In order to comprehend the gendered nature of modern finance, it is paramount to understand the historical evolution of economics from Adam Smith to John Keynes and back to the neoclassical model. According to Goede (2005), the discussion on finance is anchored on a distinct masculine concept through which financial problems are likened to delusion and madness. In the 18th century when the paper money and dissemination of credit was gaining popularity, public discourses and representations of credit were characterized by stereotypes and negative female attributes such as emotional instability, immorality, and hysteria.
After examining Defoes work of satirical personification, De Goede argues that Lady Credit represents all the unpredictable and unreasonable traits that had to be cut from financial discourses for the discussions to be regarded as scientific, rational, and disinterested. De Goede noted that scientific respectability was only achievable through the appropriation of statistical practices and moral abstinence from natural sciences. From the satire, financial debates imply that during a financial crisis, the financial man loses his self-control ability and is hindered from understanding the economic reality by the delusions created by the Lady Credit. The masculine understanding of Lady Credit ensures the smooth and stable functioning of the financial sphere. The conceptualization of the difference between feminine irrationality which upsets the smooth and stable workings of the financial sector on the one hand, and the masculine rationality that creates efficient markets, on the other hand, is inherent and embodied in the financial discourses today. The difference still exists today because males dominate finance and the people at the leadership positions during the recent financial crisis were men.
Apart from the 2008 financial crisis that saw the world economy approach a systematic financial meltdown, there have been theories put forward to explain previous crises. These theories liken a financial crisis to an accident that can be averted by changing laws and policies particularly instituting changes in rating agencies, enhancing cooperation between different regulatory bodies, and improving transparency. The theories further assert that the primary causes of a financial crisis are moral indecency and greed that cannot be eliminated through legislation. Rather than advocating for tighter laws that recognize that boom and bust cycles are a common occurrence in unregulated markets, the theorists place the blame on the boundless and greedy human nature and irrational investment decisions.
During a financial crisis, the common understanding that efficient financial markets help in stabilizing the economy is modified temporarily. Such periods are characterized by varying attitudes and opinions of pessimism and optimism. In worse situations, the features of an economic man who possesses all the required knowledge of a rational finance investor appear to be alienated from virtuous and prudent behavior. In other words, the exclusion of a rational man from irrational women is forcefully installed through the use of female characteristics such as delusion and hysteria while explaining the financial crisis.
Womens exclusion is further justified by the ideology that women have the tendency of deviating from economic rationality, that women are inherently less rational than men, and that women have low proficiency levels in science, mathematics and formal economics. The assumptions about gender differences that underpin the gendered nature of financial discourse draw interest in two perspectives. First, the socially constructed theory that women have higher tendencies of irrationality, hysteria, and delusion is used to legitimize the exclusion of women from finance. This behavior persists even after studies on theories of behavioral finance revealed that male investors are more prone to risks compared to women thus more irrational. Because male investors are overconfident, they engage in trade frequently which increases the risks and reduces their returns. Importantly, studies have shown that women are more reluctant to take risks and engage in stiff competition. Thus, contrary to the socially constructed theory that women are irrational, these studies show that women investors are rational in their investments.
Overall, De Goede illustrates the connection between discourses of responsibility in a financial crisis and effects of gendered power and privileges in the world economy. A majority of these discourses have failed to include how power was, is, and might continue to be gendered. This exclusion has only reinforced the ideas of integration, economic liberalization, and human development by expanding the Western-based financial capitalism hence obscuring the masculinized and models of human activity that form the foundation of these events. De Goede emphasizes that analyses of financial crisis using approaches that do not examine how actors, ideologies, organizations, and norms interact to create a social setting of financial discussion cannot yield the contributing factors to the crisis wholesomely. Therefore, it is important that strategies that promote financial inclusion and demystify financial discourse as a gendered concept are devised and implemented. Effective implementation of such strategies would help to secure individual responsibility, gender equality in power positions, and increased participation in matters affecting the consumers. Resultantly, the changes would help in changing the power structures and the shape of the modern world economy by increasing the diversity of ideas and rationalism in decision making especially those involving preventing risks.
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