The REDSTAR2000 Papers

Listen to the worm of doubt, for it speaks truth. - Leftist Discussion

The Wal-Mart "Business Model" and the American Working Class February 2, 2004 by RedStar2000

Will American workers--and workers in all of the advanced capitalist countries--continue to enjoy their "elevated" standards-of-living that we have come to expect as "normal" and "decent"?

Or are there trends underway which will make for a much grimmer future than anyone anticipates?

Here is a small effort on my part to answer that question.


(Quotes are from this three-part series in the Los Angeles Times on Wal-Mart unless otherwise indicated:


Wal-Mart Stores Inc. wants to move into the grocery business throughout the state [California] by opening 40 Supercenters, each a 200,000-square-foot behemoth that combines a fully stocked food market with a discount mega-store - entirely staffed by non-union employees. The United Food and Commercial Workers and the Teamsters are trying to thwart that effort, hoping to save relatively high-paying union jobs.

For nearly all of the last century, the standard "refutation" of Marx rested on the rising standard-of-living of the working class in the advanced capitalist countries. Where was Marx's so-called "immiseration of the proletariat"--the fall in wages to a level barely sufficient to keep workers alive and having children?

Workers in America are "middle-class" now, we were told in authoritative tones. They live in individually-owned homes, in pleasant suburbs, drive nice cars...and are often conservative or even reactionary in their politics--to be expected among people who are "middle class".

And unions are "obsolete"...they are no longer "needed" in an ever more "prosperous" and "dynamic" economy.


Wal-Mart pays its grocery workers an estimated $10 less per hour in wages and benefits than do the big [unionized] supermarkets nationwide - $9 versus $19.

My argument here is that the "Wal-Mart business model" is the future of capitalism in the "west"...that most or all of the "gains" made by working class families over the last century will be reversed in the new century, and that by the middle or latter part of this century, workers will be worse off than they were in 1900 or even earlier. (!) Their wages will be subsistence-level or close to it; suburban homes will contain two or even three families crowded together; health standards for most workers will resemble the 19th century more than the 20th.

How will this happen?


From a small-town five-and-dime, Wal-Mart Stores Inc. has grown over 50 years to become the world's largest corporation and a global economic force.

It posted $245 billion in sales in its most recent fiscal year - nearly twice as much as General Electric Co. and almost eight times as much as Microsoft Corp. It is the nation's largest seller of toys, furniture, jewelry, dog food and scores of other consumer products. It is the largest grocer in the United States.

Success of this magnitude cannot be ignored, not only by Wal-Mart's competitors...but by all major corporations. Indeed, the price of ignoring that lesson is ultimately being bought out...either by Wal-Mart or by one of its emulators. It's not something limited to retail sales; it's the power that any major corporation can acquire by offering comparable products at a lower price.

Consider an insurance company, for example. Why can't it reduce premiums on its products by outsourcing its clerical work--a major portion of its costs--either to the cheapest domestic supplier of temporary workers or even to some "third world country" where there is a supply of clerical workers moderately fluent in a western language and willing, of course, to work for a tiny fraction of western wages? In either case, other insurance companies must do the same--or worse, from the workers' point of view--or be absorbed.

Eventually, this "Wal-Mart model" will spread to "business-to-business" exchanges; as they always tell us, if you can get the same thing, why pay more?


The company has prospered by elevating one goal above all others: cutting prices relentlessly.

By squeezing suppliers to cut wholesale costs, the company has hastened the flight of U.S. manufacturing jobs overseas. By scouring the globe for the cheapest goods, it has driven factory jobs from one poor nation to another.

What Wal-Mart and the companies that supply it seek are not only lower prevailing wages but "business-friendly" governments that effectively block unionization, permitting or even engaging in harsh repressive actions against restive or discontented workers.


U.S. retailers began making their way to Bangladesh in the 1980s. They found a large population of poor, young women willing to work from dawn to dusk for a few pennies an hour.

Many factories lacked ventilation and fire escapes. Labor activists estimated in the mid-1990s that as many as 50,000 Bangladeshi children were sewing apparel for companies such as Wal-Mart and Kmart Corp.

The effect on American manufacturers was not long in coming...


In 2000, [an American supplier of WalMart] took the hardest step of all: He opened a factory in Shenzhen, China, where workers earn 25 cents an hour, compared with $13 in Chicago.

This is, of course, as close to slave labor as you can get without an auction block.

It is a climate in which workers are compelled to labor to exhaustion...a practice that Wal-Mart employs itself and one that is becoming wide-spread in the United States.


In one case, a jury in Oregon last year found that company managers had coerced hundreds of employees to work overtime without pay.

The Oregon jury found last December that Wal-Mart's behavior was illegal and willful. A separate trial to determine damages for the 290 plaintiffs is set for early next year.

Wal-Mart settled similar overtime suits in Colorado and New Mexico for undisclosed amounts. More than 40 other cases are awaiting trial.

The result of this model is about what you would expect...


US works its hardest in 20 years

The US is seeing an explosion in productivity to match its growth, after the three months to September produced the fastest increase in 20 years.

Businesses are underpinning improving profits through aggressive cost-cutting, which usually means working existing employees harder and laying off staff, rather than hiring new ones.

This "growth in productivity" (exploitation of labor) is seen most clearly at Wal-Mart itself.


[Wal-Mart] is so ruthlessly efficient that 4% of the growth in the U.S. economy's productivity from 1995 to 1999 was due to Wal-Mart alone, researchers at the McKinsey Global Institute estimated last year. No other single company had a measurable impact. Wal-Mart also has forced competitors to become more efficient, driving the nation's productivity - output per hour of work - even higher.

One question can the bourgeoisie "sell" the working class on the idea that sharp reductions in its standard-of-living are "justified"?

The abstract clichι of "global competitiveness" is not exactly popular now and is certain to grow less convincing as time passes.

Here is a hint of how it might be done...


Single living 'creates eco woes'

Gadget-hungry people and shrinking households are creating huge, unnoticed climate problems, a report says.

Analysis by Dutch academic Jan Kooijman for the UK packaging industry says more radical shifts in habits are needed.

He said people should use less heating and water, drive less, take fewer flights and live in larger households.

Dr Kooijman says the current trend of people living alone is making matters worse because each household needs hundreds of essential items from toothpaste to toilet brushes and bread knives to clocks.

Each of these items has created greenhouse gases as part of the production process.

The idea that it is not the "Wal-Mart" model of ruthless corporate greed but rather "environmental necessity" that "requires" the immiseration of the proletariat may prove to be a very attractive one (to the bourgeoisie) in the coming decades.

Among other "appeals", it has the "virtue" of avoiding any public admission that Marx was right.
First posted at Che-Lives on January 21, 2004
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