Remember when like a year ago when ‘Toms’ were a must-have wardrobe staple? Well, where is that pair now? Where is that flared purse charm you wore just once to that music festival? We live in a world where fast fashion is momentary, and consumer behavior and trends change faster than manufacturers can keep up. Let’s traceback that one funny t-shirt you bought to wear just once to that office Christmas party. Why do you think it costs only 5 dollars at H&M? It was not made by a middle-aged 9 to 5 factory worker in America but probably by a twelve-year-old girl in Bangladesh skipping school to work 12 hours a day, paid next to nothing, only to keep up with our spontaneous fashion trends. One can be fast to point out the flaws of such a capitalist society that prioritizes profit over communal welfare, but who is to blame? What does the father of capitalism have to say about our unsustainable fashion choices? Before we are quick to attack Smith for the predicament we find ourselves in today, we must first turn to him, for without him it is impossible to find the root of the problem itself.
One important distinction we need to make between Smith’s idea of a free market and our popularized negative connotation to profit-oriented capitalism is that he argued against mercantilism and for a self-operating free market where people work according to their self-interests. To quote Smith himself, “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest”. The factory worker in Bangladesh does not make the t-shirt because she feels she owns us but merely out of her own self-interest. We all promote public interests throughout our own economic choices. This is the fundamental ideology of Adam Smith arguing for a self-correcting free market economy in Smith's 'The Wealth of Nations’.
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So, what is in it for the low wage workers? If these low wages and horrible working conditions are so unfavorable, why are they not outlawed? What most of us fail to comprehend is the cultural and economic differences between middle-income countries and developed countries. People have chosen to work at these factories because they feel that it is better than the alternative. This is where Smith’s theory of division of labor comes into play. In a broader sense, the low wage worker contributes to the economy with his/her skills of stitching garments while someone else comes with the technology of dying the fabric or distributing it. By doing what we are best at, the economy reaches maximum efficiency. This is a form of voluntary trade that the workers opt to participate in since it is more favorable than the alternative, often agriculture or subsistence farming, which is a far more dangerous line of work. It would be unreasonable to compare the earnings of a garment worker in Bangladesh to that of a worker in the UK, for instance, because their economic situations are not the same. Not only is this favorable for the workers, but the garment industry also makes up the majority of export earnings for developing countries like Bangladesh. For countries like this, these industries allow for rural to urban migration, allowing room for a better standard of living, education, and livelihood. Their individual need for fulfillment can, in turn, lead to prosperity for the nation. So, what would Adam Smith have to say about outsourcing to cheaper countries? Well, he would say yes, it makes all the financial and economic sense to do that. In this theory about the specialization of trade and division of labor, he explains how this concept is mutually beneficial because by maximizing efficiency, we are maximizing profit, which is what it all eventually boils down to.
Some may argue, this was work was written in a pre-industrial revolution context in a country that was developing at a different pace and under different political dynamics than developing countries today, where the majority of the production is based today, which is why the outcomes are expected to be dramatically different today. Let's look back at countries like the US, Japan, and German that have evolved out of low wage manufacturing toward high skilled labor. One might expect developing countries today not to have the same outcomes considering the government's reluctance to step in and change production, but here is why Adam Smith might just have the answer to the question at hand. What happens if the government steps in and starts forcing the industries to change production? Starting from structural unemployment to inefficient production, the economy will no longer be practicing ‘specialization’. The worker will no longer be producing what they are best at, which is a substantial decrease in productivity, leading to a communal welfare loss. Developed countries will then have to take on the work of these sweatshops to keep up with demands, perhaps having to give up producing that country specializes at. This will be detrimental to both nations.
In this modern economy, Smith's ideology of the economy working on its self-interest to fulfill our ‘needs’ seems almost hypothetical to some people. As consumers, we have now come a long way from fulfilling just ‘needs’ into creating ‘wants,’ and this change in consumer behavior was noticed around the end of the industrial revolution. Writing at the kick start of the industrial revolution, this change was unfamiliar to Smith. Some say not foreseeing the outcomes of the industrial revolution was one of his blind spots. He did not foresee the catastrophic consequences of low waged, unsustainable manufacturing, nor did he support it. Yes, he argued for maximizing profit but never prioritize it over communal welfare and so blaming him for out unsustainable fashion choices today would not be reasonable. In 'The Wealth of Nations', Smith puts emphasis on education and pushing beyond what is comfortable and conventional. Claiming people who live a stationary, or stagnant life ‘naturally loses’. So, it is reasonable to assume that Smith expects to these low wage manufactures to one day move to high skilled labor not necessarily through government intervention but over time through a change in consumer behavior and demand. Some may argue that his ideology would only hold the truth in an ideal economy, but these hypotheses are the foundation on which a modern-day capitalist free market economy is based on.
So, what can we do as consumers? Stop buying anything labeled ‘made in Bangladesh’? What exactly would that achieve? Smith would argue that any attempt to resist a free market would lead to detrimental effects for both parties. Let us start with the millions of garments workers that would now be unemployed and forced to return to agricultural labor in rural areas. Developing countries dependent on trade would face an economic crash, huge multinationals would be out of business, and with it, the employees would lose their jobs, and us consumers would be forced to buy clothes from a few stores still in business for unreasonable prices because they would now run a monopoly. Does this seem like a viable solution? Smith would argue that today's fashion industry is not exactly ‘unsustainable’ as he thinks that society will correct itself in the long run by the forces of demand and supply. So, it really up to us, the consumers, to make sustainable choices, and the market will follow. If we as consumers are willing to pay higher prices for better quality products that we can utilize for more than a season, as we do with moth fast fashion brands, companies will be incentified to stop sourcing the lowest cost and start investing in technology and training for better quality sustainable alternatives. This would not only be beneficial for us, the environment, and the company but also the garment workers who are now being trained to produce high skilled products and can enjoy a better standard of living. As Smith repeatedly emphasized in his work, production is consumer-oriented, so perhaps we should be the change we wish to see in the world.
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