Two rival schools reduce financial value to either real or illusory

Evidence

In the first chapter, I note that it is all too easy to slip into one of two undialectical approaches to finance and financialization. One position, often, but not exclusively, associated with a neoclassical approach, would insist that financial wealth is just as real as any other form of value, determined as it is by the eternal and infallible laws of supply and demand. If there is a real demand for credit default swaps, then their value is as real as the value of rice, oil or pickled herring. Such positions tend to reinforce the idea that the financial sector is merely the logical evolution of money: a neutral expedient to facilitate the primordial act of exchange. Typically (though not exclusively), those who hold this opinion blame the financial sector’s failures not on the pathology of markets, but on bungled government regulations, subsidies and interventions that skew the market’s inherent ability to properly value real and financial assets alike. By contrast, another school of thought sees the value of financial assets as purely illusory and imaginary, the result of rampant speculation. — Max Haiven, Cultures of Financialization, 41

Categorization

• DEFINE: Frames the two poles of how financial asset value is understood, against which the book’s fictitious-capital synthesis is defined.