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Ideology and reality in the industrial policy

22/10/2013

A new mythology has dominated the political culture of Western democracies over the last thirty years. In short, the inefficiency of the State in promoting economic development and the greater market efficiency.
"Across the globe - writes Mariana Mazzucato in her new book* - we are hearing that the State has to be cut back in order to foster a post- crisis recover ... The message is repeated so much that it is accepted by many as a "common sense" truth". Less State and more market: This mantra has found an inexorable evidence in the course of Italian industrial policy. The doctrine of the withdrawal of the State has a long history in Italy.The repudiation of industrial policy, which yet was central to the economic development of the first thirty years post-war, was one of the reasons for the fate of decline of Italy from the fifth industrial power on the world to the condition of a peripheral sick component of the European Union.
Let's give a look to the current events. The auto industry has been substantially demolished due to the choices of Mr. Marchionne, now CEO of Fiat –Chrysler. The steel industry is in agony after 15 years of privatization. Now the State is bound to give up Telecom, Alitalia, and Ansaldo, which would be sold to foreign companies. In any normal country the government would be on red alert. But the Prime Minister Enrico Letta, with regard to Telecom, the Italian main telecommunication company, has limited himself to a laconic and reckless comment: Telecom is a private enterprise, so the market decides. Moreover, Telefonica, the Spanish company, which is set to take control - he says - comes from a member country of the European Union: So, where is the problem? Ultimately, we play at home.
In the early 90s the (mistaken) idea grew that we had entered the post-industrial era, and that services were the new horizon of development. Italy dismantled the public industry that, even with all his faults, was a model discussed and appreciated around the world. Now, we witness the disintegration of the last remaining survivors of big industry – steel (Ilva), car (Fiat) and electro mechanical (Ansaldo-Finmeccanica), and at the same time the liquidation of two core areas of services: that is, telecommunications (Telecom) as well as airlines (Alitalia) . Services which no advanced country worthy of the name would give up.
The strategy of cutting the role of the State has deep roots. It's been over thirty years since Ronald Reagan summed up the essence of neoliberal doctrine with the famous statement: “government is not the solution; government is the problem”. It was the reversal of the line that had presided over the development of the capitalist countries in the thirty years that followed the post-war period. According to the new mantra, the State had to withdraw, leaving all the power to markets. Margaret Thatcher moved in the same direction in Britain, ushering in the era of neo-liberalism.

Italy came late, but in the early 90s began a run that made the process of disengagement of the state and mass privatization much faster and deeper than that implemented by Margaret Thatcher. The mastermind was Mario Draghi, then Director General of the Treasury. The process went on during all the 90s sponsored by several governments, including the centre-left ones headed by Romano Prodi and Massimo D' Alema. Now, the process of de-industrialization is headed to the end with the dismantling of what remains of the largest manufacturing and services industry.

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