The Italian Crisis: A Communist Perspective

Author(s): Giorgio Napolitano

Source: Foreign Affairs , Jul., 1978, Vol. 56, No. 4 (Jul., 1978), pp. 790-799
Published by: Council on Foreign Relations

Stable URL: https://www.jstor.org/stable/20039992

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 Giorgio Napolitano
THE ITALIAN CRISIS:
1* A COMMUNIST PERSPECTIVE

he policy of the Italian Communist Party (PC

based on the conviction that Italy is in the grip of a
crisis and that the labor movement must do everything
to overcome this crisis. To transform Italian society in
of socialism ?which remains our ideal ?we must emer
crisis. If the workers, the left-wing forces, and the
Party did not put forward their own constructive pr
short-term and medium-term ? aimed at preventin
tion of the conditions in which Italy is struggling toda
not contribute to a united effort of all democratic forc
might come to a head, with catastrophic results for
racy. Progress toward socialism would be hopelessly d
might be a very grave political and social slide backw
At the same time, it will be impossible to pull Ital
crisis without effecting certain far-reaching social
stantial changes in policy and methods of governmen
we say that economic, social and political reforms an
the crisis are two sides of the same coin. In this l
worked in recent years for a loyal collaboration amo
cratic political parties, especially among the large
Christian Democrats (DC), the Communists (PCI), a
ists (PSI); this collaboration has been developing, in f
general election of June 1976 and has already borne
in a phase of transition, but certain basic conditions fo
have been agreed upon, although considerable dif
dangers still lie ahead, as the recent dramatic events
out once again.
But what is the "Italian crisis"? What are its main char
We fully realize that the whole global system of econ
is in crisis. When the dollar was declared nonconvert
there began a long period of monetary instability; an
sharp rise in oil prices in 1973 convulsed the whole n
ternational economic relations. In industrial countrie

Giorgio Napolitano is a member of the Directorate of the Ital

Party, with responsibility for economic policy and social affairs.
drawn from talks given at Harvard and Yale Universities.

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 THE ITALIAN CRISIS 791
have for years been almost at a standstill; a perverse mixture of in
flation and stagnation prevails, accompanied by mounting unem
ployment. But against this world background, the Italian situation
has its particular characteristics.
Not only is it a crisis of economic and social structures, it is also
an acute crisis of the state ?its apparatus, its functioning. Until a
few years ago we had a highly centralized bureaucratic state,
becoming steadily less efficient; its mechanism had for years been
shockingly out of date and rusty; its procedures always slower and
slower. It is, however, quite difficult to distinguish between prob
lems of the state and economic problems, between current eco
nomic difficulties and the malfunctioning of the state and certain
of its important institutions, such as schools and universities.
The problems of speedy and correct enforcement of laws in the
economic sphere, of economic planning and public spending, have
become more serious every day. And so has the crisis in the
educational system ?the absence of an efficient modern system of
professional training, the chaotic development of high schools and
universities with no updating of their structures and objectives,
inadequate and muddled state intervention in the field of scientific
and technological research. At the same time, there has been a
massive increase in current public spending, especially on social
security.
The gravity of this crisis of the state in Italy lies not only in its
direct effect on the economic crisis: civil liberties and peaceful civil
life are also at risk. For years both the judicial system and the
police forces have been in a deplorable condition of inefficiency
and confusion. Democratic society is thus vulnerable to political
violence ?whether neo-Fascist or extremist leftist ?and to ever
more intense and purely destructive terrorist attacks.
ii

The present condition of the state and its institutions, the

of public finance, the economic difficulties, result above al
the way in which Italy has been governed in the past, both b
and after the year 1968 when a shift to the Left took pla
witnessed by the results of that year's general elections.
1950s Italian society and economy went through a phase of
expansion and change, but this was accompanied by contradi
and degenerative symptoms that were not corrected even i
years after 1962 under "Center-Left" governments (compos
Christian Democrats, Socialists, Social Democrats and Re
cans). There was urban land speculation and there was corrup

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 792 FOREIGN AFFAIRS
a mistaken use of resources in general and a faulty allocation of
resources among the various productive sectors; and a growing
imbalance between the north and the south of the country.
Some people say that Italy's present crisis is also the result of
what happened since 1968 ?for which we all, and not only the
Christian Democrats, bear a degree of responsibility. It is true that
the intense wage push and the massive increase in public spending
that took place after 1968, as a result of big labor struggles and
under the pressure of a trade union movement that had once again
found its unity, were factors creating the present crisis in Italy.
And it is true that together with a positive and fully justified en
largement of the rights of workers and students and of democratic
life in all forms, there appeared a widespread permissive trend,
a dangerous slackening of discipline in many fields. For this, too,
the parties that were in opposition during these years, as well as
the trade unions, must practice self-criticism; to some extent they
have already done so. But it cannot be denied that the main share
of responsibility rests with the forces that governed the country,
above all, with the Christian Democratic Party.
If reforms were not carried out, or were begun only after long
delays ? reforms that were ripe for action in the early 1960s, such
as reforms of the educational system, of public administration, of
legislative codes, of the judicial system, of the health service, etc.?
if the necessary correctives to the economic system were not
applied at that time, even after the wage push of 1970 or the oil
crisis of 1973, it is the Christian Democratic Party that bears the
chief responsibility for its fierce resistance and continual postpone
ment of measures that became ever more urgent and indispens
able. In the years after 1968 the governments dominated by the
Christian Democrats responded to new social and political pres
sures?and to the danger of increasing electoral success by the
Communists ?by handing out public money in an even more disor
ganized fashion, based on the DCs own particular political inter
ests. The Italian crisis, in this respect, is also a crisis of political
leadership.
Since 1947 the Christian Democratic Party has remained in
power, alone or in coalition with other and much smaller parties,
supported in Parliament by different majorities, in all of which it
held a dominant position. Long ago there should have been a
major change in the method of governing and of those holding
office. If in recent years there has been a widespread loss of con
fidence in democratic institutions, this is, in part, attributable to
the lack of change in government policy and personnel, and to

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 THE ITALIAN CRISIS 793
episodes of mismanagement and corruption, many of which re
main unpunished. All this has stoked up a moral crisis, leading to
a lowering of moral standards among many Italians.
The Italian crisis is thus complex and runs deep. During the last
two-and-a-half years some important new factors have appeared
on the political scene, and we have begun to work at overcoming
the crisis. The 1975 local elections brought about changes in
administration in several regions and local authorities. The 1976
general elections, and a change in the attitudes of the Christian
Democrats' old allies (Socialists and Republicans), limited the
possibilities of maneuver and predominance for the Christian
Democratic Party and led to the search for a new balance of power.
A new line of approach emerged toward the Communist Party:
despite some disagreement and ambiguity among Christian Dem
ocrats, the "strategy of competitive engagement with the PCI"
replaced the old policy of outright frontal opposition.
This trend was encouraged by the Communist Party's efforts to
clarify some of its basic tenets, both ideological and political, in the
field of foreign affairs as well as in economic matters. All political
parties felt the need for a period of collaboration even if only
temporary ?as distinct from the traditional division into majority
and opposition ?in order to cope with the emergency, because of
the danger of a still sharper social tension and of a still deeper crisis
of the state and of law and order, which would make the country
truly ungovernable.
When the experiment of the Popular Unity government in Chile
under Salvador Allende came to its tragic conclusion in September
1973, the PCI Secretary General, Enrico Berlinguer, declared the
need for a long-term agreement, a broad-based form of "historic
compromise" among democratic forces ?Catholic, Socialist and
Communist ?to carry out the task of transforming Italian society
without dangerous, possibly fatal, cracks in the tissue of civil
liberties. These views have been discussed at length: both Christian
Democrats and Socialists have rejected them. But it has been
recognized that, for some years to come, such collaboration is
absolutely necessary; in view of the complexity of the problems of
reshaping the country's structures, Italy cannot afford the luxury
of keeping either Christian Democrats or Communists in the op
position.
After the 1976 elections we had, first, a one-party Christian
Democratic government that survived only because of the PCI and
other parties' abstention. Then we moved on to a Six-Party
Agreement (which included the Communist Party) with a short

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794 FOREIGN AFFAIRS
term crisis program. Now we have yet another Christian Demo
cratic minority government supported in Parliament by a five
party majority (again including the Communists). In our opinion
the change in the form of government should have been more
drastic and clear-cut: there should have been a coalition govern
ment composed of all the parties that at this moment support the
government. The changes were too limited, and were effected by
such tortuous methods that they lost much of the political impact
they might have had.
All the same, a considerable joint effort is under way. We are
trying to put our house in order and to create the basic conditions
for a new expansion of national activity. The level of conscious
democratic participation among the working classes and the people
of Italy is very high, and this gives us confidence for the future
and a firm base from which to fight terrorism and attacks on
democratic institutions. But we must succeed in making these
institutions function effectively, if we are to solve the most serious
economic and civic problems of our country.
in

The effort we are now making to move from th

state to a largely decentralized democratic state is
the current work of transferring administrative fu
state to the regions. We have in Italy five "Special St
which include Sicily and Sardinia; and we have
gions" that were not set up till 1970 when, for th
gional Assemblies were elected (and re-elected i
cently have the administrative functions (as distinct
lative powers) of these Ordinary Regions been de
structure of the Italian state is being complete
there are many difficulties to be overcome ?on t
position in certain political quarters (especially am
tian Democrats) and in the central bureaucracy, w
to see the powers of government and of the cent
machine redesigned; on the other hand, the risk
will not be able to cope with their new tasks quickly
that they too will become bureaucratic structure
ficient. All democratic parties must loyally work tog
this resistance and these risks.
As regards economic and social questions, in th
the autumn of 1976 and 1977, the fall of the lira
rate of inflation slowed down, the balance-of-p
changed to a surplus. But the danger of contin

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 THE ITALIAN CRISIS 795
behind the constantly shorter cycles of recovery and depression ?
remains very serious. Persistent low growth rates would exacerbate
the problems of the south and of massive unemployment.
The basic objectives of a medium-term economic program must
therefore be development in the south and increased employment.
All the democratic parties, trade unions and employers' associa
tions agree on this. They also agree that the ratio of investment to
gross national product must rise and that the national growth rate
(less than two percent in 1977) must be improved. But on some im
portant aspects of the economic policy that must go forward in
order to realize these goals, there still is a discussion going on be
tween parties and with social organizations. Let me, however, ex
plain the Communist Party's positions in our search for a common
policy.
The first major point is our refusal to accept inflationary
solutions, or a short-lived, overstimulated expansion. We must
arrest the decline in output of the last few months, fight the trend
toward recession and the risk of stagnation, aim for a higher
growth rate, but all this without for one moment ceasing to fight
inflation and while pursuing a sensible monetary policy such as
that adopted by the Bank of Italy during the last 18 months ?and
keeping the lira exchange rate steady. We must succeed in getting
inflation down to 12 percent in 1978 and then to under ten percent,
and not let it climb back to 20 percent or more.
A second important point is our rejection of all protectionist
temptations. The Italian economy largely depends on the import
of raw materials and of sources of energy: it cannot do without this
large volume of imports and counts on a considerable volume of
exports for its development. A massive use of protectionist mea
sures would be suicidal; nor could it be undertaken within the
European Economic Community (EEC). It is a different matter to
try to get EEC policies modified if they appear to grant a privileged
position to other members (e.g., in the agricultural sector) or to
get the EEC to react to dumping by countries outside the Com
munity. While constantly seeking new forms of international
economic cooperation, Italy's efforts ?and, I wish to add, the
efforts of the Italian labor movement ?must be devoted to discour
aging, not encouraging, the protectionist trends of other countries
and the possibility of trade wars. The guideline for the Italian
workers must be solidarity with developing and poorer countries,
a determination to help in every possible way their prospects for
economic development.
Italy's recurrent balance-of-payments difficulties reflect both

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796 FOREIGN AFFAIRS
serious mistakes in government policy (especially having allowed
certain agricultural/food-producing sectors to run down very seri
ously) and the convulsions of international economic relations
following the rise in oil prices, the rapid increase in economic
power of certain industrial countries (especially Japan), and the
emergence of new producers. These serious difficulties, which
threaten to reappear every time we move from a phase of depres
sion to one of recovery, must be met by (1) trying to replace some
imports (for instance, agricultural foodstuffs) by national products
at competitive prices, and (2) increasing the international compet
itive range of Italian industry and adjusting its structure to the
changes in the world market.
If you exclude resorting to any form of either galloping inflation
or protectionist policies, you can see how complex the problem is
of finding an adequate solution to the needs of the south and of
the million unemployed. The only possible road to take is that of a
rational and rigorous use of our resources, which, in turn, implies
a considerable degree of democratic control and planning. An out
standing feature of PCI thinking is just this emphasis on the need
for such a change of policy.
It is impossible to improve our growth rate unless we eliminate
waste in every sector and switch resources from consumption to
investment. We must put the brake on nonessential, artificially
stimulated consumption; we must try to satisfy specific needs (an
example is urban transport) in social and not individual terms, and
thus in more economical, more sober forms. This is the meaning
of the policy of austerity that the Communist Party supports.
The work of eliminating waste is especially urgent in the area of
public spending. Here an appreciable effort has already begun:
there has been an attempt to determine the real size of the public
sector deficit and to bring under control the rise in public spend
ing and in social security services by reforms of local finance and
health services, by making local utilities pay for themselves and by
revising pension schemes. A reform of the state budget is on the
docket: this would allow Parliament to check on the real situation
of public finances at any moment; in the past, balances were sub
ject to manipulation and discretionary measures by the executive.
The need to fight inflation and to devote a larger share of
resources to investment also implies that the cost of labor must be
contained. This should not be regarded as the only problem in
Italian economic development, but it is a significant aspect of the
effort needed to secure investments, to enlarge the productive
base, to develop the south, and to increase employment. The trade

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 THE ITALIAN CRISIS 797
unions have openly recognized this.
Wages have gone up sharply since 1969, even if they are, on
average, lower than in other West European countries; and they
are protected against inflation by built-in indexing. Social security
contributions are a heavier element in the cost of labor than is true
in other countries, in part owing to the excessive cost and wasteful
methods of these social services. As a result, profit margins, and
hence the amount available for self-financing, have been severely
squeezed. Though high profits are by no means a sufficient
condition for investment, too high a degree of leverage has been
an obstacle to investment activity.
But the policy of austerity, says the Italian Communist Party,
must be based on criteria of social justice. If fresh development in
the south and new jobs for unemployed youth require sacrifices
by all social classes (except the lowest income brackets), by all those
now employed and by all persons having an adequate basic income,
these sacrifices must be distributed fairly and enforced in just
measure on the wealthier classes. Positions of unjustified privilege
and based on unearned income must be contested by a rigorous
campaign to check fiscal evasion. The reorganization of our tax
collecting system ? already begun ?must be speeded up. And even
among both blue-collar and white-collar salaried employees, injus
tices and absurd inequalities ? what has been called the "incomes
jungle," covering wages, pensions, termination bonuses ?must be
ironed out. Finally, the widespread practice of "black labor"
(regular but unofficial work carried out under conditions of
flagrant violation of fiscal, social security and other legislative
controls) and the practice, closely related, of having two jobs
("moonlighting") must be gradually brought under control.
The mere increase in resources available for investment does
not, however, guarantee that investments will actually be made or
that they will be directed to those sectors or regions that should
have priority in the national interest, to ensure balanced growth,
with progress especially in the south. We must relaunch the
process of accumulation of capital, at industry and at national
levels: there is not a shadow of doubt about this, and the workers'
movement must make its contribution. The workers cannot pre
tend to be indifferent to the financial crisis of their industries, to
the relations of costs to profits, and to productivity; they must
think through their own autonomous proposals on ways and
means of overcoming the crisis. Business and industry must be
able to restructure and reconvert, so as to regain a dynamic,
productive and profitable position. To this end a greater mobility

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798 FOREIGN AFFAIRS
of labor is essential, both within industry or between one business
and another. Workers and their organizations must be given
adequate guarantees, but they cannot defend the "status quo" in
industries running at a loss but which might be put on their feet
again through drastic reorganization. All this is indispensable for
new economic expansion in Italy ?but it is not enough.
IV

In the years when profit margins and self-financing prevailed in

industry, when there were larger resources available for invest
ment and considerable state aid for private investment, did not the
spontaneous choices of industry, especially of large-scale industry,
still leave the problems of the south and of full employment unre
solved? Did not those spontaneous choices actually destroy re
sources and seriously weaken Italy's balance of payments? Was it
not true that in the south priority was given to capital-intensive
operations, while agriculture and food-producing industries were
seriously neglected? That there was a continuous diversion of capi
tal into speculative and luxury building, to the point that today
large cities, such as Rome, have thousands of empty apartments
that cannot be sold or rented? That the productive capacity of the
petrochemical and synthetic fiber industries was expanded beyond
all reasonable marketing estimates? And we could go on adding to
this list of industrial mismanagement.
In order to avoid a repetition of such phenomena, to guarantee,
insofar as possible, an allocation of resources and investments that
corresponds to the national interest and the needs of productive
reorganization, we must have an incisive programming policy.
This must not be a return to the vague overall experimental
planning of the Left-Center period of Italian government, but
concrete intervention in selected directions ? a program spread out
over several years of public spending, state assistance for plans in
specific sectors of industry and agriculture, etc. ?and bargaining
among major industries and trade unions to ensure activity con
sonant with the national interest.
We do not believe that the public sector of the economy should
be expanded: it is already sufficiently large in Italy to enable the
state to influence the course of investment and development in the
whole country (by direct control of part of the productive and
financial apparatus, as well as by fiscal policy, incentives, etc.). We
are convinced that a party of Marxist formation in a country like
Italy should not aim at total state ownership of the means of
production. This should not be considered a necessary condition

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 THE ITALIAN CRISIS 799
for achieving socialist ends and values in an industrialized,
Western-style economy. The role of private initiative, and even
large-scale private industry, the function of profit and the market
economy, cannot and should not be denied. The characteristic fea
ture of our Party's program today lies in its refusal to abandon
economic development to spontaneous activity, in its insistence on
democratic control of the use of the "surplus," and in the guidance
given by democratic public powers to social and economic trans
formation, thus ensuring continuity and a new quality of develop
ment, not merely a steadier overall growth.
We are not impressed by the fact that our economic proposals
are from time to time accused of being "Keynesian" or that they
smack of orthodox monetary theory. Frankly, we think our views
go far beyond a mere policy of support for effective demand or
monetary stabilization, far beyond the short-term economic man
agement prospect. However, I wish to make things quite clear: we
do not believe that you can dig detailed economic programs out of
Karl Marx. Marx provided us with an analysis of the functioning
of the capitalist system and its contradictions, and described its
future crisis and the historical necessity to supersede it. A large
workers' party of Marxist formation, such as the PCI, must today
make a concrete contribution to the task of overcoming those con
tradictions that have led to our current social and economic crisis ?
not identifying with this or that academic trend but drawing from
all the resources that modern economic science can offer as well
as from the experience of public policies in Western industrialized
countries. Moreover, we must always bear in mind our objective ?
that it shall not be the masses alone that pay the price for this crisis;
but, on the contrary, that they should be able to see the road open
ing toward real progress for all workers and for the nation. And
in this way ?not by waiting for the "collapse" of capitalism ? the
workers' movement can demonstrate its capacity for governing
and can thus transform society.

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