The Retail Revolution: How Wal-Mart Created a Brave New World of Business

Published by EH.NET (January 2010)

Nelson Lichtenstein, The Retail Revolution: How Wal-Mart Created a Brave New World of Business. New York: Metropolitan Books, 2009. ix + 311 pp. $25 (hardcover), ISBN: 978-0-8050-7966-1.

Reviewed for EH.NET by Art Carden, Department of Economics and Business, Rhodes College.

In The Retail Revolution, historian Nelson Lichtenstein makes another contribution to a growing pile of book-length criticisms of Wal-Mart. The book does its job by offering a rhetorically charged critical survey of the world?s largest retailer, but like other anti-Wal-Mart polemics it has conceptual, theoretical, and empirical problems that undermine its core message. I expected a relatively neutral, scholarly, and detailed survey of Wal-Mart?s role in the history of retail that grapples with scholarship on the changing American labor market. As I read it, though, The Retail Revolution is a survey of the ways Wal-Mart?s executives have failed to implement ? at their shareholders? expense ? the author?s vision of how the world should be. It will galvanize those who already think Wal-Mart is the embodiment of evil, but it adds little to our understanding of twentieth and twenty-first century American capitalism.

The back cover blurb from Barbara Ehrenreich is most telling. I quote it in its entirety because it provides a succinct representation of Lichtenstein?s analysis: ?Nelson Lichtenstein has written the book on Wal-Mart. You can read it as a sober indictment of the rogue company that happens also to be the world?s largest corporation. Or you can read it as a brilliantly reported case study in what?s gone wrong with the American ? and the global ? economy. Either way, you will read it, as I did, with complete fascination.? I propose a third way to read it: read it as a tract that preaches to the choir a very simple story featuring very clearly defined good guys (labor unions) fighting very clearly defined bad guys (Wal-Mart).

It is evident that those who do not share his worldview are not part of Lichtenstein?s implied audience. His rhetoric is audacious, and at times it is outright patronizing. Lichtenstein tries to connect the term ?supply chain? to slavery (p. 4). We read of the ?tentacles of trade and commerce? (p. 13) and learn that ?Wal-Mart and the GOP worked symbiotically to roll back the wage standards and welfare systems established since the New Deal? (pp. 7-8). U.S. consumer goods manufacturing underwent an ?evisceration? (p. 8). Wal-Mart?s corporate culture resists the enlightened progressivism of ?yankee? business practices and attempts to impose its ?alien? business practices on ?blue-state America? (p. 9). Lichtenstein acknowledges that some people are satisfied with their jobs at Wal-Mart, but I assume we are to attribute this to false consciousness.

According to Lichtenstein and other critics, Wal-Mart is morbidly obsessed with profit, but its managers commit an easy-to-identify pattern of money-wasting entrepreneurial errors (discrimination, high turnover, skimpy benefits, etc). The apparent inconsistency in these claims needs to be addressed. Lichtenstein points to people making more money for similar jobs in the same region (p. 143, for example). If their opportunities are better elsewhere, why don?t the workers move? If they are exploited, why don?t Wal-Mart?s competitors snap them up? This remains a mystery. Lichtenstein and others need to clarify exactly how discrimination and obsession with profit can coexist at Wal-Mart. I am skeptical of cultural explanations because elsewhere, Lichtenstein identifies Wal-Mart?s iconoclastic approach to business culture in domestic and international procurement.

For the most part, Lichtenstein ignores economists? work on Wal-Mart. His mention of Kenneth Stone?s mid-1990s work notwithstanding, economists who have written on Wal-Mart are not mentioned. Particularly since economists deal explicitly with some of Lichtenstein?s key claims ? see, for example, the section sub-headed ?Prices and Purchasing Power? that begins on page 246 and that makes no mention of empirical research on Wal-Mart and prices ? this is a conspicuous weakness.

Lichtenstein judges regulations and other interventions with reference to their progressive intentions (see pp. 105-106, 107, 118, 120-21, 202 for examples). His engagement with economics is limited to nonexistent: he doesn?t consider public choice interpretations or the possibility that (for example) minimum wages reduce employment. Discrepancies between the intentions of government edicts and their effects are apparently the result of moral failings rather than changes in incentives.

In an intriguing passage, Lichtenstein compares Sam Walton?s popularity in China to the principles that made Mao Tse-Tung so popular (pp. 191-94). As Wal-Mart?s presence in China grows, I would be interested in seeing further comparative analysis that highlights the similarities and differences between the two iconic figures. Mao killed people by the tens of millions. Sam Walton is perhaps the most visible face of a set of forces ? free-market capitalism ? that has lifted hundreds of millions of people out of poverty.

The book is not without its merits, and Lichtenstein surveys a number of topics that will inform my own future work on Wal-Mart. Most interesting are his discussions of the cultural foundations of Wal-Mart?s business ethos and the company?s overseas failures. An extension of this line of work, perhaps with reference to some of the themes developed in C.K. Prahalad?s The Fortune at the Bottom of the Pyramid, would be useful. The company?s cozy (and growing) relationship with governments deserves to be explored in much greater detail. Unfortunately, Lichtenstein?s insights are obscured by his anti-Wal-Mart bombast.

Art Carden is the author (with Charles Courtemanche and Jeremy Meiners) of ?Does Wal-Mart Reduce Social Capital?? Public Choice (2009) and ?Wal-Mart and Values: Painting the Town Red?? Business and Politics (2009); and (with Charles Courtemanche) of ?Wal-Mart, Leisure, and Culture,? Contemporary Economic Policy (2009).