Chapter V. Classical liberal

So, three years ago, Mussolini and the fascists, and now they have led definitely not the last country in the world. For some, such a development of events is proof of Mussolini's genius, for others - a coincidence of circumstances when there may be a demand even for such terrorists.

 

This change of power on the same day was officially supported by the largest union of entrepreneurs in Italy, the Confederation of Italian Industrialists:  

New government is created!

It was created by the young forces of the nation, under the will of their leader. At a time when the economic and financial situation in Italy is truly disastrous, we look at them with great hope.

The productive forces of a nation need a strong government ready to act. Such a government is promised to us by those to whom the king has entrusted its formation.

The next day, the Confederation made an even more enthusiastic statement:

In industry levels, the rise to power of the Mussolini government was met with lively sympathy and great confidence. the Confederation, which, being a purely economic organization, cannot, however, remain aloof from politics in the most severe periods of the nation's life, took an active part in resolving the national crisis and used all its influence in Mussolini's favor.

A n interesting fact, Mussolini appointed as his Minister of Industry and Trade Mr. Teofilo Rossi, who was the son of one of the founders of the world-famous brand Martini & Rossi.

The principal difference between the Italian fascists and their German colleagues, Mussolini from Hitler, was that the former, having come to power, acted hesitantly and gradually; affected by the fact that it was the world's first terrorist state. The Nazis literally went their way into a bright capitalist future only by feelings.

During the first period of its reign, fascism did not intervene openly, i.e. at the legislative level, in the relationship between labor and capital, as well as in the relationship between individual groups of entrepreneurs. Formally, the new government operated within the framework of the old constitution and without changing the basic state laws. The parliamentary regime was preserved, the existence of opposition parties, including the communist one, was allowed, even the independent trade unions remained.

I took great care not to modify the main pillars of the state.

 

And informally, the terror against the workers and peasants, had being begun at the end of 1920, continued. The massacre in Turin in December 1922 served as the example. There the Nazis killed at least 11 people. One of the victims, Pietro Ferrero, was tied to a truck and driven along the roads until he died.

The fascists wanted to smash their political opponents, destroy them physically; they wanted to intimidate and terrorize those who were not yet accustomed to being silent. And they did it with perfect success. However, it worked out, firstly, because the state apparatus did not oppose it; and because fascism became more and more the master of the state every day.

In short, at first, the fascist dictatorship was de facto instead of de jure. When the new government embarked on reforms, it immediately became clear whose interests were put at the forefront:

At the beginning of November 1922, two large business organizations gathered: Confindustria and “the Association of Joint Stock Companies”. At the meeting, it was decided to advise Mussolini what should be done in the economy in the first place: to cancel bearer instrument of shares and bonds and start the privatization process of Italian telephony.

- No sooner said than done. A couple of days later, Mussolini signed a decree canceling the bearer instrument of shares and other securities. The anonymity of securities allowed entrepreneurs to evade taxes and carry out all kinds of financial fraud.

- Four months later, the privatization of telephone lines began. After two years elapsed, almost all of them would be private. It should be said that the fascists are irreconcilable nationalists who put the interests of the state above all else. However, this did not stop them from selling strategically important telephone lines to the private hands of Fiat, Pirelli and even the Swedish Erikson.

In 1920, in the newspaper Il Popolo d'Italia, Mussolini wrote:

Among the fundamental postulate of the Italian Fashi Italiani di Combattimento, the most relevant is the revision of all contracts for military supplies... We believe that along with honest suppliers there were thieves who committed a colossal robbery. We believe that hundreds and hundreds of millions can be returned. We believe that the control commission

... can audit forty months of the work of the military administration on supply issues in six months and come to the conclusion that the public demands.

- But as soon as the “heroic revolutionary” Mussolini got to power, this control commission was immediately disbanded, and the publication of any ready-made reports was banned under the threat of imprisonment. The oligarchs of the military-industrial complex applauded the fascists.

- Then the state monopoly on match production went under the hammer.

- One more thing. There was such a company in Italy called "Consortium for Subsidizing Industrial Enterprises", a joint project of the state and a private bank Italy. Prior to Mussolini, the consortium enjoyed only limited government support. However, in March 1923, Duce ordered to remove from this company all restrictions on lending to industry.

This reform, which meant placing almost all the surplus of the state treasury at the disposal of the Italian plutocracy at the expense of the working class and the petty bourgeoisie, fully reveals the class essence of the financial and economic program of Italian fascism.

And it really was so. With the help of financial support from this Consortium in 1925, the country's largest metallurgical plant, Ansaldo, was reprivatized, which in 1921 declared bankruptcy and was nationalized. So, with the help of budgetary funds, the plant is first rescued, and then generously credited so that entrepreneurs can return the property into their own hands. With the help of the same company, the private debts of the Italian Discount Bank that had burst in 1921 were paid off and the Bank of Rome, also private, was saved from collapse. Privatization of profits, nationalization of losses.

- At the end of April 1923, in the interests of the two largest insurance companies Assicurazioni Generali and Riunione Adriatica di Sicurtà, the state monopoly on health insurance was eliminated.

- Finally, in August 1923, the inheritance tax on close relatives was abolished.

Well, then it went on and on: the tax on some real estate, on foreign movable commercial property, on foreign income was abolished; the tax on the salaries of top managers was halved; restrictions on the amount of rent and

 

 

land lease were lifted, and so on and so forth. In 1919, a law was passed that allowed peasants to use abandoned landowners' lands. Under Mussolini, this law was abolished, and the landowners received their lands back, but now they are fertile, well-maintained and, most importantly, become profitable due to the labor of the peasants.

Privatization, reduced government regulation and the abolition of many types of taxes for business - all this is called pursuing a policy of classical liberalism:

We want to free the state from all its economic attributes. Down with the railroad state, the postal state, the insurance state. Down with the state that ruins all Italian taxpayers and burdens the already depleted finances of the Italian state.

Privatization was an important part of Italian domestic policy in 1922-1925. In the 1920s, the fascist government was the only one who practiced the transfer of control over public services and property into the hands of private organizations. No other country in the world would take similar measures until Nazi Germany did between 1934 and 1937.

For 5 years of liberal reforms, the total capitalization of Italian joint stock companies has practically doubled.

* * *

Against the backdrop of this entrepreneurial paradise, some other laws look extremely attractive:

- for example, decrees on 10% taxation of wages and salaries (One, two);

- or a decree that fixed a 48-hour working week and an 8-hour working day for almost all professions. Here the Nazis completed what had been begun before them during the "Red Two Years". However, this was made only with one intention - to cancel this new restriction after 3 years and make the working day a 9-hour one, with, surprise, a 54-hour working week. At those time it was a six-day working week;

- or the decree "On the political supervision of associations and corporations that exist on workers' money." On the basis of this law, prefects could annul any decision of workers' organizations, for example, trade unions, and, in case of necessity, even dissolve their board and appoint their own delegate. At the same time, all employers' organizations, such as Confindustria, are of course inviolable and enjoy absolute freedom from supervision.

 

 

- At the same time, all employers' organizations, such as Confindustria, were of course inviolable and enjoyed absolute freedom from any supervision.

But the most frequently used instruments of the fascist government in its class-based fiscal policy were consumption taxes... Of all consumption taxes, the tax levied through customs duties on wheat is perhaps the most hated, because it can easily be defined as a tax on hunger: those who do not have the money to buy meat, sugar, eggs, dairy products are forced to consume more bread and pasta, which are relatively cheaper.

Meanwhile, the main achievement of Mussolini and his bandits was not the liberalization of the economy, but the defeat of the labor movement. According to official statistics, in 1920, at the peak of the revolutionary movement, over 2,000 strikes swept across the country, in which over 2 million workers and peasants took part. For 6 years of fascist terror from 1921 to 1926, the strikes practically came to naught. Based on the same table, it can be seen that it was in the countryside that they stopped striking in the first place. Those. where the fascist terror was most ferocious.

Obviously, if liberalism plus terrorism has made capitalists and landowners rich, then the same cannot be said about the working people of Italy. Let's turn to this work. University of Oxford, UK, February 2020, Income Inequality and Italian Fascism: Data on Earned Income and Income for the Richest, by Giacomo Gabbouti:

... that both the fall in the share of labor income and the rise in the wealth of the richest appear to be a consistent result of the regime's policies. Earlier and more efficiently than abroad, the government provided assistance and support to large banks and firms, while encouraging collusion between firms to maintain prices and profits (Silos Labini 2014, 47-54). According to Amatori and Brioski (1997, 118), "in practice, bank aid saved private fortunes", while Toniolo (1980, 256) emphasized that the state retained ownership only in the least profitable sectors, pointing to the role of " close ties in those years between the higher bureaucracy and large industrialists "(ibid., 302-303)...

Amazing, isn't it? In 1921, the Nazis declared the need to privatize industries that the state

 

does not manage well. In fact, it turned out that the state poorly manages the most profitable enterprises.

And now they urgently need to be handed over to private owners. How familiar it is…

Next here stated about fascists work-related policies and about broad tax excuses for business:

Neither policy could harm the rich. Because of these incentives, 1922-25. were "a period of feverish, sometimes even wild, banking activity"... the total net profit of joint-stock banks doubled... When this period was over, the burden of deflationary policies fell disproportionately on the workers, in accordance with early Marxist explanations (Griffin 1945, 58)...

As they say, everything that the communists lied to us about turned out to be true again. Then Gabbouti says that all this "revolutionary" in quotation marks policy of the fascists led to a sharp increase in the share of capital in the national income. He also adds that according to the latest data, the same was observed under the Nazis and that it seems that this is, in general, a common feature for fascist regimes in the period between the two world wars. In conclusion, the author says:

Undoubtedly, Italian fascism represented an important gap in the long-term development of Italy - two decades marked by rising inequality and worsening working-class living conditions... For now, the "Italian lesson" is that it is important, when defined fascism, to consider inequality.

Simply put, according to modern British researchers, the growth of income inequality is one of the important signs of Italian fascism and, possibly, all fascist regimes in the interwar period of the last century. We completely agree with them. However, we add that such processes are taking place not only under the Nazis, but also under other, so to speak, ordinary business parties. The fascists differ from them only in their special methods.