The People's Republic of Walmart

by Leigh Phillips

  This “perfect” free market only exists in the minds of its most ardent defenders and within the pages of introductory economics textbooks. Real markets are a far cry from this idealized fairy tale: companies regularly collude to keep out competitors, large corporations constantly lobby for government subsidies, and it is the norm that a few big players dominate entire product categories and set prices. One market in particular—the labor market—needed centuries of coercion and dispossession to turn peasants and farmers into workers willing to sell their labor for a wage. Frequently, supply and demand do not reach equilibrium; as a result, the market system regularly leads to crises of overproduction, which in turn provoke recessions and depressions, with wrenching consequences for millions of people. The market’s inherently competitive mechanisms catalyze, take advantage of, and exacerbate a range of inegalitarian prejudices based on identity (race, gender, sexuality and so on); lead to disruption of ecosystem services upon which humans depend; and drive militarist rivalry between nations that precipitates colonization, gives rise to imperialism, and ultimately triggers wars. While the real world is often one of messy disequilibrium, of prices created by fiat rather than emerging from the competitive ether—and, as we’ll see, one configured by capitalists who plan—it remains one where markets determine much of our economic, and thereby social, life.

  In general, criticisms of the current way of doing things propose that the market be replaced, or at least reined in. But if allocation does not proceed via the market, then it will occur via economic planning, also known as “direct allocation”—made not by the “invisible hand” but by very visible humans. Indeed, this form of planned allocation already takes place widely in our current system, on the part of elected and unelected individuals alike, by both states and private enterprises, and in centralized and decentralized forms. Even arch-capitalist America is home not only to Walmart and Amazon, but also to the Pentagon: in spite of being incredibly destructive, the US Department of Defense is the single-largest employer in the world, and a centrally planned public sector operation. In fact, almost all countries are mixed economies that include various combinations of markets and planning.

  Indeed, planning has accompanied human societies as long as they have existed. Thousands of years ago, the civilizations of ancient Mesopotamia created a nexus of economic institutions that connected the workshops and temples of the cities to peasant agricultural production in the countryside. The Third Dynasty of Ur (Ur III), which flourished around the Tigris and Euphrates Rivers near the end of the third millennium BCE, was among the first to make the breakthrough to widespread permanent record keeping. Clay tablets from Ur III include predictions of crop yields based on averages of soil quality, themselves derived from years of record keeping. Even though the economy was still at the mercy of uncontrollable weather, it could be managed at a rudimentary level. With the advent of detailed accounts, expectations and approximations—both crucial to planning—became features of economic life. Unlike the localized gift-exchange economy of prehistory, ancient Mesopotamia saw systems of centralized redistribution that mimic today’s welfare states: taxes and levies in, transfers of goods and services out.

  Alongside writing and mathematics, building blocks of civilization that developed in tandem with economic record keeping, the ancients also developed money—only not in the way some economists imagine. In an oft-repeated passage from The Wealth of Nations, Adam Smith wrote that “the propensity to truck, barter, and exchange one thing for another” led to the division of labor, the invention of money and greater economic complexity. This bit of make-believe has been passed down for centuries and can still be found in most introductory economics textbooks. The problem with this intriguing tale is that it is false. Specialization developed within large household compounds where there was no internal exchange; heads of households distributed total household production among members—they planned. Money, on the other hand, arose largely as a tool for traders, mercenaries and others to settle debts with the ancient temples. As economic complexity grew, money was more widely adopted as a means of keeping track of taxes and other major transactions. Some prices floated in extraordinary times: for example, the price of grain during a very bad harvest. Most of the time, however, prices were highly standardized.

  Early planning and early money worked in synergy. In Babylon, for example, one mina of silver was divided into sixty shekels, corresponding to one gur of barley divided into sixty kur. Each kur was a half-day ration of food given to workers. So one gur was a monthly ration worth one mina (under a standardized calendar of thirty-day months, with a New Year festival lasting a few days to realign with the solar year). Such easy equivalencies simplified account keeping and planning.

  Increasingly complex economic record-keeping, accounting and social institutions all point to early ancient civilizations producing something that cannot but be described as economic calculation and planning. This is not to say there was some Arcadia of central planning at this time, any more than it is accurate to describe hunter-gatherer society as some peaceful egalitarian Eden. The planning of the ancients was not only rudimentary and partial; it was also far from being a rational way of securing the shared benefit of all. Indeed, ancient planning was at the service of an economic system created for the benefit of a small coterie of elites who were motivated to maintain their wealth and power. Sound familiar?

  Despite the persistent inequalities that stretch back to the Ancient World, there are nevertheless reasons for hope today, including the millions whose curiosity has been piqued by references to socialism by Vermont Senator Bernie Sanders during the 2016 presidential primary, and more recently by a series of contenders for political office across the United States. In the UK too, as of this writing, an unabashed socialist, Jeremy Corbyn, heads Her Majesty’s Loyal Opposition. As the political debate becomes more polarized, young people on the whole, even in the Anglo-American center of the capitalist order, now view socialism more favorably than they do capitalism. Across Europe, far-left parties that proffer a rhetoric that endorses socialism, or at least some other way of doing things than business-as-usual capitalism—from Syriza in Greece to Die Linke in Germany and Podemos in Spain—are chasing the traditional social democratic parties and in some places eclipsing them, albeit with a widely varying mixture of success. And while Latin America’s Left has recently experienced electoral losses, leftists across that continent have been experimenting with old and new socialist ideas, both within and outside of government.

  There is not only a crying need for us to talk about what that alternative to the market would be, but also a great deal of confusion about what planning is and its history. To take one example: China appears to be the last man standing in the global economy; its growth rates, even if they have declined recently from eye popping to merely gobsmacking, have been achieved through an admixture of free market mechanisms and very heavy shepherding by authoritarian central planners. It seems even some members of the ascendant bourgeoisie in that country believe that Mao’s economic planning was less mistaken than premature. A 2018 Financial Times feature describes Jack Ma, founder of the Chinese e-commerce colossus Alibaba Group, as part of a growing movement in the People’s Republic who argue that “the fatal flaw of state planning was simply that planners did not have enough information to make good decisions.” He and his co-thinkers believe that “big data” can solve this problem. But is this what we mean when we talk about an alternative?

  Even though it has been more than a quarter century since the end of the Cold War, anyone who questions the outcomes of the free market is immediately pounced upon as an apologist for the Soviet Union and its satellites—failed authoritarian regimes that were indeed planned economies. Doesn’t their collapse, following decades of economic decline, show that planning does not work?

  These questions are far from academic. In such volatile times, it cannot be ruled out that a socialist candidate or party might soon form a government in the
capitalist heartlands. If they do not take pains to sketch out ahead of time what an alternative to the market might look like, those involved will inevitably fall back on versions of what they already know. The capitalist-realist earworm, like the Ceti eel in Star Trek II: The Wrath of Khan, remains wrapped around our cerebral cortex, foreclosing the possibility of transformation even at the moment of its realization.

  The time, then, is as ripe as browning avocados on toast to uncover a very old conversation: a long-standing but largely forgotten argument over the question of planning.

  Our aim is not to offer a comprehensive, definitive survey of this almost century-long discussion, which economists refer to as the “economic calculation debate” (or “socialist calculation debate”)—whether it is mathematically and physically possible to plan an economy, and whether this is desirable—but to provide a plain-language, hopefully even enjoyable, introduction for the uninitiated. In the main, we aim here to bring together and make more easily comprehensible ideas and findings that have been forgotten or are otherwise jargon filled, mathematical, or computer-science-oriented, or which lie buried in the pages of little-read operations-research or business-management journals. Thus, we lean heavily on the work of economic historians, computer scientists and scholars of commerce. In writing a primer on planning, and on the challenge of logistics and economic calculation, we hope to take this vital debate down from moldering academy shelves and reintroduce it into the field of live political combat.

  Above all, our goal with this brief text is simply to flag a rarely recognized, yet obvious, fact that in some sense makes the “calculation debate” anachronistic: it is already the case that great swaths of the global economy exist outside the market and are planned. Walmart is a prime example. Thus the question as to whether planning can exist at large scales without crippling economic inefficiencies could be moot. The caveat is that such vast, centrally planned enterprises—and they are so vast that we should really call them centrally planned economies—are not planned in any democratic fashion.

  Although it may not sound sexy, our contention is this: When we say we want an equal society, what we’re fighting for is democratic planning. There is no machine that can simply be taken over, run by new operators but otherwise left unchanged; but there is a foundation of planning that a more just society could surely take up and make its own.

  This is not so much a book about a future society, but one about our own. We plan. And it works.

  2

  COULD WALMART BE A

  SECRET SOCIALIST PLOT?

  Could Walmart be a secret socialist plot? This is, in effect, the question that Fredric Jameson, American literary critic, Marxist political theorist, and cheeky devil, all too briefly poses in a footnote to his 2005 volume Archaeologies of the Future, a discussion of the nature of utopia in the age of globalization. Since the demise of post-war technological optimism in the ’70s, Jameson finds that the once robust tradition of utopian thinking has waned considerably; the bare handful of fresh utopias that he identifies as having emerged—be it cyberpunk aesthetics or the cheerleading for corporate-led globalization—appear wholly unimaginative in comparison to their promethean and modernist predecessors, who did not content themselves to merely transform realms of communication and information the way contemporary utopians might. These are mere sectoral concerns, he says, rather than grander, society-wide ambitions; they are not comprehensive utopias.

  Today’s soi-disant utopians take little advantage of the genuinely new, what Jameson calls “properly utopian,” resources available now. Bits of a better world that we could exploit are already sprouting up yet no one seems to have noticed them. In a brief footnote, gleefully poking at the progressive consensus that regards Walmart as a globe-barnacling chain of retail hypermarkets, the Galactus of capitalism, the beau idéal—perhaps more so even than Goldman Sachs—of everything that is wrong with everything that is wrong, Jameson wonders whether we might in fact be missing a trick about this transcontinental marvel of planning and logistics:

  The literary utopists have scarcely kept pace with the businessmen in the process of imagination and construction … ignoring a global infrastructural deployment in which, from this quite different perspective, the Walmart celebrated by Friedman becomes the very anticipatory prototype of some new form of socialism for which the reproach of centralization now proves historically misplaced and irrelevant. It is in any case certainly a revolutionary reorganization of capitalist production, and some acknowledgment such as “Waltonism” or “Walmartification” would be a more appropriate name for this new stage.

  But beyond these comments, the provocation is not fully developed. He lets the suggestion just hang there until the publication five years later of an essay on the subject: “Walmart as Utopia.” Here, he insists more full-throatedly that Walmart is not merely a useful institution from which, “after the revolution,” progressives could (per Lenin) “lop off what capitalistically mutilates this excellent apparatus.” It is not residual of the old society, he says, but rather something truly emergent of the new one yet to be born. Walmart is “the shape of a Utopian future looming through the mist, which we must seize as an opportunity to exercise the Utopian imagination more fully, rather than an occasion for moralizing judgments or regressive nostalgia.”

  This is no contrarian “edgelord” rustling of jimmies, performed simply for the lulz; Jameson is genuinely fascinated with the emergence of this novel entity that is resistant to easy categorization. He compares it to the discovery of a new species of organism, or of a new strain of virus. He delights at the apparent contradiction of how the largest company in the world, even in its full-spectrum dominance—indeed precisely because of this omnipotence—is described by admiring, horrified business writers as a boa constrictor slowly but inexorably strangling market capitalism.

  But even here, Jameson is still mostly interested in using Walmart as a thought experiment—a demonstration of “the dialectical character of the new reality,” and an example of the notion within dialectics of the unity of opposites: the firm as “the purest expression of that dynamic of capitalism which devours itself, which abolishes the market by means of the market itself.”

  Such philosophical arabesques are more than worthwhile, but we are curious about something perhaps a measure more concrete. We want to take Jameson’s provocation beyond a footnote or a thought experiment and, in the light of what we know about Walmart’s operations, revisit a nearly century-old argument between those who favored socialism and those who asserted that capitalism offered the best of all possible worlds. For beneath the threadbare cliché of the maxim that socialism is “fine in theory, but impossible in practice,” there in fact lie claims about economic planning, and about how to calculate an egalitarian distribution of goods and services without need for markets. Furthermore, the appearance that these claims have been settled by the failure of the undemocratic Soviet Union and its satellites is merely superficial. And counterintuitive as it may seem at first, the no less undemocratic Walmart, and a handful of other examples we will consider, offer powerful encouragement to the socialist hypothesis that a planned economy—this time democratically coordinated by ordinary working people, rather than by bureaucrats or bosses—is not merely feasible, but more efficient than the market.

  But before we begin to explain how Walmart is the answer, we first have to ask: What is the question?

  The Socialist Calculation Debate

  Since the neoliberal revolution of the 1970s and its acceleration following the end of the Cold War, economic planning at scale has been widely derided from right to center-left, and planned endeavors such as public healthcare have been under attack from marketization in most countries. In most jurisdictions, the electricity systems that were once in public hands have long since been privatized; therefore governments committed to efforts to decarbonize electricity companies have had little choice but to employ market mechanisms such as emissions trading or carbon
taxation, rather than reducing greenhouse gas emissions via democratic fiat—that is, simply ordering the electricity provider to switch to non-emitting fuel sources. Almost everywhere, transportation, communication, education, prisons, policing and even emergency services are being spun off wholly or in part from the public sector and provided instead by market actors. Only the armed forces remain a state monopoly, and here only up to a point, given the rise of private security multinationals such as the notorious G4S and Blackwater (rebranded as Academi since 2011). The handful of social democratic and liberal parties that still defend public healthcare and public education do so while making vague assertions that “government has a role to play” or that “government can be a force for good.” But they don’t really say why; and in any case, this is making a case more for the state, rather than for planning per se, even though “the state” and “planning” are far from synonymous. Social democrats today will argue for a mixed economy, or for a mixture of state planning and the market—but again, they do so without saying why. If planning is superior, then why not plan everything? But if some goods and services are better produced by the market than by planning, then what are the attributes of these particular goods and services that make them so? All this activity and argument empty of actual argument reflects a set of policies enacting surrender to an unchangeable status quo, the architects of which only retroactively attempt to transform such capitulation into a coherent ideology. For much of social democracy in the twenty-first century, beliefs follow from policies, rather than policies from beliefs. And while those centrists and conservatives who cheerlead the market stop short of advocating a world where everything is allocated via markets, they still do not offer arguments explaining why their preferred admixture of market and planning is superior. When challenged, they simply describe the current state of affairs: “No economy is completely planned or completely market-based.” Well, plainly this is true. But again, this gives no explanation as to why their favored configuration is optimal.