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)