Now that we know Yale University has decided not divest from fossil fuels, what should be done next?
Over the past few months, students have repeatedly critiqued the University’s investment practices. But the size of Yale’s endowment is likely comparable to the amount of capital that its current undergraduate population will earn, inherit and invest during our lifetimes. Environmental activists would do well, going forward, to focus on informing the investment decisions that Yale students will make for the rest of their lives, rather than continuing to focus on institutions.
As Yalies, we are likely to control a great deal of capital in our lives. Some of us may already come from well-off families and can look forward to inheriting large stakes in corporations. Statistically, a high percentage of us will go on to work on Wall Street, directing financial capital to all corners of the globe. Some of us will become CEOs, making enormous decisions daily about factories, workers and supply chains. And many of us will be prudent enough to save throughout our lives, investing our surplus earnings in stocks and other financial assets.
In “Capital in the Twenty First Century,” author Thomas Piketty expresses concern about people like us — we who will be trusted, by virtue of our diplomas and our hard work, with a disproportionate and growing share of our society’s productive resources. Piketty foresees a world in which a few rich heirs increasingly dominate the economy and the poor do not share in economic gains.
And Piketty is right to worry. When Yalies accumulate capital, we will have the prerogative to do pretty much whatever we want with it. If we really wanted to, we could squeeze every penny out of our investments by employing the lowest wage labor possible, creating products that appeal to consumers’ worst instincts and taking advantage of lax laws to profit off of pollution and externalities.
As far as I’m concerned, capital is often not an immoral or negative force in society. In fact, it is often an expression of some of our highest capacities as humans. The ability to save some of what we produce, to delay our gratification for the sake of the future, to increase our societal productive capacity year after year, to build up the scope of what we can accomplish — these make the existence of capital one of the most impressive accomplishments of modernity.
Yet the fact remains that those who hold capital are faced with many options about how to use it. And it can be tempting to use it in ways that harm those who do not hold capital. For Marxists, this is essentially a law of nature: Capital reproduces itself.
I take a less fatalistic view. No one tells the owner of a corporation that she must resort to hostile takeovers or government cronyism to increase her company’s market share; it is a choice she makes, and a potential profit she is free to forgo. No external force compels an upper-class individual to invest his savings in a corporation that harms the environment, except for a willingness to avert his eyes from the consequences of his actions. Capital need not be a destructive force if its owners take responsibility for how they use it.
This is a lesson I hope Yalies take to heart. There is no better time than college to reflect upon our responsibilities and decide upon our values, before we are tempted by wealth and convenience.
It is always easier to critique institutions than it is to critique ourselves; more convenient to preach than to practice. There are those who would lead a revolution against private capital or steadily redistribute it through state coercion. I much prefer that capitalists take stock of their responsibilities to their communities and to members of society. This is a process that Yale students can begin now, especially regarding investments in the fossil fuel industry.
Scott Greenberg is a senior in Ezra Stiles College. Contact him at firstname.lastname@example.org.