Analysis
In the exploration of the Italian political economy, several interesting points have been brought up through the research. First, a historical analysis to see what brought Italy to the point it is today. Then, let us explore the several decades being highlighted in the research that will answer the question posed. The 1970s, 1980s, and 1990s all showed various states of the Italian economy, and how political leanings have changed the economic field of the state. The 1970s were a build up for the 1980s, which was a boom decade, and the stagnation of the 1990s all can be connected to differing political reforms enacted by Rome. The data will be presented with the electoral maps being displayed first for the national elections for the decade, next will be the Italian GDP graph for the decade, then the graph for Italian export values for the decade.
The city-states came to power after the fall of the Western Roman Empire, with the most prosperous gaining territory beyond the borders of the cities themselves, and staying pseudo-independent (Martines, 1971). The most prosperous, such as Florence and Venice, lent money to major world powers and shrugged off ambitious attempts at power grabs by the Papal States and the Holy Roman Empire. As an example, Florence helped fund the Hundred Years War through bank loans.
The amount of capital raised through bank loans and trading made the city-states wealthy beyond imagining for their size, yet they had the major downfall of internal conflicts. The merchants fought with the aristocracy and the city-states warred with each other, leading to internal and external weakness, culminating in the unification wars ending in 1860.
According to Locke (1996), the 1970’s were a perilous time for western textile industries. Northern Italian firms felt this the hardest, as cheaper products were being produced in Asia and Africa, which forced major changes in Europe and North America. In Italy, the textile factories “devolved” spinning off their constituent parts (i.e. wool spinning, looming, dying, etc.) creating a polycentric model. Seeing the great success of this model, Rome passed several initiatives which pushed for this model across Italy, known as industrial districts.
Understanding Italian political economy requires some knowledge on Italian political parties, the following parties were significant before 1994. The Christian Democrats were traditionally a centrist party with a slight left lean, broadly considered the people’s party, it was dissolved in 1994 (Italian Popular Party). The Italian Communist Party was the west’s largest communist party, associated with the far left, it was dissolved in 1991 (Democrats of the Left). Lombard League (later Liga Nord) is a right leaning party, as previously discussed, intent on breaking Italy down into a confederation of states (Liga Nord). Post 1994, the Italian political party scene changed, with many of the previous parties being broken up into several smaller parties by law. The main player in the post-1994 Italy was Forza Italia is the personal party of former Prime Minister Silvio Berlusconi, founded in 1993, Berlusconi pulled representatives from the whole political spectrum, but the party sat center-right as a whole (Democratic Society). The National Alliance was formed from the remnants of the former fascist and monarchical parties, and leans heavily right; the party was later absorbed into Forza Italia (National Alliance). While other parties appear on the maps below, they only controlled one region, and generally had little impact, or were single-issue parties.
1970’s
The Christian Democrats dominated Italian politics through the 1970s. Their just-left-of-center views and religious support drew in a great deal of voters throughout the decade. In the latter two elections, the Communists gained ground in the north and center of Italy, but the Christian Democrats regained their lost center. With the subtle shifts in electoral control, Italy enjoyed a somewhat stable period during this time politically.
This stability came from the Christian Democrat’s broad reaching message, and the church’s backing. As will be discussed later, the economic situation in Italy was shifting due to international pressures, and the private sector responded in kind, and Rome was willing to watch the market shift itself.
As you can observe, the Italian GDP through the 1970’s generally rose through the decade, taking a small dip in 1975. Italy started the decade at just over €700 billion, and ended just crossing the €1 trillion mark. There is almost no growth up to 1972, but a significant jump between 1973 and 1974, this coincides with Locke’s timeline of economic changes in the private sector structure, as well as the growth in the rest of the decade.
Locke (1996) states the local state governments were the first to help empower the breakdown of the large corporations, and ensured the worker’s needs were still being seen to and the unions were being listened to by the breaking corporations.
Further, if we look at Figure 2 below, detailing the Italian exports, we can see a meteoric rise in exports after 1975, showing the strength of the polycentric model the private sector had started setting up. These two graphs show the dichotomy of the Italian political economy. While there is a huge growth in exports, tripling in six years, the GDP only saw minor growth. This states the wealth accrued in exporting of goods and services was not seen across the Italian economy, and the south is likely the culprit of the disparity between the two.
In totality, the 1970s were a time for experimentation at the regional level for Italy in the new international market. The regions to first adopt the polycentric economic model were those controlled by the Communist Party. This relates to the Communist Party’s communal values, and the regional governments would more readily dictate this through law.
1980’s
The electoral maps changed very little between the 1970s and 1980s. The Communists still have a strong hold in the center and northwest, while the Christian Democrats hold the rest of Italy. The continued hold on the majority of Italy by the Christian Democrats can be attributed to the economic boom Italy was going through during the 1980s, as will be detailed below. A minor note is the rise of a regional party representing the French-speaking population in the North. While not a major player in Italian politics, the Union Valdôtaine (shown in brown on the map) showed other regional parties they could gain traction.
The 1980s saw the rise of the industrial districts after the fall of major corporations in the late 1970s. During this decade, Locke (1996) suggests the political economic paradigm shifted away from large corporations to small to medium sized businesses. Small and medium sized businesses were able to adapt and shift faster than large corporations, had higher productivity and pay than the corporations as well. Through all of these claims of great economic value, the GDP does not show this rise at all. There is almost complete stagnation between 1980 and 1983, then rising strongly again after 1984.
If we look at the other side of this equation, the export side, the picture becomes clearer. Figure 9 details the continued skyrocketing of export wealth creation through the 1980s. The trend from the 1970s continued until 1986, where the total exports doubled from 1980 to 1985. The trend continued between 1987 and 1989. The export value does indeed seem to impact GDP, with the strength of the industrial districts, at least those that made it according to Locke.
At the beginning of the 1980s, Rome starts getting involved in the safeguarding of workers during corporate devolution. Rome helped create the industrial districts which allowed many small and medium businesses to work together to keep prices down and profits up, while still seeing to paying their workers more than their former corporate jobs did.
However, by the end of the 1980s the large corporations were able to recover from the downturn at the beginning of the 1970s, and the government again turned to them to carry the economy forward. The adding of €115 billion to the economy over 20 years in only exports is nothing to look down on. However, Rome rarely looks into why the economy is doing well in order to perpetuate the causes, and only worries about the economy when there is stagnation or a downturn.
The great economic performance during the 1980s is reflected in the Christian Democrats wresting control of a few regions from the Communists, likely due to the federal acceptance of the industrial districts. The strength of these districts cannot be overlooked in the growth of the Italian economy, as well as the continued stability in electoral politics. As will be discussed, the political reforms to come, as well as the corporations revival spells the end for the hold of the Christian Democrats.
1990’s
The 1990s were a tumultuous time for Italian politics, namely the 1993 party reforms, led by Silvio Berlusconi and Forza Italia, which banned the Christian Democrats and Communist parties.. In 1994, the chaos of the new party system can be seen with a massive spread of parties, as well as well as the rise of a few more regional parties. 1996 saw the height of Liga Nord’s power in Italy, with subsequent elections seeing their message fade from favor with the population. While Forza Italia was never able to hold a strong majority of regions, Silvio Berlusconi was able to forge alliances to maintain control for nearly a decade.
The 1990s were the start of the economic stagnation still afflicting Italy. Looking at Figure 13, the economy gained, slightly, but overall stayed flat. This correlates with the return to a large corporation economic model. Further, the restructuring of the political system in 1996, and Berlusconi’s rise to power had noticeable effects on the economy, with a slowing of growth and a slow recovery after 1996 in GDP. Berlusconi pushed for a unified Italian economy, which in the long run has caused the state to suffer economically as leader after leader tries to push for a united economy.
This narrative is seen stronger in the Exports between 1990 and 1999. Looking at Figure 14, note the continued meteoric rise from the previous two decades until 1996. In the second half of the 1990s, there is a small amount of growth and then a downturn in exports. This is a direct result of the “one Italy” economic policies taken by Rome in the second half of the 1990s. While the rest of the Western world was booming, Italy stagnated.
Based on the information collected, there is a connection between the direction Rome chooses to pursue Italy’s political economy, and the actual economic outcomes. The data shows, the decades when the city-state policies are pushed by Rome or by the private sector, the Italian economy grows and prospers. When Italy attempts to push a united Italian economic model, the state suffers. The economic environment around the world was fairly weak during the 1970s and 1980s, but due to the Italian industrial districts and empowerment of small and medium sized businesses, Italy was able to grow massively in those 20 years. Italy’s stagnation began when the corporations recovered, and the political system shifted away from the traditional two party system, favoring the chaos seen today. Further, Rome resumed the prior economic practice favoring the corporations over the industrial districts.
As discussed in the Literature Review, Rome has the internalized problem of laurel-resting when the economy is booming, and wondering what to do when the economy stagnates. The political-economic analysis here shows the strengths of the polycentric model, yet it has its drawbacks. Not all regions in Italy had strong industrial districts. What is not reflected in the charts above is the impoverished south. The polycentric model worked best in central, and northeastern Italy, The southern regions (traditional Kingdoms of Naples and Sicily) never gained any benefit from the polycentric model, and no model has yet proven effective in bringing the south into the economic prosperity of the north. Until Italy reconciles the “southern problem” Italy will continue to lag behind the rest of Europe and the rising economic powers of the world.
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