Finance organises how money flows through society. It connects people who have money with those who need it across time, across space, and through different kinds of relationships. These flows of money help pay for homes, hospitals, education, and even climate action. But they also reflect deeper questions about who holds power, who is included, and who is left out.
In this subtopic, you’ll begin by exploring what finance is and how it works. You’ll learn about tools like credit, debt, interest, insurance, and investment, and how they shape opportunities and risks. You’ll then examine the goals and values behind finance: should it focus on meeting human and ecological needs, or on maximising short-term profits?
The next sections look at how financial decisions affect power and inequality. You’ll see how some institutions shape the rules of the game, how access to finance is uneven, and how debt can trap individuals and whole countries. You’ll also understand how parts of the financial system have grown so large and disconnected that they no longer serve the real economy. Finally, you’ll also consider the impact of today’s financial flows on planetary boundaries, and how weakening ecological systems in turn threatens financial systems.
By the end of this subtopic, you’ll be better able to recognise how financial systems influence daily life, shape the future, and reflect choices that can be changed through regenerative finance explored in Subtopic 6.3.
At the end of Subtopic 6.2 you should be able to:
define finance and describe the different tools of finance
distinguish between regenerative and extractive finance, and between values and financial valuation
discuss the extent to which profit-oriented finance can support regeneration
define financial power and identify key actors and factors that influence where money flows
explain how financial systems can create reinforcing feedback loops that concentrate power and exclude certain people or places
define debt and describe the role of interest
explain how personal, household, and national debts deepen inequalities
describe financialisation
discuss how financialisation impacts everyday life and is a barrier to regenerative economies
explain how financial flows drive planetary boundary overshoot
discuss how planetary boundary overshoot threatens the various financial tools of debt/credit, insurance, and investment