Real Economy

Real Economy

It is difficult to explain what the concept of Real Economy has to do with the principle of Sustainable Development but in this article I will try to explain the point of view.
All of us living in this slice of history are bombarded daily by news and economic conjectures that more often than not, instead of clarifying, serve only to disorientate.
This aspect is by no means secondary.
Indeed, it represents something which must be clarified.
If we refer to a given space (local, national or international), we know that the economy is based on both qualitative and quantitative aspects.

By economy – from the Greek οἴκος (oikos), “house”, also understood as “a good of the family”, and νόμος (nomos), “norm” or “law” – is meant both the use of scarce resources to best satisfy individual and collective needs while containing expense, and a system of organizing activities of this kind put into being by a combination of people, organizations and institutions (the economic system).
Here we will deal with the aspect of the use of resources as a means of satisfying human needs, resources that we indeed know to be limited (renewable or nonrenewable).
In fact, it is the production of resources that interferes with the economy, or indeed, as it is more correct to say, produces economy.
If a Country does not produce resources its economy will enter into a crisis as its inhabitants, to be able to live, will need resources that must necessarily be delivered from elsewhere. Such a country will become poorer and poorer in a short time because the resources have a cost (the price that we are prepared to pay for purchasing them).
The financial crisis has taught us that a certain type of economy which is not based on real resources is in decline and destined to die in a few short years or decades, with evident political and economic repercussions.
In fact, we know that finance is the discipline that studies the processes with which individuals, businesses, corporations, organizations and states manage the monetary flow (collection, allocation and uses) over time. Since the economy is defined as “the science that studies the procedures for allocating limited resources among alternative uses, with the aim of maximizing one’s own satisfaction”, likewise finance is “that science that studies the procedures for allocating money among alternative uses, with the aim of maximizing one’s own satisfaction.”
But it is here that the mechanism is jammed: the enormous flow of finance produced by a historical economy (the summation of the monetary equivalent of the resources produced until now) has doctored, or if you prefer, doped the world Economic System, based not on the real availability of resources but on the effect of the production, over long periods, of the finances derived.
Such an economic aberration is so unreal that even a common person can not help but notice it when he is bombarded by financial Indexes like NASDAQ, MIBTEL, Dow Jones, PIL, etc., which belong much more to financial indexes that to economic indexes.
Many countries have undergone a crisis, dragging down the whole planetary economy through a domino effect, because, either through political incapability or through the availability and productive ability of the resources, they have become entangled due to economies which are not based on a real and concrete evaluation of their own resources.
We can say that the old and never negligible principle of the economic budget has been totally (and often purposely) neglected also by famous economists or by the politicians responsible.
No state and therefore no healthy economy can neglect the concept of balancing resources. A country that consumes more resources than those it is able to produce is destined sooner or later to fail, and with it its citizens, notwithstanding all the financial indexes.
But resources are not unlimited and it is their exhaustion (or the ability to renew them) that has taught us that the New Economy can have a Real value if we are able to produce as much as the necessities and the customs of a population require.
The examples of oil and of many extracted materials are emblematic of the economic immorality of many states (also in Europe, above all Italy).
For a certain period the sudden economic development of many Countries has been linked to the availability of these products, which have produced a fictitious wealth, because they speeded up the processes that were at the base of the ability to produce resources. Their methodical, and clearly prolonged, use has slowly impoverished the financial resources of these Countries.
But if resources are limited and the ability to produce them not so sure and evident, the Real economy of a Country is its ability to produce resources without affecting internal finances (public or private). Such a concept is the same as saying that the real economy is based on the ability to create an “Internal Reservoir” where the resource budget is always balanced. The renewability of resources is therefore not only the First Principle of the Real economy but also the Constitution of the liberty of a Population.
States without a real Economy cannot be free because they are subordinate and dependant on other strong Economies. These Strong Economies, however, will increasingly be those Economies linked to Countries which are able to have a positive balance in their ability to produce Renewable Resources. Therefore the message is that the power of future States, once the economy based on Finance (deteriorated Capitalism) has collapsed, will be linked to the ability to create a Real Economy.

Guido Bissanti