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Globalization, Supply-Chain Dominance and Sweatshop Labour
A key component of Wal-Mart's strength is its dominance over suppliers. This reverses the historical dependence of retailers upon manufacturers.
Wal-Mart is a monopsony in relation to the supply chain -- that is, it is the overwhelmingly dominant market for the manufacturers' products (for many, it is the only retail outlet). It shapes the structure and location of manufacturers, forcing them into the same low-wage, low-cost system as the retailer. It dominates supplier production and logistics. The sweatshop empires of Nike and some of the clothing companies are miniscule compared to Wal-Mart.
Manufacturers have become dependent upon Wal-Mart's ability to market their goods -- and must respond to Wal-Mart's requirements. Wal-Mart stores are the biggest marketing channel for consumer products in the world and the 20 million customers who shop there on an average day represent a bigger market than could be reached by traditional mass media advertising.
Wal-Mart demands low prices, a "pull" (production of goods in response to a closely monitored system that predicts the likely customer demand) and "just-in-time" delivery of goods. Suppliers must make their production and delivery system "transparent" (which Wal-Mart is able to force on them through the use of electronic forms of data and inventory control). Wal-Mart sets up its own distribution apparatus as well, replacing wholesalers.
Wal-Mart tells suppliers how and where to produce their goods. They are forced to locate overseas, seeking sweatshop labour to meet Wal-Mart cost and delivery requirements. This, in turn, also creates new logistics and transportation systems. It's no accident that today Wal-Mart imports more goods from China than either the United Kingdom or Russia.
This has both contributed to and resulted from a new spatial division of labour: 'developed' countries lose manufacturing, but the role of low-wage retailing and distribution increases. Wal-Mart increases 'de-industrialisation' and precarious work. 'Developing' countries have sweated manufacturing, exporting to retailers in U.S. and Europe.
Wal-Mart would never have been able to develop this way without the corresponding advent of capitalist globalization and neoliberalism. The ability to move production across borders at will in response to cost signals makes this possible, as does the destruction of the socialist-oriented balanced developmental models that used to exist in China, Vietnam and partially in India.
to match Wal-Mart's labour costs and practises.
Wal-Mart helps usher in (and reflects) a particular social and political model: Low consumer prices serve a low-wage economy. As Wal-Mart CEO Lee Scott claims, "Low prices give people a raise every time they shop with us").
It portrays the giant capitalist as a champion of the "little person", reinforcing people's identity as consumers (shoppers) and cancelling out people's class identity. It claims to cater to the particular needs of women as caregivers and as the main shopper in the family (over â½ of which are single parent families in the U.S.), all the while reinforcing the crassest forms of sexism and paternalism.
Wal-Mart can't be explained without the neoliberal economic and political reforms of the 1970's and 80's. The pool of low-wage workers (many of whom are women) and the extra responsibilities facing women made Wal-Mart possible and attractive. Government deregulation of labour markets and the loss of high wage manufacturing jobs also contributed. The rise of consumer culture and Christian conservative values in the U.S. also played a role.
Herman Rosenfeld is a retired CAW activist living in Toronto.
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