http://www.constant-content.com/article/4904/Did-Karl-Marx-Predict-Walmart-/ Did Karl Marx Predict Walmart? Written by: Cory D. Maley Submitted on: Tuesday 10th of May 2005 --------------------------------------------------------------------------------- Summary: In his analysis of capitalism, Marx described how technology, profit, and the business cycle would lead to the existence of Wal-marts at the expense of the worker and the commons. His predictions leave us with challenges we must today address. --------------------------------------------------------------------------------- Details or Sample: "So what does this all have to do with Marx? The answer can be found in his very lengthy and complex analysis of capitalism, Das Kapital. In this book, Marx aimed to set up a capitalist utopia modeled exactly upon Smith’s theoretical framework, and to show that it was inescapably doomed to failure. While I disagree that an ultimate collapse of capitalism is inevitable, the path to destruction as told by Marx is extraordinarily prescient in one respect in particular. He explained that business owners (capitalists as he called them), like workers, are in a sense victims of their circumstances; both are compelled to seek the maximization of their economic benefit. Smith regarded this drive as an essential element in achieving the equilibrium and efficiency he hoped the market system would bring, but Marx saw it as inherently destabilizing to the capitalist economy.... ...Enter Wal-mart. The problem Marx saw is that these businesses would become so powerful that other businesses could not compete with them. So workers would not be able to find other employers to work for, and consumers could not find other producers from which to buy their products. Because of this, workers and consumers alike are left at the mercy of the “big boxes” and are protected only to the degree that the government will look out for them." ------------------------------------------------------------------------------------------- (FULL VERSION) http://www.thenoyse.com/editorials/walmart.php EDITORIALS Did Karl Marx Predict Wal-Mart? Cory D. Maley Wal-mart has burst into the news yet again in recent days over its controversial decision to close down a store in Quebec after its employees decided to unionize. It has left some people questioning the role of Wal-mart in our contemporary market landscape. Some think of it as a marvel of capitalism, an enormous and ingenious economy of scale bringing value to all Americans. Others denounce it as a plague visited upon our country, a veritable demon of capitalism devouring small businesses and communities alike. Adam Smith, the father of capitalism would say both are wrong because what Wal-mart represents is not capitalism at all. And still yet another, Karl Marx, would explain that Wal-mart is the logical historical outgrowth of the capitalist system – that it was the inevitable destiny of capitalism to create Wal-mart. Well, not Wal-mart specifically, but something just like it. Adam Smith over the generations has been seen as the first, and most noble, champion of the free-market and has inspired those same generations of capitalist architects to push their agendas toward “whatever the market will bear,” which has usually been interpreted as reaping the highest profit margins no matter what the external costs may be. Given that this has been Smith’s tag-line for as long as we’ve been a nation (The Wealth of Nations was published in 1776), Professor Smith seems rather a calloused fellow when it comes to the interests of the lowly workers. But Smith may have been given a bad rap. Like you, what I learned in my high school economics class about capitalism and its founder was mostly triumphal jingoism about the greatness of the capitalism and half-truths about the philosophies that founded the system. The whole truth, however, is a little different than the version we’ve been told; ours, you could say, is a “fundamental misunderstanding,” to use President Bush’s presidential campaign phraseology, of both the man and his system. You see, Smith was really much more a man of the people than many give him credit for. Smith believed that his system would function ideally to the benefit customers, business owners, and workers alike. He argued that equilibrium was inherent in the system because the desire of workers to get the highest possible wage, the drive of business to achieve the most profit, and the consumer’s search for the lowest possible prices would create a natural system of checks and balances that would be guided as though by an “invisible hand.” Everyone was to reap the bounty of the market system. Smith acknowledged, however, that it was absolutely essential that businesses remained small and plentiful so that there would be ample competition between business owners to allow the market to regulate itself; If the businesses got to be to big and too few, workers and consumers would not have the clout to check their power, nor re-balance the equilibrium. Without this essential competitive environment that existed when there is a veritable cornucopia of companies, the equilibrium would degrade, or fail to come to fruition in the first place, and the economy would return to something resembling mercantilism or feudalism where the rich and powerful dominated the markets. So what does this all have to do with Marx? The answer can be found in his very lengthy and complex analysis of capitalism, Das Kapital. In this book, Marx aimed to set up a capitalist utopia modeled exactly upon Smith’s theoretical framework, and to show that it was inescapably doomed to failure. While I disagree that an ultimate collapse of capitalism is inevitable, the path to destruction as told by Marx is extraordinarily prescient in one respect in particular. He explained that business owners (capitalists as he called them), like workers, are in a sense victims of their circumstances; both are compelled to seek the maximization of their economic benefit. Smith regarded this drive as an essential element in achieving the equilibrium and efficiency he hoped the market system would bring, but Marx saw it as inherently destabilizing to the capitalist economy. Under Smith’s system, Marx believed the market would indeed eventually reach the balance Smith theorized, where all owners payed workers pretty much the same, and they would all charge roughly the same amount for equivalent products. Customers, business owners, and workers would hold roughly equal power in this system and roughly equal benefit as Smith projected. However, this balance was, Marx believed contrary to the aforementioned drive of business – to increase their profits. They could not do this by cutting wages, as workers would leave to seek greener pastures, nor could they achieve their end by raising prices, as they would lose their customers to their competitors. Instead, they would gain their competitive edge by purchasing technology which would presumably lower their production costs. Each company would try to gain advantage in this way, and those that did not would be driven out of business. But as we all know, some people are better with technology than others; So some business owners would flourish, while others would be bankrupted by expensive technologies that they could not figure out how to use. When the failed businesses’ assets were liquidated, surviving businesses could get additional technological capital on the cheap, and as a result could expand to a point where other businesses that did not expand would have difficulty competing with them. This cycle, Marx pointed out, would repeat itself until only a few businesses in any given industry remained. Enter Wal-mart. The problem Marx saw is that these businesses would become so powerful that other businesses could not compete with them. So workers would not be able to find other employers to work for, and consumers could not find other producers from which to buy their products. Because of this, workers and consumers alike are left at the mercy of the “big boxes” and are protected only to the degree that the government will look out for them. Once a company like Wal-mart has maximized its efficiency, the only targets remaining in order for it to continue increasing its profits are the workers or the commons. In a system without stringent government controls on business Wal-mart does just that. With its amassed economic clout it manages to undercut small businesses by selling products below cost, thus driving them out of business and any additional gain in profitability must be harnessed through neglected safety standards, increased work hours, decreased pay, pollution, poor or non-existent benefits, and the outsourcing of their related costs to the taxpayers. Terrain Magazine reported in their summer 2004 issue that half of Wal-mart’s employees in this country qualify for food stamps, which costs millions in taxpayer dollars, not to mention the social costs. Poverty greatly affects the quality of life of the families who are affected by it. Financial strain is, after all, the number one cause of family discord and often leads to divorce. In a country where family values are of prime concern, it is curious that business practices such as those employed by Wal-mart are not taken to task, if for no other reason than that it conflicts with our social values. In countries that have more stringent controls over industry, Wal-mart has found itself less able to compete because it finds its largest advantages by employing business practices that many industrialized countries refuse to allow. The Economist pointed out in its April 17th 2004 edition that Wal-mart has found it enormously difficult to remain competitive in Germany where “price controls, which prevent below-cost selling, [and] rigid labour [sic] laws” have contributed to making Wal-marts there unprofitable. During the mid-eighteen hundreds, worker rebellions erupted throughout Europe in response to the stifling weight of unfair labor practices of the business system. It is clear that had the government not stepped in both to crush these rebellions and implement labor reforms, the economic landscape of the modern world may have been a lot different. Ultimately history demonstrates that the government can help to mitigate the suffering of the country’s workers, thereby diffusing their inevitable outrage that grows in response to the Wal-marts of the world. Marx may have missed the boat when it came to Communism, but the existence of Wal-mart is proof that Marx saw something that many of us may have missed; it gives us the opportunity to pause and look more critically at Wal-mart and others like it in order to evaluate whether this business model is one our country and our people ought to support. -------------------------------------------------------------------------------------------- http://www.socialistalternative.org/justice40/12.html Wal-Mart Wal-Mart is the largest corporation in the world, and has set the standard for effective business methods. The Walton family, which owns Wal-Mart, includes five of the ten richest people in the world. "Wal-Mart and the Waltons got to the top the old-fashioned way - by roughing people up. The corporate ethos emanating from the Bentonville headquarters dictated two guiding principles for all managers: extract the very last penny possible from human toil and squeeze the last dime from every supplier." (transnationale.org) The products sold in Wal-Mart are typically made under brutal sweatshop conditions. The suppliers who get Wal-Mart's business are those who can deliver the cheapest prices by pushing down workers' wages, repressing strikes, and avoiding taxes and environmental regulations. Suppliers who cannot meet these standards are forced out of business or "relocated." This race to the bottom is the inevitable logic of capitalism. An observer described one of Wal-Mart's suppliers, a Honduras sweatshop: "Going into these factories is like entering a prison where you leave your life outside...The workers need permission to use the bathroom, and they are told when they can and cannot go...Young women enter these factories at 14, 15, 16, and 17 years old. They become a mechanism of production, working 9 hours a day plus two, three, or four hours overtime, performing the exact same piece operation over and over, day after day." The rise of Wal-Mart brilliantly illustrates another basic law of capitalism - the inevitable tendency toward greater and greater concentrations of wealth and power. Advocates of reform within the profit system often wax nostalgic for early capitalism, where freer competition between smaller, often local, businesses predominated. But all of modern history has verified Karl Marx's prediction over 150 years ago of the inevitable rise of colossal, global monopolies that have eclipsed the naive ideal of a "free market." Whenever a new Wal-Mart bullies its way into town, the surrounding small retail outlets are squeezed out of business. They simply can't match the low prices Wal-Mart achieves through its ruthless methods and global purchasing power. Even smaller corporate chains are being driven into bankruptcy. The case of Wal-Mart demonstrates that capitalism offers little room for the dream of creating "ethical corporations" that would pay living wages and safeguard the ecosystem. -------------------------------------------------------- SOCIAL CONSEQUENCES (LARGELY GLOBAL): Imperialism and War The ruthless competition between corporations is mirrored in the relations between countries. Corporate America is engaged in a relentless struggle against European and Japanese capitalism. These advanced capitalist countries, in turn, are united in maintaining the neo-colonial world in economic prostration, as a source of cheap labor, raw materials, and dependent consumer markets. Military power under capitalism is simply a means for extending the economic and political power of the ruling class. The war and occupation of Iraq, for instance, can only be understood in this context. As the lies the Bush administration used to justify the war are exposed, it is clearer than ever that the occupation of Iraq is about dominating world oil supplies and expanding U.S. imperial domination. Britain and the U.S. came into conflict with France, Germany, Russia, and others in the run-up to war because these countries stood to lose lucrative contracts with the Iraqi regime. More broadly, these countries also feared that the repercussions of a U.S. invasion and occupation would severely rebound against the interests of global capitalism. The conflict over Iraq is not new. Capitalism's need for constantly expanding markets has sent corporations and imperialist armies all over the globe, systematically pillaging and plundering the planet. Contrary to the myths of official history, both World Wars were the result of inter-imperialist competition over markets and colonies. ------------------------------------------------------------ SOCIAL CONSEQUENCES: (OTHER CORPS) http://www.geocities.com/mnsocialist/marx-economy.html -------------------------------------------------------- (?)ALTERNATIVE: Socialist Policies Needed?? All these experiences demonstrate that taking on big business will require more than winning elections or even building mass movements. As long as the world economy remains under the control of tiny ruling elites, democracy will remain an illusion and needed reforms cannot be sustained. This perspective is made even clearer when we acknowledge that all the pressing problems of our world are global, not national, in character. Even the most determined and powerful movements for reform will never find success as long as they limit themselves to the confines of national capitalism. Instead, we need to unite the workers and oppressed people internationally behind the idea of taking the huge corporations into public ownership under democratic workers' control. By taking the global economy out of the ownership and control of capitalist elites, the vital decisions of society would no longer be determined by the drive for maximum profit. Instead, decisions on how resources are distributed and what and how products are made would be decided democratically. This is socialism. The gigantic resources now devoted to war making, which includes nearly one third of the world's research and development scientists, could be redirected toward preventing environmental catastrophe, eliminating poverty, and preventing disease. In fact, by every scientific estimate there is more than enough wealth and productive capacity to guarantee a decent standard of living for all humanity. A socialist society, freed from the domination of the filthy-rich, could organize the rapid, democratic distribution of the global wealth created by our collective labor. Racism and religious prejudice, alongside sexist and homophobic attitudes, continue to thrive on the basis of class society. In the age-old tradition, ruling elites use divide-and-conquer techniques and create scapegoats to prevent the exploited majority from uniting around our common class interests. Under socialism, the elimination of a ruling class will simultaneously eliminate the foundations for bigotry, opening the door to put an end to the vile legacies of racism, sexism, and all forms of oppression. ---------------------------------------------------------- (?)ALTERNATIVE: Socialist Democracy The experience of France 1968 provided yet another glimpse of what is possible. Instead of workplaces, schools, and other institutions being run top-down by bosses and appointed administrators, they could be run by elected councils of workers, students, etc. Weekly or monthly workplace meetings could recall unaccountable representatives, and become a forum for debate and genuine, local, participatory democracy. Workplace and community councils could send delegates to regional and national councils, forming a government of, by, and for working people. A socialist democracy would have nothing in common with the totalitarian bureaucracies that presided over the Soviet Union and other so-called Communist regimes. Although these Stalinist countries had elements of a socialist planned economy, they were not truly socialist because working-class people did not democratically control society. Instead, the corruption and repression by the ruling bureaucracy ultimately led to economic collapse and mass rebellion. On the other hand, workplace democracy and democratic planning, combined with a massive program of education, could unleash the deep, untapped wells of human creativity, now crushed under repressive workplace environments, poverty, and unemployment. This coordinated collective ingenuity, combined with the elimination of the colossal waste caused by capitalism, could open the doors to a sustainable, peaceful society of plenty.