When looking back at the 2000s, there are moments that stand out. One of them is the Housing Market Crash of 2007, where the housing bubble popped; a consequence of poor financial choices on a national level that led to serious repercussions from the individual to the institution, resulting in the 2008 recession. These events are an example of the economy’s effect as a macro level institution on the individuals micro interactions and actions.
Economy is a social institution. It is a system of production and exchange that provides for the material needs of individuals living in a given society. Because it provides for the material needs of individuals, changes on an economic scale trickle down to the individual level. As the housing market became what appeared to be an increasingly profitable enterprise, businesses began making riskier and riskier decision. Right at the climax of this part of the capitalistic economy, the risky and sometimes criminal actions taken by banks came back full force and brought the economy to its knees. However, while major economic institutions were devastated by the crash, the real consequences were reflected with the individual. Thousands of people lost their money, their jobs, and/or their homes. This macro level social institution led to a breakdown on the micro level that some people are still struggling to overcome today.
The power of the economy shouldn’t be underestimated, but it is important to note that without the individual, there would be no economy. The reason for a crash of this magnitude can be summed up to something as simple as human error. All around them, people saw others making money and wanted to be part of it. However, as time progressed, in an effort to continue to produce profit on the same scale, individuals made decisions that in hindsight were a complete mistake and had these people thought rationally, they could have potentially avoided financial ruin, and an economic crash that could have reached the same level of crisis as the Great Depression.