Hans F. Sennholz, “Sweatshops for the New World Order” — Summary

This file is a brief single-author polemical economic essay, dated “Notes, November 1996,”. Its scope is the moral and economic controversy over foreign “sweatshops,” child labor, multinational production, and globalization. Sennholz’s main thesis is that American anti-sweatshop criticism mistakes poverty for exploitation, ignores the role of capital accumulation in raising wages, and often masks protectionist hostility to international trade.

Poverty is an anomaly to many Americans.

The essay begins by diagnosing the standpoint of affluent observers. Americans, Sennholz argues, view foreign poverty “from above,” measuring low wages against American living standards rather than against local alternatives. His central reversal is to reinterpret the sweatshop not as the cause of misery but as a possible step out of worse forms of deprivation.

What these Americans call “sweatshops,” the workers in those workplaces may actually hail as “opportunity shops”; and what Americans call “slave wages,” foreign workers may welcome as “living wages.”

Sennholz then widens the argument historically. He reminds readers that American prosperity emerged from long periods of low wages, harsh work, saving, reinvestment, and technological change. The essay’s conceptual core is its productivity theory of wages: labor conditions improve not primarily because legislators or unions command them to improve, but because capital investment raises output per worker.

In reality, working conditions and wage rates depend on labor productivity, which is a direct function of the stock of capital invested per worker.

This claim structures his critique of politicians and labor leaders, whom he portrays as taking credit for improvements generated by markets, investment, and invention. Labor regulation, in his account, usually ratifies gains already made possible by higher productivity. The liberation of women and children from early industrial labor is therefore attributed to economic development rather than reformist legislation.

It was rising labor productivity and increasing levels of living that liberated women and children from the early sweatshops.

A further section applies this reasoning to child labor. Sennholz does not romanticize children’s work, but he argues that denunciations and prohibitions can worsen the situation of poor families when no better alternatives exist. Children expelled from factory work may not enter school; they may instead move into poorer-paid, more dangerous, informal labor.

Their loud denunciation of child labor in poor countries usually produces unintended consequences.

The essay’s sharpest political move is to question the motives of anti-sweatshop activism. Sennholz suggests that many American critics are less concerned with foreign children than with shielding domestic jobs from low-wage competition. The humanitarian vocabulary of child protection, he argues, can conceal a protectionist program.

They are old-fashioned protectionists who seek to disguise their odious intentions in the sweet talk of great love for children.

The closing movement defends the “new world order” as an order of expanding trade, communication, transportation, and international division of labor. Sennholz contrasts this order with the older world of war, dictatorship, and polarization. Multinational production is treated as mutually beneficial exchange: foreign workers gain wages and employment, while American workers gain from export industries and cheaper, more efficient global production.

Both parties to the exchange, Americans as well as foreigners, benefit visibly from the trade.

The essay is therefore relevant as a compact statement of late-twentieth-century libertarian political economy applied to globalization. Its core conceptual moves are comparative choice rather than ideal comparison, productivity rather than legislation as the source of higher wages, unintended consequences as a critique of reform, and protectionism as the hidden underside of moralized anti-sweatshop campaigns. Its rhetoric is deliberately adversarial, but its organizing claim is consistent: poor-country factory work should be judged against available local alternatives and understood as part of the capital accumulation process by which richer labor conditions eventually become possible.