Should Businesses Focus Solely on Profits? John Mackey vs. 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

[ProductBasement]

I don't look to my employer for purpose and I don't look to my church to pay my bills

[Frenblow]

Just as Mackey claimed Yaron was under-estimating the complexity of people, I think that Mackey is the one under-estimating the complexity of people. The business of a businessman is to maximize profit, the business of a cook is to make good food. A person can be both of these things and converge them in a restaurant business that maximizes profits WHILE cooking great food because those two things are NOT mutually exclusive.

[rust]

John Mackey vs. Yaron Brook agree 100%.. John just puts his in a feel good wrapper, and Yaron puts it in a way that someone who wants to understand.

[MrJonnyPepper]

I haven't seen so many hares split since my Uncle Louie's rabbit BBQ

[watchdealer]

As an entrepreneur with a fairly large business, I can say that the only way to earn maximum profits is to put customers first not shareholders or anyone else

[homewall]

I'd love to see how much "purpose" would drive employees and management if we simply reduced their salaries down to minimum wage in order to reduce prices to improve this notion of "purpose."

[trevorsmith]

Yaron Brook in debate is unmatched. Good job Yaron.

[homewall]

If Whole Foods hadn't been about profits first and foremost, nobody would have invested in it, none of the stores would have been built -- okay, maybe the first one would get built for some purpose of feeding the world (as if Whole Foods is the key to nutrition in the whole world) and then would have never grown further.

[.gforlife]

This question has been answered already. Yes. They should. Safety first. Customers are our first priority.

[ralexttm]

props to everyone here who watched it all the way through <3

[fabsmaster]

I wish they would have explored the issue of differing moralities a bit more. John seemed to be conceding that a good moral compass includes altruism in the way of helping other stakeholders and therefore that aspect of capitalism must be emphasized. Yaron believes that a good moral compass ultimately only means pursuing ones's self interest, so rather than convincing the public that capitalists can be altruistic, we should show them that altruism isn't a virtue in the first place. Whether or not you agree with Yaron's conception of morality, I think John is right that convincing the public that greed is good is a losing argument.

[damonhage]

Mackeys argument makes no sense. If you “optimize for any stakeholder, you optimize for all of them”, then why do we need to listen to Mackey? The shareholders are a stakeholder so why is it so important that we shift from a model that maximizes shareholder wealth? We will still make all the same decisions anyways allegedly.

[srki]

Businesses are based on a voluntary exchange? Give me a break, a lot of big businesses are lobbying to be protected.

Like big pharma, when I need medicine, it is definitely not a voluntary exchange. I would like to get a cheaper medicine from Canada or India, but pharmacists are not even allowed to give me a generic drug if my doctor prescribed a brand drug.

I am not even allowed to order some contact lenses from abroad and I need to pay for an eye exam every 6 months to get contact lenses, but it is ok that I wear glasses that are 10 years old?

Really, what are you talking about? Medical insurance companies are not allowed to offer you insurance where you can get treatment in Thailand or somewhere cheaper. That is not a voluntary exchange, that is not economic freedom.

[shadfurman]

I think they're arguing over semantics.

Rand never said helping people was bad, she said it was selfish. She gave many examples of unselfish altruism that most people would find abhorrent, she lost many converts over insisting on using the term selfish, but those would be wishy washy converts. The fact is people use altruistic propaganda to do the worst things possible, and truly operating in ones own rational self interest greatly reduced the possibility of doing something horrible.

On the other hand, we have these words that we use and when we help someone in need, we're not thinking it's in our self interest, even though of course we are doing it because it makes us feel good. Most people aren't ignoring that fact when they're helping others, but they aren't really thinking about themselves or their own interests, it's not the focus.

The win-win-win and maximizing long term profits seem to also be two sides of the same coin. Maximizing profits is very likely to be a win-win-win solution, and a win-win-win solution is likely to maximize profits.

I also think their is plenty of room for both kinds of their messaging. Many wishy washy converts may be come full converts as they become more familiar with their under standing of property rights and economics, but I imagine that's much less likely jumping clear from altruistic socialism.

[homewall]

Non-profits and hobbies are for purpose first. Business is always created for the initial intent to make money. None do the work and risk for any other reason.

[bloodwalker]

I remember what I read somewhere :
"Do you want more profit or do you want more customers?"
A company that only focuses on profit has risk of losing customers, but a company that focuses on customers will eventually get great profits.

[juanmanuel]

What we need tounderstand is that Customers and Shareholders are GENERALLY not mutually exclusive. The best way to make your shareholders happy is by giving your customers a better service than your competitors

[drbudgy]

Unfortunately Yaron did not properly articulate an Objectivist position here about self interest. Look into the 7 virtues of Objectivism. There can be all kinds of behavior that generates large profits that are improper and antithetical to those virtues. It needs to be stressed that such behaviors are not rational egoism because if someone earns money through dishonesty they have no reason to feel prideful in their productivity. It is also true that in a mixed economy it is easier to get away with irrational rent seeking as a means of earning a profit.

Howard Roark didn't make great buildings for the purpose of making a maximum profit, he even did the government project for a different kind of payment (which was not made). He did so for his own self interest which is not 100% equivalent to profit. In business with shareholders one of course must be mindful of investor profits, but ultimately if the business model and ideas were sound and one adheres to executing those ideas with a laser focus then the profit will result. Mackey does make this point fairly well, but loses out when he claims that human nature is an intrinsic mix of selfishness and altruism, Yaron misses the point when referring to profit as though it is an intrinsic good.

[FourthRoot]

It's a bullshit question to begin with. It's not a matter of whether businesses should focus on their own profits, the fact is that some businesses WILL focus on their own profits, those that do will have a competitive edge over those that don't and so will tend to grow to dominate their industry.
No amount of whining about how greedy businesses are will change that. So the question is, what economic policies should the government have that align profits with the interests of the rest of society. The answer to that is to enforce contracts, protect property rights, and ensure transactions are voluntary.

[bhosterman]

Here’s the difference in the two philosophies. One creates both outcomes. The other doesn’t necessarily. If your goal is like Whole Foods and it’s goal and purpose leads to being run out of business by the competition who doesn’t share the flowery and lofty goals, it’s a lose lose in the long run. “Well, at least we paid $15 an hour while it lasted”