Wal-Mart: The Face of Twenty-First-Century Capitalism
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Wal-Mart: The Face of Twenty-First-Century Capitalism
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Overview
Edited by one of the nation’s preeminent labor historians, this book marks an ambitious effort to dissect the full extent of Wal-Mart’s business operations, its social effects, and its role in the United States and world economy. Wal-Mart is based on a spring 2004 conference of leading historians, business analysts, sociologists, and labor leaders that immediately attracted the attention of the national media, drawing profiles in the New York Times, Los Angeles Times, and the New York Review of Books. Their contributions are adapted here for a general audience.
At the end of the nineteenth century, the Pennsylvania Railroad declared itself “the standard of the world.” In more recent years, IBM and then Microsoft seemed the template for a new, global information economy. But at the dawn of the twenty-first century, Wal-Mart had overtaken all rivals as the world-transforming economic institution of our time.
Presented in an accessible format and extensively illustrated with charts and graphs, Wal-Mart examines such topics as the giant retailer’s managerial culture, revolutionary use of technological innovation, and controversial pay and promotional practices to provide the most complete guide yet available to one of America’s largest companies.
“Like archaeologists who pick over artifacts to understand an ancient society, the scholars here [are] examining Wal-Mart for insights into the very nature of American capitalist culture.” —The New York Times
“Stimulating perspectives on the world’s largest corporation.” —Publishers Weekly
Product Details
| ISBN-13: | 9781595587466 |
|---|---|
| Publisher: | New Press, The |
| Publication date: | 07/19/2019 |
| Sold by: | Barnes & Noble |
| Format: | eBook |
| Pages: | 226 |
| File size: | 3 MB |
About the Author
Read an Excerpt
CHAPTER 1
Wal-Mart: A Template for Twenty-First-Century Capitalism
Nelson Lichtenstein
Wal-Mart, the largest corporation in the world, provides the template for a global economic order that mirrors the right-wing politics and imperial ambitions of those who now command so many strategic posts in American government and society. Like the conservatism at the heart of the Reagan-Bush ascendancy, Wal-Mart emerged out of a rural South that barely tolerated New Deal social regulation, the civil rights revolution, or the feminist impulse. In their place the corporation has projected an ideology of family, faith, and small-town sentimentality that coexists in strange harmony with a world of transnational commerce, stagnant living standards, and a stressful work life.
Founded less than fifty years ago by Sam Walton and his brother Bud, this Bentonville, Arkansas, company is today the largest profit-making enterprise in the world. With sales over $300 billion a year, Wal-Mart has revenues larger than those of Switzerland. It operates more than five thousand huge stores worldwide, 80 percent in the United States. In selling general merchandise, Wal-Mart has no true rival, and in 2003 Fortune magazine ranked Wal-Mart as the nation's most admired company. It does more business than Target, Home Depot, Sears, Kmart, Safeway, and Kroger combined. It employs more than 1.5 million workers around the globe, making Wal-Mart the largest private employer in Mexico, Canada, and the United States. It imports more goods from China than either the United Kingdom or Russia. Its sales will probably top $1 trillion per year within a decade. Sam Walton was crowned the richest man in America in 1985; today his heirs, who own 39 percent of the company, are twice as wealthy as the family of Bill Gates.
The competitive success and political influence of this giant corporation enable Wal-Mart to rezone our cities, determine the real minimum wage, break trade unions, set the boundaries for popular culture, channel capital throughout the world, and conduct a kind of international diplomacy with a dozen nations. In an era of waning governmental regulation, Wal-Mart management may well have more power than any other entity to legislate key components of American social and industrial policy. The Arkansas-based giant is well aware of this leverage, which is why it is spending millions of dollars on TV advertisements that tout, not its "always low prices," but the community revitalization, happy workers, and philanthropic good works it believes come when it opens another store.
Wal-Mart is thus the template business setting the standards for a new stage in the history of world capitalism. In each epoch a huge, successful, rapidly emulated enterprise embodies a new and innovative set of technological advances, organizational structures, and social relationships. It becomes the template economic institution of its age. At the end of the nineteenth century the Pennsylvania Railroad declared itself "the standard of the world." U.S. Steel defined the meaning of corporate power and efficiency for decades after J. P. Morgan created the first billion-dollar company in 1901. In the mid-twentieth century General Motors symbolized bureaucratic management, mass production, and the social, political enfranchisement of a unionized, blue-collar workforce. When Peter Drucker wrote the pioneering management study The Concept of the Corporation in 1946 it was the General Motors organization, from the Flint assembly lines to the executive offices in Detroit and New York, that exemplified corporate modernity in all its variegated aspects. And in more recent years, first IBM and then Microsoft have seemed the template for an information economy that has transformed the diffusion and production of knowledge around the globe.
Wal-Mart is now the template business for world capitalism because it takes the most potent technological and logistic innovations of the twenty-first century and puts them at the service of an organization whose competitive success depends upon the destruction of all that remains of New Deal–style social regulation and replaces it, in the U.S. and abroad, with a global system that relentlessly squeezes labor costs from South Carolina to south China, from Indianapolis to Indonesia. For the first time in the history of modern capitalism the Wal-Mart template has made the retailer king and the manufacturer his vassal. So the company has transformed thousands of its supplier firms into quaking supplicants who scramble to cut their costs and squeeze the last drop of sweated productivity from millions of workers and thousands of subcontractors.
The Wal-Mart Phenomenon
Snapshots from the lives of four women help us understand the impact of the Wal-Mart phenomenon upon the lives of tens of millions of ordinary people.
Chastity Ferguson kept watch over a sleepy three-year-old late one Friday as she flipped a pack of corn dogs into a cart at her new favorite grocery store: Wal-Mart. At this Las Vegas supercenter, pink stucco on the outside, a wide-isled, well-lighted emporium within, a full-scale supermarket is combined with a discount megastore to offer shoppers everything they might need in their daily life. For Ferguson, a harried twenty-six-year-old mother, the draw is obvious. "You can't beat the prices," said the hotel cashier, who makes $400 a week. "I come here because it's cheap."
Across town, another mother also is familiar with the supercenter's low prices. Kelly Gray, the chief breadwinner for five children, lost her job as a Raley's grocery clerk late in 2002 after Wal-Mart expanded into the supermarket business in Las Vegas. California-based Raley's closed all eighteen of its southern Nevada stores, laying off 1,400 workers. Gray earned $14.98 an hour with a pension and family health insurance. Wal-Mart grocery workers typically make less than $10 an hour, with inferior benefits. "It's like somebody came and broke into your home and took something huge and important away from you," said the thirty-six-year-old. "I was scared. I cried. I shook."
Halfway around the world, twenty-year-old Li Xiao Hong labors in a Guangzhou factory that turns out millions of the Mattel toys that Wal-Mart sells across America. She is part of an army of 40 million newly proletarianzed peasants who are turning south China into the workshop of the world. The plant's work areas are so poorly lighted that they seem permanently shrouded in gray. A smell of solvent wafts across the facility as rows of workers hunch over pedal-operated sewing machines and gluepots.
Li is the fastest worker on a long, U-shaped assembly line of about 130 women. They put together animated Disney-themed dolls that can be activated by the nudge of a small child. Li's hands move with lightning speed, gluing the pink bottom, screwing it into place, getting the rest of the casing to adhere, tamping it down with a special hammer, pulling the battery cover through its slats, soldering where she glued, then sending it down the line. The entire process takes twenty-one seconds.
Li generally works five and one-half days a week, up to ten hours at a time. Her monthly wage — about $65 — is typical for this part of China, enough for Li to send money back home to her rural family. But Li pays a heavy price. Her hands ache terribly, and she is always exhausted, but she seems resigned more than angry. "People at my age should expect some hardship. I should taste some hardship while I'm young."
And finally there is Crystal, the wife of a Wal-Mart assistant store manager, who brings home about $40,000 a year after a decade of hard, devoted work. Crystal took umbrage at the invective posted on one of the many anti–Wal-Mart Web sites that current and former employees have created in recent years. So she fired back.
"Wal-Mart has been very good to us. The people at the store work not only as a team but as a family unit. When families in our community have trouble Wal-Mart is there to help. Wal-Mart helps with tuition for college, they give out scholarships. Every company has its faults, no job site or company is perfect. You are only upset because Wal-Mart is Pro-Associate and Anti-Union. And I pray to GOD as a Christian woman that it stays the way it is. Wal-Mart is a good place to work, they do care about their Associates. I think that Sam Walton would be proud of the store that my husband works at."
The experience of these four women provides a set of markers for understanding this giant firm. Hundreds of millions of shoppers agree with Chastity Ferguson: Wal-Mart prices are low, cheap enough to enable hard-pressed working-class families to stretch their dollars and survive until the next paycheck. But the experience of Kelly Gray has also made Wal-Mart a touchstone for political and economic controversy. The famed economist Joseph Schumpeter might well have been thinking of a dynamically successful firm like Wal-Mart when he coined the phrase "creative destruction," the process by which one mode of capitalist production and distribution replaces another. As Schumpeter made clear early in the last century, such transformations are not inevitable, nor do they come without an immense social cost, which is why Wal-Mart's growth has generated one high-profile conflict after another.
In California, where Wal-Mart's actual footprint has been modest, the expectation that this corporation will build scores of supercenters, staffed by low-wage workers, helped ignite a four-month strike by unionists in the old-line supermarkets, who wanted to preserve their wage and benefit standards. Their strike ended in a bitter defeat in February 2004, but barely a month later Inglewood residents created a stir when that majority black and Latino city voted down a Wal-Mart–sponsored referendum designed to pave the way for construction of one of the first supercenters in Southern California. Energized by this anti–Wal-Mart show of strength, the Los Angeles city council enacted an ordinance requiring big-box stores like Wal-Mart to fund an "economic impact" analysis to determine their effect on community wages, existing businesses, and traffic patterns. But Wal-Mart struck back in the November 2004 elections, helping fund a referendum that overturned a recently enacted California law requiring large, labor-intensive firms to pay substantially more of the health insurance costs of their employees. And while all this was going on, a San Francisco judge gave the Berkeleybased Impact Fund permission to seek higher pay and back pay for more than a million women workers at Wal-Mart, in the largest class-action employment-discrimination suit ever certified by a federal court.
Li Xiao Hong does not work directly for Wal-Mart, but the conditions of her life are inexorably bound to the capitalist template the corporation is now putting in place around the globe. She is a participant in the most sweeping process of proletarian industrialization since the dawn of the factory revolution nearly two centuries ago. Li is a cousin to the mill girls of Lowell, the immigrant needle workers of the Lower East Side, and the Mexican women who poured into the border region maquiladoras just one generation ago. Now she stands on the lowest rung of a supply chain that feeds the enormous buying power assembled by the big-box stores that are becoming dominant throughout the global North. Although Wal-Mart deploys the most sophisticated telecommunications system to efficiently channel her labor power, Li's sweated work life, and that of her tens of millions of workmates, demonstrates that we still live in an industrial world. More people labor on an assembly line today, making actual things, than at any other time in human history. Still more sell, talk, or manipulate a keyboard under assembly-line conditions. The postindustrial age, heralded by so many pundits and academics, has not yet arrived.
And finally there is Crystal, a product of the Wal-Mart "family" itself. Her husband, who worked his way up from maintenance, has the toughest job in the company. He is in the hot seat because he has to accommodate the insistent demands that flow down from the store and district manager, while at the same time keeping the shelves stocked, the cash registers staffed, and the store profits growing. Bentonville's computers assign Crystal's husband a labor budget that is as tight as a drum and a sales target that moves upward with inexorable momentum. He is in a constant squeeze, and when workers quit — WalMart's annual turnover is above 40 percent a year, not far below that of McDonald's — Crystal's spouse has to fill in the gaps, which accounts for a managerial workweek of sixty hours and more. But none of this seems to have diminished the loyalty of people like Crystal and her spouse to Wal-Mart as an institution and an idea. Promotion from within, frequent contact with upper management, a measure of paternalism, and a loosely cloaked Christian identity have helped generate a remarkably cohesive corporate culture in which a substantial proportion of those who pursue careers at Wal-Mart participate. "Ordinary people doing extraordinary things": there is a measure of truth in this Wal-Mart slogan.
Why Is Wal-Mart So Big?
What makes for giantism in big business? Why was General Motors so big during the middle decades of the twentieth century and why is Wal-Mart so huge today? In his contribution to this collection, historian James Hoopes recalls the work of the Nobel Prize–winning economist Ronald Coase, who described the corporation as an "island of conscious power" in an "ocean of unconscious cooperation, like lumps of butter coagulating in a pail of buttermilk." Every firm has an optimal size beyond which the risk of loss from mismanagement more than offsets the chance of gain from the economies of scale it can realize. In the first half of the twentieth century GM became a vertically integrated conglomerate because Teletype, telephones, and good roads enabled the corporation to deploy its famous system of centralized control and decentralized operations across dozens of states and scores of factories. But such highly integrated production and distribution within a single firm may not always be the most cost-efficient way to make the most money. If new inventions and sociopolitical mores make it cheaper and faster to purchase rather than make the same goods and services, then executives will begin to dismantle the huge enterprise. According to the most savvy, technologically hip business writers, the contemporary corporation is doomed to fragment within a world of cheap, rapid communications and increasingly efficient markets. The "virtual" corporation of the twenty-first century should consist of a few thousand highly skilled managers and professionals who contract out nonessential services to cheaper specialist firms.
Thus we have the outsourcing of both call-center work and janitorial services to an ever shifting coterie of independent firms, while "branded" companies like Nike and Dell farm out virtually all the manufacturing work that goes into their core products. This has been the path followed by General Motors, which has spun off Delco, once a vertically integrated parts division. Except for final assembly and the manufacture of key components, GM and the other big car companies seek to outsource as much work as possible, even sharing space with suppliers under the same roof and on the same shop floor. So the GM payroll, white collar and blue, is about half the size it was in 1970. Giving all this a metahistorical punch, Forbes columnist Peter Huber declared that it was "market forces and the information age" that had beaten the Soviets and would soon force the dissolution of America's largest corporations. "If you have grown accustomed to a sheltered life inside a really large corporation," he advised, take care. "The next Kremlin to fall may be your own."
But Wal-Mart has found giantism efficient and highly profitable. This is because the price of goods and services it purchases on the open market has not fallen as rapidly as has the cost of "managing," within a single organization, the production or deployment of those same economic inputs. For Wal-Mart it is still cheaper to build than to buy, and to employ workers rather than subcontract them. As Linda Dillman, the chief information officer at Wal-Mart, put it in 2004: "We'd be nuts to outsource." And the reason for her disdain? "We can implement things faster than any third party," Dillman says. "We run the entire world out of the facilities in this area [Bentonville] at a cost that no one can touch." Thus the same technologies and cost imperatives that have led to the decomposition and decentralization of so many other institutions, including government, health care, entertainment, and domestic manufacturing, have enabled Wal-Mart and other retail distribution companies to vastly enhance their own managerial "span of control."
(Continues…)
Excerpted from "Wal-Mart"
by .
Copyright © 2006 Nelson Lichtenstein.
Excerpted by permission of The New Press.
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Table of Contents
Title Page,
Acknowledgments,
Preface,
History, Culture, Capitalism,
ONE - Wal-Mart: A Template for Twenty-First-Century Capitalism,
TWO - Woolworth to Wal-Mart: Mass Merchandising and the Changing Culture of Consumption,
THREE - It Came from Bentonville: The Agrarian Origins of Wal-Mart Culture,
FOUR - Growth Through Knowledge: Wal-Mart, High Technology, and the Ever Less ...,
A Global Corporation,
FIVE - Making Global Markets: Wal-Mart and Its Suppliers,
SIX - The Wal-Mart Effect and the New Face of Capitalism: Labor Market and ...,
SEVEN - Wal-Mart and the Logistics Revolution,
EIGHT - Wal-Mart in Mexico: The Limits of Growth,
Working at Wal-Mart,
NINE - Making the New Shop Floor: Wal-Mart, Labor Control, and the History of ...,
TEN - Patriarchy at the Checkout Counter: The Dukes v.Wal-Mart Stores Inc., ...,
ELEVEN - How to Squeeze More out of a Penny,
TWELVE - A Wal-Mart Workers Association? An Organizing Plan,
Notes,
Contributors,
Index,
Copyright Page,