Capitalism With a Heart

 
 
Compassionate conservatism has been an expensive bust in Washington. But an intriguing alternative is emerging around the country: compassionate capitalism.
 
Tycoons have traditionally discovered their inner saint only after exorcising the inner capitalist. Carnegie, Ford and Gates made their money and then gave it away. But Google’s young founders are already taking on poverty, disease and global warming, and they’re not just dispensing cash. They’ve set up their philanthropy as a for-profit organization.
 
To many liberals, this sounds dangerously oxymoronic. How can philanthropy be profitable? A robber baron is supposed to cleanse his hands by donating his lucre to a foundation run by enlightened beings untainted by commerce (except for the dividends going into their trust funds).
 
This new Google venture also makes conservatives suspicious. It sounds like the “corporate social responsibility” mantra used by executives trying to be hip — and impress young trophy wives’ friends — by financing politically correct boondoggles with shareholders’ money.
 
But to a new generation of entrepreneurs, there’s no conflict between capitalism and compassion. Google’s philanthropy is the logical extension of a doing-well-by-doing-good strategy followed by companies like Ben and Jerry’s, Starbucks and REI. The movement’s philosopher is John Mackey, the co-founder of Whole Foods.
 
Mackey is a passionate environmentalist, an advocate of animal rights, a promoter of sustainable development — and a self-proclaimed libertarian. Call him a bleeding-heart libertarian. He wants to spread the free-market gospel, but he sees an obstacle.
 
“Corporations are lifting billions of people out of poverty,” he says. “Why are they so hated?”
 
Mackey’s answer is that capitalism has a branding problem: its practitioners are experts at marketing everything except their own system. They justify corporate philanthropy, like donating to the United Way, not because it’s virtuous but because it buys public good will and thus contributes to the company’s bottom line. To hard-core free-marketeers, the corporation’s only mission is to generate profits for shareholders.
 
To Mackey, that’s too narrow a vision. He thinks that socially conscious companies like Whole Foods have flourished because their founders, employees and customers want a corporation to have grander goals than enriching shareholders. Mackey defines his company’s mission as improving the health and well-being of everyone on the planet. Before taking the company public, he told investors that he was going to devote 5 percent of the profits to philanthropy, so they can’t complain now that he’s robbing them.
 
Nor can Google’s shareholders, because its founders also warned investors of their philanthropic plans.  As Katie Hafner reported in The Times, they’ve given $1 billion in seed money to Google.org, and set up the philanthropy as a for-profit organization so it can work with venture capitalists, start companies and use any profits to finance further endeavors. One of its first projects is developing a car that gets 100 miles per gallon.
 
It’s smart of Google’s founders to try using capitalist tools to save the planet; the market’s discipline should keep their philanthropy from backing too many lost causes. Still, whatever Google.org accomplishes, I’d bet that it will pale next to the social good accomplished by Google.com.
 
The company’s founders may not have set out to help humanity with their search engine, but they have enriched countless lives by spreading ideas and connecting people. Maybe they’re also smart enough to come up with a way to save gasoline, but what do they know about cars that Toyota doesn’t?
 
If you read Adam Smith’s famous passage about the invisible hand causing capitalists to unwittingly serve the public interest, you might conclude that Google’s founders are better off investing their time and money in improving their core business. As Smith wrote, “I have never known much good done by those who affected to trade for the public good.”
 
But I don’t think Smith would have any problem with Google.org. He also realized that humans are motivated by more than self-interest. He wrote a long book on moral sentiments. If compassionate capitalism is a more appealing brand, if Google and Whole Foods are using philanthropy to strengthen the invisible hand, even Smith would say they’re doing good.