Economic Human Rights (21): Sweatshops

Sweatshops don’t have a very good reputation. They impose degrading working conditions, low salaries, and long hours, and they expose workers to harmful materials, hazardous situations and extreme temperatures. In many cases, the workers are young women who are vulnerable to abuse and exploitation – including sexual exploitation – by their bosses. On top of that, many sweatshops violate child labor laws. Hence, sweatshops have been called a form of modern slavery, and not without reason. They indeed look like a microcosm of human rights violations.

Most, but not all, sweatshops are situated in the third world countries, where labor regulations are lax, salaries low and trade unions not very powerful. Third world countries also don’t have a high level of technology intensity in industrial production, making it profitable to employ manual labor. Western companies often outsource high technology factories in the West to low technology sweatshops in the South. In the West, sweatshops also exist, but mostly in the illegal economy.

However, many economists who can’t possibly be accused of heartlessness or indifference when it comes to the problem of global poverty, have defended them. There’s for example Paul Krugman, Jeffrey Sachs and Nicholas D. Kristof. They argue that the alternatives in many countries are worse. Sweatshops may insult our western sense of justice, but that’s because our economies offer in general much higher standards of work. In third world countries, sweatshops are a step forward for many people. Without the opportunity to work in a sweatshop, many of them would be forced into subsistence farming, garbage scavenging, begging or even prostitution. All these alternatives offer lower incomes and worse conditions.

Furthermore, many of the young women working in sweatshops see their employment as a way out of gender discrimination. It’s a form of liberation from the oppressive local and traditional systems in their rural hometowns. They move to larger industrial towns, earn a living, have their own rooms, and as a result they can escape an early (and often arranged) marriage and early motherhood. And without the burden of an early marriage and motherhood, they can develop their education.

Developing countries starting their manufacturing sectors in the form of sweatshops, can expect improvements elsewhere in their economy:

The growth of manufacturing has a ripple effect throughout the economy. The pressure on the land becomes less intense, so rural wages rise; the pool of unemployed urban dwellers always anxious for work shrinks, so factories start to compete with each other for workers, and urban wages also begin to rise. Paul Krugman

So it’s probably not a good idea to try and abolish sweatshops, or to boycott products produced in sweatshops. We may do more harm than good when we force people out of sweatshops and into other types of employment. What we have to do, however, is to promote better labor standards and working conditions in existing sweatshops, and do so realistically. Demanding immediate implementation of western standards is silly, given the level of development of third world economies, and would result in the end of sweatshops. But western companies that use or trade with sweatshops can be pressured to do something about the worst aspects of sweatshop labor.

The Ethics of Human Rights (8): Mutually Advantageous Exploitation

exploitation: utilization of another person or group for selfish purposes. American Heritage Dictionary

To exploit someone means to take unfair advantage of that person. Usually, we define “unfair advantage” as somehow resulting in harm or coercion for the person who is taken advantage of. If A takes unfair advantage of B, we assume that B is harmed in some way, is forced to deliver the advantage, or is otherwise involuntary involved.

For example: A rapes B. The advantage gained by A is sex. This advantage is gained unfairly by A because the rape harms and coerces B. Otherwise it would not be rape. Rape is therefore charaterized as sexual exploitation.

However, it is possible to speak about exploitation and the taking of unfair advantage by A if A takes an action that benefits B. We can call this mutually advantageous exploitation, or mutually beneficial exploitation. A benefits, obviously, but B as well. B gains an advantage and is better off had the action not taken place, yet still is exploited.

Here’s an example to make this counter-intuitive statement more acceptable. Take the case where A and B have unequal bargaining power. A sells bread in an isolated village where the people don’t have the means to produce their own bread. A overcharges for the bread because B and friends don’t have the strength to find another seller or to wait. The sale of bread makes B etc. better off, because without bread they would be worse off. Yet A takes unfair advantage of the buyers’ condition. A exploits but doesn’t cause harm. However, A does coerce B. The transaction isn’t completely voluntary. B doesn’t have a choice.

It seems that the old maxim, volenti non fit iniuria – no injustice can be done to the willing – is still valid. Injustice implies coercion. But the other maxim, that injustice implies harm, can sometimes be wrong, unless the simple act of coercion by itself means harm.

A similar and politically more salient example would be if A were a transnational company offering to buy cacao from local cacao producers (B).

The Causes of Poverty (8): Lack of Economic Freedom

Open markets offer the only realistic hope of pulling billions of people in developing countries out of abject poverty, while sustaining prosperity in the industrialized world. Kofi Annan

Africa must be allowed to trade itself out of poverty. Bob Geldof

Human rights do not include a right to have economic freedom or to have a free market. But one can argue that economic freedom is a necessary consequence of human rights and that the absence of economic freedom is an indication of a country’s disrespect for human rights. The right to do with your property as you like, to move freely and to associate freely are all human rights and are prerequisites and causes of economic freedom.

There’s also a strong case in favor of the theory that economic freedom promotes prosperity and hence also respect for economic rights.

Economic freedom consists of personal choice, the ability to make voluntary transactions, the freedom to compete, and security of privately owned property. This is the definition of the Fraser Institute. This institute tries to measure the degree to which the policies and institutions of countries support economic freedom. Their index measures:

  • size of government
  • legal structure and security of property rights
  • access to sound money
  • freedom to trade internationally and
  • regulation of credit, labor and business.

They conclude that economic freedom has grown considerably in recent decades and that economic freedom is correlated with income.

 

The complete list of countries is here. I don’t want to suggest that economic freedom should be absolute. There has to be regulation of markets (for health reasons, safety reasons, reasons of fair competition etc.) as well as political corrections of the effects of markets on issues of social justice, poverty and equality.

Moreover, when discussing economic freedom we shouldn’t only think of the internal structure of states but also their interaction: import tariffs, quota, subsidies and other protectionist measures also inhibit free trade, often at the expense of poor traders and farmers in developing countries.

Why Do Countries Become/Remain Democracies? Or Don’t? (1): The Free Market

The relation between economic freedom and political freedom is that initial growth in either political freedom or economic freedom tends to promote the other. Milton Friedman in The Wall Street Journal, February 12th, 1997.

This post examines the links between the free market and democracy, especially the causal links. I believe that an increase in the level of one causes an increase in the level of the other. This may be helpful information for those who want to promote democracy around the world without the resort to violence.

I’m sure Karl Marx would have appreciated the irony of finding one of his favorite concepts at the beginning of a post defending the free market: dialectics. There is, in fact, a dialectical relationship between democracy and the free market. They may often contradict each other: the uneven distribution of wealth which one can often find in a free market system tends to falsify democratic political processes because wealth means influence; and democratic decisions often impose restrictions on a free market. However, democracy and the free market often also encourage each other.

Let us first take a look at the way in which a free market can promote democracy. A free market loosens the control of authoritarian states over their societies. If states give up control over the economy, then perhaps they will also give up control in other fields. If a state does not control all economic means, then people will have more freedom to oppose the state because the state cannot as easily take away their jobs or put them out of their houses. A planned and regulated economy usually means a planned and regulated society

A free market also promotes democracy because it requires:

The rule of law

In itself, a free market does not guarantee the rule of law but, in a certain way, it does help to promote it. Private companies like predictability. They want their investments to be protected by the law, they want a state that protects their goods and their personnel, and they want to be able to use the judiciary to enforce their contracts. Companies moreover like to have an international rule of law. They want the same rules applied everywhere. For example, if labor regulations are not the same everywhere, then companies in certain countries have an unfair competitive advantage, because they have to pay their workers less, they have to invest less in safety etc. “[T]he rule of law enforced by an independent judiciary is a condition for modern market economic relations . . . ‘Markets need laws’ claimed a businessman . . . criticizing the pervasive inefficiency and corruption of the judiciary” * . Because the free market requires the rule of law, and because the rule of law is best protected by democracy (this is an empirical fact **), one can conclude that the free market will strive towards democracy.

A limited state and a free society

Both the free market and a democracy require a limited state and a free society. Only a free society can serve as a base for the democratic control and criticism of government, and an unlimited state is the main characteristic of tyranny. The free market promotes a limited state and a free space for society because it limits state regulation and intervention in the economy. The free market is the freedom to produce, to buy and to sell and this kind of freedom promotes freedom in general.

Transparency and free flows of information

Businessmen need free flows of information in order to be able to make the best economic decisions. Hence, a free market promotes democracy, the most transparent form of government and the form of government most dependent on free flows of information.

Means of communication and transportation

A free market economy promotes the development of the means of communication and transportation. It is difficult to image a democracy without means of communication and mobility. Furthermore, increased communication and mobility weaken the power of habit and tradition, which in turn can weaken the grip of traditional authoritarian structures and forms of power.

Social mobility

Traditional authoritarian social structures, and social structures in general, are less stable in a free market, and subject to the free choice of individuals.

International trade

The free international circulation of goods can promote the free circulation of ideas. Inter-cultural communication between people who can trade freely with one another can promote democracy because it can allow people to question their habits, customs and traditional power structures. After all, you start to realize that things can be different when you see that they actually are different elsewhere in the world. In cultures that cannot trade freely and therefore do not communicate much with the outside world, most habits are considered to be self-evident and are accepted without questions. Undemocratic habits are then difficult to change. If we eliminate international trade barriers, then we can open up traditionally closed societies.

A democracy also tends to adopt a free market system. A democracy is a limited state because it necessarily (or ideally) adopts the rule of law and hence creates a space for free economic activity, exchange and competition between a variety of groups and persons. A democracy also – ideally – respects human rights and many human rights, such as the right to private property, promote the free market. It is difficult to imagine a free country, a democracy which guarantees all civil liberties, but does not allow the freedom to produce, to buy and to sell goods and services. However, a democracy may find it necessary to limit the free market, or correct for some of its injustices. It may want to redistribute some of the wealth created by the free market to those of us who cannot use their freedom to become economically successful.

There have been numerous studies measuring the degree of political freedom (or democracy) and measuring economic freedom. If you combine these measurements you can see the correlation.

* F. Panizza, in Beetham, D. (ed.), 1995, Politics and Human Rights, Blackwell, Oxford, p. 179.
** There are also many theoretical reasons to defend the link between democracy and the rule of law.