If a company can single-handedly spur on international labor unity, Wal-Mart’s it. This and similar corporations – Target, Nike, France’s Carrefour, etc. – feed off misery, inequality and competition among workers worldwide. But their anti-social behavior is also breeding global resistance. Effective resistance requires highly coordinated initiatives and leadership by workers’ parties and trade unions worldwide.
Wal-Martization is one face of capitalist “globalization.” Wal-Mart cannot be understood except in the context of capitalism’s global problems with “overproduction” and the corresponding mass unemployment. Of particular interest is the attempted Wal-Martization of China, the work of Chinese unions to resist and the potential of developments there in ending Wal-Mart’s practices.

Nature of Crisis The rise of Wal-Mart is closely related to the cycle of crisis inherent in capitalism. For an economy to avoid crisis, a broad balance must be maintained between production and the demand of both producers and consumers. Capitalism cannot prevent the inevitable small imbalances in any economy from ballooning into big ones. Crises ensue. Marx and Engels termed these “crises of overproduction.”

“Overproduction” really refers to imbalances that result from more being produced than can be sold profitably, not more than can meet human needs. Hunger repeatedly accompanies food “overproduction.” Since the capitalists produce only to enrich themselves, they perceive an inability to sell their commodities profitably as “overproduction.” Losses ensue, along with wage-cuts, factory closings and unemployment. Since the end of World War II, the years 1973-75, 1980-82, 1989-92, 1997-98 and 2001 all marked measurable turns for the worse in world capitalism’s economic imbalances.

Growth in technology and monopolization has the effect of magnifying, not correcting, imbalances under capitalism. Wal-Mart is a child of monopolization, “overproduction” and the associated unemployment and poverty. Wal-Mart in turn is breeding even greater imbalances, poverty and unemployment.

Wall Street Origins How can Wal-Mart be a child of monopoly? After all, half a century ago, Wal-Mart did not even exist. Retailing was already largely monopolized by giants such as Sears and A&P. Today, Wal-Mart dwarfs Sears, while A&P fights irrelevance. Isn’t Wal-Mart a triumph of competition, a tribute to US economic vitality? No. Beneath Wal-Mart lies Wall Street – monopoly capital.

To understand how, let’s look at Japanese industry’s “miraculous” post-war rebirth. In the decades after World War II, Wall Street arranged for the transfer of technology to Japan, and quietly invested both directly and through massive loans into rebuilding that industry. Its immediate interest was to ward off the advance of socialism in Asia.

A crucial piece of the puzzle was Japanese industry could not have survived without access to the US market. For all the talk of “free trade,” the US market was and remains tightly guarded through quotas, tariffs, sanctions and innumerable other measures. But the US market was in fact selectively opened to Japan’s industries. After all, Wall Street had profits to make – from royalties on the transferred technology, direct ownership interests and interest payments on the loans.

But in addition, the “Asian imports” ripped the ground under the United Steel Workers, United Auto Workers and other US unions. Labor here was weakened and cheapened. And the financiers stoked racism and national chauvinism in the bargain.

Of course Wal-Mart arose under different historical circumstances. “Overproduction’s” threat to profits is not as decisive as a socialist revolution’s. But Wall Street’s prints are all over Wal-Mart. Today, Wal-Mart is eroding the ground under the United Food and Commercial Workers, the Teamsters and several other unions and even challenges the huge All-China Federation of Trade Unions and the Chinese state itself.

Sam Walton opened the first Wal-Mart in 1962, in tiny Rogers, Arkansas, paying its mainly women staffers 60 cents an hour when minimum wage was $1.15. Well into the 1960s, it was a regional retailer, with a dozen stores in small towns. Sales were less than one percent those of Sears or Kmart. Histories of the company are consistent in depicting a Walton desperate for capital to expand. He found it, first in the form of loans from Republic National Bank of Dallas, whose “correspondent” ties subordinated it to Wall Street banks. More significantly, in 1969 Massachusetts Mutual Insurance and in particular White, Weld & Co. invested in Wal-Mart. Wall Street had sunk its teeth into Walton’s baby.

In Empire of High Finance (1957), Victor Perlo identifies White, Weld as one of the top five US investment banking houses of the early 1950s, part of “a group of companies [with] important ties with the First Boston Corp. and its associated banks, notably the Rockefellers.” White, Weld subsequently became a subsidiary of Merrill Lynch, now in the Rockefeller orbit.

In addition to its investment activities, White, Weld had a history of promoting ruling-class initiatives against labor at home and in favor of imperialist expansion abroad. According to Thomas Reifer, a University of California scholar, White, Weld helped finance what were called the Plattsburgh military training camps favoring US entry into World War I. Francis Weld was a member of the American Citizens Committee in London, linked to the National Security League, which worked to check the power of labor domestically and ensure US participation in the war and overseas expansion.

It should come as no surprise that union-busting Wal-Mart today maintains a working association with the Pentagon, with ominous implications for the dozens of countries where it operates.

So Wall Street was on the Wal-Mart bandwagon nearly from birth. To be sure, Wall Street was also invested in every other significant retailing venture in the US. But Sam Walton was doggedly proving his skills at keeping distribution costs down. That was in 1992. But Wal-Mart had not changed its policy. In January 2004, an electronic cart crushed a nightshift worker’s ankle. The New York Times reported that the policy is still in force “in about 10 percent of its stores...“ “The multinational corporation says locking the doors increases productivity, controls ‘shrinkage’ (theft) and ‘protects employees in (so-called) high-crime neighborhoods,” according to the People’s Weekly World.

Perhaps no single practice is more vile than the reliance here and worldwide on night work, which is extraordinarily damaging to health and the social fabric. A damning 2004 report on “Wal-Martization” by Oxfam (maketradefair.com>) reveals worldwide use of night work – and overnight locking – until “team” quotas or production deadlines are met.

Bob Ortega relates that in a December 1992 interview of Wal-Mart president David Glass, NBC’s Brian Ross documented use of child labor locked overnight at the Saraka garment factory in Bangladesh. Ross showed Glass “black-and-white photographs of the bodies of 25 children who’d died, locked in during a fire at the factory two years earlier, less than a year before Wal-Mart moved production there.” Glass responded blandly, “Yeah, there are tragic things that happen all over the world.”

As for child labor: In January 2004, the New York Times reported on an internal Wal-Mart audit which found ‘extensive violations of [US] child-labor laws and state regulations requiring time for breaks and meals.’ One week of time records from 25,000 employees in July 2000 found 1,371 instances of minors working too late, during school hours, or for too many hours in a day. There were 60,767 missed breaks and 15,705 lost meal times, according to California Representative George Miller’s February 2004 report on Wal-Mart’s practices. Note that those thousands of violations were recorded in one week among a small fraction of Wal-Mart’s US employees. Oxfam documents repeated violations of child-labor laws and rights to breaks worldwide.

Congressman Miller estimates that “one 200-person Wal-Mart store may cost federal taxpayers $420,000 per year” in healthcare, housing assistance, food-stamp and other costs because so many Wal-Mart workers’ wages fall below the poverty line. With the average store employing 350, the $420,000 is likely an underestimate. Those pushed-off costs alone would account for over 15 percent of Wal-Mart’s 2002 profits. “Externalization” of social costs is practically official Wal-Mart policy worldwide.

Miller and others have pointed out that despite all the propaganda, Wal-Mart’s prices are not consistently the lowest. But even if the price of a box of detergent is 10 percent lower, hasn’t Wal-Mart effectively raised its price if it helped cut wages 20 percent? Miller points out that since the 2001 recession, the US has seen a dramatic shift from high-paying to low-paying jobs. For instance, in New Hampshire, which still has not recovered the number of jobs it lost in the recession, new jobs pay 35 percent lower wages than lost jobs. In Delaware, those wages are 43 percent lower... “Wal-Martization” parallels worldwide continue: systematic discrimination against women; forced unpaid work; illegal overtime and no pay for overtime; sharp restrictions on bathroom breaks; massive “churning” of the labor force; the use of immigrant labor, sometimes effectively enslaved.

Oxfam reports that “In the past six years, there have been five federal prosecutions for slavery in Florida’s agricultural sector.” Fortune last year documented industry use of enslaved immigrant workers in capitalist Asia, producing faceplates for Motorola cellphones, among other commodities.

And everywhere “Wal-Martization” spells opposition to organizing efforts by workers, extending to blacklists and sometimes even use of death squads.

Ironically, Wall Street’s backing of Wal-Mart has contributed to massive “overproduction” of retail stores and supermarkets in the US and the world. In the past four years, Kmart, Ames, Bradlees and Caldor’s have all declared bankruptcy, leaving huge bad debts and mass layoffs. Over 10,000 supermarkets have shut down in the US. Wal-Mart offers an illustration in the link between “overproduction,” losses and unemployment, and how capitalism’s “solutions” end up exacerbating the problem.

Wal-Mart’s negative impact on labor in the US is large indeed. Its impact in China is also large, through both its growing number of stores and use of suppliers and subcontractors. But Wal-Mart could meet its match in China.

Unlike technology companies that bring know-how to China, there is little evidence that Wal-Mart contributes much if anything to China. On the contrary, the evidence points to Wal-Mart plundering China’s workers and the Chinese state.

Hourly wages in China are now more than double those prevailing in Indonesia, Bangladesh and several countries in Africa. Yet over 80 percent of Wal-Mart’s 6,000 supplying factories worldwide are in China. Why? One reason is that China’s workers, from engineers to assembly workers, are better educated. And they were not educated at Wal-Mart’s expense, but at China’s. Furthermore, the Chinese state, which is a product of a socialist revolution, has built a remarkable infrastructure, from highways and seaports to electric grids. This infrastructure greatly reduces Wal-Mart’s effective costs. Social accounting of the real cost to China of Wal-Mart’s $15-billion-plus annual purchases – more than one percent of China’s GDP – points to plunder.

A US condition for China’s admission to the World Trade Organization was that it open its market to Wal-Mart and similar retailers. This too is directed against labor. Why?

Because the expansion of Wal-Mart stores could rapidly devastate the relatively primitive distribution network in China, from the millions of Mom-and-Pop stores to the department stores with roots in the nationalized economy. It could thus contribute to greater unemployment and instability in the country, and to weakening labor and the Chinese state itself.

But this outcome is by no means inevitable. Labor law in China mandates union representation in workplaces with 25 or more employees. All Wal-Mart stores, and probably a majority of its suppliers and subcontractors, are violating this law. In fact, Wal-Mart’s subcontractors are notorious for sweatshop conditions, violations of labor standards and laws, even physical abuse of workers and evasion of payment of wages. An investigation by Business Week documented several such violations in China in 2000 – and placed the blame squarely on Wal-Mart as the party ultimately responsible for them.

The All-China Federation of Trade Unions (ACFTU) developed into its present form largely as the result of the 1949 socialist revolution. The revolution nationalized industry and instituted a planned economy. But important questions of economic development were not resolved. Great concessions have been made to capitalism in an effort to resolve them. For the ACFTU, this has meant difficult, even wrenching changes. One of the most difficult is that, unlike the situation at state-owned enterprises, the fundamental interests of managers of private enterprises are opposed to workers.

The ACFTU – China’s equivalent of the AFL-CIO – is facing the challenge. Led by Wang Zhaoguo, its new chairman, the 14th National ACFTU Congress last fall amended its constitution to stipulate that defense of workers’ rights was its fundamental task, period. Previously, this was one of several non-binding social functions, together with building the economy, cultural development of workers, etc. This important change may set the stage for a “division of labor” within China, where greater ACFTU independence and defensive capacity strengthens the Chinese state and labor’s power.

And the ACFTU has been calling to unionize Wal-Mart. Wal-Mart management’s response has been to reject the demand and ignore the ACFTU. Its defiance and the practices of its suppliers and subcontractors are setting the stage for cooperation between the ACFTU and unions in various countries where Wal-Mart operates, including the US.

Zhang Hongzun, chairman of China’s 22-million-member Educational Workers’ Union, told Roberta Wood of the People’s Weekly World at last summer’s conference of the Asian Pacific American Labor Alliance, “If we can organize Wal-Mart in Beijing, it would be a way to show support for the American labor movement… We’d like to join hand-in-hand to make common efforts for workers’ rights.”

China is where Wal-Mart, the largest corporation in the world, could meet its match. By addressing workers’ common interests and concerns across borders, labor will bring an end to the miserable practices of Wal-Mart and its classmates. Those interests range from good jobs, decent housing, childcare and education for all, to avoiding the havoc caused by night work. In 1871, the Paris Commune called for banning all unnecessary night work. Tomorrow’s victories will necessarily arise on the shoulders of the 1949 socialist revolution in China, and 1917 and 1871 before it, on the way to even greater struggles and victories. With Communist and union initiatives, the world’s largest corporate outlaw will yet spur on increased international labor unity.

--Wadi'h Halabi is a contributing editor of Political Affairs.