2 - Financial capability: citizens or subjects?
Published online by Cambridge University Press: 04 January 2022
Summary
Introduction
Chapter 1 suggested that financial inclusion tries to encourage individual participation in the financial system. If people are to take part in the financial system, then they need both access to the financial system and the capacity and motivation to make financial decisions. This chapter considers financial capability. Financial capability refers broadly to the knowledge, skills and confidence of people to make financial decisions.
Financial capability has been a particular area of policy concern since the global financial crisis of 2007–08 (Commission for Financial Capability, 2015; National Strategy for Financial Literacy, 2015; Financial Investor Education Foundation, 2019). One of the main reasons for this is the view that shortfalls in financial capability are thought to have contributed directly to the financial crisis. O’Donnell and Keeney (2010: 362) comment that the global financial crisis ‘only serves to highlight the importance of financial capability. It can be argued that the sub-prime crisis in the US which had such global ramifications was a manifestation of poor levels of financial capability there.’ For example, people and households were thought to have made poor decisions and housing investments that created the conditions for the financial crisis.
Governments have sought to address these shortfalls in financial capability through policies such as financial education. Critics see the stress on financial education as part of an effort to create investorsubjects. As Santos (2017: 414) writes:
Financial education policy must be put in the context of contemporary capitalist societies that are engendering a transformation of citizens into consumers where collectively earned individualised rights are being replaced by increased access to a wider panoply of commodified products and services. It must be perceived, in particular, as part of a broader strategy that aims at promoting the expansion of financial markets at the expense of collective forms of provision, based on intensifying household relations with financial markets as borrowers, investors and insurers.
The attention paid to financial capability might be part of a wider concern with a focus on individual behaviour within welfare policy. This suggests that this is part of a shift in responsibility from the state to individuals. Donoghue and Edmiston (2020: 9) refer to the attention paid to active citizenship as being part of the ‘continued reorientation of social citizenship towards neoliberal, productivist ends’.
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- Information
- Financial InclusionCritique and Alternatives, pp. 25 - 44Publisher: Bristol University PressPrint publication year: 2021