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The Consumer Is Boss
by
Sheldon Richman,
May 18, 2005
The morning paper brings two pieces of news about
Wal-Mart. The first tells of an effort by politicians and
so-called community groups to pressure the retail chain
to raise its wages. The second describes Wal-Marts
plans to meet competition from Target and other stores by
including products that appeal more to middle-income
shoppers.
The details in both stories are interesting. But the
larger context is lost in the particulars. Americans, and
Westerners generally, cannot count economic history among
their strong suits. They take the bountiful retail
landscape for granted, as though it were a natural
fixture. You need something? No problem. Get in the car;
drive to the store; pick it off the shelf; pay the modest
price; and return home. Piece of cake.
Buying wasnt always so easy. In fact, it
wasnt always possible. Its not just that
there were times when the product variety was smaller,
the quality lower, and the real price higher (measured by
how long one had to work to earn the money). I am saying
there were times when you and I ordinary people
without power or connections didnt matter to
those who produced the goods. Surveying the long sweep of
history, we find that the period in which manufacturers
worked to satisfy not an elite, but ordinary people, has
been incredibly short. But since that period includes
the lifetime of every person walking around today, this
fact is terribly unappreciated, if not unknown
altogether.
Its easy to find fault with how some people do
business, and legitimate grievances (such as fraud)
should be redressed. But we lose sight of the bigger
picture at our peril. The key element of this picture is
that until the still-defamed Industrial Revolution and
the advent of market-oriented society, virtually all
production was exclusively for the powerful. Ordinary
people went through life with little in the way of
clothing and household items. During the Middle Ages the
clothes off the back of a plague victim commanded a price
people were that desperate for garments.
Sanitation was nonexistent. Personal hygiene was unheard
of. Famine was an ever-pending threat. Forget about
medical care.
The Industrial Revolution, stimulated by personal
liberty, secure property rights, the division of labor,
and investment, was a sea change. For the first time,
mass production at low prices was the path to high
income. Ordinary people could afford more than one set of
clothes and household conveniences. Personal hygiene came
within reach. Labor-saving devices appeared. Advances in
sanitation and medicine followed. In short order,
retailers presented a cornucopia of goods increasingly
accessible to the masses. It truly was, as the title of a
book had it, the birth of a consumer society. Progress
continues virtually unabated, disrupted only by
governments unique products: taxes, regulation,
inflation, depression, and war.
Elitist authors who already have theirs, sneer at
broadening consumerism and expanding choice, but no one
is forced to partake of the cornucopia. Consumerism and
freedom go hand in hand.
This perspective sheds light on the Wal-Mart wage
controversy and similar subjects. Those unschooled in
economics wonder why Wal-Mart doesnt pay its
workforce more. They fail to realize that the real bosses
in a consumer society are not the nominal employers but
the customers. Legally and morally, capitalists control
their businesses by right. But existentially, they hold
them only at the pleasure of the consumer. When they stop
doing a better job than their competitors, they lose
sales and, if they dont shape up, they lose their
businesses. The consumer trumps even Donald Trump. The
consumer determines the height of wages. Defy him and he
says, Youre fired. In a free market, no
businessman, not Bill Gates, not the CEO of Wal-Mart,
sleeps soundly.
While seeming to be humanitarian, forcing Wal-Mart to
increase its costs harms consumers and is self-defeating
because workers are consumers too. In the market, each of
us makes demands of producers and each of us has demands
made of him. The result is an unplanned, yet orderly,
prosperous, and free society. The challenge is to keep
the economically ignorant from gaining power and wrecking
it.
Sheldon Richman is senior fellow at The Future of Freedom Foundation, author of Tethered Citizens: Time to Repeal the Welfare State, and editor of The Freeman magazine. Send him email.
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