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Carlo Vercellone, “The Anomaly and Exemplariness of the Italian Welfare State”

November 8, 2010 Leave a comment Go to comments

“The Anomaly and Exemplariness of the Italian Welfare State”

Carlo Vercellone

Chapter Six, Radical Thought in Italy. Michael Hardt and Paolo Virno, eds.

In many respects, the experiences of the Italian Welfare State represent a particular
case. The comparatively late industrial development, the continuity and ferocity
of the workers’ struggles and social movements, the high levels of Mafia activity and
political corruption, and above all the radical division between the northern and
southern parts of the country all make Italy an anomaly with respect to the rest of the
developed capitalist countries. Precisely because of these anomolous conditions, however,
the Italian experience may paradoxically prove to be exemplary for the future
of all welfare systems. The need to manage an internal relationship between North
and South, for example, has now become a generalized condition for all capitalist
economies. Most important, the Italian experiences, especially those emanating from
the social movements of the 1970s, show the possibilities of alternative forms of
welfare in which systems of aid and socialization are separated from State control
and situated, instead in autonomous social networks. These alternative experiments
may show how systems of social welfare will survive the crisis of the Welfare State.

The Fordist Period: Welfare as Regulation of the Relationship between Development and Underdevelopment

In Italy, as in other developed capitalist countries, the Welfare State was established
in the period following World War II, as a central articulation of the Fordist mode
of development. With respect to the classical model of Keynes and Beveridge, however,
the arrangement of the Welfare State in Italy immediately presented certain
important differences that follow from the depth of the geographic division of development
between the industrialized North and the underdeveloped South. In fact,
in my opinion, the central role played by the dialectic between North and South in
the project of Fordist growth in Italy has never been highlighted strongly enough.
Before proceeding to analyze the present economic situation, then, I believe it will
be helpful to review the elements that are essential for understanding the dynamic
that led from the establishment of the Welfare State to its current crisis.

On one hand, thanks to the inexhaustible reservoir of labor
power furnished by the underdeveloped South, Italy was the only country in
Europe that was not forced to rely on a foreign labor force during the period of
Fordist growth. The constitution of the Fordist wage relationship in the large northern
factories was established solely on the basis of the internal migration from
South to North. On the other hand, the role of the South was not limited simply
to that of reservoir of cheap labor for the northern industrial triangle bounded by
Milan, Turin, and Genoa. The South also constituted an enormous potential market
for the development of mass consumption and, additionally, once the dramatic
lack of infrastructure was addressed, it could be a space to accommodate the enlargement
of the productive capacities of base sectors of public industries and the redeployment
of the large Fordist factories.1

The originality of Italy, then, in the theory and practice of the
State regulation of Fordist development, consisted in the attempt to define a synthesis
of, on one hand, the functions and instruments of the Keynesian State planning
characteristic of developed capitalist economies and, on the other, the State development
policy typical of underdeveloped countries. In line with the canonical interpretation,
Italy experienced a rapid growth in spending for social services during
the period from 1954 to 1970, due in part to the country’s initial backwardness.
This dynamic of compensation, however, demonstrated two essential and original
characteristics. In the first place, the welfare system was deprived of one of the
central pillars of the canonical model: unemployment compensation. In the logic
of Fordist regulation, unemployment insurance corresponds, within the framework
of a Keynesian type of unemployment, to a security net guaranteeing the stability of
demand in a dynamic of full employment. In Italy, the South was characterized by
a backward agricultural sector and an explosive situation of underemployment; it
appeared as a pocket of “structural unemployment” that, despite Fordist growth
and emigration, could never be absorbed. The demands for the maintenance of
buying power and the social control of the labor market in the South led to the
replacement of unemployment insurance with direct monetary transfers. This translated
into the establishment of a complex system of “complementary allocations,”
and in particular the so-called socioeconomic disability pensions, based on the
recognition of incapacity to earn and not (medically certified) incapacity to work.
This was a central institution that characterized at once the backwardness and the
modernity of the Italian situation. It defined, in fact, a form of minimum income
separated from work, even though its distribution, based on no automatic criterion,
was at the base of the logic of a welfare clientelism.

Beside this system of social support we find the second central
and original institution of the Italian Welfare State and the regulation of Fordist
growth: la Cassa per il Mezzogiorno (the Fund for the South). The role of this
fund was to channel additional revenue made available by Fordist growth in the
North to the South in order to encourage industrial development. This goal was
the central project in the establishment of an explicit Fordist compromise, in which
the stabilization of the relationship between wage and productivity was based on a
policy of transfers for productive investments. In fact, with the public industries
acting as primary motor, the State did manage from the 1960s onward to begin a
large process of industrialization in the South. The entire traditional socioeconomic
structure of the South was toppled in this attempt to converge with the North.

Certainly, this strategy based on poles of development often
ended up merely creating “cathedrals in the desert,” and the break with the traditional
structure of the agricultural sector served to expand an unproductive public
and private service sector, that is, an economy that was largely parasitic and on the
dole following a specific and clientelist form of the deployment of the Welfare
State. Contrary to common opinion, however, in the zones where public industries
were not simply a substitution for the inertia of the large Fordist companies of the
North, this strategy did permit the creation of an integrated and differentiated
industrial structure that laid the groundwork for self-sustaining development. In
effect, the dualism between industrially developed zones and industrially backward
zones was displaced so as now to be internal to the South itself. This explains in
large part the division that emerged in the period from 1975 to 1990 between the
dynamism of the Adriatic South (the eastern provinces of Abruzzo, Puglia, and
Molise) and the downward slide of the “deep South” along a Mafia model, which
during the 1960s developed only in Sicily.

The Social Crisis of Fordism: Welfare as Transition and Articulation of an Alternative Mode of Production

Far from being a drag on the Italian model of regulation, the constitution of the
Fordist wage relationship solely on the basis of internal migrations proved to be a
unifying element that avoided any segmentation of the workforce between national
and foreign workers, in terms of both their status on the labor market and their
treatment by the unions. In France and Germany this segmentation seriously weakened
the political power of the workers. The very mobility of the internal migrations
in Italy played a determinant role in the constitution of an actor in the social
struggles, favoring the mechanisms of socialization and fostering circulation of struggles,
models of life, and political organizations between North and South. This point
is essential to an understanding of the social crisis that was opened by the workers’
struggles of 1969, the “Hot Autumn,” and the precocity with which Italian capital
subsequently embarked on the strategies of decentralization that marked a radical
rupture with the Fordist system of the large productive concentrations of labor
power. There was an enormous social tendency toward the project of an alternative
society in which the “refusal of work,” a slogan of the workers’ movements,
was not only a negative expression against the scientific organization of work, but
also a positive expression of a need to reappropriate the social mechanisms of production
and reproduction. This was the social tie that brought together a plurality
of subjects and struggles that, beginning with the large industrial centers, invested
the entire set of relations between the factory and society to the point of posing
the question of power over the globality of the social conditions of reproduction.
The various new forms of social transformation that emerged in Italy in the 1970s —
the so-called auto-reduction struggles, the user and consumer strikes, and the radical
critiques of the health care system and the total institutions of disciplinary society—
all were centered precisely in the attempt to reappropriate the structures of
welfare and invert their logic based on the reproduction of the norm of the wage

From the beginning of the 1970s this new subjectivity, far from
passively accepting the terrain of productive flexibility, appropriated the social terrain
as a space of struggle and self-valorization. The dramatic increase in small businesses
and in the informal economy in the central and northern parts of the country
can be understood only in terms of the diffusion across the social terrain of struggles
and practices that attempted to make use of this deepening of the social division
of labor between the businesses to experiment in alternative forms of productive
cooperation. There was a new form of mass entrepreneurship that would in
the following years act as the protagonist in the new economic miracle of the socalled
diffuse economy.2

This new subjectivity that was based on the “refusal of work”
and on the high education level of the majority of the population invested all the
interstices of the clientelist-Mafia model of regulation of the South along with all
the articulations of its integration as dependent participant, realizing finally that
class unity between North and South that Gramsci dreamed of in vain in terms of a
social bloc between the industrial workers of the North and the peasants of the
South. Despite the attempt to reestablish a compromise based on industrialization,
the social activism immediately reached the large factories displaced in the South.
There was a movement of recomposition that united all the figures of the so-called
southern social disaggregation, and its most powerful expression was probably the
coordination of the “organized unemployed” in Naples that disrupted the traditional
hegemony of the Christian Democratic Party. This social movement broke
the clientelist mechanisms of employment in public sector jobs and various aid services
along with the myth of the modernization that was supposed to come with
“peripheral Fordism.” The movement proposed instead the definition of an alternative
social model based on the establishment of a universal guaranteed minimum
income, which would replace the arbitrary system of disability pensions and other
forms of assistance. More important, the Fordist model was opposed by a model
based on “cultural” forms of production, such as education and particularly health
care, which were drastically inadequate in the South.

Thus, for example, in Naples, when the workers’ struggles paralyzed
the assembly lines at the Alfa Romeo auto plants in the early 1970s, the “organized
unemployed,” taking up a form of struggle inherited from the occupation of
land of the immediate postwar period, mounted a “reverse” strike against the health
care services. Without being hired, they occupied and ran the central hospital of
Naples, among other places, showing the social utility and the valorizing character
of autonomously organized labor, asking then for the recognition of patients in the
form of stable and socially useful employment. In more general terms, the field of
mass “illegality” and the so-called criminal economy, which has long been one of
the central components of the income of southern families, became during this
period a terrain of social experimentation and egalitarianism.

The long period of social struggles, in fact, was also the time
when the Mafia experienced a profound crisis of social legitimacy. Thus, as Pino
Arlacchi reports, during the long period through the 1970s and into the 1980s
when there was no real reconstruction to repair damage caused by an earthquake
in Belici in Sicily, the collective force of the social movements had already made
possible the emergence of a cultural model in which the traditional attitude of respect
for the Mafia had given way to disrespect and even explicit rejection.3 In short, the
relationship between the southern proletariat and the Mafia had been inverted in
the same way, we might say, as the relationship between the shop foreman of the
large Fordist factories in the Center-North and the immigrant workers. More generally,
what was thrown into question was the entire institutional and territorial
system of division based on the use of underdevelopment in the South as a resource
for Fordist development in the North, as demonstrated by the decline of immigration
and the leveling off of wage differences among the various regions. This is
why the government attempts beginning in 1975 to break this recomposition strove
progressively to dismantle the policies of industrialization and insist instead on a
logic of aid and clientelist subsidies. The attempts by the central trade unions to
recuperate this dynamic of collective action within a logic of institutional negotiation
could not be successful at the beginning without involving at least in part the
push of this movement toward the terrain of a relationship between the factory and
society or a relationship between North and South. A second front for the struggles
was thus open, which involved strikes aimed at reforms that led to a significant
extension of guarantees of employment and the social security system, even though
this was conducted in an “ultra-Fordist” perspective.4

Thus opened the first phase of the fiscal crisis of the State. The
public budget took on the responsibility of ensuring the monetarization of the consensus,
assuming all the costs of the transformation of the system of social protection.
From 1968 to 1975, State spending rose significantly with respect to the gross
national product. A system of arbitration that fed inflation was used to make the
system of social protection compatible with the general project of capitalist restructuration.
According to a logic that culminated in the scala mobile system, whereby
wages were directly linked to inflation, a modification of tax rates promised to
finance the “fiscal drag” through the raising of nominal wages and inversion of the
relation between direct and indirect taxes. In fact, from that time on, the increase
of the budget deficit, in comparison with the European average, did not result as
much from excess spending as from a planned stagnation of receipts. These informal
spaces in the budget deficit were part of the attempt to circumvent the rigidity
of the working class of the large factories through a maneuver of decentralizing
production. Far from arriving at the desired results, however, these articulations of
welfare became the new terrain on which the social division of labor was restructured
within families and community networks that developed a real synergy of
struggles, double employment, small businesses, and informal economy, using these
elements as part of experiments in production and syntheses of multiple means of
gaining income.

In short, the dynamic of struggles that were set in motion with
the Hot Autumn of 1969 defined a process of recomposition and social transformation
that shattered the set of institutional and territorial divisions that had served
to regulate the Fordist wage relationship and the dependent status of the South.
The struggles established a new relationship between North and South based on
alternative forms of social and collective cooperation. At the center of this dynamic
was the reappropriation of the functions of the Welfare State. The results of the
production process, the forms of the socialization of income, and the disposal of
the social surplus all appeared as pillars of the constitution of an alternative mode
of production at the heart of capitalism, as a first articulation of communism.

The Normalization of the Movements: Welfare as an Alliance among Producers

The principal vector of the defeat of the movements for social transformation did
not consist simply in the maneuver to bypass the “worker strongholds” in production
and fiscal relationships. The central elements of this process were the Communist
Party’s strategy of “historic compromise” to achieve a governing alliance
with the Christian Democrats, the neocorporatist strategy of the trade unions, and
the recentralization and normalization of the industrial relationship in opposition
to the democracy of the councils movements. In the context of the fiscal crisis, this
strategy was based on the logic of an “alliance among producers” against the increasingly
heavy weight of unproductive labor and rents that burdened the costs of
reproduction. In the name of the norm of a wage relationship that was stable and
secure, the trade unions opposed the principle of guaranteed income and unemployment
compensation, taking up the liberal thesis of its harmful effects on employment:
it would encourage businesses to lay off employees.

The perverse effects of the Communist Party strategy of worker
sacrifices and historical compromise were felt particularly strongly in the South.
This was clear, for example, in Naples, where the Communist Party conducted a
struggle against the clientelist welfare system, arguing in terms of administrative
efficiency for the establishment of “medical criteria of incapacity to work” that
would be necessary for individuals to obtain disability payments. This policy did
not take into account the fact that the unproductive employee in the service sector
and the payments that employee received, even linked to a clientelist mechanism
established by the Christian Democratic Party, represented ineluctable elements of
the income of southern families. For the Neapolitans, the question was not posed
in economic or moral terms, but rather in terms of the automatic means by which
the payments were granted, according to a principle of a minimum guaranteed
income for each citizen. In this way, far from eliminating the “wastes” of the clientelist
Welfare State, this Communist Party strategy allowed the Christian Democratic
Party to win back the consensus it had lost: its traditional management at
least appeared to be the guarantee of a secure income.

The policy of national solidarity and compromise between the
two major parties thus led to a dramatic rupture of the dynamics of social recomposition
that had been active throughout the South. It put a “lead cap” on the possibility
of any change through collective action, and thus opened the way in the
1980s for the immense restructuring of the Mafia model. The trade unions and the
Communist Party were caught in their own trap. The business owners, once they
had won the battle of power on the social terrain, carried the offensive into the factories.
The 1980 workers’ defeat in the Fiat auto plant in Turin symbolically marked
the end of an entire cycle of struggles. The governments of national solidarity between
the Communist Party and the Christian Democratic Party in the late 1970s
used this strategy, heralding the defense of employment of the central sectors of
the working class against the “marginals” of the diffuse economy and the South, to
break the process of social recomposition. This resulted in new, even more pernicious
forms of dualism between North and South, following a welfare model marked
by the degeneration of the entire party structure.

Fiscal Crisis and the Violence of Money: Dismantling the Welfare State

The beginning of the 1980s marked the explosion of the relationship between North
and South into two models of welfare. The shift that gave rise to this rupture was
itself the result of a monetarist strategy of financing the public deficit. On one hand,
during the 1980s in the Center-North and in the Adriatic regions of the South, the
economy dominated by large industries, with the victory of the neo-Taylorist model
of the Fiat plant and the “new condottieri” (the new captains of industry), was able to
bring the diffuse economy under its control progressively by subjugating it through
the classical relations of subcontracting. These regions experienced a new miracle,
a new period of economic growth. The decline of industrial jobs went hand in
hand with the rise of independent jobs in small businesses and the “underground”
economy. Welfare State, tax evasion, and tax exemptions all contributed to keeping
the economic miracle alive.

On the other hand, in the South, notably in the southwestern
regions of Compania, Calabria, and Sicily, the economic changes translated into a
growth of subsidies to support incomes and consumption according to a logic that
was increasingly captive to clientelist and “Mafia” structures. With unemployment
rates rising to more than 20 percent in the 1980s, the pensions for “incapacity to
work” largely outnumbered retirement pensions and continued to rise. This is the
context in which we have to understand the increasing entrepreneurship of the
Mafia, which, thanks to the drug “boom” and the deregulation of the financial markets,
was able to reverse its traditional dependence on the political and public structures.
The “Mafia business” of the 1950s and 1960s was transformed into the
“Mafia financial holding company.” In the entire South, the Mafia constructed a
new economic model, linking strictly together legal and illegal dealings, the formal
and the informal economy, and financial activity and directly productive business.
It created an integrated and self-sustaining circuit. The considerable wealth that
was accumulated through drug and arms trafficking was reinvested in the “political
market,” influencing public policy over the entire range of the formal and informal

The Mafia by this point controlled the majority of businesses
in Sicily, Calabria, and Compania, and it had introduced violent methods of regulating
the labor market and competition, erecting rigid controls on hiring. This
model explains why, despite the economic crisis and high unemployment, the disposable
income of the South remained at levels comparable to that in the northern
regions. Furthermore, the contribution of the criminal economy to the gross national
product was estimated at about 10 percent, and this indication of the dynamism
of the Mafia economy does not even take into account the importance of the penetration
of the Mafia into the circuits of the formal economy in the Center-North
and in Europe more generally. In fact, the Mafia was the principal beneficiary of
the politics of the public deficit, along with the large corporations, finance capital,
and the politicians. Capital could only respond to the deficit with high interest rates,
which allowed it, in a parasitical way, to reexert control over the movement of “productive
cooperation” and guarantee, from the perspective of both macroeconomic
regulation and social and political positions, the complementarity of the relationship
between the neo-Taylorist model in the North and the Mafia-clientelist model
in the South.

The regime of accumulation and the forms of regulation of this
post-Fordist mode of development itself entered into crisis progressively during the
later half of the 1980s under the pressure of these two structural tendencies and
linked to the decline of the regime’s internal and external conditions of possibility.
The dialectical play between internal factors and international pressures helps explain
certain fundamental reasons why the crisis of the Italian model of the Welfare
State implied both the risk of a dissolution of national unity and the risk of a
more general threat to European unity and its processes of integration.

The growing financial globalization of the world economy has
progressively destabilized the self-centered circuit of Fordism in Italy as elsewhere.
Threatening this structural condition that had been at the base of the Keynesian
policies of national regulation also drew into question the macroeconomic policy
that made the development of the South, albeit in a subordinate position, an indispensable
condition for the expansion of production in the Center-North. This process
at the base of the crisis of the policies of Fordist and Keynesian regulation was
the very same process that led all the European economies during the 1970s toward
a monetarist shift and policies of competitive deflation. This is why the constitution
of a coherent supernational space is the only possible response to the loss of
national autonomy over regulation. As Alain Lipietz has argued, however, the modalities
of the process of the constitution of a United Europe have reproduced the
perverse logic of the internationalization of capital according to a neoliberal model,
constructing a single market without establishing the bases of a common regulation,
while limiting the adjustment capacities of each country. Faced with external pressure
and the threat of not being at the center of the new European monetary system,
for example, the Socialist government in France had to abandon the attempt
it launched in 1983 to establish a policy of Keynesianism in one country for a policy
of competitive deflation and fiscal austerity.

In Italy, too, there was a passage in the early 1980s from a period
of inflationist regulation with negative interest rates to a second phase marked by
deflation and policies in line with the European monetary system. Italy, however,
was able to maintain a policy of expanding domestic demand at a higher level than
were the other European countries. It set up a model of growth on credit that in
several respects could be compared to the Reagan policies in the United States,
particularly with respect to the monetary policy of high interest rates feeding a budget
deficit based largely on informal tax exemptions. The Italian model differed,
however, in that it also maintained a high level of spending on welfare programs,
raising the budget deficit even higher. Public spending was crucial to maintaining
a consensus, and the national and local politicians profited from the State finances.
All this, however, led to a vicious circle: raising the interest rates and overvaluing
the currency sent the public deficit into an increasing spiral. These economic policies
aimed at circumventing the pressures of European monetary convergence began
to reach their limits near the end of the 1980s.

The spiraling deficit had even stronger effects on the domestic
structural crisis, in which the large corporations had followed the Fiat model and
met the crisis of Fordism with a purely technological response. Precisely the heart
of the network of industrial areas and small firms encountered the greatest difficulties.
The neo-Taylorist project ran up against the qualitative decline of the reserve
of the labor force, despite the government’s attempts to encourage immigration and
the passage of legislation favoring the employment of young people. It was essentially
an intellectual unemployment, composed primarily of a well-educated labor
force whose members preferred to remain unemployed or chose only certain kinds
of employment rather than accept jobs for which they were overqualified. This new
subjectivity made impossible any simple reorganization of the neo-Taylorist model.

With the joint pressure of the external demands and the decline
of domestic socioeconomic structures, all the supports of the social organization of
labor that had been put in place during the period of normalization at the beginning
of the 1980s were now, at the end of the decade, collapsing. One one hand,
the explosion of the deficit had undermined the credibility of the monetary authorities
and the Italian government, making inevitable a policy of fiscal readjustment.
The survival of both the neo-Taylorist model of the large industries and the political
class that was corrupt and linked to the Mafia implied at this point a frontal
attack against the very model of welfare that, despite the defeat of the movements
for social transformation in the 1970s, had reestablished a consensus based on the
uninterrupted rise of the level of consumption. Furthermore, recourse to that welfare
model risked putting Italy outside of a United Europe at a point when Italy
had no possibility of conducting an expansive policy on its own. In any case, the
politicians could only hope to give themselves a semblance of legitimacy in the
name of Europe and its criteria for monetary convergence.

In this context, then, it is only an apparent paradox that the
policies of the Amato government in the early 1990s, following a neoliberal logic
to dismantle the Welfare State, were given their first and fundamental impetus with
the 1990 decision to integrate the lira into the strict margins of fluctuation of the
European union monetary policies. This decision was designed in part to demonstrate
to European governments and markets the Italian will to respect the criteria
for entry in the European economic and monetary union. It was also and primarily,
however, a message aimed at an internal audience: the politicians and the large
industries wanted to make the dismantling of the welfare system appear to be a
structural adjustment required by an objective rationality beyond their control.
“The violence of money” thus became the essential means of blackmail, transforming
the management of the deficit from a fragile and unstable enterprise into a political
and social compromise, an instrument wielded over the economy to maintain the
command of a regressive and purely parasitic capital over the field of productive
and social cooperation.

The trade unions responded to this message once again as an
“attentive and conscientious” partner in facing the emergency, which posed the
“necessity” of dealing with the deficit. The unions played a role that increasingly
resembled that of a State apparatus, adopting, within the constraints of global macroeconomic
structures, a corporatist defense of the working class that corresponded
in effect to reproposing the old “compromise among producers” against the ineffectiveness
of public services and public administration. The central point of the
conception of welfare reform that was subsequently defended by the institutional
Left consisted in denouncing the injustice of financing the welfare system essentially
on the basis of the taxes of a dependent industrial labor force; the continually
diminishing industrial labor force was called upon to bear the costs of reproduction
of an expanding population and to support the privileges of the autonomous workers
and small businesses of the diffuse economy that engaged in tax evasion. The
policies of the unions, then, far from guaranteeing the interests of the central segments
of the working class, favored the fragmentation of the different components
of the social labor force. In particular, this strategy seemed to ignore the social structures
that had supported the miracle of the diffuse economy in the 1980s, in which
family income structure and the division of labor were not opposed to but actually
articulated through mixtures of guaranteed employment and independent work, family
subsidies and tax evasion, and unemployment benefits and participation in the
informal economy. The overall management logic of the unions appeared as a support
for the survival of a politically corrupt system that had for years enriched itself
through this kind of informal taxation, which in the North and the South had characterized
the political system’s control over public expenditures and projects.

The Italian Debacle

The so-called northern question was born in the early 1990s in the midst of the
dismantling of the Welfare State. The federalism of self-management that the social
movements had created in the 1970s was now inverted in a particularist localism in
the form of political parties known as the Northern Leagues. The emergence of
this political force was part of the initial phase of the collapse of the party system
that had long dominated Italian politics. The Leagues’ electoral success and their
power to topple the established political institutions was due in large part to their
ability to offer a space for the recomposition of different actors of the diffuse economy
in the Center-North in the form of a fiscal protest against the bureaucratic
State and the unproductive South. The leaders of the Leagues belonged to a popular
and conservative Right that took part in a more general revival of nationalism
and racism. The electoral consensus that acted as the real catalyst for the crisis of
the party system, however, can be attributed only in very small part to ethnic and
racial questions. The Northern Leagues threatened, in effect, to secede from the
rest of the country, and this appeared to be a real and effective form of blackmail,
when there was no plausible hypothesis about how to save the welfare system and
secure a certain standard of living and consumption. If the new Europe was going
to have two speeds or two economic levels, then this would allow northern Italy to
approach the European center of gravity, represented by Germany, whereas the
South would be relegated toward the most distant periphery.

The South was confronted by this threat of secession by the
northern regions, and whereas previously it had been the electoral pillar of the traditional
parties, now it was the terrain of a new Mafia offensive aimed at the State
magistrates, which included the assassination of two of the principal anti-Mafia
judges. This offensive could be interpreted as analogous to the Leagues’ strategy in
the North, renewing the Mafia’s tradition of Sicilian separatism and trying to make
Sicily into a kind of Switzerland of the criminal economy. The autonomy and power
of the economic and financial circuits the Mafia had already developed indeed made
the region less dependent on State subsidies. The role of the subsidies in the Mafia
economy were already secondary with respect to the guarantee of the institutional
mechanisms of recycling the flow of capital in the criminal economy and the possibility
of removing the legal obstacles that restricted the Mafia model of accumulation.
This dynamic led gradually to a reversal of the Mafia’s dependence on government
politicians as the Mafia became more capable of controlling voting and
gained increased financial and economic power. This changing relationship of force
served to destroy the long-standing alliance between the Christian Democratic Party
and the Mafia.5

The neoliberal strategy of the Amato government in the early
1990s, then, trying to reconcile a program to dismantle the structures of the Wel-
fare State with the survival of the old party system, was inevitably plagued by several
insurmountable obstacles: not only the inability to reform an ossified institutional
system and the difficulty of winning the confidence of international financial
markets, but also the incapacity to manage the volatile relationship between the
central State and the regions. The two enormous investigations conducted by the
magistrature, the one against the Mafia and the so-called clean-hands investigation
of political corruption, marked the definitive end of both Italy’s First Republic,
which had lasted since the end of World War II, and the economic model that Italy
had pursued through the 1980s, bringing out into the open its ugly underside. The
investigations literally blew away the common ground that held together the culturally
and economically developed Center-North and the parasitic, subsidized, and
Mafia-infested South.

As the magistrature’s investigations of Mafia and political leaders
revealed how broad the system of corruption and illegal accumulation had been
in political and macroeconomic terms, it became clear that the South should not
be singled out as a backward region; rather, all the economic, political, and cultural
centers of Italy were equally invested by the moral question—Lombardy just like
Calabria, Milan just like Palermo. Certainly, there remains a difference between
the industries of the North and the underdevelopment of the South, and there is a
kind of corruption involved in northern political and business circles that is different
from that in the Mafia, but nonetheless the arrangement of political exchanges
between the business world and the political administration is equally systematic in
both cases. The political and industrial establishment, in fact, operated along the
lines of a Mafia-style model of corruption based on a partnership between, on one
hand, business leaders who were close to a particular party or system of parties and,
on the other, a new generation of political entrepreneurs who acted as mediators,
“broker capitalists,” living off the control and diversion of public resources. In
short, already in the mid-1980s there had been institutionalized on a national scale
a situation of high corruption, that is, an economic formation in which illegal political
practices and exchanges were no longer marginal phenomena but rather infested
the entire set of networks of civil society and the institutions of the central and
peripheral State administration.

The economic crisis opened as one of its central dimensions the
crisis of the political and institutional spheres. The protagonists of this revolution,
however, were no longer the subjectivities characterized by the “refusal of work”
and “mass intellectuality” that animated the movements in the 1970s; now the protagonists
were the magistrates, along with a caricature of a resurgence of civil society
in the form of the Northern Leagues. The Leagues took up from the movements
of the 1970s a distorted version of the “localist” aspects of the demand for a radical
democracy and combined that with a call for separatism, which was often merely a
cover for racist and antisouthern sentiments. The only real content of the Leagues’
demands was the idea of financial and fiscal federalism linked to the hope of escaping
the burden of an expensive welfare system and thus entering into the first row
of the United Europe and the international markets as a highly competitive region.

Faced with the challenge of the Leagues and the collapse of the
traditional party system, the institutional Left has been unable to construct an alternative
that does not take recourse to either a logic of corporatist localism (which is
indistinguishable from the Leagues) or the logic of global capital. The approach of
the Democratic Party of the Left, which is the primary heir of the disbanded Communist
Party, consists for the most part of the attempt to reconcile the Leagues’
demands for a localist-secessionist corporativism with a new national economic compromise
between capital and labor under the hegemony of big capital and the “socialliberal”
logic of dismantling the Welfare State to prepare for entry into the United
Europe. It is not hard to recognize in this strategy a continuation of the old Communist
Party project of historical compromise and national solidarity, aimed at
creating an agreement between big capital and the Catholic heirs of the Christian
Democratic Party, that would create a governable system assuring a transition toward
a new constitutional form and permitting de facto the survival of the old political
class and the logic of the Fordist constitution dressed up, perhaps, in new clothes.

It should be clear, however, that the crisis of the Welfare State
represents the demise of the social-democratic Fordist conception of welfare, in
which the development of the indirect wage remained anchored to the principles
of a proportional relationship between benefits and wage contributions, on the basis
of an almost full level of employment in which each person earned his or her living
working for a wage. That model of financing welfare has proved untenable. Although
the level of social productivity has allowed for a drastic reduction in the number of
hours dedicated to work, and precisely because of this fact, full employment has
been shown to be an impossible goal, capital has imposed the absurd survival of the
wage relationship, creating a perverse dualism in society. In short, the fiscal crisis
of the Welfare State is only the crisis of the Fordist mechanism of financing centered
on the norm of a wage relationship and full employment; the rising levels of
unemployment and more generally of a second society of nonwork only translate,
in a distorted way, the generalized reduction of “necessary” labor time linked to
the increasingly social character of the productivity of post-Fordist labor.

We can clearly identify today the terms of a social productivity
that for more than ten years has allowed Italy to guarantee, with a progressive reduction
of the active population, a continual increase of the income and the well-being
of the society of “nonwork.” The movements for social transformation of the 1970s
conceived of this social surplus as the basis for a welfare system of the universal
income of all citizens. This system would be founded on a nonnegotiable set of use
values, cultural products, and techniques of self-management, a solidarity between
rich regions and poor regions that goes together with a decentralized management
of services in function of local needs. The logic of this new form of welfare would
destroy the common notion that State and socialization must be intimately linked.

On the remains of the defeated movements of the 1970s that
attempted social transformation from below, however, the conservative revolution
of the 1990s is constructing its power from above. The “Forza Italia” party, with
Silvio Berlusconi, the media magnate, at its head, combines an ultraconservative
discourse typical of the Thatcher government with the nationalist and populist
rhetoric of the traditional Italian Right, forging links with the former fascists. This
conservative revolution claims it will maintain the Welfare State and bring about
an economic upturn that will lead to the reestablishment of almost full levels of
employment. Despite the fears of many, however, the omnipotence of Berlusconi’s
mass media form of rule is not yet, happily, an exact science of government and
social control. There exists also, inherited from years of social struggles, the potential
for an alternative form of welfare based on autonomous self-management and
social solidarity outside of State control. The history of the Second Italian Republic
will perhaps be written between these two poles.

Translated by Michael Hardt


1. See Alain Lipietz, Stir les fordismes peripheriques de
l’Europe du Sud (Paris: CEPREMAP, 1983).

2. The notion of a new mass entrepreneurship refers to
a new social and productive stratum of society that was
consolidated both in terms of socioeconomic and class
structure and in terms of political organization. This new
stratum contributed to a radical change of the old equilibria
that characterized the Italian society of the Fordist
compromise and the First Republic. In part, this group
has formed the social bases of the Northern Leagues.

3. See Pino Arlacchi, La Mafia imprenditrice: Vetica
mafiosa e lo spirito del capitalismo (Bologna: II Mulino, 1983).

4. See Robert Boyer, La theorie de la regulation: une
analyse critique (Paris: La Decouverte, 1986).

5. The hypothesis of an effective synergy between the
separatist project of the Northern Leagues and that of
the Sicilian Mafia seemed to be confirmed in part
when Gianfranco Miglio, the principal theoretician
of the Northern Leagues, who broke with their
leader Umberto Bossi in order to rally behind Silvio
Berlusconi, proposed a federalist reform of the
constitution that would give Sicily complete
autonomy with respect to the maintenance of
public order.

Categories: welfare
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