Financialization of Values – An Institutional Anatomy of the Financial Crisis

Abstract

The aim of the paper is to present the idea that values inherently affect economic outcomes, and hence can be considered a powerful economic institution. The change of values consequently imposes a shift in economic institutions. The testing ground for examination of the above thesis is the economic downturn which began in the USA in 2007 and spilled all over the global markets. Commencing with reference to authors defining institution and their role in economy and society, the article goes on to present how values were capable of bringing change to the way markets operated by means of several mechanisms of institutional change, Financialization, understood as removing all norms and constraints on what can be traded, of the world values and consequently economic (market) and political institutions (the State) was the key process that linked all these elements and adversely affected the global community. The cited instances of the decline of values that followed suit were the rise of the role of money (at the cost of values), decline of human relationships (at the expense of transactions), and disregard for cooperation (taken over by competition) as a vital element of the economic institutions.