Articulation of ‘New Constitutionalism’ with ‘New Ethicalism’: Wal-Martization and Corporate-State-Union-NGO Efforts to Bring CSR to Developing Countries

Ngai-Ling Sum, Department of

Politics and International Relations,

Lancaster University

Outline

• International Political Economy (IPE) View – ‘New

Constitutionalism’, WTO and Wal-Mart’s Lobbying

• Wal-Martization and (Trans-)national Corporate

Watching

• Corporate-State-Union-NGO attempts at CSR-ization

• Articulation between ‘New Constitutionalism’ and

‘New Ethicalism’

• Conclusion

1. ‘New Constitutionalism’ and WTO

• ‘New constitutionalism’ (Gill 1998) & neo-

liberalism

�International juridico-political strategies that

constrain domestic institutions and ‘lock in’

neo-liberal reforms favouring international

trade and transnational investment

�This is embedded in international laws

• For example: GATs and Wal-Mart

�Wal-Mart started to lobby USTR negotiators since 2000

for the expansion of the GATs rules (Cummings 2004)

� Its contribution to Republican party - more than 2 million

USD (Bonacich and Wilson 2006: 228)

� GATs helps to put limits domestic on regulations (e.g., shop

opening laws, restrictions on large-scale retailers, zoning

and planning legislations, labour right regulation) on

overseas retail corporations

2. Wal-Martization & (Trans-)National Corporate Watching

• Supported by GATs, Wal-Mart enters into both developed and developing countries in terms of its low-cost/low-price strategies

• For example:

� In China, it entered into joint venture with the state-owned Shenzhen International Trusts and Investment Company (SZITIC)

� In 2005, 70 percent of all products sold by Wal-Mart were made in China

• Wal-Mart’s supply chains

�mediated by technological advances in logistics, distribution and inventory control

�use barcodes and RFID (tagging) – largest private sector data base

�share and control information �Wal-Mart claims this shares information with suppliers�A kind of superior collective intelligence vis-à-vis the suppliers

�A panoptic product register to steer suppliers to produce just-in-time and at particular prices

�Push this low-cost squeeze onto workers

�This changes the power relations between manufacturers and giant retailer as well as between suppliers and their workers

�Wal-Martization

• Wal-Martization

�change in social relations of production where power shifts from manufacturers to giant retailers with the former trickling insecurity downward to their flexible workforce in their search for low-cost strategies

• Corporate-Watching Attempts

�alternative voices, campaigns, exposure of abuses, etc.

Table 1: Examples of Anti-Wal Mart Groups Involved in Corporate Watching

•A Hong Kong-based NGO

•Partly sponsored by the Service Employees International Union

•Campaigner for workers’ rights and monitor of workers’ conditions in China (e.g., Wal-Mart

subcontractors)

Student Against Corporate Misbehaviour(SACOM)

•Female workers in Wal-Mart and their class lawsuitWal-Mart Class Website

•A foundation-funded group

•Specialized interviews with Wal-Mart insiders

•Anti-Wal Mart news from America and China

Frontline: Is Wal*Mart good for America?

•Consultancy group to design and implement campaigns against megastores

•Pro-local business and communitySprawl-Busters

•Sponsored by the Union of Food and Commercial Workers (US)

•Critic of Wal-Mart and its business practices (e.g., sub-standard wages)Wake Up Wal-Mart

•A US-wide public education campaign

•Sponsored by the Service Employees International Union (SEIU)

•A watchdog on Wal-Mart business practices

Wal-Mart Watch

•A research group based in Oakland, California, USA

•Campaigns against sweatshops (e.g., Wal-Mart and Nike) and private military contractorsCorpWatch

•Largest union in the USA

•Runs the ‘Paying the Price at Wal-Mart’ website

•News and specialized topics on Wal-Mart (e.g., job exports, environment)

AFL-CIO

Nature of the GroupName of Union/NGO/Community Group

Corporate-NG0-State-Union Attempts in CSR-ization

Expand to include environmental elements in the audit process (e.g., packaging scorecard)2006

Wal-Mart Ethical Standards associates train buyers, suppliers and factory managers on Wal-Mart

Supplier Standard – a product quality assurance programme (including reviews and internal audit)2003

Assuming its own global procurement and directly managing its Factory Certificate programme2002

Factories in Egypt, Pakistan, India and Nicaragua were added1997-2001

First Factory Certificate programme manual

•Pacific Resources Exports Ltd. auditing factories directly producing for Wal-Mart

•PriceWaterhouseCoopers was involved auditing at a later stage

1993-96

Wal-Mart’s Factory Certification programme

•Include Standards for Suppliers according to local employment and labor laws

•Focus on Bangladesh and China

1992

(Source: http://www.bworld.com.ph/Downloads/2006/Outsourcing4.ppt, accessed on 4th September 2007)

Wal-Mart’s Ethical Standards Programmes

• Corporate efforts - factory-certification and auditing systems� In-house auditing system – factory inspection, certification, and categorization of suppliers in green, yellow, orange and red

• Criticisms� In-house auditing �Hong Kong-based NGO - Students and Scholars Against Corporate Misbehaviour (SACOM) Report (2007) � A ‘self-policing’ system� Factory inspections announced in advance� Managers coach workers to give ‘correct answers’ (50 yuans as reward)

� Pro-corporate and pro-managerial nature ofauditing practices

�Factory rating system

�A discipline-and-punish mechanism (Foucault 1991)

�A panoptic-surveillance system that produce fear and

insecurity among suppliers and workers

�Efforts going into prevention of their factories from being

struck off the certification system and losing orders/jobs

�Paradoxical result – more efforts go into preparing records,

reports, audits, certificates, best practices than actual labour

protection

�Foucault – a process of rarefaction – selective thinning of the

major elements (e.g., corporate social responsibility) and

accompanying thickening of other aspects (e.g., managerial

tools and practices)

�CSR-ization

• More Corporate-NGO efforts to reinvent CSR

�Wal-Mart entering into corporate philanthropy �Wal-Mart and Hope Foundation� International Giving Programme – US$1.2 million to provide quality education and technological know-how

� ‘Strategic corporate philanthropy’ (Porter and Kramer 2003) benefits the competitive advantage of corporation in three ways:

�Promoting community goodwill�Educating and enskilling future employees�Improving the competitiveness contexts

• State-Union efforts to institutionalize CSR through top-down strategy in China

�Domestic social and labour unrest in China

�Union in China - ACFTU - to target giant MNCs – to

push unions in foreign-invested enterprises and to

boost union membership

�Set up unions in 66 stores

�Union branches in organizing social events and run

employee clubs

4. Articulation of ‘New Constitutionalism’ and ‘New Ethicalism’

• In a stage of ‘CSR’, ‘code of conduct’, ‘audit’ and ‘philanthropy’ rush

• Creation of competitiveness-ethical-managerialized discourses and

practices (e.g., certificates, reports, audits and donations)

• Enable corporations to:

� defer legal regulation

� respond to civic activism in self-interested ways via ‘risk

management’ and building ‘reputational capital’

� to build alliance with particular stake-holders (e.g., service-

oriented NGOs, unions, and state)

• These are flanking mechanisms offering temporary rebalancing of an

unstable equilibrium of compromise

• But cannot suspend struggles and will reproduce deep social tensions

between capital, labour and environment in transnational production

• With CSR-ization - Gill’s argument on ‘new

constitutionalism’ should be complemented by an

ethico-managerial dimension – ‘new ethicalism’

• ‘New ethicalism’ captures the ethicalized-managerial

strategies that seek to reconnect economic policies

with ‘moral norms’ that are dominated by

managerialized and technicalized practices (e.g.,

audits, reports, certificates)

• Articulation between ‘new constitutionalism’ and

‘new ethicalism’

Diagram 1 Articulation of 'New Constitutionalism' and 'New Ethicalism'

1 1 3 2 4 'New Constitutionalism' ’New Ethicalism' Articulation and Co-constitution Key: 1 - Disconnect economics from political accountability ('new constitutionalism') 2 - Re-politicization from consumer and civic activism 3 - Ethicalization of economics (e.g., CSR) 4 – Managerialization of the ethical or CSR-ization (‘new ethicalism’)

(Source: Adapted from Sum 2005)

Politics

Centring economic policies

Ethics and norms

• This articulation mediates a more complex

round of roll-out neo-liberalism

• ‘New ethicalism’ not only helps to co-

constitute ‘new constitutionalism’ but also

provides the latter with a body of knowledge

and regulatory instruments that strengthen

its micro-governing capacities (e.g.,

programmes, manuals, reports, audits,

ratings, certificates, etc.) at the factory level

Conclusion

• Adopt a Cultural Political Economy approach to reveal macro-micro power relations of CSR

• Emphasize complementarity between ‘new constitutionalism’ and ‘new ethicalism’

• Note that current proliferation of managerial logics into CSR – codes, reports, ratings, certificates, audits, etc. – a form of roll-out neoliberalism

• Recognize that this is yet one more site of continuing struggles and tensions between capital, labour, gender and environment that cannot be de-politicized easily

• The crucial question is whether CSR and its related practices involve attempts to ‘marketize the social’ or ‘socialize the market’

Thank you!

• 2003-5 – expanded partnership – a Wal-Mart-SZITICs bloc (‘ultimate partnership’)

�The SZITIC Commercial Property Development Co., Ltd.

�CapitaLand Group (Singapore property development consortium)

�Morgan Stanley (US corporate finance firm)

�Simon Property (US real estate group)

�TimeWarner (US film and media corporation)

�Prologis (US distribution-facility provider)

� they facilitated Wal-Mart’s expansion in China -69 shop-centre sites in 2005

Diagram 1 Key Forces in the Wal-Mart-SZCITIC Bloc

Wal-Mart

International

USTR

WTO

Wal-Mart

(China) Co.

Ltd.

SZITIC

(China) Wal-Mart

SZITIC Dept. Store Co. Ltd.

SZITIC

Commerical Property Dev.

Co. Ltd.

CapitalLand

Group (Singapore)

Morgan Stanley (US)

Simon Property (US)

TimeWarner (US)

Prologis (US)

International

Mass Retail Association

Wal-Mart

Procurement

Centre

(Shenzhen) Wal-Mart

Supercentres &

Sams’Clubs

Table 3 Wal-Mart’s System of Factory Ratings Since 2005

Re-audited within 30 days

Existing orders are cancelledNo future orders

Most seriousRed/Failed

Re-audited within 120 days

Orders can be placed

High riskOrange

Re-audited within 120 days

Orders can be placed

Medium riskYellow

One yearOrders can be placed

No/minor violationsGreen

Audit ValidityConditions of OrderDegree of

Violations/Risk

Factory

Ratings

(Source: Wal-Mart Global Procurement, http://fdra.org/2005%20OLP/Wal%20Mart%20presentation%, accessed 15th October 2007)