Speaking Cash to Power
Author John Harrington offers tips for taking on the leviathan
From Metro Santa Cruz
By Tessa Brunton
January 18, 2005
Self-defense manuals do not often recommend hitting an aggressor in the wallet. But in a world where megacorporations have carte blanche and suspect business practices can lead to environmental disasters, human rights abuses and corruption, concerned citizens have to hit corporations where it counts. And that means hitting below the belt at the bottom line.
In John Harrington's new book The Challenge to Power: Money, Investing and Democracy (Chelsea Green Publishing; 392 pages; $40 cloth), the author provides a helpful strategy for doing just that. The strategy is called Socially Responsible Investing (SRI), a process that enables investors to make a profit while keeping their funds away from ethically dubious businesses.
Harrington has plenty of experience using SRI to change the world. After founding one of the first socially responsible investment firms, Working Assets, Harrington wrote Investing With Your Conscience.
Harrington was also involved in the anti-apartheid movement, and used his strategy to help organize divestment from corporations that were profiting in South Africa during apartheid. Harrington recalled, "Obviously many people appealed to morality and a sense of duty on the human rights front, but that was pretty useless at that point. It was money that made the difference, and the reason that the anti-apartheid movement worked so well was that they cut the capital base out from under the South African government."
As Harrington explains, without capital there was no South African economy, and without an economy the government soon collapsed. Perhaps this is the model for dismantling the modern corporation.
However, due to the fact that corporations are composed of people with limited liability, who self-govern in a self-perpetuating system, corporations are frighteningly untouchable. "They are sovereign and don't have to obey the laws of the land and can move with adeptness and agility not only from one state to another but from one country to another," Harrington says. "There's no way to get at this leviathan. That's the really frightening part of it."
While the U.S. government does regulate corporations, the measures taken are often ineffective. A recent example of this was the Monsanto Corporation's brush with bribery. Monsanto, a major producer of genetically modified seed, recently admitted to bribing Indonesian officials in order to speed the approval of its products. Monsanto was later fined $1.5 million dollars by the U.S. government for violating the Foreign Corruption Act. But according to Harrington, such fines have little impact on giant corporations.
"They can pay fees and fines, but the fines are fairly meaningless in the stream of income," Harrington explains. "The only thing that these leviathans will respond to is money. So when you affect their access to capital and their market or their cost of doing business, that's the only time they ever respond."
Even though cut-throat capitalism is supposed to be the American way, Harrington views these corporate practices as anti-democratic. Harrington says, "It's almost identical to a Communist one-party state. But at least in a Communist one-party state ultimately the workers were supposed to revolt against the system."
To improve this problem, Harrington believes that shareholders should coordinate with local communities and attempt to gain access to the internal politics of major corporations. Yet despite having written a book aimed at social change, Harrington still describes himself as a pessimist. To him, the fight against seemingly omnipotent corporate managers who have busy lawyers is still daunting. He also finds the number of corporate lobbyists in Washington, D.C., disheartening.
But as any author of a self-defense manual must know, there is no point in focusing on the oncoming enemy--there will always be a threat. What is important to learn is how to pack the most powerful punch and to hit them in the wallet, where it hurts.
Harrington says, "It's important for those of us in the socially responsible investment community to really keep up the pressure. Because I think we can get change, but we've just got to recognize that it's really an uphill fight."
Book Review--The Challenge to Power: Money, Investing, and Democracy
by William Baue
November 7, 2005
John Harrington compiles voluminous evidence to diagnose what ails modern corporatocracy, and prescribes a comprehensive cure with socially responsible investing playing a key role.
SocialFunds.com -- John Harrington's writing, which springs from his long career in socially responsible investing (SRI) advocating social and environmental justice, walks a fine line between the kissing cousins of deep cynicism and deep hope. His cynicism stems from his encyclopedic identification (when does he find time to read all the sources he cites?) of how corporate actions systemically and systematically advance social and environmental injustice. His hope derives from his faith that SRI, working in coalition with other instruments, can effect change by holding corporations accountable for past actions while simultaneously creating a system that more actively requires companies to benefit society and the environment in the first place.
"SRI can be a progressive force of change," writes Mr. Harrington in The Challenge to Power: Money, Investing, and Democracy (Chelsea Green). "The goal is not simply to maximize financial return and feel good about it, or to have less guilt, but to understand that capital is a major source of power and authority in American culture."
A pattern develops throughout the text where Mr. Harrington introduces a problem, illustrates it by citing and quoting primary and secondary sources, then ends the paragraph with cutting sarcasm, isolating and exposing ethical failings like a surgeon's scalpel slicing out a cancer.
"Halliburton disclosed in 2002 that one of its units made 'improper' payments of $2.4 million for favorable tax treatment to a Nigerian tax consultant who turned out to be an employee of a local tax authority," Mr. Harrington writes. "Gosh, Halliburton reported making a bribe!"
"It's unclear if Halliburton received a tax deduction for this," he adds, extending the irony.
Later, Mr. Harrington explains how Coca-Cola did an end-run around its own July 2003 pledge to stop marketing soda to children under 12 by replacing Coke with Swerve, a skim milk-based drink made with the same amount of sugar as Coke and double the sodium.
"[School] districts must wean the kids off Coke and onto Swerve--sort of like going from heroin to methadone," he states dryly.
There are no sacred cows for Mr. Harrington, who founded the SRI firm Harrington Investments Inc in 1982, and co-founded Working Assets Money Market Fund (now managed by Citizens Funds) in 1983 and Progressive Asset Management in 1987. He is an equal opportunity critic of corporations, politicians, regulators, nonprofits, SRI, corporate social responsibility (CSR), and sustainability, among many other things. He calls the latter two terms "captives of 'corporate-speak,' now completely devoid of meaning, used primarily by marketers and public relations firms working for large corporations." In the next chapter he takes voluntary corporate codes of conduct to task, finding them "just that: voluntary."
"Without a comprehensive code enacted into law and enforced by national and international laws, and an international judicial system with the authority to levy penalties and mandatory sanctions, voluntary codes are a great waste of everyone's time, including the SRI community," he says.
Mr. Harrington also skewers nonprofits with progressive social and/or environmental missions that fail to put their money where their mouth is in that they lack SRI investment policies. He conducts an informal survey, asking the progressive organizations he belongs to (such as Citizen Works, Sierra Club, Nature Conservancy, Greenpeace, Amnesty International) for copies of their goals and objectives, investment policies, and schedules of investments.
"Most of the groups that responded had no social or environmental investment mission statement, and when they did, it could not be determined whether it was being implemented," he states in frustration.
Perhaps most importantly, Mr. Harrington exposes how free market capitalism as exercised in corporate America is essentially devoid of democracy.
"[O]ne of the major obstacles to shareholders improving corporate conduct [is that] shareholders have almost no power," he writes. "Even if large institutional shareholders and other owners could effectively coordinate massive serious shareholder vote challenges to management, resolutions are 'advisory,' amounting to begging; non-management nominations of board members are prohibitively expensive; and 'withhold' votes are worthless."
Mr. Harrington's sarcasm and cynicism would depress readers if it seemed intended to destroy the people, institutions, and practices he criticizes; however, his goal is to redeem them from the shortcomings he identifies with such acuity. In the final chapter, he lays out a vision of SRI working in collaboration to advance "corporate campaigns" or coordinated, comprehensive, long-term and wide-ranging efforts to promote positive progress in corporations.
"What is now needed is a strategy that is a 'systems' approach that coordinates all the stakeholder strategies at one time to overload the corporate system," Mr. Harrington. "Shareholder advocates will play a role, as will activists in the streets, NGOs in the community, labor in the workplace, and peasants, farmers, and workers in the fields of developing countries."
"Corporations will not be able to deal with campaigns coordinated at the local, state, national, and international levels," he adds. "We need to act now as investors, as voters, as philanthropists, as executives, as consumers, as activists, and most important of all, as human beings concerned about the survival of our planet, our economy, and our struggling democracy."
Active in socially responsible investing (SRI) for over 30 years, Harrington (president, Harrington Investments; Investing with Your Conscience) writes as a knowledgeable insider. He is sharply critical of the power that corporations have exerted over our everyday lives and avers that the most effective way to challenge this usurpation is to invest only in socially responsible companies. Harrington believes that we are running out of time before all-powerful corporations gain total control over our environment and our government. In this respect, he echoes the fears voiced by Joel Bakan in The Corporation: The Pathological Pursuit of Profit and Power, but Harrington's true expertise is revealed through his in-depth knowledge of the transforming concepts of SRI. He does caution, however, that as SRI products such as equity indexes proliferate worldwide, they could merely "spin money out of money" and not create opportunities to benefit society. He also faults nonprofits by citing many instances in which they follow the same dishonorable practices as their for-profit counterparts. Social activists and investors who want to make money by doing the right thing will be well served by reading this work. Recommended for all academic business collections and large public libraries.
-Peter R. Latusek, Stanford Graduate Sch. of Business, CA
by Michael Shapiro
Anyone who's been awake during the past 25 years knows that corporate power has tightened its grip on our daily lives. Napa author John Harrington says in his new book, The Challenge to Power: Money, Investing and Democracy (Chelsea Green; $40), that if we want to keep the world from deteriorating into a monolithic state run by the corporations for the corporations, we have to put our money where our values are. A key to regaining control of our economy and political system, Harrington argues, lies in our ability to redirect our money.
Harrington, a founder of Working Assets and Progressive Asset Management, knows how powerful money can be. He was an influential leader of the anti-apartheid divestment movement, which led South Africa to free Nelson Mandela and restore democracy to South Africa.
Analyzing the stranglehold that financial influence is gaining over public institutions, democratic societies and the environment, Harrington offers strategies for progressive investing to help counter corporate control. Of course it's not an easy task. Pension systems and other investment tools have given a stake in the stock market to more than half of Americans, most of whom are only concerned about getting the biggest bang for the buck.
But Harrington shows why making money one's sole criterion is a recipe for disaster. He also shows that responsible investing can be as lucrative, or even more financially rewarding, than traditional investing. Just ask any shareholder in Enron or Merck.
Among the actions Harrington recommends are shareholder activism, community mobilization and active citizenship. He speaks candidly about what individuals can do to challenge corporate power and create a fair market economy that makes people and the environment a priority over corporate welfare. Though most thinking people already know about many of the issues Harrington raises, they may not realize how high the stakes are. Harrington argues that unchecked corporate power threatens our survival as a species, and that time is running out.
Napan shares progressive views in book
We're running out of time.
And if we don't exercise some control over our investments, start taking some responsibility for decision making and going to the polls, our world could change for the worse.
That's the premise of a new book, The Challenge to Power: Money, Investing, and Democracy by Napa investment specialist John C. Harrington. It serves as not only an excellent primer for those looking for socially responsible investing techniques, but it's a platform for Harrington's progressive philosophies that have served him and his various financial ventures well over the past three decades.
Running out of time is a scary premise, but Harrington said, "That's the whole purpose of the book. We're losing democracy."
Without some fundamental change, America -- and, indeed, the world -- may become slaves to giant corporations run amok. Corporate influence is becoming more pervasive, but Harrington says there are still ways to take back control.
Greater access to corporate ballot boxes and making it easier for shareholders to nominate and elect candidates to boards of directors is a good start.
From publisher Chelsea Green's pre-release notes, "The Challenge to Power gives the reader strategies to thwart corporate domination of the earth's resources, decentralize and democratize the economy, restore participatory democracy, tame corruption and revitalize community control of our capital. Anybody who has an interest in the health of our democracy must read this book."
Who should care about the issues set forth in Harrington's book? The short answer is everybody. People who invest, people involved in politics, nonprofit groups and environmental individuals and organizations are just some of those who have a stake in the future as the author sees it unfolding.
Harrington called his first book, Investing With Your Conscience, basically a how-to book. The Challenge to Power is broader in its perspective. "That's very important to me," he said, noting more than $2 trillion dollars has been poured into socially responsible investments, much of it in "feel good while doing good" mutual funds.
Harrington founded Working Assets, one of the first SRI firms. He was instrumental in getting investment groups, pension funds and others to stop capital that had been pouring into South Africa when Apartheid was still official national policy.
When the average investor who may have money in a pension fund, public or private, puts down Harrington's book, he'd like to see the reader moved to become more involved in corporate affairs.
"Find out what your pension fund is doing, where they're investing," said Harrington, "then make sure they vote right."
Perhaps most importantly, Harrington believes in local investing. He encourages Napans, for instance, to put their money into local financial institutions and small businesses. "Generally, local and small businesses are more responsive to their investors," he said.
As corporations merge and power becomes more centralized, individual investors have less influence. They can't even affect change on a board of directors under most current corporate by-laws.
"Stalin would have loved our system," said Harrington, adding he sees corporations continuing to merge, but coming up short of becoming monopolies which then subject themselves to greater scrutiny and control. The Wal-Marts and Coca Colas of the world are oligopolies that could evolve to monopolies.
The wine industry is much more diversified despite the mergers and buyouts that frequent our new reports, besides noted Harrington, "It's an agricultural commodity that could be more susceptible to purchase by a large food conglomerate."
To the surprise of few, America's political parties fall into the same bag as huge corporations. The two major parties are controlled by similar, if not the same, interests. "They pretty much homogenize the issues," said Harrington.
Bottom line: Be aware of how you consume and invest, exercise your right to vote and use your money responsibly.
Harrington is about to embark on a master's thesis with the theme, "The Morality of Materialistic Self Interest." It will draw on his expertise in matters financial as well as his studies in philosophy and governance. Perhaps book three will evolve from that along with the changes that continue to occur in the corporate world.
The Challenge to Power is being released this month by Chelsea Green Publishing. It is available in both hard-cover and paperback. Harrington heads Harrington Investment with offices in downtown Napa. He plans a national book tour to unveil it later this fall.