Thomas Klikauer and Nadine Campbell
Many people know that Walmart is an execrable, sinister, low down dirty villain company best described by the term “flagitious,” i.e. horribly, criminal, and wicked. Walmart exploits workers and pays poverty wages. Walmart boss Sam Walton admitted, I pay low wages. His company depends on Asia sweatshops with child and prison labor. Walmart regards union-busting not only as a necessary accompaniment to their high-profit enterprise but places it at the very core of their business model.
Despite all this, Walmart is a gigantic planning organization. It is centralized to a level akin to the Soviet Union. Walmart does not have the size of the former CCCP or Союз Советских Социалистических Республик, the Russian abbreviation for the Soviet Union or Union of Soviet Socialist Republics. Still, Walmart’s economic size equals that of Sweden or Switzerland. It ranks 38th on the list of the top 100 largest economies in the world. In this game, size matters.
Walmart stocks products from more than seventy nations, operating some 11,000 stores in twenty- seven countries. TradeGecko, an inventory-management software company, defines Walmart’s central planning system as one of history’s greatest logistical and operational triumphs. The Walmart corporation simply is manna from heaven for anyone with knowledge of what business schools call operations management and its subdivision of logistics. It is also part of supply chain management.
Like the former CCCP, operations management operates without democracy. Still, Walmart’s operation is highly centralized like the CCCP’s Gosplan. In Walmart’s supply chain, all participants in the chain recognize that they all will gain more by cooperating as a trusting, information sharing whole than they will as competitors. There is no competition, no internal buying and selling, and no internal market. It is planning as far as the eye can see, and it is planning on a massive scale. In that, Walmart avoided what Sears did.
Sears versus Walmart
One of Walmart’s main competitors – before Amazon arrived at the scene – was the 120+-year-old Sears company – ala the Sears Tower in Chicago. Unlike Walmart’s massive planning, Sears did the exact opposite. Perhaps enticed by the lures of neoliberalism’s free-market ideology, Sears destroyed itself by implementing the precise opposite of Walmart’s galloping non-democratic socialization of planned production and distribution. Sears instituted an internal market inside the company in the false hope that neoliberalism’s market ideology would lead to success. Very unfortunately, there is still a gap between ideology and reality. The false promises of neoliberalism did not materialize.
Today, there is a nearly universal conviction among the many in the business press, a quasi-scholarly professor in various business schools, and dozens of very bitter former Sears executives. They are confident that the overriding cause of Sears’s failure has been the disastrous decision by the company’s then chairman and CEO Edward Lampert. Lampert moved the company into a different direction compared to Walmart. Lampert converted internal divisions into competing units operating on a free market of price-driven exchanges. Faithful to neoliberalism’s catechism of its quasi-religious beliefs, Lampert saw the internal market as a panacea and a road to success. He introduced an internal market into Sears and, by doing that, sealing the faith of Sears.
While the corporate business press, including the Harvard Business Review, likes to celebrate the heroic CEO, it is less celebratory when those celebrated corporate CEOs screw up big time. The pro-business press is even less celebratory when these heroic CEOs implement the free market and fail bitterly. As Sears killed itself by traveling a fifty year-long Road to Ruin, Walmart moved in the opposite direction with planning. Walmart has no internal free market. It did not follow an ideology partly set up by Pinochet-loving Hayek. Today, Hayek’s disciples are eager to cover up the truth about the Hayek-Pinochet connection. Most likely, Hayek, when visiting his friend Pinochet in 1977 and 1981, never saw Villa Grimaldi – Pinochet’s torture center. Pinochet friend Hayek was spared witnessing electric torture, the cutting off hands from those who played music Pinochet did not like, and the cutting of tongues of those who sung rebel songs.
Undeterred by such torturous truths, the world has embraced Hayek’s main ideology of a free market. For billions of our global poor, the free market has not worked its supposed magic. Meanwhile, Sears introduced it to its own peril. At Walmart, planning was, in fact, almost everywhere. Simultaneously, the propagandists of neoliberal economics had largely spun their pathological tales even more fantastical than UFOs visiting planet earth. It still is a fairy-tale-like story of a harmonious and self-regulating market. In short, what destroyed Sears is what Walmart avoided. Not the free market, but planning helped Walmart’s brand value of $77bn.
Companies like Walmart and McDonald’s and many others plan everything from how money is distributed between departments to the exact amount of time it should take to assemble a hamburger. There is a very good reason why many signifiers of corporate capitalism avoid neoliberalism’s free market like the Bubonic Plague and the Black Death. These giants, corporate capitalism, perform an in-house imitation of the Soviet Union simply because the cost is too high of leaving it up to markets. The system forces them to coordinate decision and pushes them toward planning. The free market’s internal price checking, negotiations, agreements, contractual exchanges, etc. are just too time-consuming or better too time-wasting for such companies.
Neoliberalism’s free-market ideology works very well as an ideology, but it works less well for companies and corporations. Corporate managers know the pitfalls of the free market, and they might also suspect that Adam Smith’s infamous invisible hand is not just invisible but sheer nonsense. Not surprisingly, the god-father of strategic management, Alfred Chandler, called it The Visible Hand. Corporations depend on the visible hand of management – not on the illusion of an invisible hand. Chandler belongs to a group of US management thinkers that run under the leitmotif, and planning can do no wrong. Most, if not all, managers understand this.
Real managers at Walmart, as well as management writers, know that the invisible hand has to be visible to run companies and corporations. They also know that avoiding the free market inside companies secures corporate existence. They might also suspect that the free market is a useful ideology, but not much more. To them, the free market does not work. It would be a bit like hiring a car mechanic to take apart and inspect the engine of a used car before you buy it to find out if it is a lemon. This can cost more than the car itself. Markets can fail. Moreover, there are other cases – some people will end up overpaying for health insurance, while others will be uninsured. This is particularly true for countries without a national health service like the USA.
Meanwhile, back at the Walmart corporation, managers who do strategic planning do not run their business organizations as democracies. Rather, management is, by definition, an authoritarian institution. It is not only non-democratic but thoroughly anti-democratic. Chomsky was correct in saying these are islands of tyranny. In short, most people who have to work in such islands of tyranny remain in stable but crappy bullshit jobs in which they have little say over how they work. This is the case whether to work for Sears or Walmart. The same goes for Amazon.
Amazon versus Walmart
At companies like Sears and Walmart, planning is not only possible, useful, and very profitable, it is also very essential. Planning is all-around workers, albeit it comes very much like in the CCCP as a hierarchical and undemocratic form. Following CCCP’s model of central planning, Amazon has become one of the world’s largest tech-company using the fruits of modern IT and AI to distribute a massive amount of consumer goods. Like Walmart, Amazon is a master planner. In fact, in its early days, Amazon headhunted –HRM’s term for poaching– so successful that many top-managers from Walmart moved to Amazon’s logistics and planning department. Walmart lost so many managers it sued Amazon.
Unlike Amazon, a conventional brick-and-mortar store like Walmart often does not know which products you –the customer– look at, how long you spend looking at them, which ones you put in your cart, and then put back on the shelf before arriving at the checkout, or even which ones you wish you had. They know which product it can sell to you, and they even know which product you do not really need and which product that marketing made believing that you need. Amazon knows all that and more, and it might know more about you than you know about yourself. This is the triumph of planning, marketing psychology, IT, and increasingly AI, which has become a weapon of math destruction.
Unlike Sears, Amazon has chosen to plan rather than leave organizational optimization up to price signals from some elusive markets, as Hayek’s hallucination would tell managers. However, like Walmart, Amazon depends on horrible working conditions, low taxes (or no taxes), and poor wages. It nevertheless – or perhaps because of this – functions. Amazon’s planning exists on a wide scale within the non-market “black box” of corporations. Similar to the years 1920 to 1980 in the Soviet Union, planning for Amazon is good enough rather than perfect. In the CCCP, planning was never perfect – nothing was perfect, not even the Gulag.
Amazon, like Walmart, used IT and AI to optimize its planning and logistics but also its inhumane working conditions. Its algorithms are used for work optimization and intensification. It eliminates constraints that hinder squeezing out even more production from its underpaid workers. These workers become ever more like Karel Čapek’s Rossumovi Univerzální Roboti, i.e., human robots exploited to the highest level.
Of course, exploitation – in the sense of hard work and Marx‘s sense, i.e., surplus value – includes not only workers but the entire business operation. In rather simple terms, Walmart and Amazon are gigantic planned mechanisms for the exploitation of workers and the distribution of goods. Both corporations have vast mechanisms for forecasting, planning, managing, and meeting demands for an incredibly wide array of consumerist things. – some are needed by people, and others are wanted as engineered by marketing.
Like all companies and corporations, Walmart and Amazon need people to be exploited. To make this look good is the job of HRM. But these corporations also need operation management, which is the planning; they need marketing so that people know Walmart and Amazon sell stuff and do not make train carriages, for example, and finally, they need finance. This is the job of financial planning and banks that loan money to companies. For Austrian political economist Schumpeter, banks are the private equivalents of Gosplan.
It is not just the CCCP’s Gosplan. The west engages in planning as well. In fact, government-funded and planned basic research, for example. This has led to significant breakthroughs like email, the Internet, and the world wide web, etc. Long before that, penicillin, for example, was produced and controlled by the USA’s War Production Board – a planning agency. The WPB distributed it to the armed forces and the US Public Health Service. Today, the US army remains one of the largest employers in the world. It is an organization based on massive planning – not the free market. The central agency of this colossal planning effort remains the Pentagon.
The aforementioned Austrian anti-communist Schumpeter assumed that the replacement of capitalism by some form of collectivist planning is unavoidable. The enthusiastic anti-socialist, nevertheless, saw how the capitalism of his time was aggregating production and creating ever-larger institutions. He thought these planning organizations would not only benefit companies and corporations but also governments and adjacent agencies, bureaucracies, and other institutions. He thought that capitalism’s future lies in internal planning on ever-larger scales.
A second example is Big Pharma. Like General Motors, Mercedes Benz, and big pharma does not produce things and wonders down to a romantic village market to see if these things sell. This sort of ideological hallucinations only exists in the first pages of neoliberal economics textbooks. In reality, former editor of the New England Journal of Medicine (not known to be a hotbed of anarchism), said in 2004 that large pharmaceutical companies blame high drug prices on exorbitant research and development costs. In reality, these corporations spend a large amount of money on marketing. Besides, it was and still is government-funded laboratories that are responsible for about two-thirds of new molecular entities during the last decade. In the world of medicine and public health, Britain’s NHS also exists. Despite decades of deliberate underfunding, the NHS still remains another agency with substantial planning. The NHS employs 1.4 million people in the UK.
Virtually all of these institutions show stark similarities to CCCP-like planning. In their book The People’s Republic of Walmart, Leigh Phillips and Michal Rozworski write, once there was this thing called the Soviet Union. Perhaps you’ve heard of it? Nasty business. Gulag. Secret police. Millions killed. Trousers came without zippers—no pineapples or Elvis. And the collapse of the USSR sort of irrefutably demonstrates the impossibility of planning, don’t you think?
Ecologic-Democratic Planning and the Future of Humanity
Set against this, one might think the fact that the survival of our earth might depend on democratic planning. Actually, it is not the earth that needs surviving, but we humans need to survive, and for that, we might need democratic planning. And this needs to reflect the words of one of the finest we ever had in Europe, Rosa Luxemburg. Rosa one said, “there is no democracy without socialism and no socialism without democracy”. We need planning to combat global warming. It might not be neoliberalism’s free market that will save humanity from itself. It may not be regulation either that might save us. Regulation only ever tamed the beast but not much more.
Today, climate researchers emphasis good versus bad Anthropocene. Bad Anthropocene describes the intensification, and perhaps acceleration, of humanity’s relentless disruption of an ecosystem on which we all depend. Good Anthropocene, however, explains a situation in which we accept our role as collective sovereign of earth and begin influencing and coordinating planetary processes with purpose and direction and furthering sustainable human flourishing. It means democratic planning to survive.
We as humanity can no longer have confidence in irrational and unplanned markets with its pathological incentives pretending to be able to coordinate the earth’s ecosystems. Instead, our collective survival may depend on democratic planning. The above proves that planning works. It also shows that planning exists all around us. If planning would not work, capitalist business organizations like Walmart, would not make such comprehensive use of it. The good news is that planning actually works. It works for Amazon, and it works for Walmart.
The bad news, however, is that corporate planning works within the confines of capitalism’s profit-maximizing system that damages our earth. The eternal quest for profit maximization has pushed corporate planning to achieve remarkable efficiencies in production, logistics, resource use, and the exploitation of human labor. Still, long-range democratic planning might be able to end poverty wages, stop climate busting production methods, and end senseless over-consumption.
Humanity has to convert fossil-fueled means of transportation, the distribution of goods, and logistics into planned and ecologically sustainable ways. Today, a host of ecological, economic incentives already encourages this. It may well be true that our basic survival depends on democratic planning. What we need is a global People’s Republic of Ecological Planning. Unless we achieve this, the survival of humanity is by no means assured.
[Thomas Klikauer is the author of Managing People in Organizations. Nadine Campbell is the founder of Abydos Academy. Article courtesy: Countercurrents.]
