The Economic Miracle of Italy

The Economic Miracle of Italy

For many years, the republic experienced economic success. Initial U.S. assistance, particularly in the form of food, fuel, and Marshall Plan aid, aided in the recovery of basic industries like steel. The Fascist-era regulations and attempts at autarky were dropped, and the 1945–1947 “reconstruction” program was endorsed by all political parties and labor organizations. By 1948, industrial production had returned to pre-war levels, and the Korean War (1950–1953) gave additional impetus for growth. Italy strongly embraced trade with the rest of Europe and participated actively in engineering and oil exploration in the Middle East. Up until 1964, the nation experienced an “economic miracle,” with industrial growth rates exceeding 8% annually (and particularly during the boom years of 1958–1963). Still located in the northwest industrial triangle, its most important businesses produced affordable motor scooters (the Vespa and the Lambretta), vehicles, typewriters, refrigerators, washing machines, furniture, and stylish items (particularly shoes) (from economical Fiats to luxury makes such as Maserati, Lamborghini, and Alfa Romeo). Italian businesses rose to fame for blending affordable production methods with attractive designs. All over Italy, a remarkable network of superhighways was built. From a mostly agricultural backwater to one of the most active industrial nations in the world in less than two decades. Politicians were able to keep their political support thanks to economic development.

A stable currency starting in 1948 and Italy’s affordable access to raw materials, particularly Middle Eastern oil, helped the postwar recovery and subsequent expansion. Enrico Mattei, the head of ENI (Ente Nazionale Idrocarburi, the state-owned energy organization), is known for his innovative initiatives. Natural gas was found in the Po valley by the petroleum business AGIP (Azienda Generale Italiana Petroli), which later became a branch of ENI. It was sold to the industry at a discount. Due to the influx of rural migrants into the metropolis, labor was cheap, trade unions were ineffective and politically divided until the late 1960s, regulatory organizations were even more ineffective, and taxes were low and readily evaded. All of this promoted investment, particularly because entrepreneurs could obtain low-cost loans from state-owned banks and credit institutions. The IRI, which Mussolini formed in 1933, remained to control a significant portion of the economy, encompassing not just heavy industries but also telephone service, air travel, and road building. Therefore, the “economic miracle” was not just based on free-market ideas; government institutions were also crucial.

“Land reform”

The land reform legislation of 1950, which allowed land reform agencies to seize sizable, poorly farmed estates, usually in southern or central Italy, improve them and then sell them to new peasant owners, represented the biggest postwar change in agriculture. Because there was typically not enough land to go around, the goal of establishing a settled community of peasant cultivators was only partially accomplished; about 117,000 families purchased farms. Peasants who lost their land relocated abroad or to urban areas. However, one significant effect of land reform was the rise to the economic dominance of the reform agencies—managed by central politicians in Rome—in many rural areas, where they were in charge of things like land distribution, lending, and grant funding for improvements. As a result, they challenged the established authority of local landowners and turned into conduits for Christian Democrats’ political patronage, particularly in the South. Many of the traditional jobs in the rural areas of Italy were gradually supplanted by mechanization and technology. The majority of day laborers and sharecroppers vanished from the north, along with seasonal female rice workers. Rural communities expanded, while smaller, well-run farms profited thanks in part to EEC subsidies.

The southern

The southern

The main economic issue was still the south of Italy, which was still underdeveloped and had little industry and a per capita income that was half that of northern Italy in 1950. The first policy prioritized irrigation and land transformation. For a moment, it appeared that, for the first time since the Risorgimento, the south was taking charge of its fate. Hundreds of thousands of landless peasants participated in the massive, organized land occupation activities that swept through the south in 1949 and 1950, which politicized a whole generation. But on behalf of the wealthy landowners, the state interfered, sometimes fatally, to put a stop to the occupations. Millions of young people decided to go to the north as a result of the fact that the land reforms that followed the occupations transferred little land to the peasantry and maintained many of the injustices in the south.

Established in 1950, the Casa per il Mezzogiorno, or Special Southern Development Fund, provided funding for roads, schools, electrification, water supply, and land restoration. After 1957, it started making investments in industrial growth as well. This was made possible by government policies that encouraged the establishment of state-owned businesses in the south as well as credit and tax benefits for private investors. Other organizations were created to develop particular industries. Key plants and the required infrastructure were constructed in promising southern regions chosen for industrial growth. As a result, several massive, capital-intensive factories were built, such as steelworks and heavy engineering in Taranto and oil refineries in Porto Torres. These factories were extremely expensive to build, frequently produced non-marketable goods, and only employed a small amount of local labor. These factories gained notoriety as “cathedrals in the desert” rapidly. The Puglian coast north of Bari was one of the locations that succeeded well, although the industrialization strategy quickly came under fire from many people. Because small businesses received minimal incentives, southerners could not see much of a benefit while northerners resented having to pay for it. The costs to the environment were likewise very high. As a result, funding progressively switched to covering training expenses and labor costs, particularly social security contributions, and by the 1980s, subsidies for small and medium-sized enterprises were available on a selective basis. Between 1950 and 1980, the fund spent $20 billion, yet southern Italy was not industrialized. While earnings remained 40% below the national average, the unemployment rate in the South remained three times higher than in the North.

However, several of the fund’s original initiatives, like building decent roads, providing clean water, enhancing health care, establishing secondary schools, and eliminating malaria, did benefit the south. Additionally, it got a large number of state social payments, frequently provided by supportive politicians looking for votes, and agricultural subsidies. The societal impact of vehicles, television, and processed foods was as profound in southern Italy as elsewhere. As large-scale migration to western Europe and the northern cities resumed from 1950 onward, the south also profited from emigrants’ remittances. Between 1955 and 1970, more than three million people—mostly healthy young men—left the south. Some rural areas experienced a significant population decline, but Rome and many northern cities almost doubled in size as a result of the immigrants’ swarming into desolate housing complexes on the periphery or makeshift shantytowns.

From the 1960s: Italy

Italy began to complete its postwar transformation in the 1960s, going from a primarily rural, economically backward nation to one of the most developed nations on the planet. As jobs grew more scarce in northern Italy and northern Europe, one effect of these developments was that migration from the south began to slow after 1970 and, by the 1980s, even reverse. Other developments in the population, the economy, technology, and culture altered daily life in Italy and exacerbated social instability. After the Cold War ended in 1989, Italy faced a new set of difficulties as a result of pressures for political and economic reform, the unification of the European economy, and globalization.

Social and demographic change

By the 1960s, Italy’s population growth had significantly halted. In the majority of the northern and central areas, the birth rate fell below replacement level in the 1970s after being already low in the postwar years. The birth rate dropped significantly after 1964, even in the South. Only 670,000 live births occurred in all of Italy in 1979, and 560,000 occurred in 1987. By the 1990s, Italy had one of the lowest birth rates of any industrialized nation, and there was a rising trend toward monogamous families and single individuals.

Social and demographic change

The factors for the sharp fall in births are many. After 1971, contraception became widely accessible, and the majority of Italians were urbanites living in apartments, thus they no longer required a huge number of kids to work the land. Nowadays, women had more education. Only in the 1960s did girls generally start attending secondary schools, and by 1972 there were one million female graduates. Now that they had alternatives to being stay-at-home mothers and housewives, they could easily find meaningful employment and pursue fulfilling professions. The first divorce law in Italy was passed in 1970 after a campaign run by the Radical Party, which was opposed by the church and Christian Democrats. A real success for secular groups against the dominance of the church and Christian Democrats in society was achieved when 59.1 percent of voters approved it in a nationwide referendum (organized by the Christian Democrats) in May 1974. Many outdated family law rules were changed or eliminated in 1975, and the 1978 abortion law was approved by 67.9% of voters in a subsequent referendum in 1981. In the meantime, unmarried cohabitation and civil marriage both increased in popularity, accounting for nearly 12 percent of all marriages by 1979.

Dramatic evidence of a more secularised culture was offered by legal contraception, divorce, and abortion. Regular church attendance plunged precipitously, from around 70% in the middle of the 1950s to about 30% in the 1980s. By 1978, Catholic Action had about 650,000 members, roughly one-fourth of what it had in 1966. In the late 1960s, Catholic trade unions formed alliances with their former Communist enemies. In 1976, the Christian Democrats’ state monopoly on broadcasting was ended. Furthermore, many church-controlled charities, particularly those operating locally, were taken over by regional governments in 1977 and 1978 and were afterward managed by political appointees as a component of the state welfare system. Italy was noticeably “de-Christianized” by the 1980s, despite the Christian Democrats still holding the majority of government positions, according to Pope John Paul II. A new concordat that acknowledged many of these developments was ratified in 1985 by the Vatican and—importantly—the socialist Bettino Craxi-led administration. Roman Catholicism was no longer the official state religion, and the state no longer paid for priests’ salaries or mandated religious teaching in schools.

labor militancy and economic stagnation in the 1960s and 1970s
Following the Socialist Party’s election to power in 1963, more political appointments were made in the businesses and government organizations, and trade unions gained sway. As soon as governments produced money to pay for higher wages and welfare, inflation started to creep up once more. While the official economy slowed down and many businesses had to be saved by the IRI at taxpayer expense, the black market sector, which was dominated by domestic textile workers and independent craftspeople, among others, continued to thrive.

The “hot autumn” of 1969, which had its epicenter at Fiat in Turin, was a period of strikes, plant occupations, and large-scale protests across northern Italy as a result of this economic downturn. The majority of strikes were unofficial, organized by militant communist organizations or workers’ industrial committees rather than (party-affiliated) trade unions. The demonstrations, which were a part of a larger wave of political and student unrest that also included resistance to the Vietnam War, concerned issues other than wage and working conditions, such as housing, transportation, and pensions.

Factory councils were established in nearly all major facilities, and the stoppages compelled bosses to offer significant wage increases—at least 15 percent. Migrant urban immigrants were frequently at the forefront of the conflicts. These advances were formalized by legislation—the Statute of the Workers—in 1970, which also established rights that had never been enshrined in the law. For wage and salary workers, the majority of pay scales were indexed to inflation every quarter in 1975, ensuring the significant pay increases of the preceding several years. In the official economy, employment was also essentially assured, and trade unions gained power over a variety of planning organizations. In many industries, it has become quite difficult to fire employees.

Most of the 1970s saw a continuation of labor militancy that was frequently spearheaded by unauthorized “independent” unions. Therefore, many businesses decided to divide up into smaller organizations that employed piece-rate or part-time employees who could be fired at any time and did not receive guaranteed salaries. This was especially true for the manufacturing of textiles and light engineering. Particularly among young people, unemployment increased significantly. One million young persons under 24 who were unemployed existed in 1977. The 1973 and 1979 increases in the price of oil served to exacerbate the ongoing inflation. When compared to other industrialized nations, the budget deficit in the United States was the highest at an average of roughly 10% of GDP. From 560 lire to the dollar in 1973 to 1,400 lire in 1982, the value of the lira decreased steadily.

The 1960s to 1980s: social movements and student protest

Italian student demonstrations had also started to gain traction in 1967, and the movement persisted into the 1970s. Alternative lifestyles started to rule the youth culture, professors and teachers were questioned in the classroom, and universities from Pisa to Turin to Trento were full. The radicalization of an entire generation. Students contested the Communist Party and the church, as well as the pervasive consumer society and the traditional authority of the family. I Want to Be an Orphan was one of the movement’s catchphrases. After an early period of innovation and democratization, the movement, however, came under the influence of numerous small, ideological factions that frequently turned to violence to further their ideologies.

The 1960s to 1980s: social movements and student protest

In 1977, a new collection of student movements known as autonomic (“autonomy”) first appeared. Autonomia Operaia (“Worker Autonomy”), the most well-known of these, adopted a more aggressive stance. There were more inventive and interesting subgroups within the movement, such as those who called themselves “Metropolitan Indians.” The traditional left was viewed as an opponent by the movement this time. Union leaders were yelled at and assaulted. In 1977, there were ritualistic and bloody protests, and some of the movement’s adherents had guns. Most of the movement’s leaders were detained by the state in 1979, while others fled the country to avoid being tried. In the 1980s, the autonomic made a comeback and focused on environmental issues. They also established “social centers,” alternative places, and squatted in abandoned buildings in part to protest the lack of cheap housing.

The feminist movement also sparked societal change in the middle of the 1970s, bringing it to Italy later than it did to most other Western nations. Feminists questioned society’s strict Catholic morality and a judicial system that offered few protections for women against male oppression, rape, or even murder. Additionally, the feminists contested the dominance of men in politics across the board, including in far-left political movements. Without the agitation of the feminist movement, the significant victories in the referendums on divorce and abortion in the 1970s and 1980s would not have been feasible.

Even the church started to embrace societal and cultural transformation. The reformist Pope John XXIII convened the Second Vatican Council (1962–1965), which was carried out by his successor Pope Paul VI and established a framework for the church’s partial liberalization and democracy. With the election of the more conservative Pope John Paul II in 1978, however, this process of liberal reform and the hopes it sparked for a change in the church began to fade.

Italian Terrorism

One of the most concerning outcomes of the abrupt collapse of economic, social, and political stability after 1969 was terrorism. The majority of violent crimes were initially committed by neofascist organizations that were supported and armed by some security agency personnel. As part of a “policy of tension,” they started setting off bombs and derailing trains to counteract the labor advances of 1969–1972 and support a right-wing coup. With a string of bombs in Milan and Rome in December 1969, the “strategy of tension” really got underway. A bombing in a Milanese bank left more than 90 people injured and 16 dead. The far left, notably the anarchists, was initially suspected by the authorities. Giuseppe Pinelli, one of the anarchists, perished inexplicably after “falling” from a fourth-floor window of Milan’s main police station. Pietro Valpreda, another anarchist, was detained and accused of carrying out the bombing in Milan. Italy was divided by the Valpreda and Pinelli cases, which also radicalized significant portions of the workers’ and student movements. While a sizable portion of the right continued to support the police and government’s version of events, a sizable portion of liberal opinion saw the situation as a combination of conspiracy and cover-up. The failure of the state to identify the perpetrators or bring charges against them (the eighth trial in connection with the case started in 2000 and ultimately ended in acquittal) only fueled public dissatisfaction with the government. In the meantime, evidence that the police had disregarded revealed that the bombs had been put by Nazis with the active assistance of Italian secret service units. Valpreda spent three years in jail while awaiting trial before being exonerated in the 1980s. The Pinelli case never concluded. Up until 1984, the “tactic of tension” persisted. The deadliest event happened in August 1980 when an explosive device detonated in a busy waiting area of a Bologna train station, leaving 85 people dead. Later, neofascists were found guilty of detonating the device.

By the middle of the 1970s, left-wing terrorism had started to draw in a lot of young people who were dissatisfied with American foreign policy, the shortcomings of governments on the left, and the Communists’ most recent alliance with Christian Democrats. Many small groups of ex-militant students and unemployed workers participated in it. The “red” terrorists started by briefly kidnapping factory managers. They soon started abducting and killing judges, journalists, and politicians. At initially, the “red” terrorists enjoyed some support from the extreme left, but from 1977–1978, the extra-parliamentary movement started to turn away from them. In 1978, former prime minister Aldo Moro was abducted and killed by the Red Brigades, who held him captive in Rome for 55 days while Italy held its breath. Since then, several questions regarding mistakes made by the secret service and potential collusion with the Red Brigades have come to light. Following the assassination of Moro, the police were reformed and granted additional authority, the courts provided caught terrorists with every incentive to testify, and by 1981–1982, the terrorist danger had significantly decreased.

In the 1970s and 1980s, politics

The Communists, whose trade unions assisted in containing pay claims after 1972 and who took a tough stance against terrorism, helped the political system endure. Enrico Berlinguer, the leader of the Communist Party, developed a strategy in 1973 that he called the “historic compromise” in response to the twin crises of the economy and terrorism, as well as the recent military coup d’état in Chile that had overthrown a Marxist administration. For the benefit of the nation, it involved more or less official agreements between the Christian Democrats and the Communists. In the 1976 elections, the Communist Party received 34.4% of the vote and 228 seats in the Chamber of Deputies. However, many Communist followers were turned off by Berlinguer’s “historic compromise”. Despite never technically being a part of a coalition, the Communists supported the Christian Democrats’ governments from 1976 to 1979 (mostly by abstaining during no-confidence votes) and were given numerous important institutional positions, including the speaker of the Chamber of Deputies. Additionally, the Communists consented to Italy joining NATO. During this time, networks that dispersed patronage throughout the political system were developed. When these corrupt networks were discovered in the 1990s, they were to spark a political catastrophe. However, as international tensions rose, communist cooperation came to an end in 1979, and in the elections that year, the party’s support dropped to 30.4%. The Communists entered opposition once more after 1979. Their proportion of the national vote has decreased to around one-fourth by 1987.

In the 1980s, governments were typically formed by coalitions of four or five parties, with a greater role than in previous decades for the minor parties. The secularisation, factional strife, and subsequent scandals further undermined the Christian Democrats, who saw their support drop from 38.3 percent in 1979 to 32.9 percent in 1983. For the first time since 1945, the Christian Democrats had to briefly resign from the prime minister in 1981–1982. From 1983 until 1987, the tenacious Socialist leader Craxi served as prime minister.

Leave a Reply

Your email address will not be published.