Fast Fashion: Production, Labor, and Trade in a System of Hidden Costs

Ava Pearson, The University of California – Santa Barbara

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Abstract

This article delves into the complex world of the international fashion industry, examining the issues of overconsumption and extractivist policies that arise from fast fashion. This piece aims to discuss the current issues with international monitoring of the fashion industry and propose tools to address the struggles plaguing many developing countries that produce garments for this industry. Through diligent research, discovering international policies, regulations, and corporate agreements, this research paper demonstrates how the industry can move forward in a sustainable way. Findings reveal that the complexity of international trade agreements and the opacity of policies can make sustainable growth incredibly difficult. The results demonstrate how important it is to continue to research within the field of international trade and encourage the development of circular economies within the garment industry. 

1. Introduction

Since the Silk Road’s emergence around 130 B.C., people have traded across borders for goods that signaled status and prestige. Ever since, the global supply chain of products has been a complex web of suppliers and consumers with actors working together to create internationally traded products. In the modern era of globalization and electronic commerce, this phenomenon has grown and accelerated into a fast fashion system, particularly in apparel. The fashion industry’s hurried expansion and individuals’ obsession with goods as status symbols are reflected in the industry’s production methods. These companies focus on high-volume and low-price production designed for accelerated turnover, encouraging exponential industry growth. In practice, this system converts trend cycles into weekly product releases and ultimately, mountains of waste, generating 92 million tons of textile waste annually. This environmental degradation comes hand-in-hand with immense strains on the humans behind the trends, with minimal worker protections and support in factory work. The manufacturing process behind fashion is left intentionally opaque, preventing consumers from seeing the true environmental and ethical implications of their purchases. Large corporations hide their supply chains by shifting production facilities, concealing the origins of their materials and their treatment of factory workers. Voluntary corporate ‘codes of conduct’ and national compliance agreements have expanded to protect against the consequences of the industry; however, the globalized nature of fashion supply chains makes effective monitoring and regulatory enforcement nearly impossible. The aggregate impacts of the industry remain incredibly high as companies are financially motivated to prioritize speed and profit over sustainability. 

The impact of fashion is inherently transnational. A single pair of jeans may be designed in one country, woven in another, stitched in a third, and then sold online to consumers scattered across the globe. While production is often distributed worldwide, the environmental degradation and human costs of fast fashion fall disproportionately on developing nations. This pattern mirrors countless other global issues: wealthy countries drive demand through relentless capitalist-driven consumption, while developing nations bear the burden of persistent production and its environmental consequences. This article seeks to answer the questions: what are the conditions necessary for countries to effectively enforce international production standards, and what role should multinational corporations serve in order to transition to more sustainable business practices? To develop a robust system that monitors environmental harm and prevents human exploitation, a set of standards must be agreed upon among major trading and manufacturing partners. This global agreement must be enforceable through a mechanism that imposes legal restrictions on multinational corporations, compelling them to comply with the requirements and restrictions outlined in this regulatory system. Politically important markets must agree on a sustainability floor and maintain a willingness to restrict access for non-compliant goods. Socially, countries and corporations must raise awareness surrounding the environmental and ethical implications of fast fashion, grounding consumer relationships in social responsibility as opposed to exponential growth. Legally, participating markets must align on outcome-based obligations with mutual recognition of restrictions and evidence. 

2. Literature Review

As the fashion industry evolves under global capitalism, it has encouraged critiques and introduced new questions about its environmental and social responsibilities. The United Nations has worked in a large number of industries to establish guidelines for Climate Action and encourage global change. In the Fashion Industry Charter for Climate Action, high-end and affordable brands like Chanel and H&M came together to establish many industry strategies and implementation plans to align brands with the international goals established by the Paris Agreement. In this charter, garment brand groups of industry representatives outlined climate goals, supply-chain reforms, decarbonization practices, and reporting guidelines. Through the development of this agreement, companies were forced to acknowledge their role in environmental degradation and commit themselves to being a part of change in the industry. Organizations proposed a complete reform of business models and product development as a solution to the issues of exponential consumption. Pedersen et al., from the Copenhagen School of Business, focus on the barriers to a sustainable fashion industry and theorize how designers and corporations can incite change by shaping consumer behavior, industry partnerships, and intentional policy making. In The SocioLog.dx Experience: A Global Expert Study on Sustainable Fashion, the authors detail the barriers to sustainable fashion through an expert study exploring the role of the producer and consumer in industry change. Diving into the “need for speed” in fashion branding, the study examines how an industry founded in constant innovation in textile, shape, color, and styling can incorporate the longevity of pieces into their perceived value. Critiquing industry values, they state, “Today’s fashion is characterized by the pressure to always have something new for your customers without too much concern for how long they will use the garment, acknowledging how the business cycle for garments ends when the item is purchased.” This linear business model, wherein companies do not place value on the lifecycle of an item and are only concerned with whether the piece will be purchased, is critiqued throughout the paper. With foundations in capitalism and the concept of exponential growth as the only tool for economic success, linear business models are inherently unsustainable. However, the authors also recognize that there have been innovations within the industry, such as the development of circular economies and supply chain transparency solutions, that have placed a sustainable future much closer in reach than ever before. They also discuss how some companies, like the IOWEYOU project, aim to change consumer relationships with the fashion industry by developing “prosperity chains,” explaining the role of each member of the supply chain, and reframing social responsibility to create a robust critique of our current industry system, while also introducing solutions and innovations, creating an insightful exploration of the growing world of sustainable fashion. However, A Global Expert Study on Sustainable Fashion fails to incorporate how these restrictions or innovations could be enforced or adopted on a large scale. Without a binding force, these goals will only be adopted by brands that already feel a strong sense of social responsibility or see sustainability as a strategic way to attract consumers. Fast-fashion companies, whose business models depend on rapid, high-volume production, will not abandon million-dollar practices simply because a more sustainable approach could be taken. 

The paper Ethical Fashion: Myth or Future Trend? by Cathrin Joergens dives into the ethical implications of fast fashion. Through a study on consumer beliefs and attitudes toward ethical fashion consumption, Joergens explores how individuals make decisions about their purchases and how ethical transparency could change consumer behavior. The study reveals that ethics play a small role in consumer behavior; for this reason, brands lack the incentive to participate in ethical sourcing and growth because there is no opportunity for financial expansion. If consumers do not care about where their clothes are coming from or how the people making their clothes are treated, then there is no reason for companies to lose money to create a transparent, ethical supply chain and manufacturing process. This harsh reality is important in understanding the role of regulation and policy in the redevelopment of the fashion industry. Though Joergens highlights some important lessons in this study, there is greater analysis to be done on consumer behavior and its potential implications on the development of ethical and sustainable fashion. Together, these pieces of literature illuminate essential dimensions of the debate over creating and enforcing ethical, sustainable fashion practices; however, they ultimately fall short of explaining how these transformations could be implemented or legally enforced across a global industry.

3. Methodology and Analytical Framework

The present article utilizes a qualitative political economy approach to analyze why global fast-fashion supply chains defy enforceable environmental and labor requirements. Since the fashion industry is not limited to one country, involving both state and non-state actors, this analysis focuses on social, political, and economic barriers that limit effective governance. The goal is not to display data about environmental harm or metrics on labor violations; rather, it is to explore structural incentives that encourage progress toward sustainable and ethical practices in the industry. This analysis comes together, drawing on three core categories of evidence: International policy tools, scholarly research, and case evidence. Only focusing on a data style would fail to encompass the breadth of information needed to conceptualize this international dilemma. Investigating progress through this range of resources mirrors the complexities of the fast fashion industry. This comparative analytical framework supports the exploration of political and economic restrictions, failures to regulate the market, and protect developing nations from exploitation. 

4. Methodological Limitations

There are two main limitations in this topic. The first of which comes from the lack of transparency in the supply chains of multinational corporations. These supply chains are intentionally convoluted and complex, limiting the consumer’s capacity for investigation into where their clothes are being made. The second of these limitations comes from this paper’s lack of original interviews or studies; instead, it combines existing research to create a conceptual argument. 

5. Analytical Contribution

Despite these constraints, this method creates a robust critique of existing systems, introducing the need for growth in the international regulatory framework. Understanding why sustainable fashion standards fail and what could make them enforceable requires the analysis of global governance structures, market behavior, and multinational corporate strategies. A qualitative approach centered around the political economy reveals these components supporting the central argument of the paper, that multinational corporations need enforceable requirements to encourage ethical and sustainable growth. 

6. GVC Fragmentation of the Fashion Industry

Because the fashion industry spans dozens of jurisdictions, there is no singular government with the capacity to regulate the production and distribution of garments. The Global Value Chain, GVC, represents the full range of steps required to bring a product from conception to the final consumer. This process has become increasingly complex in the modern era of globalization, as buyer-driven and producer-driven supply chains have come to control offshore production. The GVC framework demonstrates the exorbitant role of global brands, giant retailers, and manufacturers in the complex network of suppliers in low-cost developing economies around the world. As production remains globally scattered, with a fragmented GVC, one government is unable to regulate the fashion industry.

This dominance further exemplifies the unfair hand dealt to developing countries in the world of GVCs and the convoluted fashion industry. The privatization of the fashion market encourages a variety of issues for global economic inequality, but there is the potential for it to encourage positive policy change within the world of fashion.

7. Shift from Prosperity-Driven to Security-Driven Industrial Policy

As our global economy shifts, industrial policy shifts from being prosperity-driven to security-driven. This pivot encourages the prioritization of resiliency in the global marketplace, with a focus on predictable, domestic, or trusted supply chains. This change comes from the market volatility demonstrated by COVID-19 and various geopolitical shocks. These crises revealed how fragile GVCs are, forcing reconsideration of how much risk governments were willing to take on in global supply chains. This international market change hinges on a number of factors, including a country’s development level and its geopolitical context. Advanced economies, through the establishment of inside-out policies, have created domestic champions while emerging economies fall behind the curve. By enhancing economic security, advanced economies attempt to control supply chains more effectively, limiting growth in developing countries and fast fashion supply chains to remain opaque. 

Fast fashion is not considered a strategic or security-relevant sector. This means that it has been excluded from the development of policy responsible for reshaping other global industries. Security-driven industrial policy could aid countries in setting standards, enforcing supply-chain transparency, and restricting imports. But when applied to fast fashion, these security-driven mechanisms, such as mandatory supplier mapping, risk disclosure, and import restrictions, could establish enforceability that sustainability charters have failed to accomplish. 

8. Stakeholder Resistance and Political Barriers 

Because the motivation to establish this regulation does not exist within the communities that hold the power, security-driven resilience may create divisions among stakeholders if they are not in alignment with the ultimate goal of change. Many stakeholders within international corporations do not wish to damage their margins by encouraging regulation in the fashion industry. Without incentive, the economic logic of restriction does not hold. As long as multinational brands and their shareholders continue to prioritize speed, capital margins, and market dominance, security-driven tools will continue to be politically unattractive, leaving fast fashion outside the scope of global regulatory reforms. 

9. Fast Fashion’s Economic Model Incompatible with Regulation

The fashion industry has seen rapid growth in recent years, with consumption increasing and production speeding up to match the demand. This high demand has supported the creation of what is called the fast fashion industry, where garment production focuses on speed, volume, and exceedingly low margins per item. Brands like Shein produce 6,000+ new items daily, creating an oversaturation of garments in the market. Innovations in the industry allow these multinational organizations to deliver new “in style” items every day. With 2-week design-to-store cycles created by Zara, consumers always have access to new styles at low prices. These firms depend on micro-trend obsessions, which encourage individuals to participate in the constant accumulation of garments. The introduction of sustainability measures poses a real threat to this business model, which relies on the planned obsolescence of purchased items. Clothing production has doubled since the year 2000, and consumers now keep items for half the amount of time. This change in the market is representative of capitalism’s obsession with exponential growth with no regard to the human or environmental consequences. To change this production framework, firms should value sustainability or face some form of consequence for their extractivist behavior. 

Businesses face many barriers to changing harmful practices, most importantly, the absence of enforceable requirements and the lack of authentic motivation. Fast fashion is a business model that centers around producing trendy, inexpensive garments as fast and cheaply as possible to stay in line with demand and encourage rapid, constant consumption. This model encourages businesses to corner the market to outpace their competition and continue to match the demand for new clothing items. Feeding into humans’ obsession with status and conformity, these fast fashion corporations convince consumers that to be satisfied with their lives or display their wealth, they should be constantly purchasing new items in alignment with whatever is trending. These companies produce new waves of clothing weekly, constantly oversaturating the market with new styles, cuts, and colors—all poorly made and designed to be thrown away. Because consumers have fallen so deeply into this capitalistic system, the industry faces no internal pressure to slow production, improve labor conditions, or adopt meaningful sustainability practices.

10. Consumer Behavior and Corporate Responsibility

Though companies do not have a fiscal motivation to engage in sustainable development, consumer perceptions of brands are incredibly important. In markets, consumers make purchasing decisions based on several rational and irrational components. Rational consumers engage with the market, doing their own research about products and competitive pricing. Irrational consumers make consumption decisions based on emotions or brand loyalty rather than intentional research. Regardless of your consumption style, technology, emotions, and social factors shape the pattern of every actor in the market. To appeal to either of these consumption methods, firms participate in “nudging.” Nudging is when corporations make small environmental changes to guide people toward decisions without forcing them. An example of this mechanism can be seen in Reformations pricing strategy as they increase prices for garments built with recycled materials. Companies may use signalling to create “nudges” encouraging consumers to buy from their company. However, many corporations can generate more capital through rapid business cycles and the business of selling essentially single-use garments, made to be thrown away. Some higher-end fashion businesses have invested in the world of sustainable fashion, with messages of carbon neutrality central to their marketing strategy. Reformation is a powerful example of this, boasting that it is the most sustainable option, second only to being naked. This quote, alongside their annual sustainability reports and their commitment to being climate positive by the year 2030, demonstrates the value they have placed on sustainability. However, this commitment comes at a price, with shirts for one hundred dollars and dresses for 4 times that much, there is an accessibility issue with this method. Though sustainability can attract a large customer base, it is not an appealing path for fast fashion brands that have built empires on the fleeting nature of trend cycles. 

Though global industrial policy is experiencing a significant shift toward security, the fast fashion industry remains largely unregulated in these regulatory frameworks. Political hesitation, convoluted supply chains, and the disposable logic behind garment production prevent meaningful industry change. These political and structural issues signal underlying issues in the global market, as economic incentives within the industry and culture of capitalism fundamentally undermine enforceability. Without strong regulation or economic opportunity, firms are rewarded financially for cutting corners, damaging the environment, and accelerating production. Grasping these economic incentives illuminated why voluntary sustainability commitments are unsuccessful, and enforceability continues to be the defining weakness of the industry. 

11. Success in the Industry

Though the flaws in voluntary commitments and the struggle to enforce substantive change continue to plague the industry, it is important to explore the small wins happening around the world. There are cases where policies, industry innovation, and business models have pushed the industry toward more ethical and sustainable practices. In an industry that feels immune to positive growth, these developments demonstrate conditions under which compliance, enforcement, and sustainable changes become economically viable. 

A key issue with fast fashion is the overwhelming amount of waste the business model creates. Corporations lack any responsibility in the lifecycle of their products. This ability to externalize the end-of-life cost of garments onto the consumer supports a disconnect between the firm and the environment. Countries around the world have developed legislation to combat this avoidant behavior.  France was the first country to implement Extended Producer Responsibility or EPR policies as a tool to manage textile flows in the country. EPRs require that producers, importers, and distributors assume responsibility for their products and packaging at the end of life. This responsibility may be handled in an operational or financial method, forcing manufacturers to create easily recyclable products or assume the financial burden associated with disposal. EPR restrictions force corporations to develop products that are easier for consumers to reuse, recycle, or dispose of. This policy tool forces brands to internalize the environmental cost of production, developing end-of-life awareness within the company’s development process. As a result, France now has the highest textile collection rate in the EU. This industry change demonstrates how binding economic policies have the capacity to change behavior. Another example of industry change is evident in the EU’s 2022 Circular Economy Package. A circular economy is a system in which materials do not become waste; rather, they continue to be reused by an industry to develop new products through recycling or remanufacturing. This package mandates EPR schemes for textiles across the EU by 2025 and introduces eco-modulation fees. These fees charge brands a premium for using non-recyclable materials in their product or packaging. By introducing fees and regulations, the EU has economically incentivised sustainable practices, forcing firms to pay a capital premium for the environmental costs of their actions. 

Rational consumers are often unable to include social responsibility in their purchasing decisions because of the asymmetric information within the market. To combat this asymmetry, countries have begun to introduce mandatory transparency and due diligence laws. An example of such legislation can be seen in Germany’s 2023 Supply Chain and Due Diligence Act. This policy requires human rights and environmental risk assessments to identify, prevent, and minimise the risk of human rights violations and environmental damage. An exhaustive list of ethical conventions provides enforceable standards, resulting in financial penalties if they are not met. These penalties can cost companies up to 8 million euros or 2 percent of their annual global turnover. Germany has already experienced a great deal of change in the garment industry as a result of this legislation, leading to great improvements in supplier mapping and increased production transparency. The greater European Union has also built out a Corporate Sustainability Due Diligence Directive, forcing large fashion companies to identify, prevent, and resolve ethical abuses. These restrictions are enforced through penalty structures and civil liability. To combat opaque supply chains and asymmetric consumer information, Germany and the European Union have created legal structures to ensure brands have transparent practices aligned with defined human rights and sustainability requirements.  

The industry of fast fashion depends on linear business models, but as resources become scarce and governments begin to restrict the extractivist practices of these industries, firms have begun to innovate. This demand breeds creativity: circular business models are gaining market share, and resale platforms are expanding rapidly. The RealReal, or TRR, is a powerful example of a company rooted in circular economic theory. This company is a luxury resale platform that seeks to reduce emissions by extending the life of high-quality items. Experiencing steady growth since 2021 and achieving massive quarterly revenue, The RealReal has highlighted the great demand for circular markets in the fashion industry. Companies like The RealReal, eBay, and other online resale companies take advantage of the new era of e-commerce, connecting consumers to “producers” looking to offload their stagnant inventory, their jeans that just don’t fit anymore. These firms employ sustainability reporting, intentional marketing tactics, and consignment resale models to encourage environmentally focused consumers who are looking to expand their wardrobe without the guilt of fast fashion. 

From EPR laws, circular economic packages, supply chain transparency, to circular business models, these cases demonstrate how binding legal obligations and industry innovation can inspire real change. Financial incentives or penalties encourage change in a market driven by profit. Changing market access and implementing restrictions force companies to alter their production models, resulting in environmental relief and ethical reforms. The economic internalization of environmental and social costs forces companies to account for the harm embedded in their supply chains, rather than externalizing those burdens onto workers, communities, and ecosystems. 

12. Conclusion 

The biggest issues plaguing fast fashion continue to be the lack of monitoring and restriction enforceability across these multinational corporations. The structural incentives of the industry reward speed and exploitation with massive profit margins and booming sales. Sustainability policies are incredibly difficult to enforce across the international industry because of companies’ fragmented GVCs and a lack of governing authority. Moreover, many corporate incentives are misaligned with ethical and sustainable practices, prioritizing capital accumulation over shared values. Though companies may agree to voluntary commitments, these have no lasting power as they are nonrestrictive or legally binding. In this complex fashion market, there is a need for innovation and development of binding international standards that force political and legal framework alignment. Though there has been growth in security-driven industrial policy, the fast fashion industry has been left out of the conversation. This oversight allows exploitative practices to continue worldwide with no checks on behavior. Capitalist obsession with growth breeds a culture of disposability that has consumed the industry. Though a perfect fix does not exist, there is a great deal of innovation occurring in the industry within current legal and business frameworks. These success cases demonstrate how enforcement can be successful when it is tied directly to financial incentives. The rise of the circular economy demonstrates another capacity in which business innovation can be inspired through financial pressure or growth. These successes demonstrate the conditions necessary for enforceable change to occur internationally, for policy to shift industry behavior, and international cooperation on sustainable policies. 

Fast fashion endures not because the ethical and environmental costs are unknown, but rather because the international regulatory systems governing production, labor, and trade allow those harms to remain externalized and legally unaccountable. This paper argues that the key weakness in the fast fashion industry is not a lack of discourse surrounding sustainability or ethical goals, but rather the absence of enforceable regulatory mechanisms that can control multinational corporations operating across fragmented global value chains. Voluntary commitments, corporate agreements, and consumer-driven ethical appeals consistently fail to enact real change in industry behavior as they do not disrupt the true underlying economic incentives that reward the speed, opacity, and disposability of the industry. 

By placing fast fashion within a political economy framework, this analysis illustrates how the industry’s buyer-driven global value chains, combined with the asymmetric information in the market and regulatory fragmentation, systematically undermine labor protections and environmental protections in production-driven countries. However, recent policy developments, including extended producer responsibility laws, mandatory supply chain due diligence, and circular economy frameworks, show that environmental change is possible. This change can happen when regulation is tied to market access, financial penalties, and legal liability. These cases illustrate how firms respond when sustainability is no longer an option but a requirement to participate in major markets. 

As industrial policy begins to shift toward security and resilience, fast fashions continue exclusion from enforceable government policy frameworks. By pulling apparel into internationally binding agreements, states would be able to address supply chain issues, labor exploitation, and waste. All in all, this intentional reform would support the fast fashion industry in sustainable growth through enforceable regulation that compels firms to internalize the true social and environmental costs of the industry.