2010s >> 2019 >> no-1378-june-2019

More FALC: The Walmart hypothesis

Can Walmart Tell Us Anything About Socialism?

Internationally, there is a resurgence in discussing socialism, not just in the American sense of faintly looking at a welfare state, but credibly and seriously taking on the idea of a co-operative democratic abolition of market allocation of goods and resources. Books like Four futures: life after capitalism by Peter Frasehave already lead the way, including among the options a world of abundance without money (although reading the text, it seems the author’s preferred or most likely future was some sort of regulated market in a post-ecological-collapse world). That book sprang from Jacobin magazine, and it seems that other contributors to that magazine are beginning to produce other useful examinations of the way towards a market-free world.

The latest example is Philips and Rozworski’s The People’s Republic of Walmart: how late-stage capitalism gives way to early-stage fully automated luxury communism. This book puts forward the simple case that firms like Walmart are in effect massive planned economies, close to the size and scale of the Soviet Union in terms of the number of products and processes they have to employ to run their enterprise. They also note how 3rd party firms that trade with them are effectively locked into their productive ecosystem.

Much of this is achieved algorithmically, with resources being poured into tracking stock through the system, knowing where it is at all times, and using vast storage capacity. The algorithms calculate what resources are available nearest to the point at which they are required, and how to get them there quickly. The authors give the counter example of Sears, which imploded after implementing an internal market and competition within its firm (under libertarian ideological commitment from its directors).

Of course, Walmart and Amazon are planning to exploit, and get the most out of, their workers and advantages over commercial rivals. It is not so much an example to be emulated, but a living demonstration that wide-scale economic allocation via planned structures works. Further evidence is found in a nuanced description of the history of the NHS, noting how it has gone from an ad hoc replication of existing structures, without conscious planning to serve community needs, to being carved up by an internal market. The authors note that it has always existed as a hybrid between the firms of GPs and the hospitals and the pharmaceutical industry, and that attempts to implement society-wide input and control were stymied at Westminster.

Democracy is seen as an inherent good and a necessity for wide-scale planning in an economy, if it is to serve people’s needs. Phillips and Rozworski note that a significant part of the failure of the Soviet Union’s planned economy was because of dictatorial intervention preventing the free flow of information between productive units, and removing their capacity to respond. The other living example they cite is Project Cybersyne in Chile.

British cyberneticist Stafford Beer was called in to help the Allende government implement a planned economy. Given the state of the country at the time, he had to improvise a system of telex and phone lines. His systems were credited with enabling the government to defeat a crippling lorry drivers’ strike, by routing key resources around disruptions and allocating available lorries. The principles behind Beer’s cybernetics were thus not all about enslaving people to the machine, but allowing distributed horizontal decision-making between relatively autonomous units with oversight and regulation to achieve common ends.

If all of this sounds remarkably familiar, it is because this is what we have been saying in our slightly less fashionably way since we were formed. Indeed, our pamphlet Socialism as a Practical Alternative, largely written by the late Pieter Lawrence, based a description of socialism on using the regulated stock control models already developed by the likes of Walmart, coupled with formation clearing houses to allow communities and groups to work to enable production for needs.

It’s clear, though, that while technology has advanced, along with the experience of wide-scale economic organisation, this is not a prerequisite for socialism. Pencil and paper-based systems could have handled the work (and probably still could), but the fact that machines and computers allow us to do it faster, and are increasingly presenting the possibility of co-ordinated democratic production in people’s minds, is making the topic more popular.

Philips and Rozworski cite the work of Scottish academic Paul Cockshott with his demonstration that an economy-wide plan is computable (especially if we exclude millions of null combinations of goods, arguably Walmart does not compute all the possible combinations of goods, but works with what it has and approximates efficient allocation-adjusting over time). Cockshott is not alone in academia, and he and collaborators have made impressive inroads into the possibilities of computational planning through vertical integration of sub-systems. It would be well to think what would be the result of the combined efforts of the best and brightest computational minds being directed towards co-operative economics and the satisfaction of needs, rather than algorithmic stock trading.

We have discussed in these pages before the types of innovations in thought and process that will enable us to make socialism work on a worldwide scale: Leonid Kantarovich’s linear programming; Gale and Shaply’s stable matching algorithm; Brams and Taylor’s envy-free cake-cutting algorithm, etc. The intellectual progress for the machinery of co-ordinating activity is improving, even if the political co-ordination to pick it up and use it is not yet as developed. It is good that these obscure and complex lines of enquiry are beginning to get serious popular attention.

Some commentators have begun to compare capitalism (and/or corporations) to a vast out-of-control Artificial Intelligence, programmed to maximise profit. This is potentially a powerful way of depicting capitalism: but the risk is, in coming up with algorithms and procedures to create a planned economy, that we would end up replacing capitalism with simply a rival AI, rather than returning to a human-centred system.

Demonstrating that we can plan and rationalise resources in the way that capitalism can and does is not a clincher for socialism: it could be argued that in an ends-based economy, using labour inefficiently could well become a goal (as William Morris pictured in his utopian novel News from Nowhere). The most powerful message we can send is that there is not one way to run an economy, and the only real limit is the power of our imaginations.

The tag-line of ‘fully automated luxury communism’ that is gaining some popularity may help raise the profile of consciously planning the economy co-operatively.