Food for Thought
|Published: 9th July 2008 08:58|
Groceries were always the best illustration of the merits of free markets. How ridiculous it would be if we decided collectively - by annual ballot, say, or by entrusting the decision to some Whitehall bureaucrat - which fruits and vegetables the shops should stock and in what quantities. A system whereby competing retailers offer individual consumers a daily choice is obviously better. Yet we are close to driving the free market out of the grocery sector.
The Big Four supermarket chains already account for 75 per cent of our grocery shopping. Not only is that figure rising, but so are the chains' ambitions in other retail areas such as clothing, banking, insurance and petrol; Tesco, which announced record profits of £2.5bn last Tuesday, is about to move into housebuilding.
As the New Economics Foundation (Nef) argued this month in a submission to the Competition Commission, which is conducting an inquiry into the power of the Big Four, "we are witnessing in the independent retail sector something equivalent to a mass extinction in nature". Convenience stores are closing at the rate of 2,000 a year, and newsagents at more than 500 a year. High-street greengrocers are all but extinct.
Over the past 30 years, governments have steadily dismantled central planning. In the same period, a new form of central planning, privately controlled, has emerged in the retail industry. We haven't noticed, because it has been so gradual, and we don't think it important because it has concerned mainly food and, being British, we think food is just something we stuff in our mouths.
Paradoxically, this has happened because our political and social thinking is now dominated by the concept of the consumer. Supermarkets offer a wide choice of goods at low prices. Ergo, they must be good. We do not think of the supermarkets' effects on people as employees, as members of communities or as business owners. We also have an impoverished idea of the consumer, imagining a creature who wants to buy as many goods as possible as quickly and cheaply as possible. This consumer-lite has little interest in fresh, locally grown produce, in unusual cuts of meat or fish, in talking to someone who knows what he or she is selling and can offer advice on how to cook it, or in buying any fruit or vegetable that doesn't come, surrounded by packaging, in a quantity that would feed a family of eight for a fortnight.
Supermarkets, as Nef argues, are geared to "the market behaviour of a marginal class of customer . . . the so-called average". That, judging from an interim report and the working papers on its website, seems to be the consumer the Competition Commission has in mind, too.
Many effects of supermarket dominance, particularly the effects on the environment and the community, are familiar. Others are mentioned less often. For example, as the all-party parliamentary group for small shops pointed out in a report last year (High Street Britain: 2015), retail is usually a good sector in which to start up your own business because the entry barriers are very low. Many budding entrepreneurs have used retail as a stepping stone to other sectors. An important form of self-help and enterprise is therefore disappearing. So is a source of innovation. Supermarkets now sell some organic food but I doubt they would have done so without the example of independent retailers.
Most notoriously, the supermarkets screw their suppliers. We sometimes forget that choice matters (or ought to matter) as much to us when we are selling as when we are buying. In the US, wrote Barry Lynn of the New America Foundation in Harper's Magazine last year, Wal-Mart doesn't just dictate price to its suppliers. It also dictates how they package their products, how they transport them and gather and process information about them. At a snap of a supermarket's fingers, a farmer may have to switch from one variety of cabbage to another. And where a supermarket has local dominance, anyone with retail skills to sell has to accept its wages and working conditions or do without a job.
All this has led some commentators to announce the death of the free market and the return of a Soviet-style centralised economy. Fortunately, the internet should ensure that some small producers and retailers survive. And, with determination, it is still possible for consumers to manage without visiting a supermarket except for the odd toilet roll. Indeed, I suspect that, even if the regulators fail to act, supermarkets will soon reach the limits of their influence. But the whole sorry tale is a useful reminder that monopoly (or at least, oligopoly) is the abiding weakness of unregulated capitalism and that, in maintaining freedom, eternal vigilance is required not just against the state but also against private corporations.
Artice: - New Statesman