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November 07, 2005
Book Review--The Challenge to Power: Money, Investing, and Democracy
by William Baue
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 [ticker: HAL] 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 (KO) 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 (HII) in 1982, and co-founded Working Assets Money Market Fund (now managed by
Citizens Funds) in 1983 and Progressive
Asset Management (PAM) 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."
©
SRI World Group, Inc. All Rights Reserved.
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