Italy. The «corporative» state. The Duce’s economic powers

«The Economist», 27 maggio 1933, pp. 1133-1134

Hitlerism in Germany and Rooseveltism in the Unites States are hailed here by the Press as a proof that the world is rapidly evolving toward a dictatorial centralised government of industry. Some misgivings are felt about the motives of America’s abandonment of the gold standard, but the extraordinary powers granted to the President for the regulation of wages, prices, competition, limitation of output, etc., are looked upon as a typical case of extension of the corporative idea.

Corporativism, in the land of its birth, is making new progress. At the last session of the Central Corporative Committee, Signor Mussolini, summing up the discussion, concluded in favour of the immediate formation of the corporations, which, as State organs, shall harmonise and develop theactivity of the productive groups (categorie) to the end of a centralised control of production.

According to the Labour Chart and to the Act of April 3, 1926, the first step in the building of the Corporative State was the unification of employers’ and employees’ associations or unions. Only one legally recognised employers’ union had the right to enter with the corresponding employees’ union into collective agreements as to wages, hours and other conditions of work. Strikes and lock-outs were forbidden. Unions were not empowered to interfere with the internal organisation of industry. Collective agreements were compulsory for members and non-members of the unions alike. Individuals could contract out of the collective agreements, but only if better conditions for workers were stipulated.

It was soon realised that the system was incomplete. How was it possible to regulate wages, hours and other conditions of industry without regulating other factors in economic equilibrium? Employers felt happy to increase or not to decrease wages if only they were enabled to do so. This was the origin of the famous Section 12 of the Act of March 20, 1930, creating the National Corporations Council. It should be remembered by English-speaking people that the word Corporation has in Italy an entirely different meaning from the current English one and should better be read as Guild system or Guild State, etc. The Council is a central body representative of employers’ and employees’ associations, of certain other social public bodies (institutes for social insurance or assistance), of public departments, and of men specially competent in economic and social matters. The Council is divided into sections: agriculture, commerce, industry, land transport, navigation, banks, liberal and artistic professions. In virtue of Section 12, the Council «may regulate the economic collective relations between different economic groups» represented by unions. The wording of the section is general, and may embrace everything from the regulation of prices to limitation of production, of markets, cartellisation and restriction against starting of new factories. Special Act empower the Government to regulate compulsorily cartels and the starting of new factories. The Council, however, can act only after the request of all the interested associations, and its conclusions become compulsory only if the Prime Minister assents to their publication in the Official Gazette. The sanction of the Prime Minister is required in the interst of the consumers or of the community in general. It will easily be seen that the norma, as is called the decision of the Corporative Council, has almost the same effects as an Act of Parliament, duly sanctioned by the King and published. Hitherto the interested associations and the Council have made a very limited use of the far-reaching quasi-legislative powers granted them, partly owing perhaps to the cumbrous nature of such a numerous body as the Council.

The recent decision reached by the Council, upon the Pime Minister’s motion, aims at accelerating the process. The powers of the National Corporations Council will probably devolve on to the Group Corporations, viz., a body or Guild formed by the employers’ and employees’ associations of the same industry or industries. The guilds will act not only as consultative special councils of the Government, but also as a normative (or legislative) authority as regards (1) standardisation of the conditions of labour in the industry; and (2) regulation of industry. If the employers’ associations of a group of correlated industries, with the consent and for the partial benefit of their employees, wish to restrict production, by closing the worst equipped or badly situated factories or otherwise, they will apply to that end to their Guild; and, if the Prime Minister concurs, the regulation will become compulsory.

The lessons to be derived from the Italian experiment in the regulation of industry are, among others: – (1) Regulation cannot stop at one point, viz., wages or hours of labour; it must eventually be extended to all relevant points. (2) It cannot be entrusted, if it is to work quickly enough, to too large a body, such as an industrial parliament as a whole; smaller regulating bodies must be created, such as groups or guilds. (3) It is possible to regulate everything, subject to the final appeal to the consumer, who cannot be coerced. (4) In the Italian system the voice of the consumer is supposed to be felt in the legislative stage, through the Prime Minister’s right of assent. Experiment has not progressed enough to let us see the actual working of the Prime Minister’s brake on behalf of consumers. Is free competition’s automatic machinery going to be succeeded by the sixth sense of the economic dictator?