IF YOUR MOTTO is, "I spend, therefore I am," then Cambridge is the place to be. On your trek from the River to the Yard you can pick up a squash racket, poetry by an obscure author, and a slice of pizza with hardly a break in stride; when you tire of the Harvard market you can hop the Dudley bus for a quarter, and pour your green from Central Square to Roxbury.

The Dudley route passes through streets lined with small merchants, one-room boutiques as well as cuchifrito parlors, whose size may spell chic to the shopper but struggle to the owners. If you're on the bus you can pick and choose from the multitude of storefronts, but behind each is an owner who spends six or seven days a week there, 52 weeks a year. Often the owners are the shop's only employees, working 12 hours a day and worrying the rest. In spite of their labor, roughly a third of these small proprietorships go bankrupt within a year after they open and another third closes within five years. The mom-and-pop merchants try again and again, however, anxious to feed, clothe and bejewel us in order to nurse their infant stores along, maybe hoping that their progeny will remember the favor and take care of them when they retire.

Sid and Louise Gerstenblatt just opened their baby eight weeks ago, at 988 Mass Ave opposite the Orson Welles theater, and they have high hopes. Originally from Montpelier, Vermont, they are the Grandpa and Grandma behind "Grandma's Cookie Factory," which is the retail branch of the wholesale cookie business they ran in Montpelier along with their son Jeff, and friend of the family David Peatman. Grandma's offers six kinds of quarter-pound chocolate chip cookies, carrot and other cakes, bagels, and "what we're going to do with ice cream," says 38-year-old Sid, "will blow your mind."

The Gerstenblatts entered the cookie business in 1973 when they moved to California in search of more interesting jobs. Trained as a social worker and possessed of a degree it took him ten years to earn, Sid resembles everybody's Jewish grandfather, with his shock of white hair, and grey eyes framed by sensible glasses, except for the "groovyisms" of this year and last with which he sprinkles his speech. He designed a non-profit dental program in Vermont and health center in Rhode Island while his wife worked as a nurse and a consultant.

One day, Louise baked a few cookies as a favor to a storeowner friend who sold the whole batch within two days. That gave Sid an idea. Operating out of one kitchen, Sid, Louise, Jeff and David started Grandma's and began to sell their wares to small shop owners in the area. Within two years they were selling cookies to stores throughout the country. Now the Vermont business employs a staff of five, and has a $200,000 volume of business.

As the Vermont plant prospered, Sid and Louise decided it was time to expand, and they looked for a place in Cambridge because, "Frankly," says Sid, "I hate Vermont. Cambridge has the Orson Welles, Chinese food, diverse people--besides, it's near the beach."

The Gerstenblatts and Dave see further growth potential in their business--they have plans to add pies, ice cream, and even a pizza-sized cookie to their line of quarter-pound, two-pound, and three-pound cookies. Dave thinks the business could sustain a series of franchises throughout the city and in other states. But what is most important to the Gerstenblatts is that the business is theirs.

"I have a G.S. 13 but I've never used it," says Sid. "Louise said to me, 'you know how long you would last in a bureacratic job? About two months.' I'd blow up the place. Besides, it's a happy scene, it's not a pressure thing."

Son Jeff, who quit the graduate program in international affairs at American University to help out Grandma's Cookies, adds, "I'd like to make enough to be comfortable but I can't work for a boss at the State Department." David, who has participated in every step of creating Grandma's from baking to marketing, also says, "I feel like a part of it; I'm not just working to make someone else money. We have to work hard up in Vermont, but it's not an assembly line."

Small-scale capitalism still has its contradictions for this social worker-cum-entrepreneur and his Berkeley graduate son. His face animated, Sid says he feels "caught between what I want in life and what I need, and what I want to do for others. I'd like to be involved in a social cause, I'd like to make sure that the needs of the elderly get taken care of. I'd like to work to change the system, but I'd be knowing all the while that it's virtually impossible to change it."

Like his father, Jeff believes in capitalism, and he feels his most important task is improving his life without stepping on people--just trying to be a decent human being. "We don't," he says, "push high-priced stuff that people can't afford."

Sid is even more convinced that Grandma's is the right choice for him. "I've paid my dues for ten years," he says, "and I've been a hustler creating good things for poor people. Now I want to create good things for myself. Since I stopped being a professional do-gooder I've realized that each solution creates a different set of problems. All you can do is create a daily world that's decent."

"People ask me how I can justify selling cookies with sugar after running a dental program. It's good sugar. It's an imperfect world, but we put the best cookies we can in it." He pushes himself away from the table he's been leaning on, and says, "We're selling good stuff, and I feel good about it."

ANOTHER DUDLEY BUS trundles past, probably late and probably packed, but to make good use of your two bits you take it to the end of the line. Few Harvard students ever will, since the Dudley stops smacks in the middle of Roxbury, but if they did they would find the Silver Slipper Restaurant, "Home of Limbo Patties, Curry Goat and Empanadas," and the nest egg of Leonard and Daphne Matthews. Their tiny eatery is hard to find--with the tracks from the Orange Line blocking much of the light over the sign, and the heavy window grating taking care of the rest--but harder still to avoid, since everyone in Dudley Station seems to know where it is. The place opens every day for breakfast at 5:30 a.m., stays filled with customers until after noon, and finally closes after dinner.

Leonard Matthews works long hours every day, but today he is more aggravated than usual. He's just had to fire new help he'd hired only three days ago, and that means Daphne has to get up earlier than usual to help him with the early shift. "People are so unreliable you can't trust them to do the work," he fumes. "They believe in just turning an egg and that's it."