Wal-Mart, The Face of Twenty-First Century Capitalism
Ed. Nelson Lichtenstein
New York: The New Press
The retailer Wal-Mart is the world's largest company, notorious for its low wages and hostility to trade unions.
These 12 essays by US academics explain its origins 50 years ago and its enormous expansion in the 1990s, to the point where it employs over a million and a half workers all over the world and imports more goods from China than Britain or Russia.
It was founded in Bentonville, Arkansas by Sam Walton, whose family are now twice as wealthy as the Bill Gates family.
This was a backward part of the US, a fortress of the Republican Party and Protestant fundamentalism and the labour market was flooded with tens of thousands of unemployed, dispossessed of their small landholdings by the march of agriculture.
They were grateful to Walton, who sold general merchandise, even when he ignored minimum wage and overtime payment laws.
All employees were "associates" and first-name terms were always used in conversation.
Also, there was a profit-sharing scheme, though, with a labour turnover rate of 50 per cent a year, few workers ever benefited from it, as they had to be there for two years to qualify.
More significantly, they were the largest participants in Medicaid coverage for families with poverty-level incomes.
Walton's slogan was "always lower prices," which were welcome in rural and small-town US, but at the expense of the working poor.
He needed two or three times the turnover of traditional department stores in order to make the same profit.
That depended on a low mark-up, which demanded labour costs staying below 15 per cent of total sales, about half that of the traditional store.
Fifty years ago, when manufacturing jobs outnumbered those in retail by three to one, the effect of this downward pressure on wages was more limited than it is today, when retail workers exceed those in production of durable goods in the US and in Britain.
Wal-Mart's astonishing expansion since then is partly due to the popularity of its supercentres combining groceries with kettles, irons, microwave ovens, lingerie, teen fashions and so on, but also to its highly effective use of IT and satellite communication.
It used to be conventional wisdom that, beyond an optimal size, a firm's losses from mismanagement tended to offset the gains from economies of scale.
Wal-Mart has overcome this barrier to growth. It has the largest private satellite system in the country and computers that monitor the cash registers in every store throughout the world.
The boss in Bentonville can give pep talks to hundreds of thousands of workers and managers can demonstrate to every store in the world the way to display products.
They have a complete picture at all times of where goods are and how fast they are selling and know exactly the labour costs involved, the break times and the hours of sales assistants.
Over a quarter of a million containers are sent to Wal-Mart every year from overseas, but production decisions do not rest with the manufacturer.
The whip hand is with Wal-Mart, which records consumer preferences very carefully and communicates them down the supply chain.
The suppliers, including 3,000 Chinese firms, are required to make deliveries in small lots, just in time.
They are price-takers rather than partners, so that Wal-Mart is a manufacturer in all but name.
It has the centralised control that the planners never achieved over the Soviet economy. Would that the technology had been in their hands.
Wal-Mart, a new face of capitalism, is, of course, not the only price discounter.
It is the most successful, but does not differ in kind from the others in its industry or from low-wage service industries in general.
Traditionally, high wages in manufacturing went along with a high level of trade union organisation, which is notoriously difficult in retailing.
What is the way forward? The essays conclude with a call for a community alliance comprising national trade unions, workers organising, small businesses worried about being forced out of the market place, women's organisations concerned about sex discrimination, environmentalists concerned about urban sprawl.
In Britain, where it acquired 229 Asda stores in 1999, Wal-Mart has stepped cautiously, because the trade union reflexes are still strong among working people.
But its true colours are emerging. In 2002, Asda started a retail price war in the banana trade and consumer prices fell by a quarter, but War on Want says that workers' sweatshop conditions worldwide have worsened.
Wal-Mart seeks to stifle trade union activity and has not accepted collective bargaining, despite the efforts of the GMB.
The employees in Wigan had a successful strike and a shop steward who had been sacked was reinstated.
But until the law prohibiting trade union secondary action is repealed, effective solidarity with the supermarket workers will be hampered and the community alliance weakened.
