Blogs & Comment

Why the Wal-Mart bribery scandal doesn't really matter

The Wal-Mart de Mexico bribery scandal involves damning accusations, but tells us nothing about the company itself, or about capitalism.

(Photo: Juan Silva/Getty)

The recent allegations of bribery at Wal-Mart de Mexico are, if true, a damning indictment of a significant handful of senior executives. But they tell us little about the company as a whole, and even less about capitalism.

One of the most pervasive, and least endearing, characteristics of human beings is our tendency to project instances of failure on the part of one or a few individuals onto entire groups or institutions, and to use such individual failures as evidence confirming deep, dark suspicions to which we are already committed. The nationalist and racist versions of this pattern are too familiar to need description. But this tendency also plays a role in our evaluation of various corporations.

This is precisely the risk with regard to the recent Walmart bribery scandal.

Many critics of Walmart, or of the corporate world more generally, are, I suspect, secretly or not so secretly pleased at the revelation that executives at the highest levels of the company are (allegedly) implicated in this scandal. It supports, after all, a thesis that critics believed all along: It proves that the company is rotten to the core. And perhaps it even proves, or at least adds substantial weight to the thesis, that capitalism itself is inherently evil. After all, we now see credible allegations that the most senior executives at one of the world’s biggest companies—a paragon of ruthless efficiency and expansionary capitalistic zeal—were engaged in a practice so thoroughly discredited that it is illegal even in places where, unfortunately, it is still common.

It’s a tempting conclusion, but also a very bad mistake.

First, it’s a mistake because the alleged behaviour of Eduardo Castro-Wright (president of Wal-Mart de Mexico during the events in question), Mike Duke (CEO of Wal-Mart Stores, Inc.), and other top executives tells you nothing about the other 2.2 million people who work for the company. It tells you nothing about the character of the people who stock the shelves and work the cash registers. And it certainly tells you nothing about the sincerity of the people busy implementing the company’s ambitious sustainability and CSR goals. Nor do the recent revelations help with the big question about Walmart’s overall impact. Some people hate Walmart; others think the company deserves a Nobel Peace Prize. Walmart serves as a go-between, joining poor factory workers in Asia with (mostly) poor consumers in North America. It improves lives at both ends, while notoriously squeezing the middle-man. Whether that is on balance a good thing has nothing to do with who bribed whom to do what.

Nor do the recent accusations tell us anything, factually or ethically, about capitalism itself. Bribery isn’t a feature of capitalism; rather, it is anti-capitalistic, the very opposite of proper, competitive, capitalist behaviour. The accusations, if true, don’t prove that capitalism is inherently corrupt, but merely that a handful of executives at one particular company were corrupt.

To be clear: none of this is exculpatory, nor is it intended to trivialize the very significant impact this scandal might have on Walmart, its employees, and its suppliers. None of what I’ve said above excuses the reprehensible behaviour that seems to have gone on at the world’s biggest retailer. That behaviour violated fundamental moral principles. It violated the law, the company’s own standards of ethics and the fundamentals of capitalism. But we must not confuse the actions of individuals, even highly-placed individuals, with the virtues or vices of entire organizations, or of the market itself.