Maggie says:
This month, Harper's Magazine features a truly remarkable article: Breaking the Chain: The Antitrust Case against Wal-Mart. In it, Barry C. Lynn does the impossible: he adds something new to the Wal-Mart debate. What's even more remarkable is that he does it using a pro-capitalism perspective and makes his case in a way bound to set free-market hearts all aflutter.
Lynn argues that Wal-Mart's most egregious act - worse than the usual anti-community and anti-labor practices we lefties tend to harp on - is that because of its vast presence and power, the retail giant actually subverts the market so much that it is no longer "free." Lynn calls Wal-Mart a "monopsony:"
The mirror image of a monopoly is a "monopsony," when a firm captures the ability to dictate prices to its suppliers, because the suppliers have no real choice but to deal with that buyer. The ultimate danger is that it deprives the firms that actually manufacture products from obtaining an adequate return on their investment.
Funny that it would take market talk for my lefty sensibilities to get all warm and fuzzy. But think about it: if military families coming out against the war are the surest sign we have that the tide is turning in Iraq, how far behind is a shift in attitude toward America's most reprehensible retailer, when none other than free-marketers are leading the charge?
Lynn makes a great case:
The idea that Wal-Mart's power actually subverts the functioning of the free market will seem shocking to some. After all, the firm rose to dominance in the same way that many thousands of other companies before it did - through smart innovation, a unique culture, and a focus on serving the customer. Even a decade ago, Americans could fairly conclude that in most respects, Wal-Mart's rise had been good for the nation. But the issue before us is not how Wal-Mart uses its power today and will use it tomorrow. The problem is that Wal-Mart, like other monopsonists, does not participate in the market so much as use its power to micro-manage the market, carefully coordinating the actions of thousands of firms from a position above the market.
Of course, many a cynic will respond to Lynn's market-subverting claims with the critique that manufacturers don't have to work with Wal-Mart. After all, they could demand their own prices and simply walk away if Wal-Mart couldn't meet them. Here, argues Lynn, lies a classic disconnect between theory and reality. Although theoretically manufacturers could walk away, as long as they act alone in their demands and in their retreats, conceding the 20% of the market that Wal-Mart represents would be "suicidal." That's why only Wal-Mart itself - not the manufacturers - can turn its back on price negotiations. Lynn's solution - using the nation's antitrust laws to reel Wal-Mart back in - recalls the actual intent of the Sherman Act, designed not just to protect the consumer, but "intended to preserve both competition per se and to shelter entire classes of entrepreneurs (among whom is the individual worker)."
Those who would use the term 'free' to describe the market over which Wal-Mart presides should first consult with Coca-Cola's product-design department; or with Kraft managers, or Kraft shareholders, or the Kraft employees who lost their jobs. These results were decided not within the marketplace but by a single firm. Free-market utopians have long decried government industrial policy because it puts into the hands of bureaucrats and politicians the power to determine which firms "win" and which "lose." Wal-Mart picks winners and losers every day, and the losers have no recourse to any court or any political representative anywhere.
For me, the issue here is the loss of control and autonomy that our "free" market creates. Last weekend, sitting down in the living room of our family farmhouse with my Grandma Jessie Mae, she spoke with resignation about the new resort community being built on the banks of the Chowan River, site of many a family reunion. She mentioned the new golf course that will welcome travelers crossing the bridge that connects her childhood hometown of Edenton to the remote farm where she started a family of her own. "What in the world are you going to do with a golf course?" I asked her. She shook her head and sighed. Later, she explained to my old college roommates I'd brought with me why there isn't much happening in Bertie County any more. "This road used to be lined with country stores," she explained. "We could get whatever we needed right here, but not anymore." In her next breath, she described the "huge new Wal-Mart" being built close by.Everything's related here. Community values are people values. Community control is people power. We see Lynn's market analysis played out on a smaller scale in every community taken over by a retailer so huge and vast that country stores are forced to shut their doors to the families they've served for generations. The new Wal-Mart is the same as that golf course. Bertie County's economy is the nation's. My grandmother's loss is the small retailer's loss is the manufacturer's loss.
Lynn thinks big, and I think small. For me, this article shows how closely the two are intertwined. Maybe real change can come only when we all understand just how similar our big and small fights really are.
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