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Mutualist Blog: Free Market Anti-Capitalism

To dissolve, submerge, and cause to disappear the political or governmental system in the economic system by reducing, simplifying, decentralizing and suppressing, one after another, all the wheels of this great machine, which is called the Government or the State. --Proudhon, General Idea of the Revolution

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Location: Northwest Arkansas, United States

Monday, August 08, 2005

Living the Dog's Life at Costco

Ian Bertram at Panchromatica cites some criticism of Costco in the "business press," for treating its workers too good. This, for example:

Emme Kozloff, an analyst at Sanford C. Bernstein & Company, faulted Mr. Sinegal as being too generous to employees, noting that when analysts complained that Costco's workers were paying just 4 percent toward their health costs, he raised that percentage only to 8 percent, when the retail average is 25 percent.

"He has been too benevolent," she said. "He's right that a happy employee is a productive long-term employee, but he could force employees to pick up a little more of the burden."

And this:

One analyst, Bill Dreher of Deutsche Bank, complained last year that at Costco "it's better to be an employee or a customer than a shareholder."

That's the kind of clucking and head-shaking usually reserved for someone who spends an ungodly sum of money on an animal, like chemotherapy for a dog, or a cat psychologist. You know: "All that money on a dog! My God--they're treating him better than most people!"

I suspect the outrage at Costco is not so much over how badly the stockholder is being treated, as over how good the worker is being treated. Or as somebody once observed, Puritans objected to bear-baiting, not because it annoyed the bear, but because it brought pleasure to the participants. Treating workers too good is a bad thing, in and of itself--it's just a violation of the natural order of things. Here, most of the big retailers go to all the trouble of getting their associates' minds right, and along comes a competitor treating its people almost like human beings! Talk about the danger of a good example! How ya gonna keep the boy down on the farm when he's seen Paree?

11 Comments:

Blogger Adam said...

Did you see Brad DeLong's recent post analyzing why companies expect a higher profit margin than they used to?

http://delong.typepad.com/sdj/2005/08/john_mcgowan_se.html

He sums up his position thusly:

"I find that I'm 30% a finance economist, 20% a Galbraithian, 20% a follower of the Summers-Shleifer "breach of trust", and 30% a believer that the high unemployment of the Volcker disinflation was the key in its shift of power away from workers."

He also considered the impact of "culture" on this shift. It seems that being harangued in the press could put some social pressure on an individual (manager) to change policies, even if it isn't clear that this is in his own best interest.

August 09, 2005 6:05 AM  
Blogger Kevin Carson said...

That's an amazing commentary. Thanks for the link--I should start visiting DeLong's blog more often.

He's way more Galbraithian than I am. I think he (and G&M) exaggerated the separation of ownership from control. IMO C. Wright Mills had it right: the managerial caste helped to organize the plutocracy along corporate lines, and thereby tranformed it from an economic class into a power elite; in the process, it was coopted into the junior ranks of the Power Elite itself. But G&M underestimated the extent to which the corporation is controlled, directly and indirectly, by the largest billionaire stockholders and finance capitalists.

They and Galbraith were right to a point, though. Owner control of the corp is something that definitely ebbs and flows over time. Although it was never as weak as they make out, it was probably at its low point in the early post-WWII period, when most new investment was internally financed from the revenue stream. The reemergence of finance-capital dominance in the '80s put senior management back under the whip again. I read somewhere (I forget where) that by the late '80s, interest on corporate debt was almost equal to corporate profit. That's a big monkey on your back.

He's probably right about the effect of finance capital's comeback, and the Fed's money policy, transforming workplace relations.

But again, he probably overestimates the idyllic nature of labor relations before 1980. You could trace a lot of the changes in management policy back to elite perceptions of an "accumulation crisis" from around 1970 on. And even in the heyday of the Wagner/Fordist/Taylorist social compact, management was using deskilling technology (like numeric control systems for machine tools) to reduce the bargaining power of labor, with a view to changing the balance of power in the future. As early as Taft-Hartley, the leadership of heavy industry was starting to reassess the effectiveness of corporate liberalism.

August 09, 2005 8:45 AM  
Anonymous Anonymous said...

the early post-WWII period, when most new investment was internally financed from the revenue stream

Henwood claims that this is still the case. He makes a pretty convincing case for it.

I suspect the outrage at Costco is not so much over how badly the stockholder is being treated, as over how good the worker is being treated.

The problem is that it isn't just the business press that feels this way. Tearing each other down is the national pastime. Americans have no problem with Paris Hilton's jewel-encrusted cell phones, but finding out that senior dockworkers can make $80,000 a year (which may or may not have been true) lost them all sympathy in their 2002 strike. For another example, see your own reference to Dale Frank's outrage over a safeway meat cutter's salary of $22.50/hr (which is around 50% of America's GDP/worker). The idea of someone who works for a living living above the poverty line pisses most Americans off. American workers instinctively side against unions, because they raise the wages and inprove the working environment of their members. And the average American has internalized the idea that those who work for a living should have it as hard as possible.

August 09, 2005 9:24 PM  
Blogger Kevin Carson said...

Anon,

On the financing thing, you're right--I just did some slopping writing. Finance capital comes in, not in support of new investments, but for hostile takeovers and concentration of *existing* investment. The amount of investment in actual production (if there is any) can probably be financed internally.

You're probably more right than I care to think about on the issue of self-hating workers. Some of the rudest customers I ever dealt with, in service jobs, were working people of very modest means.

Interestingly, the most demanding customers in hospitals are often nurses themselves, and likewise waitresses eating in restaurants, etc. It seems that the world is divided into two kinds of people. One category, having done the job themselves, is more sympathetic and willing to cut some slack for that very reason. The other is even MORE critical and LESS tolerant than the general public. I suspect some of the difference is internalized authoritarian attitudes, which involve sublimating one's hostility against those exercizing power over you, identifying instead with those who have the power, and redirecting the hostility against the weak and powerless. Being a slave is a lot more tolerable when you can identify with Good Ol' Massa and think you're better than those other shiftless field-hands.

Especially pernicious is the ethos of "professionalism," which causes some of the most underpaid cubicle drones to think of themselves as "junior management" just because they get to wear a tie to work.

August 10, 2005 10:17 AM  
Anonymous Brad Spangler said...

...and along comes a competitor treating its people almost like human beings! Talk about the danger of a good example! How ya gonna keep the boy down on the farm when he's seen Paree?

Which ultimately just goes to show that Sinegal may very well be much smarter than Kozloff and Dreher. You'd think those with pretentions of being a business analyst wouldn't be to unfamiliar with the concept of "you get what you pay for". So why shouldn't Sinegal seek better quality labor by bidding up? That's exactly what's going on with what these short-sighted wonks call "benevolence".

August 11, 2005 9:11 PM  
Blogger Mike Renzulli said...

While Costco's paying its employees higher wages is good, Costco as a company is much smaller than Wal-Mart. While Wal-Mart's pay maybe lower, if an employee wants to move up they would have an easier time if they worked for Wal-Mart or Sam's Club rather than Costco. None the less, I will not buy from Costco and urge you all to do the same. The reason why is the sign they have up at their entrances saying "No Firearms Allowed". Meanwhile, one gun rights activist I know has gone into a couple of Sam's Clubs with his gun openly carried and was not told to leave or given a hard time by Sam's Club employees. Additionally, I would point out that Costco has benefitted from eminent domain use. It was pointed out by a blogger named Mark Yannone about how Costco has openly lobbied for condemning people's homes so they could build their stores. Meanwhile the Walton Foundation has sent contributions to the Institute for Justice which litigates against eminent domain. Send Costco a message that you do not subscribe to their shinanegans and wont buy anything in their stores until they change their policies regarding guns and property.

August 11, 2005 10:48 PM  
Blogger freeman said...

Mike - While those are certainly good reasons to take one's business elsewhere, Wal-Mart is NOT in the clear concerning eminent domain. The Walton Foundation's contributions have nothing to do with the actual practices carried out by Wal Mart. All you need to do is a quick Google search to realize that Wal Mart is a fan of using eminent domain laws to their advantage as well, which is one of the reasons why I'm no fan of Wal Mart.

August 12, 2005 11:14 AM  
Anonymous Anonymous said...

Why in heaven's name should I be concerned if a company bans firearms from its workplaces?

I can't go in a store without a shirt or shoes; I can purchase goods there only with the forms of payment they want -- Costco doesn't accept everything. A workplace banning firearms probably saves them a huge load of liability premiums, and if that means lower prices and a staff less concerned with workplace violence, then I can live with the hardship.

If I can't live without my gun long enough to spend a few minutes shopping, then Costco doesn't have the problem -- I do.

March 17, 2006 9:05 AM  
Blogger Kevin Carson said...

At most of the places I've worked, a little *more* fear of workplace violence might have had a salutary effect on management.

In this two-tier economy of mandatory overtime and disposable workers, it's good for management to see the hatred in the eyes of the people surrounding them.

March 17, 2006 11:20 AM  
Anonymous Anonymous said...

With all the people getting mugged walking down the aisles of costco, I think this boycott makes a lot of sense.

September 11, 2006 6:53 PM  
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August 28, 2008 8:56 AM  

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