ITALY The turn in the Italian economic conjuncture that had been universally predicted occurred this past summer. The new recession has begun and is now in full swing. Aspects of the deterioration of the situation can be listed on all levels. Industrial production, which had gone through a noticeable increase during the first six months of the year, began to turn around in August; it fell by 4.6%. The negative conjuncture has fully penetrated the automobile industry (Fiat and Alfa Romeo have reported unsold units of by LIVIO MAITAN 200,000 and 20,000 respectively), and the employers have begun to order heavy reductions in the workweek (about 71, 000 workers are on a twenty-fourhour week at Fiat). The auto crisis is affecting a series of small and middle-sized industries that are linked to auto production. Other related industries like distribution and repair will most probably be 16 centrist currents produced by this radicalization, to open a political debate with them, and to do everything to organize unity in action. This unity has to be effected around two themes that are essential in the present political conjuncture: advancing unifying demands in the struggles and popularizing and actualizing all the forms of selforganization of the working class, the only means of effectively countering the class-collaborationist program of the reformist leaderships. This unity in action with the centrist and left Socialist currents will allow the broad vanguard to exert a greater weight in the struggles, to impose unity in action on the reformists in some sectors, and thus to effect the outflanking that can help in beginning to change the relationship of forces between the reformists and the revolutionaries, to the benefit of the struggle of the workers. D THE MESS dragged in too. (According to the National Federation of Metal Craftsmen, of the 21, 620 small firms linked to the automobile industry only 20% are continuing regular production; 50% are in serious difficulty, and 30% find themselves "in extremely worrisome conditions standing on the edge of extinction. " (La Stampa, October 27.) In the textile industry the news for the month of October is no less grave. Some 20, 000 workers were on partial unemployment at the end of September; today, according to the October 26 Corriere della Sera, the figure is 50,000, According to the secretary of the Filla textile union, affiliated to the CISL (Confederazione Italiana Sindacati Lavoratori - Italian Confederation of Trade Unions, the country's second-largest union federation), there is an imminent threat of massive layoffs. There have been suspensions even in the chemical industry, which could be an indication of rising tersion (at Snia Viscosa, Montefibre, and some petrochemical factories in Ferrara and Mantova). In the construction industry the crisis is nothing new. But the fact
P ARITAL PARITA nelle PENSIONE NEI REDDITI is that there is no sign of early recovery. Production of housing units fell by half between 1971 and 1973. During the first four months of 1974 the volume of planned construction projects registered a 7% decline compared to the first four months of 1973. There was also a decline, although a more modest one (3.5%), in the number of projects on which construction was actually begun. (See Rinascita, No. 42.) It should be noted that in spite of this decline, construction accounted for 38.7% of all credits advanced to industry. (Corriere della Sera, October 27) According to the predictions of the employers, 1974 and 1975 may see further reductions • on the order of 10-15%. As for employment, Secretary Giorgi of the CGIL (Confederazione Generale Italiana del Lavoro - Italian General Confederation of Labor, the CP-led trade-union federation, largest in Italy), predicts that unless there is a change, unemployment in the industry could reach 25% or even 50%. The saturation of the internal market for electrical appliances is nothing new. In the past, the foreign market has absorbed as much as 80% of the production of this industry. But now crises are beginning to break out in the French and British markets, and the 12% devaluation of the Australian dollar will make Italian exports more expensive there. Toward the end of the month of October, total unemployment reached 800, 000, according to official statistics (Corriere della Sera, October 25). This means that the real figure is significantly higher. (In any case, 800, 000 means a little more than 4% of the active population.) As for consumption, it is enough to mention the fall in auto sales (3.4% for the first eight months of 1974) and the decline in sales of beef (which, according to the director of the Italian consortium of industrial butcheries, has ranged between 30% and 35% during the past several months). The decline in auto sales becomes especially significant when it is recalled that sales were down even in 1973 and that the first eight
PARITA' nelle PENSIONI months of 1974 actually coincided with an economic upswing. Italy had already scored admirably among advanced capitalist countries in the race for higher prices during the first four months of 1974. Italy had annual increases of 15-20%, trailing only Japan, which racked up rises approaching 25%, but outstripping all other advanced capitalist countries, including Britain. By September, prices were 24.6% higher than they had been a year earlier; the increase for September was a record, 3.3%. (See l'Unità, October 26.) An additional element that deserves mention is the difficulty in making up the enormous balance of payments deficit, which is about to reach 6 million million lire. * These difficulties will be further increased by the reduced profits drawn from one of the sources that has contributed to equalizing the balance of payments in the past: foreign tourism. During the first eight months of 1974, the inflow of money from tourism stood at 837 thousand million lire, as compared to 960 thousand million during the same period of 1973. To complete the picture, it must be remembered that the Italian bourgeoisie has already run up a foreign debt of 11 million million lire in its efforts to avert major collapse. Of the total, $3.6 thousand million is owed on loans taken out from various institutes and companies; $8.2 thousand million is owed for loans taken by Crediop, IMI, Ferrovie, etc., to compensate for the estimated balance of payments deficit; $1.2 thousand million, of which 5650 million has been used, is owed for stand-by loans from the International Monetary Fund (IMF); $312 million is owed for "Oil facilities" of the IMF used to compensate for the oil deficit; $1, 889 thousand million is owed *Just to give an idea of the depth of the crisis, in a study carried out in 1970, major Italian economists judged that in order for there to be sound economic progress, price increases should be held under 6% and the balance of payments deficit should not exceed 300-400 thousand million lire.
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ITALY to the Common Market and is due to be repaid this December; $2 thousand million is owed to West Germany, guaranteed in gold over a six-month period and renewable for two years. (See Corriere della Sera, October 22, and Rinascita, No. 42.) A long-term decline But the present serious economic difficulties can be understood in their full import only if account is taken of the more general context. The recession that is currently looming comes shortly after another recession whose first indications could be detected as long ago as the end of 1970. That recession was not overcome until the spring of 1973. What is perhaps even more significant is that even before the 1971-1973 recession, the long-term economic course had been marked by a tendency to decline. Let us take a look at this latter phenomenon. Since the beginning of the 1950s, the Italian economy has gone through three cycles of generally equal duration: 1951-58, 1958-64, 1964-71. The general growth rate went from 5.1% in the first cycle to 5.7% in the second. In the third cycle it fell to 3.8%. If the statistics are based on a longer period independent of the cycles, the results do not change: In the period 1951-61 the increase stands at 5.8%; it falls to 4.7% for the period 1962-73; the average for 1951-73 is 5.4%. (See the magazine 24 Ore, special issue of January 1974.) Half of the decline in the growth rate can be attributed to decreases in industrial production, manufacturing industries being hardest hit. During the 1950s industrial investments increased af an average annual rate of 7.3%. The rate of increase was higher in 1962-63. In 1963-65 the rate declined by 37% and continued at a reduced rate such that by 1969 industrial investments had only returned to the level of 1963. (In 1970, there was another upturn, but not in important sectors; then a new decline set in.) Further, since 1963 self-financing, on the basis of which the expansion would have been able to confinue (within certain limits), has been in such a decline that expansion could be carried out only at the cost of increasing the indebtedness of the companies. Profits, which had remained high throughout the 1950s, began to decline at the beginning of the 1960s. (Taking 1953 as a base of 100, the level of profits on gross income in the manufacturing industries rose to 114.3 by 1960 and then progressively declined to 91.2 in 1964, the lowest level reached until 1970, for which the figure fell to 82.9.) But even more significant - because of its obvious social effects - is the trend toward higher unemployment. In fact, motion on this field began to become noticeable even in the second phase (195818
64). While employment increased at an average annual rate of 0.5% during the first phase, it declined in the second and third phases (average annual declines of 0.5% and 0.3% respectively). It is scarcely necessary to recall that the decline in employment took place despite an imposing number of workers who found themselves obliged to go abroad in search of jobs. One point deserves special mention: After the 1964 decline, the level of industrial employment took five years to recover (6, 667, 000 in 1963 and 6,750,000 in 1969; 6,920, 000 in 1970). From the other side, the section of the work force seeking employment rose to about 3.5% during the period of recovery after 1964, after having fallen to 2.5% in 1963. The so-called Progetto '80, a report that was issued in 1969 (that is, in a year that was not at all negative in terms of employment levels), sketched out long-term perspectives that were anything but exhilerating. Beginning from the relatively optimistic supposition of a total increase in the national income of 5% a year, the report projected two goals of development, based on two different hypotheses about productivity increases. One called for a total increase in employment by 1980 of 100,000 jobs, the other for an increase of 350, 000. Total nonagricultural employment would be 1.1 million jobs or 1.4 million depending on which goals were reached; that is, it would in any case be insufficient to meet the increase in the number of people seeking jobs. (The increase is generated by the addition to the job market of young people now in school and by the continuing exodus from the countryside to the city.) In other words, Progetto "80 counted on a further reduction in the proportion of the employed population to the total population. That percentage has already declined significantly; between 1959 and 1968 it fell From 43.8% to 37.4%; by 1972-73 it had gone down to 35.4%. Some apologists have claimed that this decline reflects the expansion of the tertiary sector and the modernization of the country. They claim that the reduction is due to the increase in the number of people in school, the lowering of the retirement age, the increase in life expectancy, and the fact that the families that are now moving from the countryside to the city are much less dependent on the labor of women. But this theory is only partially correct. To prove this it is enough to point out that the rate of employment among the total population is significantly higher in the North (38%) than in the South (31%); and no one can seriously maintain that the South is the most "modern" part of the country. Regional statistics are even more revealing: In 1968, for example, the rate was 42.7% in Piedmont and 31% in Sicily. Conditiors in Campania, a southern region that nevertheless has zones of significant industrial development and of inten-
sive agriculture, deserves particular attention. Between 1961 and 1971 total employment in the region decreased From 1, 698, 000 to 1,552, 000. During the same period, industry's share of this employment declined from 565,000 to 538,000; agriculture's share declined from 581, 000 to 419,000, while employment in the tertiary sector rose from 552,000 to 595,000. In addition, it must be kept in mind that in many cases the increase in employment in the tertiary sector in the South results from an extension of underemployment rather than an effective shift of labor to other sectors of activity. (See Rinascita, No. 42, 1974.) Some information about the recession that preceded the present one is in order as well. While the beginning of the previous recession can be dated from the end of 1970, some people have even spoken of if as dating back to the end of 1969. (For example, see 24 Ore, January 1974.) At the time, the Confindustria (Confederazione Generale dell'Industria Italiana - General Confederation of Italian Industry) defined 1970 as a year of transition. It was a year of growth, but it did not launch a new sustained upturn. The growth occurred mostly in the first half of the year and represented increases compared to 1969, a year that was marked by huge strikes and consequent reductions in production.* It has been correctly observed that if it were not for the events of 1969, the recession would have started even earlier. This is additional proof of the falsity of the claim that the current economic difficulties are a result of excessive social conflicts. In any case, it is clear that T971 was a year of recession. The gross national income increased by only 1.4%. The added value of industrial activity suffered a similar decline, 1.3%, with industry properly so-called declining 0.4% and the primary sector almost remaining stationary (increasing 0.8%) Total employment fell by 63, 000 jobs (47, 000 in industry) and unemployment reached 3.1% according to official statistics. Underemployment also increased (up 62,000 for a total of 312,000). Total heavy investment fell by 10.3% (industrial investment remaining stafionary). In 1972 the situation improved slightly as compared to 1971. Gross national income was up 3.2%, investments up 2%, industrial production up 4.3%. Nevertheless, it must be remembered that if 1970 is taken as an index of 100, industrial production dropped to 95.6 in 1971 and by 1972 had climbed back only to 99.8. (24 Ore, January 1974.) As for utilization of plant and equipment (which had fallen from 82.7% of capacity to 78.9%), it took another drop, to 76%. According to statistics released by CENSIS, total employment dropped by 500,000 jobs during the first half of 1972 (from 18.9 million to 18.4 million).
Recovery came only in the first half of 1973 and extended through the first half of 1974. The national income increased by 5.9% in 1973; investments increased 9.9%, and employment grew by 140,000 units. (Agriculture continued to decline, but the loss was compensated by growth in industry and the tertiary sector. Between July 1972 and July 1973 employment variations among the three sectors were as follows: agriculture down 131, 000 jobs, industry up 88,000, tertiary sector up 384, 000.) The industrial index rose to 107 (with 1970 as a base of 100), while utilization of plant and equipment rose slightly, to 79% of capacity. The final element, whose significance for the future was lost to no one, was that integration of the Italian economy into the world economy was further accentuated during 1973. The ratio of foreign trade to the national production, which had already been 52%, rose to 54%. The web of contradictions The web of structural and conjunctural contradicfions emerges ever more acutely and explicitly from all the elements we have summarized above. Once again limiting ourselves to essentials, we should stress the following points: 1. The potential of the productive apparatus, especially in the most dynamic sectors, increased more rapidly than did the possibilities of expanding the internal market. At the same time, the international economic conjuncture resulted in sharpened competition, thus reducing the possibility of overcorhing difficulties through increased penetration of the European and world markets. (It should be noted in passing that stimulation of exports - along with suspensions, layoffs, intensification of the rate of exploitation, and restriction of wage increases - was a decisive factor in overcoming the crisis of 1964.) 2. Contrary lo the assertions of neocapitalist theoreticians, the presence of a backward and parasitic sector of considerable dimensions was not necessarily in contradiction with economic development during a boom period. In fact, so-called parasitic employment (in the "useless" state institutions, for example) served to occupy not negligible sections of the active population. Furthermore, it was exactly this distorted development - distorted in the sense of diverging from "ideal" capitalist development - that fostered the spread of certain intermediary social strata that constituted a market for certain commod¡ties (durable consumer goods, houses, etc.) and at the same time served as the political glue needed to hold the system together. Nevertheless, the "parasitic" or unproductive sector wound up provoking even more serious imbalances, generating dramatic
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ITALY tension. (It is enough to recall the urban chaos and the explosive situation in the sanitation sector.) The parasitic strata contributed to intensifying disorder in the political and administrative apparatus, threatening to disrupt even the minimum functioning necessary for the system's survival; these strata began to represent an ever less tolerable weight as the exhaustion of the boom restricted economic maneuvering room. Thus, today more than ever, Italian capitalism is suffering both from the contradictions of capitalism at its highest level (the automobile crisis, for example and from the contradictions deriving from Italy's specific development during the past twenty years (among which the so-called phenomena of backwardness are an essential part and not an added excrescence inherited from the past). Furthermore, the weight of the structural contradictions is making itself felt ever more directly and immediately, while at the same time the contradictions of conjunctural origin are intensifying, all the more so in that ascending phases now tend to be less dynamic and of shorter duration and recessive cycles tend to coincide more closely in various countries. Overcoming the crisis appears problematical if the existing contradictions are considered from another standpoint. Undoubtedly, inflation guaranteed the bourgeoisie certain margins for maneuver during the past several years and was the main instrument with which the relative upturn in profits was carried out in 1973 and at the beginning of 1974. But the result was that the rate of inflation got out of control, causing serious disorganization of the system. It must not be forgotten that the advantages that inFlation may provide in terms of exports can be largely or even entirely wiped out by price increases on the internal market; further, inflation strengthens tendencies toward speculation and the search for "old reliable goods, " which results in the immobilization of capital; it also deeply shakes the system of credit, and, finally, it makes the constant resort to foreign loans more difficult. Moreover, overcoming the crisis would require vast operations to restructure the economy; in most cases that would require massive investment. But with the decline in self-financing it becomes more difficult to obtain credit, and this provokes a competition that a great number of small and middle-sized companies cannot afford. In addition, the economic and political situation makes it more difficult to obtain funds through the stock market, for, as we have already mentioned, funds are being directed toward speculative operations or toward the search for "reliable commodities. " Under these conditions, there is a threat that exactly the sort of investment that is most needed will not be made: long-term investment. 20
Finally, while on the one hand the Italian bourgeoisie needs to find new outlets in the external market and to receive more aid in various forms (like loans), on the other hand it is hastening to take measures of a protectionist flavor (the law on obligatory savings being an example. This is a supplementary contradiction that is not restricted to Italy in this period; but it does take on particular acuteness and immediacy in Italy. Alternative solutions In the abstract, the Italian bourgeoisie can consider two different ways of extracting itself from its crisis in the medium term. The first would be to opt for an economic reconversion of broad scope based on: 1) singling out new, promising sectors (some sectors of the chemical industry, for example); 2) boosting production aimed at satisfying so-called social consumption (housing, transport, hospitals, etc.); 3) pumping aid into agriculture, which, by making production profitable again in a few given sectors could reduce the level of imports (with consequent benefits for the balance of payments) and slow down, if not halt, the rural exodus, which is assuming ever more irrational forms (even from the strictly economic point of view). Such a project would undoubtedly run into serious difficulties. It remains an open question whether
Gianni Agnelli of Fiat. 200, 000 unsold vehicles.
new advancing sectors can be found, especially when the many effects on employment are taken into account. (For example, it would be difficult for even a very impetuous development of certain branches of the chemical industry to play the role that was played in the 1950s and 1960s by the development of the automobile industry. In any case, reconversion, whether in industry or agriculture, would require time, in addition to other resources that are not very readily available. Far from diminishing, tensions would threaten to become even further intensified for a whole transitional period. But the major difficulty lies in the fact that a reconversion of the type proposed would require large-scale planning and therefore the existence of instruments able to carry out the plan in practice. Is it possible to believe that this condition could be met? The universal consensus on the total failure of even the most modest programmatic projects worked out ten years ago, and the recent resignation of Ruffolo in the midst of the economic and political crisis this autumn, serve as almost symbolic answers to this question. * Nevertheless, if a number of social and political conditions were met, in the final analysis such a project could breathe some life into the italian economy, easing the weight of certain structural contradictions and postponing the outbreak of new explosions of these contradictions. *The failure of these projects has long since been admitted even by the very economists who were most involved in trying to carry them out (Ruffolo and Sylos Labini, for example). It should be noted that these economists sought to locate the cause of the failure in the economic, political, and cultural "backwardness" of Italy, which they considered fundamentally atypical in capitalist Europe, particularly in terms of the subjective weakness of even the most modern of entrepreneurial groups and in terms of the enormous inability of the state apparatus to function. In his Rapporto sulla Programmazione (Report on Programming) Ruffolo indicates that "the conditions necessary for the success of programming are essentially social and political in nature." But in the first place, he does not draw the conclusion that is nevertheless partially implicit in his statement (namely that the social and political conditions are the breakup of the system as such); in the second place, the proposals he advances do not go beyond technical-institutional limits. It also appears strange, we may say in passing, that in 196566 Ruffolo considered "unpredictable" certain basic changes such as those that have occurred in international integration, in the labor market, and in the structure of the industrial system) that were nonetheless easily foreseen and in fact predicted by Marxist scholars.
The second way out for the bourgeoisie would be to undertake a reconversion in a diametrically opposite direction, so to speak - a direction whose logic has in a certain sense been embryonically anticipated in the tendencies toward declining development and the contradictions in the realm of employment. This would amount to pushing for a new upturn in the economy on a more restricted basis, lending a privileged position to goods acces sible only to given layers of the population. (For example, the automobile industry could seek a new equilibrium through production based on vehicles made for a social layer in position to guarantee a more stable demand.) Such a program would imply further reductions in the work force on the one han (with a further decline in the rate of economic activity) and certain tendencies of an autarkic nature on the other hand. The difficulties and risks involv even from a strictly economic standpoint, are so ol vious that there is no need to dwell on them. Nevertheless, a solution of this kind would not be impossible, at least for a certain period. But both alternatives involve major obstacles of a political character. If the first road were taken, it would be necessary to impinge upon vast and solid constellations of interest whose strength has alread been tested more than once since the beginning of the center-left government. If the second alternafive were adopted, the ruling closs would have to be in position to break the resistance of the working class. Exactly for these reasons (apart from the internal contradictions they involve), the two solu tions remain largely abstract. Likewise, the two political formulas that would be required to guarar tee them appear extremely difficult to realize in the given context. The First solution would require the "historic compromise" proposed by the Communist party or some equivalent formula); the second would require a conservative and authoritarian regime, if not an outright fascist or military dictator ship.* Short-term prospects What are the short-term prospects? Some people have insisted on the facts (in themselves incontestable) that the recession has not hit all sectors and that some particular sectors are even continuing or the rise. Others have expressed the view that the *It is clear that those who have most consistently and insistently proposed the first alternative have been the leaders and economists of the Itai an Con munist party. This is generally recognized by vari economists who have been engaged in the economi program of the center-left and in economic planning.
ITALY new recession may not be any worse than the 1964 or 1971 recessions, provided that a serious incomes policy is adopted and that big efforts are thrown into bolstering agriculture and the construction industry. Finally, it could be stressed that in spite of its chronic political crisis of leadership, the ruling class has succeeded before in reestablishing its profits by means of inflation; several months ago it succeeded in imposing a drastic redistribution of income by means of its fiscal decrees, and in the past several weeks it has managed to push through a reduction of the workweek in many important factories, particularly in the workers stronghold of Fiat.* This is not the place to deal with the critical problem that is confronting the entire world economy: Could the current recession have effects as devastating as those of the depression of the 1930s? In broad outline, at least for the moment, the response would have to be negative, especially given that despite everything, the ruling class today commands instruments for intervention that it lacked in the 1930s and that it is more difficult to fall back on exclusively national solutions. (The attempt of each capitalist class to take measures to save itself alone, and the inability to conceive of an international response, were factors that had a serious influence on the scope of the great depression.) From the other side, the working class commands guarantees that, while only relative, are nevertheless not insignificant, both from the standpoint of defending their immediate interests and from that of guarding against the economic effects of the recession (unemployment compensation, guaranteed income, etc.). But what is certain, and what we want to stress here, is that the tendency on a world scale will not be reversed through the end of this year, and probably through the first half of 1975. The situation will consequently become even more serious in the coming eight to twelve months than it has been up to now To return to the subject of assessing the scope of the recession in Italy, it should not be forgotten that while the automobile crisis is certainly a sectoral one, it concerns an industry that has greater specific weight in Italy than it does in any other *It would not do to underestimate the import of the reduction in employment that can be achieved through putting a freeze on hiring. This is proven by what has happened during the past period at Fiat and, over a longer period, at Pireli-Bicocca in Milan. 22 capitalist country (a sector that involves between 800,000 and 1 million people, taking account of the related industrial branches). It must also be recalled that the difficulties in the auto industry are increased by the depth of the crisis of this sector on a world scale and by its largely structural character. Moreover, the problems of reconversion and diversification are not easily'solved and, in any case, are actually insoluble in the short term. (It would be no easy matter, for example, to carry out the project, announced by Umberto Agnelli, of reducing the weight of automobile production from 90% to 50% of Fiat's total activity.) Second, it is certain that steel production has gone through a new increase and that Italsider of Taranto has received important orders. Nevertheless, some sectors of the steel industry will inevitably feel the effects of the auto crisis, and in a city like Taranto the positive situation of Italsider alone is not sufficient to avert 15,000 layoffs which will be imposed by 1975 in companies linked to Italsider. (Some 15,000 workers are already on partial unemployment.) As for the massive upturn in construction, it will not be easy to overcome the difficulties holding up investment (increase in interest rates, collapse of the real estate investment funds, etc.). It is also hard to see by what miracle the bottlenecks paralyzing public initiatives in construction can be eliminated (not to mention the availability of land). The conclusion is that the ruling class has only a very narrow margin for maneuver and that in the long term and the short and medium term as well, the problem is posed in political terms: Will the ruling class be in position to impose on the working class a drastic reduction in living standards and a contraction in employment levels? Will it be able to impose heavy sacrifices on broad sectors of the petty bourgeoisie? Will it be able to carry out its operation aimed at "cutting off the dead limbs" of small and middle-sized industry? The very least that can be said is that in a country with the political and social conditions prevailing in Italy this year it is extremely unlikely that such surgical operations can be performed painlessly and without provoking reactions from the patients. O *In the first nine months of 1974 registration of automobiles in Western Europe decreased by 16% on the average; registrations were down by 20% in West Germany and 25% in Britain. In the United States, auto production in the month of October 1974 was down 21.8% in comparison to October 1973, which was itself an unfavorable month.