From the Southern-European model to nowhere: the evolution of Italian capitalism, 1976–2011

Abstract

Before the 1980s Italy had the typical institutional configuration of Southern European capitalism: an important role for the state in controlling production activities and markets; limited social security; and high employment protection. In the last 30 years, Italian capitalism underwent a process of institutional change moving away from this configuration. The deepest reforms occurred in the 1990s and aimed to achieve a more market-oriented economy to cope with European market integration. Reforms, however, did not succeed in moving the economy towards a ‘liberal market economy’: they simply increased laissez-faire without achieving better co-ordination through markets, leaving Italy with an inefficient model.

Keywords:

• Deregulation
• institutional reforms
• Italian economy
• Southern European capitalism

ACKNOWLEDGEMENTS

The study has received funding from the European Community's Seventh Framework Programme FP7-2007-2013 under grant agreement number 225349. We wish to thank the Journal of European Public Policy referees for their constructive criticisms.

Notes

Attention was focused on territorial differences, as problems in the South involved an acute unequal distribution of income, but they were never taken up consistently. This problem of dualism has been a recent subject of a comparative study on capitalism (Gambarotto and Solari 2009) showing that in these regions, the fracture between centre and periphery is still relevant.

The idea that the country could be object of a Chile-like ‘golpe’ was at the origin of the ‘historical compromise’, a strategy the Communist Party adopted to back their own electorally based stance towards an active role in government.

See Ginsborg (2003: ch. V.4).

Terrorism heavily affected the labour relations system of the decade, which was already under pressure owing to the oil crises and other inflationary strains. The catchphrase of the 1978 congress of Rome was that wage could no longer be considered an ‘independent variable’. This meant the end of an era of conflict, supporting the idea that workers had to accept wage reductions in order to beat inflation and invert economic recession. The newly acquired ‘sense of responsibility’ of trade unions was stated so markedly that on 24 January 1979 the Red Brigades killed Guido Rossa, a blue-collar worker and CGIL representative at Italsider who reported terrorist activity in his factory. That was a deathblow for the unions, and CGIL in particular, as it found itself in the uncomfortable position of supporting a restructuring policy while defending their battling role on the workplace.

The first attempt to reintroduce universal banking dates back to 1986, when mixed banking groups were allowed. However, it failed to deliver results.

As an example, thanks to the emission of new capital during the bull market, the owners of Geox S.p.A. can control 71 per cent of a 429 million euro net capital (2010) with a simple initial investment of 18 million euro.