Do we want to end the extractive destruction?

One part of the New Economy movement is calling for divestment. The cry is for institutional investors to divest from Wall Street and the multi-national corporations that are profitably fueling the high probability of an uninhabitable planet for the coming generations. Institutional investors range from the endowments of churches, colleges and universities to the pension funds of municipalities, unions and again colleges and universities. This is important because institutional investors own 70% of the largest 1000 publicly traded corporations! Also, most of these institutions are created for the purpose of serving the greater good, they have a social mission, and yet through the choices of their investment fiduciaries, they are funding the destruction of the commons.

This is not the first time Americans have made the connection between where our collective money is invested and those profiting off of doing harm, or the investees. In 1962 the United Nations General Assembly passed a resolution calling for economic and other sanctions on the government of apartheid South Africa. This resolution was a call for action to stop the atrocious South African government and their absurd and abusive system of minority white rule over the black majority. The resolution was boycotted by many of the western nations, primarily the US and Britain, because they did not want to stomach the lost revenue necessitated by divestment from South African companies and western companies doing business in South Africa.

A very strong anti-apartheid movement began to sweep the US in the 70’s and 80’s, led primarily by students as they called for their institutions of higher learning to divest from any company doing business in South Africa. This movement was fairly successful over time with some holdouts, like Harvard, which eventually gave in to the pressure as well with a “partial divestment” policy. In 1984 53 educational institutions divested, 128 in 1985, and 155 in 1988. This campaign spread to local municipalities and finally, the federal government. In 1986 the congress passed the Comprehensive Anti-Apartheid Act which banned new U.S. investment in South Africa, sales to the police and military, and new bank loans. The act was vetoed by president Ronald Reagan in all his wisdom, but then the republican controlled senate overruled his veto. Then in 1987 in the Budget Reconciliation Act there was an amendment passed which closed a tax reimbursement loophole for corporations paying income tax in South Africa. All of this pressure ultimately led to the dismantling of the apartheid system.

Now, students are once again realizing that where we invest our money matters. One of the 14 New Economy summits which happened across the nation this spring was at Swarthmore College and it focused on the idea that the college’s $1.5 million endowment should not be invested in the companies and industries making it more certain every day that this generation will not have a future. John Fullerton from The Capital Institute, spoke at the summit further on this idea of divestment. He also hit on one of my favorite concepts, that of investment risk. He lays out a scene for us of the trustees at Swarthmore having a conversation about what divestment would look like and why they should or should not do it. One part goes like this, “The Chair of the Investment Committee's protests about the ‘risk’ of altering the investment strategy away from the conventional approach will ring hollow when the group discovers that “risk” in his mental frame relates only to the backward looking volatility of monthly returns in a portfolio of securities, an abstraction entirely divorced from the very real forward looking risk of climate change threatening unimaginable disruption of civilization itself in the lifetimes of the students in the room.”

The idea here is not to simply not invest in the current structure and its profit extracting machines, I mean corporations, but to look forward and figure out how much money could and should instead be invested in building a sustainable future. This is tricky as I have talked about in prior blogs, however, if you really dig into risk, I agree that funding the transition to renewable energy, local food, and sustainable local manufacturing is much less risky (especially for young people) than funding the current dismal selection of multi-national corporations on the easy-to-invest-in docket.

Moving forward we must create the local intermediaries necessary to aid in the movement of capital from the extraction economy to the new localized generative economy, and then the calls for divestment can rain down like fire to fuel the New Economy!