Ann Pettifor

Review: The Peoples Republic of Walmart

This review was published in the Times Literary Supplement on 28 April, 2019

As the world belatedly faces up to the threat of climate breakdown, questions loom large. Carbonisation of the atmosphere is a global phenomenon, not a local one. How then to transform the world’s atmosphere and collectively draw down the carbon that has proved so toxic to life on earth? Currently the task is largely allocated to the invisible hand of the market. But as Phillips and Rozworski argue in this quite riveting book, “the market is amoral, not immoral. It is directionless, with its own internal logic that is independent of human command. “ Instead, they argue, the process of transformation is going to have to be at the behest of human command. It is going to have to be planned.

The very word “planning” conjures up visions of the Stalinist gulag, and the authors do not shy away from explaining just how brutal, destructive and inefficient was the era of Soviet planning. But, they argue, planning is still with us, and at its most effective in one of the most profitable capitalist enterprises on earth: the behemoth that is Walmart. Not only is there no internal market within the Walmart enterprise, but the planning that makes the company so efficient, so careful in its management of costs and so profitable, is based on a system of logistics that requires deliberate collaboration, trust and transparency – rather than competition – for results.

There’s a lesson in this book for the chaotic privatisation of Britain’s hospitals and local governments. And the lesson is this: no successful capitalist company operates an internal market.  Those that do are doomed. Phillips and Rozworski cite the experience of one of Walmart’s main competitors, “the 120-plus-year-old Sears, Roebuck and Company which destroyed itself by embracing the exact opposite of Walmart’s galloping socialisation of production and distribution.” The company’s chairman and CEO, Edward Lampert managed a $15 billion hedge fund by the age of 41. He is a libertarian and fan of the laissez-faire egotism of Russian American novelist Ayn Rand. In 2004 the fund he managed, ESL Investments took over Sears in a $12 billion buyout. At first there was a period of “merciless, life-destroying”  asset-stripping, cost-cutting and layoffs. Then he radically split the company into thirty and later forty different units that were to compete against each other. “Divisions such as apparel, tools, appliances, human resources, IT and branding were now in essence to operate as autonomous businesses”. The result was disastrous. As profits collapsed, the in-fighting between divisions became increasingly vicious. The different units decided to take care of their own  profits, “the company as a whole be damned”.  In the end the stores had the doleful air of late-Soviet retail desolation: leaking ceilings, inoperative escalators, acres of empty shelves, and aisles shambolically strewn with abandoned cardboard boxes half-filled with merchandise” .

His model failed because it killed two vital elements of success: cooperation, and the efficient collection and sharing of information and data. Walmart practices the very opposite model of cooperation and transparent sharing of information and data across the whole supply chain. Society as a whole, argue the authors, is an organisation – and organisations need a holistic strategy. So while the combustion of coal, oil and gas may be a disaster for our species as a whole, so long as it remains profitable for some “divisions” to extract and process fossil fuels: to continue to act in a way that serves their selfish interests – for so long will the rest of society be damned.

This book is a powerful plea for the revival of democratic, accountable and participatory planning. The authors urge readers to a wider understanding of developments in the technology of logistics. With the help of these management tools, Walmart – but without the profit-motive-  provides a model of how social and economic planning can be undertaken collaboratively and efficiently. There is a fascinating chapter on the Salvador Allende’s government’s experiment with cybernetics – a field which investigates how different systems – biological, mechanical, social – manage communication, decision making and action.

The book is a fast-paced, provocative read. One that offers readers a new and refreshing perspective on today’s highly planned capitalism, and the prospect of a new form of democratic, transparent, socialist planning.

 

End.

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