February 5th, 2021

The Italian Left After Keynesianism

—   David Broder

—   Social Democracy

The Italian Left After Keynesianism

—   David Broder

—   Social Democracy


Luciano Lama, leader of the General Italian Workers’ Confederation (CGIL) union and a veteran PCI militant, in 1977 at Sapienza.


In 1977, Eric Hobsbawm published a book of interviews with Giorgio Napolitano, a leading figure in the Italian Communist Party (PCI)’s gradualist wing, the miglioristi. Hobsbawm proclaimed himself a “spiritual member” of the PCI and intended this book to depict the path it was beating in between Leninism and social democracy. Yet his efforts appeared rather frustrated by Napolitano’s vocabulary. Though calling for the “reconstruction and renewal” of Italian society and insisting on the PCI’s “democratic commitment,” Napolitano did little to convey any clear socialist worldview. As he extolled the “perspective of the continuous, organic, balanced development of the Italian economy” and the “retailoring of [Italian] production for the foreign market,” Hobsbawm interrupted him, as if to draw him back on topic:

Hobsbawm: All this is very useful and positive…
Napolitano: But what does it have to do with the advancement of socialism?
Hobsbawm: That’s exactly what I wanted to ask you.
Napolitano: That’s a question whose answer is less simple than it may seem.

Napolitano’s elusive response expressed a contradiction not limited to the miglioristi. In Cold War Italy, the PCI never took up the reins of national government, yet strongly identified with republican institutions and a cross-class interest. The meaning of this ambiguity in terms of economic policy was highlighted at a 1962 Gramsci Foundation seminar on “Tendencies of Italian Capitalism,” as well as the 1966 PCI congress, where leading migliorista Giorgio Amendola clashed with the left of the party. Despite the “economic miracle” of the 1950s, Amendola emphasized the backwardness of Italian capitalism, and asserted the PCI’s role in “modernization,” “democratic programming,” and “structural reforms”—less planning than Gaullist dirigisme. The PCI left’s leader Pietro Ingrao instead emphasized the fight to increase workers’ living standards—a line which other PCI leaders saw as sectional and “economistic.” It was Amendola’s perspective that prevailed in the PCI into the 1970s, though it was Enrico Berlinguer and not he who became the new general secretary in 1972.

Berlinguer’s leadership, lasting up till his death in 1984, was nonetheless marked by a substantial shift in his party’s economic thinking, embracing a strong critique of Keynesianism and even “statism.” Yet this also happened as a Socialist Party (PSI) increasingly hostile to the PCI was moving from what former Prime Minister Giuliano Amato calls a “schizophrenic” party to more recognizably social-democratic positions. While in the 1970s Italy had Europe’s most militant labor movement, profound changes in both the PSI and PCI’s culture beginning in this decade would radicalize them in a position which rejected any “sectional” blue-collar interest. It would be an exaggeration to present even the period of PSI leader Bettino Craxi’s premiership from 1983 to 1987 as the onset of Italian neoliberalism, given both the lack of any general design to liberalize the economy and the limits on incipient moves toward privatization. Yet the crisis of Keynesianism following the 1973 oil shock would mark a major reordering of the workers’ parties’ priorities, laying the bases for their transformation into a neoliberalized “center-left” in the early 1990s.

The PCI had, from the period of the Comintern Seventh Congress in 1934 and then the antifascist alliance of World War II, always proposed some variant of “popular frontism,‘ transcending the sectional interests of blue-collar workers. Ever since the failure of the biennio rosso of land and factory occupations in 1919-20, Antonio Gramsci had recognized the need for the working-class minority to hegemonize broader masses rather than just assert its own industrial might. Since the factory proletariat was small in that early period of communist organization (around 2 million), even a fairly narrowly defined working-class force would have to integrate all manner of artisans, small traders, the casual workforce and unemployed, as well as rural laborers and farmers. But under Palmiro Togliatti’s leadership, this outlook was radicalized into a search for alliance with bourgeois parties on antifascist grounds, and indeed to appeal to the broadly defined “Catholic masses.” After Fascism, the important thing was to advance democratic reforms that could put the working class in the heart of national life, rallying broader layers around it, in a series of stages which would precede the fight for socialism proper.

Reaching its height in the Resistance period, such a position faced obstacles during the Cold War era, in which the communists (and to a lesser degree, in the 1950s, even the socialists) were subject to a kind of anathema, which they sought to overcome by demonstrating their loyalty to republican institutions. The logical endpoint of this strategy came in Berlinguer’s leadership and the “historic compromise” from 1976 to 1979, in which the PCI gave outside support to Christian-Democratic (DC) cabinets. Indeed, while the PCI was now at its electoral high watermark—winning 34 percent support in the 1976 general election, bringing it closer than ever to overtaking the long-dominant DC—Berlinguer was aware he could never build a stable government just by cobbling together a “50+1 percent” coalition of the left. Recent events in Chile as well as the fact that Italy was a NATO country pointed to the need for a more mediated approach. In Berlinguer’s outlook, the PCI had to demonstrate its loyalty to democratic institutions and commitment to serving the broader national interest, thus earning it the right to hold executive power.

This was the spirit in which it tolerated DC stalwart Giulio Andreotti’s third government after the 1976 elections (the abstention known as the non sfiducia, i.e. “not-no-confidence.”) This compromise, in which the PCI still had no ministerial roles, owed much to the efforts of DC party president Aldo Moro, who had already in the 1960s eased the PSI into the first “center-left” governments and now spoke of rapprochement between the DC and the PCI. His murder in May 1978 by Red Brigades terrorists would greatly set back such a cause. Yet beyond this apparently unnatural union, this period of “national solidarity” raised wider obstacles for the PCI, especially on the terrain of economic policy. For all its historic theoretical titans, the PCI had no experience in national government and a correspondingly weak layer of party economists—instead being driven to rationalize Andreotti’s crisis-response measures, in order to pull along its own base.

Indicative in this regard was the package of austerity measures announced by Andreotti in October 1976, three months after the PCI’s non sfiducia had allowed him back into power. Alongside sharp fuel price increases, Andreotti proposed a two-year freeze on the scala mobile, a measure established in 1945 (from 1975, as a single reference point for all workers) to index wages to inflation. While the shop-floor mobilizations of the last decade had driven strong wage rises—thus achieving a more equitable sharing of postwar growth, just as it was coming to an end—faced with 17 percent inflation, the Andreotti government sought to impose a tighter wage discipline. But responsibility for such a turn now also lay with the PCI, considering not only its 12 million strong electorate but its massive hegemony among organized labor. Indeed, this revised outlook was most famously defended by Luciano Lama, leader of the General Italian Workers’ Confederation (CGIL) union and a veteran PCI militant, in an interview with La Repubblica.

Speaking with its editor Eugenio Scalfari, Lama explained that he did not just stand for a sectional interest. Rather, “if we want to be consistent with the goal of pushing down unemployment, clearly the improvement of employed workers’ conditions has to come second.” Asked what this meant concretely, he explained, “Wage policy in the coming years will have to be very contained, any improvements we can ask for will have to be staggered.” Also put into question was cassa integrazione, the mechanism which paid out wages to redundant workers: “We can no longer oblige firms to keep on the books a number of workers beyond their productive capacities, or continue to demand that cassa integrazione means permanent assistance for surplus workers.” In a policy later known as the “svolta dell’EUR,” Lama made clear that the CGIL would accept a policy of “sacrifices” in the interests of rebooting investment and resisting runaway inflation, which had by 1977 reached 20 percent.

The year in which Berlinguer first ventured the language of “austerity” as a “lever to transform Italy” was also 1977. With this he both pushed back against a consumerist vision of progress and insisted that short- term sacrifices would ultimately serve the general interest. Berlinguer’s comments did not portend a permanent fiscal austerity such as Italy would undergo in the 2010s; rather, they sought to present the PCI as a responsible party of government, while counterposing its record to the corruption of the ruling parties, shown in the first oil crisis of 1974. This change was not simply an artifact of the historic compromise with the DC, but a theme on which Berlinguer expanded even after the turn back to opposition in 1979, including in a 1981 interview with Scalfari on the “moral question” in politics. The PCI now advanced policies to handle the immediate crises facing the economy, rather than simply pointing to its ills as malign effects of capitalism or supporting mobilizations to shield workers from their effects.

I’ve noted that even by 1945, PCI leaders had abandoned any notion of a 1917-style revolution: from the Stalinist Pietro Secchia to migliorsti or more social-movement-oriented figures like Ingrao, PCI leaders raised the banner of broad popular alliances, defense of republican institutions, and compromise with Catholic Italy. Yet if each had different conceptions of how this connected to the socialist “end goal,” Berlinguer’s turn relegated any such program of transformations to an intangible future. This also allowed the PCI to draw closer to the ideas of MIT economist Franco Modigliani, a brand of post-Keynesianism in fact based on marginalist ideas. In 1976 he was feted at a conference of the PCI-linked Centro Studi sulle Politiche Economiche, at which party economists embraced even such a pillar of neoliberal doctrine as NAIRU. This was the same vision reflected in Lama’s comments on the competing interests of employed and unemployed workers, which accepted that wage rises, not an exogenous shock, were driving inflation.

For historian Guido Liguori, a gap was opening up between the PCI base and the values being imported from other political cultures. But equally striking were developments in the PSI. Ridding that party of its Marxist residues, in 1983 Bettino Craxi became Italy’s first socialist premier, in a five-party alliance mostly based on DC MPs. Where in the “national solidarity” era the CGIL had swallowed a pause on wage demands, in 1984 Craxi legislated to lower the scala mobile index by three points. In this, he had the consent of the CISL and UIL union federations, who signed the “Valentine’s Day agreement” on February 14, though not the CGIL. Berlinguer opposed this, and even after his death on June 11, the PCI pressed on with its bid to force an abrogative referendum. While the “yes” (pro-abrogation) camp far exceeded the PCI’s own base, it ultimately lost the vote 46 percent to 54 thanks to the common front among the PSI, DC and the smaller liberal and centrist parties. As Giuliano Amato hints, for a PSI, now strengthened by rising white-collar layers, the PCI’s defense of a rigid scala mobile showed it to be stuck in the past.

Decisive, here, was the idea of sacrifices now for payoff tomorrow: Craxi’s focus on combating inflation appeared in the guise of a crisis-resolution measure. But rather less understood were the structural shifts also taking place in these years, both unravelling gains made by the 1960s–70s labor movement and codifying rules which conditioned all political decision-making. Particularly important, in this sense, was Italy’s entry into the European Monetary System (EMS) in 1978. The PCI had from the onset of the Cold War opposed the European integration process, and before Italy’s entry into EMS even a relatively pro-European figure like Napolitano criticized its likely negative effects on workers in countries with weaker currencies. Yet over the 1980s EMS (later, EMU) became the framing of all economic policy discussion in Italy, a process formalized by the independence of the Bank of Italy in 1981. As opposed to the elected government setting monetary policy, including via frequent recourse to devaluations, Rome would have to fix wage policy and public borrowing with reference to a money supply whose most immediate conditioning factor was the interest rate set by the Bundesbank.

Already from 1980, public debt began to spike, driven not by government profligacy or wage rises so much as the effects of the oil shock and, more specifically, the paralyzed institutional response which resulted from the central bank’s “divorce.” With the lira effectively pegged to the mark, and the Bank no longer forced to buy up government bonds, public debt ballooned from 57 percent of GDP in 1980 to over 100 percent in 1992. Becoming premier that summer and faced with unbearable pressure on the lira (the ‘Black Wednesday’ that also forced Britain out of ERM) PSI man Giuliano Amato announced a “blood and tears” budget, while also putting an end to wage indexing. This administration would slash 93 trillion lire (50 billion euro) from the public budget. In the name of emergency response (and as Amato notes on sharing meager resources equitably) this austerity program was backed by both the leadership of the CGIL and the post-communist PDS (Democratic Party of the Left), accepting sacrifices now in the interest of keeping Italy in EMS. When, faced with the deepening crisis in the PSI, former Bank of Italy governor Carlo Azeglio Ciampi took over as premier, the PDS offered its support.

The PDS did not directly join Ciampi’s administration—when parliament voted against prosecuting Craxi on corruption charges, the party withdrew its own proposed finance minister. The PSI’s first premier would ultimately flee to Tunisia, evading trial and pushing his party toward outright destruction. Yet the changes that had taken place during his premiership would have a lasting impact, especially when considered as part of a shift in the entire left which had begun already in the mid-1970s. Whether in the leadership of the trade unions or through their participation in government, the two main parties of the Italian workers’ movement had already in this period begun administrators of the “battle against inflation,” pushing into the background not only their past visions of social transformation, but even the immediate defense of sectional working-class interests.

Over the course of the 1990s, the center-left’s bid to guide Italy into the eurozone “on time” in 1999 radicalized it in this direction, as former PCIers now unbound from the communist past could assume European liberalism as their new ideal horizon. As the PCI turned into the PDS, there were splits—a Communist Refoundation took form, and there were also sharp divisions in the base of the CGIL, with even general secretary Bruno Trentin resigning after signing up to the abandonment of the scala mobile. Yet if there have been some moments of revolt against the particular measures promoted by Italian neoliberalism, this has never amounted to a nationwide political force with an alternative governmental program and different set of priorities, such as the PCI represented at least until the late 1970s.

That the European country with the largest communist party now has a neoliberalized center left and a small and politically inert left-wing milieu raises the question of the “paths not taken.” Especially important, in this regard, is the way we understand the relationship between changes in the leadership in the PCI—especially the passing of the Resistance generation, as even Berlinguer embodied, and its replacement by younger figures like Massimo D’Alema, Walter Veltroni and Pierluigi Bersani—and their ability to impose such a dramatic shift in the party’s identity and fundamental social referents. Bersani would refer to the continuity ex-communist leadership as la ditta (“the firm”), and clearly some of the explanation for the left’s political weakness lies in the subjective choices it made. Yet a frank reckoning with the left’s weakness would also have to point to broader cultural failings in the PCI (and even more so, the PSI). A story of betrayals by leaders is certainly unsatisfactory in explaining the behavior of a political force supposedly based on the masses’ own protagonism.

In his fascinating 1981 study on the Italian Communist Party, Grant Amyot offered insights into its left wing through a local-level analysis (in Bari, Modena, Naples, Perugia, Turin), rare even among Italian researchers. He identified not only a failure in the historic compromise propounded by Berlinguer, felled by the assassination of Moro, but a wider crisis in the Popular Front model inherited from the Togliatti era, and accepted by all wings of the party. But building on this observation, one could say the left’s weakness owes not to the alleged “disappearance” of the working class—in what is, after all, still the continent’s second most industrial power—but the fact that the islands of industrial organization that still exist no longer suffice to cohere wider “popular classes” politically. Schematically, if in the 1970s the 60,000-odd FIAT workers at Turin Mirafiori symbolically represented the labor behind industrial modernity, the muscle behind the anti-fascist revolt, and a visible expression of the power of numbers, one could hardly ascribe a similarly obvious “cohesive” role in 2020 to Italy’s 1.6 million mostly low-paid tourism employees. The PCI always represented more than just industrial workers; the problem, after the loss of the identity and cohesion the party itself offered, is how to federate different types of workers, unemployed, precarious, small-proprietor groups under any common set of demands.

Thus emerges the role of the state and institutional-level politics in cohering an agenda that stands above the workplace-level bargaining power of individual groups of workers. It is, decisively, the Italian left’s weakness in proposing achievable reforms at this state level—visible even in the PCI’s 1970s response to stagflation—which has made it particularly suffer the effects of the decline of the mass workplace. This problem is further complicated by an ambiguous attitude toward the hollowing-out of national sovereignty in recent decades. Since 1989, even forces more radical in their rhetoric than the neoliberalized center-left have tended to focus on social “resistance” against various disliked reforms rather than advancing an agenda for government and state intervention. This is also why the dissolution of the old workers’ parties led not to their replacement by some superior alternative, or the masses now organizing free of bureaucratic party hierarchies, but rather a general atomization and desertion of the political terrain.

Title The Italian Left After Keynesianism
Authors David Broder
Date 2021-02-05
Collection Analysis
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