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The Unstable Stabilization Italian Capitalism and the Origins of the Current Crisis

The Unstable Stabilization
Italian Capitalism and the Origins of the Current Crisis

Francesco PETRINI

Far from being the offset of the recent events, the current predicament of the economies of Southern Europe lies its roots deep in the history of the last thirty five years. Even at a superficial look it comes clear that the deficits of the public sector cannot be considered the cause of the crisis ; if anything they are a consequence of the huge sums committed by the States to prevent the bankruptcy of the national bank systems. Much more than the product of the profligacy of the Italians or the Spaniards, the crisis could be seen as an offspring of the imbalances of the European monetary union which, as predicted by many economists, had no instruments to cope with a huge external shock, like that following the explosion of the financial bubble in the United States in 2007-2008. Furthermore, the European predicament has been worsened by the deflationary bias that had characterized the policies of the European monetary integration since its inception. [1] This set of explanations constitutes certainly a correct interpretation of the crisis, but to really grasp its roots, I think one has to go another step further, and adopt a long-term view. From this stance, the current global crisis evokes Karl Polanyi’s view of the Great Crisis of the 1930s as “the transformation of a whole civilization”, [2] that is as the collapse of the liberal order founded on British hegemony. Today we assist at the unravelling of the “neo-liberal” order after thirty years of dominance. We don’t know where we’re heading to, but it seems quite clear that the stabilization, which followed the turmoil of the 1970s has run its course. The term “stabilization” here is used in the same sense as Charles Maier did in his seminal 1981 article : “stabilization meant not so much preserving liberal procedures as re-establishing the overlapping hierarchies of power, wealth, and status that can be loosely termed ‘capitalist’”. [3]
In the XXth century the hierarchies of capitalism had been put into question, at a global level, in three occasions. First, in the aftermath of the First World War, when the revolutionary threat loomed large on European societies. At that time stabilization ensued in the form of a tentative restoration of the liberal order. Second, after the huge crisis of legitimacy of capitalism brought about by the Great Crisis and WWII. In this case the response shaped by the new hegemon was built around the twin pillars of the “politics of productivity”, as an antidote to class conflict, and of “embedded liberalism” as the economic context, which made possible to conciliate free market and national welfare systems. Finally, in the 1970s the capitalist order was questioned by a democratic push from below, a push made possible by two decades of uninterrupted economic growth and a situation of generalized full employment. As predicted by the Polish economist Michał Kalecki in 1943 :
“The maintenance
of full employment would cause social and political changes which would give a new impetus to the opposition of the business leaders. Indeed, under a regime of permanent full employment, the ‘sack’ would cease to play its role as a disciplinary measure. The social position of the boss would be undermined, and the self-assurance and class-consciousness of the working class would grow. Strikes for wage increases and improvements in conditions of work would create political tension. […] ‘Full employment capitalism’ will, of course, have to develop new social and political institutions, which will reflect the increased power of the working class. If capitalism can adjust itself to full employment, a fundamental reform will have been incorporated in it. If not, it will show itself an outmoded system which must be scrapped.“ [4]
From a Kaleckian point of view the high levels of industrial conflict in the advanced capitalist countries of the late 1960s, far from being a mere by-product of the student protests, are to be seen in close link to the condition of full employment that allowed the workers to demand a radical revision of the balance between capital and labour, both in terms of wages and of control over the organization of work. [5] In conjunction with the worsening of the competition between major capitalist centres, [6] this produced a serious compression of profits. [7] Moreover, in the 1970s the attack to the power hierarchies of capitalist societies was not confined to the factories but developed in other spheres of social life, from schools to family, and it did not come only from the interior of capitalist societies, but also from outside, with the struggle of the postcolonial states for equal sovereignty and for economic redistribution, thus acquiring a real global dimension.
The response to these challenges came in the late 1970s-early 1980s in the form of the “neo-liberal” (counter-)revolution. Then stabilisation implied the abandonment of full employment as the key policy objective, replacing it with the containment of inflation and the freeing of market forces. [8] This was made possible by the defeat of the workers’ movement and the demise of the Global South alternative. In the European Community, the neoliberal stabilization found a central pillar in the monetary integration. The increasing rigidity of the exchange rates inside the European Monetary System (EMS), and then the adoption of a single currency imposed on the participating States a strict monetary and fiscal discipline. As explained by the economist Robert Mundell, the European monetary integration could be seen as the European equivalent of the Reaganomics : in fact by removing the government’s control over currency, it would prevent elected officials from using Keynesian monetary and fiscal policies to pull a nation out of recession. “Monetary discipline forces fiscal discipline on the politicians as well”, he said, “[And] without fiscal policy, the only way nations can keep jobs is by the competitive reduction of rules on business”. [9] Of course Mundell’s view was partial, neglecting the geopolitical dimension of the monetary integration, but it is a fact that ultimately, the European societies found themselves plunged into a sort of return to the Gold Standard, in which the exchange rates were the “highly effective arm of the lever that was pressing on the wage level”, to use Polanyi’s words. [10]
Italy was fully involved in this cycle of crisis/capitalist stabilization. There, the democratic upsurge of the 1970s took one of the more radical form compared to other capitalist countries, for a variety of reasons that has to do mainly with the fragility of the country’s development and institutions. The Italian society responded to the radicalization of its internal relations and to the crumbling of the Bretton Woods order at the global level with a mixture of inflation and devaluation that carried the country through the turbulent 1970s. In the 1980s, when the internal and external conditions became favourable, it came the time of stabilization. The roots of the current crisis rest, I think, in the peculiar form that the “neo-liberal” stabilization took in Italy, which in its turn depended on the way the Italian capitalism interpreted the modernization of the country. Building on this premise, this chapter revises the ups and downs of the Italian cycle of radicalization-stabilization. My argument is that the choice for a development model based on exports and the containment of the labour cost – a choice originally justified by objective reasons but perpetuated by the conservative underpinnings of the Italian bourgeoisie – has led to a subaltern positioning of the country in the international division of labour that had generated the conditions for the present crisis. [11]

Italy’s road to modernization

After the Second World War, a “neo-mercantilist” vision according to which the economic development required the conquest of foreign markets dominated the mental horizon of Italy’s political-economic establishment. As emerged during the auditions of the Economic Commission of the Constituent Assembly, in 1946, the prevailing opinion amongst scholars, public and private industry’s and finance’s leading executives, was that Italy, as a poor country, with low levels of savings and incomes, very few raw materials on its territory and an abundance of manpower, had to find its space of growth abroad, taking advantage of the low cost of labour. [12] The imperative of sustaining exports precluded any sharp increase of the labour costs, [13] thus ruling out any possibility for a development driven by the internal demand, and in the final end perpetuating the model of low consumptions and low wages which has been at the roots of Italian economic development. [14] In this perspective, as explicitly stated on the Confindustria Bulletin of November 1945 : “it’s not a question of adjusting the salaries to the cost of living, but the cost of living to salaries”. [15] This stance, which placed a great emphasis on the containment of manpower costs, has remained the basis of the Italian industrial bourgeoisie ’s conception of its role and possibilities of development till the present time. [16] It followed certainly from a pessimistic assessment of the country’s socio-economic structure, but it also responded to the conservative bias of Italian ruling elites, which aimed at containing any increase in workers’ power and influence and at preserving the delicate internal equilibrium of the industrial bourgeoisie . [17]
This “neo-mercantilist” vision was by no means an Italian peculiarity. The Federal Republic of Germany could be considered the prime example of a mercantilist stance in Europe. However, West Germany showed a peculiar way to boost international competitiveness : the key factor was to keep inflation low in a system of fixed exchange rates and thus to realize a devaluation in real terms relative to countries with higher inflation rates. [18] Italy, under the guidance of its Central Bank, at first followed a similar strategy (in 1959 the lira was assigned by
The Financial Times the “Oscar” as the world most stable currency), but, being characterized by class relations much more conflict-prone than those prevailing in West Germany, it was ultimately obliged to shift to a different path.
The “Kaleckian moment” came very early for the Italian economy. The sustained growth of the “economic miracle” brought about, at the beginning of the 1960s, the virtual extinction of unemployment in the country’s industrial core, thus provoking an increase in the bargaining power of workers who began to demand the redress of the inequities cumulated in the preceding years. In fact, throughout the 1950s the gains in real wage were constantly surpassed by the gains of productivity. [19] In 1962 workers’ discontent exploded in a strike wave that racked the factories in the Northwest of the country. As a result wages rose substantially. Employers responded passing the increase of the labour cost on to prices in an attempt to maintain their profits, as they admitted : “the transfer of the rise in costs to prices becomes inevitable under the pressure of the reduction of the profit margins on which the firms operate”. [20] Consequently inflation started to rise and the trade balance to suffer. This development endangered the foundation of the policy followed by the
Banca d’Italia , the ultimate decision maker of the Italian economic policy. Since 1947 the Bank successfully pursued a policy mix made by monetary stability, a balanced current account and a balanced, non-inflationary growth. In order to achieve the latter, the key variable in the eyes of the Bank was profitability. Only adequately high profits could ensure the investments necessary to mop up the chronic manpower surplus. On the other hand – due to the fact that workers’ marginal propensity to consume is higher than employers’ – a wage rise would result, in the Bank’s view, in a greater demand for consumer goods, thus feeding inflation, higher imports and current account imbalances, and in the final end provoking an arrest of the growth. [21] Yet, the centrality of profits in guaranteeing capital accumulation did not translate, in the Bank’s policy, into a dogmatic conception of monetary stability. The attitude of the Bank has always been characterised by policy flexibility and theoretical eclecticism. So, in the immediate it adopted an easy monetary policy to sustain the price hike that defended the profit level. However that policy could not continue for long, given that a devaluation of the lira encountered the opposition of the United States, worried for the stability of the whole system, and of the European partners, threatened by the competitiveness of Italian exports, and was excluded by the Banca d’Italia itself for prestige and credibility reasons. [22] Thus, between the second half of 1963 and the beginning of 1964 the Bank reversed its policy of monetary expansion and shifted to a very restrictive policy, which, in conjunction with the fiscal measures taken by the government, pretty much put an end to the “economic miracle” and restored the previous conditions of capital accumulation. The abrupt slowing down of the economy provoked a surge in unemployment – the number of jobless climbed back to over a million from the 1963 all time low of 780,000 – bringing back order on the factory floor. Inflation returned under control. From 1966 the GDP was rising again at a very sustained pace. But this growth had a very different quality from that of the economic miracle years. Now investments stagnated and the growth became even more dependent on exports. The gains in productivity, necessary to maintain the competitiveness of Italian manufactures on the international markets, were realized with the expulsion of manpower and the increase in the work rates. [23]
In sum, the 1964 crisis marked a pivotal change in Italian history : by choosing a purely deflationary response to the exposure of the contradictions of the “economic miracle”, the country’s establishment decided to remain on the path of “low consumption-low salaries-export push” rather than accepting the new realities brought about by the modernization and try to accommodate workers’ demands with a shift to a more internally oriented growth and a leap towards higher value-added productions. [24]

The 1970s : inflation and devaluation

At the end of the 1960s, when the labour market tightened again, [25] industrial workers’ discontent for the tough conditions of their job exploded again, setting in motion a cycle of industrial conflict bound to last till the end of the 1970s. The workers won significant advances in terms of wage, as in the early 1960s, and also of increased control on the production process. And as before, the immediate consequence of these gains was an upsurge of inflation, in an attempt to alleviate the profit squeeze that had followed workers’ victories. The big difference with 1963 was that the ensuing deflationary move, carried out in 1970 by the Bank of Italy and by a centre-right government, did not work. This time, deflation did not bring back order on the shop floor, stopping the wage rise and thus restoring external competitiveness. [26]
The reason of this different outcome resided mainly in the increased strength of the trade unions. While in the early 1960s the unions were divided and still suffering from the defeats and political isolation of the preceding decade, in the early 1970s, though initially taken by surprise by the workers’ protests, promoted by the unskilled, not unionized workers, they were ready to overcome their political division and to respond positively to the democratizing and radical push coming from the rank and file. [27] As a result they were now much more entrenched in the factories and thus could resist to the attempts to normalization. Furthermore, international conditions were not favourable to a repetition of the “deflation in one country” move. The other major industrial countries, the markets of Italian exports, were slowing down their growth and the international environment had become much more competitive than a decade earlier. [28]
Another crucial difference was that in the early 1970s the crumbling down of the Bretton Woods system meant the disappearance of the Polanyian “lever pressing on the wage level”. While in 1963-1964 the pressures deriving from the exigency of defending the external parity of the lira coming from the US and the EEC partners had played a crucial role in legitimizing the deflationary manoeuvre, in the climate of free-for-all of the early 1970s the
vincolo esterno (external constraint) did not work anymore. The disorientation of the Italian economic establishment clearly emerged in the words of the president of Assolombarda, the employers association regrouping the firms operating in Lombardy, the industrial heart of the country :
“In practice the mechanism of accumulation that characterized the Italian economy in the 1950s and 1960s seems to have stalled, and we have not yet found the way to restart it”. [29]
In search of a way out from their predicament, the Italian employers gave their support to the attempts at reviving, on a European basis, a system of rigid exchange rates, not only as a way to insulate the common market from the repercussions of international financial turmoil, but also in the hope of restoring the external constraint on the wage level. At this regard, it is significant that in March 1972, in occasion of the launching of the “European Monetary Snake” (the joint floating exchange rate system of the EEC countries) a number of articles on the Confindustria’s daily newspaper pleaded for the adoption of a common wage policy as an indispensable complement to the monetary measures. [30] But the hopes of reviving the “lever pressing on the wage level” soon crashed against the modest results achieved by the attempts at macroeconomic coordination of the EEC countries. [31]
In sum, since the newly acquired force of the unions and the turmoil into which the international monetary relations had precipitated barred the resort to deflation as a way to counter the wage pressure, the price hike appeared as the only way to defend profits. Consequently, inflation escalated, alimented also by the steep rise of the price of the raw materials and of the labour costs consequential to the “pay explosion”. While in 1971-1972 Italy’s inflation rate, though accelerating, was lower than Germany’s, in 1973 it soared to 10.8%. Consequently, concerns raised about the loss of competitiveness that the pegging of the lira to the Deutsche mark, coupled with the increase in the cost of labour, caused for Italian exports. For example, commenting the Smithsonian Agreement that briefly revived the Bretton Woods system, Confindustria’s
Sole 24 Ore clearly prospected the necessity of devaluation :
“At the political level the need for a restoration of the business margins will arise. That can be achieved through a substantial devaluation [...]. Italian workers have to understand that it is not possible to increase the real value of wages by 20-30% in one year and then not accept a devaluation”. [32]
The monetary storm of early 1973 led to the abandonment by the lira of the Monetary Snake and to its free float, a prelude to a series of sharp devaluations that allowed the Italian economic system to withstand the impact of high rates of domestic inflation. As commented by the influential weekly magazine
Mondo Economico  : “The European Monetary Snake is an intolerable straitjacket for economies that go each on its way”. [33]
The final demise of the Bretton Woods world of virtually fixed exchange rates and the passage to floating rates made possible to use devaluation to over-compensate the internal inflation, thus boosting exports and maintaining acceptable levels of profitability. Overall, in the period 1973-1980 the lira exchange rate registered a fall of 54.6%, with an average yearly devaluation of 9%. [34] The lira’s real effective exchange rate, deflated by the unit labour cost, registered a fall of 20%. [35]

The devaluation of the lira turned out to be quite effective in terms of GDP growth and in defending the profits. In 1973-1974, the economy grew at rates similar to those of the economic miracle with an average yearly GDP growth (in real terms) of 6.3%. [36] The booming economy and the worsening of the terms of trade brought about a drastic deterioration of the balance of payment. Consequently, during 1974 the government was forced to ask for international financial assistance. [37] In return it pledged to contain inflation. The generalized depression of the advanced capitalist economies and the restrictive policies adopted by the Central Bank and the government were at the origin of the slump of 1975, [38] when, for the first time since the end of WWII, the GDP growth went into the negative. The difficult conditions of the Italian economy led to a new devaluation of the lira at the beginning of 1976. Exploiting the different course of the US dollar and the German mark, the Italian monetary authorities adopted a policy of “asymmetric” or “differentiated” devaluation, allowing the lira to lose value against the mark (to the benefit of a vast range of exports) and to devalue in a lesser degree or even revalue against the dollar (to the benefit of many imports). Thus the economy reverted to growth. As Ciocca and Toniolo write :
“In Italy, 1976 marked a real boom of the economy, with a real GDP growth of 6.2% and an increase of industrial production greater than 12% (a rate never again reached)”. [39]
This opened a five years spell of sustained GDP growth – in average 4.7% between 1976 and 1980 – analogous to that of Japan and higher than that of the European partners. It was, once again, an export-led growth. But, if between 1964 and 1972 the expansion of the exports was founded on the gains in productivity obtained through a greater exploitation of the workforce, since 1973 the key factors became the devaluation and a decrease in the cost of labour. In achieving the latter, inflation played a key role. In fact, the operation of a massive fiscal drag, that is the increase in the workers’ tax burden due to the nominal raise of wages, allowed the financing of a system of generous subsidies to enterprises (mainly through the cut of security contributions paid by the employers and passed on to the State). [40] As pointed out by Giavazzi and Spaventa :
“There was in short a redistribution from wages to industrial profits by means of an increased taxation of labour incomes induced by inflation rather than legislated by Parliament”. [41]
On a more structural plan the containment of the labour cost was realized through a threefold restructuring of the manufacturing sector. First, and foremost, the restructuring meant the decentralisation of production outside the large Fordist factories. Entire production lines were moved outside the large plants towards smaller firms. This development was part of a more general trend that slowed down and in some cases inverted the tendency, almost centennial, towards the increase of the average dimension of the firm. In Italy this phenomenon acquired a particular force, and soon the small and medium enterprises came to be celebrated as the backbone of the Peninsula’s economy. There is a vast literature on the reasons of this development that traces it back to the history of the country and to its particular social and economic structure, or to the technological change, but it is certainly no coincidence that the movement toward the concentration of capital, which had been particularly strong in the second half of the 1960s, was reversed abruptly in the climate of harsh social conflict of the 1970s. As observed by Sebastiano Brusco, there is a direct correlation between the intensity of employers’ control on the workforce and the dimension of the plants. [42] In the small firms the workforce was generally less organized and often not unionized at all, furthermore there was an ample recourse to the black market of labour that had no equal in other major capitalist countries.
Secondly, the restructuring took the form of the geographical relocation of production, inside and outside the country. The country’s most important private firm, Fiat, announced in April 1970 the decision to heavily invest in production facilities in the South of Italy, reversing a policy of development, which until then had been firmly anchored in Turin. [43] Behind this decision there was certainly the lure of the public funding for the development of the Mezzogiorno, but also the search for new sources of labour, less organized and more docile, and the escape from the large urban concentrations of workforce towards smaller establishments placed in predominantly agricultural areas. [44] In the same period, the company strengthened its international presence with the opening or the expansion of factories in Poland, Yugoslavia, Spain, Turkey, Brazil, Argentina. Thus, while in 1968 82.8% of the vehicles of the Fiat group (subsidiaries, affiliates or licensors) were made in Italy, in the following years this percentage decreased steadily to reach 58.9% in 1977. [45]
At the same time, and this is the third aspect of the restructuring, the manufacturing sector underwent a process of technological innovation that, while apparently opening to the instances of the labour movement for the humanization of work and for a greater protection of health, actually aimed at saving labour and recovering flexibility in the use of manpower. Cesare Romiti, one of the highest-ranking executives at Fiat during these years, pithily synthesized the sense of the technological change, with considerations that concerned Fiat but could easily be extended to the entire industrial system :
“You [the unions] have insisted so much with this story to produce cars in a new way that Fiat itself has come to do it. Indeed, it has passed to the forefront. It pushed so hard on automation that it realized indeed a new way of doing the cars, but for the benefit of production costs, and therefore not in the way you imagined”. [46]
In sum, thanks to a mix of devaluation, inflation, subsidies and a thorough restructuring of production, in the 1970s the Italian capitalism, though put under pressure by the strength of the workers movement, managed to defend its profit levels and in the second half of the decade registered higher performances than those of its European partners.

But, in absence of a coherent industrial policy the restructuring of the manufacturing sector was left to the “animal spirits” of the Italian entrepreneurs and, contrary to the Bank of Italy’s assumption about a direct link between profits and investments, the 1970s confirmed and strengthened the tendency of the Italian industry to specialize at the medium-low end of the technological spectrum with a decrease of the content in innovation of the Italian manufacture. [47] The respite given by the devaluation was not used as a springboard towards a new pattern of specialization, but instead as a wall to defend the mercantilist model based on the containment of manpower costs.

The 1980s : stabilization the Italian way

Though effective in defending profitability, the recourse to inflation and devaluation fed instability at home and concerns and irritation abroad. In fact, Italy’s trade partners were not willing to accept what they saw as unfair commercial practice from a member of the Common Market. Especially the German industry feared the competitiveness that the weak lira gave to the exports of Italian manufactures. Furthermore, towards the end of the decade, the changing international economic climate rendered impossible for a relatively small country, deeply integrated in the international markets, as Italy, to continue a policy that was in direct contradiction with the ascendant monetarist creed, with its insistence on the containment of inflation as the supreme objective of the economic policy.
At the internal level, inflation seemed to intertwine with the political and social turmoil of years characterized by the advancement of the left at local and national election, by violent confrontation in the streets between the groups of the neo-fascist right and the extra parliamentarian left, and by the rising activity of armed terrorist bands of both right and left tendency. In this difficult climate, and well aware of the geo-political constraints weighing on the country as a member of the Western bloc, the main party of the left, the Italian Communist Party (PCI), decided, since the beginning of the decade, to follow a strategy of “national responsibility”, that is to renounce to the prospects of a leftist alternative and to go after an accord (the so called
compromesso storico , historical compromise) with the Christian Democracy (DC), the main governing force of the country since 1947. The affirmation in 1974 of the “No” vote in the referendum on the abolition of the divorce, marked the defeat of the right wing of the Christian Democracy, opening the way to the re-launching of the centre-left coalition and to the intricate manoeuvring that some time later would led to the entering of the PCI in the governmental area. [48]
At the economic level, the February 1975 agreement between Confindustria and the trade unions on the revision of the wage indexation system (the
scala mobile , sliding scale) had radically altered the prospects. The new system, gradually entering into force by 1977, guaranteed the wages total, automatic and equal coverage against inflation. This, of course, rendered useless the recourse to the inflation/devaluation mechanism as a way to defend profits since that would have triggered, in the final end, a rise of labour costs through the automatic adjustment of wages, thwarting all the expected benefits for the competitiveness of exports. From the unions’ stance, the rise in the cost of living and the mounting unemployment (and also the evidence of a widening gap in rights and wage between the workers employed by the big industrial firms and those in the small and medium sized ones) had weakened the unions and pushed them to reconsider their strategy. In January 1978, in a historic interview, the secretary general of the main Italian union confederation – the communist/socialist CGIL – speaking on behalf also of the other confederations, signalled the willingness of the trade unions to accept a policy of moderation, and explicitly recognized as a mistake the idea of the wage as an independent variable which had been central in unions’ strategy since 1969. In order to reduce unemployment (the jobless were 1,600,000) it was necessary to revitalize the economy :
“I’m convinced – he said – that capitalism has entered a declining phase. However, this does not at all mean that in the medium term it couldn’t know again intense phases of development. [It] is to collaborate to this objective, and use it to mop up the unemployment, that we ask the working class to accept a programme of sacrifices”. [49]
Against this background, in March 1978 the PCI, for the first time since 1947, took part in a parliamentary majority with the DC, although it did not have representatives in the government. As it was, the communists were thus directly involved in the preparation of the stabilization plan presented by the Minister of the Treasury Filippo Maria Pandolfi in August 1978. The plan’s avowed final aim, which echoed the views of a Confindustria’s proposal advanced at the end of 1977, were a sustained rate of growth and an increase of the employment levels, but these objectives were in contradiction with the deflationary bias of the policies envisaged : cut of public expenditures, no increase of real labor costs (and consequently stagnant real wages), greater flexibility in the use of manpower (essentially : greater possibilities for lay offs). Again, the only possibility of growth was identified in the export push. In this context bringing the inflation back in control was essential to reap the benefits of the devaluation and of the containment of labor costs. [50]
A crucial contribution to the consolidation of the conservative anti-inflationary front came from the
vincolo esterno (the external constraint). The nascent EMS represented a challenge for Italy, making inevitable a revision of the strategy followed till then, and, at the same time, an opportunity to consolidate the anti-inflationary front. The choice for Europe, in this case embodied by the EMS, was presented, as it would happen later, as the last chance to rescue a political and social system that seemed increasingly out of control. The participation to the EMS permitted to justify the stabilizing measures envisaged by the Pandolfi plan as a sacrifice for the sake of the good cause of European integration and as an unavoidable necessity to remain hooked to the European train. [51] According to Carli, then president of Confindustria, the Italian entry into the EMS could stimulate “the acceleration of the agreement between the social and political forces on the [Pandolfi] plan and a firmer commitment to tighten the constraints that it imposes”. [52] As stated by the Christian Democratic senator Beniamino (Nino) Andreatta, one of the most influential economists in the country, during the parliamentary debate on the EMS :
“We believe that anchoring our country to the European
écu will give us a stable point of reference that can only be beneficial for the debate on the Pandolfi plan. In this perspective, it becomes evident the intolerability of an integral wage indexation […]. [We] have to aim high, to commit ourselves to a policy of stabilization, even if such a policy implies sacrifices for the industrial worker, whose wage […] has dwindled in real terms. But I believe that in the first phase of the adjustment it will be necessary to endure a real wage reduction of even 1-2 per cent”. [53]
In spite of the opposition of the Bank of Italy and of the PCI, the government headed by Giulio Andreotti decided to adhere to the Schmidt-Giscard proposal. The Bank of Italy was doubtful about the asymmetric character of the new system and feared the losses of reserves that it could sustain in trying to remain inside the fluctuation band and the ultimate loss of credibility if the lira could not fulfil its commitments. This would represent a deadly blow for any strategy of stabilization. [54] The asymmetric character of the exchange mechanism, which assigned the burden of adjustment to the debtor countries, and the lack of any real commitment for the support of the weaker countries, induced the PCI and other voices from the left to criticise the predictable social effects of an agreement that appeared tailored on the German deflationary bias. Ultimately the PCI voted against the entry into the EMS thus terminating its participation to the governmental majority.
However, the end of the participation of the Communist Party to the stabilizing effort did not represent a return to the old pattern of industrial conflict. The PCI had not yet defined any clear alternative after the failure of its long-standing attempt to compromise with the moderate forces. [55] Furthermore, the thorough restructuring undergone by the Italian industry and the worsening of the international economic climate, following the second oil shock and the monetarist turn in the USA and the UK, had irremediably weakened the unions’ position. The change in the balance of power in industrial relations was made evident in Autumn 1980 when the “march of the 40,000” Fiat white-collars in Turin imposed the end of a thirty-five days sit-down strike at Fiat plants called against the announcement of 14,000 layoffs by the management. [56] With the defeat of the unions at Fiat, the core of the Italian industry, a new season of industrial relations began, with a drastic decline of conflict and the reaffirmation of employers’ authority on the shop floor.
As evidenced by Roberto Gualtieri, [57] Italy’s stabilization after the turbulent 1970s, followed a peculiar path that is a third way between the conflicting stabilization of Thatcherism and the consensual stabilization of the neo-corporatist countries of Northern Europe. [58] After the break-up of the
compromesso storico , that could be equated to a neo-corporatist attempt to build a große Koalition involving the trade unions into the disinflationary process, during the 1980s Italy realized a “monetarist stabilization”, in which the management of the economic policy was taken over by the technocratic elite of the Bank of Italy, while politics was relegated in a “residual role”, that is to guarantee the existence of a sufficiently broad and stable parliamentary majority consistent, as much as possible, with the necessities dictated by the policy of stabilization.
In the aftermath of the second oil shock inflation reached its highest peak in 1980, but two moves consolidated the new anti-inflationary course of the Italian macroeconomic policy. One was the so called S. Valentine decree emanated in 1984 by the government with the assent of the non-communist trade unions that cut the wage indexation system in an attempt to break what was seen as a vicious circle between wage indexation and inflation. The measure, for the first time attacking one of the main unions’ achievements of the 1970s, provoked the breakup of the trade unions’ unitary federation. The communist part of the CGIL and the PCI called for a referendum against the measure. Their defeat in the polls, one year later, definitely marked the opening of a new epoch. The electorate had embraced the promises of growth that the monetarist stabilization seemed to disclose.
The other element consolidating the anti-inflationary stance of Italian economic policies was the decision taken in July 1981 by the minister of Treasury, Nino Andreatta, in agreement with the governor of Bank of Italy, Carlo A. Ciampi, to proceed to terminate the engagement, imposed in 1975 to the Central Bank, to buy all the government bonds left unsold by the market. A result of a simple exchange of letters between the two, not submitted to the Parliament – an “open conjure”, as stated later by Andreatta [59] – the “divorce” between the Treasury and the Bank gave the latter effective independence in the management of the monetary policy. The “divorce” between the Central Bank and the government made inevitable the pursuit of a policy of high interest rates, which responded to the double need of finding buyers on the financial markets to finance the public deficit and to maintain the lira inside the EMS fluctuation band. The soaring of the interest rate was the main source of the steep rise in the public debt to GDP ratio that passed from 59.5% in 1980 to 99.1% in 1990 (reaching 120% in the mid-1990s). [60]

In spite of the cooling off of prices, the spread with the inflation of the more “virtuous” European countries remained significant, and this, in the context of the EMS led to an appreciation in real terms of the exchange rate of the lira. The frequent realignments of the exchange rates, which took place in the first phase of the EMS life, were not sufficient to compensate the inflationary spread. The Italian industrial system was thus forced to compete with countries (first of all West Germany, but also the Netherlands, France, Belgium, Denmark) whose currencies underwent a process of devaluation in real terms. [61]

The Bank of Italy, under the guidance of governor Ciampi, adhered with conviction to the policy of monetary discipline and strong currency dictated by the EMS, in the hope that this would stimulate the Italian productive system to modernize and take a technological leap towards higher value added productions. [62] Actually this did not happen for the large bulk of the Italian industry. The majority of Italian employers, now that deflation had brought back order in the factories, preferred to remain on the path opened in the mid-1960s, of low productive investments and reliance on the manpower cost differential. This, in a world increasingly interconnected, characterised by the rise of the newly industrialized countries and by the entry in the labour market of huge masses of underpaid industrial workers, appeared to be a losing bet. But this did not mean that Italian productivity lagged behind. Actually, as evidenced in the following graph, the productivity of Italian workers was not so distant from that of the German ones. In some period it was even higher, for instance in the second half of the 1960s and in the second half of the 1980s.

So, it is evident that in these years the real brake to the Italian economy was not the laziness of Italian workers but the constraints imposed by the entry into the EMS. In the second half of the 1980s the virtual ceasing of the realignments inside the EMS, the weakness of the US dollar that reduced the possibilities of finding an alternative outlet for Italian exports, and finally the 1990 decision to adopt the stricter fluctuation band of ± 2,25% for the lira, further exacerbated the problem for the Italian economy. The GDP growth slowed down and, as a consequence of the insufficient growth, productivity deteriorated. [63] Inflation, after having reached its lowest level in 1987, started to rise again, as a result of the increase of prices in the service sector and, paradoxically, of the capital influx determined by the newly acquired credibility of the lira and by the high interest rates.

The end of the “internal constraint”

When, in September 1992, the EMS collapsed under the weight of the policy of high interest rates followed by the Bundesbank in order to cushion the inflationary effects of the financing of the German reunification, the lira reacquired its freedom of fluctuation. After the UK had announced in early September its abandonment of the EMS, the 21st of September the Bank of Italy publicly declared that it would restrain from further interventions on the currency markets to sustain the exchange rate of the lira. By April 1993 the lira had lost almost 30% on the mark. Then the lira’s exchange rate stabilized around a level 25% lower than in the past. [64] This permitted a sharp recovery of exports. But, again, the respite given by the devaluation was not used to obviate to the more evident weaknesses of the industrial system. To the opposite, in July 1992 the accord between Confindustria and the unions that definitively put an end to the wage indexation system and, a year later, the new agreement on the cost of labour – which linked the wage bargaining to the programmed rate of inflation – marked the definitive end of the “internal constraint” for the Italian productive system, that is the disappearance of a strong labour movement capable to oblige the employers’ to follow a strategy of growth different from the pure containment of the cost of manpower. [65] At the same time, the start of a vast programme of privatization, the hugest ever realized in an advanced capitalist country, carried out under the motto “Europe asks for it !”, meant the renunciation to any possibility of industrial policy and economic planning and led, in many cases, to dismal results. [66]

The beginning of the process of adhesion to the Euro area, in the late 1990s, marked the return to the pattern of real appreciation of the currency and deterioration of the competitiveness for Italian products. As in the 1980s and even more so, the dramatic weakening of the labour movement meant that the strong external constraint did not spur the industrial system to evolve towards higher value added productions. On the contrary, though remaining the second in Europe for dimension, the Italian industry has known in the last twenty years a low level of investments and a steep decline in productivity, which paralleled the decline in workers’ relative share of product and rights.
In the “good” years, these processes were somewhat alleviated by the influx of capitals, the housing bubble (Italy has one of the world highest rate of home ownership) and a relative low level of unemployment (thanks to the creation of jobs in the service sector and, in the 1980s, to the counter cyclical effect of the expansion of employment in the public sector and later to the creation of a large number of temporary, and low paid, positions). But when the crisis came, the asymmetries in the Euro architecture emerged in full light exposing the failure of a whole model of development.

[1] For an overview of the genesis and the course of the crisis and of the role of the Euro in it see : Riccardo Bellofiore, “Two or three things I know about her’ : Europe in the global crisis and heterodox Economics”, Cambridge Journal of Economics, n. 3, 2013, p. 497–512 ; Alberto Bagnai, Il tramonto dell’Euro, Reggio Emilia, Imprimatur, 2012, p. 21-43.

[2] Karl Polanyi, The Great Transformation. The Political and Economic Origins of Our Time, Boston, Beacon Press, 2001, p. 21.

[3] Charles S. Maier, “The Two Postwar Eras and the Conditions for Stability in Twentieth-Century Western Europe”, American Historical Review, n. 2, 1981, p. 327-352, reprinted in Idem, In Search of Stability. Explorations in Historical Political Economy, Cambridge, Cambridge UP, 1987, quote at p. 161, emphasis added.

[4] Michał Kalecki, “Political Aspects of Full Employment”, The Political Quarterly, n. 4, 1943, p. 322-331.

[5] Commenting a reprinting of Kalecki’s article, in 1976 Joan Robinson wrote : “The failure to develop new institutions and attitudes while maintaining a more or less continuous growth of national income left no way for the workers to get a better deal, other than through traditional wage bargaining. The struggle of people to maintain their share of income, which has now spread to every group in society, is the basic cause of the inflationary stagnation which is threatening to bring the era of high employment and growth to an end” (J. Robinson, “Michał Kalecki : A Neglected Prophet”, The New York Review of Books, 4/3/1976, p. 30.).

[6] Robert Brenner, “The Economics of Global Turbulence. Uneven Development and the Long Downturn : the Advanced Capitalist Economies from Boom to Stagnation, 1950-1998”, New Left Review, I/229, 1998, p. 1-265.

[7] Philip Armstrong, Andrew Glyn, John Harrison, Capitalism Since 1945, Oxford, Blackwell, 1991, p. 169-207. For an interpretation of the crisis that combines the horizontal (between enterprises) and vertical (between capital and labour) conflicts see Giovanni Arrighi, Adam Smith in Beijing : Lineages of the 21st Century, London, Verso, 2009, p. 116-39. On Labour movements in the xxth century, see Beverly J. Silver, Forces of Labor. Workers’ Movements and Globalization since 1870, Cambridge, Cambridge UP, 2003.

[8] On the rise and the characters of the new capitalist order after the 1970s see : Andrew Glyn, Capitalism Unleashed. Finance, Globalization and Welfare, Oxford, Oxford University Press, 2006 ; David Harvey, A Brief History of Neoliberalism, Oxford, Oxford UP, 2005.

[9] Greg Palast, Robert Mundell, evil genius of the euro, “The Guardian”, 26/6/2012, Mundell, a chief architect in the construction of the supply side economics, was the creator of the theory on the Optimum Currency Area and is often referred to as the “father of the Euro”.

[10] K. Polanyi, The Great Transformation, op. cit., p. 238.

[11] This point of view derives, mainly, from the works of Riccardo Bellofiore, see for ex. : « L’eccezione esemplare : il caso italiano nella crisi globale ed europea », Critica Marxista, n. 2, 2013.

[12] Ministero per la Costituente, Rapporto della Commissione economica, vol. II, tomo II, L’industria - Verbali degli interrogatori, Roma, Istituto Poligrafico dello Stato, 1946.

[13] For an exposition of this view see the annual reports of the Central Bank governor during the mandate of Guido Carli, for ex. Considerazioni finali del governatore della Banca d’Italia, Roma 31/5/1965, p. 160.

[14] Franco Bonelli, « Il capitalismo italiano. Linee generali di interpretazione », in Storia d’Italia, Annali, I. Dal feudalesimo al capitalismo, Torino, Einaudi, 1978.

[15] Quoted in Massimo Legnani, « L’’utopia grande borghese’ », in AA. VV., Gli anni della Costituente. Strategie dei governi e delle classi sociali, Milano, Feltrinelli, 1983. p. 140.

[16] As Rolf Petri pointed out, there was a strong degree of continuity between the fascist regime and the post war governments in their emphasis on exports : “the autarchic ‘imperative of the moment : export !’ was replaced by the slogan […] ‘export, export, export’”. See Rolf Petri, Storia economica d’Italia. Dalla Grande guerra al miracolo economico (1918-1963), Bologna, il Mulino, 2002, p. 306. The first quotation comes from Felice Guarneri, Battaglie economiche fra le due guerre, Bologna, Il Mulino, 1988, p. 691 ; the second from Guido Carli (with Paolo Peluffo), Cinquant’anni di vita italiana, Roma-Bari, Laterza, 1993, p. 140.

[17] As pointed out by Mariano D’Antonio, the adoption of expansive policies would have meant the sacrifice of the more backward sectors of the industrial system, Mariano D’Antonio, Sviluppo e crisi del capitalismo italiano 1951-1972, Bari, De Donato, 1973, p. 173-174.

[18] On Germany’s “monetary mercantilism” see : Carl-Ludwig Holtfrerich, “Monetary Policy Under Fixed Exchange Rates (1948-1970)”, in Ernst Baltensperger (ed.), Fifty Years of the Deutsche Mark. Central Bank and the Currency in Germany since 1948, New York, Oxford University Press, 1999, p. 307-402 ; Idem, “Monetary Policy in Germany Since 1948. National Tradition, International Best Practice or Ideology”, in Jean-Philippe Touffut (ed.), Central Banks as Economic Institutions, Cheltenham, UK, Edward Elgar, 2008, p. 22-51.

[19] The wage share on the industrial product passed from almost 70% in 1953 to 57% in 1960, Augusto Graziani, Lo sviluppo dell’economia italiana, Torino, Bollati Boringhieri, 2000, p. 83.

[20] « Una più seria politica economica », L’Organizzazione industriale, n. 19, 9/5/1963.

[21] For an exposition of this point of view see Banca d’Italia, « Considerazioni finali 1963 », in Idem, Considerazioni finali 1960-1981, p. 111-149, For an analysis of this aspect of the Bank’s conceptions : Michele Fratianni, Franco Spinelli, Storia monetaria d’Italia. Lira e politica monetaria dall’Unità all’Unione Europea, Milano, ETAS, 2001, p. 448 ; Eugenio Gaiotti, Salvatore Rossi, « La politica monetaria italiana nella svolta degli anni Ottanta », in Simona Colarizi et alii (eds.), Gli anni Ottanta come storia, Soveria Mannelli, Rubbettino, 2004, p. 281-340, p. 308-309 ; Alfredo Gigliobianco, Via Nazionale. Banca d’Italia e classe dirigente. Cento anni di storia, Roma, Donzelli, 2006, p. 282.

[22] Antimo Verde, « La crisi della lira del 1963-64, una crisi senza svalutazione : perché ? », Studi e Note di Economia, n. 1, 2002, p. 75-95, p. 90. On the contrariety of the other EEC countries, and especially France, see Paolo Peluffo, « Introduzione : ‘Il cavallo non beve’. Dibattiti negli anni Sessanta su politica monetaria e programmazione economica », in Guido Carli, Scritti scelti, edited by Paolo Peluffo and Federico Carli, Roma-Bari, Laterza, 2000, p. V-LIV, p. XIX.

[23] See for ex. : A. Graziani, Lo sviluppo dell’economia italiana, op. cit., p. 86-89 ; Guido Crainz, Il Paese mancato, Roma, Donzelli, 2005, p. 57-64.

[24] This point is developed in Francesco Petrini, « Vincolo esterno e lotte sociali : gli industriali italiani e la fine dell’età dell’oro », in Ilaria Del Biondo, Lorenzo Mechi, Francesco Petrini (eds), Fra mercato comune e globalizzazione. Le forze sociali europee e la fine dell’età dell’oro, Milano, FrancoAngeli, 2010, p. 15-44. On Italy’s industry “de-specialization” during the 1960s see : Matteo Gomellini, « Il commercio estero dell’Italia negli anni sessanta : specializzazione internazionale e tecnologia », Quaderni dell’Ufficio ricerche storiche, n. 7, 2004.

[25] More precisely, in the late 1960s the Italian labour market was not in a situation of full employment, but the growing Taylorization of the work process had paradoxically led to an increase of the workers’ control over the lines of production. Furthermore, the rise in the costs of living in towns and the higher levels of schooling had prevented the creation of an effective “industrial reserve army”. See Massimo Paci, Mercato del lavoro e classi sociali in Italia, Bologna, Il Mulino, 1973, chap. 8.

[26] See the gloomy consideration of the then Governor of the Bank of Italy, Guido Carli, in Idem, Intervista sul capitalismo italiano, interview with Eugenio Scalfari, Torino, Bollati Boringhieri, 2008, p. 64-65.

[27] Robert J. Flanagan, David. W. Soskice, Lloyd Ulman, Unionism, Stabilization, and Incomes Policies. European Experience, Washington, The Brookings Institution, 1983, chapter 9.

[28] Cf. Michele Salvati, “The Italian Inflation”, in Leon N. Lindberg, Charles S. Maier (eds.), The Politics of Inflation and Economic Stagnation : Theoretical Approaches and International Case Studies, Washington, The Brookings Institution, 1985, p. 509-563, p. 552.

[29] Giuseppe Pellicanò, « Riflessi della situazione internazionale sull’industria italiana », Mondo Economico, 5/2/1972, p. 49.

[30] See, for ex., « Lo squilibrio nello squilibrio (le strutture salariali nella Cee) », Il Sole 24 Ore, 18/3/1972 ; Assemblea dell’Assolombarda, Milano, 6/4/1972, « Relazione del presidente G. Pellicanò », Mondo Economico, 15/4/1972.

[31] « Risultati modesti », Il Sole 24 Ore, 2/11/1972.

[32] « Quale è il costo dei cambi fissi ? », Il Sole 24 Ore, 5/1/1972.

[33] « Unione monetaria. Una politica da riformulare », Mondo economico, 24/2/1973, p. 13.

[34] Pierluigi Ciocca, Gianni Toniolo, Storia economica d’Italia, 2. Annali, Roma-Bari, Laterza, 1999, p. 442.

[35] E. Gaiotti, S. Rossi, La politica monetaria italiana, op. cit., p. 316.

[36] P. Ciocca, G. Toniolo, Storia economica d’Italia, op. cit., p. 443.

[37] In April Italy received from the International Monetary Fund (IMF) a stand by credit line up to 1 billion SDR (Special Drawing Rights). In August the German Bundesbank granted a loan of 2 billion dollars, taking as collateral the gold reserves of the Bank of Italy. Finally, in December the EEC conceded a loan of $1.4 billion.

[38] In implementing the restrictive policy the Italian authorities ended up being plus royaliste que le roi applying measures much harsher that those recommended by the IMF, see Luigi Spaventa, “Two Letters of Intent : External Crises and Stabilization Policy, Italy 1973-1977”, in John Williamson (ed), IMF Conditionality, Washington, Institute for International Economics, 1983, p. 441-473, p. 454.

[39] P. Ciocca, G. Toniolo, Storia economica d’Italia, op. cit., p. 457.

[40] “Fiscal drag was responsible for an almost 9 points rise of the tax burden of industrial workers between 1974 and 1980, only a fraction of which was offset by discretionary measures of opposite sign” (Francesco Giavazzi and Luigi Spaventa, “Italy : the Real Effects of Inflation and Disinflation”, paper presented at the Economic Policy Panel, Torino, 20/10/1988,, p. 13.).

[41] Ibid.

[42] It is no coincidence, as Brusco pointed out, that the Fiat factory Mirafiori in Turin, the first Fordist plant in the country, was built under the fascist regime ; see Sebastiano Brusco, « Organizzazione del lavoro e decentramento produttivo nel settore metalmeccanico », in Idem, Piccole imprese e distretti industriali, Torino, Rosenberg & Sellier, 1989, p. 113-117.

[43] Valerio Castronovo, Fiat 1899-1999 : un secolo di storia italiana, Milano, Rizzoli, 1999, p. 1238 ; Giuseppe Berta, Conflitto industriale e struttura d’impresa alla Fiat 1919-1979, Bologna, Il Mulino, 1998, p. 150-151.

[44] Alberto Imazio, Carlo Costa, L’organizzazione del lavoro alla Fiat. Produzione e conflittualità operaia, Padova, Marsilio, 1975, p. 139-150.

[45] Gioia Pescetto, « Il settore dell’auto negli anni ’60 e ’70 e la strategia della Fiat », in Istituto piemontese di scienze economiche e sociali A. Gramsci, La ristrutturazione nell’auto e nei componenti e la posizione della Fiat, Torino, 1980, p. 22. According to Vincenzo Comito (La Fiat tra crisi e ristrutturazione, Roma, Editori Riuniti, 1982, p. 40-41), from the mid 1970s Fiat investments abroad became really alternative to those in Italy.

[46] Cesare Romiti, Questi anni alla FIAT, interview with Giampaolo Pansa, Rizzoli, Milano, 1988, p. 89.

[47] Franca Falcone, Commercio internazionale e integrazione europea. Aspetti teorici ed esperienza italiana, Bologna, Il Mulino, 1990, p. 247-361, on the 1970s, p. 261-263.

[48] Franco De Felice, « Nazione e crisi : le linee di frattura », in AA. VV., Storia dell’Italia Repubblicana, vol. 3, t. 1, L’Italia nella crisi mondiale. L’ultimo ventennio, Torino, Einaudi, 1996, p. 7-127.

[49] La Repubblica, 24/1/1978.

[50] The text of the Pandolfi plan is in Giangiacomo Nardozzi (ed.), I difficili anni ’70. I problemi della politica economica italiana 1973-79, Milano, ETAS, 1980, p. 23-56. For an insightful analysis of the document, see A. Jovane, P. Guerrieri, « Le linee di politica economica per il rilancio dell’economia italiana : un’analisi critica », in P. Garonna, P. Guerrieri, A. Jovane, A. Lazzerini, P. Leon, La politica economica italiana degli anni ’70. Un’analisi critica, Venezia, Marsilio, 1979, p. 79-104.

[51] See for ex. the contributions of the businessman and Christian-Democrat MP Francesco Merloni and of Filippo M. Pandolfi in AA. VV., La Lira e lo scudo : la scommessa europea, Bologna, Il Mulino, 1978, p. 103-111 and p. 123-138.

[52] Guido Carli, « La partecipazione del’Italia allo SME », Prospettive Settanta, n. 4, 1978, p. 3-6, p. 3.

[53] Intervention at the Senate of the Republic, 7/12/1978, in AA. VV., La Lira e lo scudo, op. cit., p. 141-156, p. 152 and p. 155.

[54] A. Gigliobianco,Via Nazionale, op. cit., p. 324-326.

[55] On the PCI positions in the 1970s and immediately afterwards see : Lucio Magri ; The Tailor of Ulm. Communism in the Twentieth Century, London, Verso, 2011, p. 244-347 ; Leonardo Paggi, Massimo D’Angelillo, I comunisti italiani e il riformismo. Un confronto con le socialdemocrazie europee, Torino, Einaudi, 1986.

[56] Paul Ginsborg, Storia d’Italia dal dopoguerra ad oggi, Torino, Einaudi, 1989, p. 541-545.

[57] Roberto Gualtieri, « L’impatto di Reagan. Politica ed economia nella crisi della prima repubblica, 1978-1992 », in Simona Colarizi et alii (eds), Gli anni ottanta come storia, op. cit., p. 190-191.

[58] This dichotomy is taken from Michele Salvati, Occasioni mancate. Economia e politica in Italia dagli anni ’60 a oggi, Roma-Bari, Laterza, 2000, p. 59-64.

[59] Beniamino Andreatta, « Il divorzio tra Tesoro e Bankitalia e la lite delle comari », Il Sole 24 Ore, 26/7/1991. The two letters exchanged between Andreatta and Ciampi to implement the “divorce” can be read in AA. VV., L’autonomia della politica monetaria. Il divorzio Tesoro-Banca d’Italia trent’anni dopo, Bologna, Il Mulino, 2011, p. 99-105.

[60] Giuliano Garavini, Francesco Petrini, Il “divorzio” tra Tesoro e Banca d’Italia : il vincolo interno e le origini del problema del debito pubblico italiano, forthcoming.

[61] Jan A. Kregel, « La politica del cambio della Banca d’Italia e la ristrutturazione dell’industria italiana, 1980-1985 », in Giangiacomo Nardozzi (ed.), Il ruolo della Banca centrale nella recente evoluzione dell’economia italiana, Milano, FrancoAngeli, 1993, p. 59-98, p. 76.

[62] Gianni Bonaiuti, « Oltre il governo del credito : finalità e limiti nell’azione della Banca d’Italia negli anni Ottanta », in Giangiacomo Nardozzi (ed.), Il ruolo della Banca centrale nella recente evoluzione dell’economia italiana, Milano, FrancoAngeli, 1993, p. 23-58 ; John B. Goodman, Monetary Sovereignty. The Politics of Central Banking in Western Europe, Ithaca, Cornell UP, 1992, p. 158-167.

[63] The correlation of growth of output and that of productivity is known in economics as Vernoorn-Kaldor’s law, see Nicholas Kaldor, Causes of the Slow Economic Growth of the United Kingdom, Cambridge, Cambridge University Press, 1966.

[64] On Italian economic policy in these years see the memoirs of the then minister of the Treasury : Piero Barucci, L’isola Italiana del Tesoro. Ricordi di un naufragio evitato (1992-1994), Milano, Rizzoli, 1995.

[65] I owe this idea of the “internal constraint” to Alberto Bagnai, Declino, produttività, flessibilità, euro : il mio primo maggio, and Riccardo Bellofiore’s reconstruction of the thought of Claudio Napoleoni, On the new course of Italian industrial relations see : Considerazioni ed indicazioni su « Le relazioni sindacali in Italia », Consiglio nazionale dell’Economia e del Lavoro, Assemblea del 12/7/1994, Roma, CNEL, 1994, p. 911-984.

[66] Cf. the situation in the steel sector, where the all the country’s major integrated mills (in Genova, Piombino, Taranto), after having been sold to private groups of Italian nationality in the 1990s, are now been dismantled or out of production ; and in the telecommunications sector where Telecom Italia, the main offspring of the privatisation in the 1990s, is now heavily indebted and on the verge to be sold to foreign investors. On the 1990s privatizations see Barbara Curli, “The vincolo europeo, Italian Privatization and the European Commission in the 1990s”, Journal of European Integration History, n. 2, 2012, p. 285-301 ; Gianluigi Da Rold, Assalto alla diligenza. Il bottino delle privatizzazioni all’italiana, Milano, Guerini e Associati, 2012.

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