Five years ago, a regional supermarket chain called Market Basket acted out a drama that was one part Shakespeare and one part Marx. The family-owned company, famed for low prices, well-compensated employees, and fiercely loyal customers, was consumed by a vicious split.
The grandfather, an immigrant from Greece named Athanasios (Arthur) Demoulas, founded his first grocery in Lowell, Massachusetts, a century ago. The current chief executive, Arthur T. Demoulas, continued the model of benign paternalism. At Market Basket, a lowly cashier can still retire with several hundred thousand dollars in profit sharing.
But the other family faction wanted more dividend payouts. A near namesake cousin, Arthur S. Demoulas, wrested control and fired Arthur T.
The majority faction prepared to extract hundreds of millions of dollars and sell the chain to a private equity company. Then something extraordinary happened. The managers, employees, vendors, and customers banded together and boycotted Market Basket, all demanding the return of Arthur T.
It was a strike on behalf of the boss. Soon, the company was worthless. The “value” of Market Basket was not its nominal valuation based on sales or profits. All the value was the creation of loyal workers and customers. (Call it the labor-and-customer-and-benign-CEO theory of value.)
The Arthur S. faction caved and agreed to sell to Arthur T., who was reinstated to tumultuous cheers. The customers returned and the chain is more profitable than ever.
The media depicted the story as a personal struggle between the Good Arthur and the Bad Arthur.
But there’s a lot more to it. Outside of a few family- or employee-owned companies, the structure of American capitalism, with its quest for rapacious profits and expendable workers, makes it almost impossible for high-road CEOs like Arthur T. to rise to the top.
This could be a moment to scrap the cult of the CEO in favor of deep structural reform, so that “stakeholder capitalism” becomes a reality and not just a slogan of Business Roundtable executives suddenly fearing pitchforks.
That’s another of the plans of one Elizabeth Warren.
