000 a month for his family here and back home” through only the means of the free market, and now a person can see what the market is capable of doing for humanity. Afterall, for most people, their perception is their reality.

David K. Meller June 13, 2006 at 1:13 pm

Mr. Mackey is absolutely correct, and this IS a fact which is long overdue for public recognition–private business, working for the personal gain of its owner(s), employees and customers,through the free market–is by far the greatest force for peoples’ well being which exists!

The caveat, Prof. Reiland, is business working through the free market. When the same entrepreneurial talents that, in a laissez-faire environment, would seek out opportunities for improving the well being of customers and shareholders is perverted into seeking out political favors and regulatory privileges, the result is NOT Whole Foods Market, it becomes Archer Daniels Midland, Chase Manhattan Bank, or ExxonMobil and from there…Haliburton or the Carlyle Group!

If this all-important difference is kept scrupulously in mind, and we communicate our awareness of this difference to other observant politically disaffected people, we libertarians will indeed see better days coming!

I thank Liberty Magazine for bringing Whole Foods Market and its remarkable founder and guide to favorable public attention. I also thank Mises.org for bringing the all-important issue of benevolent entrepreurship through private property and the market process to a much wider audience as well.

Great article!

PEACE AND FREEDOM!!
David K. Meller

Brett Celinski June 13, 2006 at 1:30 pm

Som,

How did all those immigrants make their money? How would you go about giving them your preferred standard of living? What about everyone else who can’t see your ‘reality’?. By what right do you have to tell everyone else how to earn their living?

F L. Light June 13, 2006 at 2:30 pm

Self-interest integrates the people, who
In courteous traffic* like what others do.
*business
Self-interest integrates the people, all
Well-mannered in exchange of capital.

Self-interest integrates the people, found
In civil intercourse not falsely to compound*.
*compromise
Self-interest integrates the people, seen
On profitable federations keen.

Self-interest integrates economies,
In business meeting our deficiencies.

Self-interest integrates economies,
Needing to circulate necessities.

Self-interest integrates economies,
In businesses exchanging courtesies.

Self-interest integrates economies
As buyers and sellers would each other please.

Self-interest fashions the entirety
Of business in benign society.

Dan Coleman June 13, 2006 at 2:35 pm

Brad wrote:

“Also, some folks at Mises.org talk of the negative effects of fair trade on overall production, does the same apply here when folks are willing to pay a premium for a product produced more expensively that is really no better than the “non-whole” alternative? Perhaps the quality is truly better, but if people are paying extra for roughly the same product, or inferior, is that not like fair trade?”

‘No better than’ is in the eye of the beholder. Austrians don’t prescribe the most efficient use of resources for an economy by telling individual actors what to do. It simply is the case that the capitalist social order, over time, produces the most efficient use of resources.

I agree with what Tyler pointed out: coercion will always be the key ingredient to distinguishing between social movements. The fair trade movement is all fine and good insofar as it doesn’t use force to back up its plans.

M E Hoffer June 13, 2006 at 6:46 pm

Ludwig von Mises: “Economics must not be relegated to classrooms and statistical offices and must not be left to esoteric circles. It is the philosophy of human life and action and concerns everybody and everything. It is the pith of civilization and of mans human existence.” – Human Action

Michael A. Clem June 13, 2006 at 6:53 pm

While I agree with Mackey’s general comments, it’s one thing to say we should have an idealistic vision to give to the world, and another thing entirely to actually develop such a vision.
And while I understand why he thinks we should de-emphasis the “hot buttons” like drug relegalization, gun control, prostitution, and whatnot, I also think a broad vision as he suggests should successfully integrate such controversial issues into it and present them in an appropriate light, as well as deal with education, health care, the environment, and capitalism in general.
In short, thanks for the pep talk, Mackey, but I still need some help with the “vision” thing.

Adam June 13, 2006 at 8:02 pm

Overall a decent article. But as I’ve seen from economists before, a needless attack on lifestyle ideals that can be maintained regardless of the economic or political flavor. The tone of this article tells us that no reasonable, self-interested human being would revert to vegetarianism, or would grow long hair, or live interdependantly with other humans, or be a student of nature or philosophy (eastern! oh no!). I have respect for or am striving towards these ideals, even though I entrepreneurially buy books from my college mates and sell them online for a profit.

If you want to attack a econo-political ideal, fine. But don’t try to tag on side issues and stereotypes, portraying an entrepreneur as a “convert” who left behind their life of “sin” (long hair). The critics look more foolish than some of the people they criticize.

Vanmind June 13, 2006 at 8:39 pm

Colour me green with envy and sell me as produce.

Daniel M. Ryan June 13, 2006 at 8:39 pm

It’s interesting that we have yet to see an Objectivist swooping in with the appropriate quote from the works of Rand combined with a pre-exegis.

There has been a lot of rhetoric, and thought, devoted to this issue, the bulk of which (as Mr. Mackey indicated) has only reached a relatively small audience made up of the easily convertible. The only alternative I can think of to waiting for socialists to “grow out of it” would be to at least try to think like a socialist, and in doing so guess at what motivates good people to become socialistic.

Frank Chodorov had the right idea all along with respect to this issue; it’s a pity that his advice was largely ignored, or avoided. If there’s any “third rail” in libertarianism and libertarian-oriented conservatism, it would be: following Mr. Chodorov’s injunction to immerse yourself in socialism for the purpose of thinking your way out of it.

John Markles June 13, 2006 at 8:57 pm

No matter what type of conversion Mr. Mackey may have undergone in regards to the freedom and voluntary cooperation regarding markets, he still has much to learn. Whole Foods surprisingly exclusionary stance against the producers of Foie Gras proves this.

M E Hoffer June 13, 2006 at 9:16 pm

No matter what type of conversion Mr. Mackey may have undergone in regards to the freedom and voluntary cooperation regarding markets, he still has much to learn. Whole Foods surprisingly exclusionary stance against the producers of Car Tires proves this.

Som June 13, 2006 at 11:53 pm

Brett,
to answer all your questions, i’m not giving an immigrant plan for a vision on how everyone should make a living (such is a anti-liberty). The story about a free market triumph is not about a plan one should, but an example of how one person could better his situation regardless of his current status (since all action and trade benefits all those who participate). Is it a prescription for immigrants? no. Is it the only way one could go through a market? no. Is it possible it could really happen? yes. Has it ever happend and to who? who knows.
The reason why one could use such a story is because some people simply cannot see how a person from anywhere or any condition could do better for himself in a market setting. If some people were given a story as described that is consistent with logic, and proper economic thoery also, then it can start to change people’s perspectives on how they view possibilities that occur in a free market. At the same time it can seriously challenge views that some people percieve to be true and guide them to see the market for what it actually is, not what they want it to be. So basically it’s like a thought experiment told as an interesting, attractive story.

Anyway, where mackey states libertarians focus too much on hot button issues such as drug legalization or prostitution, i agree. The way that works for me is to argue from a moral standpoint (which really gets them off guard) that the freedom of choice is far more just than punishing people for voluntary but “immoral” choices. Also it helps to tell people that there’s a fine line (although not neccesarily mutually exclusive) between justice and personal morality.

Nigel Platt June 14, 2006 at 7:50 am

No matter what type of conversion Mr. Mackey may have undergone in regards to the freedom and voluntary cooperation regarding markets, he still has much to learn. Whole Foods surprisingly exclusionary stance against the producers of Fire Hoses proves this. (This is fun).

Roger M June 14, 2006 at 11:32 am

Daniel–”…immerse yourself in socialism for the purpose of thinking your way out of it.”

Excellent approach! I spent a dozen years in PR and one of the most important things I learned was that people decide issues based on emotion then look for a rationale. But we tend to work with rational exclusively.

Someone said that if you’re not a socialist when you’re young, you have no heart; if you’re not a conservative by the time you’re 30, you have no head. The reasoning behind this is that young people lack much knowledge and are very emotionally oriented. If we’re going to reach most young people, we have to grab their emotions first.

Socialism is very emotionally oriented, also. To think like a socialist, you have to put your mind in neutral and let you’re emotions flow. The main criticism I get from socialists is that I lack emotions. I think socialists are motivated by a sincere pity for the poor with a mixture of envy and covetousness. We have to address all of these early on when talking to them.

Curt Howland June 14, 2006 at 12:14 pm

The problem with trying to do “big picture” advertising about the benefits of freedom, the blessings of Liberty, &etc., is that we the truly liberal have been pre-empted by the empty rhetoric of the Republicans and Democrats.

Hearing them speak when they speak broadly, it would be easy to think they are all Libertarian. Tax cuts, privatization, “Department Of Defense”. We have been “New Speak”ed into irrelevance in the Big Picture.

So we’re stuck arguing what seems minutia. “No, you’re voting for Social Security.” “No, you’re trying to legislate abortion.” etc.

So if he wants to do some “big picture” stuff, then go right ahead! The problem I’ve found is that when someone says “You’re not looking at the big picture”, they usually don’t then identify either what the “big picture” is or help in any way other than yet more cleaning up of minutia.

David K.Meller June 14, 2006 at 12:18 pm

This is a great article and both Liberty magazine and Mises.org deserve kudos for bringing it to public attention. There are a few reservations which must be mentioned.

The issues which he chide libertarians which he may feel are mere “side issues”, e.g. “drug legalization, gun control, and so-called “lifestyle issues” are still EXTREMELY IMPORTANT to the libertarians who focus on them, and, for opposite reasons, extremely important to the Government’s armed goons who enforce the prohibitions. Mr. Mackay loses points when he talks like this, his good advice about improving our delivery of the message notwithstanding.

It is worth mentioning that politics and government is the LAST thing to change in society, not the first!

The second point is harder to say, since I sometimes get discouraged too, but we have done extraordinarily well, given the state of public opinion in the world after WWI, These ugly trends toward collectivism, authoritarianism, and socialism accelerated and intensified during and shortly after WWII, and didn’t really reverse themselves until the early “70s.

If Mr. Mackay is old enough to remember the ’60s, then he is old enough to remember when the very NAMES of Hayek, von Mises, and Rothbard were utterly unknown to the general public, and the very word “libertarianism” was a curiosity.

We have come a long way since then and we have a long way to go, but I certainly wouldn’t call libertarianism today a “small, relatively unimportant movement”!

There are six BILLION people in the world. There are some 290 million in USA. A movement that started as a dozen people or so in Ayn Rand’s living room in 1950 is NOT going to (and it probably shouldn’t) sweep the world inside of 50 years. That we started with NO presence in the newsmedia, the Churches, the trade Unions, the Armed Forces, Fortune 500 Companies, Ivy League Universities, the Foreign policy apparatus, or the Federal Courts and Bar Association, that we started from almost NOTHING, and grew to where we are today, should count for something in any fairminded assessment of our movement’s progress.

PEACE AND FREEDOM!!
David K. Meller

Brett Celinski June 14, 2006 at 3:59 pm

Som,

My mistake. I misread your post. Such a story could be easily distorted by any statist as a too idealistic condemnation of lifestyle choices, and then slathered upon by the usual post-coherent cynicism that gullibe types are so easily swayed to these days.

These things tend to not even work with convincing the con statists. In fact, it works even less than in convincing a liberal. I think we know who the biggest admirers of power are right now: the ones in power.

I too tend to use the moral argument with my friends, and it is always convincingly successful. They are the usual jaded types, like most teenagers, yet most of them have that quiet agreement and acceptance of what I argue as true, yet won’t do anyhting about it (democratically, this is a great thing). They simply give the classic response: “It might work, but what will we DO about it?”. I just keep arguing and waiting for the state to grow so corrupt it becomes blatantly obvious. Even the Soviets fell. Of course, we haven’t had our outright Stalinist yet…

The moral line of argument has even worked well with my post-Bush hangover friends. Again, I wouldn’t waste my time on the hardliner neocons; they are half intellectuals and half privileged thugs (go to any University and see).

Perhaps the idea of market creativity, speaking your voice, tolerating others, not giving a damn about trends, (except trying to make your own for profits), the idea of imagination… Is what needs to be harnessed. Art is capitalism.

vik June 15, 2006 at 12:25 am

I have lived in three different states in three different cities, and Whole Foods is always packed. You can’t find a parking spot. The prices can be quite high, but the selection, quality and shopping experience is phenomenal. The one here in Austin has about 6 different bars with seating and prepared food. And it’s always full of beautiful women.
Now that I know of the libertarian convictions of the owner, I will enjoy going there even more.

Paul Marks June 15, 2006 at 10:41 am

My thanks to Yancey Ward and the others.

drs June 15, 2006 at 1:58 pm

He kind of looks like Gordon Lightfoot.

James Kirk June 19, 2006 at 11:58 am

The article was a great read. Nice style. Regarding the 5 M gross sales and 1.6 M gross profit note that that is only a 32% gross return and that is probably not net profit or net return.

So the industry is prospering but not ripping off the public. It cost money to keep the lights on and the insurance paid and the income tax and company lawyer and accountant paid. The patron in the store smelling the cantalope, is not aware of those costs and the plumbing bill that just came in for the $800 hot water heater that failed. He is also not aware of the one or two percent that isn’t collected because the credit card companies have to keep in business as well.

Its all ok.. remember, the only thing that those others have to sell is their time or their service. If not paid, they will not be there the next time their services are required and that stops the whole process. If you want to be able to smell the cantelopes in the future, then pay the extra few percent to keep the merchant in business.

Cory June 19, 2006 at 3:21 pm

We libertarians have a long way to go when it comes to education, but we can hardly be denigrated for this fact considering that most people that we are trying to reach have come out of 12 to 16 years of government funded public education.

It is not in the interest of government to teach anything other than that the alternative to the social contract is anarchy and thuggery. The US government doesn’t actively attempt to suppress libertarian property rights and natural law theory in public schools, but it provides little or no material to help it along.

Therefore the libertarian education movement must overcome what is very effective indoctrination of the young. That is that all rights, or at least property rights, are held by the individual only so long as they are in line with the good of the collective. The good of the collective being whatever the majority of voters, their representatives and the bureaucrats they appoint say it is.

sjm June 19, 2006 at 4:29 pm

John Mackey uses coercion and other forms of violence in his business. He is no friend of free markets and seeks to impose his bizarre choices in food by force. His Whole Foods business is closely aligned with the infamous PETA, a group that has repeatedly used extreme violence to advance its anti-human agenda.

Mr. Mackey and Whole Foods don’t like certain foods such as pate foie gras. Most recently they decided to stop carrying live lobsters and crabs, again at the urging of their PETA advisors.

Of course Mr. Mackey is free to operate the company has he sees fit, although were I a shareholder I would be very concerned about the financial, legal, and ethical implications of his behavior and choices.

But Mr. Mackey is not content to let others make choices that he does not like. Specifically, Whole Foods informed distributors that they would cancel their contracts if the distributors did not cancel previously executed contracts to supply foie gras and other verboten items to others. See http://www.slashfood.com/2006/05/03/whole-foods-vs-foie-gras-behind-the-news/
Sonoma Foie Gras, the victim of Whole Foods aggression, has sued Whole Foods for “intentional interference with contract.”

I hope Sonoma Foie Gras wins and Whole Foods is forced to make restitutin for their actions. I have stopped patronizing Whole Foods despite a very convenient location on my daily commute and very high quality produce. I simply refuse to associate with those who use violence to achieve their goals and I urge all defenders of free market principles to do likewise.

One very pleasant outcome of Mr. Mackey’s attempted coercion is now I know the name and address of all three US foie gras producers. I ordered whole livers from each of them and have sampled one. It was exquisite.

M E Hoffer June 19, 2006 at 5:16 pm

I thought this comment, found @ slashfood, says much : “4. Who are these people who are outraged that you’re against force feeding ducks. Are they just industry lobbyists or do they actually like causing pain to animals?”

Posted at 8:31PM on Jun 3rd 2006 by medleysoul

Peter June 19, 2006 at 10:33 pm

But Mr. Mackey is not content to let others make choices that he does not like. Specifically, Whole Foods informed distributors that they would cancel their contracts if the distributors did not cancel previously executed contracts to supply foie gras and other verboten items to others.

So what? He can do business with whomever he likes, under whatever terms he likes. If Sonoma Foie Gras doesn’t like it, they don’t have to do business with him. This is not “aggression”.

I hope Sonoma Foie Gras wins and Whole Foods is forced to make restitutin for their actions. I have stopped patronizing Whole Foods despite a very convenient location on my daily commute and very high quality produce. I simply refuse to associate with those who use violence to achieve their goals and I urge all defenders of free market principles to do likewise.

Good for you. See: you, too, can do business with whomever you like. If Whole Foods actions here constitute “violence”, then surely so does your refusal to patronize Whole Foods! I hope you get sued, and lose, and forced to buy from Whole Foods! (No, not really, but I do hope you grow a brain)

sjm June 20, 2006 at 6:20 am

If Sonoma Foie Gras doesn’t like it, they don’t have to do business with him. This is not “aggression”.

I may not have been clear. Mr. Mackey is not content to not do business with Sonoma Foie Gras. His firm insists that anyone who sells to Whole Foods abrogate pre-existing contracts with Sonoma. Mackey isn’t content to compete with Sonoma, he aligns himself with PETA in attempting to deny anyone the ability to purchase from Sonoma.

“Kate Lowery, a company spokeswoman, confirmed its ultimatum to Grimaud.

“We will not do business with them if they don’t terminate their relationship with Sonoma Foie Gras,” she said.

http://www.nytimes.com/2006/05/03/dining/03gras.html?ex=1304308800&en=d120b16505abab45&ei=5090&partner=rssuserland&emc=rss

Whole Foods takes direction from PETA, whose executives have stated publically that “I think it would be a great thing if all of these fast-food outlets, and these slaughterhouses, and these laboratories, and the banks that fund them exploded tomorrow” and “blowing stuff up and smashing windows [is] a great way to bring about animal liberation.”

Interfering with another’s right to make contracts is violence. Threatening to blow up firms you don’t like is violence. Whole Foods is not only unethical, it is unprincipled and hypocritical. If they care so much about “animal rights” they would not carry meat at all – but they started out that way and quickly lost half their capital. Instead of facing their own dilemma, they choose to attack a small business that went out of its way to be transparent.

Despicable. Those who care about free markets and honest trade will shun Whole Foods.

Peter June 20, 2006 at 7:07 am

I may not have been clear. Mr. Mackey is not content to not do business with Sonoma Foie Gras. His firm insists that anyone who sells to Whole Foods abrogate pre-existing contracts with Sonoma.

Yes, you were clear; I got that. Like I said, he can choose to do business, or not, under whatever conditions he likes. If he doesn’t want to buy from any company unless their employees spend the day naked and dipped in honey, that’s his choice. He’d probably go broke pretty quickly, but why is that any concern of yours?

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