3/13/13

Lichtenstein Book on Walmart Alarms


This blog seldom runs academic reviews, but given Sylvia Burwell's nomination for OMB, this is timely. 

The Retail Revolution: How Wal-Mart Created a Brave New World of Business. By Nelson Lichtenstein. New York: Picador, 2010. 978-0-312-42968-3

Walmart is a company Americans either love or hate. Nelson Lichtenstein’s updated expos√© gives considerably more rationale for loathing. His is such a damning portrayal that it ventures onto terrain generally reserved for conspiracy theorists. There’s an important difference, though–Lichtenstein’s evisceration is based on reams of evidence, not preference.

The story of Sam Walton’s enterprise is steeped in folksy creation myths as spurious as that of Abner Doubleday’s invention of baseball. Walmart has been, from the start, a blend of innovation and reactionary politics. Walton was, indeed, a small-town Arkansas boy, but one more akin to the 1920s moralists that precipitated the Scopes Trial. He was an evangelical Christian who loathed urbanites and was stirred by an autocratic desire to Bentonville the planet. Lichtenstein gives grudging admiration for Walton’s business acumen and credits him for revolutionizing retail logistics, but he insists that we also see Walton as a right-winger obsessed with routing demons he felt imperiled his world: unions, liberals, grassroots democracy, cities, and regulatory government.

When Walmart left its Ozarks birthplace in Bentonville, Arkansas, it spread to towns of under 10,000 before tackling urban areas with restorative and proselytizing zeal. Even though it has integrated its operations with China’s manufacturing sector, Walmart’s unchanged goal is to make the world like Bentonville, not promote global understanding. As Lichtenstein notes, the company’s team-building rituals and customer loyalty programs retain an evangelical flair that smacks of cultism.

Lichtenstein raises bigger questions. If Walmart is the modern-day equivalent of Frank Norris’s Octopus, how did it get that way, and how did it build such a loyal following?  Walton’s fixation on low costs is a standard feature of capitalism; in that regard, Bentonville is little different from past Yankee traders, southern plantation owners, or cut-rate retailers such as Butler Brothers, Mammoth Mart, or K-Mart. It took the stagflation of the 1970s and the anti-worker policies of the 1980s for Walton to put bigger plans in motion. Give Walton credit; he was “in love with logistics” (47) and understood how the humble bar code could restructure business. As one executive put it, Walmart became more of “distribution business” than a retailer. (48) It eliminated wholesalers and replaced them with a supply chain that directly tied manufacturers to distribution centers–not supply and demand, rather “supply and command.” (69) The rising empire was sustained through a “corporate culture” built upon “family, faith, and small-town sentimentality that coexists… with a world of transnational commerce, employment insecurity and poverty-level wages.” (70) It also has “more sticks than carrots,” (102) perfect for rooting out deviation or disloyalty.  

Lichtenstein echoes critics such as Robert Greenwald and Charles Fishman, who also reveal that Walmart’s retail model rests upon the necessity of bending vendors to its will, even if vendors go bankrupt in the process. It is equally imperative that wages be kept low. There are few tricks Walmart hasn’t used, or labor laws it hasn’t violated. It also uses propaganda to convince employees of company benevolence, despite overwhelming evidence to the contrary. It touts endless “opportunities” for “associates,” though almost none attain them. Turnover is both expected and preferred. And heaven help the manager deemed too generous with his–almost always “his”–associates. External enemies help, and Walmart slanders labor unions in ways that make mockery of the Wagner Act. The firm spends little on employees, but it spends a fortune to keep unions at bay.

Does Walmart create jobs? Yes and no. In many states, Walmart’s low wages take more out economies–in uninsured health costs and public services–than it adds in wages or taxes. It gets way with this because it uses “its size and sophistication to leverage its political influence” (268). Walmart is fond of far-right officials, but it has also had the Clintons in its hip pocket. Mostly it uses its octopus-like might to decimate competition, from mom-and-pop stores to grocery chains. It manipulates sales taxes, gets sweetheart property tax deals, uses “self-interested philanthropy” (277), and drives its trucks through every regulatory loophole opened since the 1980s.

Any cause for optimism? Refreshingly, Lichtenstein does not attack consumerism. As he puts it, there’s nothing inherently wrong with stuffing one’s house with a “a bunch of inexpensive stuff.” (338) Instead, Lichtenstein thinks Walmart is on the cusp of imperial overreach. It hasn’t done well in Europe–and pulled out of Germany altogether–and has faced stiff opposition in North America. It wins far more battles than it loses, but the campaigns take a toll. Ironically, it also faces competition from others that followed suit and likewise “churn their workforce, whipsaw their vendors, and have turned retirement pay and health provisions into a financial lottery for millions of workers.” (339) Those very millions make the Walmart model unsustainable in the long run. One employer notes that paying higher wages isn’t “altruism. It is good business.” (336) It doesn’t matter how low your prices are if nobody has the money to buy your products.

The wildcard, Lichtenstein notes, is not labor unions–the United Food and Commercial Workers has pretty much surrendered–but politics. He’s open to the charge of being naive in trusting modern Democrats to smack down Walmart*, but he’s probably right that structural adjustment and new ground rules are inevitable. In essence, the retail revolutionaries must pay the hidden costs they have incurred, or the lights will go out–even in Bentonville.

*Lichtenstein wrote this book long before the emergence of Sylvia Burwell as OMB nominee. One suspects he'd dial back some of this optimism. 

Robert E. Weir
University of Massachusetts Amherst   

1 comment:

Michelle said...

I've already seen Walmart's prices steadily rise. I don't think it's just inflation, but because they can after putting so many stores out of business :(