Wednesday, 27 February 2013

A New Strategy of Tension

The Italian election results have been described as a "shambolic outcome" that makes Italy look "ungovernable". In other words, the sort of nonsense that could have been (and was) written about any number of Italian elections over the last 60 years. Parliamentary factionalism, coalition and short-run governments have been common features throughout. Despite this, Italy enjoyed better economic growth than the UK from the 1950s up until the 1990s. By then there was even a cynical belief that institutional gridlock might be a positive contributor to growth, by preventing either left or right from deviating from a demand management consensus, though the spectacular growth rates of the 50s and 60s clearly owed more to the stimulus of postwar rebuilding and the arrival of mass-consumption.

In recent decades the two economies have been nip-and-tuck in terms of size, with Italy jumping ahead during "il sorpasso" in the mid-80s, the UK coming back strongly in the mid-90s, Italy briefly nosing in front as it suffered less contraction in 2008/9, and then ceding to the UK as it suffered greater contraction thereafter. Both economies have structural weaknesses. The UK's over-reliance on financial services, a weak manufacturing sector, and regional redistribution (to the North) via public expenditure are well-known. Italy suffers from an over-reliance on small and medium businesses (lower capital stock means lower productivity), a weak services sector (big domestically but a poor contributor to exports outside of tourism), and regional redistribution (to the South) via public expenditure. If we could combine the better features of the two economies, we might be onto a winner, though we'd also need to extirpate two flaws: the corruption of a rigged property market in the UK and the corruption of clientelism (i.e. mafia) in Italy.

Italy has a large public debt, but its annual deficits are relatively small (a mass sell-off of sovereign bonds would be a crisis, but the ECB could step in and buy them up). The problem is that interest payments are large and growing, so limiting funds for stimulus. In contrast, the UK has a modest debt by international standards (despite the government's claims to the contrary), but is struggling to get its deficit under control. Austerity has killed growth in both countries, though Italian growth rates had been anaemic since the 90s. The UK is seeing the gain of public expenditure cuts eroded by falling tax receipts, hence the date at which we "pay off the credit card" is receding into the distance. Italy under the Monti administration has broadly balanced the books, but the absence of growth means it isn't generating the surpluses necessary to eat away at the debt pile. Both economies are essentially stagnating. Though they take different forms, the underlying problem is a weak productive base. The Euro has exacerbated Italy's declining productivity, though removing the option of devaluation and making Eurozone capital cheaper are part of the structural reform package. The independence of Sterling (devalued by roughly a third against the Euro since 2007) has partially offset the UK's declining productivity, but at the expense of growing inflation.

The success of Beppe Grillo's Five Star Movement (M5S) is being held up as evidence that Italian's have had enough (basta!) of the Italian political system, as well as evidence of the emergence of a new politics based on social media. Both these views strike me as dubious. Italy has a long tradition of extra-parliamentary activism and iconoclastic mavericks, from Mussolini to the Red Brigades and Antonio Di Pietro (in the UK we had the more ridiculous Oswald Mosley, the Angry Brigade and Martin Bell). In this context, M5S look positively fluffy. They are, after all, contesting parliamentary elections. The fears of demagoguery and hidden agenda seem to owe as much to the medium as the message, though it is clear that the "new" doesn't extend much beyond tight Twitter management and competent online marketing. Grillo has hogged the limelight to date, but his ineligibility for parliament (he's debarred due to a conviction) means that others will soon come to the fore, toning down the invective.

Journalists in particular seem fixated by the potential of media technology to change the game. I suspect this reflects their anxiety about the very real threat posed to print. There was a bizarre example of this earlier in the week that attempted to explain the shift from earnestness to irony in the late 80s by reference to the Web: "The Google search gave us a way in which we could skate over the surface of cultural and political life, slickly knowing a little about a lot of things." The very real change in moral sentiment occurred during the Lawson Boom of 1986-8, when the country (or the South East at least) decided to forget about the social costs of deindustrialisation and start worrying about personal enrichment. This was the era of privatisation, endowment-based mortgages, the City big-bang, and the triumph of Thatcherism in the 1987 general election. The Web did not graduate from an esoteric interest until the arrival of Netscape Navigator and IE3 in the mid-90s, while Google was only incorporated in 1998. You could perhaps argue that the subsequent takeup of the Web was in part because we had already become superficial and ironic, but the idea that the 80s sea-change was caused by developments over 15 years later is as bonkers as homeopathy. Social media may have revolutionised newspapers, but they haven't revolutionised politics and I seriously doubt they have had much influence on public ethics.

What Italians have voted for is a similar mix to that found on the British political spectrum, but in a different party formation. The social democratic left (Partido Democratico) are offering moderation in all things: less painful austerity but continued structural adjustments and more progressive taxation. The initial stock market reaction indicates that big capital was hoping for a centre-left coalition with Monti, much as they would prefer a Lib-Lab pact in the UK if the Tories decided to quit the EU. M5S's electoral support centres on a left-of-centre coalition of unemployed graduates and older independents (in UK terms, the sort of voters who drift between Labour and the LibDems, with some right-libertarians and xenophobes thrown in). They predominantly reflect a popular left reaction to the compromised position of the parliamentary left, but it would be naive to think that big capital and M5S are essentially at odds. The structural reform of the Italian state and economy is a common "progressive" agenda: root out public sector graft (so costs can be reduced and services privatised), encourage more female workforce participation and education (so family incomes can grow as individual wages flatten), stem youth emigration (to avoid exacerbating an ageing population and falling tax receipts), reform the legal system (with a focus on quick resolution of commercial disputes), and implement environmental protection (which benefits capital-intensive businesses) and social liberal policies.

Berlusconi represents the existing centre-right alliance of small capital, rentiers and public sector rent-seekers. His current appeal is based on anti-tax policies and the defence of existing privileges. Though many commentators criticised him for failing to reform Italy during the 00s, with sleaze ultimately acting as the lighting rod for wider frustration, preventing structural reform was his not-so-hidden agenda. Outside of Italy, he is routinely derided as a venal and lecherous buffoon, which leads to bafflement when Italians vote for him. This was exemplified in a documentary on BBC4 last night, Good Italy, Bad Italy: Girlfriend in a Coma, presented by Bill Emmott, a former editor of The Economist. As you would expect with such a pedigree, it was a straight big capital analysis. Mario Monti was sympathetically interviewed, while a shifty Berlusconi refused to appear. The CEOs of Fiat, Ferrero and Vodafone Italia featured prominently, as did anti-mafia campaigners like Roberto Saviano, female academics complaining about objectification (despite the film's own patronising subtitle), subsidised culture wallahs, and artisan foodies. What this failed to get across is that the archetypal Berlusconi supporter is neither a mafioso nor a fashion designer, but a small-town pharmacist whose brother works for the council.

In UK terms, Berlusconi represents an alliance between UKIP and the Eurosceptic, small capital Tory majority. Were it not for his vulgarity, he'd be a Daily Mail hero. Though he trades on a different image (more Bertie Wooster than Del-Boy Trotter), the closest UK equivalent would be Boris Johnson. Johnson is a finance capital man, which means he will talk tough about Europe but ultimately seek a compromise with pro-EU big capital. Berlusconi has flirted with an anti-Euro stance, largely to satisfy small capitalists struggling with high interest rates, but he would be unlikely to trigger an exit. Though devaluation would temporarily improve competitiveness, this wouldn't fix the structural weaknesses of the economy and would import high inflation to the detriment of rentiers. The Euro was enthusiastically adopted by Italy precisely because of the monetary stability it brought. Berlusconi is yesterday's man but there remains a large constituency of pensioners, unambitious small business owners and petty bureaucrats that will only gradually lose its influence.

Emmott's film employed as a framing device a series of quotations from Dante (sonorously intoned by Benedict Cumberbatch) illustrated by Commedia dell'Arte-style animations. Modern Italy was equated with the circles of hell, which is a trifle over the top even as satire. The film's last section was a sideswipe at the Catholic church, held responsible for the hypocrisy and cynicism of  Italian public life. The claim is that the confessional allows corruption to be routinely and insincerely absolved, a criticism that dates back to the Reformation. This ignores the fact that very few Italians even go to mass any more, let alone confession. The film then moved on to praise the supposed Protestant virtues of Mazzini, Cavour and Garibaldi, which would have come as a surprise to the named gents. Be more North European in business and politics seemed to be the message. The real weakness of the film was the good/bad dichotomy, implying that the one could be advanced at the expense of the other. This is a classic neoliberal failing, which we are reminded of by the coincidence of the ten-year anniversary of the decision to invade Iraq. Just as you cannot bomb people into democracy, you cannot shame them into reform.

The most likely outcome now looks like a minority centre-left government supported on a case-by-case basis by M5S. Pier Luigi Bersani, the PD leader, could opt for another election to secure a decisive mandate, but the current electoral momentum does not appear to be in his favour. While this would lead to much noise about "market uncertainty", "systemic instability" and "political tension", such a co-habitation would be perfectly acceptable to big capital, social democrats and other shades of progressive. Though many commentators see the election as a victory for anti-austerity, which is really just a tactical matter, the historical judgement may well be that it was a strategic victory for progressive (i.e. non-small capital) forces. The value of M5S is that it has provided a home for centrists reluctant to vote for either the left or for Monti, who might otherwise have held their noses and voted for the centre-right. Despite the claims of a resurrection, this probably marks the beginning of the end for Berlusconi, which would cheer up The Economist at least.

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