The introductory chapter outlines the argument of the book and positions it both politically and intellectually. Politically, it challenges the naturalisation of financial assets as unproblematic objects with value in their own right and thus as just one more commodity that it is perfectly reasonable to buy and sell for profit. In reality they are nothing more than promises, and often highly tenuous promises, and their value depends circularly on the social construction of beliefs about their value. We must therefore doubt whether financial values bear any relation to the social value of financial products. Indeed, we are entitled to ask whether the buying and selling of financial instruments creates social value at all, or ultimately generates greater social costs than any benefits it may deliver. Intellectually, the book draws on recent work on valuation, but its explanatory framework depends on a critical realist understanding of causality and social structures.

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.

This chapter develops an innovative explanation of the social structures implicated in the construction of financial value. In particular, it explains asset circles: an asset circle is a set of potential investors who see a particular security as investible in the sense that they are aware of its existence and would be prepared to purchase it in the right circumstances. Asset circles are essential to the very existence of financial assets, and an important factor in determining their value. The chapter begins by extending the discussion of critical realist approaches to social ontology, notably the role played by social structures. It then builds incrementally towards the concept of asset circles by first discussing simpler structures that are also fundamental to understanding financial value: norm circles, monetary circles, and monetary complexes.