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c orporate responsibility in sweatshop labor

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The Chain of Responsibility

In “Sweatshop” Labor



Scott Peeples

April 19, 2005

International Ethics




Today’s global economy reaches into even the poorest of nations. MultiNationalCorporations (MNC)s are large, diverse, and incredibly complex. Checking or balancing the operations of corporate powers requires far more resources than it did in previous generations. Exporting manufacturing to nations with only rudimentary economies and desperate lower-classes exemplifies the sort of new endeavors taken by MNCs. Cheap labor makes for lower costs and thus larger profit margins. The issue lies not in the goals but in the means- the breakdown of ethics in the wake of self-interest. Human rights organizations have made “sweatshop” labor an international concern. The factors justifying the morality or breach thereof leave a narrow margin with which to assign responsibility among the involved parties. When centralized economic control is lacking, as is the case in the international market, the chain of responsibility leads to the corporation.

From an economic position, shipping jobs to countries needing jobs seems to produce a mutually beneficial relationship between the MNC and the growing nation. MNCs pump money into running their factories which in turn bolsters the foreign nation’s total economy. Because of lower expenses, the corporation can then satisfy more consumers worldwide with its lower prices. So, theoretically, the practice of exporting labor nurtures the global market as well as the periphery nation itself.

Save in the cases of conscripted hiring, the citizens who show up to work likely act in their families’ best interests and their own. These are jobs they would otherwise go without were it not for the MNC. Demanding working conditions as generous and secure as we enjoy in the United States may very well seem ludicrous to people facing starvation, poverty, and chronic unemployment. The actual conditions under which employees work, however, lack uniformity. So, other ethical issues arise. The reality of foreign labor is not quite so idyllic.

International contention has developed over the past century as corporations obtained the means to manufacture abroad. The International Labor Organization (Constitution), formed in 1919 by the Treaty of Versailles, has worked for over 50 years under the United Nations to standardize labor markets across the globe. The following preamble to the ILO’s constitution represents a common perspective:


Whereas universal and lasting peace can be established only if it is based upon social justice; And whereas conditions of labour exist involving such injustice hardship and privation to large numbers of people as to produce unrest so great that the peace and harmony of the world are imperiled; and an improvement of those conditions is urgently required; as, for example, by the regulation of the hours of work including the establishment of a maximum working day and week, the regulation of the labour supply, the prevention of unemployment, the provision of an adequate living wage, the protection of the worker against sickness, disease and injury arising out of his employment the protection of children, young persons and women, provision for old age and injury, protection of the interests of workers when employed in countries other than their own, recognition of the principle of equal remuneration for work of equal value, recognition of the principle of freedom of association, the organization of vocational and technical education and other measures (Constitution)


The constitution assumes that a certain standard of working conditions must be met by an employer to be considered both just and ethical. The specific measures which the constitution delineates reveal a complication in creating a universal ethics standard.

Distinguishing a universal ethic from cultural precedents or subjective societal norms requires examining the employer/employee relationship outside of any ethnocentric tilt. In America, for example, generous liberties and assurances have been in place for decades. Since 1938, Americans have been assured payment for overtime, a minimum wage, and limit on total hours which they may be made to work. This legislature, the Fair Labor Standards Act of 1938, also took steps to protect children in the workplace. Later amendments protected women against discrimination by employers (About). The American model, however, does not set the bar for the rest of the world. The issue has become saturated in bias and emotionally weighted semantics. The word “sweatshop”, so commonly wielded in debate, carries a connotation that presupposes a breach of ethics. The Government Accountability Office defines “a sweatshop as a business that regularly violates both wage or child labor and safety or health laws” (GAO 1). Law should to some degree reinforce ethics. Domestic law, however, may actually exceed justifiable ethics abroad (and vice versa). Even policies of the ILO cannot adequately define what is “socially just” when sociality varies so widely between cultures. The question then becomes one of individual responsibility.

Every man must answer to his own conscience, and the issue derives little benefit from debating exactly what constitutes an ethical breach. It seems more useful to identify the chain of ethical responsibility and discuss the conflicting interests for each participant in that chain. Although the corporation instigates the conflict of interests by eliciting foreign labor, I will begin by examining the final link in the chain of responsibility, the worker.

Assume, once again, that a man or woman will act in their family’s best interest. Consider a family accustomed to begging or toiling to grow their own food. They might conceivably consider it little sacrifice to work long, hard hours in a factory if in doing so they derived a substantial economic benefit for themselves and their loved ones. This does not negate ethical duty on their employers’ parts; it simply reinforces the principle that people work primarily to better their socioeconomic situations. Conscripted hiring, or forced labor, negates this principle by reducing workers to chattel and taking away their freedom to act in their own interest. In another sense, however, any unemployed worker with no other options is essentially “forced” to take a job though it might treat him or her unethically.

The unethical working conditions that qualify a manufacturing plant as a “sweatshop” are the result of either a lack of consideration from the corporation or from the overseers of the plant itself. These “middle-managers” have much to gain from foreign investors. Overseeing the allocation of funds amongst factory personnel must conveniently fall upon these directors. Thus, a motivator arises that might prompt unethical behavior. Corporations export labor to foreign markets because it cost less to pay the workers; the workers receive even less when greedy, unchecked managers withhold their proper wages. As in the case of Mattel’s use of foreign labor, greedy managers can thwart even the attempts of the corporation to ensure ethical treatment of workers. The Los Angeles Times covered a story highlighting this failure of supervision. “’Mattel has no way to know the truth about what really goes on here,’ said a 24-year-old worker at the Shenzhen factory. ‘Every time there is an inspection, the bosses tell us what lies to say’” (Goldman). The implementation of grossly abusive labor practices often begins with these managers. It is highly unlikely that a global corporation would institute or encourage unsanitary factories, child labor, or other grievous conditions. Still, to a large degree, the corporation entrusts and endows these managers to run their factories as they see fit.

In a scenario like the one above, if a manager received financial incentives to produce large amounts of a good for the lowest cost possible then chances of unethical behavior would logically increase. The larger the payoff the more apt one is to compromise their values. A situation where a corporation provides fair compensation and makes a substantial effort to ensure an ethical working environment leaves the manager guilty of the greatest portion of the ethical transgression. Conversely, if these managers acted as fairly as they could with what was provided, the compensation the workers received or what was required of them might still be deemed unethical. As such, ethical responsibility would shift to the corporation. Neither extreme occurs often, if at all. A tightrope of circumstantialities divides primary obligation between the managers themselves and the corporations who hire those managers - whoever is more closely affiliated with the breach and has power to correct it.

Business operates in a system of hierarchy. Owners delegate responsibility to upper level directors, directors to managers, and managers to workers, each level responsible for those underneath. Eventually final power and control rests on either CEOs or boards of directors. Here, sometimes far removed from the inner workings of a corporation, leadership depends on the analysis of figures. The role of ethics in the business environment is to balance pure capitalist agenda with humanity. This situation reflects perfectly in the “production chain” debate. Whereas an economic goal limits its motivators to profit boosting and generating capital, holistic business goals work to build the company’s reputation and relationships with both employees and the community at large.

Fairly assigning ethical responsibility to the foreign labor practices of a corporation takes comparing the virtue of the conflicting interests involved. Corporations form to make a profit. Essentially built from the ground up, they eventually become an organism capable of employing and paying large numbers of workers. A family budgeting on a living wage rather than merely subsisting on home grown foods testifies to the ameliorative potential for society in corporate growth. The more money a firm generates, the more wealth it is capable of distributing to its employees. This means the corporation is not a purely selfish and self-contained body when it comes to the interests it serves. This must weigh in the consideration of ethical obligation – corporations do not merely cushion a millionaire’s bank account; they generate and spread wealth among workers domestically and abroad. This closely follows a raison d'état argument, that the corporation may compromise some standards if it leads to a greater benefit at large. The final analysis will further deal with this argument.


As a corporation grows, so does its economic power and in turn its ability to influence both governing bodies and individuals who stand to gain from its success. This international hierarchal system creates a new ethical struggle. This struggle assigns final ethical responsibility based upon the duties of authority. Like the pyramid system of the corporation itself, the highest members must behave ethically or its lack will pervade the entire corporate body; obedience to authority figures often overrides personal ethical convictions. Here government enters the chain of responsibility, arguably with the greatest ethical responsibility overall as its very purpose lies in protecting the interests of the people governed.

Government should ensure that society functions justly. Consider crime in a developed nation - the ethical duty falls upon the government rather than the criminal because the criminal has already abandoned his or her ethical duties. In this way, responsibility passes down the chain to the first involved party with both the means and duty to respond ethically, either to prevent an unethical action from ever happening or to stop it. Developing nations’ governments may lack the means to right some ethical wrongs. Such being the case, they are responsible for only as much action as they are able to realistically take. They must consider the greater good of the entire society. Economic embargos or other restrictions might choke an economy in its early stages of growth.

American corporations involved in exporting labor direct the chain of ethical responsibility back to the democratic government of the United States. This democracy allows for the will of the majority while protecting the rights of the minority. The minority in this case, however, lies outside the scope of American government. This raises the question: if we keep this from happening to our own citizens because of their humanity should we take steps to prevent it from happening to humanity at large?

Regardless of the answer, America’s ability to interfere depends upon the wisdom of an action in international policy as a whole. Exercising American will upon the world has historically brought about smatterings of unpopularity in the global community. The American government then must deal with the issue domestically by restricting the exportation of the supply and manufacturing chains. Such action would undoubtedly cause dissention at home. This stifling work of bureaucracy and the complications in passing legislation limits the American government’s ethical responsibility in this case by limiting its ability to act. For international economic supervision an international form of government would be needed - a form of government the UN has not yet achieved due to its own lack of global authority.

In the argument of power and authority, ultimate responsibility vies between government and the corporation. Consumers, however, also enter into the debate because in purchasing goods made in a “sweatshop,” they are to some degree supporting that practice. The consumer’s self-interest in purchasing low-priced goods is the final and most distant element of consideration in both the arguments of closest affiliation (as between middle-managers and corporations) and the argument of greatest power (as between government and corporation). Still, the consumer has some obligation to respond. An ethical consumer response may include boycotting a corporation who practices “sweatshop” labor or simply petitioning government and business powers. Pollution prevention carries similar burdens. One man driving a car doesn’t destroy the planet, but unless every man and woman takes steps to protect it the end result is the planet still gets destroyed. The louder the voice opposing “sweatshop” labor, the more likely that each member of this chain will take steps to end it.


Analysis and Implications:


I have not so far distinguished between active and passive ethical duty - where ethics requires actively doing something or passively abstaining from doing something. The laborers have no obligation either actively or passively if they are acting in the best interest of themselves and their families. The middle managers have a passive duty to abstain from harsh and unethical treatment of their employees and an active duty to do what they can to stop such practices if already underway. Corporations have a passive duty not to elicit “sweatshop” labor and an active duty to provide for and ensure an ethical working environment in foreign plants. Governments have only an active duty to prevent and bring to justice unethical practices in the workplace domestically and, to a lesser degree, abroad. The consumer has either a passive or active duty to boycott corporations practicing “sweatshop” labor or to actively petition to have the practice stopped.

The chain of responsibility may be examined from a chronological standpoint - that is, by order of involvement. The consumer ends this chain, and the corporation begins it. Primary passive ethical obligation belongs to the initiator of this chain since no other element would receive any ethical duty if it were not for the first breach. The only counter argument would be that government has a primary active obligation to prevent unethical behavior before it begins. Government, however, having the role of overseer and power limited to its sphere of influence cannot be expected to create utopia from nothing. Government responds to the needs of its people more than it anticipates those needs.

Pragmatically, primary ethical responsibility should fall on the actor whose action would have the greatest direct and focused effect. The individual consumer has very little ability to bring about any profound change. The government has power to legislate more on generic and blanket terms than specific instances and tends to slightly miss the mark on particular goals. The managers may potentially shut down a factory, but a corporation may easily replace a problematic manager or move the factory to a new location. This weakens a foreign government’s potential to correct ethical injustice since there are other nations for the firm to turn to. The corporation again has the strongest ability to intervene in a focused and specific way. In light of this fact, the corporation must ethically take action to prevent and disallow “sweatshop” labor which they directly began.

In another sense, pragmatism might suggest that the corporation, by bringing about good which outweighs the bad, can absolve itself of ethical duty. That is, when the global economic benefit exceeds the ethical transgressions inherent in “sweatshop” labor. This Machiavellian logic grants ethical authority to the acting power by raison d'état. Unfortunately, no such power has yet been internationally agreed upon. Another difficulty lies in finding a means to weigh the claims of economic benefit against injustice. The subjectivity of perspective instantly corrupts the scale. Also, corporations lack the virtù necessita which Machiavelli required to wield power. The sacrifice of the few may save the many, but an illegitimate “prince” has no right to force such a sacrifice.

Abandoning pragmatism, a more deontological examination of the chain of responsibility might assign the primary ethical breach to the actor who behaved unethically without first being treated unethically. The middle-managers in the example of Mattel were responsible for a large part of the unethical practices in the factory. They failed to protect their workers. The corporation, however, exported their manufacturing in the first place to avoid the costs and restrictions of employing workers domestically. This does not necessitate a breach of ethics, however, so according to this definition, responsibility depends upon each individual case. The point is that unless a middle manager receives from the corporation all the means necessary to run a factory up to their expectations, the primary ethical responsibility falls on the corporation; they began the unethical behavior.

Assigning obligations, ethical or otherwise, requires an appeal to some common value source. People place value on improving their socio-economic stature; they place value on being able to do so in a safe, sanitary, and ethical working environment. The world’s economic landscape holds both the very rich and the very poor. The poor, ideally, have the opportunity to work their way up from the bottom. Whether or not the rich will value extending the basic liberties they enjoy in the working environment to those at the ground floor largely determines the success the world will see in preventing “sweatshop” labor. Discovering ethics in a global community means building bridges with other cultures by corporately seeking out humanity’s common ground. These bridges will likely lay the foundation for a centrally organized world economy to protect the social responsibility of business.


Works Cited


International Labor Organization. “Constitution.” ILO. 2 May. 2001.


Goldman, Abigail. “Sweat, Fear and Resignation Amid All the Toys.” Los Angeles Times (CA). November 26, 2004. Infoweb. University of South Florida Lib., Tampa, FL. 16 April. 2005

United States. Department of State. “Labor Standards in America.” About.


United States. General Accounting Office. “’Sweatshops’ in the U.S.” GAO. August 1988. <http://archive.gao.gov/d17t6/136973.pdf>

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