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) & neoliberalism
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 WalMart 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

Name of Union/NGO/Community Group

Nature of the Group

AFL-CIO

•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)

CorpWatch

•A research group based in Oakland, California, USA •Campaigns against sweatshops (e.g., Wal-Mart and Nike) and private military contractors

Wal-Mart Watch

•A US-wide public education campaign •Sponsored by the Service Employees International Union (SEIU) •A watchdog on Wal-Mart business practices

Wake Up Wal-Mart

•Sponsored by the Union of Food and Commercial Workers (US) •Critic of Wal-Mart and its business practices (e.g., sub-standard wages)

Sprawl-Busters

•Consultancy group to design and implement campaigns against megastores •Pro-local business and community

Frontline: Is Wal*Mart good for America?

•A foundation-funded group •Specialized interviews with Wal-Mart insiders •Anti-Wal Mart news from America and China

Wal-Mart Class Website

•Female workers in Wal-Mart and their class lawsuit

Student Against Corporate Misbehaviour (SACOM)

•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)

Corporate-NG0-State-Union Attempts in CSR-ization Wal-Mart’s Ethical Standards Programmes

1992

Wal-Mart’s Factory Certification programme •Include Standards for Suppliers according to local employment and labor laws •Focus on Bangladesh and China

1993-96

First Factory Certificate programme manual •Pacific Resources Exports Ltd. auditing factories directly producing for Wal-Mart •PriceWaterhouseCoopers was involved auditing at a later stage

1997-2001

Factories in Egypt, Pakistan, India and Nicaragua were added

2002

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

2003 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) Expand to include environmental elements in the audit process (e.g., packaging scorecard)

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

• 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 of auditing 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., serviceoriented 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

Centring economic policies

Politics

2

3 Ethics and norms

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)

• This articulation mediates a more complex round of roll-out neo-liberalism • ‘New ethicalism’ not only helps to coconstitute ‘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-MartSZITICs 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

CapitalLand Group (Singapore) Morgan Stanley (US) Simon Property (US) TimeWarner (US) Prologis (US)

WTO International Mass Retail Association USTR

Wal-Mart International Wal-Mart (China) Co. Ltd. Wal-Mart Procurement Centre (Shenzhen)

SZITIC Commerical Property Dev. Co. Ltd. Wal-Mart SZITIC Dept. Store Co. Ltd. Wal-Mart Supercentres & Sams’Clubs

SZITIC (China)

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

Degree of Violations/Risk

Conditions of Order

Audit Validity

Green

No/minor violations

Orders can be placed

One year

Yellow

Medium risk

Orders can be placed

Re-audited within 120 days

Orange

High risk

Orders can be placed

Re-audited within 120 days

Red/Failed

Most serious

Existing orders are cancelled No future orders

Re-audited within 30 days

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