In news features that cover international trade, we often hear the term "sweat shop," usually in reference to a factory that operates in an under-developed country or region. But most of the media coverage is woefully overly-simplistic. So what is a "sweat shop?" First of all, it's a disparaging term that is used to describe the working conditions (health and safety) and/or the wages paid to employees. Stakeholder Theorists are objectivists who argue that there are objective moral limits to how these factories "ought" to treat their workers. The two main principles that are invoked in anti-sweat shop arguments are non-maleficence and justice. Therefore, "When in Rome do what's right." Stockholder Theorists tend to be relativists who argue that there are no obvious global moral standards and that nations have a liberty-based right to set their own cultural standards in terms of working conditions and/or compensation: "When in Rome do what the Romans do." Recall that Stockholder Theorists are typically minarchists who argue that government ought to minimize laws governing economic development; while Stakeholder Theorists advocate legal solutions to market-based problems; especially in cases of "market failure." Stockholder Theorists argue that free labor markets do not fail, governments are the root cause of market failure.
Before we get started, let's recall that, even within national borders, moral standards for health/safety standards and compensation standards are controversial. Therefore, don't expect international, regional, or industry-wide standards to be less controversial.
Working conditions that violate the principle of non-maleficence "harm the employees;" usually via unhealthy or unsafe working conditions. These conditions include long hours, dangerous, boring, repetitive work that often leads to injury, sickness, and even death. Although, factories in Third-World countries are usually the main target of objectivist distain, other kinds of industries are also targeted, including mining and farming. Typically, "sweat shops" offer no Western style benefits such as health care, retirement, or unemployment compensation. If an employee gets injured or sick at work, he/she most likely will get fired and replaced by someone else.
Objectivist critics also argue that sweat shops also violate the moral principle of justice; by paying workers extremely low wages in comparison to what workers are paid in other countries, including highly-developed nations. In terms of justice, critics argue that sweat shops violate the material principle of merit, by paying workers "less than they deserve;" and/or the material principle of need, by paying workers less than they need to stay alive. Many objectivists are Kantians and therefore argue that these wages are predatory or exploitative and that beneficence and justice trump liberty and utility. Kant, of course, would have argued that sweat shops violate the Categorical Imperative.
Relativists argue that morality is mostly contextual: "When in Rome do as the Romans do." At least some relativists argue that the only universal moral principle that is relevant to business is the liberty principle; that is to say, corporations cannot force employees to work via coercion or threats of deliberate physical violence. Therefore, many relativists would argue that slavery is timelessly and universally wrong. Some relativists argue that the ethics of slavery is also contextual and subject to the mantra: "When in Rome do as the Romans do." However, worldwide the vast majority of sweat shops pay their workers, and allow them to quit their jobs, so slavery is not a major concern in manufacturing. However, some industries often utilize slavery, most often in sexually oriented industries such as prostitution, pornography etc. Desperate women and children are the most likely to fall victim to sex slavery; especially in cultures that believe that women and children are property of males and therefore lack any moral rights.
Other objectivists invoke the Principle of Utility, observe that slavery is costly, worldwide, and that many women and children have to no realistic alternatives; "It's the least-worst alternative." Other utilitarians point out that if Western Nations make sweat shops illegal, corporations will simply move to other nations where sweat shops are legal and/or that sweat shops would shut down in third countries, move to First-World countries, and leave under-developed nations undeveloped with no employment opportunities. That would also raise prices for consumers.
Given the fact that corporations are composed of various stakeholders (stockholders, employees, consumers, financiers, and local communities) questions of moral responsibility emerge. Do stockholders have a duty to sacrifice stock profits in order to provide healthier, safer working conditions and/or higher wages? Do employees have a duty to refuse to work in sweat shops, even if they pay more than any other employer and/or if they are safer at work than at home? Do Consumers have a duty to NOT purchase products and/or services produced by sweat shops? Should financiers refuse to loan money to sweat shops, even if they are profitable?
Finally, Stockholder Theorists are relativists and argue that sweat shops are a "natural" stage in labor market development, and that eventually, as other less-predatory employers move to developing nations and naturally invade those initial monopolies(in order to exploit cheap labor), and that under competitive pressure, employers will be forced by the free market to offer better working conditions and pay more. In fact, all developed nations go through that initial predatory stage, and that when Stakeholder Theorists attempt to interfere in these labor markets, they simply delay market development.