Almost 400 garment workers were crushed to death when shoddily built factory building collapsed in Bangladesh last month. Tragedies like this lead to a lot of finger-pointing in the media, as well as proposals for their prevention in the future.

Unfortunately, much of the finger-pointing and the proposals for prevention miss their mark. The most common culprits are allegedly the “selfish greed” of the factory owners and the capitalist system of competition with its relentless downward pressure on prices and costs. The argument of those assigning blame goes something like this: “In the pursuit of their selfish interest—monetary gain—the Bangladeshi garment factory owners cut corners in building factories (or illegally add structurally unsound stories to existing buildings, like in this most recent disaster) and then bribe corrupt building inspectors to look the other way. The factory owners then force workers to work in substandard conditions for below-subsistence wages. First World companies and their brands bear their share of the blame, because they insist on lowest possible prices for the apparel that they can then sell for a profit to consumers. And ultimately, it is the selfishness of consumers in the developed world that should be blamed. If we did not continually demand ‘fast fashion’ at low prices and stuff our closets with it, Bangladeshi garment workers would be better off and lives would be saved.”

The proposed solutions are consistent with the above argument: less pursuit of selfish interest and more altruism, and less capitalism and more government regulation and income equity between the developing and developed countries.

Both the above argument and the proposed solutions are wrong. It is not capitalism and egoism that are to blame for the tragedy in Bangladesh. Quite the contrary, they would help prevent such disasters. In a capitalist system, man-made disasters like this would be rare. According to Ayn Rand, “capitalism is a social system based on the recognition of individual rights, including property rights, in which all property is privately owned” , and the role of the government is to protect the rights of its citizens. Constructing unsound buildings violates the rights of others by endangering their lives and would be severely punished under capitalism. There would also be plenty of competing construction companies, trying to outpace each other in introducing safer, stronger, less costly construction techniques and materials. Operators such as Mohammed Rana, the owner of the collapsed factory building in Savar, Bangladesh, would be pushed out of the market by competition, if not caught by the government before then.

But there is no capitalism in Bangladesh and in the rest of the world. Bangladesh, like most countries, is a mixed economy, with a high rate of government corruption: it ranked in the 16th percentile of the most corrupt countries in the world in 2012, according to Transparency International. This means that severe rights violations, such as the tragedy in Savar, can and do occur, with the culprits having a good chance of getting away and repeating their crimes. Add to this lethal system the well-meaning first-world governments such as Canada and the United States, who exempt Bangladeshi garment exports from tariffs, in order to “give more job opportunities” to the poor Bangladeshis and thus alleviate poverty. The consequence of this subsidy to the Bangladeshi garment industry by North American tax payers? Not alleviation of poverty, but protection of the Bangladeshi companies from competition elsewhere—and the perpetuation of their endangering of workers’ lives as well as government corruption. Under capitalism, such government intervention in the economy would be abolished.

As for egoism as the alleged cause of shoddy construction, collapsing buildings, and workers’ deaths: it is clearly not in the rational, long-term self-interest of a factory owner to cut corners in a way that causes the death of his workers and the destruction of his assets. Such a conduct is only possible in a system where the government is corrupt and individual rights are not protected—which is unsustainable in the long run. The egoism of the First World companies and consumers who want international brand clothing for low prices, is also not to blame for the tragedy in Bangladesh. It is their demand that creates opportunities for workers in Bangladesh to arise from poverty. But those opportunities can only materialize if governments reduce corruption and liberalize markets, and they can materialize fully only in a capitalist system where people are free to pursue their self-interest and individual rights are protected.

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Jaana Woiceshyn
Jaana Woiceshyn teaches business ethics and competitive strategy at the Haskayne School of Business, University of Calgary, Canada. She has lectured and conducted seminars on business ethics to undergraduate, MBA and Executive MBA students, and to various corporate audiences for over 20 years both in Canada and abroad. Before earning her Ph.D. from the Wharton School of Business, University of Pennsylvania, she helped turn around a small business in Finland and worked for a consulting firm in Canada. Jaana’s research on technological change and innovation, value creation by business, executive decision-making, and business ethics has been published in various academic and professional journals and books. “How to Be Profitable and Moral” is her first solo-authored book. Visit her website at profitableandmoral.com.

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