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Speaking Cash to Power

Author John Harrington offers tips for taking on the leviathan

By Tessa Brunton

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."

John Harrington will do a reading and booksigning Monday, Jan. 23, at 7:30pm at the Capitola Book Cafe, 1475 41st Ave., Capitola; 831.462.4415.

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From the January 18-25, 2006 issue of Metro Santa Cruz.

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