The Political Economy of Italy's Decline by Capussela Andrea Lorenzo;

Author:Capussela, Andrea Lorenzo; [Capussela, Andrea Lorenzo]
Language: eng
Format: epub
Publisher: Oxford University Press, Incorporated
Published: 2018-03-29T00:00:00+00:00

7

The ‘Economic Miracle’ and an Ambitious Reform Programme

Overview and Periodization – The ‘Economic Miracle’ and Full Employment (1950–1963) – The Juncture of 1962–1964 and the Defeat of an Ambitious Reform Programme – A Battle of Ideas – The Political Influence of Organized Crime

Overview and Periodization

Under the political and economic institutions that we have just described Italian society underwent the most rapid and profound transformation of its history, propelled by productivity growth. Between the early 1950s and 1963, a period known as the ‘economic miracle’, industry became the dominant sector, national income doubled, and affluence began to spread beyond the upper classes. Despite their weaknesses, those institutions allowed the country to exploit the vast potential for catch-up growth that was offered by its own backwardness and a favourable international environment. Once the forces of convergence began to fade, however, and society grew richer and more sophisticated, those institutions insensibly became a hindrance to development and productivity growth progressively slowed down.

The interpretation that we have already begun to articulate is that institutional reform was impeded by the idiosyncratic social order that took shape between 1943 and the early 1950s. So we shall seek to highlight both the essential continuity of that social order, suspended in an as yet unaccomplished transition, and the signs of the onset and persistence of the vicious circles discussed in Chapter 4, which are at once manifestations of that social order, buttresses of its stability, obstacles to reform, and sources of the diverse inefficiencies that now constrain Italy’s material and democratic progress.

The country stood at a critical juncture by the end of the economic miracle, in 1962–4, when a vast reform programme was thoroughly defeated. Reform having been eschewed, during the late 1960s and the 1970s the country’s social order was severely tested. Growth decelerated, the international environment became less benign, inflation soared, citizens’ demands rose, social tensions broke out, and political violence was often a daily occurrence in Italy’s main cities. The country’s elites responded to these challenges less by expanding the opportunities available to all, which would have exposed them to greater political and economic competition, than by granting selective protections to the social groups that had either the size to attract them or the bargaining power to exact them. The social order became more inclusive but its logic was not altered. That form of co-option, through which particularistic privileges were traded against political support, gave impetus to the proliferation of distributional coalitions, raised inflation, and set the main spiral hypothesized in Chapter 4 in motion. This policy assured enough social consensus to allow the country to overcome the tensions of the 1970s, which were mostly endogenous, but dampened the dynamic forces of society and hampered the shift from a convergence-driven model of development to one based on innovation.

The periodization reflected by this chapter and the next two differs from those most commonly used (illustrated, respectively, in Figures 1.3a and 1.3b). Within a framework of progressively rising globalization, the seven decades covered by these chapters were

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