A Democratic Theory of Valuation: The Central Co-op Tacoma Food Co-op Merger

Richard Smaby
A Democratic Theory of Valuation: The Central Co-op Tacoma Food Co-op Merger

On Dec 22, 2015, after a vote of the membership with record-high turnout, the Central Co-op of Seattle and Tacoma Food Co-op voted to merge into a unified corporation with a worker/consumer solidarity structure with approximately 15,000 community members. This is important news not only because of the merger, but also because it showcases an example of how to assign value to the broad range of goods and activities outside of the top down pricing method used by most businesses. I analyze their use of democratic decision making as a way to assign prices to products which is based on valuing all factors involved in production, thus, a democratic theory of valuation.

"Both memberships came out strongly in support of the proposed changes. Central Co-op saw a record breaking 1,544 votes. Members voted 93.2 percent in favor of Proposal 1, to complete the merger, and 89.5 percent in favor of Proposal 2, to shift to a solidarity co-op model. Central Co-op is the first single class co-op in National Cooperative Grocers to convert to a solidarity model by introducing a new class of worker-owners."

The details include an over $15 per hour starting wage, health, dental and vision plans, and paid sick leave for workers. Members receive surplus patronage dividends plus shopping discounts.

The people in the surrounding community benefit from the Healthy Community Program: If they are living on a restricted income, they receive 10% off their groceries on Tuesdays and Thursdays. In 2015 there were roughly 350 members of the community who joined the program and who, in aggregate, received over $20,000 off the healthy foods they purchased. Community organizations that promote cooperative community values can receive donations from the Co-op through an application process. The Coop is collaborating with Pinchot University in Seattle to create a cooperative management program.

Central Co-op is a solidarity cooperative, with consumer and worker shares. Eligible workers who who purchase a share of equity in the business may vote in board elections and serve on the board as worker trustees (see Amended and Restated Articles of Incorporation, Section IV.3), receive returns on their labor in years the board chooses to allocate patronage dividends. Representation on the Board of Trustees provides workers significant input (four out of nine places) in the valuation of their labor, as well as other things of value important to all.  Assuming that Central Co-op has roughly 15,000 consumer owners and 150 worker owners, we have 100 to 1 ratio of consumer owners to worker owners, with consumer owners having 5 seats on the board to the worker owners’ 4. In elections both classes of owners can vote for any candidate (worker or consumer candidate) for the board. Traditionally only a small fraction of consumer owners vote in a co-op election.

The solidarity structure of the newly constituted Central Coop enables it to participate in a worldwide solidarity structure.

How to Assign Value (business view)

Karl Marx invented a theory of value based on labor. People and governments interpreted his theory in many ways and its implementations were often mixed with state control. In contrast, a democratic theory of valuation is not a quantitative model, but rather an evolving qualitative model based in practice.

The owners, i.e., worker and consumer members, of the Central Coop assign value to a large range of things by their votes. If they value workers’ health, that goes into what is assigned value. If they value community outreach, that goes in. If they value organic food, that goes in. And so on. Since a monetary pricing system is flexible, the Central Coop management can translate what its members have decided to value by their votes into price of product.

Unfortunately, the flexibility of a monetary pricing system also can result in exploitation. Large corporations can manipulate how we perceive value. They manipulate us by exploiting our weaknesses. And try to convince us that squishy white bread is the healthiest bread. They use marketing to turn a problem into a selling point. In a value system that values profit exclusively or primarily, large corporations focus on profits by cutting the costs of labor at workers’ expense, ignoring environmental costs, and pricing goods according to artificially created demand. Huge profits lead to investor confidence and management gets rewarded by huge paychecks.

The quality of our food, our business practices, and our lives depend on what we actively value, as a community, especially in a democratic community.

How to Judge Value (consumer view)

Inspect the product directly. When you buy tomatoes, you risk coming home with tasteless and mushy tomatoes. But you can improve your chances of success by checking how they look, how they smell, how they feel, and, if permitted, how they taste.

Labels provide valuable information. They allow you to choose a product based on your values. You can choose to buy chickens raised with plenty of opportunity to range freely in large pens or to purchase bread with organic ingredients or to purchase soap made in factories with healthy working conditions and good wages.

If you shop at a farmers’ market, in addition to the above, you can ask the farmer questions and, since you will likely see the same farmer next week, he or she will likely give you honest answers. Honesty is a value at a farmers’ market and should be at any place you shop.

Listen to What the People Say. You can ask the opinion of your friends and neighbors. With online stores like Amazon you can check out the opinions of complete strangers. Look for a high percentage of 4 and 5 stars from a sample size in the hundreds and thousands. And read the comments. They often indicate values, like whether the product was made in China or breaks down easily. Social media can support democratic valuation.

You can talk to workers to find out about products and about their working conditions.

There are many web sites that provide information about the ethics of corporations.

The CDC watches the safety of our food. Food and Water Watch and Food is Power watchdog the food industries.

"The Bottom Line"

The case of the Central Coop affirms our interdependence with our common value system and extends the definition of value well beyond "the bottom line."

And finally, to make democratic valuation work, you should research and share what you have learned with anyone who will listen.