Synopses & Reviews
Our only chance to save the planet and take back control of our economy and political system lies in our ability to control our dollars. In a brilliant synthesis of thirty years of experience, John C. Harrington gives investors the strategies to thwart corporate domination of the earth's resources, decentralize our economy, restore democracy, tame corruption, and regain community control of our financial resources.
A strong advocate of using shareholder power to push for responsible corporate practices that benefit society, Harrington warns that we are running out of time; corporate abuse of shareholders and other stakeholders runs rampant. Concerted, coordinated shareholder action is needed to challenge corporations to adopt human, labor, and environmental codes of conduct to eliminate years of egregious and abusive practices.
For corporate America to change in time, a revolution--fueled by investor dollars--must come from within.
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."
This is a no-holds-barred look at our money system, its threat to our survival, and how to use our investments to regain control. Harrington synthesizes thirty years of experience to give investors the strategies to thwart corporate domination of the earth's resources, decentralize our economy, restore democracy, tame corruption, and regain community control of our financial resources.
About the Author
John Harrington is President of Harrington Investments, Inc., a registered investment advisor. He is also the Manager of Global Partners, LLC, a social venture fund. He is the former President and Chairman of the Board of Working Assets Management Company and is the former Chairman of the Board of Progressive Asset Management, a full-service brokerage firm specializing in socially responsible investing.
Mr. Harrington is a board member of CANICCOR, an interfaith council on corporate accountability, Global Citizen Center, and sits on the advisory boards of the Rose Foundation and Women for Women International. He is a board member and Treasurer of Global Exchange, Community Development Finance, Pesticide Action Network North America, and Friends of KALW. He also is an Honorary Committee Member of the National Center for Gay and Lesbian Rights. Mr. Harrington is the former Chair of the Northern California Support Association for the Ecumenical Development Cooperative Society (renamed Oikocredit), a former member of the board of directors of the Filipino-American Chamber of Commerce of San Francisco, a former member of the board of the Northern California Community Loan Fund, former Co-Chair of the KPFA Radio Capital Campaign, and former treasurer for the Land Trust of Napa County.
Mr. Harrington was the Chairman of the California Governor's Public Investment Task Force and is a former member of the Sacramento Board of Administration, Investment and Fiscal Management. He also served as the Consultant to the California State Senate Select Committee on Investment Priorities and Objectives and the State Senate Committee on Energy and Public Utilities in the California Legislature. He was a consultant to the California State and Consumer Services Agency, the Council on Economic Priorities, and the Interfaith Center for Corporate Responsibility. He was also the Statewide Political Coordinator and Legislative Advocate for the California State Council of Service Employees, SEIU, AFL-CIO.
Mr. Harrington manages portfolios for an annual fee based on assets under management as well as provides an hourly investment advisory service for individuals and institutional investors. He accepts only clients who are concerned with social and economic as well as financial criteria.
Mr. Harrington has an AA Degree from Napa Valley College and a BA Degree from Sonoma State University. He has studied graduate economics at Sacramento State University, University of California, Los Angeles (African Studies Center), and the University of York, England (Centre for Southern African Studies). He is currently working on a MA in the Humanities at Dominican University. Mr. Harrington holds several NASD licenses, including Series 6, 7, 24, 26 and 63. He is the author of Investing With Your Conscience (John Wiley & Sons, 1992) and The Challenge To Power: Money, Investing and Democracy (Chelsea Green Publishing) to be released September 2005.