Money Against the Stream: Alternative Financial Institutions


This dissertation discusses the role of money and finance in transforming society towards social, ecological and economic sustainability.

During the 1980s the money markets and foreign exchange markets have been liberalized, deregulated and internationalized, and the social control of cash flows has become seriously weakened. In line with this development, banks are expected to act as profit-maximizing businesses, while they were previously expected to function as social institutions.

Contrary to this development, in many countries a variety of small organizations have emerged, that run banks and financing activities on the basis of social, environmental and ethical values. Most aim to promote investments that contribute to an ecological, solidaric and ethical development, and a large part seek to promote employee-owned companies/cooperatives. Some see their business as part of changing the economic system. Although these organizations are few in each country, and small compared to traditional banks, they have had a strong growth, both in number and size during the last decade. They represent a development towards directing cash flows to projects that point in the direction of an alternative development, putting money to social and ethical use as part of transforming society towards sustainability and justice.

However, the future importance of this trend is dependent on the further development of these organizations. Financing activities are conducted in a market where actors are obliged to fulfill certain requirements for profitable and rational operations, and to avoid losses. Furthermore, financial institutions must comply with regulatory requirements. Here, the central question is how the alternative financial institutions maintain their ideal goals, ideology and practices while surviving as market players and adapting to the regulatory framework.

The dissertation discusses these challenges using three case studies employing theories of the role of money in society, as well as theory of social movements and new institutional theories. The three organisations are

  • Cultura—an ethical bank which is part of the anthroposophical movement in Norway and internationally
  • Nettverkskreditt [Network Credit]—a Norwegian microcredit initiative for women, inspired by Grameen Bank in Bangladesh
  • JAK (Jord, Arbete, Kapital [Earth, Work, Capital])—a Swedish savings and loan system recently turned bank, which provides interest-free loans based on a theoretical critique of the role of interest in the economy.

Based on the analysis of the three cases, the study concludes that alternative financial institutions have come to stay, as part of new social movements’ endeavours for another society. The study concludes that alternative financial institutions represent real alternatives to market-based, profit-maximizing financial organizations:

Firstly, they contribute to alternative theoretical and ideological understandings of the relationship between money, economy and society, drawing on lines of thought which can be traced back to Aristotle, to the scolastics of the Middle Ages and to the major religions, within which money, profit and economic activity have been subject to social and ethical considerations.

Secondly, the alternative financial institutions create new models for an ethical and sustainable development by creating funding systems based on the consideration of the community, the environment, society or marginalized groups in the loan market, in this case women.

Thirdly, alternative financial institutions also create opportunities for ordinary people to act in line with their values, with little personal cost, by entrusting their savings and payables to an alternative bank instead of a traditional bank, thus helping to promote projects which are in line with one’s values and the future one wants, and avoid contributing to a development that one does not want.

Finally, alternative financial institutions create opportunities to initiate experiments and projects that would otherwise not have begun, thus anchoring alternative development paths in real-world examples, such as wind power, organic farming, and local small scale projects.

Read the dissertation here

Bjørnholt, Margunn (1995). Pengene mot strømmen: alternative finansieringsorganisasjoner (PDF) [Money against the stream: alternative financial institutions]. (PhD) dissertation (magistergradsavhandling) in economic sociology, Department of Sociology, University of Oslo. ISBN 82-570-0438-3.