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On Wed, 5 Jan 2022 22:58:37 -0800 (PST), Jeffrey Rubard <jeffreydanielrubard@gmail.com> wrote:


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…)

(reformatted for legibility)

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