November 15, 2005

Walmart as utopia

A little historical reflection about Walmart shows that its current public image troubles are the latest incarnation of anxiety about mass distribution.

Walmart was in the news a couple of weeks ago for an internal memo that suggested various ways the company might reduce its labor costs. Reaction from labor supporters, such as Nathan Newman, was rather critical. The mainstream media quoted lawyers as saying that the ideas could expose the company to litigation, or chided the not-unreasonable idea that jobs at the company could be designed so that all employees ("Associates") got more physical activity during their work-day.

The memo reveals Walmart's concern about its public image, stating bluntly that

Healthcare is one of the most pressing reputation issues facing Wal-Mart. Survey work done last summer shows that people’s perception of our wages and benefits is a key driver of Wal-Mart’s overall reputation. Several groups are now mounting attacks against Wal-Mart focused on our healthcare offering. These increasingly well-organized and well-funded critics – especially the labor unions and related groups, such as Wal-Mart Watch – have selected healthcare as their main avenue of attack. Moreover, federal and state governments are increasingly concerned about healthcare costs, and many view Wal-Mart as part of the problem (a view due, in part, to the work of Wal-Mart’s critics).

In short, Walmart perceives that public opinions of it are driven not by how it performs as a retailer, but as an employer. Walmart's role in production, not its role in consumption, is what attracts attention. This is not surprising, periodic, concentrated hostility to mass distributors is common in American history.

In the late 19th century, for example, the railroads were the target of significant hostility from farmers who perceived the railroads as non-productive and exploitative. The department store was perceived as putting the small store out of business, as well as being morally suspect. Department stores, it was argued, did not pay their single female employees enough, and those young women would turn to prostitution. There is at least a faint echo of these complaints in the complaints about Walmart not paying its workers enough, though the concerns have moved on from prostitution to adequate health insurance.

There was also, and here is where I get my title to this post, an eclectic utopian idea out there, that pondered a world where distribution was so efficient that everything would be available everywhere. An odd little novel, The World A Department Store, was one expression of this utopian view. In this utopian world the problem of distribution, of getting mass production to mass society, had been "solved." Perhaps a Walmart in every town is utopia.

In the 1920s and 1930s with department store ownership consolidating, and grocery chains expanding, the "chain store menace" was a phrase on the lips of economic losers (no value judgment intended) who were being displaced by more efficient chains. As with most economic changes, the losers in this process of increasingly concentrated ownership of, and expenditure at, retail stores, know who they are, and have a stronger self-identity than the winners. The winners tend to be everyday consumers who are not consciously aware that Walmart might be saving them 50 cents on a 12 pack of toilet paper, or $60 on a DVD player.

And these "losers" have a rich cultural heritage of hostility to distributive business (To say nothing of financial intermediaries. And the Merchant of Venice was shifty in part because he was a merchant ...) to draw on. The view of retail and distribution as parasitic and not producing anything may be flawed to the neo-classical economist, but it is not uncommon.

There are all sorts of legitimate questions about the role of Walmart in the American economy, whether local governments should smooth the path for its expansion, whether Walmart is just acting rationally in a screwed-up health insurance system, etc, etc ... And I don't want to come across as arguing that it's just natural, inexorable and all beneficial, that retailing will become more concentrated over time. But this is certainly not the first time that mass retailing has occasioned angst and hostility, and it won't be the last.

Posted by robe0419 at November 15, 2005 06:10 PM | TrackBack
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