The Wal-Mart Bargain

John Lanchester, "The Price of Pickles", London Review of Books, vol. 28, No. 1, 22 June 2006. — Link.

Robert Reich, "Don’t Blame Wal-Mart", New York Times, February 28, 2005. — Link.

The good thing about Wal-Mart stores is well-known, simple, and can be stated in three of the company’s own words: Always Low Prices. The bad things about Wal-Mart are what it does to get those prices low. These are now also well known: cut costs remorselessly and exploit the benefits of scale.

Few would argue with the claim that a low price is, by itself, a good thing. The trouble is that there is no such thing as "low price, by itself". Wal-Mart’s low prices are unavoidably one side of a two-sided coin. Wal-Mart knows how to push its costs onto others so that the prices on their shelves stay low: how to buy land cheap and still get subsidies from cities, how to pay so little that employees in many US states rely on government programs for health care and food stamps, how to squeeze suppliers so that they have to export jobs, and so on. Wal-Mart offers us a bargain, and as with any bargain we have to ask ourselves "is it worth it?"

The fact that over 100 million North Americans each week shop at Wal-Mart suggests that we like the one side of the coin. But this huge number does not mean that we have decided in some cumulative sense that the bargain is worth it: we have not voted in favour of low costs even at the cost to the health of other parts of our cities, and at the cost of abused workers both in poor nations and in North America. The free market is often portrayed as a continual exercise in democracy, with our purchases as votes, but that’s not how it works.

The reason is that most of us have only one direct relationship to Wal-Mart, and that is as consumers. As a result, Wal-Mart only responds to our consumption wishes. But as Robert Reich wrote a year ago during a debate over Wal-Mart coming to New York, we are not just consumers but are also workers and citizens. "New Yorkers, like most other Americans, want the great deals that canbe had in a rapidly globalizing high-tech economy. Yet the prices onsales tags don’t reflect the full prices we have to pay as workers andcitizens."

Our consumer choices are determined by those sales tags. But whether we like it or not, our consumer choices end up affecting other things too, in a minuscule way. They affect the shape of our cities, the wages that those who provide the goods pay their employees, and so on. Our own individual contribution makes almost no difference to any of these things, which is why we tend to ignore them when we make our decisions of what to buy and where to buy it. There is nothing that we can do as individual consumers to make a difference to any of these things. But multiply by 100 million and those little contributions add up. All those ignored side-effects become a big factor in our lives, and their costs can overwhelm any benefit we get from our consumption. If we trust our consumer decisions to shape our world, we inevitably end up with a world that undervalues those other parts of our lives. The private benefits of consumption drive out the shared benefits of other parts of our lives.

This is one reason why John Lanchester writes in the London Review of Books (August 7, 2006) that "Ethical consumption may indeed be the best we can do, and it gives theethical consumer a nice warm glow, but it is also another form ofself-expression through consumption, and it is consumption, at root,which is the problem." Not that we need to stop consuming, but that our consumer decisions should not shape our whole world. Lanchester goes on to argue that "The case of Wal-Mart makes us realise just how badly we lack a way oftalking about the public good that is not framed purely in terms of economics. The huge fortunes made at the end of the 19th and start ofthe 20th centuries were broken up by anti-monopoly and anti-cartel legislation, because they had been accumulated at the expense of the public good. That is a useful idea, and one that needs to be revivedand used as a yardstick. In its absence, the only ways of talking about Wal-Mart we have are through economics, which offers clear figures (sometimes) whose meanings are murky; or through local protests and objections; or through considering our own ethics as consumers. That, Iwould say, is not enough."

Lanchester and Reich both highlight the fact that free market economies won’t deliver those things that we can’t choose in a consumer kind of way. "The welfare state, free universal healthcare, paid holidays, workers’ benefits of all kinds" – those things did not come about by making wise consumer choices. The same goes for healthy cities, a clean environment, and a fair distribution of income. And all those things will go by the way if we trust consumption decisions to direct our society. The way Reich says it is "The only way for the workers or citizens in us to trump the consumersin us is through laws and regulations that make our purchases a social choice as well as a personal one. A requirement that companies withmore than 50 employees offer their workers affordable health insurance, for example, might increase slightly the price of their goods and services. My inner consumer won’t like that very much, but the worker in me thinks it a fair price to pay. Same with an increase in the minimum wage or a change in labor laws making it easier for employees to organize and negotiate better terms."

It is for these reasons that citizens who take a stand against Wal-Mart coming to town have my support. It’s time to reclaim some space for the non-consumer parts of ourselves.

Bookmark the permalink.

One Comment

  1. Carnival of Wal-Mart III

    The Wal-Mart Bargain | Tom Slee | Whimsley Tom Slee of Whimsley Blog reports on the good, the bad and a bit of the ugly that he sees behind Wal-Mart’s “Always Low Price” strategy. Tom began his blog to help explain and promote his book entitled “No on…

Comments are closed