Economics and Missing the Point

There’s an economics debate over at Reason.com entitled Rethinking the Social Responsibility of Business. If you’re not into economics, it’ll probably bore your socks off. If you like economics (like I do), you might enjoy it.

After reading the entire debate, John Mackey (of Whole Foods) seems to miss the point. Beyond accusing a respondent of ad hominem attacks and then immediately retaliating with his own, I think he’s taking way too much credit as one of the entrepreneurs who started the company. While he may have been a principal when Whole Foods began, as soon as it became a publically-traded company, he released that control.

The weakness of his argument (and the validity of Friedman’s argument) is demonstrated most clearly in the following quote:

Like medicine, law, and education, business has noble purposes: to provide goods and services that improve its customers’ lives, to provide jobs and meaningful work for employees, to create wealth and prosperity for its investors, and to be a responsible and caring citizen.

As Friedman alludes, responsible and caring citizens are actually citizens. Dictionary.com would agree. Beyond that, improving customers’ lives, providing good jobs, and creating prosperity can only be done by creating profit. The logical end of creating profit to achieve those goals is then to maximize said profit. If businesses maximize profit, more money goes to individuals (investors), who can then distribute that wealth as they see fit.

It seems that what is really going on with Whole Foods is that some of the entrepreneurs who started the company (or at least one) have an unrealistic view about who owns the company. As the great economist Jim Carrey once stated (in The Mask):

...you’re running this place like your own personal piggy bank.

Well, Mr. Mackey, you are too. You can still spend your salary however you want, but you lost the privilege to spend your business’ money that way as soon as it became funded by others. Tough luck, but that’s business.

  1. Nate,

    I’m reading a book right now called “The Economy of Grace” which tries to give a theological critique and alternative to global capitalism without resorting to socialism or an unworkable pie-in-the-sky system of platitudes. You should check it out. It’s by Kathryn Tanner and available at an Amazon near you.
    TheBlueRaja is the author. Oct 25, 15:20 is the time. <
  2. Señor Raja,

    Always good to see you around these parts. So in light of what you’ve been reading, what are your thoughts on capitalism? As I recall, you aren’t a big fan.

    I am also particularly interested in where Ms. Tanner’s position falls given the tendencies of a non-Christian society. My past thinking (as you alluded to) has been that socialism doesn’t work because it breeds laziness, but I’d love to hear a workable solution to the problems inherent to capitalism (greed) and socialism (complacency).

    And as always, I’d love to know what your personal thoughts are on all of those things.
    Nathan Logan is the author. Oct 25, 16:35 is the time. <