Thursday, March 03, 2005
Wal Mart sails close to The Economist wind

It came close; but The Economist couldn’t quite manage it.

To be fair, despite its rabidly pro-business, pro-market stance, The Economist magazine has tended to play a straight bat in purely rationalist terms of justice and fairness, albeit within the narrow confines of the ideolgues at the editorial helm. In a recent article the magazine dismissed the idea of ‘corporate social responsibility’ (CSR) [“The good company”, The Economist, 22.01.05], not because it believed that firms ought to be allowed, or even should, act irresponsibly, but because as a stand alone corporate ideal, CSR need not be pursued. Consumers and shareholders will ensure that businesses trade in a manner which reflects their ethics, within boundaries proscribed by the rules of law. Ironically, CSR is simply good PR to both The Economist and anti-corporation activist alike.

Issues of what constitutes justice aside then, The Economist has been quick to criticise governments, the judiciary and business where it does not see its version of fairness upheld. Where companies have acted scurrilously, such as Enron and Worldcom have, the magazine has hastily booted the firm out of the reputable club. Human rights abuses in China and the USA’s holding of political prisoners at Guantanomo Bay have all been the subject of critical copy in The Economist.

Presumably this is why The Economist backed away from openly criticising what most people see as the immoral activities of Wal-Mart’s operations in Canada. You see, if Wal-Mart was acting improperly, but within the law, it is for consumers to punish it; now that’s true corporate social responsibility.

Just over 10 years ago, American retailing giant, Wal-Mart, moved into Canada through the purchase of 122 of the 132 Woolco stores across the nation. The remaining 10 Woolco stores – all reputedly profitable – lay outside the deal. Everyone knew that this was because their workers belonged to a trade union.

It was widely reported that on 9 February this year, Wal-Mart issued a statement vowing to close – yes close, and lay-off the workers and leave the community without a store – the first store in North America to unionise.

The 150 Wal-Mart workers and residents of Jonquiere, in Quebec, knew this thinly veiled threat was aimed directly at them.

Staff at this store had worked well for their new corporate bosses. Insiders reckoned the store remained profitable, yet Wal-Mart refused to enter into meaningful contract negotiations and shut it down, claiming it was ‘struggling’. Of course, the company would not release any financial reports of this store’s performance, but then maybe it just was coincidence that this was the first Wal-Mart store in Canada to ever be closed down.

All the staff had done – well the majority of them anyway – was sign a union card and have their claim for recognition endorsed by the Provincial Government’s labour board. Wal-Mart have subsequently threatened closure on a further three stores, should staff there choose to follow suit. Tellingly, one of the stores ear-marked as a battlefield is the most profitable in Canada.

Wal-Mart claim that because moves towards unionisation do not require a vote, the unions themselves are undemocratic and unrepresentative and leaves the staff open to intimidation from union shop stewards. That all votes, so far, to unionise have ended in failure is a vindication of its stance, says Wal-Mart. For the workers, faced with voting themselves out of a job and the town out of a grocery store, it is more like Hobson’s choice. It’s a free market, as long as you are rich enough to own a company that monopolises it.

Efforts to unionise south of the border, in USA, have also been met with hostility. Not one of the 17 staff in a car-maintenance depot at a store in New Castle, Pen. voted to loose their jobs by joining the union.

For most reasonable people, the tactics employed by Wal-Mart are almost beyond comprehension. Few stories demonstrate the dangers of unrestrained corporate power as evidently as this. The Economist reports that the unions, rightly or wrongly, claim that their workers are paid up to 40% less than the fair market rate and their schedules, workloads, benefits and contracts are also unreasonable. Get a job somewhere else? No way, most towns which host a Wal-Mart have lost jobs too as smaller stores have been pushed out of business through a targeted program of predatory pricing and running loss leaders by Wal-Mart.

This escalates the vindictiveness of the company’s behaviour. Not only will they sack their workers for freely organising themselves for mutual support and solidarity (in exactly the same way that capital organises itself for its owners benefit), but they are prepared to cut a society off from the supply chain on which they have been coerced into becoming dependent on. This is collective punishment the Israeli Defence Force would be proud of.

But yet The Economist could not bring itself to criticise Wal-Mart’s behaviour. Whilst ostensibly this story is ‘news’ in a ‘newspaper’ and so presumably devoid of any editorial slant, the magazine has never been covert in allowing its openly declared philosophies to shape its reporting style, such as its feature on CSR. But nowhere in the article does it suggest that Wal-Mart’s actions have been dangerous, immoral or contemptuous. Wal-Mart may not broken any laws (that could be proven) and so, as yet the company does not warrant even the vaguest analysis from The Economist magazine, despite its astonishing strategy of bullying and coercion with impunity.

For a different perspective:

“Wal-Mart Chief Defends Closing Unionized Store: Scott Says Labor Costs Guided Quebec Decision” by Michael Barbaro of the Washington Post [http://www.washingtonpost.com/wp-dyn/articles/A15832-2005Feb10.html accessed 02.03.05]

A report citing that Wal-Mart was unable to reach an agreement with union in wage and conditions negotiations.

“Don’t blame Wal-Mart“ by Robert Reich in the New York Times [http://www.nytimes.com/2005/02/28/opinion/28reich.html accessed 02.03.05]

A more nuanced view stressing that Wal-Mart is not in fact a union bully, it is just like another corporation reacting to consumer preferences in a globalised world. It is our own internal conflict between our citizen and consumer selves which needs resolution. Kind of misses the ethical point to be made though.

---