Finance as a Vehicle for Change

Finance as a Vehicle for Change

As we go about our everyday lives, we don’t see the full system of our economy at work. An enormous part of our economy operates at a scale that can be hard to comprehend while looking at our personal income or expenses.

The industry of finance includes banks, investment firms, the stock market, pension funds and other forms of finance. Over the last 100 years, this system has gotten more complex, but at its core is that money is a source of power. Then, there are the people making decisions as to where that money ultimately flows to.

In what ways can we individually and collectively, redirect this massive amount of money to fund the collective good instead of destruction and harm?

Industries are aware of the pressure to change and have come up with creative ways to distract or pacify consumers. Let’s review some of the basic terms.

Divesting – A movement to pressure banks, pension funds, and government agencies to no longer support projects or companies that are doing harm, mostly focused on reducing fossil fuel projects. You can support this movement by being aware of what your bank or investment portfolio is doing. Pension funds have enormous holdings and if those pension funds make demands it has tremendous impact. You can also move your banking or savings to a public bank or coop. (See our section on Local Banks).

ESG – This stands for Environment, Social and Governance standards. The idea is that the finance industry can review companies and say that they do or do not meet standards. Unfortunately, the standards are extremely weak and this amounts to a form of marketing/performative activism to consumers. The industry needs to significantly improve these standards to match our actual needs.

There is another opportunity presented by paying attention to finance locally. Many local organizations have Pension funds. Where is that money invested?  Is it in a local bank where those returns can benefit the local economy or is it in a bank headquartered elsewhere?

Much of the money being held by these institutions are creating loans – are those to local projects to projects far away?

Some interesting statistics from Rana Foroohar about the Finance Sector:

  • Only 15% of the money in the financial sector goes towards financing real world projects. The other 85% is in financial products that are just methods to create profit for investors, which creates a closed loop system that doesn’t have any meaningful impact on society.
  • Also, 80% of money in finance is controlled by a very small number of Americans.

Thus, the entire finance system in its current form is primarily interested in fulfilling the needs of this small population.

Do we have a choice in our financial system or do we need to accept it as-is, even if it is not providing social benefit?


  • Making of a Democratic Economy Book by Kelly and Howard of The Democracy Collaborative
  • Pitchfork Economics Episode with Rana Foroohar


  • The Democracy Collaborative

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