The Iron Law of Wal-Mart: A Look at Democracy in America

        Last Sunday I had the misfortune to enter a violent spat of indigestion over breakfast. It was not the peanut-butter toast, but rather, an editorial in ‘The Oregonian’ that sent my stomach churning. Spelled out in bold relief, the article is titled ‘The demonization of Wal-Mart,’ and covers the ongoing feud between the residents of Sherwood and Wal-Mart over the super-retailer’s attempt to construct a big-box store in the center of town. The article seethes with condescension, sounding not unlike a tightly-wound adult who feels the need to lecture a child about the importance of washing behind the ears. To give you a sense of this, it is worth quoting directly from the article. The writer begins by claiming that “even by Wal-Mart standards, Sherwood’s reaction to the nation’s largest retailer is jaw-dropping,” going on to explain “less clinically” that “the citizens of Sherwood need to get a grip.” Local efforts to stop the super-retailer from constructing a store there are not only naive but misguided; they can only do damage to the city’s image and economy in the long-run. Construction is inevitable, the benefits undeniable and the economic logic irrefutable. What Sherwood is going through now are just growing pains which will soon pass. Don’t send the “town down the wrong path” with pesky regulations and red-tape; rather, realize that you are part of the twenty-first century and get your head in the game. 

        As you can probably guess, there are several claims that I take issue with in the article, the entire piece, to be precise. For one, the article’s eagerness to dismiss Sherwood’s grassroots campaign against Wal-Mart as mere anxiety over the city’s rapid growth smacks of the small town, small minds cliché. The language used conjures up images of a “sleepy” town peopled by short-tempered simpletons who are always looking to find fault with innovation. Secondly, and more significantly, the editorial glosses over the very real substance of the resident’s concerns. Wal-Mart is infamous for violating federal labor laws, depressing its employee’s wages and engaging in exploitative practices domestically as well as overseas. Yet these substantial facts are only alluded to in the breeziest manner, likely because they complicate the cookie-cutter narrative that the writer chose to pursue. 

        Reading between the lines, however, it is apparent that ‘The Oregonian’ editorial is the result of more than sloppy journalism, but in fact, a national crisis of democracy. The views articulated are not by any means exceptional; actually, they are what one would expect from a middle-of-the road American newspaper. And this is a cause for grave concern. For Sherwood’s grassroots campaign against Wal-Mart, far from being a reactionary initiative, is democracy in action. The fact that ‘The Oregonian’ failed to recognize its fundamentally democratic character is symptomatic of a degraded understanding of what democracy means and how it is practiced. Unfortunately, this degraded understanding of democracy has seeped into consciousness of the American public, politics and the media, including ‘The Oregonian.’ Instead of being participatory and empowering, this ideal is dictated by those at the top to those at the bottom, recoils at the thought of public involvement and believes that only a handful of ‘movers’ is needed to govern. When other people start to voice their own opinions, their efforts are dismissed as quaint. If they begin to take action – like Wal-Mart workers who have tried to unionize – they are attacked without a second thought. As shown below, this crisis of democracy has far-reaching consequences and is intimately tied to the global economic situation, especially where it concerns Wal-Mart. 

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        At the core of the editorial is an economic ideology which is firmly opposed to democracy – that is, rule by the consent of the people. Economic growth is assumed to be an inexorable force, one that cannot be stopped even if it is not desired by those whom it entangles. Or as the writer explains, “Sherwood was growing rapidly before Wal-Mart came calling and likely will continue to grow rapidly after the retailer opens its store,” meaning that citizens “whose goal is to stop Wal-Mart should realize it’s too late.” But why is it “too late” and why is this growth inevitable? The truth of the matter is that this type of economic expansion is always a choice: it is not as if Wal-Mart’s arrival is the result of a hurricane, a shift in tectonic plates or some other natural cataclysm. Quite frankly, the supposed inevitability of economic expansion is a myth, though one that has many disciples even as we trudge our way out of the Great Recession (an event that disproves the inevitable growth thesis in spades). And not only is the logic sloppy but it is dangerous. Environmental degradation, wage-slavery and looming inequality are explained away with the same spurious talk of inevitability. Those who engineer this misery are implicitly liberated of all guilt since – after all – it was going to happen anyway. 

        As you can imagine, this economic mantra works against democracy because those who engineer the growth are always allowed to have their way; all other opinions appear irrelevant under the storm-cloud of the inevitable. Capitalism’s fatalism, in this regard, is strikingly similar to Communism’s faith in historical materialism, or the idea that history progresses in predetermined stages through the interplay of economic forces. In other words, for the capitalist the theology of inevitable growth is the equivalent of the communist’s belief that class conflict drives history. Each brand of fatalism is incompatible with the ideal of democracy, which recognizes not only the potential for social action, but asserts that society is only as good as it empowers its members act separately and in concert towards meaningful change. Naturally this is impossible in the economic realm if the ‘economic movers’ are the only ones who get to call the shots. 

        Most economists, particularly those favored by Wal-Mart, would be quick to respond that the current system is democratic because it allows for each actor to freely compete with its competitors. After all, every company operates in the same ‘free market.’ These sentiments are shared by ‘The Oregonian,’ which states that Wal-Mart will face steep “competition” in Sherwood, before adding somewhat incongruously that the “best way to ensure that Wal-Mart thrives is to make it difficult for new competitors to open in Sherwood.” This tension in terms, what most would call a contradiction, hints at a more basic truth. To call the relationship between local stores and Wal-Mart – the biggest, richest and most powerful retailer in history – “competition” is like calling a boxing match between a toddler and Mohammed Ali fair. The statement is too absurd to take seriously. But it is.

        A related indicator of the decline in democracy is the tendency to accord corporations the status of individuals, a development which impinges on the ability of real people to participate in the political process. Within the last several decades, the Supreme Court has repeatedly affirmed the right of corporate elites to commandeer the legislative process through their control over campaign financing. Spending money in support of a certain candidate is a form of ‘free speech,’ or so we are told. If corporate interests choose to buy off politicians by deluging the political process with cash, then this is just democracy in motion, ‘free speech.’ This logic could have been taken straight out of a Lewis Carol story, though Orwell is perhaps more apropos for our purpose. Apparently the irony of money being likened, indeed equated, with ‘free’ speech does not rub off on the Supreme Court, or much of mainstream America for that matter. Free speech, a value enshrined in the Bill of Rights, is still ‘free’ but you will have to pay for it if you want your ‘free’ speech to count. And since some people own more money they also have more ‘free’ speech. To borrow from Orwell, within America’s democracy all people are equal but some are more equal than others. All people have free speech but some people have more (and costlier) ‘free’ speech than others. 

        Recognition of corporate personhood is implicit in ‘The Oregonian’ article, though not in the way one might imagine. For in practice, corporate personhood not only gives the corporation the rights of individuals, but these rights tend to carry more weight than the equivalents accorded to real citizens. Put another way, not only do corporations enjoy the fruits of citizenship but they are something of a super-citizen, enjoying V.I.P. influence when it comes to how political decisions are made. This favoritism is clearly shared by ‘The Oregonian,’ which suggests that Wal-Mart and City Council should not hesitate to ride roughshod over the will of the citizens – that is, the real people: “the committee exploring business regulations would be wise to heed two pieces of advice… shared with the council: Don’t let fear determine your actions. And remember what your goals are. Put less clinically, the citizens of Sherwood need to get a grip.” In other words, the City Council should not waste time listening to the demands of the people – those whose expressed will is leading the Council to second-guess itself, or “fear” – but should act unilaterally, pursuing “your goals” first. Sometimes the people are too stupid to know what is good for them. In such cases the movers and shakers should dictate the terms, which is to say, help them “get a grip.” 

        While this logic would find itself at home in a fascist society, it is hardly compatible with a democratic one. Contrary to the claims of ‘The Oregonian,’ the will of the people does matter; in fact, it is the foundation of all democratic governance. Yet kowtowing to corporate largesse and elite power has become a hallmark of the political process. And this knee-jerk deference to authority is as keenly practiced by mainstream journalists as anyone.  Indeed, if the media is a ‘fourth estate’ then it is one whose land has become incestuously intermixed with the estates of Wal-Mart and other vested interests. Robert Fisk, the best English language journalist on the Middle-East, cheekily described this process when he suggested that ‘The New York Times’ should change its name to “American Officials Say,” seeing as it regularly rehashes the official version of events instead of launching its own investigation. One cannot help but wonder, for example, if the Iraq War would have happened if the media had chosen to question the findings of the Bush administration on WMD. By publishing the official story of an Iraq saturated with weapons the media greased the way for war, preparing the Bush line for public consumption side-by-side with the perjurers at the White House. And the presentation of the ‘facts’ was not simply complicated by misinterpretation or a misplaced emphasis on both ‘sides’ of the story in pursuit of ‘objectivity.’ Every major international organization and creditable expert said that there was no WMD in Iraq; still, the content of the major newspapers was “American Officials Say.” 

        This uncritical deference to power, whether corporate or governmental, continues in the media’s handling of the Snowden affair. Recent revelations about the National Security Agency’s surveillance of private citizens – activities which by definition violate the constitution – were greeted by the press with hellfire and brimstone, against Edward Snowden that is. One would think that the ‘fourth estate,’ a supposed bastion of transparency and free discourse, would have welcomed the revelations. After all, investigative journalists rely on similar sources to perform their work. Instead, Snowden has been vilified by journalists from all milieus: David Brooks on public television, Jeffrey Toobin in ‘The New Yorker,’ and every major broadcasting station in America. To hear all the major news organs parrot the government line at the same time is as amusing as it is disturbing. In a rare moment of candor, the masks of ‘objectivity’ and ‘independence’ have been swiftly cast off. It is like watching a group of avowedly independent anarchists suddenly engage in an elaborate synchronized swimming routine. Needless to say, ‘The Oregonian’ has been equally reticent to call Snowden a whistleblower, preferring to describe him with more ‘neutral’ language when not simply hashing-out articles from the Associated Press or another major news organ. 

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        Having spent the first part of this essay explaining why democracy is in a state of crisis, I would like to spend the remaining portion examining why what’s going on in Sherwood is democracy in action. When I returned home last month from school, I was stunned by the number of no build signs posted around Sherwood. Residents have been packing into City Council meetings, circulating a no build petition and organizing at the grassroots level in opposition to the super-retailer. The tension is visceral: anti-Wal-Mart signs have found their way into every neighborhood and Wal-Mart, contrary to insinuations in ‘The Oregonian,’ has yet to build at the site. Residents are choosing to overcome apathy, ideology and the inertia of their personal problems to unite in demanding that the city not allow a corrupt corporation to plant its roots here. To paraphrase Thoreau, they have decided to cast their whole vote. 

        And this is a cause worth fighting for. Wal-Mart embodies much of what is wrong with democracy today. Being the largest retailer in the world, the company uses many overseas suppliers which are involved in human-trafficking, wage-slaving and other illegal enterprises. Human Rights Watch has found that at one shrimp supplier in Thailand, for example, many of the workers had been brought to the plant under false pretenses before being forced to work as indentured labor. The company illegally confiscated workers’ passports, workplace conditions were unsafe and the workforce had been procured with the help of human traffickers. 

        When HRW brought these findings to Wal-Mart the company stated that it would investigate work conditions at the plant, acknowledging that they regularly received shrimp shipments from the supplier in question. Later the company asserted that it did not receive shrimp shipments from that supplier, contradicting previous statements and a mass of evidence suggesting otherwise. Workers say that inspectors had previously visited the site but failed to lodge any complaints about the supplier’s misconduct. And as HRW’s John Sifton writes, “It is comic – or, actually, tragic – to imagine a Sam’s Club buyer visiting the Song Khla facility, saying, ‘thank you’ to a cadre of indentured laborers who are unable to speak openly about their labor woes.” 

        It is also well known that Wal-Mart applies downward pricing pressure in the clothing industry, pursuing a policy which increases profit margins by slicing the wages of workers at the bottom rung of the supply-chain. Put in bleaker terms, the company makes money by taking it away from the poorest and most vulnerable workers, oftentimes destitute widows and children. Workplace conditions for these employees are just as appalling. During a November 2012 sweat-shop fire in Bangladesh, 112 workers died deaths which could have been prevented if not for hazardous working conditions. The site supplied clothing to Wal-Mart, the biggest and wealthiest retailer in the world. And after the most recently publicized sweatshop blaze, Wal-Mart refused to join the European Union in agreeing to stricter safety standards for it suppliers, a disturbing indicator of where its true priorities lie. 

        You do not have to travel overseas, though, to witness the company’s unspeakable behavior. More sexual discrimination lawsuits have been lodged against Wal-Mart than against any other organization in the U.S. The sheer number of cases is so great that the company has succeeded in convincing the government that these cases should not be considered together. Since lawsuits have been filed in every corner of the country, the company asserts that they are too numerous and diverse to be considered the same form of discrimination – or so the reasoning goes. Yet one could equally argue that in light of the unprecedented number and commonality of the claims, it would be a serious lapse in judgment on the part of U.S. officials if they were not considered together. Unfortunately, it seems that the wishes of a single corporate ‘person’ will trump the grievances of 1.5 million real women. As Amanda Reed, a blogger for NOW, writes:

        “Many female Walmart employees have been paid less than male coworkers. In 2001, female workers earned $5,200 less per year on average than male workers. The company paid those who had hourly jobs, where the average yearly earnings were $18,000, $1.16 less per hour ($1,100 less per year) than men in the same position. Female employees who held salaried positions with average yearly earnings of $50,000 were paid $14,500 less per year than men in the same position. Despite this gap in wages, female Walmart employees on average have longer tenure and higher performance ratings.

        “In Dukes v. Walmart -- the largest class action gender discrimination lawsuit in U.S. history -- 1.5 million female employees accused Walmart of discrimination in promotions, pay and job assignments. The case included 120 affidavits relating to 235 stores. When the Supreme Court heard the case in 2011, it ruled that ‘[e]ven if every single one of these accounts is true, that would not demonstrate that the entire company operate[s] under a general policy of discrimination.’ Today, many of the plaintiffs are in the process of filing smaller suits against the corporation.”

        Wal-Mart is also renowned for attacking employees who attempt to unionize, a basic right under U.S. law but one which the company has fiercely resisted. Journalist Steven Greenhouse quotes a Human Rights Watch report which states that “when Wal-Mart faced unionization drives, the company often broke the law by, for example, eavesdropping on workers, training surveillance cameras on them and firing those who favored unions.” Moreover, the company’s crimes potentially reverberate far beyond its doors and the lives of its employees. Carol Pier, senior researcher at Human Rights Watch, notes that “When the largest private employer in the United States seems to be able to violate U.S. law with virtual impunity, that’s a very serious cause for concern, both with respect to its impact on employees, but also by other employers in the United States.” 

        The super-retailer’s assault on unions is also an assault on democracy. Within unions, workers are allowed to register grievances, voice their opinion and partake in the company’s decision-making process. At its finest, it is a perfect microcosm of democracy. I do not doubt that many readers will be put-off by hearing me saying this, but it is true. Consider. The fact that the word “union” arouses bad connotations is itself a measure of how successful corporate interest groups have been in deluding the public with their propaganda. We are told that if we do not live in a “right to work” state, we will be forced to join a union and pay unnecessary fees to maintain it. These corporate-backed propagandists neglect to mention, however, that under federal law no one can be forced to join a union. They also forget to mention that people who are members of a union generally have higher wages, more benefits and securer jobs than those performing the same work outside of one. Today people are inclined to forget that accident-insurance, the eight-hour workday and pensions were all brought about by labor activism and the unions that coalesced out of it. It does not take an economist to see why companies like Wal-Mart hate unions, it is the same reason they cut the wages of destitute children in Bangladesh: they are only concerned about making money. 

        But if the workplace can be a model democracy then it can also be a mirror of what is wrong in society. We have already noted Wal-Mart’s exploitation of the Global South, sexual discrimination and attack on free expression in the workplace. All of these problems, however, could just have easily have been noted by examining the retailer’s wage-structure; that is, who gets what on the company-ladder. Rose Aguilar writes that, “Wal-Mart, the country’s largest employer, posted $3.64 bn [billion] in profits for the third quarter alone [in 2012] and has already registered $444 bn in sales this year. Wal-Mart heir Robson Walton, whose net worth is $26 bn, took in more than $420 m [million] in dividends last year, while the average employee makes $8.81 an hour or $15,500 a year. The Walton family has more wealth than the bottom 42% of American families combined. In 2010, CEO Michael Duke’s annual salary of $35 m gives him more in an hour than a full-time employee makes in an entire year.” For a society in which wealth trickles upward at vacuum speed, it is no wonder that Wal-Mart has its apologists – the company creates and replicates the very order within which the ultra-wealthy pad their (multiple) wallet(s). 

        Sherwood’s grassroots campaign against Wal-Mart’s newest store proposal is democracy in action and a cause worth fighting for. Citizens are realizing that democracy is not a noun but a verb: it is difficult, often thankless and always requires action. ‘The Oregonian’ editorial’s quicksilver critique of Sherwood is, in truth, a resounding affirmation of their cause. Simply put, it would not make much sense if a major newspaper, a bastion of status quo values, did support this grassroots initiative. The fact that the citizens of Sherwood have so thoroughly chagrined those at ‘The Oregonian’ is really a vindication of their efforts; it is something to take genuine pride in. 

        And, as the facts make clear, opposition to Wal-Mart is not just a political issue but a moral one. Sherwood, an affluent community, has chosen to break from its role in the consumption chain; residents are refusing to taste the fruits of indentured-labor. Some critics, undoubtedly those at ‘The Oregonian,’ will respond by saying that the moral argument is understandable but unrealistic. But if Americans are not willing to address the moral problems that are visible, in fact, an entire city-block long, then where will they start? Again, none of these problems – human trafficking, sexual discrimination or depressed wages – are ‘inevitable.’ They are all rooted in decisions made by people and all human action implies choice. And even if we assume that Sherwood is being ‘unrealistic,’ it hardly seems ‘realistic’ to expect that these problems will go away if people choose to do nothing about them. It is worth noting that those who subscribe to this logic always call the plans which are destructive ‘realistic’ – deforestation, pollution and war – while all positive action is dismissed as ‘unrealistic’ – fair wages, sexual equality and conservation. As with the fallacy of the ‘free market,’ such fatalism is convenient for the powerful but dangerous for the powerless, especially if they happen to be performing sweated labor for Wal-Mart. And not only is it dangerous, it is stupid. The residents of Sherwood refuse to accept it and their decision should be respected. 

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        In the field of economics there are some principles which attain the status of ‘laws.’ These principals are held to be true in virtually every instance and over time they may begin to take on an aura of the natural or immutable. The so-called ‘iron law of wages’ may begin to appear to be as natural as a law of physics, for example. This appearance of naturalness or immutability is misleading though, since economics always occurs within a particular social order which is organized by human-beings. The ‘laws’ may, then, describe how people act within the order they have constructed, but this order and the laws which describe it are, in the end, constructed ones. Over time, however, it becomes all too easy for the economist, politician or corporate executive to mistake these ‘laws’ for natural laws, like the laws of physics; they begin to believe that what is manmade is actually natural, true for all times and places. 

        This common mistake underlies many, if not most, of the problems we now face. Free-will, which is implied by democracy, is subjugated to the fatalism of economic ‘law.’ What goes unnoticed is the fact that all of these ‘laws’ arose out of decisions which were made by people and thus can be changed by people. For corporations, then, to suggest that they cannot afford to pay their employees a living-wage because of an ‘iron law of wages,’ or the ‘laws’ of the market is misleading. Yes, they may have to alter their business-model, the government’s role may change and consumers’ expectations will have to evolve, but change is always possible. And for the sake of democracy in America, indeed, for the sake of the human race, change must come. 

        In conclusion, there may be an ‘iron law of wages’ but the iron that composes it was smelt with human hands. And there may be an ‘iron law of Wal-Mart’ which asserts its inevitability, but the people of Sherwood refuse to follow it.

        For the sake of human decency, I hope they succeed. 


Note: For those who want to sign the no build petition, please go to Jennifer Harris' petition at change.org. The petition is titled, "Walmart Corporation: Do not Bring Walmart to Sherwood, Oregon." The URL is: http://www.change.org/petitions/walmart-corporation-do-not-bring-walmart-to-sherwood-oregon