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 50 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 approaching $300 billion a year, Wal-Mart has revenues larger than those of Switzerland. It operates more than 5,000 huge stores world wide, 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 a trillion dollars per year within the 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 “everyday low prices,” but the community revitalization, happy workers, and philanthropic good works it says come when it opens a store.
Wal-Mart is 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.
Wal-Mart is now the template business for world capitalism because it takes the most potent technological and logistic innovations of the 21st 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 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.
One of the most important innovations enhancing Wal- Mart’s span of control has been a worldwide “logistics revolution.” The retailer tracks consumer behavior with meticulous care and then transmits consumer preferences down the supply chain. To make it all work, the supply firms and the discount retailers have to be functionally linked, even if they retain a separate legal and administrative existence. Wal-Mart is a huge retailer and a manufacturing giant in all but name.
Wal-Mart has installed its Asian proconsul in Shenzhen, the epicenter of Chinese export manufacturing. There a staff of 400 coordinates the purchase of some $20 billion worth of South Asian products. Because the company itself has an intimate understanding of the manufacturing process and because its purchasing power is so immense, Wal-Mart has transformed its 3,000 Chinese suppliers into powerless price-takers, rather than partners, deal-makers, or oligopolistic price administrators. While many of these suppliers are small and undercapitalized, a growing number of East Asian contractors manage factories that are of stupendous size. For example, Tue Yen Industrial, a Hong-Kong-listed shoe manufacturer, employs more than 150,000 workers worldwide, most in low- cost factories throughout southern China. A factory complex in Dongguan employs more than 40,000 workers, and its Huyen Binh Chanh mega factory in Vietnam will soon be the largest footwear factory on the planet, employing 65,000. To remember the last time so many workers were assembled in a similarly gigantic manufacturing complex you have to reach back to the armament factories of World War II—to the River Rouge, Willow Run, Boeing-Seattle, and Douglas-El Segundo in the United States, to Gorki and Magnitogorsk in the Soviet Union, and to Dagenham outside London.
The Wal-Mart supply chain is just as tightly monitored within the United States as without. Here those manufacturers that manage to survive do so only by bending the knee to their retail overlord. “If you want to service Wal-Mart you have got to be more efficient,” asserted the retail consultant Howard Davidowitz, “The power will stay with Wal-Mart.”
Nelson Lichtenstein teaches U.S. Labor History at the University of California, Santa Barbara. This abridged version of the lead article in his collection Wal-Mart: The Face of Twenty-First Century
Capitalism (New Press, November 2005) appears with permission.
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