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Exploiting Injustice in Mutually Beneficial Market Exchange: The Case of Sweatshop Labor

Journal of Business Ethics volume 156, pages 59–69 (2019)Cite this article

Abstract

Mutually beneficial exchanges in markets can be exploitative because one party takes advantage of an underlying injustice. For instance, employers of sweatshop workers are often accused of exploiting the desperate conditions of their employees, although the latter accept the terms of their employment voluntarily. A weakness of this account of exploitation is its tendency for over-inclusiveness. Certainly, given the prevalence of global and domestic socioeconomic inequalities, not all exchanges that take place against background injustices should be considered exploitative. This paper offers a framework to identify exploitation in mutually beneficial exchange, focusing on the case of sweatshop labor. It argues that an employer can be viewed as taking unfair advantage of an underlying injustice if and only if the employer’s surplus from the exchange in the unjust state of affairs exceeds the surplus it could maximally obtain in a just state of affairs. The paper illustrates the applicability of this framework using three different conceptions of justice and argues that it is superior to microlevel accounts of exploitation that regard background justice as irrelevant. The paper concludes by describing some normative implications that follow from judging an exchange exploitative.

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Notes

  1. Definitions of the term “sweatshop” vary, but typically include low wages and some violation of labor standards—see Zwolinski (2007, p. 715) and Zwolinski (2012, pp. 161, 162) for more detail. Other examples of potential exploitation in business include exploitation of customers, e.g., through price gouging (Snyder 2009) or payday loans (Mayer 2003), and exploitation of suppliers by powerful buyers (Schleper et al. 2017). Snyder (2010) offers an excellent survey of theoretical accounts of exploitation in business.

  2. For the purpose of this paper, an “exchange” will be defined as a transaction between a buyer (the employer) and a seller (the worker) in a market. The price (wage) at which the exchange occurs, although treated as a single-dimensional variable for the sake of exposition, should be thought of as incorporating all dimensions of the exchange relevant to the buyer and the seller, including the monetary transfer from the buyer to the seller, but also safety standards and other working conditions. The proposed framework focuses on bilateral exchanges between a single seller and single buyer, where exploitation identifies a moral defect in the exchange between the exploiter and the exploited. It sets aside situations in which the payments made to different sellers are inter-dependent, e.g., because a factory relies on slave labor to stay in business and be able to pay fair wages to its regular workers. I am grateful to an anonymous reviewer for raising the latter point.

  3. See also Kim (2016), who applies different theories of exploitation to the issue of “gamification” in the workplace.

  4. See Powell (2014) for a comprehensive defense that discusses a wide range of relevant issues.

  5. If justice leads to a more educated labor force, the new labor market equilibrium will feature different job assignments, e.g., someone who performed a manual job, such as sewing, may perform an office job instead. In such a new equilibrium, firms will invest in more physical capital and adopt less labor-intensive production technologies, which will further increase average labor productivity.

  6. These costs are lower for workers in third world countries than in the USA since the former have lower incomes and lower life expectancy than the latter. Incomes are relevant for determining the costs of health hazards as long as willingness to pay is the appropriate measure of welfare effects, which is far from uncontroversial. However, besides budget size, the costs of health hazards are affected by lower life expectancy as well. For instance, the health impact of workplace pollution is less devastating in third world countries where life expectancy is much lower anyway. To put it bluntly, people do not live long enough to suffer some of the harmful effects of workplace pollution.

  7. This is not to suggest that, for egalitarians, any difference in life expectancy is necessarily unjust. Nonetheless, inequalities in life prospects would be significantly reduced in a world that meets egalitarian standards of justice (Daniels 2008).

  8. Competitive markets are characterized, among other features, by large numbers of buyers and sellers, none of which can possibly have an influence on the market price. Market actors in competitive markets are price takers.

  9. Whether firms are subject to Rawlsian/egalitarian principles of justice is controversial (Blanc 2016; Singer 2015).

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Acknowledgements

I thank the editor, two anonymous referees and Jeanine Miklós-Thal for helpful comments on a prior draft of this paper.

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  1. Simon Business School, University of Rochester, Carol Simon Hall, Rochester, NY, 14627, USA

    András Miklós

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  1. András Miklós
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Correspondence to András Miklós.

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Miklós, A. Exploiting Injustice in Mutually Beneficial Market Exchange: The Case of Sweatshop Labor. J Bus Ethics 156, 59–69 (2019). https://doi.org/10.1007/s10551-017-3574-7

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Keywords

  • Exploitation
  • Fairness
  • Human rights
  • Inequality
  • Justice
  • Labor conditions
  • Sweatshops