What Happened to the Berkeley Co-op? A Collection of Opinions With Introduction by Ralph Nader Consumer Advocate And Preface by Masao Ohya Executive Director, Japanese Consumers' Cooperative Union Published by The Center for Cooperatives The Center for Cooperatives was established by the California Legisla­ ture in 1987as a center in support of research, education, and extension activi­ ties to "advance the body of knowledge, concerning cooperatives in general and address the needs of California's agricultural and nonagricultural coop­ eratives... " The Center's objectives are to promote: • EDUCATION. The Center offers formal and informal educational programs to those involved in cooperative managementand develops teaching materials for all levels of interest. • RESEARCH. To help the state's cooperatives reach their objectives, research is conducted on economic, social, and technical develop­ ments. A practical aspect of this research: the provision of competitive research grants, and studies for government agencies on how coop­ eratives can help achieve public policy objectives. • OUTREACH.The Centerinforms the public on cooperatives and their significance to the economy of California. Located on the University of California, Davis campus, the Center is a University-wide academic unit. Its teaching and research resources are drawn from interested professionals from all University of California and state uni­ versity campuses, other colleges and universities, as well as sources indig­ enous to the cooperative business community. Edited by Michael Fullerton Editor, Berkeley Co-op News, 1976 to 1990 Copyright © The Regents of the University of California 1992 ii Table of Contents Preface: v MasaoOhya Introduction: xi Ralph Nader Chapter I: Could the Failure of California's Uncommon Markets Have Been Avoided 1 Robert Neptune Chapter II: Decline and Fall of the Berkeley Co-op 11 Paul Rauber Chapter III: How to Kill a Co-op 19 David Klugman Chapter IV: The Berkeley Co-op-Anatomy of a Noble Experiment 23 GeorgeYasukochi Chapter V: A Home Economist's Point ofYiew 33 Helen Black Chapter VI: Failure From Neglect of Co-op Principles 39 Robert Schildgen Chapter VII: An Unsuitable Job for a Cooperative? 51 Lynn MacDonald Chapter VIII: The Rise and Fall of CCB 57 Margaret Gordon Chapter IX: Governance Factors as a Key Element in the Decline of CCB -A Personal Perspective 65 Terry Baird Chapter X: The Final Years .. .. 71 Bruce Black iii Chapter XI: Other Views 77 Adolph Karnil, Marcia Edelen, Serena Bardell & Doug Buckwald Chapter XII: The Palo Alto Co-op 83 Morris Lippman Chapter XIII: What's Next for California's Consumer Co-ops? 87 David J. Thompson Appendix I: A Brief History of the Berkeley Co-op 93 Appendix II: California's Cooperative Community 99 David J. Thompson iv Preface Masao Ohya Executive Director, Japanese Consumers' Co-operative Union A success story isa record ofthe victorious. Full ofinspiration and pride, it is an encouraging tale that rouses the envy of its readers. In contrast, a story offailure is naturally dishearten­ ing. It isfilled withthe agonies, grievances and shames ofmany that have suffered andfallen. It communicates a sense ofdis­ appointment that wrings the hearts ofits readers. This isthe story ofthe fall ofthe Berkeley Co-op. It isasorrowful tale that delves for the cause offailure, astory frankly related IJy the people that were involved withthe co-op at that time. How the book carne about We were well informed that the business of the Berkeley Co-op was growing worse with each passing year. This wasapparent to the co-op people who called on the Berkeley Co-opduring yearly visits to the United States. 11,e situation began to quickly deteriorate in the late 19805. The Berkeley Co-op degenerated into a problem ridden operation, and there seemed little hope it could recover. There were strong feelings among Japanese co-ops that some­ thing should be done to help, especially within the NadakobeCo-op (presently Co-op Kobe) which was Berkeley's sister co-op. There were also calls from the Berkeley side. But as is related in this book, the situation was far graver than many had imagined. The Co-op was in fact spinning headlong to its destruction. AfterJ. Ikeda, ex-managing directorofTokatsu Co-op, saw with his own eyes the pitiful, weather-beaten Berkeley Co-op stores after they had closed down, and read the sensational newspaper article "Who Killed the Berkeley Co-op?", he suggested that we askGeorge Yasukochi, former controllerof the Berkeley Co-op, to write about the incident so that we might learn a lesson from the tragedy. v In the beginning, I had misgivings about the proposition. How could I ask a person who was in an organization about to go bankrupt, to do some­ thing that was akin to opening an old wound? Coming from a foreign coun­ try not directly involved with the Berkeley Co-op, the proposition would be discourteous to say the least. However, when bankruptcy became imminent, I felt that, rather than idly stand by, we should strive to create something posi­ tive from the failure. We discussed the matter at the JCCU executive board meeting and fi­ nally agreed to go through with the proposition. After all, the Berkeley Co-op had been a paradigm to the japanese co-op movement. It had been our guid­ ing star, an advanced co-op that we had all looked up to. Mr. Fukuda, ex­ managing director of the JCCU, was invited by the Cooperative League of the USA to visit the Berkeley Co-op in 1959and stayed there for six months. Since that time, more than 1,000co-op people had presumably visited the Berkeley Co-op. Incidentally, I was a guest of the neighboring Palo Alto Co-op at that time. Both invitations had been made possible mostly by funds accumulated through used paperback book sales conducted by the two co-ops. Co-op products, its logo, supermarket management, and member rela­ tions activities are all part of the co-op movement today. Many of the prin­ ciples which drive the current movement were learned from the Berkeley Co­ op. The guiding star, our hope, at last fell. Thus, we finally arrived at the con­ clusion that we need to learn from the history of its downfall, even at the ex­ pense of discretion. Mr. Yasukochi sent word that he would see me as a friend of long stand­ ing, although my visit would be an unpleasant one. Mr. David Thompson of the National Co-operative Business Association (NCBA) consented to act as a go-between. On November 17, 1989,exactly a month after the devastating San Fran­ cisco earthquake, the ceremony for the restoration of the Bay Bridge was held on the bridge. The mood was jubilant, and people enjoyed a song by popular Tony Bennett, "Cominghome to you Oakland, San Francisco," which rang over the bridge. Mr. Yasukochi, however, appeared dispirited throughout the en­ tire celebration. On the 19th, we gathered at Mr. Yasukochi's home to discuss documenting the causes behind the fall of the Berkeley Co-op. Ifmy memory is correct, there were eight of us: George Yasukochi, David Thompson, Rob­ ert Neptune, Robert Schildgen, Bruce Black, Margaret Gordon, Michael Ful­ lerton and myself. vi Mr. Thompson chaired the meeting, and we discussed the reasons be­ hind the collapse of the Berkeley Co-op. Each participant presented a slightly different opinion, but we reached the conclusion that it would be of great ben­ efit, even to the U.S.side, to put together a record. Everyone promised to co­ operate. Mr. Fullerton volunteered to act as a coordinator of the project, and everyone agreed to do their share in securing manuscripts and to publish the book simultaneously in Japan and the U.s. Six months later, all of the manu­ scripts were in. Nineteen people from various fields agree to contribute. The group in­ cluded a wide selection of people, ranging from the Berkeley CO-DP'S chair­ man of the board, directors, general managers, staff and other personnel, to members and outside people as well. Why the Co-op collapsed Each contributor presents a different reason for the failure. Naturally, their views are affected by the positions they held at the time. Thus, there is no uniform outlook which clarifies the real cause, and their theories cannot be easily categorized. Perhaps the various opinions summed up together define the cause, yet some of the views presented contradict one another. The internal condition of the Berkeley Co-op described by the contribu­ tors shows us that the situation was much more serious than had been imag­ ined. Strong antagonism divided the board members into two opposing par­ ties. This strongly influenced the management which brought about instabil­ ity among the general managers and the arbitrary execution of decisions. Democracy was stretched to an almost absurd degree, which lead to the even­ tual nullification of democracy altogether. Staff members were confused and became apathetic to the policies of the board and the management. Co-op members were kept uninformed of policies concerning the expansion of the organization, opening of new stores, merchandise policies, and other co-op operations. Many of the contributors point out that co-op principles were not imple­ mented. Disagreement among the board members gave rise to other internal strife. Members left the co-op one after another, and unity and harmony were disrupted. Discord within the board seems to have had its roots in the politi­ cal climate of the Berkeley community. More effort should have been made on the part of the co-op to create a system capable of evading such strong clashes and conflicts. It is interesting to note that, among the contributors, vii those that held executive positions stress that the major problems applied to the management, while the others point out the issue of participation of co-op members.