Rethinking the Social Responsibility of Business

A Reason debate featuring Milton Friedman, Whole Foods’ John Mackey, and Cypress Semiconductor’s T.J. Rodgers

John Mackey defends (this is Reason Magazine, after all) his company's holistic approach to capitalism to a couple of people so devoted to the free market that you'd think the invisible hand was jerking them off under the table.

As usual, Friedman is slavishy devoted to capitalism, but with a detached, poorly-communicated style. TJ Rogers, who, if there is any karma in the world, will end up fishing recycled circuit boards out of pools of acid in rural China, brings his unique "style" of caustic, anti-humanitarian Ayn Randian horseshit to the table. John Mackey:

While I respect Milton Friedman’s thoughtful response, I do not feel the same way about T.J. Rodgers’ critique. It is obvious to me that Rodgers didn’t carefully read my article, think deeply about my arguments, or attempt to craft an intelligent response. Instead he launches various ad hominem attacks on me, my company, and our customers. According to Rodgers, my business philosophy is similar to those of Ralph Nader and Karl Marx; Whole Foods Market and our customers are a bunch of Luddites engaging in junk science and fear mongering; and our unionized grocery clerks don’t care about layoffs of workers in Rodgers’ own semiconductor industry.

For the record: I don’t agree with the philosophies of Ralph Nader or Karl Marx; Whole Foods Market doesn’t engage in junk science or fear mongering, and neither do 99 percent of our customers or vendors; and of Whole Foods’ 36,000 employees, exactly zero of them belong to unions, and we are in fact sorry about layoffs in his industry.

When Rodgers isn’t engaging in ad hominem attacks, he seems to be arguing against a leftist, socialist, and collectivist perspective that may exist in his own mind but does not appear in my article. Contrary to Rodgers’ claim, Whole Foods is running not a “hybrid business/charity” but an enormously profitable business that has created tremendous shareholder value.

Of all the food retailers in the Fortune 500 (including Wal-Mart), we have the highest profits as a percentage of sales, as well as the highest return on invested capital, sales per square foot, same-store sales, and growth rate. We are currently doubling in size every three and a half years. The bottom line is that Whole Foods stakeholder business philosophy works and has produced tremendous value for all of our stakeholders, including our investors.

In contrast, Cypress Semiconductor has struggled to be profitable for many years now, and their balance sheet shows negative retained earnings of over $408 million. This means that in its entire 23-year history, Cypress has lost far more money for its investors than it has made. Instead of calling my business philosophy Marxist, perhaps it is time for Rodgers to rethink his own.

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