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Wal-Mart: Template for 21st Century Capitalism?

April 12, 2004
Corwin Pavilion, UC Santa Barbara

In each historical epoch a prototypical enterprise seems to embody a new and innovative set of economic structures and social relationships. At the end of the 19th century the Pennsylvania Railroad declared itself “the standard of the world;” in the mid 20th century General Motors symbolized sophisticated, bureaucratic management and technologically proficient mass production; and in recent years Microsoft has seemed the template for a postindustrial knowledge economy. At the dawn of the 21st century Wal-Mart has emerged as just this kind of world-transforming economic institution, setting the pattern for a highly integrated, transnational system of production, distribution, and employment. Founded in 1962 by Sam Walton and his brother Bud, this Bentonville, Arkansas company is today largest profit-making enterprise in the world, with sales of a quarter of a trillion dollars and 1.4 million employees in more than 44 countries. As of the end of 2003 it had 4,688 stores worldwide, about 80 percent in the United States. Twenty million shoppers visit its stores each day and more than four out of five U.S. households purchase at least some products from the retailer each year. It does more business than Target, Sears, Kmart, J.C. Penney, Safeway, and Kroger combined. Wal-Mart is the single largest U.S. importer from China and the largest private employer in Mexico. If this corporation were an independent country it would have been China’s eighth largest trading partner, ahead of Russia and Britain. In selling general merchandise and groceries, it has no real rivals. Many observers expect Wal-Mart to gross a trillion dollars a year within a decade.

Wal-Mart is noted for its low-price, low-wage, globally-sourced business model, a strategy that has achieved precision control of manufacturing, inventory, and distribution by taking full advantage of the world’s new telecommunications infrastructure. It is not entirely unique in this regard, but it is by far the most successful and the most influential corporation of this sort, which is why its presence in a range of new markets, including toys, groceries, auto repair, music, and upscale consumer durables has generated such a wave of social and economic change. Indeed, Wal-Mart perfectly embodies the process of “creative destruction” identified by Joseph Schumpeter as the engine by which one mode of capitalist production and distribution is replaced by another. And as Schumpeter made clear, every set of technological and organizational innovations not only reconfigures the economic landscape, but it also casts a cultural and moral shadow across all of society.

Business history is thus too important to be left to the economists and management experts, which is why this conference assembles a wide-ranging group of historians, sociologists, anthropologists, and urbanists to probe the social context, internal structure, and cultural/economic impact of the corporation, both in the United States and abroad. Among the historians are Susan Strasser, the noted historian of consumer culture; Bethany Morton, an advanced graduate student at Yale, who is completing a remarkably well-textured history of the religious, social, and political context in which Wal-Mart’s distinctive brand of mid-South management first emerged; James Hoopes, the prolific Babson College historian of 19th and 20th century social thought; and Julio Moreno, a young historian who has just published Yankee Don’t Go Home, a study of American business in mid-20th century Latin America. In a conference-opening presentation, labor historian Nelson Lichtenstein explains why Wal-Mart has now come to replace General Motors as the paradigmatic institution structuring the political economy and setting the nation’s work-life pattern.

Two sociologists will make presentations at the conference. Gary Hamilton is one of the world’s leading experts on the “global value-chains” that have now bound Far Eastern manufacturing so closely to the American big-box retail market. Ellen Rosen of the Brandeis Center for Women’s Studies is now writing a book on gender stratification in retail trade, with Wal-Mart as her prime case study. Anthropologist David Karjanen has written one of the most extensive accounts of Wal-Mart’s impact - fiscal, employment, environmental, and governmental - on those communities in which it locates large retail outlets. Economist Chris Tilly, who is now on a Fulbright in Mexico, is studying the impact of Wal-Mart and other large retailers on the informal sector there. In addition to these academics, attorney Brad Seligman will discuss the extent to which the class action gender discrimination suit advanced by the San Francisco Impact Fund has enabled his organization to open a revealing window on the contemporary world of low-wage female employment, both at Wal-Mart and in other service sector firms. And Howard Foreman of the United Food and Commercial Workers explains why Wal-Mart has been able to pioneer a low-wage labor relations strategy without hindrance from unions, the government, or local communities. We have tried to contact Wal-Mart to provide a spokesperson, but without success thus far.

This is the inaugural conference sponsored by the new University of California, Santa Barbara Center for Work, Labor, and Democracy, the research arm of the campus Labor Studies Program. It exemplifies the integrated character of the work we hope to accomplish. Today, one cannot write a labor or community history without understanding the salient issues inherent in global trade and development, innovations in computer networking, or an analysis of how and why a leading firm has reshaped the market and pioneered new patterns of distribution, consumption, and employment. As Peter Drucker properly announced in 1945, the great corporations of our time are “the representative social actuality…the most important event in the recent social history of the Western World.” This is still true, if today on a global canvas.

This conference is sponsored by the Center for Work, Labor, and Democracy at the University of California, Santa Barbara, in cooperation with the Interdisciplinary Humanities Center and the Hull Center for Research on Women and Social Justice. The UCSB Departments of History and Sociology are also co-sponsoring the conference along with the UC Institute on Global Conflict and Cooperation. Financial support is greatfully acknowledged from UC MEXUS and the UCSB College of Letters and Science and the Divisions of Humanities and Fine Arts and Social Sciences.