Powell Zwolinski - The Ethical and Economic Case

The Ethical and Economic Case Against Sweatshop Labor: A Critical Assessment
Author(s): Benjamin Powell and Matt Zwolinski

Source: Journal of Business Ethics, Vol. 107, No. 4 (June 2012), pp. 449-472
Published by: Springer
Stable URL: http://www.jstor.org/stable/41476263
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J Bus Ethics (2012) 107:449-472
DOI 10.1007/S10551-01 1-1058-8
The Ethical and Economic Case Against Sweatshop Labor:

A Critical Assessment
Benjamin Powell * Matt Zwolinski
Received: 12 September 201 1 / Accepted: 17 September 201 1 /Published online: 19 October 201 1
© Springer Science+Business Media B.V. 2011
Abstract During the last decade, scholarly criticism of

becoming increasingly aware of the vast range of goods
sweatshops has grown increasingly sophisticated.produced This overseas and the often horrifying conditions
article reviews the new moral and economic foundations of under which workers labored to produce them. College
these criticisms and argues that they are flawed. It seeks tostudents, activists, and certain scholars were quick to
advance the debate over sweatshops by noting the extent tocondemn "sweatshops" and the multinational enterprises
which the case for sweatshops does, and does not, depend (MNEs) that used them. But this initial moral condemna-
on the existence of competitive markets. It attempts totion was based more on an intuitive sense of revulsion than
more carefully distinguish between different ways in whichnuanced moral reasoning, and critics often demonstrated a
various parties might seek to modify sweatshop behavior, lack of sensitivity to both the underlying economic con-
and to point out that there is more room for consensusditions that gave rise to the sweatshop phenomenon and to
regarding some of these methods than has previously been the beneficial consequences of sweatshops for both their
recognized. It addresses the question of when sweatshops employees and the broader economies in which they
are justified in violating local labor laws. And it assesses functioned. As a result, economists from across the polit-
the relevance of recent literature on coercion and exploi- ical spectrum quickly leapt to the defense of sweatshops.2
tation as it applies to sweatshop labor. It concludes with a During the last decade, the academic debate over
list of challenges that critics of sweatshops must meet to sweatshops has grown increasingly sophisticated. Critics of
productively advance the debate. sweatshops now defend their position with nuanced argu-
ments drawn from a variety of moral theories. And the
Keywords Sweatshops • Exploitation • Coercion • economists' early rejoinder to critics has, at least superfi-
Minimum wage • Labor law cially, been taken to heart. All sides to the debate now
recognize that sweatshop labor often represents the best
option available for desperately poor workers to improve
Introduction their lives and the lives of their family, and that any attempt
to reform sweatshops must proceed with caution lest the
As late as 1997, Ian Maitland was still able to write about
incentives that produce this benefit be destroyed.
The Great Non- Debate Over International Sweatshops}Still, this concession has only modified, not softened, the
At that time, consumers in the United States were form in which sweatshops are criticized. Scholars such as
Dennis Arnold, Norman Bowie, Laura Hartman, Jeremy
Snyder, Robert Pollin, and John Miller have raised a
B. Powell variety of new objections to sweatshops and to the argu-
Suffolk University, Boston, MA, USA ments of those who have sought to defend them. They
e-mail: bpowell@suffolk.edu
M. Zwolinski (El) 1 Maitland (1996), emphasis added.

University of San Diego, San Diego, CA, USA 2 For example, on the left, see Krugman (1997). On the right, see
e-mail: mzwolinski@sandiego.edu Williams (2004).
Springer
450 В. Powell, M. Zwolinski
argue that course, not to believe

the that demand curves are negatively
textbook eco
do not applysloped to
would be tantamount
the to declaring yourself an eco-
situation
reasons and they
nomic illiterate."3 In other words, if attempt
economic agents
mechanisms demand that
less of a good the more thatundermi
good costs, then any
condemn policies that raise the cost of sweatshop labor will
sweatshops for result in vio
in which less labor being demanded,
they operate. i.e. unemployment. Many of the And
labor, even arguments we
if counter in the following begin from this
mutually bene
necessarily framework and attempt to offer economic theories
coercive or that explo
We focus on the
describe why the argumen
sweatshop labor demand curve might be
because theypositively sloped or flat. As such, both
have wideour arguments and rele
movement. those of our critics fall within neoclassical
Many of economic
the price pol
and groups within the
theory. The dispute between us lies in determining the cor- anti-
living wagesrect understanding
and and implications
OSHA-stylof that framework.
predicted However,
by although we believe that neoclassic economic
economic theo
quences for price theory provides a useful framework for analyzing
workers. The sch
and particularly Arnold
debates over sweatshop labor, it is important to stress that we and
a distinctive do not believe that markets are always in equilibrium
position for and that the
a defense forall information has been discovered. Rather,policies
these markets are a
of standarddiscovery procedure thus we do not believe that every
neoclassical ec
guishes advance that
their could improve worker welfare without harming
conclusions fro
theory is firms or other workers hasbelief
their been discovered.4 This belief in t
principles or economic
plays an important role in the argument that follows. me
conclusions Morally, it might seem
that to some readers that a vast gulf
defenders o
their economic
separates the perspective premises.
of those who criticize sweatshops I
rigorous and those who defend them. But we do notfor
arguments believe this is pol
nizations in the
the case, with respect
anti-sweatsh
to either our own argument or indeed
developed byto most significant defenses of sweatshops
Arnold et in the academic
al. ar
activity of the
and popular literature.5
anti-sweatsh
The argument in this article, like
questioned those other defenses,
and does not seek to refute the case
refocused.
We believe against sweatshops from
that thethe perspective argume
of a single narrow
listed in theand preceeding
controversial moral theory. Instead, it seeks to show
are
that anti-sweatshop
unsuccessful in arguments fail in one of two ways:
underminin
economic and moral
Either they ground
fail internally , by running afoul of the moral
Errors", we criteria
examineto which they themselves proclaimthe
allegiance, or eco
critics to they fail in a way that is external but uncontroversial
undermine the, bybasi
regarding succumbing
the to objections that any reasonable moral
harmful theory
effect
section on ought to view as legitimate
"Legal concerns.
Regulation,
Policies" examines
Our moral approach in this article is differe
a pluralistic one.
sweatshop behavior,
Objections to sweatshops grounded in conceptsinclud
of coercion
codes, and and exploitation are perhaps most at homecompan
voluntary within a deon-
Case for tological system of ethics, but in
Violating the final analysis, these
Labor Law
justified in are concerns that any plausible moral theory
violating must take
certain
"Coercion and Exploitatio
seriously. We, therefore, attempt to meet these objections
claims that on their own terms.
sweatshops are inh
Still, our
exploitative. The primary moral focus in this article will be
"Conclus
arguments welfarist inthe
and nature. That is to say, the main questionof
state on th
Before proceeding, it is wort
the general
character of the
3 Miller (2003).
that informs the argument
4 See Hayek (1968).
start from the basic econom
5 In the business ethics literature, the most significant defenses have
sweatshop critic succinctl
been presented in Maitland (1996) and Zwolinski (2007). In the
defense was
popular "as simple
media, Krugman's (1997) defense is still frequently cited, as as
demand curves are
are several articles by downwar
Kristof and Wudunn (2000) and Kristof (2009).
â Springer
The Ethical and Economic Case Against Sweatshop Labor 451
which our moral evaluation of of wealth, or well-being labor

sweatshop in the economy as a whole.
will turn They
seem to believe that we oppose
will be a question about how sweatshops and regulations
the on sweatshops
various
because they
proposed regulations of sweatshops decrease GDPthe
affect or because they are bad for
welfare of
actual and potential sweatshop workers.
economic growth. We have two
reasons for adopting this focus. There is a grain to
First, of truth
theto thisextent
argument. To the extent
that
that sweatshop regulations do,with
there is something morally objectionable in fact, hinder
the economic
low
wages, dangerous working conditions, long hours, and
growth, this really is a strong (though perhaps not over-
degrading treatment typically riding) reason to oppose with
associated them. But not because economic
sweatshop
growth is anfor
labor, the most natural explanation end in itself.
this Rather
isbecause
that economic growth
these
is one of the
conditions are bad for the persons who most stable and effectivethem.
suffer ways of lifting the
Con-
poora
siderations of welfare thus play outmajor
of their poverty.6
role Economic
ingrowth is a means to
standard
moral objections to sweatshops.an Second,
end. And the end,many
for us, is the of
welfarethe
of the least
per-
advantaged
sons affected by sweatshops and - sweatshop workers, potentialregula-
anti-sweatshop sweatshop
tions live in conditions of desperate poverty,
workers, and future inandwhich
generations of workers potential
workers who deal with
small gains (or losses) to their objective the economic aftermath
material of today's
conditions
economic and political
can make a tremendous difference in their decisions. well-being.
One can imagine
Morally, we have very strong reason to a take
public policy that hinders
these economic
effects
seriously. This is so whether we growth
are while nevertheless making themotivated
utilitarians least advantaged
by considerations of diminishing better marginal
off. But most anti-sweatshop
utility, activity, according
priori- to
tarians who hold that the interests our argument,
of isthenot likeleast
this. Such activity may be inef-
advantaged
should have a disproportionately ficient and at odds
great with economic growth,
weight in our but these are not
moral
calculus, sufficientarians who believe that the needs of the fundamental moral reasons to oppose it. The funda-
those who do not have enough in some non-relative sense mental moral reason to oppose it is that it hurts those who
have a special moral claim on us, Catholics who believe in can least afford to be hurt.
a preferential option for the poor, or believers in some

principle of social justice for a host of other reasons.
Our concern for the welfare of persons affected by Economic Errors
sweatshops includes, of course, sweatshop workers them-
selves. But it also includes - and this is a point we feel our In the early days of the sweatshop debate, it was plausible
opponents too often neglect - individuals who do not work to claim that many of those opposed to sweatshops were
in sweatshops. It includes individuals who work elsewhere failing to take into account some of the most basic precepts
in the developing world, often in worse conditions and forof economic reasoning. Contemporary critics of sweat-
less pay, and who perhaps would like to work in a sweatshops, in contrast, are aware of and accepting of these
shop if more jobs were available there. It includes indi- precepts, but question whether they can accurately be
viduals who have no jobs at all. And it includes future applied to third-world sweatshops. Specifically, scholars
generations - individuals who do not yet exist but will one have challenged whether the background conditions that
day benefit or suffer as a result of the economic develop- are necessary to make trade mutually beneficial are present
ment that has or has not taken place in the time before their in third-world countries. They have attempted to identify
birth. economic mechanisms that allow wages to be increased
Let us be perfectly explicit about this point: Our without causing unemployment, and have occasionally
objection to bans of or regulations on sweatshop labor is tried to separate the analysis of low wages from health and
not based on the claim that such bans or regulations are safety conditions. This section examines each of these
economically inefficient. A regulation that imposed a small arguments.
cost on the very wealthy for the sake of significant gains to
the working poor might not be efficient in the sense in The Necessity of Competitive Markets
wealth maximization or Kaldor-Hicks terms, but nothing in
the argument of this article or most other defenses of The most basic point made by defenders of sweatshops is
sweatshops of which we are aware is committed to that workers' voluntary choice to accept sweatshop
opposing such a regulation. This is not, however, how our employment demonstrates that sweatshops were the best
opponents seem to have interpreted our position. Our alternative available to them. Therefore, activists should
opponents seem to believe that defenders of sweatshops are
willing to sacrifice the welfare of the working poor for the 6 See, for instance, Peter Singer's discussion of the living standards
sake of some overarching, impersonal aggregate measure of the world's poor today compared to 20 years ago (Singer 2009).
Ô Springer
not advocate policies

such a situation, advertising conditions that comply with that
Critics have challenged
the law, when the defacto conditions do not, may be ben- bo
demonstrateeficial for the
thatemployees. We discuss The Case for Vio-
they we
conditions lating
and Labor Laws in fourthwages
section. There is also a gray cou
area around
jeopardizing the failure to disclose information
jobs compared to becau
were not the type
outright misrepresentation of
of it. Here, it would depend on com
economics textbooks. Arnol
what local implicit contract custom is and this can vary
argue that considerably between countries. Things that we might
expect to be disclosed in the United States might not be
Free markets... generate many benefits; but their
expected to be disclosed in poorer countries. For example,
ability to generate those benefits presumes certain
working with a chemical that causes cancer in 70-year-olds
fixed conditions. For example, transactions among
might be expected to be disclosed in the United States but
workers and employers optimally satisfy the interests
not in a country where the life expectancy is only 50 years.
of each only if there is a free flow of information, the
We endorse a version of what Arnold (2010) describes
transaction is truly voluntary, people are able to make
as the context-specific reasonable person standard for dis-
rational decisions about their self-interest, and there
closure. Arnold objects to this standard because he finds it
are many buyers and sellers (e.g. no potential for
"incompatible with basic human dignity and the rights to
exploitative monopoly exists)7
life and survival."10 However, as we argue in "Coercion
Let us examine each of these conditions. The free flow and Exploitation" section of this article, there are good
of information improves economic efficiency. But infor- reasons to believe that Arnold's account of rights is too
mation itself is not free. When Arnold and Hartman elab- rigid both in its refusal to permit interactions that are
orate, they write that workers "may not be able to makebeneficial
a to workers but not as beneficial as his account of
rights would require and in its insistence that workers'

fully informed choice because of their lack of information
about what lies ahead. Furthermore such labor choices, rights to certain standards of treatment be non-waivable. As
once made, can be difficult to undo when additional Matt Zwolinski (2007) has argued, genuine respect for
workers' dignity requires recognizing their freedom to
information is learned 'on the job'."8 But whatever validity
decide for themselves issues of central importance to their
this point has applies to all markets, not merely the market
for sweatshop labor. No party to any exchange will ever lives.11 If it is genuinely true, as Arnold himself claims,
have all the information about what will transpire in thethat workers "with relatively short life-expectancies who
future, and there will often be transactions costs of have lived and worked their entire lives in such circum-
reversing course once new information is obtained. stances would not regard the failure to be provided infor-
Arnold and Hartman (2005) are holding up an unrea-mation about carcinogens and other harmful substances
sonable standard of "perfect competition" that never existsthat would affect their lives as unreasonable," then this
in any real world market and that, indeed, assumes awaytells us that these workers themselves see these potential
the very problems the market has to solve. Only in the harms as insignificant, at least compared with the tremen-
idealized end state of perfect competition is all informationdous benefits promised by the work. Taking this fact into
fully known. The real competitive market process is aboutaccount in a standard of reasonable disclosure is not an
discovering opportunities for gains from trade. The bidding
affront to the dignity of workers, but a recognition of it.
by buyers and sellers reveals the information about peo- Defenders of sweatshops do assume that transactions are
ple's willingness to supply and demand all products, voluntary.12 Arnold and Hartman probably correctly
describe the situation of many workers when they write
including labor. It is this very market process that discovers
the previously unknown knowledge.9 Rather than being athat "workers may agree to labor under poor conditions,
flaw of markets, the lack of perfect information is one ofbut only because they have no other option for securing
the essential reasons we need markets. income."13 But this does not make their acceptance of
As a general rule, we believe outright fraud should be sweatshop labor involuntary, at least in the sense required
for our argument. The key premise in our defense of
illegal. In practice, identifying harmful fraud can be diffi-
cult. In some cases, government mandates for wages or
working conditions may push total compensation above the
10 Arnold (2010, p. 635).
level that employers can profitably employ workers. In
11 Zwolinski (2007, pp. 691-693).
12 "Voluntary," at least, in the sense that their choice is not coerced.
7 (Arnold and Hartman 2005, p. 208). We discuss the concept of coercion and its application to sweatshop
8 Arnold and Hartman (2005, p. 209). labor in the section on "Coercion and Exploitation".
9 See Hayek (1945). 13 Arnold and Hartman (2005, p. 209).
Springer
sweatshops is that sweatshop labor

discovery represents
procedure in which market the bestto
actors struggle
alternative available to workers. The fact that workers' discover new opportunities.17 When Arnold and Hartman
choice sets are severely constrained by poverty is, of
document voluntary innovations that companies have made
course, of crucial importance to the workers themselves,
in worker health and safety, they are performing a valuable
and, depending on the cause of their poverty, mayservice
be a and contributing to the market's discovery pro-
matter of grave injustice. But this does not challengecess.18
the But the fact that not all innovations have been
truth of our premise. Nor does it challenge our claimdiscovered
that is hardly a flaw in the market process; it is, in
fact, one of the cornerstones of the justification of that
workers must be free to choose from within their severely
process. If all opportunities had already been successfully
constrained set of options. If sweatshop labor is the best
exploited, competition would cease to be necessary.
choice within that constrained set, then workers are likely
to be harmed if that option is made less feasible. Finally, Arnold and Hartman question whether markets
Defenders of sweatshops need not assume that are
thebeneficial if there are not a large number of buyers and
sellers.19 He writes that "defenders of sweatshops such as
model of homo economicus accurately characterizes most,
Matt
or any, human beings. We do think that people tend to Zwolinski and Benjamin Powell, assume that such
choose what is in their best self-interest and that it is labor markets are competitive, but it is not clear that such
impossible for outside observers to know the subjective
an assumption is warranted. In many nations employers
tradeoffs made by other human beings.14 Sweatshophave monopsony power over the workers."20 But there
need not be a large number of buyers and sellers for
workers have much more local knowledge of their partic-
ulars of time and place than first-world scholars and to produce efficient results.
markets
If there is freedom of entry, a monopoly (monopsony)
activists do and those workers certainly have the incentive
to choose what is best for them.15 The claim thatcan their
produce results identical to a competitive market. If
consistent tendency to choose sweatshop labor over employers
other systematically pay workers less than their
available alternatives is "irrational" would thus require
marginal revenue product, then there is an incentive for
considerable evidence to sustain, evidence that those new firms to enter the market and bid the workers away
opposed to sweatshops have so far failed to provide. from the underpaying firm because in the process they will
Arnold has also written that defenders of sweatshops earn more than normal profits. As a result, even a single
"assume that multinational corporations always act with firm, when threatened with entry, pushes wages towards
workers' marginal contribution to revenue.21
instrumental practical reason aimed at self-interested profit
maximization. Such a view is empirically inaccurate."16 What if there is not freedom of entry? Countries with
But this is a strawman. Defenders of sweatshops do notsweatshops often suffer from numerous government regula-
assume that corporations, or anybody else, always act withtions and interventions into the market. Even if there is a
perfect instrumental reason at the aim of profit maximi-
government regulation that prohibits or raises the cost of entry,
zation. The fact that they do not, however, fails to under-we should recognize that an individual sweatshop is better
mine our argument for two reasons. First, it says nothingthan none at all. If the single sweatshop disappeared, the
about whether corporations have a strong and reliable
regulation would be restricting labor market competition even
tendency to behave in profit-maximizing ways. It ismore. Rather than protest the sweatshop, inefficient regula-
tions that inhibit the market process should be opposed.
important to recall in this context that profit maximization
means maximization of the present value of the future
stream of profits - not just maximization of short-run
Efficiency Wages
profits. So profit maximization leaves plenty of room for
things such as ethical branding or other sweatshop Arnold and Hartman argue that the existence of efficiency
wages means that firms can raise wages without
improvement policies that may decrease short-run profits
but enhance long-run profitability through brand image.
Citations to companies pursuing such policies do nothing
to undermine the general profit maximization model.
Second, the defense of sweatshops is entirely compatible
17 See Hayek (1968).
with the fact that market actors act with imperfect infor-
18 Powell (2006) praises them on exactly this point.
mation and imperfect rationality. Competition is itself a
19 Arnold and Hartman (2005).
20 Arnold (2010, p. 651).
14 See Stringham (2010).
21 Economists refer to this as contestable markets theory. There is
15 A point recognized by Arnold himself in his discussion of moral
also a large experimental economics literature that shows small
imagination (see Arnold 2003, p. 79). numbers of buyers and sellers achieve results that approximate what a
16 Arnold (2010, p. 637). perfectly competitive market is supposed to achieve.
^ Springer
are seenworkers.22
unemploying as making a gift to workers, who reciprocate withSim
"wage greater productivity
increases and greater loyalty."27
are likely t
other A gift-exchange
changes instyleworkplace
efficiency wage may be necessary
can cause the labor demand curve to shift. These include when the labor market is tight and monitoring employee
productivity is difficult. If a firm pays an above market
increases in productivity."23 They do not specify whether
wage in these cases, then the employee has something to
the increase in productivity is exogenous, but a charitable
lose if he is caught underperforming, hence he will work
reading would interpret them to mean that it was endoge-
nous, possibly through and efficiency wage.24 Arnold andharder. In most sweatshop jobs, monitoring employee
productivity is simple, and most of the jobs exist in labor
Hartman are more specific, writing that "there is evidence
to support the claim that positive MNC deviants who
markets that have substantial unemployment or underem-
voluntarily pay employees a living wage (or a 'fair wage')
ployment. Absent these two key characteristics, Arnold and
will achieve increases in worker productivity and loyalty.
Hartman are wrong to assume that an employee will work
harder because higher wages are seen as a "gift" from the
The most obvious ways in which wages affect productivity
employer. Employees already work as hard as they are
are captured by nutrition models of efficiency wages."25
going to because labor market alternatives are poor and
Yet nutritional needs cannot justify efficiency wages from
28
profit-maximizing firms. monitoring is intense.
Malnourished workers are less productive, so employers Efficiency wages may sometimes be necessary to
achieve profit maximization. However, the conditions
should want to pay enough to ensure productivity. Arnold
and Hartman state that because workers will spend income
necessary for efficiency wages to work are not widespread
inathird-world sweatshops. When they are present, man-
on other members of their family, firms may need to pay
agers will have every incentive to voluntarily adopt effi-
worker two to four times the amount necessary to meet the
ciency wages. Arnold and Bowie anticipate that one might
minimum daily caloric intake for the worker. The increased
productivity from an efficient diet may not offset theobject that their efficiency wage "analysis implies that
MNE managers are unaware of the correlation between
increased cost of paying two to four times the cost of that
diet, however. More importantly, when the difference
wages and productivity, and that such ignorance on the part
between malnourished and healthy worker productivityof MNE managers is implausible."29 Unfortunately, they
does justify paying enough to ensure a minimum caloricdo nothing to assuage us of this fear.30 We have no reason
to believe that pushing for higher wages will result in
intake, firms can more efficiently provide those calories
higher productivity in most sweatshop jobs and thus the
through free or subsidized meals at work. Although Arnold
and Hartman grant that this is a possibility, it is in fact
standard economic model that predicts higher wages will
always the case.26 An efficiency wage is never necessary lead
to to lower employment still holds.31
improve caloric intake because workers will spend some
portion of their earnings on things other than their own
food. Thus, employers can always provide the calories
directly at a lower cost.
They also çlaim, "A second economic model empha-
sizes the gift-exchange nature of employment relations, as
27 Arnold and Hartman (2005, p. 218).
opposed to the pure market exchange of such relations. On
28 Powell and Skarbek (2006) show that sweatshop jobs pay wages
this model, employees who are compensated at rates sig-
substantially above the living standards in the countries where they
nificantly higher than the wages demanded by the market
exist. Thus, loss of a sweatshop job already imposes a severe penalty
on a worker. An efficiency wage is not necessary to create a downside
to job loss.
22 See Arnold and Hartman (2005, 2006). Arnold and Bowie (2007)
29 Arnold and Bowie (2003, p. 238).
equivocate on this issue. They grant their critics that the effect of
efficiency wages on worker productivity is indeterminate "for theTheir response is simply to reassert that it is the fact the case and
30
sake of argument" (p. 142). then point to a single study from the El Salvadoran Ministry of Labor
that found companies using North American productivity standards
23 Pollin et al. (2004, p. 156).
without accounting for either different nutritional conditions or
24 Pollin et al. (2004) also list improvements in product quality, technical capabilities of local workers. This latter does nothing to
marking, and overall expansion of product market demand. In most show that efficiency wages would be justified and the former is just a
cases, these are likely exogenous and thus violate the ceteris paribus
bald unsubstantiated assertion.
clause and thus do nothing to undermine the economic theory that
31 See Arnold and Hartman (2006) in which the authors offer three
predicts mandating higher wages reduces employment from what it
otherwise would have been.
other mechanisms for how increases wages might not unemploy
workers: passing on costs to consumers, cost cutting in other areas,
25 Arnold and Hartman (2005, p. 217). and accepting a lower return. See Powell (2006) for a critical review
26 Arnold and Hartman (2006, n. 46). of these mechanisms.
<£) Springer
not
Wages and Working Conditions increase
are their profits
Jointly because of them. In these cases,
Determined
the firm regards such benefits as costs that come off their
bottom
Some critics of sweatshops want toline, just like wages.
separate the A profit-maximizing
analysis of firm is
wages from the analysis of working conditions.32
indifferent to compensating workers with Somepay or with
will admit that mandating higherhealth, safety, wages
leisure, and maycomfortresult benefits ofinthe same
value when productivity
unemployment but want to maintain the health is unaffected.
and safetyThe firm simply
cares about the overall
can be improved without unemploying workers. cost of the total compensation
However,
the two are jointly determined. package.
Arnold has seemed to flip flop Workers,
on onthisthe otherissue.
hand, do care Inabout2003
the mix ofhe
compensation they
writes, "in the case of the Salvadoran receive. When the
factory overall compensation
question
of whether or not the workers goes
are up,exploited
workers are more is likely to desire
tied more non-
primarily
to the terms of employment monetary
rather than
benefits. Comfort andtosafety
wages... How-
are what economists
ever, it is arguable that as an call "normal goods"of
element for most people. Workers demand
employee com-
more of these goods
pensation, the terms of employment are as their
anincomeelementincreases. Unfortu-
of the
labor contract."33 Then in 2006 with Hartman he
nately, many workers have low productivity, so theirwrites,
"defenders of sweatshops typically
overall compensationdo levelnot
is low. Asdistinguish
such, they demand
between issues such as the health and
most of their safety
compensation in wagesconditions
and little in health or in
the factories, the number of working hours of employees,
safety improvements.
compliance with local labor laws, wages,
This presents a problem for and
those who benefits.
wish to separate
Indeed, they appear to assumesafety
that improvements
and working in
conditions from pay. Both are any
limited
one of these areas will result in inevitable and dire con- by the same factor - the worker's marginal revenue prod-
sequences for workers. However, these assumptionsuct.
areFirms are indifferent about whether to pay monetary
unwarranted."34 wages or in-kind benefits after adjusting for those benefits
Then when responding to Sollars and Englander (2007)
that improve productivity. Workers do care about the mix.
and their criticism of his analysis of wages, he and Bowie
As such, firms have every incentive to provide the mix of
benefits and wages that their average worker desires to
write, "if, as they suppose, raising wages will cause inev-
itable increases in unemployment, isn't the same trueattract
of the best employees possible. This means that the
adhering to local labor laws and improving working con-
mix of compensation is really driven by employee prefer-
ditions?"35 Although Arnold and Bowie (2007) seem to (limited by their overall productivity), not by the
ences
believe (incorrectly) that there will not be dire conse-
preferences of multinational corporations.
quences for workers, they are correct to equate the analysis
Clark and Powell survey Guatemalan sweatshop work-
of wages with that of working conditions. ers on precisely this question and finds that few of them are
Compensation can be paid directly as wages or indi-
willing to sacrifice any wages to receive more health and
safety benefits.36 Employees were asked about ten
rectly as benefits, which may include health, safety, com-
fort, longer breaks, and fewer working hours. Some improvements in working conditions and if they would be
indirect payments can raise worker productivity. Obvi- willing to accept lower wages to improve any of these
ously, employing healthy workers who can perform their conditions. On eight of the questions, more than 90% of the
workers answered "no." Paid vacation was the most pop-
jobs positively affects profits. Some firms may thus choose
ular improvement but even here more than 81% of the
to provide subsidized lunches, health care, and on-the-job
safety that increases worker productivity. In fact, it workers
is in answered that they would not sacrifice any amount
firms' best interests to contribute this form of indirect of wages for it. Nearly 65% of workers surveyed answered
compensation. If these benefits cost more than the revenue
that they were unwilling to sacrifice any wages for each of
gain from increased productivity, however, then firmsthe
doten improvements. Similarly, Skarbek et al. interviewed
El Salvadorian sweatshop workers. Their findings that
workers were satisfied with their job and working condi-
tions compared with their prior employment is broadly
32 For instance, Ваша Athreya, from the International Labor Rights
consistent
Fund, admitted that wages in sweatshops were typically higher than in with Clark and Powell's results.37
domestic industry but argued that it is the working conditions that
need to be addressed in a public debate with Benjamin Powell at
Grand Valley State December 1, 2008. Another example can be found
in Arnold and Hartman (2006).
36 Nicotex and Sam Bridge were surveyed because they were
33 Arnold and Bowie (2003, p. 253). identified as sweatshops and protested by the National Labor
34 Arnold and Hartman (2006, p. 8). Committee. Powell and Clark (2010).
35 Sollars and Englander (2007). 37 Skarbek et al. (2011).
^ Springer
The issues Indonesia andwage

of found the unemployment impact that eco-
compen
and other nomic theory predicts. In response are
benefits to anti-sweatshop intim
only activism and the US government's
improve to safetythreat to remove special in f
implicitly tariff privileges if human rights issuesfor
pushing were not addressed, a red
workers the Indonesian
have government made increasing the minimum
already demon
safety or wage a central component
they will of its labor market
unemplo policies in
the 1990s. The
compensation morereal value of the minimum wage
than more than the
is why doubled between 1989 and 1996. What happened
economists do to man-not s
health, ufacturing employment? Harrison
comfort, and and Scorse estimated
other
any of that a 100
these percentage point increase in Indonesia's raise
factors mini- t
worker productivity,
mum wage was associated with a decrease in employment the
Alternatively,
between 12 and 36%. if total
They also found that wage increases com
reformers demand better
led to plant closures among small exporters. They conclude w
decrease. that "the significant negative impact on employment needs
to be seriously considered in any campaign to increase the
Labor Costs are Small and can be Absorbed mandated minimum wage or to increase compliance with
by Consumer Price Increases the minimum wages."39
The magnitude of unemployment effects varies with
Most of the mechanisms identified in this section are the-
context. In some cases, consumer demand for ethically
oretical. However, empirical objections to the standardproduced products may shift out to compensate for
defense of sweatshops can also be raised. Labor demandincreased labor costs, but there is no reason to expect this
curves may slope down, but not steeply. Garment demandcondition to be universal. The section on "Legal Regula-
too might slope down but not steeply. Economic theory tion, Industry Codes, and Company Policies" considers the
would still operate as predicted, but depending on thescope for ethically branded niche products compared with
magnitude of these slopes, the empirical effect might be across the board wage mandates. For now, it is enough to
small. It is theoretically possible that a large mandatednote that the best available empirical evidence indicates
wage increase might be met with laying off only 1% of that large across the board minimum wage mandates
workers, whereas the other 99% were made better off.unemploy a significant number of workers.
Depending on one's normative framework, it would then
be at least possible to deem the unemployment effects a Cost of Safety Improvements Relative to Revenues
tolerable cost.
Pollin et al. make an empirical argument that because The prior section argued that businesses should improve
the wages are a small fraction of the total product cost, health and safety conditions, and would have the incentive
large wage increases could be made and absorbed through to do so, when their employees prefer their package of
charging higher consumer prices without harming workers.compensation shifted in that direction. Arnold takes a
They estimate that for USA and Mexican firms, a 100%different view,
wage increase would only require a 2-6% increase in the
business owners have an obligation to improve
retail price of the garments. They compare this with polling
workplace safety beyond the minimal standards leg-
data that indicated that US consumers were generally
ally mandated by many developing nations under two
willing to pay between 15 and 25% more to ensure that
circumstances: first, when doing so can be done at
products were not made under sweatshop conditions. They
little or no cost and, second when the cost as a per-
responsibly note that "Of course, consumers may not be
centage of revenues of doing so is marginal in com-
willing to help finance good conditions for garment
parison to profits as a percentage of revenues.40
workers when faced with the prospect of actually spending
more money rather than just responding to a poll." Yet
they remain optimistic that spending would match survey
results.38
39 Curiously, Harrison and Scorse (2010, p. 263) go to great lengths
A more recent empirical study of the effect of actually to cast anti -sweatshop activism in the most favorable light. Most of
mandating increases in the minimum wage casts serious the article emphasizes how they do not find any additional
unemployment effects from anti-sweatshop activism beyond the
doubt on Pollin et al.'s predictions. Harrison and Scorse
unemployment effect of the minimum wage. Yet it is anti-sweatshop
examine the effect of increasing the minimum wage in activism that was in large part responsible for increasing the
minimum wage.
38 Pollin et al. (2011, p. 155). 40 Arnold (2010, p. 639).
Ô Springer
can be expected
If a business could improve health andtosafety
behave morefor
responsibly
liter-in more
43
ally no cost, then they should do so for simple profit-
areas.
maximizing reasons: It would lower the wages they have to

Individual cases do nothing to undermine the gen
pay workers as long as the workers valued the increased
economic theory that predicts widespread adoption of s
safety. If it comes at little cost, then employers need to
policies would lead to adverse consequences for worker
weigh the trade-offs between how much workers value the
This leads us to the importance of differentiating betw
safety relative to wages. Otherwise, increasing safety
company policies, industry codes, and legal regulation
would harm workers rather than help them. Arnold seems
to assume safety would be improved and that employees
would suffer no consequences.
Legal Regulation, Industry Codes, and Company
The fact that some safety improvements may be small as
Policies
percentage of revenues compared with profits as a percent
of revenue is utterly irrelevant in determining how profit-
The case for or against reforming sweatshops cannot be
maximizing firms would adjust to the increased safety
adequately assessed until both sides are clear regarding
costs. When costs are smaller compared with profits as a
precisely which institutions or behaviors associated with
percentage of revenue, it does not mean that firms suddenly
sweatshops are meant to be reformed. Reform could take
do not care about maximizing profits on the margin. All
place at the legal/regulatory level or at the level of indi-
economic decisions are made on the margin. Increasing
vidual voluntary company policies. Most of the arguments
safety costs may not cause the firm to close if they are
from scholars who defend sweatshops are targeted at the
small as a percentage of revenue but it will change the
legal/regulatory level, and it is with these sorts of reform
firm's other marginal decisions such as how many workers
with which we have the greatest concern. Some arguments
to employ or how much to pay workers. The fact that
also apply at the level of voluntary company policies, but at
overall costs are small compared with profits does nothing
this level, there can be substantial common ground between
to change this fact.
advocates for sweatshop reform and those who are critical
What proof does Arnold offer that this would not harm
of reforms at the legal/regulatory level.
workers? "The examples of such companies [those that
Reform at the legal/regulatory level includes host
improve health and safety without laying off workers] are,
country laws and regulations such as minimum or living
perhaps, the best responses to those social theorists who
wages and workplace health and safety regulation. This
cling to the idea that economic growth in developing
level also includes laws adopted by wealthier countries that
nations must inevitably come at the cost of the safety and
would use trade regulation to limit or prohibit products
welfare of workers."41
made in factories in host countries that do not conform to
The existence of some firms who do improve health and
particular wage or working condition standards.44 At this
safety standards is not proof that more universal adoption
level, all the standard arguments developed in the eco-
of such standards would not lead to the adverse conse-
nomic defense of sweatshops apply. We maintain that any
quences economic theory predicts.42 The firms who
nationwide law or regulation that mandates higher wages
improved conditions could have experienced employee
or health and safety standards, set at a high-enough level to
productivity growth and employees preferred their
have any effect, will raise the cost of labor and thus end up
increased compensation in the form of safety rather than
unemploying some workers and moving them to less
wages. Companies could have been successfully pursuing
desirable alternatives.45 Businesses employ labor up until
ethical branding and shifted out the demand curve for their
the last marginal laborer no longer generates profits. Any
product by improving workers' safety. As David Vogel put
law that raises the relative price of third-world labor will
the point in another context,
unemploy at least some marginal workers and close some
CSR is best understood as a niche rather than as a marginal firms. How big the effect is depends entirely on
generic strategy: it makes business sense for some
firms in some areas under some circumstances. Many 43 Vogel (2005).
44 Some critics of sweatshops advocate global rather than national
of the proponents of corporate social responsibility
regulation to avoid so-called "races to the bottom." We lump global
mistakenly assume that because some companies are
and national regulation together because the standard economic
behaving more responsibly in some areas, some firms
defense of sweatshops is the same in both cases. In either case, the
automation of production and shift from low-productivity to high-
41 Arnold (2010, pp. 641-642). productivity countries leads to adverse consequences for poorer
workers.
42 Similarly, just because Cadillac can profitably put leather seats in
45 Or as explained in the previous section, changing the mix of
its cars does not prove that all firms could profit more by putting
leather seats in their cars. compensation away from that desired by the employees.
â Springer
how far the Kimberly

law Elliot and Richard
pushes Freeman have a fairly wag
ditions balanced analysis
beyond whatof how companies can respond
the to mar
own.46 sweatshop activism.48 Using survey data, they estimate that
Reforms at the level of voluntary company codes can be firms face a kinked demand for their products in which
an inherent part of the market process that both critics of consumers are not very price sensitive when firms are
sweatshops and their defenders embrace. In fact, not only exposed for having bad conditions, but in which they are
are voluntary improvements in wages and working condi- price sensitive when good conditions are used as a mar-
tions at the company level compatible with the standard keting strategy. In other words, firms could lose a lot if
defense of sweatshops but also they are actually an their products are identified as being made under bad
important component of that defense. A large part of the conditions but they gain little from having them identified
defense of sweatshops has always been based on the as being made under good conditions compared with a
dynamic character of markets. Sweatshops bring capital baseline where consumers know nothing about the condi-
and technology to the third-world countries and thereby tions. This means there is little scope for many companies
raise worker productivity over time. More sweatshops also improving conditions from an uninformed baseline as a
create more competition for labor, thus raising workers' marketing strategy, but that firms may respond with posi-
opportunity costs. The competitive forces between firms tive improvements when they encounter negative publicity
cause them to improve compensation as productivity from anti-sweatshop activists. Whether they improve con-
increases. As a result, countries develop beyond the level ditions, ignore the activists, or have to cease production in
of sweatshop employment. The overwhelming majority of response to consumer activism depends on the relative
improvements in working conditions throughout the world changes of the costs of improved conditions and the rev-
have occurred through exactly this process. Note though, enue at stake. Which way a firm chooses is not a matter of
that no activism is necessary for the above process to work. a priori theory. However, even in the case where they
Competitive forces produce the result on their own.47 choose to improve conditions, so long as those improved
Firms may choose to spell out guarantees to workers out in conditions are not a fixed cost, it will change the relative
a company code but explicit codes are not necessarily price of labor to other inputs and result in the firm
needed. employing fewer workers.
Explicit company codes might be voluntarily adopted How do Freeman et al. judge the effect of the anti-
when firms believe that it increases consumer demand for sweatshop activism? They do not believe that many
their product. In this case, the explicit code, and improved workers have been harmed, but nor do they think direct
wages and conditions, are part of a profit-maximizingactivism to get companies to voluntarily improve policies
marketing strategy. Consumers would have to place higher has been very successful either, noting "So far, however,
subjective valuations on these "ethically" produced goods the successes are ad hoc and often temporary."49 Our
for the strategy to work. We believe this can be the case foranalysis throughout this article is broadly consistent with
some products. their analysis of activism in attempting to get companies to
make voluntary reforms. The point on which we differ,
though it is one that falls outside the scope of their actual
analysis, is that they seem optimistic that conditions might
46 Many health and safety regulations and wage mandates in the first
improve because of greater governmental awareness in
world are very close to what the market would produce anyway so
they have little impact. For instance, 97.5% of all workers earnedresponse to activism. We argue that is precisely govern-
more than the US Federal minimum wage in 2005 (http:// ment laws and regulations adopted in response to anti-
www.bls.go v/cps/minwage2005. htm). Hall and Leeson compare thesweatshop activism that are likely to make workers worse
per capita income in the United States when it adopted various wage off.
and safety regulations to the incomes in third-world countries today
and find that sweatshop-intensive developing countries are One important caution is in order when reforms come at
35-100 years from reaching the level of development the United the company policy level. A company may pursue ethical
States was at when it adopted similar policies. See Hall and Leeson branding by advertising that its factories have certain
(2007).
minimum wages and working conditions, while down-
47 Market forces continue to be the main cause of increased safety
playing the fact that these conditions are only met because
even in countries with strong regulatory standards. For example, in
the United States, the expected penalty per worker for OSHA their factories are located in relatively richer higher pro-
violations amounts to only $1.34 per worker while market forces,ductivity countries than they would have otherwise been
through compensating wage differentials and workers' compensation located. Such relocations away from the developing world,
premiums imposed costs in excess of $1,234 per worker. See Viscusi
(2005, p. 851). Also see their discussion on pp. 854-860 of how safety
was improved through economic growth, and the creation of OSHA48 Elliot and Freeman (2004).
had no impact on increasing the trend. 49 Elliott and Freeman (2004, p. 86).
Ô Springer
industry
we argue, harm the welfare of poorer level. sweatshop
Some individual companies
workers may find
enhanced consumer
for the benefit of relatively wealthier workers.demand in response
For to improved
instance,
the International Labor Rights Forum,
working SweatFree
conditions while Com-
others do not. Some companies
mayjointly
munities, and Sweatshop Watch find efficiency wages improve
sponsor theproductivity
"Shop while
with a Conscience Consumer others
Guide,"
do not. A which lists
filtering process that firms
allows reforms to
selling products that have beentake place where
made in they help workersthe
factories but does not mandate
guide
has deemed "sweat-free." These sweat-free sources are them where they do not is necessary to find out what can
either unionized or run as worker cooperatives; have
work and what would unemploy workers. The market's
healthy and safe working conditions; offer wages competitive
and process is precisely that filter.
Indeed, at times Arnold and Hartman seem to recognize
benefits that will lift workers' families out of poverty; and
treat the workers with respect, dignity, and justice.50 So this
far, very point. They describe the essential role that free-
41 factories have met these criteria and been certified. dom plays in the moral imagination:
About 29 of these factories are located in the United States
The exercise of exploratory moral imagination pro-
and Canada; only 11 are located in Latin and South
vides individuals with more choices regarding cour-
America, and a single factory is in Asia. Although con-
ses of action and character development. As such, it
sumers might feel they are "shopping with a conscience,"
allows individual the possibility of choosing paths
they are mostly buying products made by wealthy first-that would not otherwise have been available to them.
world union workers while decreasing the demand for
It must be acknowledged that the social, political, and
products made in poorer countries and thus harming the
economic structures that partly constitute a culture
employment prospects of the poorer third-world workers.
frequently impose constraints on the exercise of
It is important for us to stress that the case for sweat-
such freedom. However, only the most oppressive
shops does not depend on the claim that the market is
regimes will be successful at stifling imaginative
necessarily in a perfectly efficient general equilibriumself-creation.52
where all gains from exchange have been exhausted and all
information is known. The market is dynamic discovery Economic structures place constraints on what the moral
imagination can achieve because we live in a world of
procedure that is always tending towards a final state of rest
scarcity. Some morally imaginable actions are not practi-
(general equilibrium) but that end point is always moving
as new information is discovered, technology changes, cally
and possible and an attempt to realize the impossible
would leave workers worse off. Other moral imaginations
consumer preferences evolve. We, therefore, do not believe
that every voluntary action that employers could take are
to practical. The market's filtering process is what sorts
this out as long as entrepreneurs have the freedom to
improve wages and working conditions without unem-
ploying workers has already been taken.51 imagine and implement. Political and regulatory restric-
Arnold and Hartman (2003) document the "moral tions are incompatible with the exercise of moral imagi-
imagination" exercised by Adidis-Salomon and Nike nation precisely because they prescribe what is to be done
management in improving working conditions in their and take away some of the freedom to innovate.
firms and supply chains. For them, moral imagination The "moral imagination" is precisely the entrepre-
involves an exploratory function that lets people question neurial imagination that generates profits. Although we
the conventional ways of doing things in their own culture recognize the presence of inefficiency in the status quo
and using and transforming norms from other cultures. The because not all information has been discovered by profit-
exercise of moral imagination helps discover some of these maximizing firms, it is the very undiscovered nature of this
improvements in working conditions that the market has knowledge that makes it crucial that reform comes from the
not yet adopted. bottom up as the knowledge is discovered. The knowledge
However, we should take care not to overgeneralize of the particulars of time and place where particular
from anecdotes such as this. The mere fact that there are mechanisms could improve worker welfare without un-
always possibilities to improve on current market condi- employing others are not known to any one mind and thus
tions does not justify mandating standards at the legal orcannot be imposed by regulation without also doing so in
other situations where workers would be hurt.
50 http://www.sweatfree.org/shopping_suppliercriteria. It is not entirely clear where this leaves the work of
Arnold
51 Both Powell and Zwolinski have commended Arnold and Hartman and colleagues. Arnold and Bowie (2003, p. 239;
for their work in documenting some voluntary actions firms have 2007, p. 142) explicitly state that they do not take a posi-
taken (see Powell 2006; Zwolinski 2007). We, also, believe that
tion on increasing federally mandated minimum wages in
making these actions more widely known to other companies can help
speed the discovery of improvements that can take place without
harming workers. 52 Arnold and Hartman (2003, p. 427).
Springer
developing nations. Yet

developing world? They should clearly take a position inArnol
(1998) seems to imply
favor of mandates. As we have argued earlier,that
they would he
"a need for enforceable multilat
be incorrect to favor mandates because at the legal/regu-
those advocated
latory level, suchby
mandates would the Intern
unemploy workers and/
(p. 250) and Arnold and
or change their mix of compensation Hartm
in undesirable ways.
unclear section titled "The Case for the Mandated This brings us to the third aspect of universalizability that
needs to be dealt with.
Improvement of Working Conditions."53 Most recently
Arnold (2010) argued that when companies were unwilling
Arnold and Bowie seem to say that everywhere every
to improve working conditions on a voluntary business
basis, "acould raise wages and not unemploy workers
strong regulatory model is to be preferred. OSHA-type
because of mechanisms such as cost cutting, efficiency
regulations are justified."54 wages, passing on costs to consumers, etc. We have argued
Arnold and Bowie (2003, 2007) do argue that all that
firmsthese mechanisms are not universal. They may be
present
can act on a maxim of paying their employees either the in some cases and firms will have incentives to
voluntarily
legal minimum or enough to live above the poverty line adopt them in those cases. Precisely because
working a 48-h week, whichever is higher, and tothose
do soconditions are not universally present, the standard
without making layoffs. They reject the argumentprediction
of Sol- of economics, that legally mandating higher
lars and Englander that such a maxim is not universalizable
wages (or better conditions) will unemploy some workers
because it involves a practical contradiction: The mecha-
or change their mix of compensation in undesirable ways,
nism of universally increasing wages undermines the
is universalizible. An across the board mandate may not
maxim's purpose of helping workers.55 The issue of uni-
negatively affect workers in some firms where efficiency
versalizability needs to be addressed on three levels.
wages or consumer demand offset the requirements, but in
First, Arnold and Bowie's response to Sollars
otherand
firms where this is not the case workers would be
Englander misses the mark altogether. Arnold andharmed,
Bowie just as economic theory predicts.
note that it is sometimes possible to raise wages without
Arnold argues that "defenders of sweatshops tend to
causing unemployment.56 But that it is sometimes ground
possible
their arguments in textbook economics, rather than in
for single firms to raise wages without causingactual
unem-studies of labor markets. Few studies have been con-
ployment is irrelevant to the question of whetherducted
a uni-of labor markets in which corporations have volun-
versalized maxim of raising wages above the market level
tarily increased wages."58 Studying some markets where
would do so. It is possible for a single person to tell a lie
firms did have the mechanisms available and raised wages
without destroying the practice of promise-making,does
butnothing
the to undermine the standard textbook economics
morality of an action depends (for Kant) not on the effects
that allows for their presence in some, but not all, situations.
of any particular action but on the ability to consistently
His argument that "the claims of sweatshop defenders are
will that maxim as a universal law. To refute Sollars and undermined by the many corporations, in a variety of
Englander' s criticism, Arnold and Bowie would have to industries, that routinely expend substantial corporate
show that a world in which everyone raised wages greater resources to help ensure safe and healthy working conditions
than the market-clearing level would not be one with sig- for workers" is simply false.59 It is precisely the non-uni-
nificant unemployment effects, and this is something they versal nature of the specific instances and mechanisms he
have not attempted to tod. Thus, Sollars and Englander' s and co-authors argue for that makes the textbook economic
point stands: A maxim of paying a subsistence wage in defense of sweatshops universal. Arnold and co-authors
contexts where such a wage is higher than the market should explicitly denounce legally mandated wages and
clearing one is not universalizable, and hence impermis- working conditions and share our view that the market's
sible on Kantian grounds. entrepreneurial process will best enable the moral imagina-
Second, if Arnold and Bowie believe that their claim tion to discover the particular instances where individual
that wages can be raised without causing unemployment is firms can voluntarily improve wages and working condi-
universal, and worker welfare is their goal,57 why do they tions. This naturally leads to the question of what should be
equivocate on mandating federal minimum wages in the done when there are already legally mandated wages or
working conditions in the third world.
53 Varley (1998).
54 Arnold (2010, p. 632). Footnote 57 continued
55 Sollars and Englander (2007, pp. 121-122). not the welfare of workers in general. We shall address this possibility
56 Arnold and Bowie (2007, p. 139). in "Coercion and Exploitation" section.
57 It is, of course, possible that their goal is the welfare of the 58 Arnold (2010, pp. 645-646).
particular workers who happened to be employed by sweatshops, and 59 Arnold (2010, p. 642).
Ф Springer
The Case for Violating Laborthat

Laws
companies respect local labor laws.64 If the violation
of labor laws is entailed by the pro-sweatshop argument
Several times now, Denis Arnold and isand Norman
unjust, then Bowie
the pro-sweatshop have
argument will need to
issued a challenge to defenders beof
modified or abandoned. If, on the
sweatshops. Oneother hand,
of the vio-
the
lation of labor
main elements of the pro-sweatshop laws is morally justifiable,
position, Arnold then and
it is
incumbent
Bowie accurately note, is the claim on defenders
that theof imposition
sweatshops to provide of
an
new labor regulations on sweatshops, such
argument for this claim. as minimum
But although Arnold and Bowie
wage laws or health and safety are correct to note the importancewill
requirements, of this issue, they are
increase
the cost of labor and lead to incorrect
fewer sweatshop
in claiming that the need to giveworkers
an argument in
being employed. But if new defense
labor regulations
of their are
position is one that defenders bad
of sweat-
because they lead to unemployment, should
shops "have yet to acknowledge, not
let alone theIn
provide."65
enforcement of existing labor fact, Powell responded to Arnold's
regulations be bad challenge
forin an article
pre-
cisely the same reason? Defenders published 4 of
years sweatshops
before the one in which Arnold
such madeas
this
Gordon Sollars and Fred Englander, who grant that man- allegation.66 Nevertheless, the point is important
agers of MNEs have moral obligations not and
enough to warrant repeating to tolerate
expanding on. or
encourage violations of the law,60 The essence of our response
thus seem to Arnold's
to hold challenge an
is
inconsistent position. "A more that the violation of labor
consistent laws by sweatshops
view," according is indeed
to Arnold and Bowie, "would seem to be that MNE sometimes morally justifiable. Arnold is correct to claim
that the same logic that underlies the opposition to the
managers have duties to ignore local labor laws, ignore
working conditions, and pay the lowest possible wages,increased
so legal regulation of sweatshops also counts
against the enforcement of certain existing regulation by
long as none of these practices deterred employees from
working in MNE factories."61 the state, and the compliance with certain existing regula-
Of course, Arnold and Bowie do not believe that man-
tions by sweatshops. Take, for example, laws mandating
certain safety conditions at the workplace. If workers
agers have any such duties. In the statement immediately
would prefer larger paychecks to a package of smaller
following the preceding quote, Arnold and Bowie state that
paychecks and safer working conditions, then laws that
the "more consistent" pro-sweatshop view is "indefensible
mandate safer working conditions will harm workers to the
on Kantian grounds."62 And in a more recent essay, Arnold
extent that the costs of providing those safer working
writes that although defenders of sweatshops must "either
conditions are paid from funds that would have otherwise
deny or tacitly approve the widespread violation of labor
been used to compensate workers directly. This, we
laws that take place in global sweatshops," it is neverthe-
less "difficult to justify widespread violations of the believe, is at least a very strong point (though perhaps not a
law."63 Their argument is therefore best conceived decisive
as a one) in favor of the moral legitimacy of violating
reductio ad absurdum. Because the pro-sweatshop argu- such laws.
ment, if followed to its logical conclusion, entails that This claim sounds more philosophically radical than it
really is. After all, the idea that there is a distinction
managers have a duty to ignore local labor laws, etc., and
between what is moral and what is legal is philosophical
because managers clearly do not have these duties, the pro-
sweatshop argument clearly must be unsound. commonplace. And if any conclusion can be gleaned from
The challenge Arnold and Bowie have raised isthe
an massive philosophical literature on political authority,
important one and is representative of the larger anti-
it is that justifying even a prima facie obligation to obey
sweatshop movement. Although anti-sweatshop groups the law is a tremendously difficult, and possibly hopeless
task. Traditional accounts of political authority, as Robert
vary considerably in the policies they advocate and their
Paul Wolff has argued, seem to be incompatible with a
means of protest, almost all groups demand, at a minimum,
respect for individual autonomy.67 More sophisticated
accounts of political authority, such as Joseph Raz's, have
been developed in ways that avoid this problem, but
because the standards they set for legitimate political
60 Actually, what Sollars and Englande (2007, p. 115, emphasis
added), actually say is that "MNEs or their managers have duties not
to tolerate or encourage violations of the rule of law Arnold and
Bowie assume that violations of the law are tantamount to violations See Powell (2010, Chapter 2) for a survey of the demands of the
of the rule of law. We will allow this assumption for the sake of the various groups in the anti-sweatshop movement. Draft Manuscript.
present exposition, but will return to criticize it later. Available on request, 201 1.
61 Arnold and Bowie (2007, p. 139). 65 Arnold (2010, p. 639).
62 Ibid. 66 Powell (2006).
63 Arnold (2010, p. 638). 67 Wolff (1970).
Springer
authority are Defenders

so of sweatshops
much are, therefore, not logically highe
ally existingcommittedstates qualify
to morally approving of all labor law violations,
them. In short,
but the logic of their as
position does Leslie
push toward the moral Gre
objections to
approvaleach
of some such violations. What
of makes the the
differ- do
duty to obey the
ence? As we law,"
have already noted in the introduction to this to an
present for most philosophic
article, our argument is not, contrary to the impression that
problems plague
Arnold and others have given, basedthe
on a slavish devotion justi
even those laws
to "economic efficiency."71 that are
The mere fact that the viola- g
democratic tion of a law would be wealth maximizing and
systems, in some th
in their aggregative sense doesHow
effect. not, on our view, give anything
much
be the close to sufficient moral justification
justification offor it. Indeed,
a we do duty
in an autocratic or
not think the moral values that unjust
underlie our argument are
in their effects
very different at all fromon the
those that underlie the arguments mos
population?69 of our opponents. Like Arnold, we hold the welfare of
Still, none of this means that all violations of labor laws citizens in the developing world to be a legitimate goal of
by sweatshops are morally permissible. First, some labor public and company policy.72 The conclusion we draw
laws will prohibit actions that defenders of sweatshops can, from this, however, is different. For we believe that when
consistent with their pro-sweatshop position, hold to be laws undermine rather than enhance the welfare of work-
indefensible on independent moral grounds. The opposition ers, potential workers, and other vulnerable parties, this
to forced labor, for instance, is not only consistent with the creates a very strong reason for companies to disobey those
logic of the pro-sweatshop position but also is a presup- laws.73 People in desperate poverty stand to derive tre-
position of it.70 Sweatshops, therefore, ought to comply mendous benefit from any marginal improvement in their
with laws that prohibit forced labor - not because such economic situation. On almost any reasonable moral the-
laws make forced labor illegal, but because forced labor ory, the needs of such persons will have any especially
would be immoral regardless of its legal status. Second, it heavy weight in moral calculation. If, then, the violation of
is sometimes morally obligatory to comply with even bad labor laws would benefit such persons, especially if they
laws, when the costs (especially those borne by others) of would do so without imposing a significant moral cost on
noncompliance would be excessively high. For example, others, then the case for violating those laws will be very
our position is that minimum wage laws are immoral strong indeed.
insofar as they tend to create greater unemployment among Cases that do involve trade-offs between persons or
unskilled laborers. Nevertheless, if such laws are enforced, groups of persons will be more difficult to assess. Mini-
perhaps by the imposition of monetary fines on noncom- mum wage laws are an example. In countries where labor's
pliant firms, firms might have decisive moral reason to marginal revenue product is less than the legal minimum
comply with them, because doing so might be necessary to
remain in business and to continue employing labor at all.
In complying with the minimum wage law, the firm may be
forced to employ less than the optimal number of workers,
but both the firm and its employees would suffer even more
if it were forcibly shut down by government enforcement See, for instance, Arnold and Bowie (2003) "the intentional
efforts. violation of the legal rights of workers in the interest of economic
efficiency is fundamentally incompatible with the duty of MNEs to
respect workers" (p. 228), Arnold and Hartman (2005) on the need to
move the sweatshop debate "beyond the entrenched, polarized,
68 Green (2010). political narrative of economic efficiency versus increased regulatory
69 This idea is not mere idle philosophical speculation. As one referee protection for workers' rights" (p. 212), Arnold and Hartman (2006)
pointed out, the Sullivan Principles of corporate conduct made "those who are genuinely interested in the welfare of the citizens of
violating Apartheid-era laws a condition of doing business in South developing nations ought to demand that MNCs and their contractors
Africa. respect local labor laws, rather than excusing those MNCs that violate
local laws in the name of economic efficiency" (p. 690).
70 Forced labor is inconsistent with {both the autonomy-based and
72 Arnold and Hartman (2006. d. 690).
welfarist justifications of sweatshop labor given in Zwolinski (2007,
pp. 691-665). Obviously, a worker who is physically compelled to 73 We also believe that laws that unjustly violate the autonomy of
work in a sweatshop cannot be said to autonomously choose workers and potential workers should sometimes be disobeyed. Most
sweatshop employment. Nor can it be inferred that sweatshop labor of what we say in the following regarding violations justified by
is his or her most preferred alternative (and hence likely his or her appeals to welfare, however, will also apply to violations justified by
most welfare-enhancing alternative) if his or her employment is appeals to autonomy; so for the sake of brevity, we will focus here
forced, and not chosen. only on welfarist arguments.
£) Springer
wage, respecting local labor laws

rights.74 Forwill leave
if one believes workers
that violating labor laws is a
violation
unemployed or push them into of workers' rights
informal sector, then jobs.
the fact In
that doing so
would
other words, it entails that there improve
will betheir
somewelfare is irrelevant.
persons whoThe violation of
rights
are unable to find work at a wage is morally
that impermissible,
is equal according toto
or higher the standard
view, find
the legal minimum, but who could even if itwork
is better for
at the rights-holder
a wage that for his or her
is less than the minimum, and rights
who to would be willing and
be violated.75
Of course, none
happy to accept such work if the only available of this would be a problem if the rights
alternative
in question
is unemployment (or employment in were
thealienable by an act sector).
informal of consent on the part
Such laws, thus, undermine both the
of workers. autonomy
If workers could waiveand thetheir right
by contract
to a persons
welfare of a significant group of certain level of safety in the workplacebut
(nonworkers), in exchange for
arguably advance the welfare ofa higher paycheck, group
a distinct then the tension between respect for
of persons
workers' rights
(workers). How should such conflicts and concern for their welfare could be
be addressed?
As we noted in the beginning of- workers
resolved this article,
could claim thewe are of their right
protection
untilAnd
moral pluralists, not utilitarians. and unless
sothey
wedecided
do notthat they could do better by
believe
that such cases can be resolved waiving
merely it. Most
byof"adding
the rights we
upthink
thepeople have are
alienable in course
numbers" and following whatever precisely this way. And
leads to for
thegood reason.
Alienability
maximization of aggregate utility. Weseems
do superior to inalienability
not believe, for on both wel-
farist and autonomy-based
instance, that it would be permissible to violate grounds. Giving person the
the moral
rights of one group of persons option
not to to waive a right in exchange
be enslaved even for
ifsome
it perceived
would provide tremendous benefit to
good respects hisanother group
or her choice in a way thatof
disallowing it
desperately needy persons. But does not; and it also
questions puts himviolating
about or her in a position where he
or she is able to exercise
the legal right of some persons to, say, a certain minimumthe right if and when he or she
thinksstandards,
wage, or certain health and safety that is his or her are
most welfare-enhancing
different. option, but
to below)
First, we are not convinced (see trade it away if a better
that opportunity
persons docan
inbe served by
doing so. Arnold and
fact have a moral right to such conditions, othercertainly
and critics of sweatshops
not have not
explicitly
a moral right that they could not said whether
waive they believe the workers'
by consenting to rights
take the job once they have been told
they endorse what
should the inwage
be waivable this way.or
But the kind
working conditions will be. And
of rightssecond, the
typically assigned by case for regulations
the OSHA-type
endorsed
respecting the legal rights of such by Arnold
persons are usually
must be not waivable,76 and the
weighed
general
against the effects of compliance ontone of Arnold's
third Kantian We
parties. moral have
reasoning suggests
that he views
no ready formula for making such the underlying moral
comparisons. But,rights as non-waivable
sig-
as well.
nificantly, we do not believe that Thus, although
there is anyArnold is no doubt sincerely con-
compelling
moral reason for companies or cerned
for with the autonomy
public policy and to
well-being
weigh of workers, the
ability of his
the interests of workers more heavily moral theory
than other to be responsive to those values
vulnerable
is severely
persons, especially because the limited byconditions
objective the way his theory
ofof rights is
developed.
persons not employed in factory labor are often signifi-
cantly worse. Even if compliance with the law provides
some benefits for sweatshop workers, then, there may be a
strong moral case for violationCoercion
if itandimposes
Exploitation significant
costs (e.g., in terms of unemployment) on non-workers.
Part of the explanation for theEven disagreement
if the economic reasoning presented
between in previous
sections is sound,
Arnold and us on this issue is surely there still remain two
empirical. We concerns that lead
believe
that many labor laws are harmfulmany to todoubt the moral defensibility
workers andofpotential
sweatshop labor.
workers, whereas Arnold hasThetried first is thatto argue
sweatshop workers arethat
coerced -these
either in
their decision to accept
harms are overstated or not necessary. Butsweatshop
there labor is
in the first place
also, weor
in certain of the demands
think, a significant moral disagreement underlying this that are placed on them once they
debate. That tension has to do with the way in which the
74 The form
relationship between moral rights, of problem manifests
consent, and itself elsewhere
welfare in Arnold's
argument, as discussed in Zwolinski (2007, pp. 698-700). Jeremy
ought to be understood. We believe that Arnold's pro-
Snyder, a philosopher generally sympathetic to Arnold and Bowie's
claimed commitment to the welfare of citizens in the
critique of sweatshops, makes a similar point in Snyder (2008,
developing world is in tension with his strongly stated
pp. 394-395).
commitment to respect for workers' rights, and his claim
75 Arnold (2010, p. 632).
that adherence to local labor laws is required by those
76 Arnold (2010, p. 632).
Springer
are on the job. The

Still, there remain second
important disagreements about whe- i
exploited - either
ther certain activities of sweatshopsby manag
are properly analyzed
or by the as coercive. Arnold and Bowie,
MNEs for instance, hold that whi
with
This section coercion is "widespread" in the demands that are
explores, andmade of ul
these two considerations
sweatshop workers after they have taken the job.82 This
position. coercion is used to force workers to work long hours of
overtime, to meet production quotas in spite of physical
Coercion injuries, to remain working while in need of medical care,
and so on.83 The coercion involved, however, is not
Coercion is a philosophically contested concept, and wephysical but "psychological" coercion. Psychological
will not try to settle any grand debates about its precise coercion, as understood by Arnold and Bowie, occurs when
meaning in this section.77 Rather, our goal is to assess the three conditions are met: (i) the coercer has a "desire about
role that the concept of coercion has played in anti- the will of his or her victim," (ii) the coercer has an
sweatshop arguments from a perspective that makes as few"effective desire to compel his or her victim to act in a
assumptions as possible about controversial normative andmanner which makes efficacious the coercer' s other-
conceptual issues. regarding desire," and (iii) the coercer is "successful in
Before proceeding to examine the controversial issues getting his or her victim to conform to his or her other-
regarding sweatshops and coercion, however, it is worth regarding desire."84 So, for example, "when a worker is
pausing to take stock of what is not controversial. First, nothreatened with being fired by the supervisor unless she
one - not even the most ardent defender of sweatshops - agrees to work overtime, and when the supervisor's
condones the use of physical coercion to force individuals tointention in making the threat is to ensure compliance, then
work in sweatshops, or to prevent them from quitting oncethe supervisor's actions are properly understood as
they have begun work. Forced labor is a serious moral wrong, coercive."85
and its status as such has been explicitly affirmed by almost This account of coercion has been subjected to criticism
every participant in the debate over sweatshops.78 elsewhere.86 And although the account plays no role in
Second, no participant in the current debate holds thatArnold's most recent writing on the topic of sweatshops,87
typical workers are coerced into taking sweatshop jobs.Arnold and Bowie have attempted to defend their account
That is, all of us reject the claim that individuals areagainst some of the criticisms that have been leveled
"forced" to work in sweatshops by "the coercion of pov- against it.88 We, therefore, believe it is worthwhile to
erty."79 Even Arnold and Bowie, ardent critics of sweat- subject the theory to one more round of scrutiny.
shops though they may be, grant that typical sweatshop First, it is not at all helpful to define "coercion" in terms
workers take their jobs because "they believe they can earnof "compulsion," as this account does, because the latter
more money there than they can in alternative employ- concept is just as unclear, and raises almost precisely the
ment."80 Workers might wish that they had even better same sort of philosophic questions, as the former. Essen-
employment options available, but "having to make atially, Arnold and Bowie's account says that if I desire that
choice among undesirable options is not sufficient foryou give me your car, and if I intentionally attempt, and
coercion" according to their analysis.81 If there is a moralsucceed, in compelling you to give it to me, then I have
wrong in transactions such as this, it is better described ascoerced you. But what kinds of activity on my part count as
"exploitation" than as "coercion." We shall have more to "compelling you"? Arnold and Bowie make clear that they
say about the concept of exploitation in the following. want to distinguish coercion from "rational persuasion," so
presumably my trying to convince you that you have
overwhelmingly good reason to give me the car would not
77 See, for an overview, Anderson (2006).
count as compulsion of the relevant sort. And, presumably,
78 See Arnold and Hartman (2005) "No one in this debate advocates
forced labor" (p. 679, n. 5), Sollars and Englander (2007) "We
agree... that workers should not be physically coerced" (p. 122),82 Arnold and Bowie (2003, p. 229). See also Arnold and Bowie
Zwolinski (2007). "The truth of premise 1 [in the argument for the(2007).
moral impermissibility of interfering with sweatshop labor] hinges on
83 Arnold and Bowie (2003, pp. 229-231).
whether people do in fact choose to work in sweatshops, and fails in
cases of genuinely forced labor" (p. 696) 84 Arnold and Bowie (2003, p. 229).
79 The only person of whom we are aware who does make this claim 85 Arnold and Bowie (2003, p. 230).
is Miller (2003, p. 97). But he does not defend the claim at any length,86 See Sollars and Englander (2007, pp. 122-123) and Zwolinski
and has not (as far as we are aware) repeated it since. (2007).
80 Arnold and Bowie (2003, p. 229). 87 Arnold (2010).
81 Arnold and Bowie (2003, p. 229). 88 Arnold and Bowie (2007, pp. 140-142).
â Springer
employment.93
my threatening to beat you severely If Arnold and
unless you Bowiegave
describe it
themto as
me would count as a paradigm case
coercive, of that
it suggests compulsion.
their view really does justBut
col-
lapse to
what if I were to offer to give you a one in which being
million forced to choose
dollars for between
your bad
car? We should hardly want to alternatives
describe counts such
as coercion,an
something
offer which,as
as we
saw earlier,
"coercive," and yet in an earlier they had previously
article on denied.94
the subject
Arnold identifies a category of compulsion
In response, that
Arnold and Bowie object he and
that Sollars
describes as "rational compulsion," and which occurs
Englander focused their critique on only one of their three
examples of
"when an agent is forced to choose coercion. Their two
between second example
actions,involved a
hypothetical
one of which is plainly superior."89 account of ayour
Unless supervisor car
threatening
is avery
worker
who was ill or dollars
nice indeed, the prospect of a million injured with termination
is likely unless he
toor she
be
meets a production
plainly superior to keeping it. But if my quotaoffer
that is eitheris
impossible
really for hima
form of compulsion, and hence or her to meet or impossible
coercion, then for him
it orisher difficult
to meet without
to see how we could maintain the commonsense idea, sustaining further injury, and their third involved an actual
which Arnold explicitly embraces, that coercion is asaccount
a of a pregnant worker in El Salvador who began
hemorrhaging on the job and was not allowed to leave the
conceptual matter prima facie wrong.90 On the other hand,
if we rule out rational compulsion as a genuine form factory
of to seek medical attention.95
compulsion, then all that we are left with, on Arnold's These examples are indeed shocking. But what renders
account, are "psychological compulsion" and "physical them shocking, we will argue, has to do with the perceived
compulsion." The former occurs when A acts in a way sounreasonableness of the substance of what is being
as to create an "irresistible desire" in В to act in a certain demanded of workers, and not with a belief that the
way, and the latter occurs when A forcefully moves B's workers are being coerced into complying with the sub-
body. But genuinely "irresistible" desires are almost cer- stance of the demand. After all, if the demands above
tainly either nonexistent or so rare as to provide scarceindeed qualify as coercive on Arnold and Bowie's
basis for Arnold's claim that psychological coercion is account,96 then so too does almost any instance of an
"widespread" in sweatshops.91 This leaves only physicalemployer demanding her employee to X or else be fired -
compulsion, and this means that psychological coercion even the demand that the employee show up regularly to
simply reduces to threatening to physically coerce some- work at the scheduled time. If these are genuine examples
one, a phenomenon that Arnold and Bowie themselves of coercion, then coercion is everywhere in the workplace.
admit is "comparatively rare," and which we have already And an account of coercion that has this implication seems
noted is universally condemned by all sides of the sweat- too overinclusive to be much use in moral theorizing. Nor
shop debate.92 One serious problem with Arnold and does Arnold and Bowie's reassurance that coercion is only
Bowie's account, then, is that it fails to provide an analysis prima facie wrong do much to help. For starters, this places
of psychological coercion that distinguishes it from phys- all the weight of determining which instances of coercion
ical coercion, on one side, and rational persuasion, on the are really wrong, and which are acceptable, on further
other. moral theorizing which they have not so far explained in
A second and third problem can be seen by examining any detail, let alone defended. But moreover, many of the
Gordon Sollars and Fred Englander' s criticism of Arnold actions that would qualify as coercive on their account do
and Bowie's claims regarding psychological coercion in
sweatshops. These authors find Arnold and Bowie's 93 Sollars and Englander (2007, p. 123). We are not convinced that
the distinction between "conditions of employment" and "informal
example of a worker being threatened with termination
practices" suggested by Sollars and Englander (p. 123), and picked up
unless she agrees to work overtime unconvincing as an explicitly by Arnold and Bowie (2007, p. 141) is a helpful one. For, in
instance of coercion. Of course, workers might not like to the standard case, one of the conditions of employment will simply be
work overtime, and we can safely assume that they would that one comply with the informal practices of the workplace and the
occasional job-related special requests of one's supervisor.
prefer to keep their job without having to comply with their
94 Sollars and Englander (2007, p. 123) and Arnold and Bowie (2003,
bosses' demands. But Sollars and Englander interpret these
p. 229).
requests, so long as they are routine and known about in
95 These examples were originally presented in Arnold and Bowie
advance by workers, as simply part of the conditions of (2003) but are reproduced in their entirety in Arnold and Bowie
(2007, pp. 140-141).
96 We leave this as an open question, because it is not clear from
Arnold and Bowie's presentation which of the three possible types of
89 Arnold (2001, p. 56).
"compulsion" are supposed to be at work in them. Threatening to fire
90 Arnold (2001, p. 54).
an employee might qualify as "rational compulsion," but it is
91 See Morse (2000, pp. 1054-1063). doubtful that it could be interpreted as either psychological or
92 Arnold and Bowie (2003, p. 229). physical compulsion.
Ô Springer
not seem drowning by selling В a spot on

wrong A's boat for $10,000.
even in a
worker that Assuming
he we reject
or the "hardshe
choices" account of coer-
will be
the basic cion, and thus the claim that В is coerced
functions ofinto acceptinghis or
should A's offer, we
appear tocan hold B's us
choice to be voluntary.
as And wron
and find some
although the dealother
is clearly beneficial to A - we can
featur
stip-
justify it. Itulateis
that A values the $10,000 much more
just highly than the
not wron
In time and effort
conclusion, he or she must sacrifice - it is no less
Arnold and B
some examples
clearly beneficial to В. Вof
surely values shocki
his or her life more
sweatshops, but
highly they
than the $10,000 have
he or she had to give up to save it. n
argument for
If he or she didwhy we
not, why would he or she sho
have accepted A's
behavior as offer? Still, most people (including
wrong, norus) would judgehav
that A
theoretical has clearly acted wrongly in making
account of his or her rescue
what
consist of. Our
contingent own
on B's paying such an exorbitantview
sum. In doing
wrong for so, A seems to be taking wrongful advantageto
sweatshops of his or her
dem
it might or monopoly
might on the means of rescue,
not and failing tobe
treat В w
workers with the respect
meet he or she deserves.
production qu
the Can we analyze sweatshopand
circumstances, labor in a similar
thatway?
refuse Perhaps potential sweatshop
permission forworkers are like
a people
wor
medical drowning
care. But in ponds, and the MNEs that permis
the ultimately finance
each of their actions
these employment are like the man
is in thenot
boat. The s
by appeals potential
to the workers are in a desperate situation, "drowning"
wrongfuln
proof thus in poverty and perhaps unable on
remains to adequatelythe
provide for cr
compelling themselves
argumentand their families. MNEs have powerand
in the
wrongness. form of wealth to rescue these individuals. But rather than
providing that rescue out of common kindness or a sense of

Exploitation moral obligation, they make it contingent on an onerous
payment. The MNE provides the worker with just enough
The charge that sweatshop labor is coercive is, as we have money to make the employment offer attractive, and will
seen, difficult to sustain in the face of rigorous philo- demand in exchange the worker to toil for long hours in
sophical analysis. And, perhaps for this reason, most cur- dangerous and unpleasant conditions. Such an offer might
rent academic criticisms of sweatshops are not based present the worker with a better alternative than anything
primarily on this charge. Far more common is the charge else he or she has available. But so does the boatman's
that sweatshop labor is wrongfully exploitative.97 offer, and this does not make it any less unfair, demeaning,
What it is for a person to be exploited is a matter of or objectionable.
some philosophical dispute, and again the purpose of this Still, there are good reasons for thinking that the stan-
section is not to try to resolve that dispute.98 Most dard cases of sweatshop labor - even those involving low
accounts, however, hold that wrongful exploitation consists wages and very bad working conditions - are not wrong-
in taking advantage of another person in a way that is either fully exploitative. First, it is not clear that the distribution
unfair or that fails to manifest sufficient respect for that of burdens and benefits between sweatshop workers and
person's dignity. Understood in this way, an interaction can MNEs is unfair , and hence not clear that MNEs are taking
be exploitative without being coercive. Indeed, an inter- unfair advantage of sweatshop workers. Part of the problem
action can be both voluntary and beneficial to both parties in credibly establishing the charge of unfairness stems from
(relative to how they would have fared in the absence of the immense difficulty in specifying a general principle of
any interaction), while still being wrongfully exploitative. fair distribution, something no critic of sweatshops has yet
Suppose, for example, that A offers to rescue В from managed to do. Even without such a principle, of course,
critics of sweatshop might hold that the division is unfair in
97 See, for instance, Arnold and Bowie (2003), Mayer (2007), Meyers some obvious and intuitive way - perhaps because MNEs
(2004), Snyder (2010), and Young (2006). are clearly getting more than they ought to out of the
98 Some of the most influential accounts include Goodin (1987), transaction, or because workers are clearly getting less. But
Wood (1995), Wertheimer (1996), Sample (2003), Snyder (2008), neither of the factual claims on which this "obvious and
Mayer (2007), and Valdman (2008, 2009). Wertheimer (2008) intuitive" account of unfairness rests are accurate. The rate
provides an overview of most of the main philosophical accounts.
Snyder (2010) provides another overview with specific focus on the of profit in MNEs that outsource is generally no higher than
application of such accounts to the issue of sweatshop labor. it is in other industries with a similar level of risk. The
â Springer
income
often cited fact that a sweatshop of sweatshopwho
worker workers produces,
is lower than it morally
say,
ought toone
a pair of Reebok shoes is paid only be as a result
USofdollar
this injustice.to make a
shoe that sells for around $100 does not mean
The explanation thatclaim
for this paradoxical Nike is
lies in the
fact that
walking away from the exchange with the labor
$99agreements
andbetween
the sweatshops
worker and
with only $1." Most of thetheir
$100employeesgoes to
are a product paying
of a wide for
variety of factors,
many materials,
advertising, retailer markup, raw of which fall well outside the responsibility of
transportation
MNEs. The
costs, and so on. The amount that background political
actually and economicto
accrues institutions
Re-
of the host country,
ebok as profit is generally no greater as for
a instance, shape and constrain
percentage of the
opportunities
their investment than the profits in anyavailable to potential sweatshop
other workers. To
competitive
the extent unusually
industry. So MNEs are not earning that those institutions high
erect barriers to entry to
profits
new businesses,
off the backs of sweatshop workers. Nor deny is
workers
it the freedom to organize
obvious that
collectively,
sweatshop workers are receiving lessorthan fail to ensure that citizens
they have reasonable
ought to
access to food, be
earn in wages. Such a claim might shelter, and education, workers'
credible if opportu-
MNEs
nities to advance
were, as some critics have charged, using their their
interests and the interests of their
monopso-
nistic power to pay workers less than the market Workers'
families will be severely limited.101 rate opportunities
for
are almost
their labor. But as we have argued certainly further
earlier in thisrestricted by injustices in the
article,
there is no reason to think that workers'
global economic wages
order, including areseizure
the unjust not of land
and natural
determined, by and large, by their resources by states and other
productivity entities,102
- just as and the
unjust restriction
they wages of non-sweatshop workers are.of free access to Western markets by
various
The charge of unfairness, and forms of protectionism.103
hence of exploitation, And the more limited
derives some traction in the comparison drawn
their opportunities are, between
the more likely it is that an offer of
sweatshops and the rescue case described above. But
sweatshop labor will be workers' most attractionon option.
Sometimes, MNEs themselves
closer examination, these cases are dissimilar in ways that will bear partial respon-
seem morally significant. First,
sibilitypart of background
for the unjust what pulls
conditions our
against which
intuition in the rescue case is the labor
belief that
agreements arethe boat
formed. owner
Because of the benefits that
will not be made (significantly)
MNEs worse
can bring to off by especially
host counties, having to
in the form of
perform the rescue gratis. As weincreased
have taxtried
revenue, they are often well-positioned
to argue in this to
influence the behavior
article, though, increases in sweatshop wages of the
orhost country government.
improve-
MNEs canwill
ments in their working conditions make their economic come
usually investmentat
in aacountry
contingent on the
cost to someone - if not to the employer government's
then willingness to use its
to customers,
power to secure the
or to potential workers. Furthermore, special benefits
rescue for the
inMNE
the- benefits that
will often come
example we have provided is entirely at the cost of the The
fortuitous. MNEs competitors,
boat the
country's
owner just happened to be there when workers,
theand its citizens.
victim To the extent that
needed
rescuing. Our intuitions mightMNEsbe different
influence governments toif the boat
act unjustly in a way that
owner were there precisely because he anticipated
constrains workers' options, MNEs do bear that
moral respon-
sibility for the background
people might need rescued, especially if his conditions
beingagainst
therewhich labor
agreements
required significant investment of time are made.
and In this case, however,
capital. the real wrong
With
of which MNEs
this contrast in mind, sweatshops look areless
guilty like
would seem to be of
cases a form of
joint-coercion
fortuitous rescue and more like cases of withprofessional
the government, rather than exploita-
sal-
104
tion per se.that admiralty law has
vage operations, and it is noteworthy
Very often,
traditionally recognized that the latter however,
are limiting background
entitled to claim conditions
significantly higher awards thanwill
thenot be the result of any injustice assignable to MNEs.
former.100
It is important to recognize, however,
Sometimes, that on
the main constraint even
workers'ifoptions will be
a poverty thattheir
sweatshops are not guilty of providing owes its existence
workers not to any
withpositive evil but
rather toit
less compensation than they should, the is
absence of the
still delicate combination
possible that of social,
workers' income is lower than it morally ought to be. The
101 We defend
claim that MNEs do not exploit workers' freedom workers
sweatshop to organize collectively
is voluntarily
which is distinct from laws that allow labor unions to organize
entirely compatible with the claim that sweatshop workers
workers where a subset of all workers has the legal right to
are suffering grievous injustice,collectively
and with the
bargain for claim
all workers eventhat the
when some workers would
rather bargain individually.
102 See
99 This particular version of the claim isPogge (2005, from
taken p. 7). Meyers (2004,
p. 331). 103 Pogge (2005, p. 6).
100 Eisenberg (2009, vols. 15-16). 104 See Zimmerman (1981).
Springer
political, geographic, and

of what it means to respect other persons as ends in ot
production of wealth
themselves, according to this line of reasoning,and
is to not eco
times, it will be
merely refrain an
from interfering injustic
with their actions, but take
government without
positive steps to promote their autonomy. As a general the co
interests. When
matter, this dutyworkers'
of beneficence has an imperfect form, optio
such these,
meaning thatand as where
individuals have "considerable leeway in th
workers and determining when and where to direct their resources are
sweatshops n
procedural wrongdoing
toward supporting" the autonomy of others.107 But Sny-such
difficult to see
der's key move ishow the
to argue that when we enter into certain claim
unfair advantage of
forms of special relationships workers
with others, this general duty c
taking advantage, takes on a "perfect, strict form."108 to be
MNEs, then, that enter sur
entering into into relationships
an with particular sweatshop employees
agreement w
beneficial relative to their antecedent circumstances. And have a special obligation of beneficence toward those
although sweatshop workers might reasonably wish that employees. Because they are in a direct relationship with
their antecedent circumstances were better, and hence that
other human beings in desperate need, they no longer have
their bargaining power with sweatshops were stronger, it is
the leeway they once had in determining how to discharge
far from obvious that they have any grounds for complaint
their duty of beneficence. Rather, "they are required to
cede as much of their benefit from the interaction to their
against sweatshops in circumstances such as those that we
have described here. employees as is reasonably possible toward the end of their
Such a complaint could only be grounded in the claimemployees achieving a decent minimum standard of
that sweatshops, or more plausibly the MNEs with whichliving."109
they contract, have some kind of moral obligation to rectify But there is something puzzling about Snyder's position.
the injustice of the background conditions against which
As we have seen, sweatshop labor generally represents a
labor contracts are formed. Or, at least, to try to "correct"
more attractive option than any other option available to
for this background injustice in some way when formingworkers - often a significantly better option. By making
such labor opportunities available, then, MNEs thereby
labor agreements with workers - perhaps by entering into
only those agreements of the sort that would have beenconfer considerable benefit on their workers. But why
formed had background conditions not been unjust. But as
should the very act of providing such a benefit impose on
Alan Wertheimer has noted, this way of understanding
MNEs a moral obligation to confer an even greater benefit?
what a non-exploitative transaction requires seems to place
Why does providing some help to workers in the devel-
an unduly heavy burden on those interacting with the oping world confer an obligation to help more, especially
victims of background injustice.105 Why should MNEs
bear special responsibility for rectifying injustices for
Footnote 106 continued
which they were not responsible? responsibility is "participation in the diverse institutional processes
that produce structural injustice." And this might make sense if we
Jeremy Snyder has argued that MNEs' special obliga-
thought that agents who participated in such structures were wrongly
tion has its origin in a Kantian duty of beneficence.106 Part
benefitting from them at the expense of victims of injustice. But this
cannot be what Young is saying. For, if what grounds responsibility is
not participation in unjust structures as such but wrongful participa-
105 Wertheimer, Exploitation , p. 234.
tion in unjust structures, then Young's account would seem to col-
106 See Snyder (2008, 2010). Snyder also appeals, in the first of these
lapse into a standard liability model of responsibility. One might think
articles, to Iris Marion Young's account of political responsibility.instead
It that participation matters because it provides ones with
is not clear, however, exactly what work Young's account is supposed opportunities to fight the injustice. But there is no reason to think that
to do in an account of exploitation. After all, Young is explicit in
all who participate in unjust structures will have such opportunities,
saying that her account of responsibility is distinct from what she calls
nor that all non-participants will lack them. It is hard to see, then, how
the "liability" account, and that it will generally be inappropriate to
"social connection" could be specified in any way that would non-
blame individuals or groups who bear only a "political" responsibilityarbitrarily assign any kind of special responsibility to sweatshops or
for injustice. This is because, on Young's account, political respon- MNEs for remedying structural injustice. Those who own or operate
sibility is borne by persons who are not "guilty or at fault for having
sweatshops or MNEs might have the power or opportunity to work to
caused a harm without valid excuses" (Young 2006, p. 119). remedy So certain kinds of structural injustice, but if this power and
Young's account cannot explain why sweatshops or MNEs deserve opportunity is neither universally nor uniquely present among them, it
more blame than other parties for the fate of sweatshop workers. Nor,
will not generate any universal or unique obligation on their part. For
really, does it do much to explain why they should be seen as bearing
a helpful discussion of these issues, see Silvermint (2011). See also
a greater responsibility to rectify those injustices, even in her own Zwolinski (2012).
special sense of political responsibility. She argues that this respon-
107 Snyder (2008, p. 396).
sibility arises from social connection. But the special status of social
connections is never defended in an entirely clear way. Young states 108 Snyder (2008, p. 390).
that the kind of social connection that generates political109 Snyder (2008, p. 396).
Ô Springer
employee.112
when those who provide no help are (on Compliance with such aaccount)
Snyder's duty, let us stipulate,
would require
guilty of no moral wrongdoing?110 the company
Consider theto provide a benefit to its
following
two companies: employee of amount Y. But let us suppose that the
employer is only willing to provide its employees with a
Company A: This company, based in the United
benefit of amount X, where X < Y. Would it be permis-
States, outsources production to a developing coun-
sible, on Snyder's account, for the employer to make its
try. The wages it pays are considerably higher than
offer of employment contingent on its workers' willingness
the wages paid elsewhere in that country, and work-
to waive their right to benefits of amount Y? Before
ers' lives are greatly improved by the benefits those
entering into a relationship with employees, the employer
wages confer. Moreover, the company uses a portion
has only an imperfect duty of beneficence. No prospective
of the profits it earns to fund various charitable causes
employee has any valid moral claim upon its assistance.
in its home country. It does not, however, give to its
Thus, the company would not be acting wrongly if it
workers as much "as is reasonably possible."
refused to hire or assist the prospective employee at all. But
Company B: This company,if based in for
it is permissible the United
the employer not to hire prospective
workers, and if hiring
States, does not outsource production at all.prospective workers at benefit level
It does,
X is better forto
however, use a portion of its profits bothfund
the employer and the worker than not
various
charitable causes in its home country.
hiring the prospective workers at all, then how could doing
so be wrong? If employees' claim to benefits at level Y is
Let us stipulate that both Company A and Company В give
waivable, then employers are not necessarily acting
enough to charity to satisfy an imperfect duty of benefi-
wrongly in providing their employees with benefits at level
cence. Snyder's account nevertheless implies that Com-
X. If, on the other hand, employees' claim to benefits at
pany A is acting wrongly, whereas Company В is not.111
level Y is not waivable, then Snyder's account is com-
This implication would seem to hold even if workers in the
mitted to holding that failing to benefit needy workers at all
developing country to which Company A outsources stand
is better than benefiting them at a level which is (signifi-
in greater need of aid than the beneficiaries of the
cantly) greater than zero but less than the morally required
charitable causes that Companies A and В fund, because
amount - even if workers themselves would strongly prefer
according to Snyder, the perfect nature
and would ofthe
like to choose Company A's
latter over the former.
obligations toward its employees is not a function of their
This strikes us as a deeply implausible conclusion. The
need, but rather of their interaction with Company A. This
structure of our argument, of course, draws on many of the
seems implausible.
same intuitions as those invoked in Zwolinski' s presenta-
But suppose we agreed with Snyder that a company's
tion of the "non-worseness claim."113 And Snyder has
entering into an employment relationship with a needy
attempted to argue that this claim is false, and hence not a
individual was sufficient to generate a strict perfect duty of
threat to his theory.114 But we are not convinced that his
beneficence on the part of the company toward that
response succeeds. The first point he makes, that "by
choosing to enter into a relationship with another person,
we can take on new duties or specify existing duties
beyond the duty not to harm others," is true as far as it goes
1 10 So long as they discharge their imperfect duty of beneficence in
but does not save him from the problem posed by the
some other way. The point here is really a specific application of what
argument above.115 the
has been called, in the literature on exploitation, For we"non-worseness
do not deny that entering into a
claim," which holds that it cannot berelationship
morallycan create new
worse forobligations. We simply hold
A to interact
with В than it is for A not to interact with В when the interaction is
that it is implausible to hold that those new obligations are
mutually beneficial, consensual, and free from negative externalities.
not waivable, even when one party regards the other's
See, for a discussion, Zwolinski (2007, pp. 708-710; 2008,
pp. 357-360; 2009), Snyder (2009), and Wertheimer (2011, chapter waiving of the obligation to be a necessary precondition for
6). It is beyond this article to set out a full defense of the non- entering into the relationship, and the other party strongly
worseness claim (though see Zwolinski, "Exploitation and Neglect" prefers the relationship without the obligation to no
for an attempt to do this). Instead, the discussion that follows attempts
to press the intuitive force of the non-worseness claim in this specific
context, without fully defending it as a general principle.
1,2 Actually, Snyder does not quite hold that it is "sufficient."
111 Alternatively, Snyder could hold that Company A is guilty of Several other conditions must be met for the employer to have this
exploitation, whereas Company В is not, but that Company В is guilty duty, but as they do not affect the present argument these need not
of some other and perhaps more serious form of moral offense. This concern us here.
would save Snyder's account from having to embrace the counter-
113 Zwolinski (2007, 2008, 2009).
intuitive claim that Company A is acting in a worse way than
114 Snyder (2009).
Company B, but only at the price of reducing the moral significance
of exploitation. 115 Snyder (2009, p. 305).
Ô Springer
relationship Atat all.

the end of the Snyder
day, however, we are prepared to bite h
otherwise. the bullet with respect to the possibly counter-intuitive
Snyder's second
implications of NWC. After all, we point hope to have shown is
borrows an that example from
the rejection of NWC entails strongly counter-intuitive
proposes to implications
marry as well. Moreover, we hope В to have shown
only i
bution of that the rejection of NWC is at odds with
financial two core moral
arrangem
labor."116 values that both consequentialists
Even if and
we Kantians must agree
rec-
marry В at ognize:
all, welfare and autonomy.
Snyder It is clear enough that the says
unfair rejection of NWC cannot
marriage is be basedbetter
on concern for sweat- for
at all, A's shop workers' welfare, since rejecting NWC entails
proposal still se
despite the rejecting transactions that
fact that are Pareto-superior. NWCBut our s
Similar casesdiscussion of non-waivability above shows that the
might be rejec- mul
offer jobs tion of NWC cannot
that are be grounded in concern for workers'
better tha
that involve autonomy either. After all, if workers' autonomy was aand
shocking d
workers are central value, then why would we not allow them to to
required waive per
of employment? Or
certain of their rights when they to
themselves judged that the work
with no fire benefits they could gain by doing so are worth the cost?
extinguishers?11
We share Snyder's intuit
Not only is the rejection of NWC counterintuitive, then, it
behavior in this
also seems to involve a kind
case.
of paternalistic substitution
As of Sny
is difficult the moral theorist's
to know own values for thosewhatof the workers to
to cases likethemselves.
this without
Until such time as the critics of sweatshops can so
retical account.
provide a theoretical
One account for their
possibil
intuitions, and/or
ever, is thatshow our
that the balance of counterintuitiveness
intuition tilts more in in
contingent feature
their favor than it has appeared from
of our presentation,
the we w
bed, rather than
are not prepared to abandon
a this
reflection
principle.
situation itself. As Werthei
marriage case, for instance
here, the Conclusions
only details we ar
aspects of the exploitative m
tion of В in We have carefully absence
the considered the arguments in a body
of of t
told only scholarshipit
that critical ofis
sweatshops and found that, while
worse fo
ingly going beyond
detailed the superficial objections to
account of sweatshops
wh
is possible raised by activists
that in the 1990s, the more sophisticated
because the
described in arguments
any still fail todetail,
undermine the basic economic
it and d
shaping our ethicalintuition as
defense of sweatshops. No economic mechanisms d
situation. In have been identified that would allow
effect, our higher wages or
intu
badness of better
the alternative
working conditions to be legally mandated without
evidence which suggests
harming workers. tha
The only meaningful type of coercion in
which a situation
sweatshops is the threat ofisphysical describ
violence if a worker
our moral intuitions,
refuses a job or attempts to leave. This formand
of coercion is it
suppose that something
relatively like
rare and defenders and critics of sweatshops alike
118
present case. condemn this type of coercion. And although the claim that
sweatshop workers are often the victim of gross injustice is
1,6 Snyder (2009, p. 305). plausible, the claim that it is sweatshops or the MNEs with
1,7 We thank an anonymous referee for raising these questions.
Footnote
1 18 In one extremely interesting experiment, Christopher Freiman and 1 1 8 continued
result of this genetic advantage, Beth' s singing is much more
Shaun Nichols presented subjects with either an abstract or a concrete
description of a situation involving a distribution of resources. The As a result, Beth attracts bigger audiences and hence gets
impressive.
abstract version asks subjects to "suppose that some people make
more money than Amy." Subjects were then asked whether the fact
more money than other solely because they have genetic advantages,"
that the genetically advantaged individuals make more money is fair.
while the concrete version asks them to "suppose Amy and Beth both
Surprisingly, subjects who were given the concrete version of the case
want to be professional jazz singers. They both practice singing
were significantly more likely to say that it is fair for the genetically
advantaged
equally hard. Although jazz singing is the greatest natural talent of individuals to make more money than those who were
given the abstract version of the case. See Freiman and Nichols
both Amy and Beth, Beth' s vocal range and articulation is naturally
(2011).
better than Amy's because of differences in their genetics. Solely as a
â Springer
The Ethical and Economic Case Against Sweatshop Labor 47 1
Arnold, D.,
which they contract that perpetrate & Hartman,
this L. (2005). Beyond
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through
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wrongful exploitation is difficult to sustain.
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Stanford encyclopedia of philosophy. Stanford, CA. http://
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Powell Zwolinski - The Ethical and Economic Case

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The Ethical and Economic Case Against Sweatshop Labor: A Critical Assessment

Author(s): Benjamin Powell and Matt Zwolinski

The Ethical and Economic Case Against Sweatshop Labor:

Benjamin Powell * Matt Zwolinski

Abstract During the last decade, scholarly criticism of

M. Zwolinski (El) 1 Maitland (1996), emphasis added.

argue that course, not to believe

which our moral evaluation of of wealth, or well-being labor

a preferential option for the poor, or believers in some

not advocate policies

rights would require and in its insistence that workers'

sweatshops is that sweatshop labor

The issues Indonesia andwage

maximizing reasons: It would lower the wages they have to

how far the Kimberly

developing nations. Yet

The Case for Violating Laborthat

authority are Defenders

wage, respecting local labor laws

are on the job. The

not seem drowning by selling В a spot on

providing that rescue out of common kindness or a sense of

political, geographic, and

relationship Atat all.

Powell, В., & Viscusi, K., Harrington, J., &J.

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