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Power and production in the twilight of the sweatshop age

In his new book, Monopsony Capitalism, Dr Ashok Kumar explains the endurance of sweatshops and considers the future of the garment and footwear industry.

Woman working in the garment industry.

While technological advances have seen production methods change significantly in many industries over the last century, the garment and footwear industry has remained stubbornly unmoved.

In auto production, for example, much of the manual labour on the factory floor has been replaced with machinery, whereas the image of rows of women crouched over sewing machine holds true for garment factories today as it did in the past.

In his new book, Monopsony Capitalism: Power and Production in the Twilight of the Sweatshop Age, Dr Ashok Kumar from Birkbeck’s Department of Management explains this industrial anomaly and suggests how the growing power of workers could shape the industry’s future.

Dr Kumar explains: “What sets garment and footwear factories aside from other industries is the outsourcing of production. While auto companies both manufacture and sell their products, garment and footwear brands such as Adidas do not own any of the production process.”

The outsourcing of production has led the garment and footwear sector to be highly exploited, as industrial workers have low bargaining power to change their circumstances. There have been a number of incidents that show the precariousness of working conditions in sweatshops, the 2013 Rana Plaza building collapse in Bangladesh, which killed at least 1,132 people and injured more than 2,500, being one of the most high profile. Yet, despite these incidents, the sweatshop has endured.

Dr Kumar explains this through the theory of monopsony capitalism. Monopsony is the opposite of monopoly: instead of large suppliers with many buyers, such as companies like Apple and Amazon, the garment and footwear industry sees larger buyers with the choice of many suppliers.

This asymmetrical relationship means that brands have a lot of power, with tens of thousands of suppliers from all over the world to choose from. Because of this intense top-down pressure, workers have very little bargaining power, as even an increase in pennies to the cost of production could send a buyer with plenty of choice elsewhere.

Dr Kumar’s theory suggests that, in this competitive market, some factories will not survive, while those that do will grow. This brings monopsony down, as the buyer to supplier ratio decreases. As a greater share of value goes to the suppliers, the bargaining power of workers increases.

Furthermore, the introduction of labour-saving technology means that skilled workers will not be so easily replaceable. Workers also need to be able to keep up with the seasonality and ephemerality of fashion. The greater value that workers bring to their role gives workplace action a higher chance of success.

The garment and footwear industry is known as a ‘starter sector’, since the relatively low setup cost makes it the first exportable industry in developing countries. Starter sectors provide insight into changing trends, as Dr Kumar explains:

“An industry can never move from high monopsony to low and back to high again: what we conceive as the sweatshop’s days are numbered, as the bargaining power of workers steadily increases. In my research into strike actions in India, China, Honduras, Vietnam, and Cambodia, I’ve seen how workers can negotiate a better deal in denim. We can see the early indicators that the sector is changing.”

Monopsony Capitalism explores how this changing composition of capitalism came about and looks to a future where sweatshop workers will be able to mobilize for better working conditions.

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