By Giovanna da Silva
On March 4, Whole Foods CEO John Mackey led a discussion on social entrepreneurship at LibertyCon, an international pro-liberty student conference hosted annually by Students For Liberty in Washington DC. Mackey detailed his political and business journey from being the owner of a small organic food store to heading one of the largest supermarket chains in the United States. In his talk, he argued for the importance of businesses directly giving back to communities:
“Businesses are inherently good because they create money for others, but if we–if business doesn’t support the nonprofit sector, we’re forced to have the government become all powerful. It’s very important that we have a vital, effective civil society.”
Many economists cite the fact that traditional entrepreneurs promote economic growth by opening firms, hiring employees, and investing their capital into future projects and investments. In an article published by the Harvard Business Review, Mackey credits the spread of capitalism with the increase in economic prosperity and higher standards of living around the world. He states that over the span of 200 years, the average life expectancy of the world’s population skyrocketed from 30 years to 67 years and global income has increased fifteen-fold.
Within the United States, disdain towards greed and wealth dates to the early Protestant settlers. In their paper “Entrepreneurship and Philanthropy in American Capitalism,” Zoltan Acs, a leading expert on entrepreneurship at the London School of Economics, and Ronnie Phillips, professor of economics at Colorado State University, assert that the Puritans viewed overt displays of wealth and luxury as sinful and advocated instead for the donation of excess profits. They posit that the culture of philanthropic capitalism in the United States arose out of this form of Protestant morality and inspired entrepreneurs to give up large portions of their wealth to charitable causes. For instance, Andrew Carnegie dedicated most of his fortune to philanthropy by founding Carnegie-Mellon University and endowing over 3,000 public libraries, and many other public institutions. Similarly, Johns Hopkins University, MIT, Duke, and the University of Chicago were all founded by entrepreneurs seeking to make a lasting impact on society.
According to researchers at the Heritage Foundation, American entrepreneurs donate 80 percent more of their income to charity than the general population. Across income brackets, Guinevere Nell and James Sherk found that entrepreneurs contribute more to philanthropic causes than others do. Warren Buffett himself has donated a total of $46 billion to charity over the span of 17 years, which translates to over 71 percent of his wealth.
In Conscious Capitalism, Mackey argues that in the modern era, businesses must act as the driving force for social change. Businesses, he says, “must lead in the journey of human evolution rather than trail behind or be victimized by it. Business leaders must learn to heed the call for transformation and growth coming from within themselves, from their stakeholders, from society, and from evolution itself.”
As Acs and Phillips point out, measuring the social and economic impacts of the universities, foundations, libraries, and charitable organizations founded and funded by entrepreneurs is difficult. Through conscious capitalism, however, many businesses have incorporated into their mission the desire to leave a civil legacy with society and resolve social ailments without the help of the government. Whether their motives are based in altruism or more self-centered reasons, society collectively benefits from their contributions.