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Originally published January 20, 2013 at 11:00 PM | Page modified January 21, 2013 at 11:03 AM

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Whole Foods founder Mackey seeks capitalism with conscience | In Person

John Mackey defies most labels, but unabashed capitalist is one of the few that sticks.

Austin American-Statesman

John Mackey

Founder and co-CEO of Whole Foods

Age: 59

Pay: Mackey voluntarily reduced his salary to $1 in 2007 and swore off any future bonus and stock-option awards. Total compensation for the company’s four other top officers averaged about $890,000 for 2011.

Stock: He owned $1.1 million shares as of last January, currently worth about $100 million.

Source: SEC filings

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AUSTIN, Texas —

John Mackey defies most labels, but unabashed capitalist is one of the few that sticks.

In “Conscious Capitalism,” Mackey’s first book, the 59-year-old founder and co-CEO of Whole Foods Markets offers nothing less than a full-throated psalm for the power of free markets to create value and lift humanity.

Yet at its core, and true to Mackey’s ability to avoid those hard-and-fast labels, the book also delivers a pointed critique on how capitalism can lead business astray if its practice isn’t grounded in a sound ethical foundation.

“If everybody is always calculating what’s to their advantage, and no one comes with generosity, or kindness, or compassion, or forgiveness — higher virtues — your society starts to break down,” Mackey said in an interview at his company’s Austin headquarters. “I actually think that’s what’s happening in America right now.”

For much of American industrial history, Mackey said, free-market capitalism was underpinned by a sense of Judeo-Christian values.

A sense of empathy and care softened the cold, hard forces of self-interest.

But that ethical underpinning has eroded as American society has grown increasingly secular, Mackey said. And with that decline, the trust in both public and private institutions has evaporated.

“We have to find our purpose again,” he said. “Business needs to rediscover its purpose, or evolve” to discover it.

Mackey and his co-author, Bentley University marketing professor Raj Sisodia, wrote “Conscious Capitalism” as a guidebook for rediscovering that higher purpose. As humanity has evolved, their argument goes, so also must business evolve to integrate the needs of all the stakeholders.

Conscious business leaders don’t think in terms of win and lose, they write, but in creative terms that “deliver multiple kinds of value simultaneously.” While it’s a marked change from how many business leaders think today, Mackey admitted, it has become second nature as a guiding principle at Whole Foods.

“I can do this very quickly,” he said. “I quickly run through every one of the major stakeholders and say, ‘Is this creating more value for them? Is somebody losing here?’ And if somebody is losing, then really we haven’t been creative enough, and probably it’s not a good decision.”

“Conscious Capitalism” includes several anecdotes that illustrate that process. When vendors argued that Whole Foods didn’t put them on equal terms with customers and employees, for example, the company added suppliers to its list of core stakeholders.

When animal-rights activists picketed the company’s annual meeting in 2003, Mackey was initially offended by their accusations. After meeting with them and studying the issue, he wrote, he overhauled Whole Foods’ animal-welfare standards and became a vegan.

The college dropout co-founded a natural-foods store in Austin in 1978 with his then-girlfriend, Renee Lawson Hardy. The store was called Safer Way, a spoof on the Safeway chain, which operated supermarkets nearby.

Two years later, Mackey and Hardy merged their company with two other grocers to form the original Whole Foods.

The company began expanding beyond Austin in 1984 and acquired regional grocery stores and chains in the 1990s. Sales rose 16 percent to $11.7 billion in the fiscal year ended in September, the third straight year with revenue growth of at least 12 percent.

Since the grocer went public in 1992, the shares have soared more than fivefold.

Mackey says he practices what he preaches at Whole Foods by capping executive pay at 19 times the company’s average hourly wage. For the four years through 2011, he earned $1 in salary and received no bonus. Whole Foods has no corporate jet.

In the book, Mackey and Sisodia write that Costco Wholesale, Google and Southwest Airlines also practice conscious capitalism.

Those who have followed Whole Foods know that Mackey has drawn his share of critics in recent years, including government regulators who investigated him after he posted online messages about the company under a pseudonym.

In the book, he notes that the investigation and media scrutiny forced him to open his heart and mind further.

This past week, in a National Public Radio interview, he said President Obama’s health-care overhaul, which he opposes, is “more like fascism” than socialism. He soon retracted that characterization, calling it “a bad choice of words on my part.”

Ultimately, it’s that notion of an evolving consciousness that lies at the heart of both Mackey’s ardent support for — and his concerns about the direction of — free-market capitalism today.

Once, underpinned by an ethics of compassion and care, capitalism created more value for humanity than any other political or economic framework in history, he said.

As business rediscovers a higher sense of purpose — one that seeks to create value for employees, suppliers, investors and customers alike — it can create value for all stakeholders, he said.

Because humanity is more conscious today than ever before, he argued, business has the capacity to integrate a new, needed ethical foundation on which capitalism can thrive and benefit humanity.

“In a way, our book is a criticism of capitalism,” Mackey said. “It’s basically saying, ‘If it’s not going to disappear, it’s going to have to go higher. It’s going to have to get to a higher level of consciousness, and the practitioners of it are going to need to be more conscious as well. ...’

“There are all kinds of challenges we have,” he said. “Unless we become more conscious, we’re not going to be able to deal with it.”

Information from

Bloomberg News and

Seattle Times staff is included

in this report.

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