Manual Morality and Corporate Governance: Firm Integrity and Spheres of Justice

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Read More. Challenges and risks of doing business in India Companies doing business in India should be aware of increased risks, including those related to corruption, particularly if they use third parties to promote their business, obtain Read More. In the following pages of this Ethisphere publication, we have focused on the practical, including very specific steps Read More.

In our most recent Ethicast series, we gave our Listen Here. The Ethisphere Institute recently had the opportunity to interview Listen Here. In our most recent Ethicast series, Stephen L. Brown, Listen Here. At the Global Ethics Summit leaders gathered to take a closer look at the issues. The new Anti-Bribery and Corruption Study by Kroll and the Ethisphere Institute shows how companies are hitting a 'third party data refresh' for effective risk mitigation and defense. For the second consecutive year, third-party Read More. Editor's Note: This post originally appeared on WilmerHale.

This past year marked the 40th anniversary of the U. Since its enactment in , the U. Reproduced with permission from Paul Hastings. There is no shortage of institutions — public or private — looking to implement reforms these days. A transportation company struggles to rehabilitate its corporate culture after allegations targeted at its leadership team.

A financial Read More. More about Lang below. The best boards provide Read More. Most of us have annual events we look forward to. For some it might be Read More. Katherine B. Quinn has served in this position since joining U. Bancorp in September and has served on U. Business activity shapes the world we live in, sometimes for good and sometimes for ill. Business ethics is a huge field. Philosophers from Aristotle to Rawls have defended positions on topics which can be understood as part of business ethics.

This entry summarizes important research on central questions in business ethics, including: In whose interests should firms be managed? Who should manage them? What do firms owe their workers, and what do workers owe their firms? Should firms try to solve social problems? What responsibility do they have for the behavior of their suppliers? What role should firms play in the political process? Given the vastness of the field, of necessity certain questions in business ethics are not addressed here.

Many people engaged in business activity, including accountants and lawyers, are professionals. As such, they are bound by codes of conduct promulgated by professional societies. Many firms also have detailed codes of conduct, developed and enforced by teams of ethics and compliance personnel. Business ethics can thus be understood as the study of professional practices, i. This entry will not consider this form of business ethics. Instead, it considers business ethics as an academic discipline. Business ethics as an academic discipline is populated by both social scientists and normative theorists.

This is reflected in the attendees of academic conferences in business ethics and the types of articles that are published in business ethics journals. Social scientists—who at this point comprise the largest group within the field—approach the study of business ethics descriptively. They try to answer questions like: Does corporate social performance improve corporate financial performance, i. I will not consider such questions here. This entry focuses on questions in normative business ethics, most of which are variants on the question: What is ethical and unethical in business?

Considered only as a normative enterprise, business ethics—like many areas of applied ethics—draws from a variety of disciplines, including ethics, political philosophy, economics, psychology, law, and public policy. This is because remedies for unethical behavior in business can take various forms, from exhortations directed at private individuals to change their behavior to new laws, policies, and regulations. One is that the means of production can be privately owned.

A second is that markets—featuring voluntary exchanges between buyers and sellers at mutually determined prices—should play an important role in the allocation of resources. Those who deny these assumptions will see some debates in business ethics e. Merck and Wal-Mart are examples of the first type organization; Princeton University and the Metropolitan Museum of Art are examples of the second. Business ethicists sometimes concern themselves with the activities of non-profit organizations, but more commonly focus on for-profit organizations.

Indeed, most people probably understand businesses as for-profit organizations. One way to think about business ethics is in terms of the moral obligations of agents engaged in business activity. Who is a moral agent? Individual persons, obviously. What about firms? To be precise, the question is whether firms are moral agents and morally responsible considered as qua firms, not considered as aggregates of individual members of firms.

In the business ethics literature, French is a seminal thinker on this topic. He bases this conclusion on his claim that firms have internal decision-making structures, through which they 1 cause events to happen, and 2 act intentionally. Donaldson claims that firms cannot be persons because they lack important human capacities, such as the ability to pursue their own happiness see also Werhane Other responses denied that firms are moral agents also. Velasquez argues that firms lack a necessary condition of agency, viz.

In later work, French recanted his claim that firms are moral persons, though not his claim that they are moral agents. Discussions of corporate moral agency and moral responsibility have largely faded from the business ethics literature as of But they continue to receive attention in the mainstream philosophical literature, where they are treated with a high degree of sophistication. Here the focus is on collectives more generally, with the business firm playing a role as an example of a collective. As in the business ethics literature, in the mainstream philosophical literature a key question is: What are the conditions for moral agency and responsibility, such that collectives qua collectives, including firms, do or do not satisfy them?

This view has strong intuitive appeal.

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On the other side are writers who deny that firms can be moral agents, such as Gilbert , S. A claim advanced on this side is that agency requires intention, and firms are not the kinds of things that can have intentions S. Miller The common way of speaking about the agency and responsibility of firms may be metaphorical, or a shorthand way of referring to the agency and responsibility of individuals within firms. For discussions of these issues, see the entries on collective responsibility , collective intentionality , and shared agency.

While the question of whether firms themselves are moral agents is of theoretical interest, its practical import is uncertain. Perhaps BP itself was morally responsible for polluting the Gulf of Mexico. Perhaps certain individuals who work at BP were. What hangs on this? According to Hasnas , very little. Firms such as BP can be legally required to pay restitution for harms they cause even if they are not morally responsible for them. What ascribing agency and responsibility to firms enables us to do, according to Hasnas, is blame and punish them. But, he argues, we should not engage in this practice.

Phillips , by contrast, argues that in some cases no individual employee in a firm is responsible for the harm a firm causes. To the extent that it makes sense—and it often does, he believes—to assign responsibility for the harm, it must be assigned to the firm itself. There is significant debate about the ends and means of corporate governance, i. Much of this debate is carried on with the large publicly-traded corporation in view. There are two main views about the proper ends of corporate governance.

According to one view, firms should be managed in the best interests of shareholders. Shareholder primacy is the dominant view about the ends of corporate governance among financial professionals and in business schools. A few writers argue for shareholder primacy on deontological grounds.

On this argument, shareholders own the firm, and hire managers to run it for them on the condition that the firm is managed in their interests. Shareholder primacy is thus based on a promise that managers make to shareholders Friedman ; Hasnas In response, some argue that shareholders do not own the firm. They own stock, a type of corporate security Bainbridge ; Stout ; the firm itself may be unowned Strudler Others argue that managers do not make, explicitly or implicitly, any promises to shareholders to manage the firm in a certain way Boatright More writers argue for shareholder primacy on consequentialist grounds.

In support of this, some argue that, if managers are not given a single objective that is clear and measurable—viz. Consequentialist arguments for shareholder primacy run into problems that afflict many versions of consequentialism: in requiring all firms to be managed in a certain way, it does not allow sufficient scope for personal choice Hussain Most think that people should be able to pursue projects, including economic projects, that matter to them, even if those projects do not maximize welfare.

The second main view about the proper ends of corporate governance is given by stakeholder theory. To its critics, stakeholder theory has seemed both insufficiently articulated and weakly defended. The groups most commonly identified are shareholders, employees, the community, suppliers, and customers. But other groups have stakes in the firm, including creditors, the government, and competitors. It makes a great deal of difference where the line is drawn, but stakeholder theorists have not provided a clear rationale for drawing a line in one place rather than another.

With respect to defense, critics have wondered what the rationale for managing firms in the interests of all stakeholders is. This is precisely what defenders of shareholder primacy say about that view. It is important to realize that a resolution of the debate between shareholder and stakeholder theorists however we conceive of the latter will not resolve all or even most of the ethical questions in business. This is because this is a debate about the ends of corporate governance; it cannot answer all of the questions about the moral constraints that must be observed in pursuit of those ends Goodpaster ; Norman Rather, these views should be interpreted as views that managers should do whatever is morally permissible to achieve these ends.

A large part of business ethics is trying to determine what morality permits in this domain. Answers to questions about the means of corporate governance often mirror answers to question about the ends of corporate governance. Often the best way to ensure that a firm is managed in the interests of a certain party P is to give P control over it.

We might see control rights for shareholders as following analytically from the concept of ownership. To own a thing is to have a bundle of rights with respect to that thing. As noted, in recent years the idea that the firm is something that can be owned has been challenged Bainbridge ; Strudler But contractarian arguments for shareholder control of firms have been constructed which do not rely on the assumption of firm ownership.

All that is assumed in these arguments is that some people own capital, and others own labor. It just so happens that, in most cases, capital hires labor. Many writers find this result troubling. Even if the governance structure in most firms is in some sense agreed to, they say that it is unjust in other ways. Anderson characterizes standard corporate governance regimes as oppressive and unaccountable private dictatorships.

Arguments for these governance structures take various forms. According to it, if states should be governed democratically, then so should firms, because firms are like states in the relevant respects Dahl ; Walzer A fourth argument for worker participation in firm decision-making sees it as valuable or even necessary training for participation in political processes in the broader society Cohen Space considerations prevent a detailed examination of these arguments.

But criticisms generally fall into two categories. The first insists on the normative priority of agreements, of the sort described above. There are few legal restrictions on the types of governance structures that firms can have. And some firms are in fact controlled by workers Dow ; Hansmann To insist that other firms should be governed this way is to say, according to this argument, that people should not be allowed to arrange their economic lives as they see fit.

Another criticism of worker participation appeals to efficiency. Allowing workers to participate in managerial decision-making may decrease the pace of decision-making, since it requires giving many workers a chance to make their voices heard Hansmann It may also raise the cost of capital for firms, as investors may demand more favorable terms if they are not given control of the enterprise in return McMahon Both sources of inefficiency may put the firm at a significant disadvantage in a competitive market. And it may not be just a matter of competitive disadvantage.

If it were, the problem could be solved by making all firms worker-controlled. The problem may be one of diminished productivity more generally. Business ethicists seek to understand the ethical contours of, and devise principles of right action for, business activity. One way of advancing this project is by choosing a normative framework and teasing out its implications for a range of issues in business. One influential approach to business ethics draws on virtue ethics see, e. For MacIntyre, there are certain goods internal to practices, and certain virtues are necessary to achieve those goods.

Building on MacIntyre, Moore develops the idea that business is a practice, and thus has certain goods internal to it, the attainment of which requires the cultivation of business virtues. Scholars have also been inspired by the Aristotelian idea that the good life is achieved in a community. They have considered how business communities must be structured to help their members flourish Hartman ; Solomon Another important approach to the study of business ethics comes from Kantian moral theory D. In a competitive market, people may be tempted to deceive, cheat, or manipulate others to gain an edge.

Ethical theory, including virtue theory and Kantian deontology, is useful for thinking about how individuals should relate to each other in the context of business cf. Rorty But business ethics also comprehends the laws and regulations that structure markets and organizations. And here political theory seems more relevant see and cf. This is not an easy task, since while Rawls makes some suggestive remarks about markets and organizations, he does not articulate specific conclusions or develop detailed arguments for them. But scholars have argued that justice as fairness: 1 is incompatible with significant inequalities of power and authority within businesses S.

Arnold ; 2 requires people to have an opportunity to perform meaningful work Moriarty ; cf. Hasan ; and requires alternative forms of 3 corporate governance Norman ; cf. Singer and 4 corporate ownership M. A version of this view can be found in McMahon , but it has been developed in most detail and is now most closely associated with Heath According to Heath, the reason we have a market-based economy, as opposed to a command economy, is because markets are more efficient. But markets fail, due to imperfect information, externalities, transaction costs, and more.

The state corrects for many market failures through regulation. We set limits on pollution and require truth in advertising, among other things. But we would not want, and we cannot write, regulations to address every market failure. This is where business ethics comes in, according to the MFA. Businesspeople have a moral obligation not to exploit the market failures that the law allows them to exploit. Put another way, the moral obligations of businesspeople are identified by the ideal regulatory regime—the one we would have if regulations were costless and written and administered by a godlike figure.

Selecting a normative framework and applying it to a range of issues is an important way of doing business ethics. But it is not the only way. Indeed, the more common approach is to identify a business activity and then analyze it using intuitions and principles common to many moral and political theories. The main way that firms interact with consumers is by selling, or attempting to sell, products and services to them. Many ethical issues attend this interaction. Among the things commonly said to be inappropriate for sale are sexual services, surrogacy services, and human organs.

Some writers object to markets in these items for consequentialist reasons. They argue that markets in commodities like sex and kidneys will lead to the exploitation of vulnerable people Satz Others object to the attitudes or values expressed in such markets. They claim that markets in surrogacy services express the attitude that women are mere vessels for the incubation of children Anderson ; markets in kidneys suggest that human life can be bought and sold Sandel ; and so on.

Whether selling a particular thing for money expresses disrespect, they note, is culturally contingent. They and others also argue that the bad effects of markets in contested commodities can be eliminated or at least ameliorated through appropriate regulation, and that anyway, the good effects of such markets e. Some things that firms may wish to sell, and that people may wish to buy, pose a significant risk of harm, to the user and others.

When is a product too unsafe to be sold? This question is often answered by government agencies. In the U. In some cases these standards are mandatory e. The state identifies minimum standards and individual businesses can choose to adopt higher ones. Questions about product safety are a matter of significant debate among economists, legal scholars, and public policy experts. Legal scholars have also devoted considerable attention to tort law, the area of law that deals with cases of non-contractual, non-criminal harm. But business ethicists have paid scant attention to these questions.

Existing treatments often combine discussions of safety with discussions of liability—the question of who should pay for harms that products cause—and tend to be found in business ethics textbooks.

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There is much room for exploration of these issues. Drop side cribs pose risks to consumers; so do chainsaws. On what basis should the former be prohibited but the latter not be Hasnas ? On the question of liability, an important issue is whether it is fair to hold manufacturers responsible for harms that their products cause, when the manufacturers are not morally at fault for those harms Piker Most advertising contains both an informational component and a persuasive component. Advertisements tell us something about a product, and try to persuade us to buy it.

Both of these components can be subject to ethical evaluation. Emphasizing its informational component, some writers stress the positive value of advertising. Markets function efficiently only when certain conditions are met. One of these conditions is perfect information: minimally, consumers have to understand the features of the products for sale.

While this condition will never be fully met in reality, advertising can help to ensure that it is met to a greater degree Heath Another value that can be promoted through advertising is autonomy. People have certain needs and desires—e. Their choices are more likely to satisfy their needs and desires if they have information about what is for sale, which advertising can provide Goldman These good effects depend, of course, on advertisements producing true beliefs, or at least not producing false beliefs, in consumers.

The issue here is not whether deceptive advertising is wrong—most believe it is cf. Child —but what counts as deceptive advertising, and what makes it wrong. Its advertisements were deceptive, and therefore wrong, because they appeared to make a true claim, but in fact made a false claim. But many advertisements that do not seem deceptive make false or unverifiable claims. It is common to say of these types of claims that they are not warranted as true, and so cannot deceive Carson Yet these claims may in fact deceive some people.

Advertisements are deemed deceptive when a reasonable person, not any person at all, is deceived. This makes deception in advertising a matter of results in consumers, not intentions in advertisers. Many reasons have been offered for why deceptive advertising is wrong. One is the Kantian claim that deceiving others is disrespectful to them, a use of them as a mere means. Deceptive advertising may also lead to harm, to consumers who purchase suboptimal products, given their desires and competitors who lose out on sales.

A final criticism of deceptive advertising is that it erodes trust in society Attas When people do not trust each other, they will either not engage in economic transactions, or engage in them only with costly legal protections. The persuasive component of advertising is also a fruitful subject of ethical inquiry.

Galbraith , an early critic, thinks that advertising, in general, does not inform people how to acquire what they want, but instead gives them new wants. Moreover, since we are inundated with advertising for consumer goods, we want too many of those goods and not enough public goods.

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Hayek rejects this claim, arguing that few if any of our desires are independent of our environment, and that anyway, desires produced in us through advertising are no less significant than desires produced in us in other ways. Galbraith is concerned about the persuasive effects of advertisements.

In contrast, recent writers focus on persuasive techniques that advertisers use. Some of these are alleged to cross the line into manipulation. It is difficult to define manipulation precisely, though many attempts have been made see, e. For our purposes, manipulative advertising can be understood as advertising that attempts to persuade consumers, often but not necessarily using non-rational means, to make irrational or suboptimal choices, given their own needs and desires see and cf.

Associative advertising is often held up as an example of manipulative advertising. In associative advertising, the advertiser tries to associate a product with a positive belief, feeling, attitude, or activity which usually has little to do with the product itself. Thus many television commercials for trucks in the U. Commercials for body fragrances associate those products with sex between beautiful people. The suggestion is that if you are a certain sort of person e.

Crisp argues that this sort of advertising attempts to create desires in people by circumventing their faculty of conscious choice, and in so doing subverts their autonomy cf. Arrington ; Phillips Lippke argues that it makes people desire the wrong things, encouraging us to try to satisfy our non-market desires e. How seriously we take these criticisms may depend on how effective we think associative and other forms of persuasive advertising are.

Our judgments on this issue may be context-sensitive. Paine Paine et al. But children, she argues, do not have the capacity for making wise consumer choices see also E. Moore Thus advertising directed at children—as opposed to advertising of products for children directed at adults—constitutes a form of objectionable exploitation. Other populations who may be similarly vulnerable are the senile, the ignorant, and the bereaved.

Ethics may require not a total ban on marketing to them but special care in how they are marketed to Brenkert Sales are central to business. Perhaps surprisingly, business ethicists have said little directly about sales. But much of what is said about advertising also applies to sales. Salespeople are, in a sense, the final advertisers of products to consumers. They provide benefits to consumers in much the same way as advertisers and have the same ability to deceive or manipulate consumers. Carson works out a detailed theory of ethics for salespeople. Carson justifies 1 — 4 by appealing to the golden rule: treat others as you want to be treated.

He identifies two other duties that salespeople might have he is agnostic : 5 do not sell customers products that you the salesperson think are unsuitable for them, given their needs and desires, without telling customers why you think this; and 6 do not sell customers poor quality or defective products, without telling them why you think this. For the most part, 1 — 4 ask the salesperson not to harm the customer; 5 and 6 ask the salesperson to help the customer, in particular, help her not to make foolish mistakes.

Whether salespeople should help customers in this way may depend on how adversarial their relationship should be. The broader issue here is one of disclosure.

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But there is no consensus on what information is relevant to a purchasing decision, or what reasonable people want to know. For many products bought and sold in markets, sellers offer an item at a certain price, and buyers take or leave that price. But in some cases there is negotiation over price and other aspects of the transaction. The locus classicus for this debate is Carr According to him, bluffing in negotiations is permissible because business has its own special set of rules and bluffing is permissible according to these rules.

Carson agrees that bluffing is permissible in business, though in a more limited range of cases than Carr. If you have good reason to believe that your adversary in a negotiation is misstating her bargaining position, then you are permitted to misstate yours. A requirement to tell the truth in these circumstances would put you at a significant disadvantage relative to your adversary, which you are not required to suffer. That is, the prices of goods and services are set by the aggregate forces of supply and demand; no individual is able to buy or sell a good for anything other than the market price.

In reality, things are different. Sellers of goods have some flexibility about how to price goods. Most business ethicists would accept that, in most cases, the prices at which products should be sold is a matter for private individuals to decide. This view has been defended on grounds of property rights. Some claim that if I have a right to X , then I am free to transfer it to you on whatever terms that I propose and you accept Boatright It has also been defended on grounds of welfare.

Prices set by the voluntary exchanges of individuals reveal valuable information about the relative demand for and supply of goods, allowing resources to flow to their most productive uses Hayek Despite this, most business ethicists recognize some limits on prices.

One issue that has received attention recently is price discrimination. This is widely regarded as wrong. Economists tend to think that price discrimination is valuable insofar as it enables firms to increase output. But the moral status of it is less clear. When it was revealed that Staples and other online retailers were charging consumers in different zip codes different prices for the same products at the same time, consumers were outraged. But some writers argue that this practice is no worse than movie theaters giving discounts to children Elegido ; Marcoux The problem may be that Staples and others engaged in this practice without disclosing it.

Another issue of pricing ethics is price gouging.

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Price gouging can be understood as a sharp increase in the price of a necessary good in the wake of an emergency which renders that good scarce. In the immediate aftermath of Hurricane Katrina in New Orleans in , for example, many retailers charged very high prices for water and gasoline. Many jurisdictions have laws against price gouging, and it is widely regarded as unethical Snyder But some theorists defend price gouging.

While granting that sales of items in circumstances like these are exploitative, they note that they are mutually beneficial. Both the seller and buyer prefer to engage in the transaction rather than not engage in it. Moreover, when items are sold at inflated prices, this attracts more sellers into the market. Permitting price gouging may thus be the fastest way of eliminating it Zwolinski For further discussion, see the entry on exploitation.

Most contemporary scholars believe that sellers have wide, though not unlimited, discretion in how much they charge for goods and services. Business ethicists have written much about the relationship between employers and employees. Most of this writing has inquired into the obligations that employers owe to employees.

This may be because employers usually have more power than employees, and so have greater discretion in how they treat employees, than employees have in how they treat employers. Another important topic in this area is privacy. For space reasons this topic will not be discussed, but see the entries on privacy and privacy and information technology. Ethical issues in hiring and firing tend to focus on the question: What criteria should employers use, or not use, in employment decisions? The question of what criteria employers should not use is addressed in discussions of discrimination.

While there is some debate about whether discrimination in employment should be legally prohibited see Epstein , almost everyone agrees that it is morally wrong Hellman ; Lippert-Rasmussen Discussion has focused on two questions. First, when does the use of a certain criterion in an employment decision count as discriminatory? It seems wrong for Wal-Mart to exclude white applicants for a job in their marketing department, but not wrong for the Hovey Players a theater troupe to exclude white applicants for a production of A Raisin in the Sun.

We might say that whether a hiring practice is discriminatory depends on whether the criterion used is job-relevant. Suppose that white diners prefer to be served by white waiters rather than black waiters.

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In this case race seems job-relevant, but it also seems wrong for employers to take race into account Mason Another question that has received considerable attention is: What makes discrimination wrong? Some argue that discrimination is wrong because of its effects on those who are discriminated against Lippert-Rasmussen ; others think that it is wrong because of what it expresses to them Hellman For further discussion, see the entry on discrimination.

According to them, employers have a duty to hire the most qualified applicant. Some justify this duty by appealing to considerations of desert D. Miller ; others justify it by appealing to equal opportunity Mason The standard challenge to this view appeals to property rights Kershnar A job offer typically implies a promise to pay the job-taker a sum of your money for performing certain tasks. While we might think that excluding some ways you can dispose of your property e. In support of this, we might think that a small business owner does nothing wrong when she hires her daughter for a part-time job as opposed to a more qualified stranger.

Many of the same ethical issues that attend hiring also attend firing. There has been a robust discussion of the ethics of firing in the business ethics literature. Most would say that it is wrong for an employer to terminate an employee for some reasons, e. Thus the debate is between those who think that employers should be able to terminate employees for any reason with some exceptions , and those who think that employers should be able to terminate employees only for certain reasons. Arguments for at will employment appeal to freedom or macroeconomic effects.

Business organizations generate revenue, and some of this revenue is distributed to their employees in the form of pay. Since the demand for pay typically exceeds the supply, the question of how pay should be distributed is naturally analyzed as a problem of justice. Two general theories of justice in pay have attracted attention. This view is sometimes justified in terms of property rights.

Employees own their labor, and employers own their capital, and they are free, within broad limits, to dispose of it as they please Boatright According to it, the just wage for a worker is the wage that reflects her contribution to the firm. This view comes in two versions. On the absolute version, workers should receive an amount of pay that equals the value of their contributions to the firm D. On the comparative version, workers should receive an amount of pay that reflects the relative value of their contributions to the firm, given what others in the firm contribute and are paid Sternberg The contribution view strikes some as normatively basic, a view for which no further argument can be given D.

The pay of any employee in a firm can be evaluated from a moral point of view, using the two theories sketched above. But business ethicists have paid particular attention to the pay of certain groups of employees, viz. There has been a robust debate about whether CEOs are paid too much Moriarty a , with scholars falling roughly into two camps.

Reiff There has also been a robust debate about whether workers in sweatshops are paid too little. They say that sweatshops wages, while low by our standards, are not low by the standards of the countries in which the sweatshops are located. This explains why people choose to work in a sweatshop: it is the best offer they have.

Efforts to increase artificially the wages of sweatshop workers, according to these writers, is misguided on two counts. First, it is an interference with the autonomous choices of employers and workers. Second, it is likely to make workers worse off, since employers will respond by either moving operations to a new location or employing fewer workers in that location. Other writers challenge these claims.

While granting that workers choose to work in sweatshops, they deny that their choices are voluntary D. Given their very low wages, this suggests that sweatshop workers are exploited. Moreover, some argue, appealing to a Kantian duty of beneficence, that firms can and should do more for sweatshop workers Snyder Smith [] famously observed that a detailed division of labor greatly increases the productivity of manufacturing processes.

To use his example: if one worker performs all of the tasks required to make a pin himself, he can make just a few pins per day. However, if the worker specializes in one or two of these tasks, and combines his efforts with other workers who specialize in one or two of the other tasks, then together they can make thousands of pins per day. But there is human cost, according to Smith, to the detailed division of labor. Instead, it is a call for labor processes to be arranged so that work is interesting, requires skill, and gives workers substantial decision-making power Arneson ; Michaelson et al.