"The Finance Industry Is a Grift. Let’s Start Treating It That Way."

by Purpose Foundation

Powerful words. And we couldn’t agree more. As we do with the entire guest essay, recently published in the The New York Times, written by Oren Cass, chief economist at American Compass (👉 a must-read for anyone wondering what’s wrong with the finance industry).

The underlying question sits at the heart of our work: What is finance actually for? Who benefits from it? And how can we save capitalism and move forward to actual value creation?

Cass argues that much of modern finance has drifted away from its original purpose: channeling savings into productive, real-economy investment. Instead of helping companies build, hire, and innovate, too much capital today is busy refinancing debt, engineering buybacks, flipping assets, and optimizing short-term returns.

This shift is known as financialization: “That’s the term for making financial markets and transactions ends unto themselves, disconnected from – and often at the expense of – the societal benefits that support human flourishing and are capitalism’s proper purpose.”

Cass calls this “financial nihilism: an entire business model built on gaming the system”. Transactions themselves become the goal, while businesses, employees and customers are “manipulated” in order to maximize financial returns. “Workers become just another cost, like lumber. Customers are just revenue streams to be tapped.” 

Ironically, the financial sector cannot even achieve the goal of maximizing financial returns for investors. Its success is merely a hollow narrative, while both data and real-world stories mainly show failure. 

So what can we do about it? Owen finds that “policy alone” won’t solve the problem, we need a “deeper cultural reckoning.” We agree. 

• We need to challenge the thought that everything that creates shareholder value must be valuable.
• We need to move on from treating companies as wealth assets towards seeing them as organizations with a purpose.
• We need to highlight actual value-generating and intentional forms of investing and ownership.

StewardOwnership models provide exactly this: They ensure that companies cannot be commodified. Profits serve the company and its mission. Decisions are not taken to maximize financial return (while adequate returns are possible) but to create actual value. The examples speak for themselves: Patagonia, Signal Messenger, Bosch, Novo Nordisk, Ecosia are just some of them.

Also investors like the Innovative Finance initiative, Purpose Ventures, Purpose Evergreen Capital, Delta Fund show how through stewardship-aligned financing and other forms of innovative investing, we can revert to financing playing a supporting role instead of an extracting one. They’re already doing what Oren suggests: “put their assets where their values are”.

This way, capital becomes a means.
Not the end.