2013/04/04

Book Review: Conscious Capitalism

Conscious Capitalism book cover
At first glance, Conscious Capitalism looks like just another business book from an egotistical CEO. John Mackey has had great success running Whole Foods Market, and now he wants to share his learnings with the rest of the business world in self-serving, boldly self-assured, and dreadfully written prose. But his aim is higher than just giving business tips or recounting war stories - with co-author Raj Sisodia, he wants to revitalize the entire economic system and provide a "richer and more ethically compelling narrative" about capitalism. Their subtitle, without any trace of irony or humour, of course, is "Liberating the Heroic Spirit of Business".

The combination of the title and the subtitle gives it away. What we have here is a very contemporary collision of values: a New Age libertarian how-to. Eckhart Tolle meets Adam Smith - The Secret for the haves.

"Evolution of Consciousness"

The book starts from the New-Agey premise that we as a species are "evolving to higher states of consciousness" and that we as individuals can choose to "raise our consciousness". An appropriately "conscious" leader can help his or her company become a "conscious company". What, exactly, is this consciousness? Page 29 gives us the definition:

Perhaps the greatest change that we humans are experiencing is our rising consciousness. To be conscious means to be fully awake and mindful, to see reality more clearly, and to more fully understand all the consequences - short term and long term - of our actions. It means we have a greater awareness of our inner self, our external reality, and the impacts we have on the world. It also means having a greater commitment to the truth and to acting more responsibly according to what we know to be true.

The word "evolution" is bandied about quite a bit. It is worth examining the meaning of the word in biology. When species evolve (individuals do not evolve), they become better adapted to their environment. This does not necessarily involve an increase in complexity and structure. Many parasites, for example, have evolved to become highly adapted to their niches by becoming very simple, relying on the host organism for many nutrients and functions their ancestors had to provide themselves. Over time, a lineage may repeatedly gain and lose functionality; for example, when fish evolved into land animals, they lost the ability to live in water; when some mammalian descendants evolved into whales and porpoises, they regained that ability.

do what your heart desires - but within capitalism!
But in common parlance, "evolution" is assumed to be a directional, progressive process that generates increasingly complex specimens - such as the caveman who slowly evolves good posture. It is in this sense that New Agers and this book use the word, trying to support their claims of "evolution of consciousness" by comparison to biological evolution. Let's apply the biological metaphor more fully: yes, consciousness may be "evolving", but that doesn't mean it is getting better in any specific sense. It is just changing to adapt to current circumstances, and if circumstances change back, then consciousness will, too.

Unclear Boundaries

Mackey and Sisodia tell us that once it has determined its "higher purpose", a conscious company will forgo Jack Welch-style pursuit of maximum profit at all costs. It will consider all "stakeholders" and seek "synergies" rather than trade-offs, avoiding a zero-sum view to instead find a way to benefit workers, customers, suppliers, investors, the environment, and perhaps others. This enlightened way of doing business will lead to higher profits in the long run - a "win-win-win-win-win-win" situation. (I didn't make that up. They actually call it Win6.)

(At one point, they tell us that the "media should also be considered a stakeholder". If that's the case, who the hell isn't?)

Throughout the book, various companies are named as examples of conscious capitalism or of some aspect of it. There does not seem to be any firm way for one to determine whether a company, or for that matter, an individual, is "conscious", or a metric to determine the degree of consciousness. Amazon is mentioned, even though Jeff Bezos is well-known as a micro-managing asshole, they pay abysmally low wages to their warehouse workers, and they've evaded enormous amounts in sales taxes. Southwest Airlines is mentioned favourably, and indeed it seems that they have been profitable while treating workers well and "help[ing] bring the benefits of air travel within the reach of hundreds of millions of people on the planet". Except, of course, that in doing so they have contributed to the greenhouse gases that threaten catastrophic climate change. Do they still count?

What about coal or copper companies? Can they be "conscious", even if they're destroying mountains to get at natural resources? Could Blackwater become a conscious company? Could McDonald's? What about landlords? Would a "conscious" landlord not raise rents beyond a tenant's ability to pay, in the interest of maintaining a favourable long-term relationship and not incurring undue hardship?

One thing we know is that Altria (formerly Philip Morris) cannot be a conscious company. "It matters how the money is made." they tell us. But the market demand for tobacco persists. Is there a way to be a "conscious" tobacco company? If not, how will we get to the brave new world where all the companies are conscious? Will it require that all individuals are conscious enough to be non-smokers?

Contradictions

We learn that Whole Foods engages in "conscious philanthropy", donating 5-10% of profits. Mackey defends this policy from Milton Friedman-esque critiques by saying that it is "simply good business and works for the long-term benefit of investors and other stakeholders as well". Later on he estimates that campaigns around their Whole Planet Foundation "generat[e] perhaps a 1,000 percent return to our investors".

So now a 10x return is considered philanthropy?

This stark example points to a deeply buried confusion about ethics. Conscious Capitalism offers a standard justification for capitalism: "Voluntary exchange for mutual benefit creates the ethical foundation of business." Well, exchange is better than rape and pillage, but to call it "ethical" is to give that word short shrift. Exchange is no high moral act - it treats others as means, not ends. One doesn't engage in exchange with one's family or friends. The following is voluntary exchange: I offer a sandwich to a homeless person begging for change. "Oh, yes, thank you very much!" "Okay, but first you must pay me five dollars."

Joseph Heller would love the following two-step: a whole appendix provides support for the notion that conscious capitalism works better; in the long run it leads to higher profitability. But, you should not embrace it just for the financial benefits! Why, that would not be very conscious of you, would it? You would not be focusing on your higher purpose. Tut-tut.

Total Ridiculousness

The feel-good mantra just doesn't stop. "No one has to lose, not even competitors." Are you fucking kidding me? This one is belied by Mackey's own behaviour, staying up late at night anonymously talking smack about Wild Oats on Yahoo financial boards while Whole Foods was trying to buy it. (Which, BTW, Mackey mentions in the book, totally fails to apologize for, and shows that he fails to comprehend the basic ethical violation.)

For all their talk of synergy and systems thinking, the authors' arguments can be quite simplistic. At several points, they juxtapose "conscious capitalism" with its four tenets and its conscious leader against a stereotypical ruthless business resembling GE under Jack Welch, with rounds of layoffs, wage cuts, and hardball negotiating with suppliers. Either a business is naively about short-term profits above all else, or profits are a by-product of running a business with purpose. Very few actual companies operate at either one of these extremes.

All this woolliness is overshadowed by the major problem: the assumption here is that right makes money. If you run a conscious company, the profits will eventually come. But what happens when they don't? Then we get to the Achilles' heel of the whole charade. If investors get fed up with waiting for profits to grow sufficiently quickly, or a corporate raider sees an opportunity, they can elect a new board who will appoint a new, less conscious CEO who will aim to achieve the results the owners desire. At points the authors express concern about the possible "exploitation" of the owners. But the reality is that no matter how conscious everybody else is, the shareholders, not the stakeholders, own the company and have the final say. No suggestion in the 300 pages of Conscious Capitalism alters this fact.

No Systemic Analysis

Not only does the book not touch upon the fundamental power relations of ownership, it does not seriously engage with critics of capitalism or with the macroeconomics of capitalism. Whatever you may think of Karl Marx's prescriptions, he was the most insightful analyst of capitalism's internal dynamics. Here is the entire mention of Marx in a book that claims to introduce a revolutionary new variant of capitalism: "Karl Marx attacked capitalism as inherently exploitative of workers." That statement focuses on ethics rather than on the structural problems of capitalism, when Marx's innovation was precisely to downplay a merely ethical criticism of capitalism in favour of a rigourously analytical one.

The book criticizes a financial sector corrupted by "crony capitalism". That sector is urged to "become more conscious and discover its higher purposes". Well, that's sorted, then. You'd be forgiven for thinking this book was published in 2006 rather than 2013: the Great Recession is barely referred to, and never by that name. But perhaps testosterone caused the crisis: in the course of praising the rise of "feminine values" in business, the authors pass on a speculation: "What if Lehman Brothers had been Lehman Sisters?"

Actually, Marx showed how capitalism is prone to crisis, and how crisis is a part of how capitalism functions. The problem is not that men are in charge, or even that non-"conscious" men are in charge. The underlying problem is the system - capitalism itself. A declining rate of profit in the "real" economy led to a bloating of the financial sectors of the economy, and after much time and a couple of bubbles, a ongoing debt crisis. (See "The rate of profit is key".)

Splitting

The authors avoid acknowledging capitalism's real downsides by a deft ideological manoeuvre. They put all the great things about capitalism (and I agree there are quite a few) into a bucket called "real capitalism" or "conscious capitalism" and they shed the bad things into a bucket called "crony capitalism". Once their system - real, conscious capitalism - is in place, everything will be groovy. But it's not just laziness on their part. It's part of a pattern in the book of the psychological phenomenon known as splitting. We saw it before in their separation of all companies into two categories: ruthless, and "conscious".

The third form of splitting we see in the book is in Mackey's worldviews. Before his time as a businessman, he thought that "business and corporations were essentially evil". Afterward, he came to see the "free-enterprise system" as the best social system evar, and the businessperson as "heroic" and "noble". Ironically for someone touting how goddamn conscious he is, splitting is considered an extremely primitive defense mechanism.

"Team Members"

screenshot of Gallup showing 'Employee Engagement'
Ixnay on "Eamtay Embermay"
This tendency to see the world in black-and-white terms illuminates a persistent feature that another reviewer dismissed as "silly": Mackey's annoying use of the phrase "team member" instead of the word "employee" throughout the book. As the other reviewer notes, Gallup did not conduct a "team member engagement survey". She's right that it really seems like a crude find-and-replace operation. At one point, they mention that an SBA study showed that regulation costs were higher for "firms with fewer than twenty team members". Hmm? Wouldn't it be more natural to say "for firms with fewer than 20 people"? The word "employee" only appears twice in the book, in the middle of extended direct quotes. It doesn't even appear in the index! That's an indication of someone who is determined to bend reality his way. The fact that the entire English-speaking world would look under "e" in the index for this book does not faze the authors one little bit. There will be no entry reading "employees; see team members".

The phrase "team member" is a determined effort to obscure the real power relations. Despite the ludicrous claim that "[c]onscious companies do not have a class system that separates leaders from [employees] at large", the employees are there on the sufferance of the managers, not the other way around. (Mackey is notoriously anti-union. He touts Whole Foods' higher pay and better benefits than other grocery stores, but the wages only look good in comparison to the ridiculously low minimum wage. Arguably, the higher wages are a premium he pays to prevent unionization, a theory borne out by his description of a unionization attempt in Madison, WI.)

Behind the book is a resolute refusal to recognize class conflict, or really, conflict at all. Contrary to all the best rhetoric, sometimes there are real trade-offs. Some situations just are zero-sum. It reminds me of the anecdotes about Steve Jobs having a "reality distortion field", being able to get people to see things his way without fail. Mackey tries but the field ain't quite as strong. Maybe the only person he's really trying to convince is himself.

Propaganda

The book is blatantly a propaganda effort. It speaks of "correcting the narrative" about capitalism. The "tired maxims of self-interest and profit maximization" have hurt capitalism's image, and the possible reactions threaten the continued existence of "our freedom and our prosperity". Interestingly, Mackey debated Milton Friedman on "conscious capitalism". Rarely do you find me cheering on Milton Friedman, but he managed to goad Mackey into admitting

If our two statements are equivalent, if we really mean the same thing, then I know which statement has the superior "marketing power." Mine does.
And in the end that is what this book is. It is a new brand, with New Age marketing, for the same old capitalism. One website calls it "Less Controversial Capitalism". It boils down to enlightened self-interest on the part of the capitalist, both in terms of actions, and in terms of ideology.

The project of Conscious Capitalism is to recuperate hippie and New Age values into capitalism. They have it all: environmental awareness, East-West integration, elevation of the feminine, even keeping a gratitude journal and "giving people permission to be their own higher enlightened selves". But I don't think this is undertaken with any cynicism; as wacky as our hippie libertarian can be, he definitely comes off as well-intentioned. If anything, the ideology is a side effect of John Mackey's attempt to fuse two sides of himself: the businessman and that idealistic hippie from his youth.

The Birth of an Ideology

Here, then, is the pearl in this rotten oyster of a book: we can see an ideology being born. Before it's cynically refined in think tanks, it arises here "naturally", uncynically, as the output of internal psychological processes to harmonize conflicting value systems. Similar individuals will take up the ideology as a salve to their own internal conflicts. It may gradually mutate from there until it becomes well integrated into the dominant ideology.

The kicker is that a language about "being conscious" and "seeing reality clearly" is being used to develop an ideology that masks the true power relations of capitalism.

Conclusion

Mackey and Sisodia are right that there is a threat to capitalism. The old ideologies are losing their grip, and in the current crisis only a very small fraction even of the populations of developed countries feel that they are benefiting from capitalism. Their kinder, gentler capitalism relies on individual capitalists and managers changing their attitudes and behaviour. But as Richard Wolff says, "If we don't change the system, we're not going to change the behaviour of the people in it." I find it ironic that I, as a leftist, must tell these capitalists that you can't run a society on good intentions alone.

Mackey and Sisodia are also dead-on when they tell us:

We are in the midst of a historic transition where it is becoming clear that the old paradigms no longer work well and people's minds are open to new possibilities. The great challenges and exciting opportunities of our era demand visionary thought and bold action…. We have an invaluable opportunity today to effect fundamental changes that will set our course for the future, because the resistance to change in society at this moment appears to be lower than it has been in a long time.
Let's not waste this opportunity by creating a new ideology for capitalism, or even a truly new version of capitalism. Now is the time for really revolutionary thinking.

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