Page 1 of 31
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Advances in Social Sciences Research Journal – Vol.7, No.7
Publication Date: July 25, 2020
DOI:10.14738/assrj.77.8761.
Cossiga, G. A. (2020). According To The Sustainability Theory, The Natural Rebalance Of Resources And Wealth May Continue In Global
Scenario. Advances in Social Sciences Research Journal, 7(7) 927-957.
According To The Sustainability Theory, The Natural Rebalance Of
Resources And Wealth May Continue In Global Scenario
Giovanni Antonio Cossiga
Presidente Collegio sindaci Policlinico Umberto,
Università Sapienza, Roma
ABSTRACT
According to the profile of the sustainability economy, the scenario of
the nineteenth century, characterized by a colonial structure governed
by the major powers, and the imbalance in the wealth distribution that
is recorded in today's world are both phenomena dependent on the
deviation of the economy from the path of sustainability with nature.
Nevertheless, it is inevitable that this deviation will eventually be
corrected, and the global economy should then return to the path of a
constant and balanced growth. So, leaving the instability world, which
today starts from the performance decline and from the general
convergence towards price deflation. The fall in the instability world,
however, is far from irreversible because we should admit that deflation
is a message telling us that things are going wrong, and the economic
situation is a tool that is starting the recession to correct the economy in
order to bring it back to the balance with the nature. In the sub-world,
unfortunately, there are the excesses of an incoherent distribution of
resources at a global level, together with the trend towards the
concentration of wealth and income within the 10% of families at a local
level. A double interlocking that slows down the development potential
locally and globally and alters the democracy mechanisms due to the
influence that owners of wealth and large incomes undoubtedly can
have on the process of selecting the leadership for the economy
management. A perverse mechanism that essentially exacerbates the
differences in income and resources among peoples and families. In the
perspective of the sustainability economy, the movement favoring the
concentration cannot continue because the natural correction
mechanism comes into play, thus operating according to the times of
nature which are quite different from those of our daily lives. Therefore,
we can now interpret and understand the amazing work that is globally
reshaping the distribution of resources and culture, where Asia is
becoming protagonist together with the West of a greater equity and
participation. At the moment Africa remains out of this process, though
trying to reinforce its pace. The reactions to the so-called globalization
are obstacles to the development of process, on which is depending not
only the emergence of post-colonial Africa. Because even the
development of the global economy is now linked to the continuation of
the natural process of rebalancing resources and wealth, not only at a
global level but also at the level of states and continents.
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URL: http://dx.doi.org/10.14738/assrj.77.8761 928
Cossiga, G. A. (2020). According To The Sustainability Theory, The Natural Rebalance Of Resources And Wealth May Continue In Global Scenario. Advances in
Social Sciences Research Journal, 7(7) 927-957.
Communication Partner On Uptake Of Voluntary Medical Male Circumcision Among Married Men In Kenya: An Evaluation Study Of Information Source
Attributes. Advances in Social S Keyword: ciences Research Journal, Economic Instability, Rebalance Of Resource, Deflation As 7(7) 825-842.
Message, Corrective Mechanism, Sustainability Issue
INTRODUCTION
According to the sustainability issue, the engine and the evolution of development have their deep
origin inside the compatibility with our planet evolution inside the Universe. Therefore, even the
human evolution throughout its history on the planet is marked by the imprinting of the natural
context that has safeguarded our survival. According to this point of view, our survival through
endless events and intricate troubles, since the origins of human life on this planet is strongly linked
to the mutual relationship that binds human beings and the planet around us.
This is the only way to explain the survival and the outstanding growth of human beings on the
planet, the meaning taken by the technological acceleration in the relationship between humanity
and nature as well as the amazing desire to explore the cosmic oceans after our ancestors crossed
the Earth's oceans. In other words, the human history seems just a big question point if we do not
analyze it from the perspective of an essential relationship existing between living creatures and
nature all around. Moreover, on the other hand the aspiration towards the knowledge about mother
Nature can somehow find an explanation only if we consider that the science seems to be more and
more the main tool bringing the life of living beings closer to a nature that is gradually uncovering
its secrets.
According to this point of view, the scientific method is not only the parameter moving the
primordial human selfishness closer to the understanding of the nature that hosts us, but it’s also
the right tool to get the knowledge that brought us throughout the history until here and that is even
accelerating to bring new insights and perspectives.
Now, it seems evident that if we analyze from this perspective the economic issues, which are
basically the leaven of the potential human achievements, then the phenomena affecting the
economy should be interpreted as part of the special relationship linking the humanity to mother
Earth. In the sense, by the way, that the relationship between humanity and nature can only proceed
through an exchange relationship between the nature that is feeding us and the humanity that
investigates the evolution of the context where we live.
Since the science of economics can be considered a sort of basic condition of the relationship
between humanity and nature, it is clear that the survival relationship should be based on a
balanced natural relationship. As saying that nature is feeding us on the condition that resources
are not wasted but are kept and saved for future generations.
This primary and essential condition also means that the distortion of this relationship deriving
from the misuse of resources and from their irreversibility, must therefore find a mechanism, also
natural and irreversible, able to protect this primordial axiom. Ergo the distortions suffered by the
economic situation must be repairable, on one hand. On the other hand, they should always have
some natural mechanisms able to condition the economy – generally intended - to restore the
balance of the good relationship between humanity and nature.
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Therefore, if the humankind has reached this day and can look to the future with high confidence,
it’s unavoidable to believe that the natural relationship can be loosened, even for a long time, but it
cannot be completely violated.
From these brief considerations, the consequence arises that the normal balanced relationship
requires that the global economy should grow according to a constant and increasing development
line, following a rhythm that is connected - we can assume - to the scientific standards. In the sense
that a backward outdated science is a weak engine of the economy, while an advanced and
technologically robust science could allow a more balanced and therefore more accelerated
dynamics of the economy, according to the natural order.
The combination between the constant and growing development and the level of scientific and
technological situation is therefore the paradigm that has conditioned the potential of human
development in the past. Now, the acceleration of science and technology - which also means a
greater human attention to the relationship with mother Nature - opens development profiles, and
even more will do in the future, in harmony with the logic of the planet and the natural world from
which we all depend.
THE BASIC PRINCIPLES OF THE SUSTAINABILITY ECONOMY AND THE DEVIATIONS FROM
THE BALANCED RELATIONSHIP WITH NATURE
The repercussions on the economy due to the tensions in the relationship between humanity
and nature. The natural correction
The development difference of times in the relationship between humanity and nature is drawing
us to think that there must be some natural tools to control, to reduce and eventually to compensate
the distortions in that relationship. In the sense that the basic selfish nature of humanity could make
the predatory character of human activity to prevail, therefore causing the increase of the possible
dystonia between the evolution of living beings and its relation to the more slow process of natural
environment. It is now clear that the escape from the natural development path cannot be
destructive, because otherwise the basic principle of preserving resources for the future
generations would be compromised.
It follows that the temporary breakdown of the balanced relationship between humankind and
nature must be reported in the economic world through direct or implicit messages to alert about
the deviation from the correct course. So, in the economic world the main message that marks the
balance breakdown is the changed pace of economic development. Thus, the line of constant and
slightly rising growth characterizing the path of the economy in natural balance is transformed into
the conjunctural wave and its alterations during the imbalance state.
It is not just a sort of corrugation of the otherwise straight development line. Rather, it is a complex
intervention scheme changing over time with the persistence of the instability state. The profile of
the conjuncture waves is almost regular and repetitive when the correction of the altered system
begins. If the economic system persists in the deviation from the correct relationship with nature,
the economic wave changes with a progressive narrowing of the recovery phase while at the same
time is extending and deepening the recessive phase.
Page 4 of 31
URL: http://dx.doi.org/10.14738/assrj.77.8761 930
Cossiga, G. A. (2020). According To The Sustainability Theory, The Natural Rebalance Of Resources And Wealth May Continue In Global Scenario. Advances in
Social Sciences Research Journal, 7(7) 927-957.
Communication Partner On Uptake Of Voluntary Medical Male Circumcision Among Married Men In Kenya: An Evaluation Study Of Information Source
Attributes Therefore, the novelty encountered in the sub . Advances in Social Sciences Research Journal, 7(7) 825-842. -world of instability, when the relationship with
nature is distorted, is the presence of the recession over time becoming more aggressive. Basically,
the system in the sub-world uses the recession as its main tool to curb growth. In other words, the
system that derailed from the path of balance with nature slows down or reduces potentials, thus
limiting the engine of the economy which exceeded the limits of compatibility with the environment.
This correction mechanism is activated - without any apparent guidance - when the economy has
attempted to accelerate the pace, so undermining the rule of the correct consumption of resources.
This correction process, which alters the development line, is strangely felt by the community, or at
least by its majority, through signals and sensations involving also common people and not only the
responsible leaders. In the sense that the economy travels through the human minds and can
accelerate or decelerate only on condition that individuals, companies and families, are all involved
in an atmosphere permeated by optimism or, instead, by pessimism about the prospects.
Therefore, the final engine of the correction system lies inside the community that feels, without
delay or distraction, the ongoing change within the economic development process. Nor could it be
different, because otherwise we should think of some authority invested with this high power:
absurd and inconsistent hypothesis. So, the correction process lies in the community, which must
therefore be the main receptor of the sensations and of direct and implicit information that the
deviated economic system is generating and reproducing.
From this point of view, we can believe that even our neighbor is generally informed about the state
of the economy and has some general ideas on the reasons that led the system to derail from the
path of balance with nature. Nevertheless, it is possible that the limited group of privileged people
with high income and wealth may have different ideas on the state of the economy; and this group
has a high conditioning power.
However, this is only an exception to the opinion about the state of the economy recognized by most
of the community. Because we may assume that the majority of the community shares the
orientation on the economy state. And even because the progressive gap increase in wealth
possession is a non-secondary effect of the economic imbalance and of the ongoing forcing about
the correct relationship between humanity and nature. And all this can therefore represent a cause
for further deviation or permanence of the economy on a path derailed from the balance with
nature.
Even our neighbor, therefore, has excellent references to be able to give a summary judgment on
the state of the economy in a current situation. But also, to get some basic or general ideas on the
reasons that led to a deviation from the balanced growth path; as well as, moreover, to signal the
way forward in order to bring the altered system back to its former stable condition.
Well, how can our neighbor next door have this information, which in quite different terms and in
far greater detail is available to industry experts and economic analysts? On the other hand, there
is a widespread trend towards market surveys based on the consumer sentiment. A good test for
this genuine gift that each member of a community shares, which is a good guidance for the
spending decisions of families and companies, but also - on a more general plan - for the general
orientation of the markets.
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In fact, the radar that everyone seems to have when assessing the state of the economy in their
workplace, refers primarily to the markets in which the family or the company are operating. These
are direct and explicit messages or messages somewhat implicit or perceived in the environment.
The main and basic data for the individual analysis of the market state are of course the prices and
their pace.
The pace of prices originates primarily from the pace of markets. In fact, we can say that in a stable
and balanced economy it is impossible to imagine a growth of prices that be zero. In an economy
that is growing, with a moderate but steady increase, prices cannot stop at zero. In other words,
they cannot give the image of a paralyzed economy, because the markets are expression of a
dynamism that is then transmitted to prices, according to a minimum but measurable scale. Because
the price scale is nothing but the synthesis, as "in the mirror", of the huge and general dynamism of
markets. Basically, it is the market background noise, recorded by prices when the economy is
stable.
This base value - or base inflation - is nothing but the value close to 2%, but not coincident, that the
Central Banks have indicated as the key value to measure a healthy and balanced growth in the
economy.
Well, this is a completely ideal value, because it could only be found in economies that long remained
firmly on the path of stability and balance. An ideal condition unavailable inside the global economic
scenario. For this reason, in the case of an unstable economy, the possible compression of prices at
these levels close to 2% could only indicate that we are in a condition of tendential price deflation,
which therefore takes us away from the possibility of a good balance of the market. In fact, is missing
the basic premise to give a rewarding meaning to the price rate close to 2%, because the economy
is running through an unstable territory as reported by the price deflation trend. (Cossiga, 2008)
The price indicator provides a summary of the economic condition through an explicit and clear
signal, immediately spread and with the same immediacy received by families and companies.
Obviously, there are variations deriving from the escalating prices of the main raw materials, oil
first. Prices that may interfere generally with the values of goods, though temporarily. In this case,
the message coming from prices, although broad and widespread, relates to the dynamics of the
economy.
Otherwise, if the price gauge becomes independent from the economic context, so moving under
the pressure of a natural force inside the instability malaise, then we are faced with an explicit
message from the economic system. The economic system is reporting, with a price movement or
even run (inflation), that there is a deviation of the development process from the correct
relationship with nature. Likewise, if prices tend to fall and then fall below the base value close to
2% becoming even negative. The deflation is a message from the deviated system, informing us
about the opportunity to intervene to return to the natural and balanced condition.
The natural correction and the messages of the economic system deviated from the balanced
relationship
Hence, the corrective system activated by the deviation from the balanced development path is
basically based on the transformation of the growth line, steady and slowly rising, into the
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URL: http://dx.doi.org/10.14738/assrj.77.8761 932
Cossiga, G. A. (2020). According To The Sustainability Theory, The Natural Rebalance Of Resources And Wealth May Continue In Global Scenario. Advances in
Social Sciences Research Journal, 7(7) 927-957.
Communication Partner On Uptake Of Voluntary Medical Male Circumcision Among Married Men In Kenya: An Evaluation Study Of Information Source
Attributes conjuncture motion as a tangled snake that obviously penalizes the ec . Advances in Social Sciences Research Journal, 7(7) 825-842. onomy potential. Therefore,
the corrective system turns into a degrading sinusoid because the recession must go into action. In
other words, the temporary slowdown of the system through recession is the natural tool to reduce
the damage caused by the breakdown of the balanced relationship with nature.
Well, if the development deviated mechanism is protracted over time, the correction becomes more
intense through a progressive alteration of the conjunctural wave. In the sense that during the initial
phase of the corrective process, the recovery phase is quite pronounced, while the recession is short.
As the economic environment gets worse, the recovery phase is reduced and weak while the
recession time is extended. Finally, with an extended alteration of the economic system and the
greater distance from the correct relationship with nature (according to the rule of preservation of
natural resources), the development line becomes only recessive, while the push towards recovery
completely disappears.
So, the conjuncture is basically the scenario on which is consumed and developed the attempt to
bring the system, deviated from the natural development relationship, into its natural channel. The
natural corrective mechanism is the cause of the progressive exhaustion of the economy potentials,
which decrease until to become negative, to progressively reduce the damage that the improper use
of resources can produce over the natural system.
Nevertheless, the defenses of the natural system in the event of development deviation do not act
promptly. That is, the natural reaction can also follow the times of the environment around us; times
that are not compatible with those of human life. Therefore, it is unlikely that a system deviated
from the natural development line could be promptly affected by the corrective reaction. Also,
because it is legitimate to argue that the natural system has a certain degree of elasticity in its
response, which may depend on the relative capability of the natural system to self-repair the
overuse of natural resources.
The temporal gap in natural response, therefore, creates a discontinuity between the cause that
started the natural deviation and the corrective event that is following but at a different time. A
discontinuity that shelters or could shelter the leaders responsible for the economy management,
who caused the deviation of the economic system from the natural path.
The probability that those responsible for a bad governance could be protected from the
collectivity’s judgment, due to the time shift of natural response, however, is partially reduced. We
are helped in the consideration of this real possibility by the attitude of community that acts in
relation to the environment as a sort of great perceiver of the symptoms, even minor, affecting the
unstable economy. In the sense that the fall into the instability sub-world does not lead immediately
to an immediate impact on the efficiency of the system's growth. However, although the signs of the
new suffering condition are not so near, anyway the perception of the community, which is a fine
receiver of any change in the state of the economy, may have already acquired the awareness on
pace change.
This is to say that a dangerous political action aimed at accelerating the growth potential for mere
partisan interests and to increase consensus, could achieve the opposite effect. In the sense that the
community, perceiving the risk of a slow sliding towards the growing indebtedness of the system,
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could at least in its majority contain and not increase the consensus for a government, which is
judged to be unscrupulous and unreliable. In this sense, the most promising option for a ruling class
and its economic governance should be to seek and maintain the natural balance road, which may
allow us to magnify the potential and to prospect a steady period of constant and slightly rising
growth.
This optimal direction does not expect future recessions because there is no need for corrections
on the path made by the balance with nature. Furthermore, the prospect of "a tomorrow equal to
today", therefore without any possible reversal in the near future of the economic process, must be
considered rewarding for the community, or at least for its majority, which is the instrument of the
privileged relationship between humankind and nature.
Only in this way we can interpret the longevity of those political classes that invested in programs
able to maintain the growing and cautious trend of the economy. While on the contrary we can see
the dynamism of continuously changing management classes in countries affected by the shock of
an uncertain future, due to choices that favor the short run leaving out those interventions aimed at
the long run and then at the balance with natural evolution.
In fact, we should think that the irrevocable relationship between community and nature implies
the presence in the common DNA of the expectation for a "tomorrow not different from today" at
the economic level. A widespread feeling, indeed, based on the natural evolution of economic
systems inside a balanced and stable contest, in which the growth of the economy follows a steady,
slightly increasing trend. In a context of balance between the economy and nature, we can admit
that there is no opposition to the linear motion of the economy, which therefore should grow
according to a constant path of moderate development.
So, unlike what happens in the instability sub-world, where the opposition arises from the gap
between the balanced path to development and the deviation undertaken either intentionally or by
error. It follows that the alteration of the linear growth process is a serious disturbing factor
compared to the expectations of the community, according to the natural order. Therefore, the
community will seek to restore the natural condition without disturbances, thus placing the
responsibility for the altered path of the economy on the political class guiding the country.
Ergo, to avoid the loss of consensus, the ruling class will try to restore the blocked path of linear
development. In this contingency, the short-term effect is often pursued through measures that can
have some social impact, though limited. This response is not only partial and improbable about the
expected effects, but also contradictory with the community's position aiming to restore confidence
in a future without cyclical troubles.
It is not improbable that the first reason for the system deviation from natural motion could be
found in a somewhat distant past, while responsibilities may fall on the current leadership
governing the economy. Despite this delay, it is anyway evident that the persistence of an economic
system inside the sub-world is obviously a serious responsibility, which consequently lies with the
current government. Just because of the “nonchalance” in treating the distortion symptoms in
development and persevering in the current status quo without taking corrective measures.
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phenomenon is accentuated with the progressive worsening of the conjuncture, whose effects still
convey a message to the community about the urgency to change the economy’s direction.
Likewise, the economic system becomes troubled by the attempts to force the potentials that anchor
its run towards liquidity availability and easy credit, which are inconsistent with the actual state of
the economy. In response, the system shows a constant trend to falling prices. Even in the case of
deflation, prices follow a natural engine that reproduces the economic trend, but without interfering
in any way with the conjuncture. This situation of unstable state shows a slowdown in the economic
potential but is somewhat doped due to the presence inside the market of great liquidity availability
and anomalous credit growth.
Deflation and inflation are therefore both messengers, shadows created by the instability of
economic systems, which are expressions of different unstable economic situations. Exactly for this
reason, to believe that deflation may be the opposite of inflation is an error in substance and method.
Even worse would be to believe that deflation could be corrected by a "measure" of inflation,
because in this way we would state that we can pretend to move from one monetary expression to
another, as if they were comparable to a real economic management program.
Because both inflation and deflation are mechanisms with a natural engine and as such, they
certainly cannot emerge through a normal economic management model, which by the way may be
responsible for the fall and permanence of the economic system into the instability sub-world.
This perspective, which perceives the nominal price movements linked to the unstable economy as
messengers that are essentially warning about the system deviated situation, introduces some new
points of view in the fight against the deviation of the economic system. In fact, talking about fight
against inflation or deflation control may no longer make sense. Because fighting the signs of
malaise could mean that we are going against the mirror represented by money, which is just a
handmaid of the economic scenario.
In other words, the struggle against the symbols of the instability within economic systems,
represented by inflation or deflation, in this way becomes a sort of battle against windmills. The
system fever, that is the nominal alteration of the prices dragged by an autonomous engine which
is somehow transferring over the money the conjuncture trouble gradually increasing, is to be
compared to the fever of a living organism. That is, a sign of malaise and not the malaise itself, which
is essentially the untreated instability of the economy.
The inflation fever obviously cannot be treated by placing limits on the main prices, with a sort of
straight jacket on prices. Because in this way the market becomes frozen and the basic problem
certainly remains unsolved. The classic attack to the inflation rising through monetary policy is the
maneuver of interest rates, which thus will follow the price adventure. Basically, there is not a real
action against the reasons that caused the deviation of the economy from the natural route. The
increased cost of money is widely reflected on the prices, so affecting the behavior of companies
and families that reduce consumption and investments. Therefore, the delegation of the fight
against inflation to the monetary policy is the waiver from the economy government of the right
action to attack the actual reasons that led to instability.
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URL: http://dx.doi.org/10.14738/assrj.77.8761 936
Cossiga, G. A. (2020). According To The Sustainability Theory, The Natural Rebalance Of Resources And Wealth May Continue In Global Scenario. Advances in
Social Sciences Research Journal, 7(7) 927-957.
Communication Partner On Uptake Of Voluntary Medical Male Circumcision Among Married Men In Kenya: An Evaluation Study Of Information Source
Attributes. Advances in Social Sciences Research Journal, 7(7) 825-842. In any case, the function performed by monetary policy through the interest rate maneuver affects
the economic situation and only indirectly the price direction. In other words, with the rate
maneuver in the case of inflation, the cost increases, this time due to the rising interest rates, will
affect and slow down the growth of the economy. The following freeze or recession of the economy
has an impact, though only by reflection, on the fate of prices which thus tend to decrease. In fact,
the recession in the economy is generally followed by consequent falling in nominal prices.
It should be noted that the inflation driven by the natural engine, follows its rhythm dependent on
the acceleration imposed by the instability degree of the economic system. The speed reduction of
prices due to the ongoing recession is of a different nature, which is obviously unrelated to the
natural engine of nominal inflation. In this regard, it is worth to note that deflation (so to say an
economic recession in fieri) normally acts in subtraction from the underlying phenomenon of
nominal inflation. It can be deduced that prices would begin to fall, under the pressure of the
economic downturn, but only if the downward push operated by the recession would be stronger
than the acceleration of nominal inflation driven by instability.
In the case of a fight against inflation through monetary policy, the target are not the nominal prices
but the economic situation, which through its decline transmits a downward impulse to the run of
nominal prices. Therefore, the monetary policy takes the place of the natural engine that usually is
activating the recession to mitigate the gap between the natural path and the deviated course of the
unstable system.
Talking now about the case of deflation inside an unstable system, also in this case the monetary
policy acts by delegation of the economy government, on which lies the task to control the excesses
of an economy running out of the natural path. In this case, however, the scenario is different. In
fact, to mitigate the price decline it would be necessary, also in this case, to let the natural system to
push the economy down to allow thus the economy recession. A maneuver that, blocking the
tendency to speculative rush of the altered system, in reasonable times can reduce the economy
instability and consequently would therefore mitigate the downward trend of prices.
If the monetary policy hopes to mitigate the price run with the progressive decline of interest rates,
and therefore of the cost of money, we can witness a basic misunderstanding. Deflation may decline,
perhaps maintaining a value lower than the base inflation rate, so lower than that value close to 2%
assumed by the central banks as a potential indicator of a good economy. To mitigate the economic
downturn and the growing dangers of economic default series, the central banks, as now, are
feeding the market with new and growing liquidity system. Thus, the reduction in interest rates
supports the economy while increasing liquidity added to the system keeps the price deflation in
the balance.
The misunderstanding lies in the fact that under the influence of these two different actions, the
conjuncture seems to hold, although it is weak, while deflation remains a latent and unresolved
danger. Apparently, there is no way out! And in fact, we must admit that in this case we are unable
to find a way out and we seriously risk that the scenario would act in unexpected and overly critical
way. In short, in this hypothesis the monetary policy plays a substitute role for the government,
which remains ‘at the window’ just to see what would happen. However, the buffer function carried
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out by monetary policy seem to be in opposition to the natural correction, which instead requires
an economic recession to restore the correct course as soon as possible.
ACCORDING TO THE SUSTAINABILITY THEORY, THE GLOBAL ECONOMY IS SUFFERING
Some preliminary observations
We can state that the fate of the economy seems to be entrusted to monetary policy, which at the
global level essentially moves in line with the position taken by the Federal Reserve, at least
regarding the continental areas. In summary, according to the FED, the warning signal represented
by the chronic price weakness is partially neglected; and this phenomenon is confirmed even
though the US economy is apparently healthy, at least in the years 2018-2019. Therefore, remains
somewhat unspoken the basic thesis confirming the choice to finance the economy with increasing
liquidity in the belief that the chronic trend towards economic deflation can be overcome, although
in an indefinite time (On a 12-month basis, overall inflation and inflation for items other than food
and energy are running below 2 percent. Market-based measures of inflation compensation remain
low; survey-based measures of longer-term inflation expectations are little changed. - Federal
Reserve issues FOMC statement December 11, 2019.) The changing global scenario for the storm
imposed by COVID 19 do not seem to change in deep the strategy of central banks, at least on the
theme of the envisaged price path, when in the end it will be passed the pandemic disease.
However, maximum attention had been paid to the economic trend, essentially looking at the
indicator of the economy state (The Committee decided to maintain the target range for the federal
funds rate at 1-1/2 to 1-3/4 percent. The Committee judges that the current stance of monetary
policy is appropriate to support sustained expansion of economic activity, strong labor market
conditions, and inflation near the Committee's symmetric 2 percent objective. - Federal Reserve
issues FOMC statement December 11, 2019). On the assumption that as long as the economy holds
and remains positive, sooner or later prices should follow the same upward pace. This uncertain
hypothesis sees - before the outbreak of the pandemic - a conjuncture that holds (even with a
decreasing growth) and weak prices, far from the base inflation value close to 2%. An anomalous
condition that cannot in any case be considered as like the condition of natural, linear and constant
growth, with the inflation close to the base value.
Therefore, it seems possible to deduce that the Fed's effort is aimed - before the pandemic but in
perspective also after - at keeping a good economic growth, and that the good economic factor is
valid to expect a recovery in prices. The US central bank is therefore acting as a substantial support
to the action of the economy management, relying on the doubtful assumption that the economy is
dragging with it also the fate of prices. An unfounded axiom, indeed.
It can be observed that the conjuncture is the expression of the economic situation, while nominal
prices (inflation and deflation) fully follow the economic situation without contributing to the
economy’s fate. The relationship between the conjuncture and the nominal prices implies that
during the recovery phase the inflation is pushed upwards, while during the recession the prices
are pushed downwards. We must consider that this upward or downward push imposed by the
conjuncture, is algebraically added to the accelerated underlying motion of the nominal price
movement, which in turn depends on the instability state.
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Cossiga, G. A. (2020). According To The Sustainability Theory, The Natural Rebalance Of Resources And Wealth May Continue In Global Scenario. Advances in
Social Sciences Research Journal, 7(7) 927-957.
Communication Partner On Uptake Of Voluntary Medical Male Circumcision Among Married Men In Kenya: An Evaluation Study Of Information Source
Attributes Therefore, during the recession there will be a downward adjustment of the price nominal trend, or . Advances in Social Sciences Research Journal, 7(7) 825-842.
an upward push in the event of a recovering conjuncture. Just to say that, inside an unstable system
subject to deflation, a moderate cycle expansion brings with it an upward push to depressed prices,
while in the case of recession an additional downward fall in prices would occur. Downward and
upward tensions that, as we said, are algebraically added to the accelerated underlying motion. In
the case of the US economy, the cautious expansion of the cycle in the years 2018-2019 objectively
contributes to the increase of price pressure, which however remains low. We are therefore faced
with a mechanical - how to say - effect according to which the good conjuncture provides a modest
upward push at weak prices.
So, if we eliminate this mechanical component of price support, it is clear that the economic system
has an underlying tendency towards deflation. Which we should consider incompatible with the
economic system recovering phase. Therefore, does not seem sustainable the underlying thesis that
a supposed continuation of the US economy expansion may represent the driving force for a
recovery of price strength. Indeed, it could be thought that the progressive exhaustion of the
economic push may lead to a slightly declining path for nominal prices.
As saying that the economic pressure is partially hiding the chronic price weakness that obviously
occurs when the cycle strength is exhausted. From this point of view, may seem correct the position
taken by the Central Bank, which relies on the resilience of the recovering economy as a support
instrument also for the price holding. Now, firstly it is to be excluded that a value near to base
inflation close to 2% may announce that a balanced situation could have finally been reached
together with a linear and constant growth. Even if this would occur, it would be just a simple
overlap with an ideal value, which instead postulates an extended season of balanced economy, not
found in the recent experience of cyclical trouble doped by the tax return and the permissive
monetary policy. (Cossiga, no. X, 2018)
In short, an economy working with the ‘crutches’ of fiscal policy, which creates an embarrassing
public debt, and a monetary policy that seems to have no other chance than to follow the market
hungry for liquidity. These are not certainly the ideal conditions to maintain the structure of an
enduring natural balance.The problem can get complicated when we observe that the scenario in
North America is not so different from what is outlined inside the European Union. With the
exception, anyway, of the fragmentation of fiscal policies within the Europe of 19, which sees
together the countries willing to support the cycle by deficit support policies and some core
countries, Germany first, more likely instead to stop the public debt. A duplicity in the management
of the public budget and deficit that persists also in post-coronavirus Europe, even if faced with a
different prodigality of fiscal policy to support the economy between the north and south of the
continent. It does not seem singular therefore that the European Central Bank, before the spread of
the epidemic that is changing the economy of the continent, insisted on a very permissive monetary
policy, anticipating this time the position of the FED (Pending the activation of the Recovery Fund
at European level, the burden of the support to the conjuncture cycle, carried out in a fragmented
way by the Union countries, seems then to find a sort of unity through the monetary
policy(Regarding fiscal policies, the euro area fiscal stance is expected to continue to provide some
support to economic activity. In view of the weak economic outlook, the Governing Council
welcomes the Eurogroup’s call in December for differentiated fiscal responses and its readiness to
coordinate. Governments with fiscal space should be ready to act in an effective and timely manner.
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Advances in Social Sciences Research Journal (ASSRJ) Vol.7, Issue 7, July-2020
In countries where public debt is high, governments need to pursue prudent policies and meet
structural balance targets, which will create the conditions for automatic stabilizers to operate
freely. All countries should intensify their efforts to achieve a more growth-friendly composition of
public finances. Christine Lagarde, President of the ECB, Frankfurt am Main, 23 January 2020)
The picture does not change if we move on to the Asian countries which, before the shock caused
by the pandemic, envisaged a slightly rising price profile given a supposed slow rise in the economy.
According to ante-Covid 19 position of the Reserve Bank of India, the price trend towards standard
2% base inflation would be possible provided that growth continues at a rapid pace. Finally, China
provides a framework which reflects the resolute monetary easing due to coronavirus( The People's
Bank of China (PboC) announced on Sunday that 1,200 billion yuan (equal to over 156 billion euros)
will be injected into the country's financial system through reverse repo transactions, on the eve of
the reopening of the Shanghai and Shenzhen markets, closed for the Lunar New Year holidays from
January 24th. Subsequently, the PboC also announced that the interest rates on the 14-day reverse
repo had been cut from 2.65% to 2.55% (after the reductions of five basis points in October and
December) and from 2.50% to 2.40% the rates on the seven-day ones.)
The fearsome unexpected storm of the pandemic suddenly changed the picture of the global
economy at worst. The outlook for 2020 has changed ex abrupto, with a generalized drop in GDP in
all industrialized countries and a rapid decline in employment. The response of the financial market
to the lockdown has been uncertain. After a rapid drop in stock prices to the global level, in the face
of the progress of the threat and the consequent uncertainty, there has been a non-marginal
recovery especially in the US stock exchanges (Figure 1). A sign of uncertain understanding, given
the expectation of a profound cut in the GDP and, I would say above all, the unprecedented increase
in unemployment with a worsening of the classes less favoring and an increase in poverty.
The gap between the world of finance, in relative recovery, and the economy deeply wounded by
the pandemic, highlights a probable different recovery capacity of the two fronts. The first that is
already moving to partially regain the fall in values (though few win and many lose), although they
represent structures of the economy which is destined to redesign itself in minus, at least for the
next one or two years. The other (real economy) who must prove his ability to recover after the
sudden braking and decline. It seems to be able to say that the two images of the economy, financial
market and the real economy, are giving a plastic appearance of the degree of recovery. Slow for the
economy and therefore for the community of the labor, much more rapid and uninhibited for
wealth, always concentrated upward in society. Not only.
Because the different recovery capacity of the financial market in the various industrialized
countries seems to mark not so much the effective capacity of each economic system to recover after
the pandemic, but rather the recovery potential that individual economies can bring into play,
essentially on the front of the financial market. A potential that comes not from the real economy
and its virtues, but rather from the financial market itself and its instinct - so to speak - to the
increase in financial wealth. (Roubini, 2011)
Page 14 of 31
URL: http://dx.doi.org/10.14738/assrj.77.8761 940
Cossiga, G. A. (2020). According To The Sustainability Theory, The Natural Rebalance Of Resources And Wealth May Continue In Global Scenario. Advances in
Social Sciences Research Journal, 7(7) 927-957.
Communication Partner On Uptake Of Voluntary Medical Male Circumcision Among Married Men In Kenya: An Evaluation Study Of Information Source
Attributes. Advances in Social Sciences Research Journal, 7(7) 825-842.
Figure 1 – Trend of Dow Jones Industrial in recent six months from November 2019 to May 2020
Source: From MarketWatch
Now, if the recovery of financial market surpasses the real economy, it often may happen to the
detriment of the same production activity, which in some way remains in a weak position on the
credit market and therefore sees its possibility of recovery diminishing. It follows that the financial
market thus ceases to be predominantly the mechanism capable of oiling the wheels of the economy
and, instead, assumes the characteristics of an entity with its own purposes. That is, above all to
maintain the ability to centralize wealth for the limited members of the community favored by fate.
It follows that it becomes necessary at this point to set limits on the accentuation of this
phenomenon, because it occurs in contrast to the objectives of recovery in the real economy facing
the pandemic crisis. But this requires a separate discussion on the rhythms of finance and its
possible cycles, even adverse ones.
With the emergence of the pandemic on a global level, the main central banks have - how to say -
adjusted the monetary policy settings to the evolution of the economic scenario. Keeping the
reference rate at a level close to zero and, above all expanding the measures to give all the liquidity
necessary for the economic systems, which suddenly entered a severe recession. In any case, the
main decisions adopted in the first months of 2020 are reported in the note (In connection with
these plans, the Committee voted unanimously to authorize and direct the Federal Reserve Bank of
New York, until instructed otherwise, to execute transactions in the System Open Market Account
in accordance with the following domestic policy directive: - The Committee also directs the Desk
to continue conducting term and overnight repurchase agreement operations to ensure that the
supply of reserves remains ample and to support the smooth functioning of short-term U.S. dollar
funding markets. In addition, the Committee directs the Desk to conduct overnight reverse
repurchase operations (and reverse repurchase operations with maturities of more than one day
when necessary to accommodate weekend, holiday, or similar trading conventions) at an offering
rate of 0.00 percent, in amounts limited only by the value of Treasury securities held outright in the
System Open Market Account that are available for such operations and by a per-counterparty limit
of $30 billion per day. Federal Reserve issues FOMC statement. - March 23, 2020), (Additional
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identify a sort of leading manager who orchestrated such a powerful design of great historical
significance that is bringing closer economy and culture of the different continents and especially
North America, Europe and Asia.
The phenomenon, which has taken the name of globalization, in its superficiality can lead to an
excessive simplification. Not only about the underlying reasons behind the universal redistribution
of the resources offered by our Mother Earth, but also and maybe above all about the dynamics of
the phenomenon. (Roach, 2009)
A phenomenon, that of the redistribution of resources at a global level, which seems far from
exhausted and which is now moving with the experienced dynamics towards Africa. Now, it should
be clear that our planet’s capability to create resources is far from unlimited, in the respect for the
historical rules of preservation of natural resources for the future generations. It could be deduced
that a powerful process like the one we have witnessed during the recent years, must have losers
and winners. In the sense that we can imagine that the development strength experienced by the
Asian countries would have as a conditional consequence, the progressive slowdown in the growth
of Western countries.
With various consequences, indeed. Nevertheless, in the meantime, the global redistribution issue
must anyway have an engine, something that has been activated over time until to produce the
unexpected effects that we are observing. In the sense that even the distorted redistribution of
wealth and culture, and therefore the exclusion of large communities, can have inside a natural force
capable, in times maybe not consistent with those of a single generation, to start the action for a
redistributive strong effort.
Now, it should be clear that scientific and general knowledge is not only the basis of human
civilization but also the ideal bridge linking humanity's path throughout history with the evolution
of mother nature. In the sense that the relationship between humankind and environment around
us, can be strengthened and harmonized only thanks to the mediation offered by culture. So, the
more widespread would be the culture, without time and space limitations among the communities
living on our planet, the more it could carry out an effective task as the ideal humankind-nature
mediator.
According to this paradigm, we can believe that an altered redistribution function of the earth's
resources, and therefore an unbalance of the relative civilization levels, are symptoms of an
incorrect development for a balanced relationship with Nature. The phenomenon of globalization
can therefore be ascribed within a natural process that is trying to rearrange the access-to- resources issue, according to principles of greater equity between the communities. In the
assumption that this greater coherence in the use of natural resources has the consequence of an
acceleration of scientific and general research. Which, in turn, is synonymous with a more coherent
approach between humankind and nature.
On this basis we can believe that the gap of the wealth and resources between the different world
areas, as in the nineteenth century, cannot go on endlessly but there must be a point beyond which
the inconsistent development mechanism can stop, precisely because of the widening gap. It follows
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Advances in Social Sciences Research Journal (ASSRJ) Vol.7, Issue 7, July-2020
global economies, but at this point is taking the form of a forced and undue pressure. It is then
inevitable that despite the pressure exerted through the monetary policy and the strength of public
investment, the process should stop or almost regress, even apart from the repercussions of the
pandemic on the scenario of the global economy.
The exhaustion of the current homogenization process and the global consequences
An interpretation of the global situation, which would have exhausted its approaching role between
the great countries regarding the cultural and economic development level, could shed light on the
underlying reasons that are somehow cooling the pressure of global development. In some ways it
can be argued that the instability, which leads today almost the entire global context to a backward
march of prices and to an escalation of price deflation, can also be connected to the changed global
scenario. A context that sees only a partial restoring in the process of more equitable distribution
of culture and resources in the global context. Obviously, there are those excluded from this
revolution in the general economic framework
At this point, we could believe that if the development mechanism of the global economy is stopping,
perhaps this could depend on the fact that the adjustment of the Asian economies is running out,
with the relative equality of the great Asian countries and the West. As also shown by the
progressive process, though still weak, of the reallocation of production activities within the
European less developed areas and in part by the return to the home countries of the Western area.
Now, this return process, if it can prove that the homogenization phase is exhausted at least in some
great Asian area, does not appear capable of reactivating the mechanism of global development,
which therefore tends to decline. In other words, the post-homogenization adjustments in Asia do
not seem to be able to revive even a moderate run toward a more equitable global development. For
the simple reason that evidently the route to an acceptable homogenization of culture and resources
at a global level is still incomplete and therefore the natural process must go on.
This is to say that it must be fully understood and interiorized at the level of large countries that the
launch of new economic colonization processes, see Africa, are inconceivable. And that on the other
hand, the idea supported by some conservative sectors in the USA to call back home the production
activities located mainly in Asia, would be a limit imposed on the country's economic growth. And,
obviously, also on global development, which remains entangled in this revenge which is a losing
strategy from many points of view.
The current condition shows that a relative stasis of the global homogenization process is now
prevailing, and at the same time, thus, there is a decline in global development potential. We cannot
believe, however, that outbreaks of improper nationalism are worsening the scenario, because
otherwise we should believe that the leadership of some countries, the USA and China first of all,
would be able to condition the long and inexorable tendency towards a greater balance between the
continents.
Instead, we can now believe that this strange lethargy currently taking the economy – even for the
pandemic disease - is justified by the timing of the mechanism which is incomparable with the
human times. On the other hand, the long run of Asia, and China in particular, started from far away
and only during the 2000s achieved a level that is now remarkably close to that of the West. It is