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ABSTRACT
Since its origins European integration has been closely connected to the social tensions that capitalism generates. During the interwar years, one of the main rationales behind the push to deeper European economic integration was the search for increased prosperity as a means to prevent class conflict. After the economic collapse of the 1930s and the Second World War, the European Communities were an essential part of a larger effort towards the restoration of capitalism’s legitimacy and hierarchies. Since the end of the 1970s, following the crisis of the post-Second World War regime, the stabilizing role of European integration assumed new modes. Italy, as a weak link in the chain of capitalist development, showed in advance and with the utmost clarity how this new role worked. In two crucial passages of the post-1945 country’s history, when workers’ unrest strongly challenged the existing capitalist hierarchies, European governance played a crucial role in their restoration. Both in the early 1960s and in the late 1970s the European ‘vincolo esterno’ (external constraint) decisively helped the affirmation of the domestic deflationary forces.
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Notes
1. Horkheimer, “The Jews.”
2. The article was originally published as Maier, “The Two Postwar Eras.” Later republished in Maier, In Search, 153–84, quote from 161.
3. In order to explore the relationship between capitalist competition and European integration, a useful tool is the concept of uneven and combined development, as originally proposed by Leon Trotsky and more recently adopted by a school of international relations theorists and some historians (Trotsky, History of the Russian Revolution; Rosenberg, “Isaac Deutscher”; Anievas, Capital, the State and War; Tooze, The Wages of Destruction).
4. Beckert, “American Danger.”
5. The push towards the unification of Europe was often paralleled by the pleading for the creation of ‘Eurafrica’ (Beckert, American Danger, 1161–3).
6. In the preceding years, as foreign minister of the Weimar Republic, Stresemann had followed an ‘Atlanticist strategy’ aimed at finding an ally in American financial circles to restore Germany’s position on the world scene (see the Introduction in Tooze, The Wages of Destruction).
7. Tooze, The Wages of Destruction, 15; Wright, Stresemann, 476. Striking a similar note, a few days earlier Briand told Stresemann that ‘the next task’ would be to consider how to achieve ‘the political and economic consolidation of Europe’ to maintain peace and resist American dominance (Wright, Stresemann, 474).
8. Hitler, Second Book, 107.
9. Tooze, The Wages of Destruction, 10.
10. Sombart, Why is There no Socialism, 106.
11. Maier, In Search of Stability, 128.
12. Maier, “The Politics,” 70.
13. Quoted in McCormick, America’s Half-Century, 79.
14. Typically representative of the Europeanism of these reformist circles was the journal Sozialistiche Monatshefte, founded in 1905 by Joseph Bloch and widely read in German trade unionist circles. The review melded a moderate socialist position with a pan-European stance (Bloch, “La conception”).
15. Coudenhove-Khalergi, Idéalisme Pratique.
16. Kuisel, Ernest Mercier, 45–113. See also the work of the economist and member of the Redressement group, Delaisi, Les Contradictions.
17. Milward, The European Rescue, 216.
18. On the precarious economic and social equilibria after the Second World War see Armstrong et al., Capitalism, 3–26; Mazower, Dark Continent, 217–24. A telling example of the radicalization brought about by the war and the Great Depression is the Ahlen programme approved by the German Christian Democratic Union (Konrad Adenauer’s party) in the British zone of occupation in February 1947. The document opened with these words: ‘The capitalist economic system has served neither the State’s nor the German people’s vital interests. After the terrible political, economic, and social collapse that resulted from criminal power politics, a new order is required, and it must be built from the ground up. The content and goal of this new social and economic order can no longer be the capitalistic pursuit of power and profit; it must lie in the welfare of our people.’ The text of the programme can be retrieved from http://ghdi.ghi-dc.org/print_document.cfm?document_id=3093.
19. The term comes from Ruggie, “International Regimes.” Karl Polanyi was the first to distinguish between embedded and disembedded economies. In the first case economic activity is constrained by exogenous rules and institutions. The attempt at ‘disembedding’ the economy by building a self-regulating market during the nineteenth century led to ‘massive suffering’ and ended in failure, highlighted by the Great Depression and the Second World War (Polanyi, The Great Transformation, quote from 258). The Bretton Woods regime proceeded to re-embed the market, by instituting some form of the regulation of international transactions, in an attempt to reconcile the pursuit of an autonomous national economic policy of demand regulation and market integration.
20. Brenner, The Economics, 99–121.
21. Harvey, The Limits to Capital, chap. 7.
22. Arrighi, Adam Smith, chap. 6.
23. The basic social contradiction of the ‘Golden Age’ could be summed up with Sharon Smith’s words: ‘… higher wages and a better standard of living available only at increasingly extreme levels of exploitation. Even for the highest-paid workers, better pay couldn’t make up for the dehumanizing and degrading conditions on the job’ (“‘The Workers’ Rebellion’. An Enlightening Description of the Factory Workers’ Conditions in the Capitalist Core during the 1950s” in: Meyer, “An Economic.” On workers’ discontent in the capitalist centre in the 1960s, see Brecher, Strike!, chap. 7.
24. Kalecki, “Political Aspects.”
25. Armstrong et al., Capitalism, chap. 12.
26. Kalecki, “Political Aspects,” 326.
27. Phelps Brown, “A Non-Monetarist View.”
28. A good testimony of the degree of control achieved by the working class in the early 1970s is Roberts, Workers’ Control. See also Trentin, La città del lavoro, 26–8.
29. The quadrupling of the oil price was only the most visible manifestation of the fundamental change which occurred in the relations between the core and the periphery whose subaltern position as a supplier of cheap raw material and primary products at declining terms of trade had been one key feature of the post-war boom of the capitalist world. At least temporarily, the movement for a new international economic order put an end to this state of affairs. On the relationship between European integration and the ‘global South’ in these circumstances see Garavini, After Empires.
30. Quoted in Matusow, “Feature Review,” 771.
31. Cf. for example Szasz, The Road, 20.
32. On West Germany’s “monetary mercantilism” see: Holtfrerich, “Monetary Policy Under Fixed Exchange Rates”; Idem, “Monetary Policy in Germany.”
33. Parboni, Il conflitto, 128.
34. Parboni, The Dollar, chap. 4.5.
35. Szasz, The Road, 23–5.
36. Biven, Jimmy Carter’s, chap. 5.
37. Margaret Thatcher Foundation Archive, EMS Material https://www.margaretthatcher.org/archive/EMS_1978.asp, Note for the Record, Prime Minister Meeting with Chancellor Schmidt, Bonn, 12/3/1978. As Schmidt told Callaghan, who had answered his proposal by saying he had no technical understanding to judge it: ‘One effect would certainly [be] to weaken the German Mark.’
38. Ibid. For a broad overview of the interrelation between the economic development of West Germany and that of its European partners see Halevi, “The EMS.” According to Halevi, German post-war economic development can be divided into three phases: the first 15 years after the end of the Second World War, during which Germany’s rapid growth was contributing to a virtuous cycle for the whole of Europe (in the context of US-controlled institutions); a second phase during the 1960s in which a tension emerged within the European Economic Community’s balance of payments; and another phase after the end of the Bretton Woods regime when Germany’s role as a deflation exporter to the rest of Europe was firmly established.
39. At the start of the talks on the new system, the Bundesbank feared that the exchange rate mechanism of the EMS could represent a ‘perfect inflationary machine’. But, as Schmidt told the Central Bank council in November 1978, it was only a ‘façon de parler, a swimming trunk, or makeup to cover up the fact that the French are joining for the third time a European currency association that they twice left’ (quotes from James, The Making of European Monetary Union, 176 and 174. Of course, the currency association Schimdt was referring to was the Snake).
40. One of the main mechanisms fostering asymmetry was the possibility for the participating countries’ Central Banks to intervene in the exchange market in extra-EEC currencies. As explained by Parboni (The Dollar, 149): ‘If, for example, the Mark rises and reaches the divergence threshold, then the Bundesbank intervenes. If it were compelled to intervene with Community currency, it would have to sell marks for other currencies and would therefore increase the supply of Marks in circulation […]. If, on the other hand, the Bundesbank intervenes in dollars, as the accord permits, then it leaves the supply of marks unchanged while acquiring the weak currency. Moreover, under the former intervention system the Mark is weakened and falls into step with the other currencies; under the new system the weak currencies are pulled upward, held in a suffocating embrace by the Mark. […] The asymmetry lies in the fact that under the EMS, as under the Snake, there are no effective means by which to compel a strong-currency country to weaken its currency, but the weak-currency countries are compelled to strengthen theirs.’
41. For an analysis that almost in real time highlighted the asymmetric character of the EMS see Parboni, The Dollar, 141–68. Although Germany-dominated, according to Marcello De Cecco the EMS represented Germany’s climbing down ‘from a global monetary role to a regional one’. ‘Before the EMS inception, the FRG had tried a solitary confrontation against US economic policy, and had, after a few years of interest rate wars, revaluation and the defeat represented by the locomotive experiment, decided that it could not risk a repetition of the attempt to have an independent economic policy. The EMS was ostracised by the Bundesbank and imposed by the German political authorities exactly because it represented the end of monetary autonomy vis-a-vis US monetary policy, not that of other European countries’ (De Cecco, “The EMS,” 30).
42. Spaventa’s speech in Atti parlamentari. Camera dei deputati, VII Legislatura, Seduta del 12/12/1978, 24892–24899; Napolitano’s in Atti parlamentari. Camera dei deputati, VII Legislatura, Seduta del 13/12/1978, 24992–25000.
43. The importance of the vincolo esterno to rescue Italian capitalism was explicitly theorized by Guido Carli, one of the main protagonists of Italy’s economic development after 1945. The opening chapter of his memoirs is entitled: ‘The External Constraint that Saved us Thrice’ (the three times he referred to were: the adhesion to the Bretton Woods institutions after the Second World War; the European Monetary System at the end of the 1970s; and the Maastricht Treaty in the 1990s). Cf. Carli, Cinquant’anni, 5. One of the few historical analyses of the subject is by Gualtieri, “L’Europa come vincolo esterno,” who highlights the ‘political utilization’ of the European constraint ‘outside the democratic circuits of power and representation’ (p. 320). Striking a similar note, but with a more pronounced emphasis on the class character of that political utilization is Petrini, “Economia politica della crisi.” Campus, “Il governo del vincolo esterno”, stresses the passivity and insufficiencies of the Italian ruling circles in managing the country’s economic interdependence.
44. Bonelli, “Il capitalismo italiano.”
45. The ‘privilege of historic backwardness’ is an aspect of uneven development highlighted by Trotsky (History of Russian Revolution, 4).
46. Bellofiore, “I lunghi anni settanta,” 90.
47. On the declarations of the German Chancellor, Ludwig Erhard, and his minister for economics Kurt Schmücker expressing preoccupation with the inflationary tensions and demanding the institution of a Community machinery to coordinate the fiscal policies of the member states (i.e. to have a say in the policies of the more financially ‘indisciplined’ members) see “Tensione delle economie del Mec,” Orientamenti 453, April 15, 1964; cf. also Schmücker interviewed by Eugenio Scalfari, “Che si può fare per la lira,” L’Espresso, July 19, 1964. On the positions of the European partners and the EEC Commission see Cavalieri, “Il prestito della CEE.”
48. Peluffo, “Introduzione,” IX.
49. It is no coincidence that in this period the Commission presented a project for the coordination of national economic policies which led, in 1964, to the birth of the Committee of Governors of Central Banks, of the Budget Policy Committee and of the Medium-term Economic Policy Committee. On this aspect of the EEC institutional history Bussière, “Les tentatives.”
50. “La situazione economica dell’Italia è la più inflazionata in seno al Mec,” in L’Organizzazione industriale 7, February 13, 1964.
51. Also thanks to the US$1.275 million line of credit obtained (from various sources) in March through the good offices of the US administration. Cf. Fodor, “I prestiti internazionali.”
52. Petrini, “Esportare,” 40–9.
53. See the text of the letter in Franzinelli and Giacone, Il riformismo alla prova, 359–63, Doc. 346, Lettera del presidente della Commissione della CEE Hallstein a S.E. il presidente del Consiglio Aldo Moro, May 20, 1964.
54. Franzinelli and Giacone, Il riformismo alla prova, 430, Doc. 414. Diario di Nenni, June 19, 1964. Cavalieri evidences that Marjolin, with a ‘very questionable choice’, decided to not consider a report prepared by a Commission expert which showed that Italy was by now out of the crisis (Cavalieri, “Il prestito CEE,” 10).
55. “Il riequilibrio dell’economia italiana nel quadro del Mec,” L’Organizzazione industriale 26, June 25, 1964.
56. Within the governmental majority, the Socialists and the Republican Party were against the deflationary measures, albeit with different positions. Outside the government, the CGIL, the left-wing trade union, declared its contrariety as did some prominent figures in economic and financial circles, like Raffaele Mattioli, president of Banca Commerciale, one of the major financial institutions of the country (Petrini, “Esportare,” 42–5).
57. This quotation comes from Moro’s memoirs, published in Flamigni, “Il mio sangue,” 221–6. We must add that, in January 1968, in a speech in Parliament, Moro said the opposite, defining Marjolin’s visit as ‘the most discreet, constructive, respectful one could imagine’ (Gotor, Il memoriale, 513–51).
58. Bellofiore et al., “Il presente come storia,” 235.
59. Salvati, Economia e politica, 89–97.
60. Graziani, Lo sviluppo, 86–9; and Crainz, Il Paese mancato, 57–64.
61. 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 in workers’ control over the lines of production. Furthermore, increases in the cost of living in towns and the higher levels of schooling had prevented the creation of an effective ‘industrial reserve army’. See Paci, Mercato del lavoro, chap. 8.
62. This point was evidenced by Carli: ‘[The unions] aimed not only, and even not so much, for purely wage claims, but for the rigidity of the labour force. This was the crucial point of that clash: to exonerate the workforce from the operation of market mechanisms, from the ups and downs of the economy and from the autonomous decisions of the employers’ (Carli, Intervista, 64).
63. “Una prova difficile,” Il Sole 24 Ore, January 16, 1972. Il Sole 24 Ore is a daily newspaper owned by Confindustria, Italy’s main employers’ association.
64. See, for example, “Lo squilibrio nello squilibrio (le strutture salariali nella Cee),” Il Sole 24 Ore, March 18, 1972; “Assemblea dell’Assolombarda, Milan, April 6, 1972, Relazione del presidente G. Pellicanò,” Mondo economico 15, April 1972.
65. Giuseppe Pellicanò, “Riflessi della situazione internazionale sull’industria italiana,” Mondo economico 5, February 1972, 49.
66. “Unione monetaria. Una politica da riformulare,” Mondo economico, February 24, 1973, 13.
67. “Giudizio positivo degli imprenditori, dichiarazioni di F. Mattei,” Il Sole 24 Ore, February 14, 1973.
68. On Italy’s monetary policy see Fratianni and Spinelli, Storia monetaria d’Italia, who, from an orthodox point of view, give a severe judgement of Carli’s policy in the 1970s (p. 616).
69. Introducing a touchstone book on Italy’s economic history, Gianni Toniolo defines Italy’s economic performance in the 1970s as ‘surprisingly good’: Toniolo, “La crescita economica italiana,” 36. See also Ciocca and Toniolo, Storia economica d’Italia, 427–76.
70. Giavazzi and Spaventa, “Italy.”
71. On the maturation of a ‘responsible attitude’ by the Communist Left in the second half of the 1970s, see Paggi and D’Angelillo, I comunisti italiani, 9–28. On the Left and the historical compromise see Magri, The Tailor of Ulm, chap. 15.
72. Magri, The Tailor of Ulm, 283–4; Turone, Storia del sindacato, 502–6.
73. Barca, Cronache, 715.
74. On the genesis of the EMS and the negotiations see: Ludlow, The Making; Szasz, The Road, chap. 7; James, Making the European Monetary Union, chap. 5; and Mourlon-Druol, A Europe, 163–260.
75. “Europei se competitivi,” Il Sole 24 Ore, July 14, 1978, 1, in which is reported the debate at the annual conference of Federmeccanica, the association of engineering industries.
76. “Non basta dire di volere l’Europa, ci sono cose da fare per restarci,” La Stampa, July 15, 1978, 1. See also Giorgio La Malfa, “Il governo deve smettere di rimandare i problemi,” La Stampa, July 30, 1978, 2.
77. “Per il rilancio dell’economia meno rinvii, più coerenza e rigore,” Il Sole 24 Ore, July 28, 1978, 1.
78. The idea was tabled in April during a dinner between Pandolfi, Barca and Luigi Spaventa – an economist close to PCI positions (Barca, Cronache, 734–5). At the end of May, Barca spoke of the project with the PCI secretary, Enrico Berlinguer. On 9 June Berlinguer wrote to Andreotti in support of an economic programme centred on three priorities: job creation; youth employment; and support for the development of the country’s southern regions (Ibid., 741–2).
79. “Documento del 20 ottobre 1977 presentato al governo e alla federazione unitaria CGIL-CISL-UIL,” in Confederazione generale dell’industria italiana, Assemblea e Consiglio direttivo, Operazione sviluppo, Rome, January 11, 1978.
80. The integral text of the plan in “Proposta di sviluppo, scelta per l’Europa,” Il Sole 24 Ore, September 1, 1978, 3–4.
81. Jovane and Guerrieri, “Le linee di politica economica,” 90. The plan forecast a 6.5% annual growth in exports (“Proposta di sviluppo, scelta per l’Europa,” Il Sole 24 Ore, September 1, 1978, 4.
82. At the meeting of the PCI Direction on 5 September, the head of the economic department, Giorgio Napolitano, condemned the ‘neoliberal temptations’ of the Pandolfi plan, while at the same time defining it as ‘the most coherent and binding amongst all those presented by the government’. He concluded: ‘The need of a critical assessment […] should not imply a full rejection.’ (“Da PSI e PSDI giungono consensi al documento Pandolfi,” Il Sole 24 ore, September 7, 1978, 1–2 [2]; and Soddu, Ugo La Malfa, 333).
83. “Proposta di sviluppo, scelta per l’Europa,” Il Sole 24 Ore, September 1, 1978, 4.
84. “Il fuoco dell’inflazione cova sotto la cenere,” Il Sole 24 Ore, July 21, 1978, 1.
85. Varsori, La Cenerentola, 318–9; and Mourlon-Druol, A Europe, 168.
86. “La moneta europea e l’agricoltura. Un rischio elevato,” La Stampa, December 10, 1978, 18. See also: “Il 1° gennaio parte lo SME, l’agricoltura rischia il caos,” La Stampa, December 22, 1978.
87. In the aftermath of the Bremen summit Il Sole 24 ore published, on 8 December 1978, a comment by Tancredi Bianchi, president of the Associazione bancaria italiana (Italian Banking Association), meaningfully entitled ‘A noi conviene stare a guardare’ [‘We should wait and see’]. On the attitudes of the financial circles cf. also: “Avremo vantaggi o sventure dallo SME? In disaccordo industriali e banchieri,” La Stampa, December 14, 1978, 17 and the statement by Francesco Cingano, CEO of Banca commerciale italiana, in “Così gli esperti,” La Stampa, December 13, 1978, 1.
88. On Baffi and the EMS cf. Gigliobianco, Via Nazionale, 324–7; and Campus, “Il governo del ‘vincolo esterno’,” 286–7.
89. Quoted in Barca, Cronache, 761.
90. Letter from Baffi to Andreotti, November 9, 1978, quoted in Varsori, La Cenerentola, 322.
91. Mourlon-Druol, A Europe, 252–5.
92. Varsori, La Cenerentola, 325.
93. “La DC preme per lo SME,” Il Sole 24 Ore, December 8, 1978, 1; “Il governo sotto accusa per il no a Bruxelles,” La Stampa, December 7, 1978, 1.
94. Carli, “La partecipazione dell’Italia,” 3.
95. Barca, Cronache, 763.
96. “Così gli esperti,” La Stampa, December 13, 1978, 2.
97. Andreatta, “Intervention at the Senate,” 152 and 155.
98. “Così gli esperti,” La Stampa, December 13, 1978, 1.
99. “Valutazioni difformi tra i ministri,” Il Sole 24 Ore, December 13, 1978, 2.
100. Ibid.
101. Carli and Peluffo, Cinquant’anni, 6.
102. Eich and Tooze, “The Great Inflation.”
103. Quoted in Aftalion, “The Political Economy,” 9.
104. Crozier et al., The Crisis of Democracy.
105. ibid., 161 and 164.
106. McCracken et al., Pour le plein emploi, 3.
107. The others were Paul McCracken (USA), who chaired the group, Herbert Giersch (West Germany), Robert Marjolin (France), Robin Matthews (United Kingdom), Attila Karaosmanaglu (Turkey), Ryutaro Komiya (Japan) and Assar Lindbeck (Sweden).
108. McCracken et al., Pour le plein emploi, 208–13.
109. Gayon, “The OECD.”
110. Kehoane, “Economics,” 119.
111. Particularly relevant in this perspective were the projects of strengthening workers’ rights in multinational corporations advanced by the Commission with the support of the main European trade unions in the early 1970s and which resurfaced again at the end of the decade. After lengthy discussions and heated debates ultimately the unions achieved very little in terms of increased protection for workers. (Petrini, “Demanding Democracy”). For an analysis of EEC social policies in the 1970s along similar lines see Andry, “Social Europe.” On the attitude of the trade unions see Quentin Jouan’s article in this number (Jouan, “European Integration,” 600–617). The political and economic openings to the demands of the developing world, the other key feature of the ‘progressive’ Community of the 1970s, were also shelved by the early 1980s (Garavini, After Empires, 255–61). Furthermore, as evidenced by Parboni, trade concessions to developing countries are to be read in the context of the ongoing inter-capitalist economic struggles. Germany and the US, divided in competing for outlets for their industrial exports, were united in promoting the opening of the European markets to imports from the newly industrializing countries, inasmuch this gave the latter the resources necessary to pay for their purchases of capital goods and other advanced industrial products from German and American firms at the expense of the First World’s less advanced-low technology productions (Parboni, Il conflitto, chap. 6).
112. Modern Records Centre, Warwick University, Archive of the Confederation of British Industry, MSS.200/C/3/INT/16/10, D. E. Midgley (Company Secretary, Gascoigne Group) to CBI, 28/11/1978.
113. Gualtieri, “L’impatto di Reagan.” According to Gualtieri, during the 1980s Italy pursued a ‘monetarist stabilization’ – a ‘third way’ between the conflictual stabilization of Thatcherism and the consensual stabilization of the neo-corporatist countries of Northern Europe – in which management of economic policy was taken over by the technocratic élite of the Bank of Italy, and politics was relegated to a ‘residual role’ (190–1).
114. Bonaiuti, “Oltre il governo”; Goodman, Monetary Sovereignty, 158–67.
115. For a general assessment of the Italian experience in the EMS see Graziani, Lo sviluppo, 140–7. On the Italian economy in the 1980s see Pizzuti, L’economia italiana.
116. Van Apeldoorn, Transnational Capitalism, chap. 5.
Additional information
Notes on contributors
Francesco Petrini
Francesco Petrini is Associate Professor in History of International Relations at the University of Padua, Italy. His research focuses on the interplay between the socio-economic structure and the international sphere. Among his latest publications are: ‘Counter-shocked? The Oil Majors and the Price Slump of the 1980s,’ in Countershock: The Oil Counter-Revolution of the 1980s, edited by D. Basosi, G. Garavini and M. Trentin, 76–96 (I.B. Tauris, 2018); and ‘Capital Hits the Road: Regulating Multinational Corporations during the Long 1970s’, in Contesting Deregulation: Debates and Practices in the West since the 1970s, edited by K. Andresen and S. Müller, 185–198 (Berghahn Books, 2017).