Why Sweatshop Jobs Are Worth Defending – A Short Response to Long

By On June 9, 2012 · 106 Comments · In Current Events, Exploitation, Left-libertarianism, Libertarianism

Roderick Long raises some important concerns about my defense of sweatshops. I’m short on time, preparing for the symposium on John Tomasi’s book next week, but I wanted to get in at least a quick initial response. I trust and hope that we will have plenty of time to continue the conversation later.

First, a lot of the left-libertarian critique of my position seems to be on my emphasis, rather than on the substance of my argument. Why do I spend so much time defending sweatshops, rather than criticizing the background injustices that allegedly give rise to them?

I suppose there are a number of reasons for this, some philosophical, some pragmatic. One pragmatic reason is that I’m a philosopher, not an activist. And so I choose my topics based on the basis of what I think can make a contribution to philosophical understanding, not on the basis of what conclusions, if implemented, would make the world a better place. And the fact is, I think that the philosophical community still has a ways to go in understanding the importance of mutually beneficial exchange, and its role in arguments about expoitation specifically. By contrast, I don’t think there’s nearly as much disagreement about the wrongness of the background injustices that give rise to sweatshops. I could argue that stealing people’s land, depriving of them of their basic liberties, and subjecting them to kleptocracy is wrong. But philosophers wouldn’t find this very interesting, because no one really disagrees. I recognize the irony of the incentive structure here – as I’ve said in another post, philosophers are often driven to talk about what’s interesting rather than what’s important by academic incentives. But there it is.

That’s not the only reason though. The fact is, I am concerned about my work effecting change in the world, and I want to make some contribution to that change being positive. So how do I judge various projects on that criterion? Remedying background injustice would mean a huge difference in a lot of people’s lives. But in judging the expected utility of a project, we have to consider not just the utility of the outcome, but the probability of achieving that outcome via one’s chosen means. And I think that I have a better chance of producing an effective defense of people’s ability to find meaningful factory work than I do ending the many background injustices to which those people are subject. Sweatshops are under constant criticism within the academy – and not by people like Roderick and Kevin Carson who understand the basic libertarian insights about markets but worry about background violations of rights of association and/or property. I think I have a useful role to play in that debate, and one which has the potential not just to make an impact on the specific issue of sweatshops, but on people’s understanding of the tremendous importance of mutually beneficial exchange. If the freedom to trade can be defended even in this context (or even in this one), then how much stronger must be the case for it in ordinary contexts?

And, let’s be clear, factory work can contribute to a significant improvement in workers’ lives. Look at the kind of work that is so often the alternative to factory work for people in the developing world. And look at the powerful effect that this work can have on people’s quality of life (see the video). Or look at Ben Powell and David Skarbek’s study on wages in sweatshops, and the survey results of what workers say those wages mean to them. In the developing world, factory jobs can be life-changing.

Now, as you say, no one really comes out and advocates that we just take those jobs away full stop. But they do advocate policies that have the effect of taking those jobs away. And as libertarians, this kind of unintended consequence should hardly be a surprise to us. Look at what happened to Masango’s friend as a result of minimum wage laws in the video. Or look at some of the studies that Powell and I cite in our paper. Sweatshops, or the MNEs that contract with them, might be able to afford higher wages or better working conditions. (Though I have yet to see any critic of sweatshops produce hard data about the profit margins in sweatshop-employing companies compared with profit-margins elsewhere in the industry). But what they can afford to do is less important than what they will do. And very often, sweatshops and the MNEs that contract with them respond to consumer pressure by shutting down, automating production, or moving elsewhere. And that hurts people who can ill-afford to be hurt.

I’ve deliberately said “factory work” in this post rather than “sweatshop.” Part of the problem with debates over sweatshops, I think, is that there’s no clear and objective meaning to the term, so that people end up using it simply to mean “factory jobs that I think are somehow immoral.” But that loose definition means that people on different sides of the debate wind up using the term in different ways, and talking past each other as a result. To some people sweatshops might mean “forced labor” or “sexual harassment” or “physical abuse.” To be clear: I do not think any of these are permissible, and they are not part of what I am trying to defend with my work. Period. By contrast, I do think that factory work that involves long hours, “low” (at least by the standards of developed countries) wages, and “poor” (ditto) working conditions are defensible. I suggest, then, that future discussion of the “sweatshop” issue will be more productive if we focus less on whether “sweatshops” are good or bad, and more on specific practices, or even better – specific real-world cases. If we do this, I suspect that we’ll find that the difference between my position and that of Roderick and some of my other interlocutors is less than it might at first appear.

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  • http://www.facebook.com/people/Roderick-Tracy-Long/1037941173 Roderick Tracy Long

    a lot of the left-libertarian critique
    of my position seems to be on my     emphasis, rather
    than on the substance of my argument.

     

    There are several reasons of that, but here are
    two: a) this emphasis tends to reinforce, among nonlibertarians, a tendency to think
    that libertarians are corporate apologists uninterested in radical empowerment
    for the poor; and b) more importantly, this emphasis also tends to reinforce,
    among libertarians themselves, a tendency to be corporate
    apologists uninterested in radical empowerment for the poor. 

     

    Since BHL exists to counteract both of those tendencies,
    I think the emphasis tends to undermine the BHL project.

     

    Now, as you say, no one really comes
    out and advocates that we just take those jobs away full stop. But they     do
    advocate policies that have the     effect of taking
    those jobs away. And as libertarians, this kind of unintended consequence
    should hardly be a surprise to us. Look at what happened to Masango’s friend as
    a result of minimum wage laws in the video

     

    No disagreement there.  And I’m all for pointing out the vast economic ignorance of
    the statist left.  But stopping
    there reinforces the impression that libertarians favour doing nothing; and if
    one doctor is peddling snake oil while the second doctor is saying “do
    nothing,” it’s the snake-oil doctor who’s going to win.

     

    I could argue that stealing people’s
    land, depriving of them of their basic liberties, and subjecting them to
    kleptocracy is wrong. But philosophers wouldn’t find this very interesting,
    because no one really disagrees.

     

    Yet many on both the conservative and libertarian
    right have a visceral reaction to the very idea of third-world land reform, for
    example, as though the existing pattern of holdings were libertarianly
    legitimate; so the reminder that they aren’t is one worth making to many on the
    right.  (And the reminder that  libertarians don’t think the pattern is legitimate
    is one worth making to the left.)

    • http://whakahekeheke.tumblr.com Cal

      But Zwolinski didn’t advocate “nothing” — he advocated what most all libertarians advocate: policy and reform that encourages economic development. Free trade, free market stuff. The solution to relatively poor working conditions is economic development and the resultant more competitive labor market. The solution is inter alia more “sweatshops” as it were. Such policies and reforms have done and can reliably do much more to “empower” the relatively-poor workers than strikes, boycotts, or unionization (which carry higher risks of the making the situation worse for those workers or other potential workers).

      See, for instance, the greatest reduction of poverty in human history: that brought about by neoliberal reforms in China.

      The Immokalee Coalition is relatively admirable in a number of ways, but it’s not at all a realistic alternative to what typical libertarians advocate. A few elements of it may be complementary (e.g. mutual aid stuff) and, in some cases, workers might be able to squeeze a little more out of employers using CIW brand-tarnishing tactics and so on; but again this has high risks of negative consequences and low potential payoff.

      Your conception of “empowerment” seems to consist primarily in inciting employer-employee hostility and general class antagonism. Libertarians usually argue that this does less-than-nothing to help the relatively-poor.

      • martinbrock

        Agreed. The solution to low wages (including long hours and poor working conditions) is a competitive shop paying higher wages. If I may not operate such a shop, the question then is why? If I may not pay higher wages, because an existing shop has exclusive rights to markets (including markets for the shop’s produce and markets for credit), then these exclusive rights are the problem.

        But in reality, excluding competition is at best only part of the story. Sweat shops in less developed countries pay lower wages, because a shop’s costs other than labor are higher, because the country is less developed. All sorts of infrastructure does not exist or is more costly to the shop, so it pays more to transport goods to market, to power its machinery and to provide comforts like air conditioning that workers in more developed countries take for granted. Wishing for better working conditions doesn’t conjure this costly infrastructure from the void, and neither does a strike.

        • http://aaronmclin.blogspot.com/ Aaron

          I’m impressed that “there are large numbers of people for whom the work ‘pays’ better than subsistence farming” didn’t make your list of factors. Not to be an ass about it, but it struck me as a glaring omission.

          Labor is a commodity. Lots of people looking for work = a lower wage that will attract people. My understanding has always been that “entrepreneurial competition” has done little to raise wages precisely because the entrepreneurs don’t need to compete for labor. In fact, labor competes for work.

          • martinbrock

            I won’t omit anything you want to discuss.

            There are large numbers of people for whom sweatshop work pays better than subsistence farming. I agree. These people should choose their best option.

            To give you a better idea of my position, if the best option of any of these people is work in the U.S. competing with mine, I want them denied this work only if they’ve committed crimes ordinarily subjecting a U.S. citizen to imprisonment. I want no other restraint on immigration for someone that anyone within the U.S. wishes to employ, and I want no legal distinction between such an employee and me, no “guest worker” status or anything else so repulsive.

            I’m not saying that everyone outside the U.S. should be entitled to plane ticket to the U.S., but if anyone outside the U.S. has a ticket and a credible offer of employment from anyone inside the U.S., this person outside the U.S. should be immediately entitled to immigrate, and if such a person remains employed and consuming no statutory welfare benefits for a few years, s/he should be entitled to citizenship with every right that I have by birth. I don’t want to be privileged in this way. I stay here because I am selfish, but this distinction between my rights and the rights of others offends my conscience and my tradition.

            I say so especially if this person competes for my job. I accept a standard under which only persons competing for my job category specifically are so entitled, but I favor a much broader standard.

            Returning to the point, if your best options are a sweatshop or subsistence farming, I want you to choose your best option, and I also want you to have an opportunity to take my job from me by offering your employment to my employer.

            The question is: what can be done to increase the options of persons with limited options? For persons without these offers of employment in the U.S., I favor liberal credit to entrepreneurs outside the U.S. seeking to organize labor and other resources outside the U.S. more productively. I also favor a progressive consumption tax. Ideally, this tax raises no revenue for the state imposing it. I favor a 100% tax rate above some margin, say half a million dollars in current terms.

            I oppose war with states limiting entrepreneurial opportunity, but these state policies seem tragically counterproductive.

      • http://aaronmclin.blogspot.com/ Aaron

        I disagree. I think that part of the problem with the “stereotypical” libertarian advocacy is that it presumes that I (and I’ll use myself as an example) am at all invested in a “general increase in living standards and more competitive job market.” But if I’m a “sweatshop” owner, these things are BAD for me, and I do not want them. And I have ACTIVE incentives to want others (state actors or others) to undermine them.

        You are correct in that enough jobs, call it factory work, sweatshops or what have you, would create a tight job market, which would improve conditions for the working poor. That’s a given. But it’s also, as I understand it, a rarity. And if I want to build a sweatshop (or worse) I don’t want it someplace where the labor market has tightened. And if I’m using unskilled labor, so that I’m not chasing skills, all I need it just enough infrastructure to ship the finished goods.

        And I think this is why people look askance at things like “Why Sweatshops Are Good For the Poor.” The JOBS themselves, given that they are better than what’s otherwise available (usually) can certainly be worth defending. But the incentivising of poor living standards and uncompetitive job markets that while unspoken, seems to go hand-in-hand with it, strikes many people as encouraging exploitation.

        • martinbrock

          If I’m the proprietor of a shop in which workers sweat, “a general increase in living standards” describes more consumption of my produce, so it does not describe anything bad for me.

          Capitalists do support anti-competitive restraints of trade imposed by states, and libertarians generally oppose these restraints. People believing that I favor forcible proprietors of non-human resources over the proprietors of their own labor, in some sort of battle for control of the state, thoroughly misunderstand me.

          • http://www.facebook.com/people/Kristan-Overstreet/815912527 Kristan Overstreet

             You presume that the workers are the customer base.  Not only can this not be presumed, but historically it’s completely untrue. In most cases of sweatshop labor, past and present, the workers cannot afford the product they are making.

            Simply put, if the capitalist maximizes his or her profit at a price too high for his or her employees to afford, then he or she has no interest in what they want or need. The capitalist will always and invariably pay the dead minimum required to retain a workforce- not one penny more, and with zero regard for the needs or well-being of those he or she employs.

          • martinbrock

            A “general increase” is definitively an increase in all living standards. Aaron asserts that a general increase is bad for a sweatshop owner, but it isn’t.

            If I work in a shop making passenger airliners, whether or not I sweat, I cannot afford the product I’m making, but I do receive a share of the value of this product, so I can purchase other things.

            I produce software for electric utilities. An implementation of the software can cost millions of dollars, so I can’t afford to consume what I produce in fact, and I don’t want to consume it, not directly anyway.

            What history of sweatshops are you describing here? I’d like to see evidence that producers of Nike shoes cannot purchase the shoes at a factory outlet store for example. Maybe the workers can’t pay what I pay for a pair of Nikes, but that’s a separate question. Why should they pay this price?

            I’ll wager that workers in shops making Nike shoes often do wear Nike shoes, and I’ll concede the point when I see evidence that they don’t.

            A capitalist will pay the market price for labor just as you will pay the market price for a pair of shoes, but do you really have zero regard for the needs or well-being of the people making your shoes? Why demonize other people this way?

            I want entrepreneurial opportunity permitting any profitable organization, with free (as in speech) credit and minimal monopoly rents,  to exist. In this scenario, entrepreneurs do not dictate wages to employees, because employees are free consumers of the 
            entrepreneurs’ capital. Wages have risen historically in this scenario.

          • http://aaronmclin.blogspot.com/ Aaron

            As Kristan notes, that’s only true if you’re doing a Henry Ford, and deciding that you want the people who make your product to buy and evangelize for it. In current developing world nations, this isn’t the case – sweartshops are aimed mainly at producing goods to be sold at high markups (and/or through several middlemen) to affluent overseas customers.

            But it’s also worth noting that a capitalist and libertarian can both agree that anti-competitive restraints on trade imposed by non-state actors, whether criminals or social conventions, are legitimate comparative advantages to be used. And this often gives them a stake in the perpetuation of those restraints.

        • http://www.facebook.com/people/Kristan-Overstreet/815912527 Kristan Overstreet

           No, he’s NOT correct. There is NEVER a shortage of unskilled or low-skilled labor. Thus, absent protests or government regulations, there is NEVER any pressure on capitalists to raise the pay of their workers- and every pressure, especially maximizing profit, to race to the bottom. The free market will NEVER protect poor workers outside of high-skill specialty trades, because to the capitalist they are DISPOSABLE.

          • http://aaronmclin.blogspot.com/ Aaron

            But he would be correct, if there were enough jobs to create a shortage.

            An “if/then” statement may be true, even in cases where the “if” never comes to pass. It may only be conjectural at that point, but that doesn’t make it false.

          • Mark

             There must be.  If you look at the history of South Korea, or Japan, they started out at the bottom, with “sweatshops”.  Even in China, the wages have risen in some areas as the skills of the employees has risen.

  • http://www.facebook.com/people/Roderick-Tracy-Long/1037941173 Roderick Tracy Long

    Also, the pun in “A Short Response to Long” is grossly unfair, because there is no analogous pun I can make on “Zwolinski.”  That is why an Equalisation of Names Act is so vitally needed.

  • http://libertarian-labyrinth.blogspot.in/ Shawn P. Wilbur

    “philosophers wouldn’t find this very interesting, because no one really disagrees”

    But how is your very limited defense of sweatshops more *interesting*, except to the extent that it *flirts* with being a defense of the indefensible?

    “If the freedom to trade can be defended even in this context…, then how much stronger must be the case for it in ordinary contexts?”

    The problem is that you are very specifically not justifying “the freedom to trade” in any context which anyone not already convinced of the relative justice of the status quo would find compelling.

  • http://profile.yahoo.com/JAAIPFVHDPOIJKWIYYKZWKDTEM Sharon

    Matt, you are not really the problem here.  Many of the others who write  in defense of sweatshops are less nuanced than you. Yet what Roderick has to say needs to be said nonetheless. Any discussion of this topic without reference to other ways to deal with sweatshops or, if you like, worker dissatisfaction with conditions, is incomplete.

  • DBake

    “I do think that factory work that involves long hours, “low” (at least by the standards of developed countries) wages, and “poor” (ditto) working conditions are defensible.”

    But they’re not.  Also, nice use of scare quotes.  The best part is that you didn’t put them around “long.”  I guess even you have to admit that yes, those are some long hours.

    “I suggest, then, that future discussion of the “sweatshop” issue will be more productive if we focus less on whether “sweatshops” are good or bad, and more on specific practices, or even better – specific real-world cases.”

    Workers at Foxconn are rioting over their working conditions.  That seems specific and real world.  

    • http://www.sandiego.edu/~mzwolinski Matt Zwolinski

      “But they’re not” is not an argument. If you have one, I’d be happy to hear it.

      As for Foxconn, the account you relate seems starkly different from the account presented here:
      http://www.slate.com/blogs/moneybox/2012/03/21/the_real_foxconn.html

      Do you have a source for your claim, so I can check it out?

      • DBake

        Yeah, maybe I missed your argument for what’s preventing sweatshops from paying their workers more, giving them shorter hours (especially if the employment situation in these countries is so dire), and better working conditions.  Your argument, so far as I can tell, was the non-sequitir that sweatshop owners have no special obligation to the poor in their countries.  But the complaint isn’t that sweatshop owners don’t donate enough money to public goods, it’s that they violate the obligation not to make exceedingly long hours, or subsistence-level wage, or working in an unhealthy environment a condition on employment.

        Here’s the riot:
        http://www.cultofmac.com/171744/1000-foxconn-workers-riot-at-iphone-ipad-display-factory/

        • DBake

          I should add that your “What they can afford to do is less important than what they will do” is only a justification for sweatshop practices on the assumption that sweatshop owners and contractors lack agency.

        • martinbrock

          I missed your argument for what’s permitting sweatshops to pay their workers more, give them shorter hours and provide better working conditions.  Does an employer pay employees whatever he pleases? May he crown every employee a king?

          Maybe greedy shopkeepers are the only impediment to better wages and working conditions in developing countries, and maybe greedy states excluding competition from less greedy shopkeepers are the only impediment to better wages and working conditions. I doubt it.

          • DBake

            That’s the greatest defense I’ve ever heard of anything.  *It was practiced a few generations ago in the United States.*  Well, then it must be okay, right?

            As I recall, the US ended up making shops like that illegal because they thought it wasn’t acceptable that people should continue working in those conditions.In any case, I assume that the workers could be paid more because of the massive profitability of the retailers selling the products they make.  Now maybe that money doesn’t go to the owners of the factories.  But then the answer is simple, the retailers should pay them more, and they should pay their employees more.  See.  Not that hard.

          • martinbrock

            It was practiced a few generations ago in the U.S., because modern working conditions were not possible then.

            The retailers should charge their customers more in order to pay the factories more so the factories can pay the employees more?

          • DBake

            Or they could reduce their own profits.

            We disagree about the history.

          • martinbrock

            Profit is value added. Compelling an entrepreneur to reduce his profit, all else being equal, compels him to add less value to productive resources and also deprives him of the means of reorganizing his resources seeking to add still more value, by improving working conditions for example. An entrepreneur’s employees are consumers of his productive means, no more bound to him ideally than consumers of his produce.

            So reducing profit is incredibly counterproductive; however, I would compel entrepreneurs not to consumer their profits personally beyond a specified margin. I would compel them only to reinvest these profits or to expend them charitably, i.e. I favor a progressive consumption tax. This compulsion is proportion to and consistent with the compulsion associated with enforcement of the entrepreneur’s right exclusively to govern productive means.

          • Jay_Z

            I think it was a little hard for the employees of the Triangle Shirtwaist Factory to “vote with their feet” and find a better job, given that their workplace was on fire and the owners had locked the exits to prevent employees from leaving.  No market solution there.  Also given that the owners overinsured the building and made a profit on the fire even after the piddling amount in death benefits they were required to pay, the market seems to have failed there too.  I really doubt the market helps illiterate immigrants discern which factory owners are creating deathtraps and which aren’t.

          • martinbrock

            Cherry picking a tragedy only demonstrates that tragedies occur. Proprietors of textile mills ordinarily are not evil, murderous men, though some may be.

            When cases of this sort occur, the cases are well publicized, proprietors change their practices or employees find other employment, and abusive proprietors should be subject to torts at common law.

            Politicians also make speeches and dictate changes that proprietors are already making, but political speeches and central authority didn’t prevent this fire at the Triangle Shirtwaist Factory. Most often, politicians shield proprietors from torts.

            If this freedom to innovate does not exist, the economy must be freed further. If competing entrepreneurs may not offer safer working conditions to free laborers, within the limits of existing technology and the requirement that businesses must profit, then resource organization is not sufficiently free.

            Businesses must profit, because the only alternative to this profit is compelling consumers to accept produce from particular businesses, entitled not to profit, in exchange for less of the consumers’ own produce than they choose to surrender for the produce of the more privileged businesses. Profit in a free market is fundamentally a good thing.

        • http://www.sandiego.edu/~mzwolinski Matt Zwolinski

          My arguments are presented in my academic papers on the topic. See especially the paper co-authored with Powell, linked to in my original post.
          The argument about whether sweatshop workers have special obligations to relieve poverty is distinct from the argument that they are unable to raise wages, so I’m not sure why you call this a non-sequitur.
          Finally, what reason do you have for believing that sweatshop owners have “obligation not to make exceedingly long hours, or subsistence-level wage, or working in an unhealthy environment a condition on employment”? Especially when those conditions are better than others available to workers, and ones that workers are willing (often eager) to accept?
          Interesting article on Foxconn. Though I still have trouble reconciling this with the account provided in the Slate article.

          • DBake

            The Slate article was incredibly poorly reasoned.  Because one of the reports detailing abuses at Foxconn turned out to include falsehoods, all of the many other reports documenting abuses there should be ignored in favor of this one article from Bloomberg.

            I apologize for not making my problem with your argument clearer.  I don’t see how you move from the fact that boycotts would be counterproductive to the claim that the sweatshops themselves are defensible without either (1) thinking that there are no parties who could improve conditions there (after all, I think that intervening in Afghanistan to improve women’s rights is counterproductive, I don’t conclude from that the treatment of women there is acceptable) (2) there is nothing unjust in the conditions under which they are asked to work.

            As far as (1) goes, you aren’t sure if the factory owners could pay their employees more.  Maybe they can’t, but they aren’t the only relevant actors either.  Apple can’t pay Foxconn more with the understanding that Foxconn will give its workers fewer hours and more money per hour?  I also thought, to repeat, that your claim that what factory owners or contractors could do was less important than what they will do is one of the weirdest assertions I’ve ever come across in a normative debate.  Are you actually endorsing an ought implies *will* principle?  If not, who cares what people will do?  Maybe we just know that they will act badly.

            I’ll finally add that (1) isn’t going to get you very far with non-libertarians.  Even if you do show that there are no actors with the power to improve the situation of the workers, the natural interpretation of this is that the market constrains everyone’s options so that they can’t make any choices other than the one they do.  This does not seem like a happy result for libertarians.

            Okay, so (2) as I see it is your only hope.  So this is where my thought about the non-sequitir came in– from what I’ve read in older posts, you seem to regard the company paying its workers more as some sort of extra positive obligation it owes to these people.  But the natural way of thinking of such an obligation is as the negative obligation not to exploit.  Your arguments seemed to show, at best, that there was no additional positive obligation to the poor on the part of these companies.  But it doesn’t follow from this that they aren’t violating any obligations.  So, apologies for conflating two problems.  Though I hope you see why they strike me as connected.

            Reasons for thinking that there’s an obligation not to make the working conditions listed above conditions on employment?  So mostly it’s just intuitive.  (As an aside, I can understand, sort of, how theory might lead one to reject the intuition, but I’ll admit that the ‘I just don’t get it’ response is kind of shocking.)  I live in Hong Kong, which definitely straddles 1st and 3rd world, and I could name some things I’ve done to try to avoid exploiting people on the 3rd world end, because it’s really easy to do here, and I’m probably a lot less successful than I’d like to be.  But the thing is, I don’t do this by consciously thinking ‘how can I avoid taking advantage of this guy who is poorer than me’– I just start unreflectively feeling really embarrassed at certain possibilities and try to avoid causing them.

            As far as theoretical justifications: using unjust asymmetries to improve the self-interested outcome of some bargain is wrong, I think.  Also, menial labor is inherently unrewarding, and so the people who do it should have some portion of their life still free to them to do other things.  Subjecting people to health risks or long-term health problems to increase one’s own profits is wrong, at least when those risks can be reduced.

            In summary, I haven’t really seen a defense of sweatshops yet that would convince a non-libertarian– at most I’ve seen an argument that boycotts are a bad way of solving the problem.

    • j_m_h

      While it’s a rather sparse account CNN’s report ( http://articles.cnn.com/2012-06-07/asia/world_asia_foxconn-workers-riot_1_foxconn-china-foxconn-workers-riot?_s=PM:ASIA ) on the incident — at least I’m assuming it’s the same — doesn’t seem to discuss working condition.

      Is this what you were referring to?

      • DBake

        Yes.  I guess you can insist that the workers were destroying the plant because they love their jobs so much… but that seems like a stretch.

        In any case, if you want a description of their labor practices specifically (though one from before the riot), here’s this article:

        http://www.guardian.co.uk/technology/2012/may/30/foxconn-abuses-despite-apple-reforms

        • j_m_h

          I wasn’t insisting anything. The CCN article described an dispute that originated at a restaurant that resulted in the police showing up, the works then “retreating” to their dorms shouting “They’re beating us.” 

          I was asking if this was the same event you were talking about.

          Thanks for the Guardian link. Makes it sound more like being in the Army than being employed. I am struck by one thing to — how is all this overtime being documented when, according to the article, Chinese labor law seems to limit hours to 36 hours per week. (Though I’m a bit confused by the terminology they use regarding hours worked so might be misinterpreting the number.)

          • DBake

            In the article you linked to, the Taiwanese newspaper and Foxconn have different accounts of how the riot started.  I was basing my statement off a blog post that had a more detailed description of the initial newspaper claims.

  • http://twitter.com/VelizCF CFV

    What troubles me of this moral defense of sweatshop labor is that it seems to assume that because sweatshops labor is mutually beneficial (which is true), sweatshop labor is not exploitative, which is a non-sequitur. 

    • TracyW

      But hold on, if it’s mutually beneficial, then it’s not exploitative by definition. The relevant definition of exploit in the dictionary is “To make use of unethically”. When something’s mutually beneficial, and doesn’t harm anyone else, it’s ethical. So where’s the non-sequitor?
      (There are other definitions of exploit, but none of them have moral bearing.)http://www.thefreedictionary.com/exploitative 

      • DBake

        “But hold on, if it’s mutually beneficial, then it’s not exploitative by definition.”

        Non-libertarians don’t believe that.  Maybe I misunderstood the exercise, but I thought you were trying to bring the unconverted around to your point of view.

        More to the point, for someone to use an unjust advantage in power, knowledge, or resources to improve their position in a bargaining situation seems like the very definition of an exploitative agreement.  That means one party to the agreement is using the other unethically.

        • j_m_h

          I don’t think all libertarians do view the situation as TracyW — though clearly a sizable portion, or that lease their rhetoric, do.

          My view is that if, given the existing circumstances, sweatshop employments is sought as the preferred alternative by the workers then before we get too high on our horses and eliminate that option for the worker we should think hard about that. Boycotts and trade sanctions will likely cause more immediate harm and suffering.

          There clearly are positive things that can be done to increase the opportunities available to the workers, and those even more unfortunate who don’t even get the sweatshop jobs. These types of actions will help eradicate sweatshop production.

          • TracyW

            Or sweatshop production will just be redefined to cover better and better working conditions. 
            I remember when the Lord of the Rings movies were being produced in NZ. The riders in that (the extras) were being paid $500 a day, and some Hollywood person was asserting that that was exploitative and sweatshop conditions. 

          • j_m_h

            We’re always going to see extremes on both ends of the distribution. I’m not too worried about such “inflation” but am concerned about the situation where people are taking advantage of people in no good position to insist on improved conditions. 

            I really do think we should expect one another to not just not kick someone when they are down but to be open to helping them get back up if it’s not too much of a burden. In the case of sweatshops I see a small group getting hugh benefits and a larger group getting little. That simply doesn’t square with my vision of the good society. 

          • TracyW

            Yes, I agree that we shouldn’t kick someone when they’re down.
            I also don’t think that if we come across someone helping someone else stand up, our first impulse should be to kick the helper. But that’s what sweatshop protests tend to do, they focus on the people helping the poor, not the ones who could have helped the poor but aren’t. 

            If your concern is “a small group getting huge benefits and a larger group getting little”,  I don’t know why you’re worried about sweatshops. The sweatshops’ production shows up as lower cost goods, which consumers benefit from. The sweatshop employees benefit, and their families benefit, and their local economies benefit from the extra spending. Sweatshop owners’ profits we can expect to be competed away, and a brief eyeball of this list of the world’s billionaires doesn’t indicate to me that sweatshops are particularly more profitable than other ways of making money. 
            http://www.forbes.com/billionaires/#p_2_s_a0_All%20industries_All%20countries_All%20states_ 

        • TracyW

          Non-libertarians don’t believe that.  Maybe I misunderstood the exercise, but I thought you were trying to bring the unconverted around to your point of view.

          Yes, which is why I am asserting that a mutually beneficial trade, is not, in and of itself, exploitative (it might be exploitative if it throws significant costs on third parties unfairly, eg slavery was exploitative).  

          Anti-market types blithely assert that mutually beneficial trades are exploitative, without doing any thinking behind it.  Pointing out the weakness of this is how I intend to bring the unconverted around to my point of view. (I think I am more likely to change the views of onlookers than the person I am debating with at the time). 

          More to the point, for someone to use an unjust advantage in power, knowledge, or resources to improve their position in a bargaining situation seems like the very definition of an exploitative agreement.

          Only if an “exploitative agreement” is defined as a circular argument. 

          As you haven’t defined “unjust” here, we have no way of telling what you think is the difference between using power, knowledge or resources in a just way (which presumably isn’t exploitation), and using it in an unjust way (which apparently is).  You’ve just repeated the idea that exploitation is “to make use of unethically”, but using the word “unjust”. 

      • http://twitter.com/VelizCF CFV

        TracyW: A bilateral self-interested voluntary exchange can be mutually beneficial and exploitative, because the things transferred are of unequal value.
        Check this out: Steiner, Hillel, “A Liberal Theory of Exploitation,” Ethics, Vol. 94, No. 2 (Jan., 1984), pp. 225-241.

        DBake: “Non-libertarians don’t believe that.” Not only non-libertarians. See the reference above for a libertarian theory of exploitation.

        • DBake

          Thanks.  I’ll look it up.

        • TracyW

          I can’t find an ungated version. 

          • TracyW

            I note that from the abstract to the paper, the author apparently isn’t arguing anything like that an exchange is exploitative ”
            because the things transferred are of unequal value”. It appears by description to be an argument about changing the circumstances of third parties. 

          • http://twitter.com/VelizCF CFV

            If you give me an e-mail address, I can send to you the article, but only in exchange for a pound of your flesh. 

            Not quite so. Charity, for example, is unilateral. Taxes are non-voluntary.

            Two things can be utterly different an have equal value. For example, apples and oranges might cost $5 each. 

          • TracyW

            CFV:
            I’ll counter-offer you my mum’s bolognase sauce recipe in exchange for the article. My email address is tracyw@gmx.com.

            I fail to see how the unilateralness or otherwise of charities and the voluntariness or otherwise of taxes make them any less exploitative according to your definition. Both of them involve transferring things of unequal value (the giver of charity gets warm fuzzy feelings, or at least a relief from a feeling of guilt, the taxpayer generally gets some share of whatever the government spends that taxes on, and if the government spends that tax money on persecuting the taxpayer, it’s a very unequal trade indeed). 

            I don’t see how your example of an apple and an orange happening to both have the same price of $5 applies to your definition of exploitation. Doesn’t it imply that all market trades are non-exploitative? 

          • http://twitter.com/VelizCF CFV

            Deal. I won’t push further your reservation price.

        • http://independent.academia.edu/DannyFrederick Danny Frederick

          Exchange takes place because each party values more highly what the other party has.

          • http://twitter.com/VelizCF CFV

            Danny: thanks for the comment. Use-value is different from exchange-value, and for the exchange takes place there has to be a common exchange-value. How do you explain from ordinal (revealed) preferences the exchange-value of things? As far as I know, utility can’t be measured.

          • http://independent.academia.edu/DannyFrederick Danny Frederick

            There does not have to be a common exchange value for exchange to take place.

            I swap an apple for a pear. For me the pear has greater use-value than the apple. For the other party, the apple has greater use-value than the pear.  For me, the exchange-value of the apple is the use-value of the pear; for the other party, the exchange value of the pear is the use-value of the apple. I swap because the exchange value of the apple for me is greater than its use-value for me; the other party swaps because the exchange-value of the pear for him is greater than its use-value for him.

            The idea that, in exchange, the goods have an equal value or else someone is being swindled, is misguided. That ‘objective’ theory of value was replaced by the ‘subjective’ theory in the marginal revolution of the 1870s (though the subjective theory had been around since the middle ages).

            Or have I misunderstood your question?

          • http://twitter.com/VelizCF CFV

            I’m well aware of the marginal revolution of the 1870s by Menger, Jevons and Walras.

            A short answer: some things don’t have use-value and are constantly exchanged in our modern economies: money.

          • http://independent.academia.edu/DannyFrederick Danny Frederick

            But when people exchange things for money there is still no common exchange value.  If I sell my apple for £1, the exchange-value of the apple is the use-value of the best combination of things I can buy for £1. This is greater than the use-value to me of the apple. For the person who buys my apple, the exchange value of the £1 is the use-value of the apple for him, which is greater than the use-value of the best combination of other things he can buy with the £1 (and greater than the use-value of the £1, which may be zero).

          • http://twitter.com/VelizCF CFV

            Why can you buy things for £1?
            In other words, why £1 has value?
            It seems that you cannot just say £1 has use-value because you can buy the best combination of things that have greater use-value to you than the apple. In that way, you are deducing the use-value of £1 from its exchange-value, but that leaves unexplained its exchange-value in terms of its use-value, which is precisely the point of a subjective theory of value.

          • http://independent.academia.edu/DannyFrederick Danny Frederick

            I didn’t say £1 has use-value.  It might have for some people in some situations. Football hooligans used to throw £1 coins at football matches because they are small and solid and quite heavy and can do serious damage, but they were not confiscated by security when a search for weapons was done.

            But people usually want money for its exchange-value. And the exchange-value of £1 is the best use-value you can get for it.  Thus, the exchange-value of £1 for me is different to the exchange-value of £1 for you, even if we buy the same things with it, because those things have a use-value-for-me and a use-value-for-you.

            I cannot fathom where you are coming from.  Your claims to which I am objecting are this one:

            “A bilateral self-interested voluntary exchange can be mutually beneficial and exploitative, because the things transferred are of unequal value”

            and this one

            “for the exchange takes place there has to be a common exchange-value.”

            The second claim is  false; the first is confused, but false if it means anything.

          • http://twitter.com/VelizCF CFV

            I’ll respond below. 

      • j_m_h

        I think this only leads into a semantic game that does little to nothing in the way of shedding light on the problem at hand.

        • TracyW

          Yes, indeed I’d go beyond that and say that waving around the word “exploitation” actually obscures the problem at hand. 

          But what other approach do you advise when people like CFV drag this term out? 

          • j_m_h

            I think you should rethink your position about this only being something CFV is dragging into the discussion. 

            It’s clear to me, at least, that something is wrong in some work settings and there’s enough smoke to accept there is at least some fire.

            The point, though, is if the workers are better off working in the sweatshop than not working in the sweatshop then the way we seek to address such shortcomings does matter. I forget the exact title of the blog item in this forum but the subject was about action that made the actor feel better about themselves without doing anything for for the people they supposedly are advocating for.

      • http://insteadofablog.wordpress.com/ Neverfox

        There are two Veblen goods: true widgets with a market price of $100 and nearly identical pseudo-widgets with a market price of $99. Twain prefers a true widget to any amount of money up to $101 and a pseudo-widget to any amount of money up to $100. Twain approaches Norton, a widget seller, and asks to buy a true widget. Norton takes $100 from Twain, but unbeknownst to Twain, hands over a pseudo-widget. The exchange is mutually beneficial; though Twain paid over market price for the pseudo-widget, Twain prefers a pseudo-widget to $100 and Norton prefers $100 to a pseudo-widget. However, the condition of exchange was that Twain would receive a true widget. Would you call this exchange exploitative?

        • http://independent.academia.edu/DannyFrederick Danny Frederick

          That exchange is fraudulent. We don’t need the term ‘exploitation’ and we should not use it because it is bound up with a discredited theory. No one in physics tries to explain things in terms of ‘phlogiston’ or ‘caloric’ or ‘celestial spheres’ anymore. The theories to which those terms belonged have been jettisoned.

          • sigaba

            “We don’t need the term ‘exploitation’ and we should not use it because it is bound up with a discredited theory.”

            There is no such thing as a discredited philosophy.  Marxism isn’t science, despite its own pretensions.  It’s unfalsifiable, just like utilitarianism or libertarianism.

          • http://insteadofablog.wordpress.com/ Neverfox

            Yes, it is fraud but it also seems to fit a very common definition of the word ‘exploitation’.

            Despite your claim, ‘exploitation’ doesn’t seem to have the status in the English language that ‘phlogiston’ or the other terms you provide, so I’m unmoved by the analogy. Not only does it have meanings unrelated to Marx’s theory (to which I assume you are referring) but it’s a bit of a stretch to say that Marx’s theory is in the same state of “discredit” as the theory of phlogiston, the Austrian faithful notwithstanding.

        • TracyW

          Good point – as Danny says, the word we have for that is fraud, but it can be called exploitative. 
          Another example I’ve now thought of is blackmail, which is unusual as a vice in that the market does often make it worse to people’s intuitions at least. 

      • martinbrock

        A state can limit competitive, entrepreneurial opportunity so that employment options are severely limited. In this scenario, the employee is exploited. An entrepreneur pursuing the limited opportunity isn’t necessarily a party to this exploitation, but let’s face it. Capitalists are not exceptions to the rule of rent seeking. They are the heart and soul of the rule.

        That said, I still agree with Matt’s analysis of sweatshops. I oppose states limiting opportunity, but I have no interest in war with these states, and I don’t know how else to deal with a state other than advocating its reform or abolition. In Matt’s analysis, “sweatshops are good for the poor” describes the options of persons subject to a state, not the virtue of the state.

    • http://www.sandiego.edu/~mzwolinski Matt Zwolinski

      I don’t make this claim, or believe it. In fact, I have explicitly disavowed it in several posts on this blog. See, e.g., here: http://bleedingheartlibertarians.com/2011/06/which-is-worse-a-sweatshop-or-you/

  • Bryan Caplan

    The “background injustice” that swamps all others in magnitude is immigration restrictions.  Just sayin’.

    • http://aaronmclin.blogspot.com/ Aaron

      No, I would say that it’s access to education and healthcare. Simple mass migrations of the world’s poor people to wherever they think they might find work is not going to be an answer. Labor is a commodity like anything else, and too much of it in one location will depress wages, perhaps to below subsistence levels. And if people could afford to gallivant around the planet until they got it right – they wouldn’t be poor in the first place.

      People need to be educated enough to be able to make intelligent decisions about how they’re going to support themselves, whether or not it makes sense to migrate, what skills they’re going to need when they get there and how many other people are likely going to be headed to the same places. This will lower the risk of thousands or millions of people showing up in one place with the clothes on their backs, but little else in the way of viable resources, which creates an exploitable vulnerability. Education also means that family sizes tend to be smaller, which creates less migratory pressure in the first place.

      By the same token, better healthcare also helps keep family sizes down, by reducing child mortality.

      • martinbrock

        To gallivant around the planet accepting offers of employment, one must be rich in marketable skills, so education is as necessary for gallivanting employment as for any other employment; however, if a state limits employment in buildings above a certain height or along highways guarded by the state to a privileged few, education does not extend the privilege.

        We can’t simply pass a law and immediately realize schools with qualified instructors and hospitals with qualified doctors in parts of the world where these resources are scarce. No one can. States in various parts of the may impede organization of these resources in their parts of the world, but short of war, we can only try to persuade these states to change their policies. We can change our immigration policies unilaterally and instantaneously create opportunities for many people.

        • http://aaronmclin.blogspot.com/ Aaron

          I’m not necessarily arguing any of those points. I’m simply making the point that someone who knows enough about the world to understand where on the globe might be the best place for them to settle, rather than simple chasing rumors of wealth, and someone who has a small enough family that they aren’t desperate makes for a better migrant.

          And I’m not arguing that it’s more feasible for the US to unilaterally drop all restrictions on entry than it would be to increase education and health care in the Third World. Just that were I to chose one or other to hold up as the major obstacle to their success in life, I would say being uneducated and unhealthy is worse than not being allowed to gamble everything on a one-way trip into the unknown.

          • martinbrock

            I also wish for greater education and health for everyone everywhere, but being uneducated and unhealthy in a less developed world seems worse than being uneducated and unhealthy in a more developed world.

      • j_m_h

        I suppose one can also argue that emigration into to more developed will provide both improved education and health care to immigrants and their children — with the idea that the longer term, intergenerational benefits are more important to this discussion than just the immediate benefit to the first generation.

        • http://aaronmclin.blogspot.com/ Aaron

          Perhaps. But I feel that this presumes that developed nations throw open their borders and then take it upon themselves to subsidize health care and education, which I find unlikely and unsustainable. So I don’t think that penniless migrants, looking for a better life than subsistence farming or sweatshop work would find that education and healthcare would be free in the new countries.

    • martinbrock

      I agree. Labor protectionism is the elephant in the room.

  • http://andrewfm.tumblr.com/ AndrewFM

    Also, this argument conveniently ignores the deleterious ecological impact that many of these industries have on the places they inhabit. These companies often make such a huge profit not just because they pay workers little, but also because they can effectively externalize the costs of their production on to the local environment. (just one example: http://ageconsearch.umn.edu/bitstream/10807/1/dp030018.pdf3 ). Pollution can, and does, seriously undermine the quality of life that these industries’ defenders claim they bring to an area. Absent any concrete policy proposals to provide healthcare to these workers or mitigate the pollution caused by local industries, sweatshops might indeed do far more harm than good.

    • TracyW

      They might indeed. But that’s a matter for the local people to decide. And it’s as true a possibility of locally-run industries as of international ones. 
      (And I note that earning more money is a good way of affording more healthcare.)

      • DBake

        “…that’s a matter for the local people to decide.”

        How?

        • j_m_h

          One could also ask you how you’re going to solve it as an external party? Forcibly? Verbal protest/suasion? Something else?

          • DBake

            And I’d answer that that’s not relevant, and seems to involve the same basic conflation that has been running throughout this discussion.  From the fact that I can’t do anything about X, it doesn’t follow that X is justifiable.

            I took Tracy to be saying that the collective consent of the community is enough to justify the pollution caused by an industry operating within that community.  My point was that in most of these countries, lack of protest or lack of action by public officials can’t be taken as implied consent.  Apologies if I misunderstood Tracy’s point, but in that case I’d like it spelled out in more detail.

          • TracyW

            I’m saying that we don’t have a better way of deciding whether something is good or not than by looking at what public officials do. Even if the government of the day is not democratic.  We, in far away places, invariably know less about local conditions than people in the same country. 

            Indeed, even in one country, local knowledge is still important, I have an uncle-in-law who is very eloquent on the point of building  standards being written in Canberra for the tropical areas of Queensland. 

            I’m in favour of pressurising countries towards greater democracy, to permit them to make better decisions for themselves. But I’ve seen enough stupid things said by non-Kiwis (and all too often by Kiwis) about NZ environmental problems to think that interference by non-democratically elected outsiders is likely to be on the side of good. 

          • DBake

            That’s a good point.  For the most part I’d agree with you.  But I think some of the environmental problems in, say, China are such that we are in a position to criticize them, whether we live there or not.  And given the way the Party works, I’m not sure I’m that impressed by what local officials do allow to go on.

          • j_m_h

            Why should we trust such public official behavior (which behavior are we talking about anyhow) as such a guide? If public officials always acted in the public interest, or at least were the best observational data point, then democracies should be near utopian.

          • TracyW

            I think there can be quite a big difference between always acting in the public interest and being the best observational data point. A thing can be far from perfect, and still be the best we can get. 

          • j_m_h

            First, I don’t everyone, or even any large minority, has been saying X is justifiable merely because one cannot stop it. I cannot stop all murders but I clearly don’t think murder is justified.

            My point is that if you’re not trying to be part of the solution — which I think Matt is doing — then what is it that you are doing.

            We’ll never eliminate cases where some people exploit others or otherwise take an unjustified advantage of a situation for their own benefit at the expense of another. At the same time not all such situations are such that eliminating that situation leaves the least advantaged better off. Simply pointing out the injustice and wrongness of the situation doesn’t really help those who need the help.

        • TracyW

          By government.

          The government of the day might not be democratic. But then outside pressure from Western interests isn’t democratic either.  And we’re even further removed from the local situation. 

      • http://andrewfm.tumblr.com/ AndrewFM

        I suppose you can make that claim in theory, but in practice the decisions about pollution and runoff are, especially in the impoverished countries under discussion, made against the exact same background injustices that resulted in the expulsion of locals from their land in the first place. Regardless of whether it’s a local business or a multinational, it’s still often the case that the land used for these factories is obtained unjustly. Simply put, it’s not up to the local people in any straightforward fashion. So the suggestion that it is really appears to be just a way of dodging the question of environmental injustice.

        Moreover, while factory work might indeed allow those who pursue it to get better healthcare, pollution isn’t selective about who it impacts. Those who either choose not to, or cannot work in these factory jobs are often just as apt to suffer the consequences of the pollution as those who do work in the factories. Higher incomes for some will not mitigate worse health for all.

        • TracyW


           Simply put, it’s not up to the local people in any straightforward fashion.

          Nope. But there’s not much we can do about that. Certainly, Westerners lobbying governments in far away countries are no substitute for the local people making decisions about their own life. 

          . So the suggestion that it is really appears to be just a way of dodging the question of environmental injustice.

          And what more democratic way do you propose to decide these matters?

          Those who either choose not to, or cannot work in these factory jobs are often just as apt to suffer the consequences of the pollution as those who do work in the factories. Higher incomes for some will not mitigate worse health for all.Now that assertion is not supported by history.  Higher incomes for some might well be spent on goods that do indeed improve everyone’s ability. For a start, the people working in the factories often have families who they are likely to divert resources to support. Then the increased incomes that they spend will spillover to other people working in the area. And if the people working in factories spend their money on things like better food for their children, then malnutrition is likely to fall, leading to more effective adults in their working life, improving everyone’s outcomes. 

          Finally, increases in taxes paid allow more resources to be spent on public goods that improve the quality of life. 

          If you look at the history of countries that have gotten rich, it’s generally the case that people’s wellbeing does increase overall.  See this video of life expectancy related to wealth. So I don’t see any support for your statement here.  http://www.gapminder.org/world/#$majorMode=chart$is;shi=t;ly=2003;lb=f;il=t;fs=11;al=30;stl=t;st=t;nsl=t;se=t$wst;tts=C$ts;sp=5.59290322580644;ti=1800$zpv;v=0$inc_x;mmid=XCOORDS;iid=phAwcNAVuyj1jiMAkmq1iMg;by=ind$inc_y;mmid=YCOORDS;iid=phAwcNAVuyj2tPLxKvvnNPA;by=ind$inc_s;uniValue=8.21;iid=phAwcNAVuyj0XOoBL_n5tAQ;by=ind$inc_c;uniValue=255;gid=CATID0;by=grp$map_x;scale=log;dataMin=194;dataMax=96846$map_y;scale=lin;dataMin=23;dataMax=86$map_s;sma=49;smi=2.65$cd;bd=0$inds=;example=60

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  • http://insteadofablog.wordpress.com/ Neverfox

    “Now, as you say, no one really comes out and advocates that we just take those jobs away full stop. But they do advocate policies that have the effect of taking those jobs away. And as libertarians, this kind of unintended consequence should hardly be a surprise to us. [...] Sweatshops, or the MNEs that contract with them, might be able to afford higher wages or better working conditions. [...] But what they can afford to do is less important than what they will do. And very often, sweatshops and the MNEs that contract with them respond to consumer pressure by shutting down, automating production, or moving elsewhere. And that hurts people who can ill-afford to be hurt.”

    Would you still push this point if the policies being advocated were designed to correct activity that was sufficiently un-libertarian? For example, what if it could be demonstrated, through some other argument, that employment itself was not a legitimate contract, no matter how voluntary, and consensus was reached among BH libertarians that it was un-libertarian? Would you still think we are committed to avoiding actions based on what “they will do” in response? It just may be the case that a push to convert the factories to worker-managed firms would send the factory owners packing. Is that sufficient reason to stand aside?

  • http://www.facebook.com/people/Kristan-Overstreet/815912527 Kristan Overstreet

    I’m sorry, but it seems to me the core of your argument remains: “Never question the wisdom or generosity of your employer. You do not deserve more money, but your EMPLOYER does, and he is well within his rights to fire you as he pleases if he finds someone willing to work for less. Simply be grateful he deigns to employ you at all.”

    Sweatshop labor is serfdom. It seeks out the truly destitute and pays them barely enough wages for a better class of poverty- nothing like enough to escape it. It keeps the laborer totally at the mercy of the employer- which usually has none. In the meanwhile, sweatshop labor takes jobs out of countries whose laws and regulations require something that at least pretends to be a living wage, thus lowering the standard of living in those countries and making everyone poorer… except the capitalists involved.

    This is the free market at work. Capital has always treated labor as disposable and interchangeable… except when labor has organized and fought back, either through law and government or through more violent and destructive means. Capital has responded to these efforts, in the past, with naked violence and mass murder, usually with no consequences to itself.

    Libertarianism in its anarcho-capitalist form has no answer for the plight of the poor laborer, because it refuses to accept the fact that the rich can coerce the poor by removing employment or business. In a libertarian free market wealth has all the power, and those without money have no power or recourse except revolution. In short: you can either be anarcho-capitalist, or you can support the working classes- NOT BOTH.

    • http://aaronmclin.blogspot.com/ Aaron

      I’m sorry, but it seems to me the core of your argument remains: “Never question the wisdom or generosity of your employer. You do not deserve more money, but your EMPLOYER does, and he is well within his rights to fire you as he pleases if he finds someone willing to work for less. Simply be grateful he deigns to employ you at all.”

      Taken at face value, that seems to be more an ideological reading of the argument, rather than one supported by the actual text.

      I understand the arguments that you are making. No system is immune from perverse incentives, and one of the best way to promote same is to feel secure in the thought that they don’t exist.

      But it’s worth keeping in mind that if you approach Libertarianism with the assumptions of the social welfare state, it will make no sense. You have to understand a new set of assumptions, and understand where they lead, and then argue why they are not true, rather than just pretend that they don’t exist.

  • http://twitter.com/VelizCF CFV

    “The second claim is false; the first is confused, but false if it means anything.”

    We can do barter without a numeraire, but we cannot exchange things. For exchange takes place there has to be some shared scale. And, as far as I can see, we cannot infer that shared scale from purely subjective utilities. The example of money (numeraire par excellence) is telling: money can’t have utility because of its exchange-value and have exchange-value because of its utility. That would be a circular reasoning. Thus, I still believe, my second claim is not false.

     As for the first one, it is just a definition of exploitation in terms of its features. Maybe you believe it is just not possible the voluntary self-interested and bilateral transfer of things of unequal value (in which case there is no exploitation) or that just all voluntary self-interested and bilateral transfers are of unequal (subjective) value (in which case there is no exploitation either).

    • http://independent.academia.edu/DannyFrederick Danny Frederick

      “For exchange takes place there has to be some shared scale.”

      You keep repeating this; but it is false, as I have pointed out. Why do you think it is true? Or, what do you think is wrong with my examples which show it to be false?

      For exchange as you define it, there must be money. But the existence of money does not imply any shared scale. The value of £1 to me is one thing; its value to you is another. For exchange between us to be mutually beneficial, all we need is that:

      (1) what I sell you has greater use-value to you than the use-value of the next best thing (or set of things) you could buy with the money;

      (2) the use-value for me of what I can buy with the money is greater than the use-value to me of the good that I sell you.

      Let us assume that money has no use-value directly: it’s only value is its exchange-value, i.e., for each person, the highest use-value that it can be exchanged for. Why does it have exchange-value for a person? Because other people want it. Any good that has exchange-value for a person has it because other people want it. Why do other people want money when it has (by stipulation) no use-value? Because they know that other people want it, so it can facilitate their exchanges.

      All this is overly simple, of course: money is a complex topic. I am just trying to get to the bottom of your quandary.

      Many people would maintain that it makes no sense to say either that goods exchanged are of equal value or that they are of unequal value, because value if subjective. I don’t go that far myself; but that is a long story. I do say that we do not even need to raise the question to understand what takes place in exchange. The question belongs to metaphysics, not economics.

      An exchange may be morally defective in various ways. If it involves force, threats or fraud, it involves a violation of rights. Even if it involves no violation of rights, it may be immoral because it takes advantage of someone or for other reasons. Immoral actions that involve no violation of rights are open to criticism but not rectification. Some people might want to apply the term ‘exploitation’ in some of these cases. I think that is a mistake. The term ‘exploitation’ comes from a discredited theory. so by using the term you are always in danger of being construed as being misled by a childish theory or even as defending that theory.

      • http://twitter.com/VelizCF CFV

        Well, why do you think is false? Again, we can do barter in purely subjective terms. But for exchange takes place there has to be some shared scale: not necessarily money, but we should know, for example, the quantity of apples/pears. 

        I know money is a complex topic. As I said, you are presupposing the exchange-value of money instead of explaining it in purely subjective terms.
         
        Well, I know Austrians would say that. But the regression theorem is, to me, a misled and childish theory. The same story goes to neoclassical models of “cash-in-advance,” etc.

        I don’t want to directly dispute your assertion that value theory belongs to metaphysics, not economics. There are different points of view in economics and its boundaries are not very clear.

        Exploitation is morally defective because it involves a violation of rights: rights to the natural means of production and to the whole product of labor. So, it is an injustice that commands rectification.

        • martin

          “Again, we can do barter in purely subjective terms. But for exchange takes place there has to be some shared scale: not necessarily money, but we should know, for example, the quantity of apples/pears.”

          Since barter is a form of exchange, I’m guessing you mean “indirect exchange” (exchange of good A for good B not out of want for good B itself, but to trade good B for other goods) where you say “exchange”. Am I right?

          Why is a shared scale needed? Shared by whom? By the people involved in the exchange? Or by everybody else also?

          “But the regression theorem is, to me, a misleading and childish theory.”

          Why? To me it seems the only possible explanation for the emergence of money.

          • http://twitter.com/VelizCF CFV

            Martin: thanks for the comment. I am not quarreling about words. We can talk about direct and indirect exchange. In the case of indirect exchange, the numeraire has an objective-exchange-value (its purchasing power). How can you explain its objective-exchange-value in terms of its use-value in a non-circular way?

            In a sense, yes. A system of prices is like a language: there can’t be a private language. If we press Austrian theory, I think we have something like a theory of economic solipsism: value is just a sensation.

            There are many criticism of the regression theorem. Firstly, it violates Mises’ own methodological commitments: methodological individualism. The Mengerian-Misesian theory is a functional explanation of the emergence of money. Thus, it is not a praxeological explanation of the value of money, and explanation based on the a priori features of human action.

            Secondly, it cannot explain some of the features of money: money it is not only a medium of exchange but also an store of value (BTW, what value does it ‘store’? Subjective sensations? That seems implausible) .

            Thirdly, it is unrealistic. There are many historical counterexamples. Now there is an interesting discussion about the regression theorem and BITCOINS.

          • martin

            “In the case of indirect exchange, the numeraire has an objective-exchange-value (its purchasing power). How can you explain its objective-exchange-value in terms of its use-value in a non-circular way?”

            Well, that’s what the regression theorem explains, isn’t it?

            “In a sense, yes.”

            Yes to what?

            “A system of prices is like a language: there can’t be a private language.”

            But there can be different prices. And there are. If you go to two grocery stores there’s a good chance they will have different prices for apples (or if not for apples for a lot of other items). And still people exchange apples for money.

            “If we press Austrian theory, I think we have something like a theory of economic solipsism: value is just a sensation.”

            Value is just that: value. You might value apples. Or you might not. You might value them because you like their taste, or because you think they’re good for your health (and you value your health), or because you can trade them for pears (and you value pears). What’s so difficult about that? What’s to argue about that? 

            “it violates Mises’ own methodological commitments: methodological individualism. The Mengerian-Misesian theory is a functional explanation of the emergence of money. Thus, it is not a praxeological explanation of the value of money, and explanation based on the a priori features of human action.”

            Can you elaborate on that? Or maybe point me to an article on that criticism?

            “Secondly, it cannot explain some of the features of money: money it is not only a medium of exchange but also a store of value”

            Well, you can store money and exchange it for things you value at some later time instead of immediately, what’s so mysterious about that?

            “BTW, what value does it ‘store’? Subjective sensations? That seems implausible”

            Well yes, so it’s better to not take “store of value” to literally, or not us that term at all.

            “Thirdly, it is unrealistic.”

            Again: why?

            “There are many historical counterexamples.”

            I’d be interested to hear some.

            “Now there is an interesting discussion about the regression theorem and BITCOINS.”

            I’d be interested in that too. But what bearing doe BITCOINS have on this discussion in your opinion?

          • http://twitter.com/VelizCF CFV

            I’m sorry if I can’t answer all your questions in a blog post. I’ll do my best. 

            A shared scale doesn’t imply that there can’t be different prices! If we choose a numeraire, all the different relative prices are referred to it. We cannot choose subjective sensations as our numeraire, right? Utility can’t be measured (an Mises was well aware of this . 

            “Can you elaborate on that? Or maybe point me to an article on that criticism?”

            That criticism is mine. I haven’t read it in an article (or I don’t remember now). But it is well-known (and uncontroversial) that functional explanations violate methodological individualism.

            “Value is just that: value.” Well, as I said, we end up in economic solipsism. When people are evicted of their houses because they cannot paid  their mortgages, they are not suffering an economic loss if they don’t care or are happy enough. The same story goes to profits. Economic value it is just a subjective sensation. 

            Here you have an interesting discussion and some more criticisms of the regression “theorem” as an explanation of the value of money:

            uneasymoney.com/2011/07/25/the-paradox-of-fiat-money/

            You can find the discussion about Bitcoins and the regression “theorem” on the Internet.

            Cheers.

          • martin

            I’m getting a bit claustrofobic here, I’ll reply in a new comment.

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  • martin

    In reply to CFV:
    “A shared scale doesn’t imply that there can’t be different prices! If we choose a numeraire, all the different relative prices are referred to it.”

    If that’s your definition of shared scale, you have a shared scale *by definition* if there’s exchange. So what’s the problem?

    “We cannot choose subjective sensations as our numeraire, right?”

    Right.

    “But it is well-known (and uncontroversial) that functional explanations violate methodological individualism.”

    I don’t know about that, but I’ll take your word for it. What I would like to know is: - why do you think the regression theorem is a functional explanation? - how does *this particular functional explanation* violate methodological individualism?

    “Well, as I said, we end up in economic solipsism.”

    I don’t see any connection to solipsism, sorry.

    “When people are evicted of their houses because they cannot paid  their mortgages, they are not suffering an economic loss if they don’t care or are happy enough.”

    Well, strictly speaking that’s true. But usually people *do care* about loosing their houses. That’s why they take mortgages in the first place.

    “The same story goes to profits.”

    Sure, but why is that a problem? You can still calculate profits in terms of money and conclude e.g. that A makes more profit than B (in terms of money). What you can’t conclude is that A has received more value than B.

  • http://twitter.com/VelizCF CFV

    Martin,

    Thanks for your response. 

    “If that’s your definition of shared scale, you have a shared scale *by definition* if there’s exchange. So what’s the problem?”

    Do you mean barter-exchange or indirect exchange? If the former I admitted that there is no need for a shared scale (but you need double-coincidence-of-wants, and you are not going too far with a barter system (On this, see, for example, White, Lawrence H.  The Theory of Monetary Institutions (Oxford: Basil Blackwell, 1999), Cap. 1).
     
    The problem with indirect-exchange is to explain this shared scale in purely subjectivistic terms in a non-question-begging (and plausible) way. Or not to introduce that shared scale (in general, money) in an ad hoc way, as in some neoclassical models (Baumol-Tobin, Patinkin, Clower-Constraint, etc.). I still believe that an adequate explanation of money in terms of the marginal utility theory has not been given (it is interesting that even the distinguished economist P.H. Wicksteed, the ‘purist of marginalist theory’, as it was called (Check: http://mises.org/page/1465/Biography-of-Philip-Wicksteed-The-Austrian-Economist), relied on a different type of explanation).

    You can read more about functional explanations in the social sciences and methodological individualism in, for example, Elster, J. Making Sense of Marx(Cambridge: Cambridge UP, 1985)

    The regression theorem is not itself a functional explanation (it is not a theorem either). I don’t know what it is. It seems to be some form of adaptive expectation hypothesis (would it resist a Lucas critique?). Anyway, the functional explanation is the Mengerian hypothesis about the origin of money (which Mises also endorse): something, some commodity suddenly acquire the property of ‘marketability’ or ‘saleability’ beyond the intentions, purposes and beliefs of individuals agents and as a consequence of that it is established as money.

    Caveat: I am not saying that there is something ‘wrong’ with functional explanations (In fact, I should think more carefully about this), but Mises has a strong commitment to methodological individualism. And, I also should say, some Austrians are eager to discredit some theories they happen to dislike (for example, Marxist historical materialism) for its reliance on ‘spurious’ functional explanations. 

    http://en.wikipedia.org/wiki/Solipsism

    “Value is just that: value.”

    Maybe I can say a little more about this, but I will have to revise more carefully the works of Mises and Israel Kirzner and I don’t have the “social necessary labour time” (joke).

    To put it bluntly, if you believe (or have the inner feeling) you are making profits, you are making profits! (BTW, maybe sweatshop workers believe or have the inner feeling they are exploited, and if they believe of have the inner feeling they are exploited, they are exploited according to the subjectivist theory of value, right?)

    For some historic counterexamples to the regression theorem, check US Greenbacks and tally sticks.

    Well, I hope this response is OK, at least for the moment. Surely, these are interesting topics, but it is a bit difficult to explain the diverse array of things involved here in a blog post.  Give me a break!

    Cheers.

  • martin

    “Thanks for your response.”

    You’re welcome. And you thanks for your responses too. :-)

    “The problem with indirect-exchange is to explain this shared scale in purely subjectivistic terms in a non-question-begging (and plausible) way.”

    Well, what you’re asking here seems to be why prices are what they are, why e.g. a kilo of tomatoes costs €1.50 and a new Hyundai I20 costs €10.995.

    That’s a result of ages of negotiating prices, setting prices, adjusting prices etc.

    “some commodity suddenly acquire the property of ‘marketability’ or ‘saleability’ beyond the intentions, purposes and beliefs of individuals agents and as a consequence of that it is established as money.”

    Some commodity is in demand. Some people start trading goods for it not (just) because they want the commodity itself, but (also) because they expect they can trade (some of) it for the (other) goods they want. This increases demand. So more people start doing the same thing. This increases demand more, with the result that even more people start doing the same thing. Etc. etc. you end up with money.

    In a way it’s “beyond the intentions, purposes and beliefs of individual agents” because (presumably) none of them intended to establish money, but still it’s the result of the “intentions, purposes and beliefs of individual agents”.

    “To put it bluntly, if you believe (or have the inner feeling) you are making profits, you are making profits!”

    That it’s up to you how highly or lowly you value an apple doesn’t mean that it’s a pear if you believe it is.

    • http://twitter.com/VelizCF CFV

       ”Well, what you’re asking here seems to be why prices are what they are”
      Nop. I am asking for an adequate explanation within the marginal theory of value of that shared scale (in general, money).

      “For this purpose acting man needs a method of computation, and computation
      requires a common denominator to which all items entered are to be
      referable. The common denominator of economic calculation is money.” (Cf. Von Mises, Ludwig Human Action. A treatise on Economics, 214).

      Maybe Danny Frederick can go to “the bottom of *my* quandary” and give me a good marginalist explanation of the value of money.

      “In a way it’s “beyond the intentions, purposes and beliefs of
      individual agents” because (presumably) none of them intended to
      establish money, but still it’s the result of the “intentions, purposes
      and beliefs of individual agents”.”

      That’s exactly a functional explanation. 

      “That it’s up to you how highly or lowly you value an apple doesn’t mean that it’s a pear if you believe it is.”

      I’m not talking of tangible things like apples or pears. We are talking about an economic concept (a praxeological category?): profits. What it is a profit for the subjective theory of value? Whatever I value as a profit:

      “Profit, in a broader sense, is the gain derived from action; it is the increase in satisfaction (decrease in uneasiness) brought about; it is the difference between the higher value attached to the result attained and the lower value attached to the sacrifices made for its attainment; it, in other words, yield minus costs. To make profit is invariably the aim sought by any action. If an action fails to attain the ends sought, yield either does not exceed costs or lags behind costs. In the latter case the outcome means a loss, a decreasein satisfaction.Profit and loss in this original sense are psychic phenomena and as such not open to measurement and a mode of expression which could convey to other people precise information concerning their intensity. A man can tell a fellow man that a suits him better than b; but he cannot communicate to another man, except in vague and indistinct terms, how much the satisfaction derived from a exceeds that derived from b.” (Cf. Von Mises, Ludwig Human Action. A treatise on Economics, 289).

      “psychic phenomena” “no open to measurement” “he cannot communicate to another man”. That what I meant by “economic solipsism.”

      Regards.

      • martin

        “a good marginalist explanation of the value of money.”

        Money has value to a person because he expects he can trade it for other goods.

        “That’s exactly a functional explanation.”

        Well, you’ll have to enlighten me, because I’ve read a few pages on functional explanations:

        http://www.iep.utm.edu/func-exp/
        http://www.answers.com/topic/functional-explanation
        http://media.pfeiffer.edu/lridener/dss/Durkheim/DURKW5.HTML

        And I don’t see how that explanation fits in there.

        “I’m not talking of tangible things like apples or pears. We are talking about an economic concept (a praxeological category?): profits. What it is a profit for the subjective theory of value? Whatever I value as a profit”

        Ok, you’re right. A loss in terms of money can be a profit in terms of value if loosing money is what you are after. What is the problem with that?

        “”psychic phenomena” “no open to measurement” “he cannot communicate to another man”. That what I meant by “economic solipsism.”"

        From Wikipedia: “Solipsism is the philosophical idea that only one’s own mind is sure to exist.”

        That’s something entirely different from the idea that it’s not possible for a person to convey to another person precisely how much he values a good.

        Do you really think it *is* possible? Honestly? How?

  • hastanebul

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