The Soho Forum Debates

Should Businesses Focus Solely on Profits? Whole Foods' John Mackey vs. Ayn Rand Institute's Yaron Brook

A Soho Forum debate about stakeholder value vs. shareholder value.


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At each of Whole Foods Market's more than 500 American stores, managers ask every team member—from the meat clerks to the baristas to the janitorial staff—to orient their work around a shared purpose, which is to make natural and healthy food widely available. This goal, according to Whole Foods CEO and co-founder John Mackey, is in no way inconsistent with maximizing shareholder value, often seen as the essential purpose of a corporation. 

As Mackey writes in his new book about leadership, "At the heart of Conscious Capitalism is a radical refutation of the negative perceptions of business, and a rejection of the split between purpose and profit." Mackey believes that this is the key to defending capitalism against those who condemn it for having no inspiring ideals. 

At a Reason-sponsored Soho Forum debate held on February 18, 2020, Ayn Rand Institute Chairman of the Board Yaron Brook challenged this view. He believes that maximizing profit should always be the primary goal of companies, and it's that focus which explains why capitalism has lifted the broad masses out of poverty. That's the message businesses should be emphasizing, he said, and it's inspiring enough.

The debate, which played out in front of 200 people in The Villages, Florida, was moderated by Soho Forum Director Gene Epstein. It was an Oxford-style debate, meaning the winner is the person who moves the most people in his direction.

Narrated by Nick Gillespie. Edited by Ian Keyser and John Osterhoudt. Camera by FeatherDot Productions.

Photo: Whole Foods Market; Kris Tripplaar/Sipa USA/Newscom; Event photos, Brett Raney

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  1. Shop in a Whole Foods store – the prices are higher than at one of the less woke supermarkets, but well advertised as ‘organic’ or ‘free trade.’ To justify the high prices for something not measurably better, Mackey indicates to the buyer that it is better for the planet and for the buyers psychic health.
    This approach is just as much a pursuit of profit as any other. He knows his market.

    1. There’s a liberal born every minute and each one will shop at Whole Foods, eventually.

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    2. I call it “Whole Paycheck.”

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    4. Yeah, pretty much the only thing Mackey is conscious of, is how much money he can make selling over-priced organic avocados to affluent people.

      Businesses should focus on delivering items people want at a price they’re willing to pay, and Mackey has figured out that a certain segment of society will pay a premium to feel good about themselves by buying things stamped “organic,” even though they still have NO IDEA where their food is actually coming from, and the organic farming industry really not much more moral or ethical than the conventional farming industry.

      It’s not “conscious capitalism,” it’s selling virtue to people who can afford to pay for it. If you can make a buck off that, fine, but stop pretending it’s anything else.

      1. “Businesses should focus on delivering items people want at a price they’re willing to pay,…”

        When I was young businesses priced items based on cost for the most part.

        1. That’s why they are out of business.

          1. “That’s why they are out of business.”

            More than a grain of truth there.

            When we opened up our graphics art/advertising business, in a small city, after having worked in that industry there, and in other places, we decided to 1) attract the best personnel by paying the highest salaries we could reasonably afford, and 2) charge the highest rates possible.

            Since decision “1” allowed us to deliver our “products” with a high level of customer satisfaction, and on-time, we did very well. In two years, we were the largest agency of our type in the city.

    5. I believe that the idea of corporations having a social conscious is a trend brought about by prosperity. We work less for more money; we have more free time; we have time to think and worry about “the good of society.”

      I also believe that, although Mackey says this is a third win, there is value to his company in doing social good. It helps in marketing, how the business is perceived, etc. Therefore, there is no third win – this is simply part of the win-win scenario.

      Finally, if we were in hard times, almost certainly the first thing these companies, following the current trend of being socially conscious would do, is cut back on those “social conscious” expenses.

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      Yes, huffpost. Amazingly.

      I move on to the next aisle and ask the nearest Whole Foods clerk for help. He’s wearing a visor inside and as if that weren’t douchey enough, it has one word on it in all caps. Yup, NAMASTE. I ask him where I can find whole wheat bread. He chuckles at me “Oh, we keep the poison in aisle 7.” Based solely on the attitudes of people sporting namaste paraphernalia today, I’d think it was Sanskrit for “go fuck yourself.”

  2. Should human beings focus solely on survival?

  3. ” a shared purpose, which is to make natural and healthy food widely available. ”
    How noble of Whole Foods to sell their products at cost in order to make them more widely available.

    1. Rat bastards, they should be selling below costs to really benefit others.

  4. No, businesses shouldn’t focus solely on profits. Businesses are property, and should be used by their owners based on whatever the owners value, and they usually do.

    I own a lot of things that I don’t use solely for profit. Why should a business be different?

    1. The argument is that businesses create value when they profit. They can’t profit without offering something of equal value. So the more profits they make, the more value they create for society. By maximizing profits they maximize wealth creation.

      1. Not all business owners care about wealth creation to the exclusion of everything else.

        1. You mean the bankrupt ones?

        2. I’d say very few do.

        3. The objective is to maximize shareholder value over the long term, which involves a thousand things, providing the best product for your customers at a good price, reducing risk inherent in your business, hiring and keeping good people, treating customers right… The majority of WFM stock holders will sell if offered enough for their stock. The current management understands that they have to maximize value or someone else will do it for them.

    2. A business that doesn’t make profits is a hobby.

      1. And a business that doesn’t maximize profits is still a business.

        1. And a business that doesn’t maximize profits is still a former business.

          1. Maximizing profit and not making profit is a false dichotomy

            1. The true dichotomy is running your business well so that someone else doesn’t take it over and run your business better…

    3. I’m watching it right now.

      I get what he’s saying. When we buy stuff we generally look at the price. Unless buying organic or fair trade or whatever makes you feel good, you’re probably going to look at the price primarily.

      So his idea is to instead of looking at individual facets like where the factory is located, which supplier benefits and which loses, bond holder, etc. to simply look at whatever maximizes profits. That makes the decision easier while also creating the most wealth for the most people.

      Makes me think of Metallica. They were an awesome band until they decided to maximize profits.

      1. Generally look at prices, but not exclusively. We also consider quality, taste, health benefit, or status. Name brands sell just the same as store brands. And it isn’t for lower cost.

    4. You, as an individual consumer, have the unlimited right to own and use things for any (legal) purpose including purposes that have nothing to do with profit.

      You, as a joint owner, have more limited rights to impose your values on your co-owners. If you, for example, want to give to UNICEF but your co-owner wants to give to the Red Cross, what right do you have to force your choice on your co-owner? Wouldn’t everyone be better served if the company focused on making money, distributed the profits to both of you and let you make your own choices about charities?

      That scenario is amplified when you are a non-owning manager making choices allegedly in the name of the owners.

      1. If you, for example, want to give to UNICEF but your co-owner wants to give to the Red Cross, what right do you have to force your choice on your co-owner?

        By the same logic, if I want to maximize profits, but no co-owner wants to give to the Red Cross, what right do I have to force my choice on my co-owner?

        1. I assume there was a typo and you meant “my co-owner wants to give”? If so,

          You have the right to force that “choice” on your co-owner because it’s not really a choice. Your co-worker will still be able to give as much as she wants to the Red Cross. The only thing your approach does is a) change the name on the check, b) maybe change who gets the goodwill for the decision (and yes, goodwill does have financial value – that’s irrelevant to this debate) and c) introduce lots of inefficiencies and opportunities for suboptimal decisions into the management process.

          1. Owners disagree on lots of things. They don’t come into agreement on all business decisions merely by choosing to maximize profit. They then start arguing about how exactly to do that.

            Can you define “efficiency” in this case that doesn’t already assume profit maximization is the most efficient?

            1. “Efficiency” in this case is defined as meeting each owner’s individual goals (in proportion to their ownership interest) while minimizing transaction costs and other losses.

              Your mistake is in thinking that “maximizing profits” means the charities won’t get the money. That’s just not true. It merely changes who will make the final donation.

              Assume that you and I are the only two owners of a business and that your goal is donating to UNICEF while my goal is donating to the Red Cross. We could spend time and management energy arguing over that point or we could spend our scarce time on maximizing the company’s profits, then split the profits and each give our share to our preferred charity. That’s efficient even though 100% of the profits went to charity.

              Note that you could still try to lobby me to favor UNICEF over the Red Cross but it would be outside the work relationship and less likely to bias decisions inappropriately.

              1. By the way, yes you can and often should argue that donating to charity (or doing other values-based things) is a way of maximizing profits. Examples:

                Choosing not to use child labor is both a values-based decision and a way to avoid litigation costs.
                Greenwashing can be quite profitable if the incremental revenue driven by your advertising campaign outweighs the costs.
                Paying workers well is both a values-based decision and a way to keep down recruitment and retraining costs.

                “Profit maximization” does not mean “be immoral”. It means “do things that make business sense (including in the context of customer perception), then let the owners salve their consciences with their own distributed profits rather than by spending other people’s money”.

              2. But charity isn’t the only way a company can do good at the expense of maximizing profit.

                For example: conflict resources. If the owners don’t want to buy mineral resources sold by assholes who will then perpetuate their assholiness, I think they should go ahead and avoid it, even if it means spending more money. I don’t think they should feel required to do business with them for the sake of efficiency.

                1. With a publicly held company, there is a limit to how much a manager can do with regard to spending money on things that don’t maximize long term profits. They can choose suppliers based on personality, but if that reduces future growth and cash flow enough, someone will see the opportunity and take their jobs through a hostile takeover…

                  1. I’m talking about board decisions, not manager decisions. Lots of publicly traded companies avoid conflict resources in their supply chains. They’re not all subject to hostile takeovers over it.

  5. Inexcusably, the article above does not report the results of the debate. So for the record:

    First, the headline asks “Should businesses focus solely on profits” but the actual proposition being debated was “A clearly-articulated purpose, consciously embodied by the leadership, should be an essential element in all business organizations, while also enhancing shareholder value”. So a “Yes” vote to the headline of this article would be a “No” vote to the proposition debated.

    The results were:
    Pre Post Change
    Yes 46% 41% -6%
    No 25% 44% +19%
    Undecided 29% 15% -15%

    “No” (argued by Brook and, again, a “yes” answer to the headline) won overwhelmingly.

  6. Please throw the word “should” in the shit can.

    Business “can” do what ever the hell they want.

    1. Of course they can. One could suggest they SHOULD not do what would put them out of business.

    2. Please throw the word “should” in the shit can. Business “can” do what ever the hell they want.

      Thank you!

      A business is property, and the only appropriate response to what I “should” do with my property is “fuck off, slaver.”

  7. Seeking profit is moral because markets reveal preferences. It’s easy to say you want everything for nothing in a vacuum, or to say you would give “anything” for something. It’s only when people confront reality and scarcity that their true preferences become revealed, hence the term. That’s why anyone who isn’t purely chasing profit is immoral. You’re assuming that by trying to maximize value for shareholders that you are somehow damaging the world for their financial gain. What most people do not realize about capitalism and free markets is that there are no rules that preclude you from being “ethical” in whatever capacity that means to you, just like how you can operate a Communist cooperative in a free market. If you find a way to make it work and everyone is willing, great job!

    Prices reflect real costs. For many people, their ethics have a dollar cost. Whole Foods charges you more for those ethics. Pretending that we shouldn’t chase profit is to pretend that there is no scarcity and that some values do not have a cost. It presumes that everyone can be the holiest and most unassailable leftist on a budget, which could not be further from the truth. Removing feedback mechanisms and pricing information by not pursuing profit results in inefficient markets that ironically create more problems.

    Profit isn’t the end result. It’s the tool that gets us there. The result is the most efficient allocation of goods in a world with scarcity.

    1. Seeking profit is a requirement for a healthy business. Seeking profit as the sole purpose of a business is inherently immoral. If maximizing profit is the only goal of a business without ethical constraints, several scenarios are necessary results:

      All waste products, regardless of toxicity should be disposed of as inexpensively as possible. Assuming the perfect libertarian world where all property is privately held, toxic waste will be dumped in to bodies of water. When that is not practical, it will be released as an aerosol in to the atmosphere. In a libertarian society it becomes essential to treat most waste as non-existent. Nuclear waste products don’t aerosol easily so I suspect that they will be dumped in to the oceans in containers that are only sufficient to survive the trip to the dumping zone.

      Another requirement of businesses is to work to reduce the cost of manufacture.

      Raw materials should be obtained from small 3rd world countries using local labor working for little pay, probably under duress. A small investment in a local warlord should enable a business to obtain low cost raw materials.

      The domestic labor force should also be paid as little as possible. Foster morals that encourage large families to ensure that the labor market is always in excess of the demand for labor (encourage illegal immigration is also profitable & an excellent way to sidestep regulations meant to protect worker safety. The notion that people will not work for wages that do not allow them to survive has been proven fallacious time & again. For the vast majority, any income is better than no income. People will work 16 hour days & sleep 4 to a bed if the alternative is starvation & death. Another important element in keeping labor costs low; Educated people are less inclined to work for low wages. Encourage a disdain for education & science. Sure, we will need a few people who actually know what they are doing but not so many that we would actually want a large well educated populace. Ignorance is beneficial to keeping labor costs low.

      Finally, to ensure profit, endeavor to create products that are addictive. Preferably, products without which people will die. Purdue Pharma is a good example although insulin producers have learned as well. Sell addictive drugs & bribe doctors to prescribe them to patients. Since profit is the driving force behind the economy, doctors should have no trouble going along with this scheme. The Hippocratic Oath is clearly the product of the imagination of some radical leftist. Once the patient is addicted, you can raise prices at a rate where the death rate from withdrawal (for those no longer able to afford the drug) balances the profit margin. Better yet, convince people to purchase health insurance to pay for the addictive drugs so that the cost can be spread over the incomes of those who are not yet addicted to your product.

      I could go on but hopefully by now you can see that an unregulated marketplace is inherently both immoral & destructive. If there is not a strong legal system in place to prevent businesses from causing harm to the environment (social as well as physical) every business will succumb to the pressure to harm the environment in pursuit of profit in order to compete with every other business that is subject to the same pressures. While my libertarian brother once remarked that only a fool urinates in his own drinking water, in a libertarian society a person would be encouraged to urinate in other people’s drinking water if it allowed him to buy bottled water & other desirables.

  8. Whole Foods is and always has been a great store where quality reigns. For someone who is acutely focused on buying as cheaply as possible, it’s not an option. But for people who put quality first, who want organic, who want things like non BPA lined canned foods, and other sometimes intangibles when it comes to what they eat, Whole Foods is great. Even their non organic orange juice tastes fresh squeezed. I love the emphasis on quality and it does pay. Offer a great product consistently to enough people who want it and you make money. That’s capitalism. Mackey never said making a profit isn’t a goal, it’s just not the only goal. Quality sells.

    1. Right on. When profit is the only goal we get dirty water and air. We get unsafe workplaces. We get substandard pay. So on and so on.

  9. But paying taxes doesn’t give you that touchy-feely thing, even though it would be far more effective in keeping children from being left alone in hotels. موقع برستيج

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