September 28, 2005

If the Corporation is a Person...

What kind of person is it?
If you ask John Mackey, self-described "free market libertarian" and CEO of Whole Foods, the Corporation is generally a small, egocentric child.
These days, we are seeing more and more debate about the role of corporations, either negatively, in the aftermath of Enron-like catastrophes, or in the more hopeful sphere of socially responsible investment.
In this Reason article, Mackey debates the merits of his business and its "stakeholder" capitalism with renowned economist Milton Friedman and Dartmouth's (Board of Trustees) own hardass libertarian Thurman J. Rodgers '70 .

Essentially, Mackey discusses all the great things that Whole Foods does for its stakeholders, like its employees, the local community, and the environment, and the great things it does for its stockholders, like being the Fortune 500's leading food retailer in terms of returns on invested capital.
Friedman, who believes corporate philanthropy to be theft from shareholders, says that Mackey isn't really being a stakeholder capitalist. Instead, Friedman argues that Whole Foods makes these donations and policies for three reasons: 1) Helping the community is long-term profit maximization for the store, not altruism; 2) The non-evil-corporation is a successful marketing strategy, not actual altruism; 3) Donations make for nifty tax breaks.
Rodgers calls Mackey a communist and then pleasures himeslf to the notion of the nobility of laissez-faire capitalism, while ignoring the fact that his company can barely turn a profit.

The question that comes to my mind is that, whether Whole Foods is intentionally altruistic or not, if the company is doing good, who cares. The very idea that a large segment of the population finds non-evil corporate activity appealing is a step in the right direction. If the general public comes to reject corporations that maximize profit at the expense of community, or at the very least, exercise a preference where possible towards more stakeholder-concerned corporations, the market will begin to favor non-evil corporations. That's a good thing, because everybody, shareholders included, wins, or at least, the people who typically get screwed will get screwed less. I do believe that part of being a rational and informed consumer means exercising ethical judgement of a company, and that this will influence American capitalism. I guess I'm an optimist.

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