This was my capstone paper written for my senior Political Science work at CSU Channel Islands in 2016.
Italian politics and economics are steeped in history dating back to the Medieval era. Attempting to untangle the issues of Italian politics and economics requires a study in history and creating the links between history and modern issues. The current European Union economic policies, at the behest of Germany, are not working for the southern European states. In a conjoined economy, like Europe, the member states need to understand how to make their constituent economies work in the frame of the conjoined economy. If the constituent economies of Europe cannot work together cohesively, the Euro will lose many of their large economies, namely Italy, which is ranked in the top 10 of world economies. In Italy, if the state does not get a grasp on their economy, the state may not only be pulled out of the Euro Zone, but may be ripped apart into the constituent regions. Many assume political stability is a key component to economic growth. However, Italy has managed to build and maintain one of the world’s top ten economies, while the political system is unstable. With 64 governments since World War II, and nascent independence movements in the North and on Sicily, the economy has still performed better than most states. In light of Italy’s numerous governments since World War II, how has the role of city-state identity made a positive impact in intrastate, and international politics and economics? This research project explores if the divisions between the regions of Italy have directly led to the economic stagnation.
Literature Review
Modern Italy has been known as a weak state, or one without solidified direction in the political and economic worlds (Locke 1996). Both foreign and native observers of Italian politics have noted the system is backward, corrupt, and unstable. These issues have been further compounded by major political and social issues, in the 1990s major scandals broke out over corruption between businessmen bribing politicians for public works contracts. This led to irresponsible spending, coupled with archaic fiscal policies, drove up the public debt, and led to the Lira’s collapse on the markets (Muehring 1992).
The political reforms of 1993 attempted to fix these problems stemming from the perception of a weak Italy. Between 1946 and 1993, Italy was a two-party state, split between the Fascist and Communist parties (Shin et al, 1996). In 1992, Berlusconi’s party, Forza Italia, rose to power and banned the old parties, allowing for a multi-party state to rise. The change to the party system did not fix all the governmental problems in Italy.
The constitution established in 1946 by the Allied Powers after World War II, created an intentionally weak state (Shin et al, 1996). The state has humongous legislative houses for the population size, leading to massive, long term debates resulting in little change (Senato della Repubblica). Further, the two houses have no official way to speak to each other, nor to any of the other branches. These weaknesses were placed in the Italian Constitution with intent, the Allied Powers were worried about the rise of a new Italian empire.
Further, the Mafia of the south made open attacks on the federal government, and challenged the government’s authority. The removal of the traditional political parties in favor of more new ones has given the impression Italy has no internal sovereignty. Through these issues, Italy outperformed their more stable neighbors during the 1980s in terms of growth and exports. Even through the global recession in the early 1990s, the Italian economy was relatively stable, meeting many high end export demands. These strange trends continue to this day, with Italy holding the ninth largest economy in the world (Cnn.com 2016).
In the current research, there is a great deal of talk about the history of the Italian city-states, their economies and politics, and why they failed in the long run. Further, there is information on the modern state as a whole, and the confusion of how a major economic power in the world has so little say in political spheres as well as how Italy has such a strong economy. What many of the researchers have missed is the connection between the two. The problems in Italy did not start after independence in 1945, nor did they start after unification in 1860, but much further back to the 1200’s or earlier, with social, regional, political and economic disparities compounding over the centuries. A cursory glance of the semi-autonomous regions and provinces in Italy, seven to be precise, shows the turmoil in the state, and the issues of Medieval-era politics marring the current situation. This research will attempt to bridge these two aspects of the Italian political economy.
Tilly (1994) created a model for describing European states in the Middle Ages through the Renaissance. He argues that the large empires, such as Spain, France and England were able to coerce the capitalists into funding wars and expansion. While the Italian, Dutch and German city-states were capital-intensive, focused on making more money over building a functional state (Tilly 1994). The ability for the budding nation-states to unify the populace for common purposes enabled states like Tsarist Russia and the Ottoman Empire to survive to modern day. Tarrow argues the combination of capital-rich states, bureaucracy porus to local class conflicts, and contentious politics left the Italian city-states vulnerable to their nation-building rivals to the north because they were rife with political uncertainty, and unable to finance and build modern armies.
In contrast to the Hanseatic League of Germany, the Italian city-states traded in high-value, light goods (spices and silk, or money), had to deal with the Holy Roman Emperor’s desires for Italy independently, and the leadership of the city-states were internally volatile, and the merchant-princes were war like against the other Italians (Spruyt 1994). This argument is period sensitive, as by the 14th century, the Holy Roman Empire had been defeated in Italy, and many of the smaller city-states had been absorbed into larger territorial states. The strength of the city-states was their timing, weakness in their non-Italian rivals, and the geographic location because the peninsula halfway between the Levant and the Atlantic allowed large trade centers to build. Their weakness came from internal problems; for example, the aristocracy and the merchants never formed a true coalition, and each was trying to dominate the other constantly.
Further the tax system benefited the elite at the expense of the poor and public good. These weaknesses led to the fear of popular politics, which in turn led to the inability to convert from a mercenary army to a true standing army of citizens to combat the empires of the north. In Florence, there were four popular uprisings between the 13th and 14th centuries, each of which molded the political structure and helped create a more modern state, all of which was reversed when the Medici came into power in the 1430’s. Machiavelli argued Florence did not know how to be either a Republic or a Principality, stating that the disorder of holding private reputations over public ones in governance reduced the authority of the government (Molho, et al 1991). Looking broadly at the city-states, the foundation of their governments was based on a pact between private interests, and then the government. The pact was built on a foundation of mistrust between the two sides at the expense of the public good.
Italy, socially, politically, and economically, is divided largely into two halves, the south and the north. Even in the south, there are areas more developed than others. The federal government tried to compensate for these growing disparities with economic programs, but the programs only led to a deepening divide between north and south and the driving up of the Italian debt. These costs provoked backlash against the central government, with Liga Nord spearheading the charge to dismember Italy into a confederation of city-states (Liga Nord currently holds 26 seats between both houses and controls 2 regional governments) (Liga Nord 2016). Many of Italy’s observers would call the economy an anomalous case due to the fractured political and social world, as well as the Byzantine institutional arrangements, yet this does not account for Italy’s overall strong performance in the world market. These maladies have led the Italian economy to have “fat” years and drops. When times are good, the government never addressed the issues in the economy, and only tried to fix them when the economy fell. This has led Italy to remain backward and inefficient in an observer’s eye.
Post-unification in 1860, the Italian state went through transformation, and then the collapse of the Liberals with the rise of Fascism, and World War II, and the resistance, led to a highly polarized post-war political system. These issues led to a highly fractured political system, at times with the central government encouraging diffusion. It was the strength of the regions which allowed the industrial districts of Central and North Eastern Italy to flourish, where their counterparts floundered or failed. Locke (1996) argues local firms and unions are more likely to be successful and responsive when they are working with like minded entities through multiple, horizontal ties, as opposed to few vertical ties in a hierarchy. Actors in this arrangement will be able to share information, build alliances, and build trust easier in an egalitarian network. A polycentric system allows the actors in a region to work together as equals, buying and selling to each other and to the outside world. Further, because actors work directly with each other, disagreements can be easily settled amongst the group, repairing ties between actors instead of allowing division. These local networks create stronger ties to local governments, which have ties to the central government in turn. Locke cites the textile industry of Biella as the success of his proposed method of analysis in Italy, and how Italy can thrive. The firms maintain their autonomy from each other, but come together to buy raw materials and sell their finished goods. The greatest advantage is the work done between business owner and the unions, the entire transition was done with negotiation between the two sides and remain in open communication.
The final group of works show how the Italian economy works now, and the effects of the policies taken now by the Italian government through the ages. The research used will reflect on the research from the prior two groups to make the point the final group is influenced heavily by the effects of centuries of fragmentation in city-states. The OECD report on the Italian economy gives recommendations on how to fix the Italian economy. The research will attempt to explain why these recommendations are needed, as well as state why some may not apply to Italy.
Wealth in Italy is the least effective as the explanatory reason for corruption as Italian corruption is high amongst others, even amongst the outliers on the corruption scale. Parliament further refuses to allow corruption investigations to take place (Golden et al, 2001). Political instability and fragmentation have been constants for post-war Italy. Italy has an intentionally weak government, created to prevent the rise of another strong-man state which rose with Mussolini. It is comprised of co-equal houses, the Senate and the Chamber of Deputies, with no official way to communicate, meaning the houses must pass bills back and forth until they both pass identical bills. Cumbersomely large houses, combined they have nearly 1,000 ministers for a population one-third of the United States. The Prime Minister has relatively few powers for an executive. Adding to Italian electoral chaos, Parliament can change the electoral system whenever they choose. Further the parties are fairly weak, many are small, and form coalitions, but due to Proportional Representation being the bulk of representatives, the people have little connection to the parties. Italian voting has been divided as such geographically: Patronage in the south, party identification in colored zones, and opinion in the northwest (Agnew, 2007). There are two versions of a ‘single Italy theory.’ One states the media under Berlusconi created a homogenous Italian polity. The other states the political menu of parties have created a more homogeneous polity. Parties no longer call themselves as such, preferring other terms such as league or alliance. The increase in television media has pushed the parties into using polls and advertizing to push their agendas. Since the breakup of the major parties in 1992, the electorate has become more volatile, with parties failing to have strongholds in regions. The changes brought bipolar competitiveness at the expense of territorial connectedness. The proportional representation took connection between regions to politicians away. In the 1994, 1996, and 2001 elections the South was the most competitive with the Centre, while the north was dominated by the centre-right depending on Ligua Nord’s involvement with Polo/Casa della Liberta, and not very competitive. Even after the change back to Proportional Representation in 2005, these trends continued in the 2006 election. The bipolar nature of Italian politics has devolved into rhetoric against opposing parties, such as communists eat babies and Berlusconi is the new Mussolini, and less in policy debates. This is an extension of Berlusconi’s use of American Republican electoral tactics, which have spread across the country’s political parties. When political parties linkage to the electorate breaks down, bipolar competitiveness cannot be guaranteed. Without the connection to the region, voters can defect or abstain from an election. In an attempt to nationalize politics, and homogenize Italy, the country has become more divided and the electorate more volatile.
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