A Corporatists Daydream: Tescos Cut Down to Size(or not..)

American readers of this blog are obviously familiar with the depredations of Walmart and the company’s manipulation of the US planning laws to fuel its seemingly exponential growth. In the UK the closest equivalent to Walmart is Tesco in terms of its market power, and the leverage they have over both consumers and producers. Tesco has not really innovated to expand, more a case of doing what other supermarkets traditionally do except better, bigger and cheaper. Tesco like Walmart has aggressively expanded taking market share from its traditional competitors and hurting other non-grocery related businesses like M&S as well. While not being a monopoly Tesco does hold a dominant place within the UK supermarket sector with one out of every eight pounds being spent by UK shoppers in Tesco.

Now it’s being reported that the Office of Fair Trading (an oxymoronic title in our current system) seeks to divest Tesco of some of its stores so as to curb its market dominance. The typical vulgar libertarian would throw their hands up in horror at this, for how can the government dare intervene in the sacred workings of the free market thus the kneejerk response by Adam Smith Institutes of this world would be to support Tesco against the government. In fact the whole debate is framed in statist language with both sides accepting the same basic assumptions. The traditional social democrat along with the vulgar libertarian in this instance do not truly look at the material causes of Tesco’s dominance of the market place and both offer no true solution to the problem that Tesco and it’s ilk have become.

The typical social democratic or to be more accurate the liberal reformist approach is to do as the Office of Fair Trading suggests: trim Tesco’s wings slightly by forcing it to sell a few stores. This again is very short-sighted and ignores what (in a terms used by a FSA regulator) the complex monopoly of the Supermarket sector. As I noted above as businesses the supermarkets are pretty much interchangeable as can be observed whenever one supermarket takes over another’s store. The lettering and colouring might change but the way the business works remains pretty much the same. So removing a few stores from Tesco may slow down its expansion or at best stop it completely what it will not do is stop another supermarket chain doing exactly the same thing in an ever so slightly different way. The internal logic of the current state capitalist marketplace coupled with the complex monopoly of the Supermarket chains does tend to produce predictable outcomes….

The vulgar libertarian refuses to recognise the role of the state in subsidising, cosseting and encouraging the growth of the supermarket as a viable business. Supermarkets could not exist without widespread car ownership, a viable road network, biased planning laws, subsidies to the trucking industry among a million other small perks and tweaks provided by the state. Tesco and other supermarket’s large size and consequent economies of scare are only possible within a oligarchic and cartelised state-capitalist marketplace. Take away the artificial supports and the large supermarket chains like Tesco would cease to exist in their present form, who knows what free market alternative would supplant them but it would reasonable to speculate that consumer and producer co-operatives of some variety would localise and decentralise the current supermarket distribution networks in favour of locally manufactured and produced goods.

Tesco’s size, market dominance, political influence and leverage with local councils are as ever a symptom of the dysfunctional nature of modern capitalism rather than a cause. Reformist and pseudo-free market approaches to fixing this problem miss the point and perpetuate the problem, kill the state and kill Tescos anything else is just window dressing.