Italy's Malaise

Guido Carli

From Foreign Affairs, July 1976

Article preview: first 500 of 4,451 words total.

Summary:  Italy is in the throes of that most difficult of predicaments, a state of transition. Transition to a more open and egalitarian society; transition to new economic and financial arrangements; transition to a more efficient administrative machinery; transition to greater participation in decisions concerning the place of work; transition to a more important role for women; transition to an expanded influence for parties of the Left. The transition is made all the more difficult by the fact that the hectic, unbalanced economic growth of the sixties, which made tolerable the (lower) pace of social change, has given way to the twin evils of stagnation and inflation. Attention abroad has been largely focused on the drift toward impotence of the government, the crumbling of established authority, the current economic and financial crisis, the turbulent division of society and the growing ungovernability of the country, and above all on the advance of a party calling itself communist, apparently the only one capable of filling the void, since the balance between the parties of the Left in Italy is different from that in other Western European countries as a strong Socialist party does not exist. But the wheels of history are turning fast not only in the political sphere but also in the economic field, and transformations in the latter are both cause and effect of the socio-political changes of the past decade.

Guido Carli was Governor of the Bank of Italy, 1960-75, and Minister of Foreign Trade, 1957-58. He is currently a consultant to the First Boston Corporation.

Italy is in the throes of that most difficult of predicaments, a state of transition. Transition to a more open and egalitarian society; transition to new economic and financial arrangements; transition to a more efficient administrative machinery; transition to greater participation in decisions concerning the place of work; transition to a more important role for women; transition to an expanded influence for parties of the Left. The transition is made all the more difficult by the fact that the hectic, unbalanced economic growth of the sixties, which made tolerable the (lower) pace of social change, has given way to the twin evils of stagnation and inflation. Attention abroad has been largely focused on the drift toward impotence of the government, the crumbling of established authority, the current economic and financial crisis, the turbulent division of society and the growing ungovernability of the country, and above all on the advance of a party calling itself communist, apparently the only one capable of filling the void, since the balance between the parties of the Left in Italy is different from that in other Western European countries as a strong Socialist party does not exist. But the wheels of history are turning fast not only in the political sphere but also in the economic field, and transformations in the latter are both cause and effect of the socio-political changes of the past decade.

In the seventies the structural weaknesses of the economy have been accentuated and the risk of social and political regression has increased. Just as the democratic surge, the assertion of egalitarianism and the onslaught of demands on the government are not idiosyncrasies of Italy but are a familiar phenomenon throughout Western democracies, similarly the dysfunctions of its economy have many parallels in other industrialized nations. The postwar period has witnessed everywhere a major rise in governmental functions and an equally large decline in governmental authority and in governmental capacity to meet the public's rising expectations. If Italy's malaise is deeper than elsewhere, it is because of the vulnerability of its economic structure and the fragility of its democracy; and perhaps most of all, to a Latin lack of interest in minor or medium-sized reforms and routine maintenance of the bureaucratic machine. All or nothing is the cry of the reformists, and usually that means nothing. There is a helpless tolerance of certain abuses which is more Asian than European, alongside one of the most efficient and modern private sectors.

Contrary to standard Marxist analysis, the battle is no longer between workers and the owners of the means of production-for the simple reason that since the thirties the Italian state has controlled most large enterprises. Railroads, public utilities, steel-making, the national airline, banks, computers, machinery, shipbuilding, textiles and many other sectors are controlled by the state through the well-known IRI formula and its latter-day variants. In recent years, many obsolete industries have been taken over by the state, further extending its hold on the economy: over 50 percent of GNP ...

End of preview: first 500 of 4,451 words total.