The Liberals' Passion for Benito Mussolini

Image: Umberto Boccioni


Benito Mussolini was one of the greatest advocates of austerity in its modern form.

When speaking of concepts such as “totalitarianism” and “corporatism”, it is often assumed that fascism is very far removed from the liberal market society that preceded it in Italy and in which we still live today in many countries. But if we pay more attention to the economic policies of Italian Fascism, especially during the 1920s, we can see how some typical combinations of both the last century and ours were already experienced in the early years of Benito Mussolini's government.

An example is the association between austerity and technocracy. By “technocracy” I mean the phenomenon whereby certain current policies (such as social spending cuts, regressive taxation, monetary deflation, privatizations and wage repressions) are decided by economic experts who advise governments or even directly take the reins, as in several recent cases in Italy itself.

As I explained in The capital order: the capital order: how economists invented austerity and paved the way to fascism, Benito Mussolini was one of the greatest advocates of austerity in its modern form. This was in large part because he surrounded himself with the authoritarian economists of the day, as well as with advocates of the emerging paradigm of “pure economics”, which is still the basis of dominant neoclassical economics today.

A little over a month after the march of the Italian fascists on Rome, in October 1922, the parliamentary votes of the National Fascist Party, the Liberal Party and the Popular Party (Catholic party and predecessor of the Christian Democracy) introduced the so-called “full period”. powers". In doing so, they granted unprecedented authority to Mussolini's economy minister, the economist Alberto de Stefani, and to his colleagues and technical advisers, notably Maffeo Pantaleoni and Umberto Ricci (as opposed to the first two, a man of liberal ideology).

Benito Mussolini offered these economic experts the opportunity of a lifetime: to mold society according to the ideal of their role models. On the pages of The Economist,, Luigi Einaudi – celebrated as a defender of liberal anti-fascism and, in 1948, the first president of the postwar Italian democratic republic – warmly welcomed the authoritarian turn.

“Never has a Parliament entrusted the Executive with such absolute power […] The relinquishment of all its powers by Parliament for so long a period was greeted with general applause by the public. Italians had had enough of talkative and weak executives,” he wrote on December 2, 1922. On October 28, on the eve of the March on Rome, he had declared: “Italy needs a man at the head of government who is capable of to say no to all requests for new spending”.

The hopes of Luigi Einaudi and his colleagues were fulfilled. Mussolini's regime launched bold reforms that promoted fiscal, monetary and industrial austerity. These changes worked in unison to impose hard lives and great sacrifices on the working classes and to ensure the resumption of the capitalist order. This order was widely contested in the biennio rosso (two red years), as well as numerous popular revolts and sophisticated experiments in post-capitalist economic organization.

Among the reforms that managed to silence any impulse for social change, we can mention the drastic reduction in social spending, the dismissal of civil servants (more than sixty-five thousand in 1923 alone) and the increase in taxes on consumption (tax on the value added that it has always been considered regressive because it is mainly paid by the poor). All this together with the elimination of the progressive inheritance tax, which was accompanied by an increase in interest rates (from 3 to 7 percent from 1925 onwards), as well as a wave of privatizations that scholars such as the economist Germà Bel, have been described as the first large-scale privatization in a capitalist economy.

Furthermore, the fascist state enforced coercive labor laws that drastically reduced wages and banned unions. The final defeat of workers' aspirations came with the Labor Charter of 1927, which closed any avenue for class conflict. The Charter codified the spirit of corporatism whose aim, in Mussolini's words, was to protect private property and "reunify within the sovereign state the pernicious dualism of the forces of capital and labor", which were seen as "no longer necessarily opposed, but as elements that should and can aspire to a common goal, the greatest interest of production”.

Economy Minister De Stefani hailed the Charter as an “institutional revolution”, while liberal economist Luigi Einaudi justified the “corporatist” character now assumed by wages as the only way to imitate the optimal results of the competitive market of the neoclassical model. The hypocrisy in this case is obvious: economists, so adamant about protecting the free market against the state, had no problem with repressive state intervention in the labor market. In Italy there was an uninterrupted fall in real wages that lasted throughout the interwar period, a trend unique among industrialized countries.

Meanwhile, the increase in the exploitation rate ensured an increase in profit rates. In 1924, the London times commented on the success of fascist austerity: "The development of the last two years has seen the absorption of a greater proportion of profits by capital and this, by stimulating commercial enterprise, has certainly been advantageous to the country as a whole." This is the typical narrative capable of promoting and gaining acceptance for austerity doctrines. Even today, common people's consent to sacrifices is built on the rhetoric of the common good.

In short, at a time when most Italian citizens were demanding major social changes, austerity required fascism – a strong, top-down government that could coercively impose its nationalist will with political impunity – for quick success.

Fascism, on the other hand, needed austerity to consolidate its dominance. Indeed, it was the allure of austerity that drove liberals from establishment international and domestic support to Mussolini's government, even after the Leggi Fascistissime [literally: “the most fascist laws”] of 1925-6 that installed Mussolini as the official dictator of the nation.

The Economist,, for example, on November 4, 1922, showed remarkable sympathy with Benito Mussolini's aim of imposing a "drastic cut in public spending" in the name of "the overriding need to obtain sound finances in Europe". This is how he gloated in March 1924: “Mr. Mussolini restored order and eliminated the main disturbing factors”.

Before, in particular, “wages reached their maximum limits, as strikes multiplied”. These were the troubling factors, and "no government was strong enough to attempt a solution". In June 1924, the Times, calling government fascism an "against waste" movement, he praised it as a solution to the ambitions of the "Bolshevik peasantry" of "Novara, Montara and Alessandria" and to "the brutal stupidity of these people", seduced by the "experiences of called collective management”.

The British embassy and the international liberal press continued to gloat over Benito Mussolini's triumphs. O Duce managed to unite the political and economic order, the very essence of austerity. As archival documents show, in late 1923 the British ambassador to Italy assured observers that "foreign capital had overcome the unwarranted distrust of the past and was once more flocking to Italy with confidence." The diplomat often highlighted the contrast between the ineptitude of post-World War I Italian parliamentary democracy – considered unstable and corrupt – and the effective economic management of Minister De Stefani:

Eighteen months ago any educated observer of national life was bound to conclude that Italy was a country in decline... It is now generally admitted, even by those who dislike Fascism and deplore its methods, that the whole situation has changed... amazing progress towards stabilizing the state's finances… strikes decreased by 90 per cent and lost working days decreased by more than 97 per cent and an increase in national savings of 4.000 [million lire] over the previous year; in fact, they exceed the pre-war level for the first time by nearly 2.000 million lira.

Italy's celebrated austerity successes – measured in terms of industrial peace, high profits and more business for Britain – also had a repressive side, going far beyond institutionalizing a strong executive and bypassing parliament. The English embassy itself reported numerous brutal actions: the constant assault on political opponents; the burning of the socialist headquarters and workers' offices; the dismissal of numerous socialist mayors; the arrest of communists; and many other notorious political assassinations, most notably that of Socialist parliamentarian Giacomo Matteotti.

But the message was unmistakable: any concern about the political abuses of fascism faded in the face of its austerity successes. Even the defender of liberalism and Governor of the Bank of England, Montagu Norman, after expressing his distrust of a fascist state, under which "everything in terms of otherness" had been "eliminated" and in which "the opposition under any form had disappeared", he added: "this state of affairs is suitable for the moment and can thus provide the most suitable administration for Italy". Similarly, Winston Churchill, then British Treasury chief, explained: “Different nations have different ways of doing the same thing… If I were Italian, I am sure I would be with Fascism from beginning to end, whatever he, “the victorious struggle against Leninism”.

Both Norman and Winston Churchill pointed out in their private and public comments how these illiberal solutions, inconceivable in their own country, could be applied to a “different” and less democratic people like the Italians. They thus maintained a “double standard” that contemporary readers might well recognize.

Indeed, even when doubts were raised by liberal observers, they were not about democracy but about what would happen without Mussolini. In June 1928, Einaudi wrote in the The Economist, who feared a vacuum of political representation, but even more a collapse of the capitalist order. He spoke of the “serious questions” on the minds of the English:

When again, in the inevitable course of things, the strong hand of the great Duce if he withdraws from the helm, will Italy have another man of his caliber? Can every historical moment produce two Mussolinis? If not, what will be next? Under weaker and less wise control might not chaotic revulsion ensue? And with what consequences, not only for Italy, but for Europe?

The international political world was so enamored with Mussolini's austerity that it rewarded the regime with the financial resources needed to further consolidate the country's political and economic leadership, in particular by liquidating the war debt and stabilizing the lira, as reported by Gian Giacomo Migone in your classic book The United States and fascist Italy.

The ideological and material support that the Italian and international liberal establishment lent to the Mussolini regime was certainly no exception. In fact, the mixture of authoritarianism, economic expertise and austerity inaugurated by the first “liberalist” (economically liberal) fascism had many epigones: from the use of Chicago Boys by the dictatorship of Augusto Pinochet, passing through the support of Berkeley Boys to the Suharto dictatorship in Indonesia (1967-1998), to the dramatic experience – recently back in the spotlight – of the dissolution of the USSR.

In this case, Boris Yeltsin's government effectively declared war on Russian lawmakers who opposed the IMF-backed austerity agenda that Yeltsin sought to stabilize the Russian economy. The high point of Yeltsin's assault on democracy came in October 1993, when the president called in tanks, helicopters and 5.000 troops to fire on the Russian parliament. The attack killed more than 500 people and left many others injured.

Once the ashes settled, Russia was left under a dictatorial regime without control: Yeltsin dissolved the “recalcitrant” parliament, suspended the constitution, closed newspapers and jailed his political opposition. As it did under Mussolini's dictatorship in the 1920s, The Economist, he had no qualms about justifying the actions of Yeltsin's strongman as the only way to guarantee the order of capital. The famous economist Larry Summers, who was a Treasury official under Bill Clinton, was convinced that for Russia, “the three actions” – privatization, stabilization and liberalization – “must be completed as quickly as possible. Maintaining the momentum” of reform is a crucial policy issue.

Today, these same liberal economists make no concessions to their own countrymen. Larry Summers is at the forefront of advocating monetary austerity in the United States, where he prescribes a dose of unemployment to cure inflation. As always, the traditional economists' solution is to demand that workers absorb most of the hardship through lower wages, longer working hours and cuts in social benefits.

* Clara E. Mattei is a professor in the Department of Economics at The New School for Social Research. She is the author, among other books, of The capital order: the capital order: how economists invented austerity and paved the way to fascism (University of Chicago Press).

Translation: Eleutério FS Prado.

Originally published on the portal Sinpermiso.


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