Member Financing of the People's
Intergalactic Food Conspiracy:
The Essence of Economic Democracy

by Lee Altenberg

(An Intergalactic Food Conspirator since 1988)

Published in Grains of Thought, Summer 1990, Durham, North Carolina
© 1990

The People's Intergalactic Food Conspiracy #1 has taken a great step: the membership voted to buy the co-op its own building. But now we face the immediate problem of coming up with the money to pay for it. The co-op's Board of Directors has faced the problem by holding fund raising events, and soliciting loans from members and from co-op friendly institutions. In their approach, the Board has done its best to shield the general membership from the financial demands of the move, because they were afraid of driving members away. While this might seem to make sense, it is in fact the worst thing the Board could be doing. The approach is flawed because it is based on conventional concepts of business, and indicates that we as a community do not fundamentally understand what a co-op is. The end result will be millstone of debt around the neck of the co-op that will weaken it for years to come. Here's why a co-op has to think in radically different business terms in order to prosper.

``Food for people, not for profit''
is a familiar slogan on the political Left, and it has an immediate appeal: food is a basic human need, and should not become a captive instrument for money making. But in the context of a natural foods cooperative, ``Food for people, not for profit'' is peculiarly misleading. It reinforces the idea that people and profit are separate entities in inescapable conflict. In reality, there is only one entity­­people­­but there are different people: people with capital, and people without it. If one considers just who is doing what, then it can be seen that the conflict is not between people and profit, but between people with the money to control businesses and people without that money.

If one tries to apply the slogan as-is, without this `deconstruction', it makes for muddled thinking. ``O.k., let's be for people, and against profit.'' What kind of guidance does that give for members of a food co-op? Is it bad for a co-op to make a lot of profit then?

Let us take a closer look at `profit'. Webster's has just the right description of profit as ``the compensation accruing to entrepreneurs for the assumption of risk in business enterprise.'' Who are the entrepreneurs in the People's Intergalactic Food Conspiracy Number 1 (PIFC)? The members of course. So in this light, the members who founded PIFC were seeking a particular kind of profit. The availability of the low cost natural foods comprises ``the compensation accruing to the members''. And these profits are made in the PIFC through cooperation, and are shared by all. The underlying co-operative ideal is not to run an unprofitable enterprise, but to create­­if I may coin this rather blunt slogan­­

``Profit for the people, not for capitalists.''

The critical means by which co-ops can provide profit for the people is to remain independent of the capital market. Capitalists exist because it takes a large amount of money to start a business. Therefore either

  1. the business is owned by the wealthy, or
  2. the wealthy lend the money to the business owners who then must pay them interest.
In either case, the advantage is always in the direction of those with money. The fundamental purpose of cooperation is to escape the capital market. When a co-op borrows money, the interest payments become a hemorrhage that eventually manifests itself as the pattern of ``self-exploitation'' and burnout so often seen in the co-op movement.

So Wells Eddleman is exactly right in warning that the PIFC not take on too much debt. When we examine what killed the Berkeley Consumer Cooperatives, the largest food co-op system in the country a couple of years ago, we find the culprit we expected: loans. You go to Berkeley expecting to see the 50 year old co-op market chain and now you find they have been replaced by a chain of ``Wellsprings''­­Andronico's. They had taken on too much debt, got in to a cash flow crisis, the vendors lost confidence, and whammo! Bankruptcy, in very short order.

But the PIFC needs capital for the move to the new building, so what alternative is there to taking out loans? Member financing­­where, by each of us investing an increased `fair-share' in the co-op, we create the collective economic power that is our only escape from the capital market.

But member financing puts to the test the reality of what co-op membership means. In saying ``Profit for the people, not for capitalists'' I hope to emphasize that the People's Intergalactic Food Conspiracy is a conspiracy, a collective enterprise, and we must realize that each of us must be an entrepreneur for that enterprise to succeed. We all profit from PIFC's existence, and we have to take seriously our position as entrepreneurs, not mere consumers. The membership of PIFC is perfectly capable of financing the entire capital needs for the move to the new building. When the estimated total of $150,000 for the move is divided by the 384 members who voted 'YES' on the move, that equals $390 per person. If we count all the voting members, it comes out to only $298 per person. We have the economic power to come up with that kind of money, which will keep PIFC completely free and unbeholden to anybody but ourselves. We need the entrepreneurial spirit to realize that this co-op is our baby, and we can take care of its capital needs ourselves.

Now we must acknowledge that $300 is above what many can afford to tie up in an investment, but well below what some can afford. So we may wish to take into account each member's assets in deciding what a ``fair share'' is. Yet collectively, we can finance the move ourselves, and finance it fairly. However, the fact remains that the amount pledged in member loans thus far is only one fourth the amount needed for the move. This means that we do not yet take our ownership responsibilities seriously. Getting outside loans should be seen as nothing more than a financial quick-fix, for it takes control out of the members' hands, and interest payments out of their pockets.

The Berkeley Co-op could never get member financing because it was too big and impersonal; experientially it was little different from shopping at any supermarket, and its thousands of members related to the Co-op as consumers, not owners. PIFC's smallness can be a liability, but it gives it a human scale that makes it possible for each member to feel like one of the entrepreneurs. We need to take stock of ourselves as a community and start getting serious about what the People's Intergalactic Food Conspiracy means to us. We need to gather as a group and talk about ourselves as a group, and each member needs to demonstrate their commitment to this enterprise in the open, before their peers.

If you think of yourself as a consumer at PIFC, then you will think it is absurd to be lending $300 to a grocery store. If you think of PIFC as an organization working for a political ``cause'', then $300 is way more than most people would lay out for their political causes. But co-ops are neither ``cause'' nor corporation­­they are instruments of economic self-help. When you weigh $300 among your other costs of living­­rent, mortgage, car, school, health insurance­­then $300 is in the same ballpark. That is why we can afford member financing. But we have to realize that PIFC is a part of our personal economic assets, and invest in it like we would in the rest of our personal economic base.

I propose that we discuss, as a community, the idea of expecting each member to lend 2% of one year's income, or equivalently increasing the fair-share, to capitalize the move. The current effort by the co-op management of privately and individually soliciting loans from members will not build the consensus we need for substantial member financing. We will know that we have built the needed consensus only if we can say,

``The co-op is the people and the people are together.''

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