Wal-Mart is the quintessential plantation in the U.S. and global economies. Like a classic agricultural-commodity plantation, Wal-Mart enters a region and market with a diverse, employment-rich ecology of small businesses and networked supply chains of local and regional manufacturers and distributors, and it bulldozes the entire “forest” of businesses, suppliers and distributors with the irresistable blade of global supply chains and “lower prices, always.”
The original sugar king, Claus Spreckels, pioneered the integrated global plantation economy of scale: he owned the plantations which grew the sugar cane, the ships used to export the cane and the refineries which processed it for distribution to global markets.
He also imported uncomplaining, cheap (i.e. desperately poor) labor to provide the heavy work required.
Wal-Mart doesn’t have to own the suppliers or distributors or the ships—it’s great size gives it supreme pricing power and the ability to offer suppliers a simple yet stark choice: either lower your price to our price-point or we pull your contract, and you implode. You may survive as a much smaller business, but probably not.
Like a plantation, Wal-Mart extracts wealth via mono-cultures and an integrated structure and supply chain. Wal-Mart’s model calls for selected global suppliers— the monocultures who make millions of specific items— to provide massive quantities of goods at Wal-Mart prices, meaning that small suppliers get squeezed out by their inability to scale up to meet Wal-Mart’s demands for product.
Profitable suppliers are squeezed to the break-even point (or below) by Wal-Mart’s continuous demands for ever-lower costs. In effect, Wal-Mart expropriates the profits of all its suppliers and distributors in the entire chain.
A Wal-Mart store quickly bulldozes the complex economic ecology of local businesses. Small business is both the engine of job creation and a highly employment-rich ecology. Wal-Mart crushes this ecology and replaces it with a low-job, low-pay, highly efficient plantation economy in which the townpeople’s only choice is to work for Wal-Mart or scrape out a living feeding the Wal-Mart workers, doing their laundry, etc.—exactly as on a classic plantation.
On a classic plantation, the wages are low and the “company store” offers easy credit, binding the workers to the corporation not just for wages but for credit and goods.
Those few who manage to save up enough capital to start small service businesses— laundry, cafes, etc.—must do so in the shadow of the Company, which can always drive them out of business should they irritate their corporate overlords.
A once-diverse landscape is reduced to a monoculture wasteland dependent on subsidies, either implicit or explicit. Wal-Mart’s low wages leave many of its workers’ families on state aid or food stamps to survive, and so it prospers on the backs of taxpayers who subsidize its low wages.
Wednesday 25 August 2010
Wal-Mart and the Plantation Economy ☀
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