The pretence that society is regulated by eternal, iron laws applying to particular areas is finally revealed for what it is: a pretence. The true structure of society appears rather in the independent, rationalized and formal partial laws whose links with each other are of necessity purely formal (i.e., their formal interdependence can be formally systematised), while as far as concrete realities are concerned they can only establish fortuitous connections. --George Lukacs

What can be said for the budgetary principle of Every Tub on Its Own Bottom is that it works and that it would be very hard to change. Choice between incommensurable enterprises (accounting and ethics) remain implicit and hence are resolved with a minimum of conflict and pain to the community.   --Harvard and Money: A Memorandum on Issues and Choices

I

BY DEMANDING that Harvard divest itself of its Gulf Oil stock, the Pan African Liberation Committee (PALC) is asking the bourgeois moralist to look the bourgeois property holder straight in the eye. Harvard's hesitating, half-hearted response attests that even men of presumed good will are discomforted by the question of how much the university will pay for a good conscience. Yet to call attention to the dilemma mirrored in the slogan "shareholder-democracy" is not to foreclose debate about Harvard's investment policy. Between here and the land of final contradictions there is a great measure of human misery to be eased--some of it at bargain basement prices. It is true that were the providential to come to pass and all the universities in the country joined together to vote their stock for the Good, our industrial order would be untransformed. But here and there a company, rendered especially vulnerable by the concentration of its stock (as was Kodak, when it was forced to introduce a minority hiring program) or by some accident of geography (like the one which places Polaroid within easy reach of Harvard) can be pressed to reform itself. As Campaign GM demonstrated last year, even a breath of dissent produces a gesture of reform. Every so often a Black could be elected to a board of directors or an alum might ask himself if the old school doesn't have a point when it urges a new conception of civic responsibility. Not much for not much--but better than nothing. Besides, the alternative to a politics of the better is a politics of the worst; and who has the right to tell the victims of the world that they should endure a clearly evil existence until we present them with a most perfect one? To proceed in this way, to urge with sincerity a series of reforms which advertise so clearly their merits and ultimate limitations, we shall need a sense of irony.

II

THE FIRST irony is that Gulf Oil stock, vexed by virtue of the company's participation in the economy of the Portuguese colony of Angola, is a mediocre investment. You wouldn't turn up your nose if you heard that your great uncle had just left you 1000 shares. As of yesterday's quotation you would be $25,250 richer. But if you told your financially cagey friends that you had quietly held onto your Gulf shares when they were selling theirs last year, all you would get is a Bronx cheer. For the last four years the stock has steadily declined from a high of about $49 per share to the current price, while paying about $1.50 in dividends. That means that even if Harvard's 671,187 shares of Gulf stock have appreciated dramatically since the undisclosed date when they entered the portfolio since at least 1969 (which is doubtful, considering that Gulf has sold no lower than 19 since 1963), retaining the stock has cost the University some substantial amount of money in missed investment opportunities.

Assessing this opportunity cost is difficult, since it turns on a comparison of the average return on the University's $1,244 billion portfolio investment, treckoned in the April edition of Upstart at an annual average of 6.5 per cent for the last ten years, and some "standard," "fair" return on market speculation. (Disheartening as it may be for investment analysts, a recent study at the University of Chicago conclues that a portfolio of stocks purchased randomly returned slightly more than 9 per cent. A regular savings account at the Harvard Trust will earn you about 5 per cent.)

More to the point, it is easy to find stocks in heavy industry in general or oil in particular which offer better combinations of risk and return than does Gulf. For example, Gulf's competitor Mobil Oil has shown a far greater earnings growth than Gulf (since 1968, Gulf's earnings have actually declined), better price performance and a comparable dividend yield (Mobil's dividends have increased). Whatever the precise balance of merits between Gulf and similar, but "good" capitalists, it is safe to say that in this case a solid argument can be made for divestment on economic grounds. Yale, financially much harder pressed than Harvard and so presumably quite hesitant to walk away from a promising stock, let alone a true gold mine, apparently took the low road to valour a few weeks ago by selling its shares of Gulf as part of routine portfolio management.

BY VIRTUE of a second irony, namely the large assortment of investment opportunities offered by the (capitalist) capital market in response to the variety of investor tastes, it is possible to make an important generalization: the financial equivalent of any morally objectionable stock can be found. Given a statistical description of the aims of the Harvard investment program--target distribution by industry, risk characteristics, aggregate rate of growth and return would be examples of the necessary parameters--it should be possible to keep the University out of moral potholes for nothing. Indeed, there is some justice in the argument that investing in companies like manufacturers of pollution control devices will increase returns, simply because the public's demand for a cleaner world translates itself into a growing demand for the goods and services such companies produce. The same argument in reverse holds that corporate malefactors will do some this-worldly penance thanks to expropriations, consumer boycotts and the like. Investors who held on to Kennecott Copper probably wish they had called the marines or their broker some time back.

Were the list of unacceptable companies to grow past a certain point, of course, this painless model would break down and the University would have to contemplate real cuts in its income. But then again, the list is likely to become prohibitively comprehensive only at a point when public opinion is so aroused that the issue of university investment will have become relatively small beans. In the foreseeable, placid, meantime, no one but the dinasaurs is likely to disagree with a cautions study of investment policy conducted by MIT this year which concluded that: "It is unlikely that limited exclusions (of morally unacceptable stocks) could cause a perceptible difference in the Institute's portfolio returns with the wide selections of alternatives currently available."

BY A THIRD irony--the last one we shall pause to count--the major objections to a reform of financial policy are likely to be more political than economic. Even if they concede that some forms of moral control over investments would be costless, university administrators are prone to argue that the political procedures by which decisions could be reached on individual stocks would in themselves corrode the "freedom" of the academy. Harvard's administrators are probably representative of corporate bureaucrats in fearing the disclosures of now confidential information and the presumption of legitimization of institutional expressions of will which would necessarily be associated with any investment policy--whether it limited itself to a goal of "social responsibility" or defined itself as "socially active."

Arguing from what they take to be common sense notions of the role of academic communities, the Harvard Administration has openly deprecated the desirability of communitarian decision-making several times in the last year. The Austin report, commissioned last year to investigate the disastrous malcoordination of the University's various decision-making bodies during Campaign GM, adopts the conclusion of an earlier report that

...it is well to remember that non hierarchic, explicit, participatory processes impose large costs. They disperse responsibility. They are vulnerable to empire protection, logrolling and the like. And they exact a high price measured in divisiveness, and in the time and energy of people whose competence may not reach the particular question at hand.

"The fact is," the Austin report concludes, "that the universities are simply not very good at reaching collective decisions on questions with social or political overtones." So, to forfend this fragile galaxy of genial political incompetents from overtaxing their powers of decision, the Austin report would entrust the power to formulate University moral investment policy to a "single officer of substantial standing, with a small staff, who would invite and sift suggestions from all members of the University community with respect to what might be termed the nonfinancial aspects of the University's role as investor."

The inclination to such a patently anti-democratic solution--and the resistance to any popular control of the University's endowment--clearly rests on a conception of the university as an assembly of self-sufficient thinkers whose thoughts in collision form the best practical approximation of truth. Plainly, corporate political activity or even the procedure by which corporate political policy could be determined would force "members of the University community" to acknowledge a commonality which according to the theory should not exist. The Austin report reminds us: