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Title: Ritorno alle compatibiltà : la proposta del Centro Studi Confindustria per l'economia italiana negli anni Settanta-Ottanta
Authors: Dafano, Alessandro
Advisor: Bini, Piero
Issue Date: 22-Jun-2017
Publisher: Università degli studi Roma Tre
Abstract: In this thesis we want to face a period of the Italian economy that goes from the reorganization of the Research Department (henceforth CSC) performed by Guido Carli during his chairmanship at the helm of the Confederation of Italian Industries (henceforth Confindustria) 1976-1980, to its highbrow legacy at the Ministry of Budget and Economic Planning 1980-1982. This theme has been considered worthy of investigation because it highlights many attempts to place Italy within a long-run stable macroeconomic path through supply side policies and by a structural turning point against the stagflation occurred in our country as in others. In recent years, also the recognition of a specific role of think tanks in the relationship between economic knowledge and policies has gained ground and growing interest worldwide (Cockett 1994; Mcgann 2010; Mcgann & Weaver 2000; Rich 2004). Our more specific goal is to stress the features of CSC as a modern think tank that, through theoretical analysis supported by econometric researches made also by Italian scholars, tried to stem and/or to advise parties, tackling politicians with technicians. For example, although CSC belonged to the entrepreneurs, it proposed a way out suggesting a new path for growth and development, believing that firms should be free from government and bureaucracy “laces”, but at the same time they had to run a fully transparent management; moreover, rent-seeking positions, helpful but inefficient public intervention should be abandoned and firms should open themselves to national and international competition. This was for Carli and CSC the only possible way to legitimate their requests to trade unions, parties and government, in a framework of economic bust, low capital accumulation, inflation and unemployment, excessive state aids with high crowding-out effect; considering pluralism and competition as the main factors of economic and social development, Carli believed in firms as driving forces of innovation and growth. In the Seventies the majority of entrepreneurs rejected these proposals, in their opinion too focused on general interests: net of critical issues, a call for more social projects instead of lobby ideologies was required. Consequently, Italy proved incapable of tying itself with rules of conduct, accepting and empowering an “external constraint”. Moreover, this thinking and working machine was able to reach the unquestioned authority of the Bank of Italy and was a yardstick for trade unions that afterwards built up their own research departments and began to start quantitative studies. Its reengineering method was a landmark for the creation of the Evaluation Group on the Investment and Employment Fund established at the Ministry of Budget. The historiography about Confindustria, although relevant, is not very thorough; it consists primarily of books by Bazzichi (2009) and Castronovo (2010), who set their work with a more historical, political and institutional leaning, marginally dealing with economic analysis. There are also several essays or articles especially centered on Carli’s chairmanship, pointing to stress in different disciplinary approaches his civil servant method, undoubtedly legacy of his Bank of Italy’s governorship. Last but not least is the book of Savona (2008) about the figure and work of Guido Carli at the helm of Confindustria. The main publications about the work of the Ministry of Budget during those years were a book edited by Pennisi & Peterlini (1987), together with several articles by La Malfa and Savona, among others. Overall, we used primary and secondary sources, both from scientific journals and newspapers, along with archival material and official documents, in order to reshape the route made by many of them, especially by an economic viewpoint; we also used interviews asked to several researchers and visiting scholars/professors who were protagonists of that period of change, in order to deeper understand the network of scientific relations, together with their theoretical and economic policy contributions. This thesis is organized as follows. The first chapter has been dedicated to the rebuilt CSC; after a brief introduction which includes the Italian economic scenario and the “Carli’s method” of action, we underline the staff recruitment started by the Director-general Paolo Savona, CSC’s research guidelines, Confindustria’s institutional relationships, the econometric models elaborated within the Research Department, an overview of its proposals, the brand new Reports on Italian industry within a national and international framework. Finally, the last paragraph points out the legacy of Carli’s chairmanship and an evaluation of his work. The second chapter has been dedicated to the main policy statement drew up by Confindustria, the Development Operation; until that period mainly aggregate demand and fine tuning policies were carried out, whereas the “4,5% proposal” (due to its growth level target) stressed the importance of decreasing crowding-out effects of public spending, in order to revamp capital accumulation, restart private investment and the export-led growth, together with a central role assumed by the balance of payments and monetary policy (supporting Wicksellian teachings). The initiative built up by Confindustria tried to introduce a forerunner “supply-side” policy in order to place our country in line with the “growth-with-disinflation” model. Born as a document to evaluate government action and to create consensus within the “historic compromise”, this proposal was rejected because it was basically a manifest of “compatibilism” among economic variables. We have reported the structure of this document along with its economic thought background and its empirical findings; the debate that revolved around it, which involved several scholars such as Franco Modigliani, Mario Monti, Tommaso Padoa Schioppa, Paolo Savona, Luigi Spaventa, has been traced. The last paragraph analyses the concept of austerity during the Seventies which was relevant because it highlights the profound turning point did by the Communist party (and partly trade unions) over the theme of labor cost, that created a loss of confidence in it, making the rise of Socialists possible. In the third chapter a deeper attention to the econometric modeling within Confindustria has been spent, in terms of the Italian cultural roots, the use of Dyanmod after Carli’s chairmanship and also outside the Confederation, the strong relationship with Lawrence Klein. Although Keynes’ recipe within econometrics was considerable during that period, we have stressed that, however, the initial target of Keynesian demand control gradually lost prominence; indeed, the simulation of other economic policies (price control, sliding scale changes, income policy) aimed at quantifying the effects of different behaviors of economic actors or institutional changes, assumed more importance. This also happened as a result of the changed context of the Italian economy in which the inflation and public debt control acquired an increasing relevance; we have also seen that the original emphasis given to the forecasting ability of the models decreased, and the goal assigned to them was not anymore the foresight conceit but the attempt (always hard) of explaining reality. The fourth chapter describes the continuity from CSC to the Ministry of Budget, both in terms of staff and of economic paradigm pursued; here we can see a heterogeneous mash up of post-Keynesian and monetarist scholars, such as Karl Brunner, Hyman Minsky, Enzo Grilli among others: this open-minded method was carried out because, according to Jan Kregel’s (one of CSC’s main engines) witness about Carli’s method, “such diverse positions were invited at the same time […] he never knew when he would need an economic theory to support a decision so he had to know what they all had to say”. Moreover, we can notice the creation of a pool of economists belonging to CSC, Bank of Italy and CEEP (a think tank based in Turin) which tried to modernize our country basically in line with IMF, OECD, EEC and other foreign scholars suggestions, at first within the organizations mentioned above and then together at an institutional level. The fifth chapter revolves around the economic planning since the late Seventies, the failure of Pandolfi Plan and the elaboration of La Malfa Plan; the political and economic scenario during the Eighties together with a description of both documents has been given. During this period, the main innovation was due to the setting-up of the Evaluation Group which had many World Bank officer and introduced the cost-benefit analysis in order to estimate public investment’s profitability, thus interrupting the political discretion on it. After reporting the research for consensus and the critics on La Malfa Plan, we have seen that it was not completed mainly due to political instability occurred in Italy, but it tried to set our country on a safer path of growth that could have been useful during the years to come, when the “external constraint” became tighter. The sixth and final chapter has been reserved to an analysis of the economic thought behind Plan La Malfa; here we can totally find what the fourth chapter tried to stress. The economic framework followed by this document was the Keynesian post-monetarist synthesis primarily conceived by James Tobin, where Keynes’ teaching was directed to boost investments, monetary deceleration and income policy used as a disinflation guidance, thus driving expectations; it was also in line with polycentric market planning pursued by other European countries, according to the suggestions of several international organizations. This document shared similarities and continuity with the Development Operation, in terms of public spending decrease, balance of payments equilibrium, energy saving production, disinflationary monetary policy; in the end, these contributions stressed the role Italy had to play within foreign framework, thus the relevance that a small open economy strongly linked to the rest of the world has to give to its long-run macroeconomic adjustment. The appendix lists all the collected interviews.
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