Kreis: Hunger Mountain, what a co-op is really all about

Editor’s note: Donald M. Kreis studies and writes about electric cooperatives in his capacity as Associate Director of the Institute for Energy and the Environment at Vermont Law School. He is active in the cooperative movement, serving as treasurer and longtime board member of the Hanover Consumer Cooperative as well as vice president of the board of the Cooperative Fund of New England, a community development financial institution that lends money to co-ops. He also serves on the board of the Vermont Journalism Trust, parent organization of VTDigger.org.

Amy Shollenberger poses an intriguing question – What’s a co-op all about, anyway? – in her July 24 column about the ongoing labor dispute at one of Vermont’s premier consumer cooperatives, Hunger Mountain in Montpelier. From the very controversy she references, it is possible and, indeed, desirable to tease out a good answer.

The International Cooperative Alliance defines a co-op as “an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise.” Those are just words on a screen until these compelling values play themselves out in situations like the one unfolding in Montpelier.

As a business enterprise, Hunger Mountain is in direct competition with profit-maximizing supermarket chains like Shaw’s and Price Chopper. Shaw’s is part of a publicly traded corporate megalith that is based in a foreign country. Price Chopper lacks a unionized workforce and operates in complete secrecy as a closely held business that benefits the upstate New York family that owns it. Both firms are in business for only one reason: to extract wealth from their customers, in part by reducing costs (including labor costs) as much as possible, and to pay those profits out to distant owners who have no real interest in the well-being of Montpelier or any other community served by their stores.

To state the obvious, you will not see Shaw’s or Price Chopper conduct their labor relations in public, disclosing their financial situation for all to see, and subjecting their negotiations with employees to open scrutiny. But that’s exactly what Hunger Mountain is doing, not merely because it’s run by principled people but also because, as a consumer co-op, it’s owned by the community and must be accountable to the community. That’s what it means to be both the “enterprise” referenced in the definition of “cooperative” while also meeting the rest of the definition as an “association” of people united around common economic and social aspirations.

Consumer members of Hunger Mountain like Amy Shollenberger give life to this definition by holding their cooperative publicly accountable. They rightly demand that their co-op make good on its public commitment to treat its employees fairly and in a manner that honors their right to a decent living for doing good work.

But it is worrisome to see an active cooperative member-owner like Shollenberger call for her co-op to “pay its workers as much as it can” and “also do what it can to raise the expectations of all consumers so that this is the rule, rather than the exception.” If Hunger Mountain raised wages without regard to competing imperatives, which would trigger corresponding price increases, some consumers would indeed adjust their expectations and take pride in their contribution to the well-being of the employees. But lots of other customers would simply take their business elsewhere.

That might be okay in some businesses, but it could devastate a retail grocer like Hunger Mountain. Vermont’s food co-ops typically operate on a margin of 1 percent or less, meaning that the difference between success and insolvency is a small one – perhaps the difference between a reasonable union contract and a notably generous one.

In some sense it is unfair for the media to focus on labor relations at one small grocery retailer while similar issues at bigger operations – ones that treat their employees far more shabbily – go unexamined. But cooperators in Vermont should welcome the scrutiny because it highlights the significance of co-ops in our state, and their transformative power, at a critical time.

A 2008 study of food co-ops in northwestern New England by economic analyst Doug Hoffer noted that, collectively, Vermont’s food co-ops are the state’s 25th largest employer – and that was before the Hanover Co-op of New Hampshire opened a big store in White River Junction. The co-ops offer alternatives to the grocery chains from Brattleboro to Burlington. And these retailers are just one slice of a vibrant cooperative sector that includes two electric cooperatives, agricultural co-ops like Cabot Cheese, credit unions, and other businesses that thrive as alternatives to both investor-owned businesses and traditional nonprofits.

Moreover, we have a governor who grew up as a member of the Putney Food Co-op and whose campaign statements last year demonstrated that he well understands the value of Vermont’s cooperative sector. It is both desirable and, for the first time, intriguingly plausible that Vermont’s leaders might actually start referring to cooperatives – institutions that are deeply committed to plowing every last shred of wealth they generate back into their communities – as a key element in our state’s economic development strategy. It certainly beats coaxing out-of-state companies with tax breaks and other incentives and then hoping any resulting new jobs manage to last.

And finally, we have Jeffrey Hollender, the Vermont-based founder of Seventh Generation who, according to his recent writings, has discovered cooperatives. He’s spending a good hunk of his summer in Spain and Italy, studying the powerful cooperative networks there. Fired by the board of Seventh Generation last year, Hollender has been rooting around for models of businesses that can’t just throw their human capital out the door when it seems convenient. Hollender plans to roll out a yet-unspecified but big cooperative initiative this fall. When he does, he will have Vermont’s cooperative sector right in his front yard to serve as a great example of what he is trying to accomplish.

Seventy-five years ago, a Christian theologian from Japan named Toyohiko Kagawa toured the U.S. to lecture about a book he had written, called Brotherhood Economics. At a time when the Great Depression was roiling the U.S., and all the now-discredited “isms” were seducing millions around the world, Kagawa urged in his book that people of goodwill “search for a new way for the reconstruction of society, which neither materialistic communism nor political socialism has accomplished and which is beyond the power of [the traditional] Christianity” Kagawa had studied. His answer – Kagawa’s formula for an economy based not on greed but on love – was cooperatives.

Today we see that love principle in action at co-ops like Hunger Mountain, a bright and friendly place with a modernist design that contrasts boldly with the banal big boxes. It’s not just a grocery store but a place to hang out and watch the Winooski River while eating a hearty and healthy vegetarian meal. I did that the other day, and on the way out I struck up a friendly conversation with a woman at the service desk who was wearing a t-shirt bearing the name of her union. She handed me a flyer the Co-op had prepared about its labor issues and we both expressed confidence that all will ultimately be well.

There’s your answer, Amy Shollenberger, to your question of what a co-op is all about. There’s your answer, Jeffrey Hollender, to your question of what a business would look like when it doesn’t need to treat its employees like dirt because there are no investors to demand it in the name of wealth maximization. All is well – for workers, for consumers, and for their community – when we build our economy not around exploitation but around democracy and cooperation.

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