Perspectives on Sweatshops

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1. Contrast the two perspectives on sweatshops.

Are you asking for two ethical perspectives on sweatshops since this an ethics class or are you asking for two types e.g., operating in a competitive labor market and the other in a coercive labor market, which each have different economic and ethical implications?

Let's touch on both.

Sweatshops are often portrayed as the horrifying underbelly of the global textile and apparel industries. Sweatshops sometimes exist in developed countries, including the United States, but they are most common in less-developed nations, particularly in Asia and Latin America. Textile and apparel factories supply goods to larger corporations, many of which are household names. These larger companies sell the goods to consumers. To keep the companies' business, factories must often compete fiercely with each other on the basis of price. Thus, there are two types of sweatshops: one operating in a competitive labor market (see perspective II attached) and the other in a coercive labor market (see perspective I attached). Each has different economic and ethical implications.

1. COERCIVE LABOR MARKET

A less-competitive labor market is characterized by only one firm or by a cartel of firms bidding together for labor. Without the force of competition, employers can set wage rates below a worker's worth, artificially holding wages down. Exploitation occurs when employers pay workers a wage below the true value of the workers' contributions as measured by their productivity.

In the early history of capitalism, for example, workers frequently feared ? and often faced ? collusion among employers. Collusion can include blacklisting workers who try to switch jobs or form unions. This caused Adam Smith, the founder of modern economics, to write that anyone who doubts employers collude "is as ignorant of the world as of the subject." Smith went on to say that employers in his day "are always and everywhere in a sort of tacit, but constant and uniform combination . . . . to sink the wages of labour . . . ." (Adam Smith, The Wealth of Nations, eds. R.H. Campbell and A.S. Skinner, Indianapolis: Liberty Press, 1981 [1776], 84) The formation of labor unions was a natural response to this.

Smith's solution to collusion was to promote active and open competition, which forces employers to pay workers the market value of their labor. Most workers in developed countries have access to the Internet, cell phones and fast transportation. Thus they have the ability to take their labor to the highest bidder. But modern labor markets can still lack competition for several reasons:

1. Workers face high search costs.

Most of the world's poor are illiterate and live in rural areas. Such factors make it difficult for these workers to search for better opportunities. Additional factors may contribute to this problem. Communication and roads are inadequate, and workers lack motorized transportation. Unless workers migrate away from their families, their daily job search is limited to the area they can reach on foot in two or three hours.

In many Latin American countries, for example, land ownership is highly concentrated. It is difficult for rural workers to find competing employers. Workers still have the option to migrate. However, rural families may be in permanent debt to the landowner, who also owns the local store. Workers in these families cannot leave without facing arrest, yet staying means getting deeper in debt (and debts are transferred to children). Asymmetric (one-sided) information or bargaining power may exist. Workers may be unaware of labor laws that provide certain rights such as minimum wages, limited hours and rest breaks. Employers may prevent workers from forming unions to counter the bargaining power of the firm. Finally, employers have used violence to intimidate workers and members of the press who attempt to raise questions about coercive labor ...