Walmart supposedly provides the greatest value for the buck. Coming out of one of the greatest recessions in human history, U.S. shoppers are still looking for bargains, so Walmart is sure to attract a plethora of wild money-savers.Free-market financial analyst and radio talk-show host Peter Schiff recently went undercover at the Democratic National Convention to ask attendees whether corporate profits at giants like Walmart should be banned. The responses he received were overwhelmingly anti-business. Add that to a 2009 story about a Walmart employee being trampled to death on Black Friday…
The question begs to be asked: has Walmart gone too far?
For years, Walmart has carried the glamour of being the world’s largest company. The store rightfully puts the “super” in “supermarket.” Its dominance is so great that it has forced out other competitors. Walmart is a growing business, and over time, it will continue to gain more power. Nevertheless, it epitomizes the ideas and rejections of capitalism. Three prominent economists, Adam Smith, Karl Marx and Joseph Schumpeter, would likely have been against breaking up the prodigious supercenter.
Because of Walmart, the government opposes import tariffs and quotas. Furthermore, administrations have promoted free-trade pacts with third-world countries. Walmart thrives on the idea that customers should get a good value, so bringing in a large supply for a very cheap price without government intervention and then selling those products for reasonable prices allows customers to achieve a certain level of satisfaction that Adam Smith would certainly make note of.
Smith said a division of labour is the most efficient way to maximise work. Because Walmart has such a great supply of capital through its various departments – from eye-care to pharmacy to clothing to food – and because it sells its products for guaranteed low prices, its success has spurred more stores to open, thereby hiring more workers. Customer loyalty proves Smith’s points on buyers’ approval. With more discount retailers come more customers. People continue to shop at Walmart because of its low prices, and soon enough, the entire world could shop at the super-centre and achieve consumer happiness.
Contradictory to Smith’s ideas on competition, if the entire world shops at Walmart, it would effectively own a monopoly, so it can essentially make whatever decisions it wants as long as its customers are satisfied. The “middle classes” are companies like Walgreens and Randall’s that are “creatively destructed.” People then could only own Walmart products. The company could fundamentally own peoples’ lives. Walmart would be indirectly forcing people to buy its quality products for everyday low prices and using them. Karl Marx would note this as anti-capitalistic. In a sense, the proposed practice is sheer capitalism on a micro-level, but collectivism macroeconomically, because buyers are obliquely “commanded” to buy certain brands and types of products.
Marx could later add that because of Walmart’s expansion globally, employees could ultimately be forced to move to different parts of the world. As it is, Walmart does not provide its employees with proper benefits compared to its competitors, due to surplus values from upper management. More Walmarts mean more unhappy workers, which in turn, according to Marx, would lead to a very high chance of a revolution – a “Walmart proletariat uprising” that could put Walmart on the shelf. This situation would thus leave the world helpless, because without Walmart, the industry would be nonexistent. The result: a “supermarket-less” society.
Let It Be
Joseph Schumpeter’s laissez-faire belief in entrepreneurship would undermine the naysayers of the store’s success. He would be the first to defend Walmart’s development, stating that it sustained long-term economic growth despite destroying established companies like Kmart.
Schumpeter’s idea of creative destruction has been prevalent through history. The great ones are always brought down by the younger, more creative industrialists. The mighty Caesar was deposed and replaced with Octavian Augustus. During the 1970’s, IBM was said to be the Big Brother of the technological world, yet since the 80’s, it has struggled to keep up with Apple, Microsoft, and now, Google. Lehman Brothers, Bear Stearns and General Motors were all deemed “too big to fail.” All three went under or bankrupt during the last four years. Walmart can’t innovate forever.
To be talking about Walmart wrecking humankind speaks volumes of the company’s mighty strength. The company is undoubtedly gaining power, and only the future will tell whether it grows into one big collective force or whether some other company overtakes it as the most popular enterprise on the globe. Nonetheless, Smith, Marx and Schumpeter would have likely supported its continuing operations.
NOW WATCH: Briefing videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.