Massachusetts Daily Collegian

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A free and responsible press serving the UMass community since 1890

Massachusetts Daily Collegian

A free and responsible press serving the UMass community since 1890

Massachusetts Daily Collegian

Market Basket a case study in social responsibility

(Photo Courtesy of Mark Sardella/Flickr)
(Photo Courtesy of Mark Sardella/Flickr)

When Athanasios (Arthur) and Efrosini Demoulas opened a neighborhood grocery store in 1916, they could not have imagined it would tear their family apart or that its struggle to survive almost a century later would exemplify the power of American workers.

Last Thursday, Arthur S. Demoulas agreed to sell his 50.5 percent share of Market Basket – the now 71 store chain – to his cousin, rival and beloved Market Basket CEO Arthur T. Demoulas. Both grandchildren of the original Arthur and Efrosini, the two Demoulas have been locked in a power struggle for control of Market Basket for nearly 20 years, after Arthur T.’s father stole a majority of the company’s shares from the family of Arthur S. An early 1990s court settlement left Arthur S. and his allies with majority control.

While the family of Arthur S. controlled a majority share, his sister-in-law, Rafaela Evans, continued to vote with Arthur T. until this spring, keeping him in control of the company.

When Evans switched sides, the board of directors voted to oust CEO Arthur T. That’s when the trouble started.

Within hours, workers, both on the floor and in management, had stopped ordering and restocking stores and encouraged customers to boycott the store. Why would workers show such passion for their CEO? Because, even though Market Basket is renowned for its low prices, it pays workers good wages with benefits, invests them in a profit sharing plan and provides ample room for upward advancement.

So why would Arthur S. want to oust a successful CEO who is respected by the workers and creates an exceptional customer experience? There are two reasons: the first is familial animosity. The second? Profits.

Market Basket is a privately-held company, meaning its profits are split between a small group of family shareholders, like Arthur T., Arthur S. and Rafaela Evans. When prices are low and wages are high, profits are squeezed, which means less money flowing into shareholder pockets. When Arthur S. convinced Evans to switch her vote, part of his argument must have been that a new CEO could maximize profits by lowering compensation and/or raising prices.

Evans bought it. The workers didn’t.

Market Basket is a non-union shop. Its workers do not have the protection of a labor union or collective bargaining agreement. But what they did have was a CEO who ran a company on the principle of social responsibility. By providing good compensation, he created livelihoods for thousands of people. By providing low prices, he made it easier for penny-pinching Bay Staters to buy milk and bread. Shareholder capitalism, personified by Arthur S., thought that was a mistake.

Thomas Kochan wrote in the Boston Globe that Market Basket workers “asserted an implicit right of ‘ownership’ of what they believe to be their company.” There is awesome power when workers feel a sense of ownership over their corporation. Although they were not given a ballot, they voted for their boss. That sounds a lot like socialism to me.

Again and again in this country we are instilled with the idea that socialism is “bad,” clearly a vestige of Cold War propaganda campaigns. But socialism is not bad. In fact, socialism is what played out during this Market Basket standoff. Socialism means that workers help to select their leaders, no more and no less. It is not a government takeover of private business. It is not President Barack Obama riding an undead steed to murder your grandmother. It is when workers help to select their leaders.

This shows us that, even behind the propaganda, both workers and consumers fundamentally believe in the tenets of socialism. Socialism helps to give corporations a sense of social responsibility, represented by Arthur T.’s management style. Most workers and firms are not lucky enough to have a CEO raised by his family with an innate sense of social responsibility. In fact, we can see from Arthur S. that corporate decision-making is more often based on profit motive.

“Words cannot express how much I appreciate each and every one of you,” Arthur T. said at his press conference announcing the purchase of his cousins’ shares. “We are equal. Everyone here has a purpose. … No one person is better or more important than another.”

“Respect and honor and dignity is a way of life,” Arthur T. concluded. “In this organization … everyone is special.”

I guess that’s what it was really about all along.

 Zac Bears is the Opinion & Editorial Editor and can be reached at [email protected].

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  • K

    Kevin BushSep 12, 2014 at 10:41 am

    Ministry of Food Central Committee Komisar Jabba The Hut says…”Market Basket you are must now belong to us!”.. Filet Mignon is now “peoples price!”.. 30 cents a pound! FOR THE GREATER GOOD!..of course

  • ?

    ?Sep 9, 2014 at 9:08 pm


    Zac, aren’t you the head editor? That Rafaela bit is a pretty big part of the article, one that definitely warrants a source, and this being an opinion column doesn’t waive that.

  • Z

    Zac BearsSep 5, 2014 at 2:46 pm

    Hey Bill,

    I see where you’re coming from. First, I want to say that this is an opinion column and not a news story.

    1. I could have characterized the event slightly better, but I think it’s reasonable to say that once the workers’ demand for Arthur T.’s reinstatement was not met, they closed down operations within hours.

    2. By profits, I mean profit distributed to shareholders, a common characterization. More exactly, the profits include all excess revenue after costs are paid, and the argument was whether a larger share should be distributed to workers in the form of profit sharing and bonuses (Arthur T.) or to the shareholders (Arthur S.). I am not speaking of additional worker compensation when I say “profits.”

    3. I am including the share of profits paid to workers under the umbrella “wages.” Shareholder “profits are squeezed.”

    4. The original phrase was: “…part of his argument must have been that…” An editor changed that.

    5. I think the reason they wouldn’t “answer ‘Yes'” is that there is a skewed definition of “socialism” in the common lexicon. As I said, I believe in socially responsible corporate governance. There is a skewed definition of “free market” in the lexicon as well, because the people who represent “free market” values in government tend to frown upon “bottom-up” free market actions, such as striking or unionization (or need I remind you that the ‘right to work’ states actually put up entrenched barriers to protect business from the “freedom to take group action.”)

    I appreciate the fact-checking! It’s good to see that someone who knows what they’re talking about reads this paper and cares about the issues.

  • B

    Bill ToddSep 4, 2014 at 9:52 pm

    OK – you’re only a college publication but you still should learn the basics of competent journalism, so here goes:

    1. Though a handful of very senior employees immediately quit and many other employees started raising protests when Artie T. was fired it was 25 days, (not ‘within hours’ in any reasonable interpretation of the phrase) before any start of the actual work obstruction and strike (by a relatively few) MB employees and any urging of customers to boycott (the precipitating event was the expiration of a deadline in an employee demand for Artie T.’s reinstatement 24 days after he was fired).

    2. To the degree that financial concerns played a part in this fracas the issue was not profits per se but rather how profits were used. DSM/MB has consistently generated profits at or near the top of its industry but has traditionally plowed as much profit back into expanding the business as it could make good use of, thereby enriching the value of shareholders’ holdings more than generating immediate cash dividends. The Arthur S. faction wanted a lot more up-front cash, to a degree that would have seriously impeded the chain’s overall profitability over time (but they apparently wanted to bleed the business before selling it, so long-term profitability was the last thing they cared about).

    3. Given that its profits were industry-leading your parroting of the boringly conventional wisdom that “When prices are low and wages are high, profits are squeezed” was also in error. MB’s low prices generated sufficiently high volume to more than compensate for them, and MB’s good wages and benefits and policy of promoting from within resulted in a work force so competent, experienced (many worked there for years or decades in contrast to the normal turnover in grocery chains), and dedicated that they were more cost-effective than the larger, lower-paid work forces in other chains.

    4. If you did not pull the details about how Arthur S. convinced Rafaela Evans to switch her support out of your butt please provide a citation for them: no one I’m aware of has published anything in this area (though speculation has of course been rampant).

    5. Ideologues across the spectrum have tried to use the MB case to support their own pet beliefs, and you seem to be no exception. If you asked the MB employees and customers who took such effective action whether they “believe in the tenets of socialism” I strongly suspect that only a very small percentage (a percentage which I wish were somewhat higher, given the current state of our country) would answer “Yes.” Rather, what they did was very much in the spirit (and obviously played out in the context) of the free market: employees exercised their freedom to take group action to achieve an end which they had no nominal authority to demand, and customers exercised their freedom to shop where they chose in order to help them. I hope that this serves are a reminder that the ‘free’ in ‘free market’ works in both directions (bottom-up as well as top-down, if you want to look at it that way), since I think we really needed one.