Whole Foods represents the failures of ‘conscious capitalism’

It’s hard to think of a better poster child for “conscious capitalism” than Whole Foods Market, the high-end grocery store that made a name for itself selling organic produce in feel-good, mood-lit stores. These days, the chain is floundering and a potential buyout is on the horizon. What does that say about the conscious capitalism it championed?

Same-store sales have declined for six straight quarters, and Barclay analyst Karen Short estimates that 14 million Whole Foods customers walked away during the same period. Last month activist hedge fund Jana Partners swooped in, buying up 8.3% of the company’s shares and demanding an overhaul. Whole Foods responded by reshuffling its board, bringing in a handful of big box retail stars and promoting Gabrielle Sulzberger, who hails from private equity, to chairwoman.

A failing firm isn’t exactly news. In the dog-eat-dog world of global capitalism lots of companies have their moment in the sun only to crash and burn a few years later.

But Whole Foods was supposed to be different.

John Mackey, the company’s chief executive, has long argued that Whole Foods is wired differently — that it runs on a “conscious capitalism” model that outsmarts the competitive pressures of our for-profit system through creativity and innovation.

In Liberating the Heroic Spirit of Business: Conscious Capitalism, Mackey argues that his conscious capitalism model achieves success by honoring not just shareholders but all stakeholders, including workers, communities and the environment.

The Whole Foods founder penned his treatise in response to the growing consensus that capitalism is doing irreparable harm to the planet and the people who live on it. Our for-profit system is increasingly viewed as a zero-sum game in which ecological destruction, climate change and rising inequality are firmly linked to the rapacious behavior of multinational corporations.

Mackey agrees that humans are harming the planet, but he doesn’t think the problem lies in capitalism. Free-market capitalism, according to Mackey, is actually a “beautiful”, “heroic” system that, properly harnessed, can operate “in harmony with the fundamentals of human nature” and the planet.

Read more at The Guardian.