Monday, November 3, 2014

Why and how should we confront capitalism? (1/2)

Wal-Mart is the world’s largest retailer with more than 4,300 stores in the United States and over 8,000 worldwide, with global sales topping $400 billion in 2009. Walton family owns Wal-Mart, and they own more wealth than the bottom 40 percent of Americans. Many research studies have thoroughly documented the negative impacts of  Wal-Mart  on local economies. These studies have shown that in cities and towns where Wal-Mart opened its stores the local stores went out of business and unemployment rose.  After a single Wal-Mart opened in Chicago in September 2006, 82 of the 306 small  businesses in the surrounding neighborhood had gone out of business by March  2008. The common customer thinks that he/she is getting a better price but that is not necessarily true and definitely not in the long run. Why, you would ask.

 The answer lies in the nature of capitalism and monopolies under capitalism. Wal-Mart, Metro, Hyperstar and others like them are called big-box stores. These are the giants in the retail business. Then there are Multinational Corporations (MNC) in other fields like Nestle, Pepsi, Coke in food; Total, Exxon, Shell in oil and gas etc. Strictly speaking they will be labeled as oligopolies not monopolies. But the reality is that they operate as monopolies.
These MNCs have access to huge amounts of capital thanks to their brothers in global finance. Armed with this almost unlimited capital they enter different markets in the name of free and fair competition. The reality is that it is anything but free and fair. The local small businesses with limited capital cannot compete with these MNCs and go out of business. Once that happens then there is no real competition and they can jack up the price as much as they want. This is happening all over the world, country after country and industry after industry.
Let us take three of our local industries, shoe, milk and meat, as an example of this phenomenon. In every locality there used to be a “mochi” (cobbler) who used to not only repair shoes but also make new shoes. He was a highly skilled man who was very knowledgeable about leather and other related materials. The shoes he used to make were long lasting. One of the authors ( Dr. Zubair ) has personally witnessed his father wear a pair of mochi made shoes for fifteen years. With the advent of capitalism in our society, large multinational shoe manufacturing companies came and eliminated mochi from cities. The production capacity of these companies was more than what was needed. Instead of reducing production and curtailing their profit margins, these companies implemented a very devious plan. They kept the production high but through media campaigns created a desire based demand. Now new shoes are purchased not because the old ones are torn, but because they are “out of fashion”, and fashion changes every year or two. Soon they realized that because they have hoodwinked people into purchasing new shoes even when the old ones are still wearable they don’t need to make shoes that last several years. So why put effort into making long lasting shoes when it is more profitable to sell large quantities of lesser quality shoes? By the way a group of local entrepreneurs have started a very interesting business by supporting our local mochi. You can visit ( for details. Before any one suspects us of having any financial incentive in this regard, both of us solemnly pledge that we have no contact financial or otherwise with folks running markhor. In fact we would like to see mochi directly selling to the customer instead of markhor, but it is a step in the right direction and as such we commend it.
Fortunately milk and meat industry in Pakistan is still in the hands of local “gawala” (milk man) and “kasab” (butcher), but that is rapidly changing. Gawala is losing his business to big milk processing plants. The biggest of these is Nestle. Similarly the local kasab is losing to companies like Zenith and Metro. The reason that the capitalistic corporations give to lure the customers is mainly quality. They claim that the local kasab and gawala sell adulterated products. Both add water to their products to increase profit. I would concede that it is generally true in case of gawala and in some cases to kasab also.
Now consider what will happen when both the gawala and kasab cannot compete with the capitalistic corporations and go out of business. They will suffer for sure, but let us be callous and ignore their suffering. After all they were selling us adulterated products so they deserve to go out of business. What do you think these capitalistic corporations will do to us, their customers, once the local kasabs and gawalas are gone? They will jack up the prices, because then we will not have any local kasab or gawala as an alternative. As we have seen capitalism produces monopolies, the allusion of competition is just that, an illusion.

In the current situation we have huge number of people in both businesses. Just consider the annual sacrifice we make at Eid-ul-Idha. How many animals are sacrificed? Hundreds of thousands, if not millions of people are involved in raising these animals in remote parts of the country. Then these people sell these animals to middlemen who bring it to the cities. The transporters are involved in this transportation process. Finally on the Eid day thousands of kasab are employed to sacrifice the animals. If we allow the kasabs to go out of business then this huge enterprise will be consolidated in few capitalistic hands like Zenith. The non-commercial disadvantages of that situation are numerous; our kids will never see (apart from a clips on Facebook ) how animals are sacrificed, for them Eid will be when we bring four extra bags of meat from Zenith. The negative effects on environment due to industrial scale animal raising is well documented. Food and Agriculture Organization of the United Nations estimated that livestock are responsible for 18 percent of greenhouse gas emissions, a bigger share than that of transport ( Similarly the milk business involves a huge number of people. Once again if we allow them to go out of business we will be left at the mercy of Nestle and it’s like. I would invite, those who doubt, to search how some of these capitalistic organizations got babies addicted to powdered baby milk formula ( A related, but bigger disaster to industrial scale animal raising is corporate farming, which is being promoted in Pakistan as a panacea and as a tool for lifting poor out of poverty. Those who have any illusion about what corporate farming is really about should read “Hungry for Profit: The Agribusiness Threat to Farmers, Food and the Environment”  Edited by Fred Magdoff, John Bellamy Foster and Frederick H. Buttel.
Unfortunately our educated class is infatuated with technology, mass production, scalability. If you throw these words in any proposal the chances of it being approved increases in direct proportion to how many times you use these words in your proposal. The reality is that we should sit back and take a broader perspective as to which technology we should get, is mass production good for us in every field/industry, is scalability a holy virtue that we should strive for in every situation? These things are compulsion in graying western civilization. Most of the western world has rapidly aging populations. The median age in Europe is 40+ while ours is 22.6 years. We have 112 million ( about 57% of our population) people in 15-55 years age bracket. Europe cannot afford to have manual kasabs they have to have mechanized meat plants. They have built and installed those in their countries in amounts that they needed, so what to do with the factories which build these plants? Sell the huge meat processing plants to folks like us, who would buy every shiny machine that the western salesman pitches to us, whether we need it or not. Capitalism gets triple benefit out of this. 1) It keeps their factories, which makes those big shiny toys running 2) they put us under debt because most of these shiny toys are bought with debt money 3) enslaves us to their dictates, because once we lose our local skills and methods we have no choice but to accept their terms and conditions or else our plants (which are really their plants on our soil ) will not run.
The role of media in the propagation of capitalistic aims and objectives is very insidious. It blatantly attacks traditional order and provides subtle support to capitalistic enterprise. You must have seen reports and features on bad kasabs and gawals in both electronic and print media. Have you ever seen a negative report on Nestle, Pepsi, Zenith, Coke, Exxon, Shell etc. Do you think that all of them are angels and are sinless? Obviously not. But they provide the energy that keeps media running via advertisement. The local kasab and gawala cannot provide this energy to the media. Have you ever seen advertisement from a local kasab or gawala on TV? As such the media portrays them in the worst possible manner. Every bad report on local kasab and gawala implicitly makes the capitalistic alternates look really good and appealing. The explicit part is then done by the corporations directly by advertisement. First a TV channel will show a highly sensational “investigative” report on how local gawals are mixing really dirty looking bad stuff in the milk. All the while a really annoying sound track is played in the background. When your mind is fully prepared then an ad in the commercial break will appear. In the ad you will see beautiful, clean, very whitish kids, with their parents and grandparents and a very soothing voice will inform you that Nestle is “pure life” 

Part two of this article is at P2



Tayyab said...

I agree to the broader concept of crushing the retailers through super-marts. But in micro sense, the concept of "super-mart" fails in our beloved Pakistan. I can give some arguments in support of my view: 1) The super-marts in rest of the world provide the commodities at comparatively lower rates than the retailers. But in our country, the super-marts (Zeneth, Metro etc) are over charging. 2) There is a huge variety of each item in super-marts and the customer can choose what ever he can afford. Whereas in our case, the so called super-marts only keep the essential and hot selling products. 3) In rest of the world, the super-marts provide promotions and price cuts. Whereas in our country, whenever this happens scarcely. 4) The super-marts in the world discard the near-to-expiry items through price cuts to the ordinary customers. But in our country, God knows what happens to such nea-to-expire items. 5) In rest of the world, a super-mart serves a particular part of the city where there is no super-mart within miles. But in our country, the super-marts exist with in walking distance of retailers. People find better options, variety and prices with the retailers than the super-marts. Regarding the meat and milk, the monopoly game is political oriented rather than economic. A single political family once owned the major share in poultry is now a major share holder in milk industry. They also control the prices of sugar. They use the artificial shortage and price hike as political weapons. They use the price cuts as political intensives. I would say that we Pakistanis have further blackened the concept of super-marts in this way. What we have is a sick economy controlled by sick politicians. Even the education sector is monopolized in the same sick sense.

Hamad Rasool said...

Well written case Br Nadeem, it is a proven fact that one of my friends actually had a very bad experience with Zeneth that they were selling goats which were given steroids to make them fat and the evidence was proved from chemical exam of the meat on the last Eid ... further we can check and se our selves what we are getting here in a case of Qasabs but in case of packed meat we are even unable to check it Halal status as it is found imported from Brazil... !