Worker Rights and Low Wage Industrialization: How to Avoid Sweatshops

Abstract

Disputes concerning global labor practices are at the core of contemporary debates regarding globalization. Critics have charged multinational enterprises with the unjust exploitation of workers in the developing world. In response, some economists and "classical liberals" have argued that these criticisms are grounded in a naïve understanding of global economics. They contend instead that sweatshops constitute an inevitable and essential feature of economic development. To the contrary, we argue that there are persuasive theoretical and empirical reasons for rejecting the arguments of these defenders of sweatshops. In particular, we argue that respecting workers entail an obligation to adhere to local labor laws, and we demonstrate that it is feasible for multinational corporations (MNCs) to provide decent working conditions and fair wages to workers. The main conclusion of this essay is that there are compelling ethical and strategic reasons for MNCs to embrace voluntary codes of conduct.

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