Enterprise v. Employment

Wal-Mart has certainly faced many darts for eating away mom and pop stores in small town America. The open capitalistic market led to the creation of a scale of business that enabled true 'economics of scale', and the result is that Wal-Mart has been able to sustain its profitability even while consistently providing goods at low prices to the market. From the consumer's perspective, it has been a dream come true, though it has come at the cost of the neighbor's business. Come to think of it, the neighbor would never have been able to provide the variety of goods and services at the same rate to be competitive with Wal-Mart. Is this economics of scale creating a pseudo socialism, or is it capitalism at its best?

Even though Wal-Mart may have cannibalized the mom and pop stores, what it has done to small town America is something that a neighborhood store can never provide. That is access to the national money market. By using profit sharing strategies for their employees, the company has provided opportunities for the employees to retire in greater wealth than they would if they had owned their own store. This access to a nationwide profit stream not only benefits the employees, it ensures that money reaches the small towns and enables economic development at the grass root levels.

The other positive aspect of this phenomenon is that goods no longer have to be pigeon-holed into specific markets based on geographic limitations, and true demand and supply logistics can balance the production economics of any product. In a way, it eases the burden on the environment and ecological imbalance in certain areas. The applicability of the concept is huge in terms of a developing country's grass roots market.

The imbalance in economic development between the rural and urban areas in developing countries is too apparent, causing a natural beeline towards the high pressure areas. While the biggest economic opportunities are concentrated in the urban areas, the rural areas resort to agriculture and small scale industries to make ends meet. The wealth generated from these products are low due to the vernacular market conditions, while the urban areas create products that have national or international markets, and hence have higher profit potential.

The centralized procurement system of Wal-Mart combined with the marketing potential created by a brand name opens out the market for locally produced goods to areas way beyond the geographical constraints of the local market. This strategy has multiple advantages as far as the small town producers are concerned - mitigates risks at the grass root level, increases profit potential and provides growth opportunities - thereby enabling sustainable development in the area.

Not only this, it also provides employment opportunities in spades in traditionally weak employment zones. And, with the wealth creation opportunities provided by profit sharing, this is a career path that can help sustain a substantial livelihood in non-urban areas in developing countries, hitherto unheard of. Majority of any developing country's population is still rural, and this majority still depends on agriculture and small scale cottage industries to provide a livelihood, with very little to no employment opportunities that can provide a comparable lifestyle to that available in a city. Moreover, urban jobs require a certain level of education which is still inaccessible to many rural areas. Migration to cities which seems a natural way out leads to unemployment issues, and the frustrated and dejected unemployed people resort to crime or are subject to abject poverty, detestable life in slums and lack of spirit in participating in the democratic process.

The biggest thing in common to most problems faced at the grass root level in a developing country is access to opportunity for development. It is not easily available, and the governments can only do so much as far as providing opportunities are concerned, due to the traditional paucity of funds and larger than manageable population to provide for. Political inertia and corruption may be cited as bigger reasons for this imbroglio. Whatever the reasons, the result is that a large majority of the population has to resort to self-employment to find a means of livelihood. Self-employment brings with it its own perils, and an extremely constrained market adds to the risks of operating a business.

This is where the dichotomy of enterprise v. employment springs up in the path of creating sustainable development. In an economy where enterprise is chosen for wealth creation and employment is chosen for sustained livelihood, a majority of the population that are not risk takers, or are not in a position to take a risk can thrive. In the developing countries where employment opportunities are low, however, the scenario is such that enterprise is seen as a means of survival while employment is seen as a means of sustained livelihood and small wealth creation. This distortion brings economic tensions and economic imbalance to the fore and hinders the progress of the development process.

Also, by increasing cash flow through traditionally poor communities, new markets and new consumers are being created, and in a capitalistic market, the higher the number of consumers, the higher the profit potential. Thus, by decentralizing economic opportunity away from the urban centers, nations can create an open market conducive to profitable businesses as well. Also, by enabling opportunities for social and cultural emancipation for the majority of the population, it creates an upbeat democracy that believes in the democratic process and creates stronger governments chosen for the right reasons.

Wal-Mart may not be everyone's favorite store, but the potential the concept creates for sustainable development in developing countries is huge. By providing opportunities for the right mix of enterprise v. employment through a demand-supply process rather than a political process, it is capitalism at its very best providing for social, cultural and economic development at the grass roots.