Wir sind bettler. Hoc est verum.

Now I do not like to be a doomsayer, but I think Wal-Mart, the great success story of Capitalism, will ultimately be the noose that hangs it. I will be the first to say: “Capitalism works” I believe history shows us that there is no other system on economics which creates the freedom, wealth, and “happiness” that capitalism does. Capitalism’s results may not be perfect, but it’s not because the system is flawed, but because humans are flawed and tend towards sins of greed, lust, and the like. Wal-Mart is no doubt a success story for Capitalism, for it effectively used the free market to create one of the world’s largest companies and make its owners more successful than the founders of Microsoft put together, at least according to George Miller’s essay “Wal-Mart Harms Americans”. However, to me these facts are unimportant, what is important is that Wal-Mart is huge, has tons of employees and arguably mistreats said employees.

Now it is no secret that Wal-Mart doesn’t pay its low level employees very much, and that many of them are not allowed to work full time, so that Wal-Mart doesn’t have to pay for their benefits. Now I do not think these employees were duped into working there and have decided to do so under their own freewill, and can leave at any time, so my problem isn’t namely in that. That’s how the system works, people offer jobs and people accept jobs when the terms work for both. My problem with Wal-Mart is with the long term effects will be on the wages they pay and the power they have over manufacturers and wholesalers.

I would think that my fellow Capitalists would agree with me that when a government starts dictating wages and prices of goods, that’s a bad thing. We Capitalists think that the free market should dictate price. Yes, I know that back in the day many Capitalists took advantage of this by charging high prices, and by mistreating employees, however, much of that has been fixed by now, and I do not think it is fair to put such evils on contemporary Capitalism. The strength of Capitalism is that the market will, in time, exert pressure which will change many injustices. The evil that Capitalism was apart of in the past we largely due to the fact that the population was ok with it. People were ok with accepting jobs for such low wages, and were ok with working long hours. It wasn’t until enough of them became not ok with it, that all of it started to change. The problem with our society now is that we are moving more towards socialism and away from Capitalism.

My question to everyone is, what happens when a company become so big that it can exert pressure on a market beyond normal market pressures? Take for example how the market normally works. Company A sells product B and consumers want to buy product B, Company A must figure out at what price they can sell product B and make the most profit because consumers are more likely to buy a product when the price is lower, however Company A cannot charge too low of price because they have overhead in labor and other costs, as well as the fact that they have to get product A from a manufacturer who themselves have costs and have to charge a minimum price. This means that Company A has to charge say $5 for the good because they pay $4 for the item from the manufacturer. The manufacturer has to charge $4 because of overhead and other costs. So the consumer will pay $5 for the product B, yes it is true that more consumers will buy the product at a lower price, but the market won’t allow it.

This is where Wal-Mart comes in. Wal-Mart does a few things, first they cut their own costs by paying their employees less than the living wage and what their competitors do, thus they can charge a lower price than their competitors, say $4.80 for product B with just the labor cost savings. But because they are so big and powerful and sell so much, manufacturers want to sell through Wal-Mart because they will make a lot of money, thus Wal-Mart uses this to their advantage, and makes the manufacturers charge them only $3 for product B, and thus Wal-Mart can charge $3.80 for product B, make what they did when the price was $5 and sell a whole lot more than any other competitor, and eventually run them out of business because manufacturers will not give them such low prices because they are not Wal-Mart. But what does this mean for the manufacturer, the manufacturer doesn’t want to charge only $3 for product B because that means losing money, so they must figure out how to cut their own costs. They do this many times by cutting wages, and hiring lower skilled employees, hiring more part time so they can cut benefit costs, and buying cheaper materials from other companies. Because they have to cut costs so much, many times the quality of the product suffers, which Wal-Mart doesn’t care about because they only care about selling the product cheap.

Now usually such things are good, and for much of Wal-Mart’s existence this behavior helped to make the markets more efficient and productive, all good things. However, I believe that Wal-Mart has gotten so big, that their power is like that of the government, where one entity is able to dictate prices over what the free market dictates. The main reason for this is because Wal-Mart is so big that no one can compete with them, everyone wants to sell through them, and they provide so many jobs that people need to work for them, because they might be the only available job in that city. Because Wal-Mart is a Mega-Monopoly they keep the market out of equilibrium and do not let Capitalism work. They are at the other extreme of socialism, hyper-capitalism which in essence does the same thing as socialism to free markets. Again Wal-Mart is not a failure of Capitalism, but a moral failure, they put their own short term profits over long term plans. I predict that this short sightedness will both destroy Wal-Mart and Capitalism. If Wal-Mart continues to mistreat their employees by paying them such low wages (so low they cannot afford to live in the area on just their Wal-Mart salaries), they will literally make the area’s in which they exist poorer and poorer as they siphon money out of that area and into their corporations coffers. This will happen because either its employees will have to rely on tax payers to subsidize their low wages, or else they will have to work a second job, which will take away jobs from other people, because now you have a bunch of people working 2 jobs instead of one, and when you have a job shortage this is not a good thing.

Wal-Mart will also destroy Capitalism, because their irresponsible and selfish business practices will taint the good name of Capitalism. People will see Wal-Mart’s mistreatment of employees, manipulation of the markets, and low quality of goods as a failure of Capitalism and a good reason to get rid of Capitalism. When it isn’t a failure of Capitalism but of people’s morals. The leaders of Wal-Mart care more about their own profits and success than the success of their suppliers, and employees. They do not want a competitive market, they want to be the only player in town. Capitalism works best when there is competition, not under monopolies. I believe in the free market, in Capitalism, however, I also see that men are evil and need to be restrained. If you allows some markets to be completely uncontrolled, then you will get mega-monopolies like Wal-Mart which ultimately pervert the free market.

Capitalism is the best economic system, but men are evil and will pervert any economic system. We need to stay with Capitalism, however we need to as a society be concerned about justice and ethical treatment of people. As a people need to check our own greed, and be concerned for the welfare of our fellow man. I do not think that the Government is the solution for Wal-Mart’s problems, God ultimately is, and it is up to the people to exert pressure on the company through the free markets so that Wal-Mart will consider the ethical and fair treatment of their employees and manufacturers. Now I typically do not like unions in what they have become, but they are useful in such circumstances, and Wal-Mart does not let employees form a union, which I think is wrong, because that means they keep their employees from sticking up for themselves. Ultimately I think Wal-Mart is a Capitalism success story and has done many good things for our country, however they do some unethical things in their treatment of their employees which I do not think the public can turn a blind eye to. Success in life isn’t just about profits and income, its also about how you treat your fellow man. I think many of the management in Wal-Mart should be ashamed of themselves for how they have treated the people who rely upon them, they have let greed, profits, and success corrupt them into unjust men. Let’s not give people any more reasons to wrongly hate Capitalism.

P.S I hope to create discussion on this topic and this article is by no means comprehensive. I just think Wal-Mart is hurting Capitalism now, and is hurting America in the long run. We will see if I am right. Please post your comments so we can discuss this very difficult issue. Namely how far do we take Capitalism, and how much influence should the government have and what kind of moral standards should we hold companies too, and are profits really everything? Are profits really the point of Capitalism, or is it something greater?