Italy's Failure Is a Failure of Statism, Not Liberalism

The recent election in Italy marks the first time in the modern era that populist parties have won a majority of the seats in a legislature in Western Europe. While the two parties that won, the Northern League and Five Star, did not run on a common policy platform and and may have difficulty governing together, their success represents a milestone for Western populism. But it does not represent a defeat for liberalism, at least of the classical kind. Italy has since World War II been the nation in Western Europe least hospitable to such liberty.

From the beginning of the new Italian constitutional order, Italian politics had three important strands in its politics, all hostile to liberalism. For a long time, the Christian Democrats headed governments. They were heavily influenced by Catholic social thought antithetical to free market economics. Its focus was on directly protecting the livelihood of the (generally male) breadwinner. As a result, Italy enacted laws that made it extremely hard to fire workers. It also protected businesses from pharmacies to notaries from the competition that technological change would otherwise have created.

Italy was also home to the largest Communist Party in Europe. That party promoted state-run industries and impeded competition with them. The third strongest force, the socialists, were pretty much in favor of both programs, although sometimes in weaker form. The liberals represented a tiny minority in the Italian parliament despite a proud intellectual heritage, today reflected by the Bruno Leoni Institute. All the major parties have supported exceedingly generous pensions paid for by the state, which have burdened the young and made its debt the highest in Western Europe except for Greece.

After making the easy economic gains from catching up after the devastation of the world war, the Italian economy has stagnated. It has had essentially no growth for the last two decades. Few nations in the world other than Zimbabwe have done worse. It has sky-high youth unemployment because businesses do not want to hire those they cannot fire. As an old professor says in the Best of Youth, one of Italy’s great films of the last decade, it is becoming a country fit only for old dinosaurs like him. While there have been a few reforms in the last decade, Italy has had no change on the order of Thatcher’s revolution or even the Hartz reforms in Germany.

Given the failure of its politics to deliver, Italy is the Western European country most ripe for populist revolt, even if what it needs instead is a refoundation in classical liberalism and the opportunity society it creates. But this revolt refutes rather than supports the meme, made popular by Patrick Deneen and other anti-liberals, that the dead end of liberalism leads to populism. Just as Marxism was intellectually embarrassed by the communist revolution’s first appearance in pre-industrial Russia when Marxist theory would have predicted it would break out in a place like Great Britain or Germany, so anti-liberal theory should be embarrassed by the success of populism in Italy. Classical liberalism has not failed there. It has not been tried.