4 - Theories of Financial Value

Summary

Financial value, as I use the term in this book, is the monetary value of a financial asset: a belief or claim about what it is worth. Academic understandings of financial value are dominated by the marginalist tradition of mainstream economics, and so this chapter begins by explaining the profound inadequacy of this approach to financial value. It goes on to outline a theory of financial value based on more recent contributions from the literature, notably André Orléan’s work on financial valuation conventions, Pierre Bourdieu’s work on symbolic value, and Jens Beckert’s work on fictional expectations. It then engages a little more critically with recent work on the idea that economics plays a performative role in the finance sector. This chapter and the previous two provide a constructively critical review of the literature on value and financial value, but they also piece together what is in effect the book’s theoretical hypothesis, which is supplemented with an ontological hypothesis in the next chapter and then tested by applying it to empirical cases in the later chapters of the book.