Review: People's Republic of Walmart (2019)

Is Walmart a new model of all-American socialism?

People's Republic of Walmart (Verso, 2019) would suggest so. Reaching to Fredric Jameson's footnote in Archaeologies of the Future, and later to his work Walmart as Utopia, authors Leigh Phillips and Michael Rozworski suggest that Walmart—as well as Amazon, and even the Pentagon—are planned economies, at scale, organized outside of market relations. Exactly the sort of thing Austrian economists would have said is impossible.

To appreciate this point—why it's interesting—step back with me to the socialist calculation debate. This debate, popularly imagined as taking place between Marxian and Austrian economists in the early 20th century, centers around a 'simple' question: what's the theoretically optimal way to allocate the things people want and need? The Marxians argued that, with enough data, a centrally planned economy would distribute resources optimally. The Austrians, most notably Ludwig von Mises, argued that a centrally planned economy was folly—that only a decentralized market economy could possibly be optimal, as all the ‘information’ required to distribute those resources exists only and essentially in market participants’ heads.

Both extremes, as Polyani would remind us, are utopias. But they are each, in their way, beautiful dreams. Each animated the left and right in the long 20th century: the Soviet economy in the early, and the Reagan/Thatcher economies in the late 20th century. But central planning as a left concept faltered after Gorbachev. Deng Xiaoping perhaps rang its death knell. Mises, it would seem, had won.

Or had he? There's a problem with Mises’ story: command economies exist, and serve more people more efficiently than they ever have in the past. They exist within firms like Walmart and Amazon: zones of centralized analysis and planning, within which no market forces exist. This is the case People's Republic of Walmart makes—or, at least, tries to.

The foothold Phillips & Rozwarski find in orthodox neoliberal theory—and this is the cleverest part of their analysis—is the boundary of the firm debate. Why are organizations the size that they are? Indeed, why are there organizations? If Mises is right and market relations are ideal, shouldn't there be no organizations, but instead a Randian person-as-island world, all linked in 'flat' (ontologically, if not in class or power) market relations? The classic answer comes from Coase: firm boundaries emerge around the gradients of transaction costs. When transaction costs can be made lower by bringing something inside the firm, low enough that the process of bringing inside is itself profitable after all associated costs, a firm will expand. When not, it won't. Firms emerge like the membrane of a cell, firms grabbing low transaction costs and repurposing the captured efficiency to their strategic advantage.

This neat story of how firms ‘naturally’ emerge elides detail about what exact factors cause these gradients of differing transaction costs to come about in the first place. In a world in which transaction costs are always lower within the firm than outside, do we not predict a firm, at sufficient size and absent regulation, would eventually, through leverage and mergers, eat a market economy—that is, become an entire system of resource allocation within the boundaries of a firm? Explanations as to why this would not happen have emerged in information economics (‘information’ too has a ‘cost’) and behavioral economies (the economic models are right, but the market participants are “wrong”—i.e., predictably irrational). But the best evidence against command economies was always their absence: there simply weren't any effective, massively scaled centrally planned economies to point to, so neoliberal economists were not obligated to explain them away. The debate was settled. Until Walmart.

But wait. Is Walmart a command economy? If People's Republic of Walmart made a robust argument to this effect, I missed it. The suggestive details they provide have a few holes. First, Phillips and Rozworski imagine Walmart (or any firm, it seems) to be "authoritarian" (p 43) on the inside, that is, dominated by relations of command instead of by market forces. Market forces surely do exist within firms, in the form of bonuses, for example, and also in the sense that pricing matters within the supply chain—prices that are denominated in the currencies of market economies. Second, and most glaring, a market economy surrounds these supposed command economies completely. Even if Phillips and Rozworski argued successfully that Walmart is centrally planned, what role does this market play on the edges of such a system?

Answering these questions would have been fascinating. Instead, we get a tired summary of how Amazon and Walmart use algorithms to plan (but don't hope for any discussion of how they enhance labor discipline; citations of Janet Vetersi or Virginia Eubanks are not to be found). In these thin analyses, People's Republic of Walmart fumbles the most promising, and least developed, question in the book: assuming these command economies exist, how are we to bring them under democratic control? This is a wonderful question. With a thicker look at how exactly the market economy interacts with this within-firm command economy, Phillips and Rozworski might have made progress. If centrally planned economies have indeed emerged under capitalism, would a transition away from a market economy also mean a transition away from a monetary economy? If not, what is the new role of monetary policy? For fiscal policy? Even schematic answers to any of these questions would have been stimulating.

The greatest sin of People's Republic of Walmart is that it seems to presume its reader is bored by such questions—or, worse, liable to equate any discussion of economic theory with neoliberal apology (“You might also be asking: Why does it now seem like I’m reading a god-awful, capitalism-fellating airport business book? Suck it up. Socialism is all about logistics, comrade.” p. 33). Do you think so little of us? I am not unique in my desire to understand the theory that not only propelled the neoliberal project but also gave economists the aura of scientific authority, that disembodied ‘objectivity’—what Haraway would call the “view from nowhere”—which made their policy proposals so compelling in 20th-century debates. Nor am I unique in wanting an explanation of how these theories break in ways that can inform the production of a meaningful and cohesive counter-hegemony. The greatest trick of neoliberal economics is that, from the 1980s through today, it made even its policy failures look like successes. It is this trick any counter-hegemony must attack. Walmart, Amazon, and the other “economies within a firm” are surely sites for this work. They deserve a richer analysis than Phillips and Rozworski give them.

People’s Republic of Walmart, Verso Press, 2019.

Thanks to Zeke Medley for encouraging me to post this piece.