NY Times Book Review, August 2, 2009
Nickel and Dimed
By ROBERT FRANK
TO SERVE GOD AND WAL-MART
The Making of Christian Free Enterprise
By Bethany Moreton
Illustrated. 372 pp. Harvard University Press. $27.95
THE RETAIL REVOLUTION
How Wal-Mart Created a Brave New World of Business
By Nelson Lichtenstein
311 pp. Metropolitan Books/Henry Holt & Company. $25
Wal-Mart’s founder, the Arkansas entrepreneur Sam Walton, was in many
ways a classic illustration of Adam Smith’s invisible hand in action.
Seemingly from out of nowhere, his discount chain, propelled by ruthless
cost-cutting, became the largest private company in the world. And
without question, Walton’s quest for profit made cheaper products
available to hundreds of millions of consumers.
It’s no surprise, then, that Walton and his successors at Wal-Mart have
been among the nation’s most uncritically enthusiastic boosters of the
invisible hand. Thus, as the University of Georgia historian Bethany
Moreton notes in “To Serve God and Wal-Mart,” the company and the Walton
Family Foundation have given tens of millions of dollars to conservative
research groups like the Heritage Foundation to support educational
outreach programs that tout the virtues of unfettered free markets.
But lower prices and more efficient distribution methods have not been
the only consequences of Wal-Mart’s explosive growth. Indeed, much of
what we learn from Moreton’s book, as well as from Nelson Lichtenstein’s
“Retail Revolution,” raises serious doubts about whether the
corporation’s influence has been positive on balance. But in the process
of describing the downside of Wal-Mart, both authors offer penetrating
insights into why the chain has been so phenomenally successful.
It is no mystery that consumers show up in record numbers when a
retailer offers significantly lower prices. More puzzling, however, is
how the notoriously stingy Wal-Mart has managed to attract so many
dedicated workers. Anyone who has read Barbara Ehrenreich’s description
of her experiences as a Wal-Mart clerk in “Nickel and Dimed” or Steven
Greenhouse’s chronicle of Wal-Mart’s widespread flouting of safety and
hours regulations in “The Big Squeeze” might well wonder why anyone
would even consider a job with the company. Yet as Wal-Mart spokesmen
never tire of pointing out, the chain routinely receives scores of
applications for every opening it posts. Moreton offers a gracefully
written and meticulously researched account of why people not only have
been willing to work for the company, but often have also developed
fierce loyalty to it.
It is no accident, she argues, that Wal-Mart emerged in the Ozarks, a
stronghold of fundamentalist Christianity that was one of the last
regions of the American economy to shift from farming to other pursuits.
Many farm women actually preferred the part-time jobs with flexible
hours that Wal-Mart offered, even though such jobs were exempt from many
regulations. Many of these women, after all, were still trying to help
their husbands eke out a living on their farms, and flexible work made
it easier for them to care for their children.
Economists have long recognized the attractions of flexible working
arrangements to some segments of the labor force. But Moreton also
offers more novel observations about the lure of Wal-Mart. She explains,
for example, how the company invoked the fundamentalist Christian
teachings embraced by many of its employees to fashion a working
environment that induced them to work contentedly for low wages and
paltry benefits.
Sam Walton was not a fundamentalist Christian. He and his wife, Helen,
worshipped at a liberal branch of the Presbyterian Church, and Mrs.
Walton was even an early abortion rights advocate. But Moreton argues
that Walton and his fellow executives quickly recognized the economic
advantage of weaving specific strands of the Ozark region’s
fundamentalist belief system into their corporate strategy.
At the heart of that strategy was the company’s emphasis on the
Christian concept of “servant leadership.” In other parts of the retail
sector, the servitude demanded of retail clerks was typically
experienced as demeaning. But by repeatedly reminding employees that the
Christian servant leader cherishes opportunities to provide cheerful
service to others, Moreton argues, Wal-Mart transformed servitude from a
negative job characteristic into a positive one.
Another cultural strand in Moreton’s account is the company’s policy of
reproducing the social relationships characteristic of fundamentalist
Christian households in the workplace. To this end, Wal-Mart needed a
legal pretext for hiring mostly men as managers and mostly women as
clerks. The solution was to move managers to new store locations
frequently, a condition of employment that men would generally accept
but most women would not.
But even though the managerial jobs paid better and offered more
opportunities for promotion, there was still a problem for male
employees. The highly regimented, rule-driven jobs at Wal-Mart were a
pale substitute for the independent farmer’s role from which the
company’s Ozark male managers had recently been driven. Rather than cede
greater control to managers, Moreton argues, the company salved the egos
of the men by celebrating a patriarchal ideal of “Christian manliness.”
The women, for their part, were only too happy to adopt the prescribed
submissive role.
While Moreton’s book answers important questions about why workers have
been willing to accept Wal-Mart’s austere compensation package,
Lichtenstein’s sheds valuable light on the technological reasons for the
company’s success. His detailed account of the company’s early prowess
in exploiting bar-code scanning and satellite technology helps explain
how Wal-Mart revolutionized the way distribution channels are organized.
ichtenstein, a professor of history at the University of California,
Santa Barbara, also provides a detailed look at the dark side of the
company’s employment practices. From its ruthless efforts at
union-busting to its determination to overcome basic safety and hours
regulation to its widespread employment of sweatshop subcontractors in
China, Wal-Mart has consistently maintained that no one has the right to
limit the corporation’s freedom to act as it pleases.
The recent market meltdown, however, has led to increased skepticism
about the efficacy of Adam Smith’s invisible hand. And the more we
learn, the clearer it becomes that market outcomes are often far from
perfect. Smith’s theories are especially likely to break down when the
goals people are trying to achieve depend, in varying degrees, on the
amounts they spend relative to others.
Most parents, for example, want to send their children to a good school,
but a good school is a relative concept. Only half of all schools at any
moment can be in the top half. Because there is a strong link between
house prices in a neighborhood and the quality of its schools, people
cannot send their children to good schools if they spend less than
others on housing. Families thus feel pressure to take whatever steps
they can to buy a house in a good school district.
One option is to work longer hours. Another is to accept a job that
entails greater safety risks. But if everyone works longer hours or
accepts greater risks to buy houses in the better school districts, the
only effect is to bid up the prices of those houses. As in the familiar
sports stadium metaphor, all stand to get a better view simply to
discover that no one ends up seeing any better.
That’s why we have labor regulations. And as Lichtenstein argues,
Wal-Mart may have done more than any other American institution to
undermine those regulations. Sam Walton and his successors were no doubt
driven by a sincere belief in the magic of the invisible hand. But their
sincerity has done nothing to mitigate the damage they’ve caused.
Robert Frank, an economist at Cornell University and a visiting
professor at New York University’s Stern School of Business, is the
author of “The Economic Naturalist’s Field Guide.”
_______________________________________________
pen-l mailing list
[email protected]
https://lists.csuchico.edu/mailman/listinfo/pen-l
