On Harvard's South

The debate following Harvard's decision to divest itself of $1 million worth of stock in Baker International Corp. because that company could not show that it was "adhering to reasonable efforts to improve the efforts of non-white employees, their families and communities" has largely missed the print. While the Corporation's action was surely noteworthy, the "new initiatives" promulgated by the Corporate Committee on Shareholder Responsibility are far more significant.

These proposals include commitments to engage in "intensive dialogue" with companies that do business in South Africa, and to "vote...shares and to seek other means of persuasion to induce companies...to implement...anti-apartheid principles." These comprehensive plans would seem to lend credibility to the Corporation's argument that it can accomplish more to bring about change in South Africa by retaining its shares than it can by pulling out altogether.

The problem with the "new initiatives," however, is that they are new only to Harvard. The very same tactics, better known as the Sullivan Principles, have, because their goals are by definition unattainable in South Africa, already been discredited as a viable way to fight apartheid.

South African law reserves virtually all highly skilled and white collar jobs for whites, and prohibits Blacks from supervising whites, thus rendering worthless Harvard's requirement that portfolio companies institute fair employment and management training programs for non-whites. There is, after all, no apparent reason to teach workers skills that it is illegal for them to use. The validity of the equal pay for equal work concept is likewise obscure in the context of South African law; in a country that forbids equal access to education and jobs, there is no equal work.

South African law will also severely hamper any attempts at information gathering and "intensive dialogue." The 1978 Protection of Business Act, passed in response to the Sullivan Principles, "restricts the enforcement in the Republic of certain foreign judgements, orders, directions, arbitration, awards, and letters of request; (and prohibits) the furnishing of information relating to businesses in compliance with foreign orders, directions and letters of request."

In other works, any information that the management of South African subsidiaries sends to American percent companies must first be censored by the Minister of Economic Affairs. I would therefore question the accuracy and completeness of any information obtained from companies about operations in South Africa, as well as the usefulness of seeking such information in the first place.

These "new initiatives" are patently unworkable, so obviously destined to leave apartheid unaltered that one wonders whether they were not designed to do just that. But there is a far more serious consideration than the potential efficacy, or lack thereof, of the "new initiatives." The Sullivan Principles and Harvard's proposals encourage foreign nationals to subvert, and to persuade others to subvert, the domestic policies of a sovereign nation in which they live as guests. This is an intolerable violation of international business ethics, and the South African government is justifiably indignant at what it views as gratuitous interference in its internal affairs. If we indeed agree that foreign based businesses should use their subsidiaries to vigorously oppose South African laws, we implicitly accept the larger premise that one country may attempt to contravene or even to supplant the legal system of any other country if it believes that its own policies are more efficient, fair-minded, or moral. To support this premise would be to promote a particularly contemptible kind of cultural imperialism, and this is precisely the reason why the subsidiaries of multinationals are expected to respect and to conform to the laws and customs of all countries in which they do business. Excepting South Africa from the basic protections accorded all other nations in which multinationals operate establishes an exceedingly dangerous precedent.

But there is a more fundamental problem with using subsidiaries of multinationals to bring about radical change in a foreign country. Investment in South Africa is profitable because Blacks have the civil or political rights; foreign investment is there because of apartheid, not in spite of it. Preserving the political and economic supremacy that the oppression of Blacks gave whites--in plainer terms, retaining the present system as nearly intact as possible--is the only way to maintain the current high rate of return on South African investment. Anyone who exposes financial support of the present regime as a means to bring about reform is either easily deceived or willfully deceptive, because it would be financially unsound for any shareholder or corporation to support any course of action intended to give Blacks a meaningful role in economic planning. Profits, not justice, are the primary concern of anyone who has money in South Africa. Apartheid makes good business sense.

If the Harvard Corporation wishes to continue abetting white rule in South Africa, it should do so without meretricious displays of moral concern and human compassion. Intrinsically worthless projects such as the specious "new initiatives" serve only to soothe the consciences of those who collaborate with tyranny, mislead the uninformed, and prolong the struggle for black liberation.