The Sustainability Issue at the Time of the Epidemic. The Abnormal Cycle of Finance

Abstract

The sustainability principle explains the economic situation and its alterations according to the basic view of continuity, in the view of life preservation for future generations. From this perspective, the troubles affecting the economy, including those caused by the COVID 19, must be interpreted under the sign of the instability of systems, while following the natural tendency to recover the compatibility with nature. Even the cycle of the economy is accompanied by the recession and involution of the economy, which are to be interpreted as natural tools for the return to development equilibrium. According to this approach, the financial crises of the 2000s are symptoms of the serious gap separating us from the balanced development and from the irrevocable obligation to systems stability. On this issue, we will try to understand whether the possibility that the financial tsunami caused by financial crises is the result of an ambiguous and abnormal secondary financial cycle, which overlaps with the economic cycle. Therefore, it doesn’t seem unlikely that the breakdown imposed by the pandemic on the global economy could have the effect of blocking, but only temporarily, the development of the secondary financial cycle. It’s therefore not surprising at all that a few months after the outbreak of the pandemic, the financial market, after the fall of last March, is now raising again (see the US Stock exchanges) despite the collapsed employment. The hypothesis we propose is that it’s the serious phenomenon of the unusual concentration of wealth and income to the detriment of the rest of the community, the improper engine of the adverse financial cycle. It is Adverse because it falls on the economy and once again is inflicting a heavy damage on the weaker part of the community. It should be noted that also this fearful wave in the financial market would be caused by a natural reaction. The natural goal of the financial cycle would be, indeed, to periodically demolish wealth, through the collapse of stock exchange values and related assets. At the same time, the increasing unemployment and corporate crises would be contrasted with Keynesian policies, which can be seen as means for a more equitable distribution of wealth and income. However, the natural goal is partially disregarded for the enormous low-cost liquidity available on the market, and this will finally allow the financial part to prevail over the market. What to do, then? It’s necessary and advisable to promote a greater equity in the distribution of income and wealth.