Society Characterized by Financialization

Finance and Society
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Finance and Society
Introduction
Money and the financial system, in general, have become a fundamental component of human life in the contemporary era. The ever-present nature of money in society has created an impression that money, and by extension, the financial system, has always existed, without bothering its rich history, close ties with philosophy, and varied definitions. According to De Bruin et al. (2018), the credit theory and the commodity theory of money are the two main ontologies that best describe what money is and its role in society. The commodity theory holds that money is a commodity with three primary functions in society: acting as a medium of exchange, store of value, and unit of account (De Bruin et al., 2018). On the other hand, the credit theory takes a diverse view of money not as a commodity but rather as an abstraction that can be credited, transferred, and used as a means of payment in trade (De Bruin et al., 2018). Furthermore, the credit theory gives rise to the social construct of money where its existence depends on the common beliefs and attitudes shared by the community members.
Financial systems bring together the different theories that define the term money. Financial systems can be viewed as a formal intermediary that oversees the use of money and facilitates payment using money and other financial assets. The term finance can also be interpreted as a discipline or branch of financial economics charged with elaborating the monetary and financial systems (De Bruin et al., 2018). Modern financial systems have incorporated additional financial assets with a higher level of abstraction than tangible money. From a societal viewpoint, money and finance have had a tremendous impact on values and beliefs that define a society as well as introduced powerful financial tools that have rendered the society and the environment as collaterals. The role of finance in society can be comprehended based on the logic of the financial systems or rather financialization and how it has influenced the different aspects that define a society.
Society Characterized by Financialization
The modern society where financial literacy has become dominant has had almost every aspect that defines social life commodified, securitized, or turned into assets that can be managed the same way the financial systems manage the financial assets. The reduction and conceptualization of society’s major aspect in the realm of finance can be termed as financialization (Aalbers, 2019). The concept of financialization has transformed almost every aspect of society into wealth acquisition and profit-making by transforming them into financial channels. As a result, the financial systems have overstepped their financial mandate and have infiltrated into every aspect of social life that affects the members of society. “Nonfinancial firms have always been dependent on credit, but the rules and logic of Wall Street are increasingly becoming the rules and logic outside of Wall Street.” (Aalbers, 2019, p. 7). The desire to fill the gap of inadequate resourcing from the public sector and drive sustainable development has often been justified for promoting private investment and condoning financialization within other social sectors (Hunter & Murray, 2019). Although the motive seems to be of genuine concern to society, it has opened doors to the overzealous capitalists from the financial sector whose primary aim is to maximize capital investment as opposed to promoting social development. Among the most impacted social sectors where financialization has had a massive impact include education, housing, and even healthcare.
Financialization and Education
Schools are a critical component that defines the social wellbeing of society. Education in the contemporary era has been heavily commodified and often regarded as a human capital investment, courtesy of the financial logic that has infiltrated the sector. The Wall Street logic applied in education has seen the emergence of numerous private institutions that are often perceived to offer quality education due to heavy investment within the private sector. Financialization in education has also led to institutions, both public and private, reaching out to private investors and banks to improve their competitiveness and attract as many students as the private institutions (Birkinshaw, n.d.). The younger generations are also burdened with student loans that are a result of the financialization of education. This trend of using the Wall Street logic in education has transformed education that used to be regarded as a public good into human capital investment. The financialization has also exposed the institution meant to serve the society to risky behaviors driven by the desire to make profits that are typical of a modern financial system. As a result, society is paying the price in the form of student loans, escalating student fees, and overshadowing public institutions by private schools.
Housing
Housing is a fundamental element of society as it serves to uphold human dignity, enhance healthy living, as well as offer physical and social security. However, the infiltration of financialization into the housing sector has led to the liquidation of once illiquid assets that can now be bought and sold as a vehicle of wealth acquisition (Hui & Sundaram, 2019). According to Hui and Sundaram (2019), lending to the housing sector by the leading financial institutions accounts for as high as 70 percent of total credits in world-leading economies. The domination of corporations and financial institutions in the housing sector as a result of widespread financialization has led to unintended suffering to the members of society due to unaffordable and insufficient housing that can further escalate to discrimination (Leijten & de Bel, 2020). Leijten and de Bel (2020) argue that in this day and age, the fact that housing is a fundamental human right has been overshadowed by commodification driven by financialization. Just as in the case of education, the society suffers inadequate ...