WAL-MART: unfair or good business?

December 11, 2011

Political economy


Its getting around the time for the Holidays and everyone is going crazy over where to get the best prices for their gifts and hands down the place most people turn to is Wal-Mart. But if Wal-Mart is a place that everyone goes to do their Holiday shopping because they have the lowest prices then why does Wal-Mart take so much heat from people in the areas where their stores are located? It is because in the process of giving the consumer the best possible prices and large range of choices they also destroy local businesses, but I asked the question, should Wal-Mart be persecuted for good business practices? Some people see Wal-Mart or the other Walton creation, Sam’s Club, as a detriment to society that destroys original American norms that Tocqueville said created the American way of life. I agree that Wal-Mart and other massive superstores to destroy the sense of community and commonwealth that we’ve been discussing all semester but at the same time they make every single consumer in the market better off with their low prices and great variety.

In my opinion, Wal-Mart should not be discredited as they are right now by the media as being cheaters but rather as being a genius of business. Their size and efficiency make them able to take advantages of economies of scale which means they get more products at a cheaper price because they have such a massive share of the market demand. They are just taking advantage of their size and from doing this they are being criticized for it. I do realize there are many negative impacts from Wal-Mart that they destroy jobs and local businesses but they make the consumers better off and there is also a transfer of jobs to Wal-Mart. There are both positive and some negative effects from Wal-Mart but from a strictly economic perspective there is an increase in consumption with a lower price which is a positive economic outcome. This is probably very different from most peoples’ viewpoint but this argument makes the case that Wal-Mart is a display of business genius. Unfair as Wal-Mart’s practices appear to seem if one of us wanted to get a product for a very low price we would turn to Wal-Mart because they have the lowest prices guaranteed. The media or local communities hate them for awhile usually right after the store opens but over time we start to come around simple because they are the best at selling products at the cheapest cost.

Wal-Mart is also a case of capitalist exploitation in that they are a profit maximizing firm. The lone worker has little power in the case of Wal-Mart making it a perfect scenario for a Marxist ideal that the working class gets exploited by the Capitalist because they hold the power in the company. This is where Wal-Mart could be seen as the evil powerhouse they are in some cases. However, the goal of every business is to stay afloat and maximize their revenues and profit and Wal-Mart is bigger than most businesses in America so they have to adopt different, sometimes seen as unfair, power over their employees. Most of the employees we come into contact with in the stores are at the bottom of the food-chain and because of this they are the most expendable, less-skilled employees. Wal-Mart needs these people but at the same time they are the easiest to replace so they feel there is no need to pay them the highest wages. This is capitalism at its finest but if one were to interfere with this by raising the minimum wage Wal-Mart could be the one that pays the price. This would be catastrophic because Wal-Mart holds such a large share of the market and if they didn’t exploit their workers at the lowest end then a market failure could exists which the economy couldn’t afford. No Wal-Mart means we will have to go back to buying higher priced goods at lesser quantities. As unfair as Wal-Mart may seem to their lowest-skilled workers this may be necessary to give the consumer everything we’ve been used to.

How do you view Wal-Mart? Do you see them as a genius in the business world or as a detriment to the American way of life? Also how well do you think they fit into the category of a profit crazy capitalist we saw explained by Marx?

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About ndreynolds864

Student at University of Michigan

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12 Comments on “WAL-MART: unfair or good business?”

  1. elmatts25 Says:

    I’m not exactly sure how well this fits in with political theory, however I do see your point. I think in the end this type of controversy is entirely up to personal opinion, which is exactly what makes it such a controversy. The question of what is “better”, local businesses or powerful corporations that some may call genius, is a vibrant debate today, in many regions across America. If we were to address this issue in a Marxist sense, we just use apriori thinking (address the issue in a logical sense). First, this issue is circumstantial. Would the community benefit most from local small businesses or a Wal-mart? How do we define “benefit”? Which option would create more jobs? Which option would most boost the local economy? There are a million and one questions we can ask. Next, the issue is personal. Do I think it is best to create more jobs or support local business owners? From a materialism view point, these decisions are incredibly important. Materialism says that social changes are fueled by the development of and changes in production relations. On a social level, the community would most likely change dramatically when we develop or change it economically. In conclusion, I don’t have an answer to whether or not Wal-Mart is a detriment the the American way of life. In some cases, it could be a detriment to a community, but in other cases it may be exactly the boost the community’s economy needs. I do believe Wal-Mart is a genius business idea, however there are many small businesses that are the same level, if not more, genius.

  2. benjishanus Says:

    I agree that Wal-Mart is doing what any business strives to do – maximizing welfare and eliminating competition- however, I also understand the criticism that they’re destroying local businesses, and hence, the America Dream for some people. As the author indicated, Wal-Mart has done what they have had to do in order to become a global juggernaut. In the process, they have literally expanded and eliminated competition at an incredible rate. So from a certain perspective, kudos to their brilliant tactics and remarkable work ethic.

    HOWEVER, this can be seen as a two way street, and from a certain perspective, what Wal-Mart has done has been extremely unethical and incentive. The main reason for their success has come from their ability to offer extremely low prices, which has come from the disgustingly low amount they pay their employees. IS this really what it should take to make it in this world? Taking advantage of others? Some may argue yes, others will disagree. Personally, I think the greater issue has been the fact that Wal-Mart has no stopped. They had continued to take advantage of this unfair advantage, and in the process, have drowned out far too many local competitors who can no longer afford to run a business of provide for their families.

  3. kelseymlee Says:

    I understand where Wal-Mart is coming from, and that their main goal is to maximize profits. I think it is unfortunate, however, that Wal-Mart has the power to put smaller businesses under, and something about how Wal-Mart is run makes me uncomfortable. I feel hypocritical saying this, as I am occasionally guilty of shopping at Wal-Mart myself, but if Wal-Mart were more ethically run, maybe I wouldn’t feel guilty about shopping there.

    I think the main thing that bothers me about Wal-Mart is how you mentioned that it is a perfect situation for a “Marxist Ideal” to take place. The many workers that Wal-Mart employs see very little benefit from the large profits that Wal-Mart takes in. For example, in the book, “Nickel and Dimed”, the author goes undercover as an hourly worker at Wal-Mart, to see if she can make enough living off of minimum wage. She works many minimum wage jobs, but the time she spends working at Wal-Mart was the description that bothered me the most. She never saw a raise, and the hours she worked were long and tedious. Compared to her other jobs, I felt that Wal-Mart was the most unfair employer.

    In a sense, I feel like Wal-Mart is sort of making money off of poverty. From what I have read in books and/or seen in documentaries, their workers are given very little incentive for good work, which is where I see similarities with Marx’s theories on communism. Everyone is treated the same no matter how hard they work, and there is very little room for advancement. While the people who work for an hourly wage at Wal-Mart suffer, corporate Wal-Mart continues to grow and reap more and more benefits.

  4. tyhughes2014 Says:

    In my opinion, Wal-Mart is a 100% legitimate business that should not receive as much criticism and blame as it does. Wal-Mart is breaking no laws or commuting no illegal practices. Wal-Mart is merely executing an intelligent and profit maximizing business plan that is a perfect example of what is capable in a free market society. It is not the government’s job to restrict Wal-Mart in anyway just because they may be driving small businesses out of business. All businesses have rights and Wal-Mart is functioning well within those rights.

    With all this being said, I agree with your portion of the blog where you mention Tocqueville and say that “Wal-Mart and other massive superstores destroy the sense of community and commonwealth”. Wal-Mart has drastically transformed the United States and by driving many small businesses out of business has harmed the sense of community that this country was built upon. But let me ask, is a transformation from a society fueled from community businesses to a society fueled large corporations necessarily a bad thing? If you are resilient to change, you may think so.

    So what needs to be done about Wal-Mart? I believe the answer to this question lies in the consumer. If you believe Wal-Mart is not harming this country and do not find a transition away from Tocqueville’s sense of community alarming, you should continue shopping at Wal-Mart with no worries. If you do believe Wal-Mart is harming the United States and small businesses, you should not give Wal-Mart your business. If others are on the same page as you, Wal-Mart may be harmed by this and small businesses could benefit. It is all a matter of personal opinion.

  5. habavol Says:

    I actually see Walmart as a genius of business as well! I know I’ve heard stories of Walmart treating their employees terrible, but I can’t be upset with them when their prices are so cheap! lol. I actually find it crazy how cheap they can make things.. even the walmart pharmacy. I had a prescription a little while ago that cost $40 per month everywhere I went, but I checked out Walmart’s pharmacy, only $9.99 a month! How do they do this?!!? haha.
    And also every time I think of Walmart, I think of the south park episode where they say walmart is the devil, which I find really funny. But I mean, if they found a way to have the lowest prices and so many customers, they’re doing something right. Must be awesome with business!

  6. reidmech7892 Says:

    In a world filled with harsh competition and economic hardship, it seems inevitable that economic powerhouses, such as Wal-Mart, will be put under heat by local businesses. Are businesses such as Wal-Mart detrimental to smaller local businesses? Of course.

    Without places like Wal-Mart, however, it is likely that average American people would not be able to afford the lifestyles they live today directly as a result of what they could purchase from Wal-Mart at a discount price. Wal-Mart provides a place to buy goods in large quantities for low prices, which is great considering the harsh economic era our society is currently battling. Along with this, the plethora of jobs it offers lower class workers is extremely beneficial in aiding our society’s unemployment rate. With providing numerous job opportunities, unheard of discount prices, and very large retail selection, it seems that superstores like Wal-Mart seriously benefit our society, especially in modern times.

    Though this is appealing, there is one other option to consider: without Wal-Mart, the local businesses may ultimately lower their prices anyways as a result of retailer competition. With this, extreme competition amongst local businesses will drive some to the ground, full of debt and bankruptcy, while others face prosperity, expansion, and ultimately the flexibility and capital of a “local” superstore. In essence, the idea of low-priced, high-quantity superstores is a vicious cycle, one which will never exit our society.

    So, it seems that there would be no difference between having or not having superstores. Since the idea behind low prices along with high quantities is so appealing to both retailers and consumers, when a business has the opportunity to do so they will, without a doubt, take it up. With this in one way or another, stores will lower prices, offer discounts, and eventually out-do competition, just as Wal-Mart did.

  7. Rainyo Says:

    The South Park episode “Something Wall-mart This Way Comes” is an extremely funny, and wonderfully executed allegorical representation of the Walmart corporation. I think the guys at South Park Studios were dead-on in representing Walmart (named Wall-mart in the show to avoid copyright issues) as a “Matrix”-like corporation bent on total and utter control. In some ways, this comical portrayal seems to actually reflect Walmart’s modus operandi, but I tend to side with ndreynolds864 in that Walmart is just another business like all others out there, the only difference if that the people at Walmart were smart in how they chose to expand their business.

    Walmart (originally “Walton’s”) started off as a tiny general store in Arkansas. Sam Walton, the founder, was a crafty businessman who knew how to expand his tiny store into the mighty corporation it is today. So, why is Walmart dubbed as an evil corporation? I think it’s because people tend to name it so because it is successful. People/businesses who are successful are usually always met with some degree of hostility because others always want to question the other’s success, either out of anger that their mom and pop store was beat out by Walmart, or simply out of envy that the Walton family is extremely wealthy because of the corporation.

    I think that all the mom and pop places that complain about Walmart can also be quite hypocritical. Would the mom and pop place be complaining about Walmart if they themselves struck it big with their company? I’m sure to an extent they still would, since that is the nature of business, but I’m sure the newly expanded mom and pop store wouldn’t have so much hostility toward Walmart as they did because the owner’s would realize they have taken a similar path as Walmart had back in the ’60s. Sam Walton knew how to utilize his business to his full potential, who can criticize a man for being smart? Plus, I think there is an expansionist ideal inside all humans to some degree, that’s why we choose to move forward technologically, politically, etc. Humans always want to better themselves because the sad truth is that we are imperfect beings-Sam Walton had that same ideal, he just understood it better than most.

  8. mpogoda3 Says:

    I think that in America, the debate between whether or not Walmart is a good thing is irrelevant. This country has been founded on the fundamental principle of capitalism and Walmart has seemed to perfect the industry. After reading numerous articles about these types of business, they have an approach of being a familiar and homey place that people feel comfortable in. Instead of specializing in a specific item, they have EVERYTHING in mass that is cheap and accessible. While I do feel better for the small family businesses, they still have the ability to compete with these stores if their products are better quality, but not mine win the money battle. As a commentator stated earlier, corporations such as Walmart and Mcdonald’s allow the average American to live with quality products at a cheap rate. Despite the companies having effects on small businesses, it actually does a lot of good for the citizens of the country.

    In terms of Marx, he would of course disagree with the fundamental principle of Walmart. His biggest concern would be that Walmart is a business strictly conducted by capitalism. The problem with the post, as I see it, is that Marx would obviously disagree with Walmart, but that is the reason why he embraced Marxism and Communism. The post seems to be trivializing this obvious concern of Marx. While he talks about the profit crazy capitalist companies, Walmart is definitely one of them, but that is the whole point of capitalism.

  9. mcdonmeg Says:

    Personally I have mixed feelings about Walmart. I understand that Walmart tries to accomplish what every other company tries to too, and that is maximizing profits. However, the way in which they accomplish that seems sometimes greedy and detrimental to our society. They drive the prices low so that consumers begin purchasing their products, which leads to local business’s closing down their stores and once the local competition is shut down they raise their prices. Although I find this greedy, I can understand why Walmart does it.

    I don’t really blame Walmart for their business choices, but instead the consumers themselves. People complain all the time that the economy is bad, however people usually don’t make daily choices that would help the economy. Instead, they are more focused on the “now moment”. If people were really concerned about the economy, they would support the local companies and try to promote small businesses. However, people choose to go to Walmart because of the cheaper products. At that moment they are benefited more by paying less for more, but in the long run they are only hurting themselves and the economy. By people always going to Walmart, people are essentially giving Walmart more and more control over the market. Giving so much control of the market to just one cooperation, will only detrimentally effect our society in the long run.

  10. thelenj1 Says:

    I think Walmart is a horrible company and I hate having to ever go in their stores. The store definitely abuses the system. Their employees are overworked and can barely scrape by on the amounts they make. Very few get health care or even over time. Oversees it is even worse. In countries like China, Walmart makes their factory employees work an enormous amount of hours daily in horrible conditions, and there they do not even have to pay them minimum wage. Besides how they treat their employees, Walmart picks locations that are by small towns and drive countless family own businesses out of business. Walmart has also been known to not be environmentally friendly. They have been caught dumping waste into rivers by multiple of their locations. How the company is run goes against so many American ideals, yet most Americans are only worried about saving a couple of bucks. It is really sad.

  11. akmcoy Says:

    To answer your questions at the end of your post, I wouldn’t say that Walmart is a “genius” in the business world because they definitely weren’t the first superstore. With that said, however, they have clearly shown the capability of exploiting the system to the fullest. At the same time, they are definitely a detriment to the American way of life.. Personally, I’ve always viewed Walmart pretty negatively, and definitely still do. I think that the amount of small businesses they put under is very unfortunate especially given the state of the economy in the past few years. They are essentially monopolizing shopping by being able to bulk order all of their products and goods, and hold lower prices than all the local stores. Unfortunately, there’s nothing wrong with that, and this trend will only continue on. They will continue to overwork and underpay employees, while simultaneously forcing honest local companies out of business. I think to get the most valid opinion of Walmart’s business practices we need to ask the communities around them, most of which are very critical.

  12. kunalsaxena Says:

    In my opinion, what Walmart is currently doing is completely legitimate. The points that you highlighted about job creation is a very strong counter argument against people complaining that they are loosing their jobs. Similarly, to add to that, Walmart is the number 1 company in Forbes 500 companies. This means that it is a very key market player for America as an economy. If the general population tries to destroy Walmart, the whole US economy can be hit with higher prices. Granted it may or may not be marginally higher, however higher nonetheless. Similarly, if Walmart does breakdown, it has approximately 2.1 million employees who will be left unemployed. 2.1 million people is a significant amount and this would increase the unemployment rate exponentially. To look at it from the other side, I do empathize for local store owners, however, Walmart shows business excellence and these small stores will have to find other ways to satisfy customer wants and be profitable.

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