Progressives' Stock Portfolios
a Regressive Dilemma
April 28, 2000
According to the constant business-page reminders, half the United States
population now owns stock, either directly or through pension plans and
mutual funds. Despite occasional blips, the gloaters tell us the future
is rosy, at least for those who have the money and guts to log on to E-Trade.
Regardless of the economy's true state of affairs, however, it's the stock
market mania itself that may be the ultimate capitalist tool, one that
too many progressives are tempted to pick up and try to use. We should
know better, and we should do something about it.
Progressives can identify the fallacies in the thickening media haze.
We know that individual stock portfolios won't end injustice. Some people
get rich at the expense of many others who remain poor and exploited.
Vast segments of the population don't have the means, the education, or
the energy to invest.
And we know that the corporation is a recipe for social irresponsibility.
When "our" corporations cause harm to people or the planet, we're neither
legally nor financially responsible for the damage. Sure, we may lose
our investment, but we won't be sued and we won't go to prison. And in
most cases neither will the corporate managers who cause the harm. Corporations
are explicitly and legally designed to accumulate immense wealth and power
solely for the purpose of making a profit, with no risk to anyone involved
except the victims.
Yet despite all that we know, politically conscious progressives suddenly
find themselves among the new stock-holding class, increasingly dependent
on the booming market to help get their kids through college and themselves
through retirement. With stock market mania all around us and everyone
a budding mini-capitalist, rising above principle is tempting as co-optation
Our dilemma is this: How can we satisfy our own legitimate needs without
strengthening the capitalist system that prevents egalitarian social institutions
Most of us never set out to get rich. By choice, we became teachers and
social workers, nurses and professors, legal aid lawyers and therapists.
Now, after 20 or 30 years of socially useful work in harmony with a lifetime
of political activism, many of us have some extra money to put in the
bank. But the bank turns out to be a lousy place to keep ahead of inflation.
Worse, with traditional pension plans disappearing and Social Security
threatened, many of us are forced by our employers to select among competing
investment options. Along with millions of other workers, we're supposed
to "manage our pensions" by immersing ourselves in mind-numbing details.
We're given literature about 401(k)s and 403(b)s. We compare notes about
IRAs. We wonder how to make up for lost time--those decades when we had
better things to do with our money than invest in capitalism--while our
children plan thirty-five years ahead, determined to avoid replicating
their parents' financial shortsightedness.
It now matters to more people whether the Dow is up or down, whether
the Nasdaq's latest slide is just temporary.
Imagining an easy way out of the dilemma, many progressive boomers turn
to so-called socially responsible mutual funds. These funds screen out
corporations that sell tobacco, produce weapons, or fail some other politically
correct test of "good corporate citizenship." Larger mutual fund companies
such as Vanguard are now starting their own socially responsible funds,
seeking to attract more dollars from the growing number of conscience-ridden
Unfortunately, there's less to this than meets the eye. Responsibility
screens inherently are both loose and subjective. With profit the goal,
compromises must be made. As explained by the pioneering Domini Social
Equity Fund, "No company is a perfect model of corporate responsibility"
and "you may find that some companies in the Index do not reflect your
social or environmental standards." So if you buy into Domini or similar
funds, your money goes to Wal-Mart, AT&T, Microsoft, Coca Cola, Disney,
the Gap, and a host of other corporations that might violate your own
conception of good corporate citizenship.
If you object to the stultifying, homogenizing impact of large corporations
on modern life--even if they're good to their employees and don't destroy
the environment--then the socially responsible funds don't resolve your
dilemma. Besides, it's hard to maintain an anti-corporate political stance
when your computer keeps a running tab of your ever-changing net worth.
Does it matter to you whether Wal-Mart moves in to your town? Do you care
if the feds break up Microsoft? Are your answers based on your politics
or on your portfolio? Are you sure?
So where does that leave you? One option is to avoid the mutual funds
and set up your own screens. Invest in individual companies based on your
own research, selecting those whose products and policies meet your standards.
With on-line trading you can buy and sell more easily and cheaply than
ever. But that's a pretty risky investment strategy, especially for people
with limited funds. Even worse, all that research is time-consuming, and
it never ends. Your small benign corporation gets bigger, or sells out
to something less cozy. The equation changes. Remember Ben & Jerry?
There's a third option: invest in whatever makes you richest. Like it
or not, we live in a capitalist system, so why not accept the capitalist
rationale? Just sit back and enjoy it. You can always send off a check
to your favorite cause. When you start wondering if any ruined lives might
be financing your profits, just send a bigger check to an anti-sweatshop
group. It's probably tax deductible.
The truth is we have no good options. The left has been out-maneuvered
by a structural adjustment of the US economy that's muddied the line between
capitalists and the rest of us. Worse, to the extent that our personal
finances really do depend on the health of corporate institutions, we're
not likely to create alternatives. We may still march in Seattle or DC
against corporate-designed structural adjustments imposed by the IMF on
Third World nations. But people whose minds are on their readjusted portfolios
may find it hard to work up much enthusiasm.