| | Andrew:
Thanks for posting this. My reaction to this Reason article is currently being developed into an article of my own that I hope you will post on Solo. The thesis of the article is this: that this whole debate over how to profitably run a business is moot because in a laissez-faire economy owners of capital (and those they choose to act on their behalf) are free to allocate capital in any lawful manner they wish.
Whatever the owners of capital wish to call the vehicle through which they allocate capital- whether an industrial enterprise or a charitable organization- what matters is the vision that the owners of capital have for it and whether they are effectively earning a return on their capital. Here a matter of subjectivity enters the equation. "Return on Capital" can mean many things: it can mean a return of capital (profits), higher environmental standards, larger product selection, or the number of shelters for battered women opened.
Of course, laws of capital must be followed if the vision of a capitalist (industrialist or philanthropist) are to become reality. An industrial enterprise must be profitable and reinvest some portion of their earnings to capital improvements; and charitable organizations must receive donations and achieve satisfactory results with those donations if they are to be maintained.
So, does business have a social responsibility? (I was about to put quotation marks over social, but then Roger Bissell would try to assess my Objectivism affiliation, of which I have none). The answer is no, business, meaning any profit-seeking method of allocating capital, can choose to do whatever it wishes with its capital and whether that includes investment in "social" concerns (DAMN IT, Roger is gonna have my head!) up to them. In the end, I want to show that, except in rare circumstances, directing capital in a given manner is amoral and that the moral ideal to be evaluated is the degree of success a capitalist has in seeing their vision come into being...
In seeing their visions flourish, both John Mackey and T.J. Rodgers should be proud, however, I disagree with Mackey when he states, "I believe the entrepreneurs, not the current investors [owners]in a company¡¯s stock, have the right and responsibility to define the purpose of the company." It is the owners whose vision is being actualized through the company, they are free to change that vision at any time and sack the current officers of the company, if they are dissatisfied with present conditions. And, although I do not think he states this explicitly, a business is not required be charitable. If it works for Whole Foods, fine, that is their method of successfully allocating capital but it is not incumbent upon all capitalists to follow that method.
Enough said... the article is forthcoming.
T
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