Yesterday Wal-Mart announced plans to quintuple its workforce in China, adding 20 new stores to the 56 it already operates.
It is very libertarian chic to be pro-Wal-Mart these days, mostly for good reason. But while ‘big box’ retailers like Wal-Mart deserve credit for job creation and for the truly innovative supply-chain efficiencies they have created, the trouble is that discount retailers in the US have always functioned in an unhealthy state of symbiosis with government, often with huge leverage at the local level, where tax incentives can often overrule ‘the market.’ It’s pure back-door socialism of the most cynical kind–not evil, just kinda co-dependent. Which is why it’s so fascinating to think about what Wal-Mart will do in China.
Like joining the Communist Party? In 2004, Wal-Mart agreed under pressure to allow its Chinese stores to ‘unionize’–the only Union in China being the Communist Party. Okay, I’ll give them that one, as it seems hard to avoid. But where is it all headed? I can see this whole Wal-Mart in China thing going a couple of ways:
In the ‘Hell’ scenario, Wal-Mart, which grew up suckling on the (relatively) vestigial socialist glands of the United States will absolutely flourish in China, due to abundant access to the unpasteurized milk of communist kindness. In this version of the story, communism, coupled with the superior economic and organizational model brought to bear by Wal-Mart, actually experiences a revival and renaissance, Wal-Mart providing the missing link – a viable economic model – and the Chinese government providing the regulatory breeding ground for a thousand years of centrally-planned, iron-fisted, prosperity in which the retail ethic of ‘choice’ ineluctably replaces the value of ‘freedom’. This is the scenario in which it will be necessary for the crew of the Starship Enterprise to travel back through time to Earth in the 1950s to kill Sam Walton while he’s still a fresh-faced young bootstrapper.
In the ‘Heaven’ scenario, Wal-Mart and the Chinese manage to civilize each other without symbiosis, resulting in the kind of benign, socialized capitalism Schumpeter dreamed of in his dotage – a world where everyone is so prosperous that capitalism naturally comes to admit socialized services because things like food shelter and healthcare are of such marginal relative cost that, like water and power, that they flow as easily from the Mongolian Steppes as do the milk and honey and human kindness. Did I mention that in Heaven, Wal-Mart’s goods are delivered faster than ever by a fleet of highly compensated, well-insured flying pigs?
A third scenario? Wal-Mart fails to ‘get’ the Chinese market, the Chinese fail to ‘get’ Wal-Mart, and neither time travel nor genetic engineering become necessary after all.