Modern Slavery and the Supply Chain: The Dark Side of Globalisation
Lack of transparency and visibility of product origins result from globalisation and complex supply chains.
In a world of plenty, why do consumers buy products containing slave labour? And why do large enterprises tolerate slave labour within their supply chains? After all, slavery is illegal. Right?
The answer is surprisingly simple: in the past there was no way of knowing for sure whether a product contained slave labour.
Globalisation and complexity in the supply chains of the products we buy have led to a lack of transparency of the origin of raw materials, goods, and labour. Where products are the result of multi-stage production processes crossing multiple national boundaries, traceability rapidly disappears. And the mapping of the human cost of the “Human Supply Chain” becomes almost impossible.
Customers Choose Savings Over Product Knowledge
According to rational economic theory, consumers make informed, intelligent choices about what they buy. That is, we choose goods that give us the highest level of utility or happiness within our budget. The theory suggests that the consumer is sovereign: they wish, and business provides. The consumer in this theory is all-powerful.
Looking around a clothing store demonstrates that this theory is not valid. It’s a tiring and disempowering experience for the most part. Indeed, what those few minutes prove, multiplied by millions of times a day around the world, is that consumers do not dictate what is on offer and how much it costs.
Instead, what we do to survive the modern shopping experience is a trade-off between price and budget, and perhaps even colour, fit, and style. And we also virtually ignore what we might rationally know, from a news headline for example, about a business or a brand.
Fast Fashion Highlights Disconnect between Consumer & Supplier
There is a fundamental disconnect between customer demand and the supplier at the heart of modern consumerism. It’s most evident in the fashion industry where “experts” try and predict what we will be wearing 12 months from now. Fashion houses churn out collections based on what might sell and what might ‘excite’ the customer, rather than what the customer wants. It’s the pursuit of the “shiny” and “new” that they sell.
Behavioural Economics Indicates Buying Decisions are Irrational
Behavioural economics has proved that rational ways of buying and selling do not govern us. Instead, buying and selling involve mutual understanding, communications, and trust – the fundamental characteristics of relationships between people. Consumers and businesses do not make buying decisions rationally. And even if they did, they are not fully equipped with all the information they need to make ‘good’ decisions. All people make bad decisions at some point. We all fall for “shiny”, “new” and self-imposed peer pressure.
Companies take measures to protect their brand image. In these cases, supply decouples from consumer demand and marketing tries to predict and drive consumption patterns; this is behavioural economics in action. People are not as easy to predict as rational economic theorists would have us believe. Lack of rationality seems to be the only rule.
The Alibaba Effect and Circles of Trust
The nature and transparency of relationships between buyers and sellers are at the heart of countering modern slavery. Global neo-capitalism has fragmented those relationships and knowledge. In turn, this has deeply undermined trust between actors; this is called the Alibaba Effect.
In the past, local markets operated based on those involved knowing each other, the products and their provenance. It’s one of our working hypotheses that the breakdown of trust in relationships, and the opacity that has obscured vast swathes of the global supply chains, created space for slaving.
The distance between consumers and retailers, retailers and suppliers, and employers and their workers have increased, both literally and figuratively.
Where nobody cares to look, bad things can happen.
Our theory of change revolves around circles of trust. We have learned that, with the global expansion of neo-capitalism globally, we have seen local markets and suppliers morph into burgeoning global supply chains. The distance between consumers and retailers, retailers and suppliers, and employers and their workers have increased, both literally and figuratively.
Everyone in the Circle of The Supply Chain Wheel is Responsible For the Results
We test everything we do against how it contributes to building or rebuilding circles of trust. We want:
- Ethical consumers to find and connect with, and learn to trust ethical businesses.
- Ethical retailers to be able to find, connect with, and learn to trust, ethical suppliers.
- Ethical suppliers, as employers, to care sufficiently about their workers’ conditions.
All parties in the circle need to communicate and trust each other and work together to build a better business and better lives for all concerned.
We do not pretend to understand all there is to know about why people and businesses make buying decisions that enable or challenge slavery. But we certainly have the means to find out.
We are concerned with the simplest of economic activities: buying goods and services. Behavioural economics has proven that rational ways of buying and selling do not govern this. Instead, buying and selling involve mutual understanding, communications, and trust – the fundamental characteristics of relationships between people.
We do not pretend to understand all there is to know about why people and businesses make buying decisions that enable or challenge slavery. But we certainly have the means to find out. And one thing we know for sure is that we’ll cast off the yoke of traditional economic theory about rational beings in the process. Life is just too complicated and, for some unlucky souls, too short or torturous for such over-simplification.
The Power of the Consumer
We don’t overestimate the power of the consumer to shape the way business does business. Nor do we assume a consumer who always makes rational purchases, uses their money wisely, and never regrets their purchases. But at the same time, we don’t underestimate the consumer.
The market differentiates between different ‘types’ of consumers. Just as there is no “homogenous” consumer, there is also no “all-powerful consumer who is supreme.”
What we know is, some consumers think; some consumers understand they have the power to shape the world they live in through their buying choices. And some consumers use technology to help them inform their decisions.
Businesses that make products for a particular type of selective and informed consumer, in an unacceptable way will soon find themselves in a rocky place.
We are working on using human rights and advanced technology to make these decisions simpler and better for everyone.
If you believe in a world free of slavery, you too can play a role.