Italy's "German' economy
6 International Viewpoint February 1996
* Italy by Gianni Rigacci The economic situation has been good under Italy's last three, "technical" governments. Prime Ministers Amato, Ciampi and Dini have made serious inroads into the welfare state, abolished certain historic gains of the working population, continued the privatisation of the major public sector companies, and allowed the country's 'entrepreneurs' to make fat profits.
By sharply devaluing the Lira, the government provoked Italy's departure from the European Monetary System (EMS) and provoked an interest rate two or three times higher than the European Union average. In this sense, they took Italy further away from Europe. Sectors of the ruling class realised that the path towards European union should be modified Some politicians began talking about the need to revise the Maastricht Treaty.
The Party of the Democratic Left (PDS) has been the main force which has permitted these "technical" governments to survive. The party can legitimately claim to be a respectable and responsible candidate to see through to the end the necessary construction of a new, "Second Republic" PDS leaders can boast of the role they played in the struggle over retirement pensions. The party initially supported the mass movement and the trade unions in their mobilisation against Silvio Berlusconi's proposed counter-reform. But in parliament they supported Prime Minister Dini's very similar counter-reform. So did the trade union leadership.
FIAT President Agnelli has openly praised the PDS as a force "able to follow the new political direction". Before the March 1994 elections, PDS Secretary Achille Occhetto visited London, to assure the City bankers of his good intentions. Nowadays, there would be no need for his successor, Massimo D'Alema, to make a similar trip. His policy record is a good enough guarantee to reassure large sections of the employer and business classes.
Serious economic problems
Italian capitalism was traditionally based on a limited number of "leading families".
This structure no longer functions. The powerful families are no longer the same. Some have disappeared, and there are some newcomers. More importantly, the equilibrium between these families and the state (which, until very recently controlled the general credit system and a number of public enterprises which had a key position in the economy) has been broken. In effect, the state has decided to sell its entire
At the end of WW2, the 'anti-fascist' banker Raffaele Mattioli created the business bank Mediobanca. His goal was to assemble the capital needed to restart the economy, and to solve the immediate, pressing problems of reconstruction. And to make a profit in the process. His formula was brilliant. Most of the capital would come from state-owned banks. But a strict pact would ensure that the leading families would enjoy effective control over these funds, though each family would only own a very modest portion of the bank.
Over the years, this bourgeois "smart set' has lost ground. Great dynasties have died out. The sons and grandsons have not exhibited the same talents as their fathers. Some have fallen flat on their face while trying to take too large a piece of the cake. The nouveau-riche Silvio Berlusconi didn't want to enter the club. He thought he could do all right on his own. Some say that this impertinence is at the root of all his current
The Italian state's massive intervention in the economy began in the 1930s. It grew in importance after WW2, for two reasons. There was a real need to overcome the backward nature of Italian capitalism. And there were the political interests of the Christian Democracy party. No part of the private sector had the necessary capital. So the development of a strong public sector reflected the needs of the private capitalists. They needed a source of basic and intermediate products, available at cheaper prices than those paid by their foreign competitors. And they needed a much better infrastructure.
This is all over. Today, Mediobanca thinks it can act on its own. It has taken control of the banks which the state has made available for sale. The banks which, until yesterday, financed Mediobanca's activities! The bank has begun to assemble a massive industrial group, uniting the chemical, newspaper and financial sectors. The project is temporarily frozen, since one of the companies concerned has been found to have much larger debts than expected. Whether this continues to be a problem for Mediobanca or not, one thing is clear. Italian capitalism cannot continue its reconstruction programme without the investment of much more significant quantities of international capital.
It will not be easy to find a solution. They could establish a stock exchange on which a much larger number of companies would be quoted. This would make it possible to draw in much larger sections of personal and institutional savings. Such a stock exchange would also be the ideal institution for assuring the various privatisations which are being planned. But there is little chance of success as long as the national debt soaks up 10% of GDP. This debt means that a large part of savings are soaked up by treasury bonds. For the moment, a US-style stock exchange, which could regulate the system, is no more than a THE GERMAN SOLUTION?
If the 'American' solution is out, the only alternative is the German model, [based on strong banks, closely linked to the industrial sector]. The fusion and take-over battles among Italy's main banks are proof of the interest in such a solution. The drastic reduction in the number of banks will create a few extremely powerful financial groups. And now that Italian banks are no longer forbidden from holding shares, most banks have built up impressive portfolios. These are mainly the result of "debt for equity" swaps. In other words, those major companies which are in crisis, or particularly indebted, have surrendered some of their shares to the banks, in exchange for a reduction in their debts..
Will these developments bring a new stability to Italian capitalism? With a generous dose of state aid, they probably will. And such a choice is perfectly compatible with the ruling class's support for Maastricht Europe. THE STATE OF THE ECONOMY
The foreign press regularly reports that Italy is about to fall into the abyss. A little later, the same media report that "il belle paise*????? has once again muddled through. The reality is, of course, that the Italian economy is not in a disastrous situation. It has even shown itself capable of adaptation. The key is the large number of
CGIL: an alternative strategy for the union
This is the month of the preparatory meetings for the forthcoming congress of the Italian very dynamic small and medium enterprises. The economic tissue of the north eastern regions is entirely made up of such enterprises. Behind the dynamism is,