Forum Final Response
Innovation will produce at best limited results.
May 21, 2013
With Responses From
May 21, 2013
6 Min read time
Innovation will produce at best limited results.
I’m grateful for the respondents’ thoughtful comments on private, voluntary regulation and its capacity to improve conditions for the millions of workers currently employed in today’s global supply chains. Despite our differences, we all agree that enforcing labor standards in our global economy requires more than one strategy (private vs. public) or one lead actor (global brands vs. nation-states). We need multiple approaches and parties to tackle the problem. The question remains: What is the best mix?
Some respondents raise important questions about the role of private compliance programs (Short and Toffel, Prakash, Gereffi); others about whether—and how—developing-country governments can improve the regulatory function I advocate (Bartley, Mosley, Prakash, Brown, Passman); still others point to different actors who might improve this effort (Shapiro) and to the need for a less fragmented conversation (Jones).
The objections in these responses are very important. Still, I remain convinced that key challenges to fair labor standards in global supply chains can only be tackled by state bureaucracies operating in and legitimated by their home countries.
I start with the charge that I am overly critical of existing private compliance programs. Several respondents argue that these programs work well—or at least better than the alternatives—and are especially important in countries with weak institutions. Jodi Short and Mike Toffel rightly point out that monitoring schemes have generated important information about workplace conditions that could mobilize consumers, socially conscious buyers and brands, and even public policy. Yet there is little evidence that these schemes in and of themselves actually lead to the improvements that Short and Toffel claim. Other mechanisms such as NGO pressure, capability-building initiatives, and government regulation also need to be at work.
Gary Gereffi points out that global value chains have been evolving in important ways and that several large host countries (China, Brazil, India) are also becoming large consumer markets. I share his belief that this creates possibilities for reshaping governance patterns in those countries. But the troubles that continue to plague Apple and its lead supplier Foxconn are evidence that even when most of the assembly work is done in a country—China—that is tightening its labor regulations and raising its minimum wages, private compliance efforts alone are not enough to enforce labor standards.
Aseem Prakash defends private, voluntary regulation as a crucial tool in countries with weak institutions and rule of law. Let me be clear: I don’t suggest throwing out private regulatory initiatives. I argue that they need to be complemented by strong public regulation in both well-established democracies and developing countries. Prakash’s own work has shown that “voluntary” regulation often works best in countries with strong public authority and rule of law. And while I would like to agree with Prakash on the importance of social labeling schemes and ethical-consumption initiatives in driving positive change, the evidence simply does not support this claim.
Other respondents argue that I am insufficiently critical of private compliance programs. Tim Bartley makes an excellent point that most private compliance programs are focused merely on changing behaviors within the factories. They do nothing to change behaviors outside of the factories: for example, where and how multinational corporations source their products. Private compliance also does nothing to address the proliferation of new product types, consumer and retailer demands for rapid product upgrades, and even some forms of lean manufacturing that undermine labor standards among suppliers. Bartley advocates public policies that encourage patient sourcing and shape where global brands manufacture their products. This is a useful strategy, which can build on nascent efforts by some global brands to modify their sourcing practices along these lines.
Until the costs and benefits of doing business are shared among everyone involved, innovation will produce at best limited results.
Are there actors other than governments and firms that can improve labor standards? Isaac Shapiro makes an important case for bringing workers’ voices into discussions about poor conditions in supply chain factories. Shapiro argues that where workers are unable to form independent unions, labor-rights NGOs can speak for them.
I agree that workers’ voices are important, and I acknowledge the central role NGOs continue to play in the anti-sweatshop movement. But we need realistic expectations about NGOs. They vary greatly in technical expertise and resources, which limits their effectiveness. The failure of the Joint Initiative for Workers Rights and Corporate Accountability—a project of several NGOS, which sought to improve working conditions in Turkey—speaks to NGOs’ unreliability. And NGOs are not always legitimate worker representatives. As the sociologist Gay Seidman has shown, transnational NGOs sometimes crowd out local labor activists and focus on the concerns of consumers and institutions in the global North rather than the challenges facing workers in developing countries.
Layna Mosley and Drusilla Brown also argue for the importance of external actors. They focus on the threat of ILO and trading-partner sanctions, which may compel local suppliers and host-country governments to enforce labor standards. Drawing on the experience of the Better Factories Cambodia (BFC) program, Brown shows how trade access to the United States can serve as both a carrot and stick to drive improved standards compliance. But once the Multi Fiber Arrangement ended in 2005, the threat of sanctions in Cambodia came from the state, not from external sources. Cambodia refused to grant export licenses to apparel companies that did not participate in the BFC program. At the same time, reputation-conscious buyers could look to improved working conditions in order to determine which factories to source from. BFC was effective thanks to an innovative combination of state and private regulation.
Mosley also argues that trade with countries that respect labor standards can foster improvements in developing countries, especially those that lack the basic institutions of democracy required for effective public regulation.
I agree that trade, under certain conditions, can yield positive changes, though this is by no means the only mechanism that can work. Even “weak” states with a long history of authoritarian rule and corruption can build new regulatory capabilities and promote improved labor standards. In the Dominican Republic, for example, reform efforts were instigated in part by pressure from external trading partners (including the United States) and in part by a local group of reformist politicians and labor activists. In Brazil, India, and Cambodia, a combination of public and private actors pushed labor standards that external trading partners were not demanding. And, as Mosley points out, for the millions of workers who are employed in domestically focused, often informal workplaces, public regulation may be the only hope.
Pamela Passman and Hannah Jones rightly suggest breaking out of our highly segmented discussions of standards—be they labor or environmental or even commercial—and instead looking at how these different spheres inform one another. Passman describes capability-building efforts geared at protecting intellectual property and preventing corruption, efforts that mirror those focused on labor and environmental standards. Can initiatives from one sphere spill over into others, thereby creating a “culture of compliance”? Perhaps. But we have not yet seen that.
Jones is right about the need for a new conversation that does not pit global corporations against labor-rights NGOs. And I share her conviction about the importance of creative, sustainable, ethical business models.
But we cannot simply innovate our way out of our current situation. New technical and managerial solutions are not sufficient. Until the costs and benefits of doing business are shared among everyone involved—large retailers, global brands, lead suppliers, and workers—innovation will produce at best limited results. Real change indeed requires a new conversation. But the heart of that conversation needs to be about a more equitable distribution of the gains from globally dispersed business models.
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May 21, 2013
6 Min read time