In Defense of Coöperatives

IN the December Atlantic Mr. J. B. Matthews makes a strong case against the coöperatives which I hope will circulate widely among the organizations whose products he mentions and any that are reaching the stage of complacence. Coöperatives have often failed in the matter of quality as well as in other respects, and it is salutary to have the members jolted from any tendency toward self-satisfaction by writers who can ferret out such grave deficiencies as Mr. Matthews has discovered.

Of course the situation is not so black as he implies. For every case of deficient quality, exaggerated claims, appeals to false buying motives, it is possible to cite instances of noteworthy quality, reliable (sometimes disparaging) descriptions of products, even recommendations not to buy, spectacular savings to members. Such citation would simply show the possibilities of coöperation when members are wideawake, when leaders are capable, when organizations are strongly knit together, just as Mr. Matthews’s article demonstrates how far short of their goal they can fall. The only technique for honest appraisal of their present success or failure in serving the interests of their members, however, would be to select a representative sample of cooperative products and organizations and a similar cross section of private business and compare the two critically and impartially. If Mr. Matthews would make such a survey, he would find the coöperatives, despite their immaturity and recognized shortcomings, in general far ahead of private business.

The lack of standardization that Mr. Matthews decries is indeed typical of the movement. Though federated nationally for strength and mutual assistance, it is essentially decentralized. Freedom rather than regimentation is its cornerstone. Such principles as it has evolved have emerged from the crucible of experience, experience that many organizations must follow for themselves in greater or less degree before they become convinced of the soundness of these principles. A certain conformity thus emerges gradually from the interplay of unhappy experience in unorthodox techniques and education which demonstrates through logic and history the merits of the proven practices. Therefore, though the casual observer will find an apparent maze of ‘contradiction’ and ‘muddled economics,’ if he will scrutinize more carefully he will find that within the mass of variables there exists a solid core of organizations conforming in their essentials to each other, and that, as time advances, more and more of the eccentric organizations either shoot outward to be lost in space or settle within the solid nucleus.

The quality of coöperative products does have shortcomings, as Mr. Matthews states. Yet how difficult a problem even the proper gauging of quality presents must be apparent to him, since, in his service with Consumers’ Research, he has doubtless witnessed the frequent reversals of its recommendations as new information has come to light, and seen how often other experts have disagreed with its findings. Reports of Consumers’ Union disagree in many respects with recent reports of Consumers’ Research even on so definite a subject as soap. Such difficulties, though they cannot excuse obviously false claims, are factors which necessarily impede the progress of coöperatives in developing and handling quality products, and likewise render less reliable appraisals of their success.

Mr. Matthews feels that the money appropriated by most coöperative societies for education might more effectively be spent on product testing. The most direct route is often not the shortest. Direct improvement of quality tends to encounter the same obstacle that faces the private manufacturer who wishes to produce the greatest value for his customers — consumer illiteracy. Consumers do not know enough about the goods they buy to be able to distinguish the good from the bad or even the valid claims from the spurious. Therefore the unscrupulous manufacturer, by spending his money on high sales pressure instead of high quality, can all too often triumph over the one who would create the highest value. The educational appropriation of coöperatives tackles this evil and others at their source. It aims to encourage and stimulate the members to study the problems confronting the consumer. It aims to instruct members in the matter of quality, that they may be more intelligent and persistent critics. (Mr. Matthews would have members who found a flaw in their goods shift their patronage to some more worthy store — a quest that, as Consumers’ Research has often pointed out, is but pursuit of the elusive bluebird. Coöperation provides the organization and facility through which complaints may raise the level of the quality at the member’s own store. Thus is democracy strengthened.)

The educational appropriation is used to help promote and support federation of the individual societies, which makes available to each the experience of the others and gives to all the opportunity jointly to provide facilities which none alone could readily attain. It helps to educate managers and clerks that they may more capably serve the members’ interests and operate so efficiently that more funds will be available for improving quality if the members feel this their most pressing need. It aims to inspire the members to greater loyalty and to bring into the ranks new members, so that the fixed overhead expenses may be spread over a greater volume of business.

Thus, by increasing the intelligent demand of members for quality, increasing the capacity of the staff to provide it, fostering the development of wholesales with the strength and volume to select quality more efficiently or manufacture it themselves, and yielding a greater margin between receipts and operating expenses with which quality may more readily be acquired, the appropriation for education takes the most fundamental if not the most obvious road to quality. That many organizations have not achieved these objectives successfully does not invalidate the technique through which other organizations are notably succeeding. Mr. Matthews terms the appropriation for education a ‘sales tax upon consumers’ goods ... to build a better world.’ Let us not forget that competing goods bear a similar though hidden tax, which manufacturers employ, often subversively, to keep the world safe for pseudocracy.

It may be of interest to quote in full the section of the minutes of the meeting of the Central Coöperative Wholesale to which Mr. Matthews refers in his discussion of coöperative quality.

Among matters under new business that of the quality of merchandise distributed by the Central Cooperative Wholesale, and chiefly goods under the Co-OP label, came in for searching questions and considerable discussion. Variation in the quality of some lots of Co-OP Best Flour was called to attention by a number of delegates, also in some of the canned goods. Questions were also made as to what measures are taken by the Wholesale to assure proper selection of merchandise and maintenance of quality.

Ivan Lanto, head of the C. C. W. Purchase and Sales Department, answered in detail the questions made from the floor. Quality variation in Co-OP or any brand of flour is frequently unavoidable when condition of the grain crops often varies greatly from one season to another. The same holds true for many of the canned foods; the tomato yield this season may be considerably below the average, compared to last year, and so forth, and that reflects in the pack. However, every effort is made to maintain the regular set standards of Co-OP label; reliability of the source is one important consideration; government grading standards are used wherever available; tests and analyses of samples are made, the C. C. W. spending upon laboratory tests considerably more than ordinary wholesale concerns. Contracts with producers provide for return and indemnity if goods fail to come up to the specified standards and formulas, and these are checked by sample tests of deliveries. At the same time, Lanto stressed again the established instruction to all members and managers of stores, that notice should be given immediately when goods are received that may appear for any reason to be below standard. Discussion on the question was closed by a motion instructing the management and staff of the Wholesale to exercise all possible care in the selecting of goods and maintenance of quality.

Mr. Matthews’s conclusions from this report are: —

Reports of coöperative gatherings show that the subject of quality in coöperative goods is sometimes raised by members. The answers of the management are so notably vague that they engender the suspicion that there is rarely or never any systematic and careful testing to ensure appropriate quality. At the 1936 annual meeting of the Central Coöperative Wholesale, discussion of the question of quality was closed ‘by a motion instructing the management and staff of the Wholesale to exercise all possible care in the selecting of goods and maintenance of quality.’

Mr. Matthews’s casual dismissal of the subject of financial savings with the observation that they are no more important than the savings in quality should not obscure the obvious fact that they are co-important. The ratio of value per dollar spent, as Mr. Matthews observes, is what counts, and it should not be forgotten that most coöperatives return to their members savings that appreciably and often remarkably reduce the effective cost. There are economies in a truly cooperative enterprise, too complex for present discussion, which permit larger payment to vendor, better pay and working conditions for employees, better selection of products, appropriations for ‘building a better world,’ and yet substantial savings to the members. That such economies too often are not completely realized cannot argue against their general possibility, in the light of the fact that they have been realized with management which can be secured for very modest salaries.

(The fact that discussion here centres on the material and immediate objectives of coöperation should not divert attention from the expectation of cooperators, based on some definite progress as well as readily demonstrable logic, that t he widespread growth of cooperation will gradually tend to strengthen democracy, promote international peace and national unity, increase economic stability, and foster the cultural development of the people of the earth.)

Approaching the question of quality from another angle, too briefly to be more than indicative, I should like to ask how else than by coöperation the consumer can assure himself of securing the best quality. There are good products on the market, as Mr. Matthews points out, yet how can we discover them? Consumer education might seem the answer until we reflect that even the very sketchy handbook of Consumers’ Research comprises two hundred pages, difficult at best to memorize; that, of the products there discussed or rated, comparatively few of frequent purchase are to be found either in a convenient store or even in any one store; and that products are changing so frequently and so obscurely as effectively to baffle even the wellversed shopper.

Are we to rely upon the government? Mr. Matthews seems to incline in this direction, though he criticizes the Belgische Samenwerking of the Société Générate Coopérative for quoting to its members the recommendations of the Chief Health Inspector of the Belgian Government. Government grading may be of great value, though we must reckon in the enormous pressure exerted by private interests to prevent the government from making any real contribution in this field, and the danger of graft, from which, apparently, the inspectors to date have managed to keep reasonably free.

Self-regulation by industry, while tending to fight the most flagrant abuses, has in general proved to be more interested in producers and distributors than in the consumer. Education has proved of great benefit to consumers chiefly in showing wherein private manufacturers have fallen down and the pressures acting to make the government often more considerate of private than of public interests. In this respect Consumers’ Research and its more peaceful brother, Consumers’ Union, have been of great service to the cooperative movement.

But criticism cannot be effective, nor education of positive value, unless it leads to constructive action. Cooperation provides a means through which consumers who do not like the kind of goods commonly offered them may get the type they do want, in so far as their collective knowledge and state of organization will permit. The consumer must know merely enough to be a good critic and to hire management who can satisfy these criticisms. In so far as the clerks have been well trained in value (another demand on that sales tax on consumption), they can, by virtue of the coincidence of their interest with that of the consumer who employs them to serve him, provide unbiased education on quality at the time when it is most useful, the moment of purchase.

Government grading and standards and the findings of Consumers’ Research and Consumers’ Union can most effectively be used by consumers through the persons they employ to buy for them and deal with them.

In coöperation, therefore, we find a means by which consumers may realize their aspirations, an organization making procurable under one roof those products of better merit which Mr. Matthews assures us are procurable, a focal point through which all available knowledge — whether publications of Consumers’ Research or Consumers’ Union, government standards and gradings, reliable information from individual members, or independent work of the organization itself — may be utilized in practical fashion. With all its failings, coöperation is making progress, and still seems the only technique by which consumers can assure themselves that their own fundamental needs shall be served.