Student, University of London, UK
This paper attempts to present, through a theoretical framework, as to how the deepening process of finance is penetrating the whole realm of human life and social institutions in a catastrophic direction. It will portray the nature of omnipresent-expanding finance along with its soft bellies and the possible direction to limit its undesirable consequences. The world for the past couple of years has seen the acme and also the nadir of the global socio-political, economic, and environmental phenomena. Since the apocalyptic 2008 crisis, people from all walks of life have seen the power of finance affecting their apparently “financially safe” lives.
Hyman Minsky, a renowned economist, popularized on his core model known as “Financial Instability Hypothesis” (FIH), which simply declares stability is inherently destabilizing. He opined “Unless we understand what it is that leads to economic and financial instability, we cannot prescribe--make policy--to modify or eliminate it. Identifying a phenomenon is not enough; we need a theory that makes instability a normal result in our economy and gives us handles to control it”.
Financialization is not merely higher infusion of finance into the system; but is more of a qualitative change. Finance has not only changed the banking, stock and insurance business, but has affected every social institution. It is changing the way the prioritization is made in the society as every asset classification is evaluated in terms of its value as finance. Thus financialization is a qualitative process. But this qualitative change has emerged through the massive quantitative changes in the basic parameters of financial system.
