Let’s talk about virtuous capitalism

There is a new trend going around among big corporations, which I am going to call virtuous capitalism. This is when a gigantic mega-corporation decides to be the “good guy”: they don’t deny that profit is their prime motivator, but they make sure you know that the way they plan to make a profit will be good for the planet and with a big heart!

Fast Company interviewed Pepsi, Co. chairman and CEO Indra Nooyi and chief scientist Mehmood Khan about their plans and vision for the future of the largest Food and Beverage company in the United States.

It is a great interview overall, but this is one segment that stood out to me.

Fast Company: You just announced a new sustainable-growth agenda for Pepsi­Co: goals for 2025 based on three pillars. The first is “helping to improve health and well-being” through your products. PepsiCo’s business has historically been built on sugary drinks and salty snacks. Doritos are delicious, but we don’t think of them as being healthy. Is there anything inauthentic about your trying to improve health and well-being?

Indra Nooyi: PepsiCo’s business is three pieces. It has fun-for-you beverages and snacks: Pepsi, Mountain Dew, Lay’s, Doritos, Fritos, Cheetos . . . I could go on. All the ’tos. [Laughs] The second is what I would call better-for-you: Diet Pepsi, Baked Lay’s, Baked Doritos. And then there’s the good-for-you piece: Quaker Oats, Tropicana, Naked Juice. We are trying to take the fun-for-you portfolio and reduce the salt, sugar, and fat. I didn’t create Pepsi Cola. I didn’t create Doritos or Fritos or Cheetos. I’m trying to take the products and make them healthier. And guess what they tell me? “Don’t be Mother Teresa. Your job is to sell soda and chips.” So this is not being disingenuous. We are trying to take a historical eating and drinking habit that has been exported to the rest of the world and make [it] more permissible.

Fast Company: To what extent is your job to teach consumers that we shouldn’t eat foods that aren’t as healthy, versus giving us products that we like?

Mehmood Khan: I might be a health care professional [Khan is an endocrinologist], but that is not my job now. My job is to take the best advice that exists and figure out how we can deliver products to consumers so they can make the right choices. We are doing our part. Everybody else has to do their part.

Indra Nooyi: We have to make sure that the healthier products, [like] Quaker and Tropicana, taste good and are reasonably priced—because you shouldn’t have to pay more for healthy products—and are ubiquitously available. Then we have to display them so that we nudge you to the healthier choices. Look, there is a time and place for the fun-for-you products. We are not nannies, and I don’t think we should be nannies. Our job is to make sure that we put these products out on the shelf and make the labeling clear.

These answers are pitch-perfect and sound amazing. At least, they do to me, because I’m a pro-capitalism progressive.


Let me take a moment to explain what I mean by that. I know some people feel “pro-capitalism progressive” is a strange phrase. There are plenty of conservatives who see that I support high taxes and government regulation, and assume I must therefore be “anti-capitalist”. There are also plenty of liberals–many of them my close friends–who firmly believe that one cannot embrace liberal ideals and profit-based economic systems at the same time. So in this interlude I’ll try to explain this position, and then we can get back to the interview with Indra Nooyi and Mehmood Khan, and some of the questions I have about Pepsi, Co.

When you want to change someone’s behavior, your options essentially boil down to two methods: The Carrot or The Stick. You can make “correct” choices appealing, or you can make “incorrect” choices appalling. There are more extreme or less extreme versions, but in the end these are the only two options.

Liberals tend to gravitate toward what they imagine to be a third option: educating people about the virtues of correct behavior and allowing them to then make the proper choice on their own. And in my heart of hearts, I’m a firm believer in this method as well. I often say that I’m an Enlightenment Era philosopher born 400 years too late: I firmly believe that all people are rational, educable, and good.

But the reality is that even education is usually implemented using either Carrot or Stick psychology. And for whatever reason, when talking about food consumption, my fellow liberals–bless their dear gentle souls–usually opt for the stick.

Shame the companies that make “bad food”. Put scary warnings on food to scare people into behaving properly. Fear! Fear! Fear! Don’t eat the bad thing!

The problem is, there isn’t any evidence that this approach works. Scaring people is effective for some things, like motivating people get a flu shot, but are terrible for introducing long-term changes to diet or lifestyle. You also can’t scare people into eating healthier if the healthier food isn’t accessible, and fear isn’t a powerful enough motivator if the healthy food doesn’t taste good. All of the evidence suggests that meaningful, health-impacting changes in diet only happen when a person actually crafts their lives in such a way that eating well is part of their routine… and that rarely happens as a result of fear. As much as I love big government (and I really do), as a scientist I have to admit that there is zero evidence that negative regulation (i.e. The Stick) can successfully change people’s eating habits.

So what is the other option?

Make healthy food more affordable, more available, and more enticing. This can be done by government fiat (it was attempted by Michelle Obama’s healthy school lunch initiative), but it also can be done through private initiatives that are motivated by profit… exactly like the high-level vision that the leaders of Pepsi, Co., describe in their interview.

In fact, the approach they describe is exactly in line with traditional Enlightenment-era liberal philosophy. Give people information, give people choices, make the right options available… and people should choose it on their own.

It also is in line with psychological research on the best way to get people to make and maintain positive changes in their lifestyle. Decades of research on behavior modification show that for a diet or exercise plan (or anything else, for that matter) to work, you need to make doing the right thing not only easy: you have to make it an integral part of your daily routine.

And if a company finds a way to inject positive, healthy changes into people’s daily routines by selling (for a profit) products that people will want to voluntarily incorporate into their lives… doesn’t everyone win?

Now, don’t get me wrong: I still think there are things in this world that absolutely should never involve a profit motive (such as health care and education). But when it comes to steering people toward healthier eating habits… I admit to being enticed by the idea of virtuous capitalism. It seems to be psychologically the most powerful method, as well as being the one most likely to actually succeed in guiding human behavior.

Words, words, words!

“But how much of it is bullshit?” asks the cynical voice in my head. To be sure, when I read this interview with Nooyi and Khan, my first instinct was to be impressed: This is exactly the mindset that a moral corporation should have! If all companies could encourage this kind of thinking and culture, we would be in our way to an idyllic free and healthy society!

The realist in my knows that this interview was a marketing puff piece, and wants to ask some questions. Are they just saying this because they’ve seen the studies that Millennials respond well to companies that “seem to care”? This new move toward “virtuous capitalism” could simply be good old-fashioned regular capitalism responding to the fact that the new generation likes “feel-good” messaging.

Some might argue that the motivation doesn’t matter, though: If companies start behaving better in order to capture the interest of Millennials, isn’t the important part that they are behaving better?

So the real question is: is it all talk? Or will their long-term advertising and product-development strategies actually be aligned with this agenda? Does it matter that this is the attitude “at the top” if it filters down to “boots on the ground” marketing strategies that end up just pushing the same old stuff for the convenience of making short-term profit?

I don’t know the answers, of course. I suspect it is as cynical and presumptuous to automatically assume that their answers are opportunistic bullshit, just as it is naive to automatically assume that it is not. In the end we will just have to see.

Perhaps asking a capitalist system to rest upon the good will of virtuous mega-corporations is as naive as asking a monarchy to rest upon the temperament of a noble prince. The real question isn’t whether this kind of system is perfect: it’s whether the risks and abuses are any less than any other system we’ve come up with to to get people to make better consumer choices… whether with carrot or with stick.