More “Pro-Business” Measures Aren’t Going to Pull Italy Out of Crisis

Fabrizio Barca

When COVID-19 sent the global economy into meltdown, European leaders insisted they wouldn't repeat the same mistakes they made after the 2008 crisis. But in Italy, a familiar cast of technocrats are again touting the same neoliberal recipes — hobbling the country's public sector and driving ever-wider inequalities.

A woman in a face mask strolls down an empty street leading up to the Vatican gates during the COVID-19 lockdown in Rome, Italy. (Gabriella Clare Marino / Unsplash)

Interview by
Fulvio Lorefice

In the early days of the pandemic, it might have seemed the European Union’s dominant economic dogmas had been shaken. The crisis raised questions over everything from health care investment to intellectual property rights — and its drastic economic fallout led EU institutions to insist they could not just repeat the austerity recipes with which they had responded to the 2008 crisis.

But if there was some talk of “building back better,” it was far from clear what rethinking this would actually mean. This is particularly striking in the European country first hit by the pandemic, Italy. In a land whose once-mighty left has all but disappeared, the recent formation of a “national unity” government under former European Central Bank chief Mario Draghi shows how neoliberal elites are acting to defend their own model.

Fabrizio Barca is coordinator of the ForumDD (Inequalities and Diversity Forum). He spoke to Fulvio Lorefice about the current disaster’s roots in the neoliberal policy of recent decades, the use of the crisis to strip back rights and regulations, and the possibility of reversing a decades-long rise in social inequality.

Fulvio Lorefice

In a recent ForumDD report you tell us that “the mistaken neoliberal choices of the last three decades, responsible for the current situation, are plain to see.” But the need to turn the page on these failures doesn’t seem to have been recognized, politically but also in wider society.

Neoliberalism’s sharpest critics are often outside parliament, while those who have benefitted from the current order — and even the current disasters — enjoy bipartisan majorities in Rome, Paris, Berlin, and Brussels. The financial-economic establishment and its hegemonic apparatuses may well be able to steer the present situation to their own advantage. So, will we come out of this emergency in a more right-wing direction?

Fabrizio Barca

In the ForumDD we see three possible scenarios. While there are some issues specific to Italy’s situation, they are not so different from those posed in the United States after Joe Biden’s victory. Let’s start with the two negative scenarios we want to avoid.

The first response, which we call an insistence on “normality and progress,” does mention inequalities, but only opportunistically. After all, who would say they didn’t want less inequality? But this response has no intention of taking the crucial steps required to reduce inequalities by rebalancing power in society. Champions of such an approach prefer age-old “compensation” measures to dampen social unrest; they talk of more working from home and distance learning, but avoid the whole question of who should control digital platforms and in what conditions remote work should take place. They have no intention of altering the rules of the labor market, nor of opening up policy making to a sharp and well-informed public debate.

In Italy, their new watchwords are “simplification” and “recentralization” — despite the increasingly feeble condition of the central state administration, and the fact that local municipalities are still the backbone of this country and its democracy. “Normality and progress” is a neo-neoliberal scenario. This is the approach that transpires from the micro-reformism of so many papers and bills from [Giuseppe Conte’s recently ousted] government, and by the insistence of figures like former prime minister Matteo Renzi and his former finance minister Carlo Calenda on rebuilding some new “centrist” force.

The second starts out by recognizing the failures of neoliberalism, but is also rooted in a widespread conviction that there is no solution to inequalities. Faced with the obvious inadequacies of the “getting back to normal” approach, it proposes an authoritarian turn. This points to a dynamic that was already at work before the pandemic, where people’s rage and resentment was fueled by hatred for the even worse-off and the desire for some “strongman” to come in and take “bold decisions.” In Italy, this has already manifested itself in the restriction of rights to protest and other civic rights, especially for migrants. This dynamic’s initial anti-EU connotations have also lost strength, for they risked upsetting the interests of a significant part of the Italian productive system (i.e. exporters). This approach could thus end up converging with the first one.

But a third approach is one that seeks more equitable future. The highlighting — and harshening — of inequalities during this crisis have made the need for a radical change more obvious, to more people. Moreover, the current destabilization could bring catalysts of change. During the lockdown, we have been more clearly able to see the circular nature of production, the interdependencies between different sectors (especially when it comes to evaluating what is really “essential”) and the decisive importance of often invisible jobs (from janitorial to care, transport, and farm work). It’s become clear that these jobs, so essential to us all, are so badly paid only because so many workers are compelled to do them, sometimes with no regular contracts, or even in conditions of modern slavery.

Opportunities for change have also emerged at the level of citizens’ preferences and potential demands: the awareness of the importance of care services and reciprocal, humane relations of the origin of the food we eat, of the potential advantages of rural spaces, and so on. This doesn’t itself bring change — and such awareness could be suppressed by illusory hopes in normalization or authoritarianism. But it provides the opportunity for a political project able to identify new values and respond to them with suitable policies. This is especially true in a country like Italy, with a capacity for solidarity and cooperation that has proven fundamental for maintaining the social fabric in so many places during this crisis.

Clearly, there are many powerful opponents of such a scenario. Not only international, oligopolistic powers but also all those who profit from the current inequalities, especially that vast sector made up of those drawing rents, be they public, private, or even opportunistic businesses disguised as cooperatives. This demands a political subject that can unite the forces of change around an alternative vision and proposals that speak to the four great forms of subalternity — of class, race, gender, and the environment. No such subject today exists.

Italy’s Democratic Party (PD) claims to be a forward-looking party attentive to local territories. But neoliberal ideology weighs heavily on this party, and it has raised a class of national political leaders largely closed off from engagement with society. It is the guarantor of what I would call a “neo-feudal” arrangement with local-level organizations: “you support us in national political contests and in return you can use our name and logo, in support of your particular local objectives, within extremely broad limits.” That’s something the party’s new leader Enrico Letta will have to tackle and disentangle. In the meantime, in wider society, local social alliances are being cobbled together, sometimes including the trade unions. But they have neither organizational structure or the conviction that they can become political subjects.

Fulvio Lorefice

In his day, Antonio Gramsci reflected on the particularly egoistic, anti-popular, essentially corporatist nature of the Italian bourgeoisie. Today, the Confindustria’s (Italian employers’ federation) furious opposition to even a momentary shutdown of production last spring — a message barked at the state’s political representatives almost like an officer barracking the troops — was an especially sharp illustration of this.

Beyond the usual bid for various government subsidies and subterfuges, typical of a parasitic economy, Confindustria does not seem able to propose any general measures to advance the overall social-productive fabric. What explains the persistence of this approach?

Fabrizio Barca

What you refer to is an old feature of the Italian industrial bourgeoisie. It’s one of the reasons why every turnaround in Italy’s economic development has been driven by state-owned companies, even more so than in other countries. Results came from entrusting innovative and motivated civil servants with the control of companies that we all collectively own — and by entrusting them with a strategic mission.

Italy once provided a model of this, allowing us to develop the steel industry, energy production, telecoms, highways, insurance, etc. Since the late 1960s the governance of these companies gradually deteriorated; many did not so much provide means of long-term development as serve to dampen social unrest by dishing out jobs and making short-term investment decisions useful to political power. This could and should have been addressed by changing how these companies were governed. Instead, neoliberal hegemony pushed for rushed privatizations, with notably harmful effects in telecoms and the highway network.

Nonetheless, state-owned companies still represent a third of the assets quoted on the Milan stock exchange and they are the backbone of the country’s large corporations. But for years they have not been entrusted with any strategic mission, their role being limited to providing dividends. That is why ForumDD have proposed that the much-weakened Finance and Economy Ministry should be handed the technical and intellectual powers to design national industrial strategies together with the managers of state-owned companies.

In Italy “industrial policy” has been dismantled entirely — taking the neoliberal creed much more literally than in Germany and the United States.

Fulvio Lorefice

The debate on Italy’s post-pandemic recovery has seen renewed calls for the public administration to be exempted from regulation on tenders, subsidies, and all manner of services connected to the post-COVID recovery. This is typical of the deep discrepancy in mainstream political discourse, between an ideological form which sings the praises of competition and the market, and then its regulatory substance, which rejects all this in favor of traditional parasitism…

Fabrizio Barca

The attitude toward public administrations is twofold: a constant call to “cut back red tape,” but also moves to hand decision-making to technocratic task forces outside of the public administration. These are both steps toward the scenario of “normality and progress” I described above. Public spending is seen mostly as a way to push up demand, or to dampen social tensions. This has fueled corruption and enriched rentiers, while worsening the quality of public services in marginalized areas, especially rural areas and urban peripheries.

That is why ForumDD was alarmed by the way the [Conte] government first went about preparing the plan financed by the EU Recovery Fund. Instead of starting from the needs of the millions of people whose life plans have been thrown into doubt, and then setting strategic priorities, it outlined a series of “shovel-ready” projects. There was subsequently a significant rethink, but after the change of government, two important steps need to be made.

First, the strategic priorities need to be sharpened and turned into measurable targets in terms of improving people’s well-being. We have proposed steps that could be taken in various areas: combating educational poverty; preventing and mitigating the effects of natural disasters; overcoming the housing, overcrowding, and urban decay emergency; providing SMEs with access to technological innovation; orienting the digital transformation toward social justice; accelerating the energy transition, starting with the most vulnerable citizens; and rebuilding collective spaces.

This also means transferring power: to labor, with measures that prevent wages falling below a socially acceptable threshold and building labor and citizenship councils as new spaces of strategic participation; to women, starting by breaking apart stereotypes in the classroom, and strengthening community welfare; and to young people, by rebalancing the intergenerational transfer of wealth (a genuine “universal inheritance” as Anthony Atkinson put it) and promoting a generational renewal in the public administration.

The second front has to do with promoting citizens’ active participation in the implementation of public projects, based on open databases on spending and results. We need to abandon the one-size-fits-all logic of the neoliberal era. Setting national strategic objectives is central, but their adaptation to specific contexts should be decentralized. The municipal level is the tier of government where civil society and labor can truly take part in project implementation and where a permanent learning process can take place which improves the quality of public spending: what Chuck Sabel calls democratic experimentalism, and we define as a place-based approach.

Fulvio Lorefice

ForumDD — the Inequalities and Diversity Forum — aims at “producing, promoting and influencing proposals for collective and public action that favors social justice and reducing inequalities.” Your fifteen proposals start out from the idea that inequalities are not inevitable but, as Atkinson put it, a “choice.”

Fabrizio Barca

Coming together with capitalism’s growing, destructive environmental impact, the most important feature of the current phase is the interruption and often inversion of the fall in inequalities that had taken place between 1945 and the 1970s. It concerns all dimensions of social justice: inequalities of income and especially of wealth have been growing rapidly, as have inequalities in access to basic services. Also very important are inequalities of recognition: large sections of society, within both the working and the lower middle class, especially in marginalized territories and rural areas, were progressively excluded from the “culture of progress,” with their role and their community values disregarded by elites, and their voices ignored.

This phenomenon has proceeded along three fault lines. First, technological change and in particular digital transformation: due not to its inherent nature, but to the way in which it has been collectively left ungoverned, thus encouraging an unprecedented concentration of knowledge and of the power to shape our preferences. Secondly, the heightened imbalance in the power relations between labor and capital, whether material or immaterial. Third, regression in the processes of generational transition, with the weakening of the redistribution of wealth that takes place in the passage from one generation to another. A fourth neoliberal distortion has also been at work: the intentional space-blindness of policy making, purposely ignoring the specific features of places.

The effects have been amplified in Italy by three specific national factors, behind the stagnant productivity of the last two decades. First, the archaic character of the public administration (the oldest in the West, including in terms of employees’ age); having avoided de-fascistization after 1945 and long been left unreformed, it has been the object of recurrent reform efforts that have not improved its hiring methods, nor shifted it away from its bias toward compliance with formulaic procedures rather than actual results in terms of popular well-being.

Second, the halt to the welfare reform process and expansion of civil and women’s rights that had begun in the 1970s, plus the resumption of the corporatist practice of handing subsidies and tax breaks to particular groups. Third, the dismantling/suicide of the whole post-1945 party system, a self-flagellating response to the guilt brought by the corruption trials of the early 1990s and the fall of the Berlin Wall.

Fulvio Lorefice

As well as illustrating the factors that have driven the sharp rise in wealth inequalities, your report focuses on the “common sense” that has resulted from this. Here, it is taken for granted that public is worse than private; your merit is shown by the wealth you manage to accumulate; companies’ sole objective is to maximize shareholder value; poverty is the fault of the poor or just a charade put on by those who want to cheat the system; and freedom means the freedom to “vote with your feet” and abandon a hospital, a school, a neighborhood, or a city when it no longer works properly…

Fabrizio Barca

If we cannot change the commonsense understanding of these words, we will not be able to build coalitions for the more equal future we believe in. To take three of them:

Merit. With the neoliberal turn, this term was distorted, reduced to the capacity to raise the wealth at one’s disposal. With neoliberalism, society is thus grotesquely reduced to market plus control. Those controlling capital no longer need to convince society that the power imbalance from which they benefit is the key to prosperity and growth. Capitalism — so goes the narrative — produces inequalities, but they are an inevitable short-term cost: “eventually, they will disappear when the benefits of growth reach us all.” The collective “return on investment” vanishes into a distant future that will never come.

Poverty. After 1945, the first reaction to poverty was to question the conditions in which the poor were born and had to live: now the first reaction is to ask what they did wrong to get themselves into such a state. Blame and individual stigma are fundamental aspects of the way the poor are often seen today. It is assumed that work would, by definition, dignify their existence, while a basic income would be indecent: as if irregular jobs for poverty wages were edifying. This tension made itself felt in the Italian debate on emergency measures for irregular workers and the most vulnerable, faced with COVID-19.

Freedom. The Italian Constitution upholds the “substantial freedom” (as Amartya Sen would put it) which entrusts the Republic with “removing the obstacles” to the full development of the human person. But according to current common sense, freedom is instead associated with the individual freedom to “exit” — to leave a hospital, a school, a city, a country that you don’t like.

The freedom to move and the right to vote do indeed go together with the right to protest and speak, but these rights have also been diminished and demeaned, like when Tony Blair dismissed the mass protests against the war on Iraq. And the state does not organize spaces of public engagement where citizens can influence the choices being made, instead of simply “exiting.” This is a limit that civil-society organizations try to compensate for by building their own spaces for public debate.

Rewriting the terms of what merit, poverty, and freedom mean is a cultural project that could mobilize a “social justice international.” Such an effort should put to use all the powerful tools that digital transformation has to offer. That would make the difference in the struggle to build a different future.