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Sweatshops: The Best Hope of the Third World
Ben Platt • April 1998

Students at Yale often encounter arguments against capitalism based on the inhumane conditions in sweatshops. Factories labeled as sweatshops are those which subject employees to grueling work, long hours, low pay, and sometimes even physical abuse. Such working conditions, currently experienced in the United States as well as in developing countries, seem to point out a conflict between free-market economics and ethical principles.

It appears obvious that free markets encourage industrialists to create sweatshops. The logic seems impeccable: Economic principles dictate that the business owner will cut costs wherever possible, squeezing ever more productivity out of the helpless workers until, eventually, wages reach rock-bottom, giving the laborer exactly enough compensation for subsistence. Karl Marx argued extensively about the inevitability of any capitalist economy reaching such a state, and found his argument eagerly received by selfless do-gooders and evil power-mongers alike for many years after his death. Even today, despite an abundance of evidence and economic study pointing to the contrary, people use similar arguments to justify a legally-mandated minimum wage.

Why is it, then, that historically real wages have consistently risen over time in industrialized, capitalist economies? What was the driving force behind the decline of sweatshop labor in the U.S.? To say “capitalism” would be just as slipshod an argument as the one claiming that capitalism is the cause of inhumane sweatshop conditions in the first place. Underneath the rise and decline of the sweatshop are elements of both capitalism and human nature at work. But these elements do not make a complete system and, by themselves, are insufficient to condemn the larger concepts. Capitalism is not a structure, but a lack of structure. It is a system of voluntary free trade among people. As a concept, capitalism is only dependent on structure to enforce the voluntary aspect of exchange. In reality, a great deal of the structure developed to support capitalism inhibits free trade.

Today, the remaining sweatshops in the United States are a result of immigration and minimum wage laws, neither of which were ostensibly adopted to support capitalism. People who move to the United States illegally find that their boss might demand more of them than the current U.S. labor laws allow, because he has the power to send them back to their original country. Thus bosses can require long hours, low pay, and severely restricted liberty. The only thing differentiating a slave from a man in this situation is that if he were to escape, the outside world would not support his boss, but rather send the immigrant back to his place of origin. In this situation, assuming that there are no physical restraints (which would be slavery, not a sweatshop), the illegal immigrant is choosing to work under sweatshop conditions rather than be sent home.

The difference between the immigrant’s initial standard of living in the U.S. (which might be lower than it was where he left) and his standard of living where he came from represents the utility that the worker places on his hope for the future. In other words, the worker places a much higher value on living in the United States than on returning to his homeland due to the potential opportunity that exists here.

His sense of opportunity is rooted in real life and real evidence. The immigrant’s journey begins at home, where he collects information through various sources receiving news from his destination. He does not go blindly to the chopping block; he understands the conditions he is about to face, because they have been relayed to him from people already experiencing them.

The same choices facing the worker can be extended to developing countries in faraway continents. If a factory moves into a city in an undeveloped African country, for instance, people who choose to work in the factory instead of continuing to work on the traditional farm are voluntarily deciding to accept the harsh working conditions in order to have an unknown, and, as far as they know, better future. By deciding to work in a sweatshop for low wages, the worker is placing a value on his time compared to his next best option; in this case, traditional life.

Unfortunately, though, in many cases the worker does not have a choice. The lack of choice means that if he does not accept an offer to work in a sweatshop, he will die. This dilemma is not the result of capitalism. It is the result of many different forces acting to destroy the fabric of a functioning capitalist support structure: war, regional famine, and the state seizure of privately-owned land. To denounce capitalism because a factory moves into a country and offers its citizens their only hope for survival is outright ludicrous. Capitalism was not the source of the dilemma in the first place. At worst, it was the only hope.

The effect of denouncing industry in developing countries, if the protest is successful, is the limitation of future opportunities for the people living in these lands. Just as we enjoy the many options and future potential available to us through an industrialized economy, many people in developing lands would also like to join in the excitement that comes with opportunity. The problems facing such people are not due to voluntary free trade, but to political and cultural systems that make trade only free to the privileged people with guns.

—Ben Platt is a senior in Saybrook College

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