On April 3, 1986, Jonathan Simon, a graduate student at the University of California (UC), Berkeley School of Law, noticed the Alameda County Sheriff’s deputies taping over their badges. He grew a bit worried as time passed. Earlier that day, he recalls, rumors around the campus said that if the demonstration continued, it would provoke a “heavy-handed police response.” At 8 p.m., police in riot gear began gathering near University Hall, moving in sometime after midnight. There were as many as 91 arrests and 30 injuries. As the dawn broke, hundreds of police reinforcements arrived from agencies across the East Bay. They broke the protesters’ lines, drove the buses out, and finished by demolishing the shanties carrying placards and posters built by students to draw attention to the abysmal living conditions of poor Black South Africans toiling under the iron fist of the South African apartheid government.
Approximately a year before, in April 1985, a few dozen anti-apartheid students launched a sit-in at the entrance to Sproul Hall. They hung banners, organized teach-ins, and as night fell, unfurled sleeping bags on the steps. Within days, hundreds were sleeping there overnight, and thousands were turning out for midday rallies. A banner above the steps spelled out their demand: END UC TIES TO APARTHEID, CALL TO DIVEST.
Divestment, in financial terms, refers to withdrawal or reduction of assets, including stocks, bonds, and other financial instruments connected to a particular financial entity such as a firm, a bank, or a private corporation. Simply put, divestment is the opposite of investment. For an investor, it serves the purpose of securing profit: selling out stocks and reinvesting somewhere more profitable. However, divestment gains a political force when investors or stakeholders overlook monetary profit in pursuit of a set of political goals. It turns into an attempt to use a concerted economic and social boycott to pressure an industry, company, or government towards a change in policy or even regime change in the case of governments. As we shall see, there’s something unique about divestment as a social movement that becomes successful in generating an undeterred social consciousness amongst the masses and, ultimately, achieving the political goal. And this success is nowhere more apparent than in higher educational institutions, despite their relatively more minor economic muscle compared to other institutional sources.
Let’s clear out some basics first. Besides private investment funds, grants, and endowments in educational institutions, pooled contributions from pension plans in retirement funds and other institutional investments are also potential sources of investment for a corporation. The corporation utilizes these investments for different operational and developmental purposes, resulting in the sustained growth of the corporation itself and profit for its investors. Educational institutions, in particular, use these accrued profits on invested endowments for a variety of purposes, including funding for research, financial aid, or new infrastructure.
Divestment, however, acts as an aberration to this self-sustaining process. It challenges the economic incentive of profits and growth for moral or ethical concerns. In an ideal free market scenario, when investors begin to sell away stock holdings from a corporation at a lower price than bought, it sets off a domino effect in the market: others follow suit for fears of an imminent price crash. But situations involving big corporations, which are often the subject to scrutiny, are farthest from ideal. They not only have tools or mechanisms to stand against such coordinated price crashes, but they are also equipped to take advantage of this growing discernment amongst investors. Evil.
So, is that it? Are evil corporations, racist governments, and the immoral agenda they represent beyond the scope of political upheaval? The answer shall become evident as we step back in time for a moment.
The years 1985-86 were marked by a surge of political consciousness against the apartheid across college campuses in the United States. At UC Davis, more than 300 students were arrested, including 25 who had camped outside the chancellor’s office; Students at the University of Pennsylvania occupied the office of the president; At Dartmouth College and Brandeis University, students built shanties on campuses; students at Reed College occupied the college administrative offices; Students at the University of Chicago undertook a hunger strike; students at Rutgers University chained shut the doors of the students’ center; students of the University of Wisconsin occupied the state capitol; students at Harvard University and Columbia University held sit-ins; at Princeton University students blockaded the entrance to a university hall. It was, as the students at Stanford University described it, “war against racism.”
As a result of growing discontent amongst its student body, in July of 1986, the University of California voted to divest $3.1 billion from firms and companies doing business with the apartheid government. It was the most significant university divestment in the country. The state legislation soon followed suit by enabling the state’s pension funds to divest. California’s pension funds added substantial weight to the divestment movement. The pension fund of the UC schools had in total $13 billion in assets. The state’s Public Employee Retirement System was the second-largest pension fund in the nation, with $58 billion in assets. The pension fund for teachers was the nation’s seventh-largest, with $30 billion in assets. After California acted, more than 100 firms, ranging from IBM to Coca-Cola, severed direct ties and sold subsidiaries in South Africa. By the end of 1987, more than 250 corporations had divested entirely from the apartheid, strangling its economy with an inflation rate of 12-15% per year. A few years later, during a visit to the Bay Area after his release from 27 years in jail, Nelson Mandela pointed to the protests at American university campuses, and subsequent divestments from apartheid South Africa, as “a catalyst that ultimately helped end whites-only minority rule in his country.”
The death of apartheid not only symbolized the struggle of South African people against their oppressors, but it also proved to be the political victory for thousands of students from universities across the country whose selfless contributions to the campaigns for divestment assisted the emancipation of South African people. It proved, in the words of Nobel Prize winner Desmond Tutu, that “there is no greater testament to the basic dignity of ordinary people everywhere than the divestment movement of the 1980s.”
On the successive issues to this series, we’ll learn about ongoing divestment movements worldwide, their goals, and our responsibilities. We’ll examine what makes higher educational institutions potential breeding grounds and accelerators of divestment movements and successive political upheavals. We’ll know how colleges manage endowments and how outcomes affect the student body and the college itself. Lastly, we’ll investigate the sustainability of the divestment movement as a political tool, its potential pitfalls, and its potential use in the future.