Were Mussolini’s economic policies a success?

Benito Mussolini seized political power in 1922, at the end of an era of social and civil unrest. The Italian Socialist Party was making important electoral gains as working class activism prospered and militant trade unions were making strikes to fight for worker’s rights. Mussolini never had an interest or great apprehension in economics and how it operates. However, he knew of the importance of a strong economy and how it could help him consolidate his power and strengthen Italy into a great nation. This essay seeks to discuss Benito Mussolini’s economic policies and analyse whether they were a success or a severe failure to the nation of Fascist Italy. The areas I will look at will be: Mussolini’s early economic policies, the economic battles, key areas of the Fascist economy, Autarky, Italy in the Great Depression and finally, the Corporative State. Some of Mussolini’s economic policies had their failures, but, his policies did improve the profile of modern Italy throughout Europe and the rest of the world.

When Mussolini began to make his mark in economics in the mid 1920s, he was luckily blessed. The economy in the early years of Fascism developed positively for many different factors. Laissez-faire policies were introduced which favoured industrialists by letting them take their own courses, paying workers the minimum wage with little government intervention. In addition, a future Socialist revolution had vanished and there was no threat from the PSI, meaning the confidence of the economic elite rose. Another reason why the early economy improved was because trade unions began to weaken and worker organisations began to collapse. There was also a general European economic recovery. Alberto de Stefani was put in charge in 1922, by Mussolini, as an Economics professor. While de Stefani was in charge he was characterised by his Laissez-faire ideas. Taxes on war profits were reduced and the industrialists were pleased. After 1925 de Stefani was dismissed and the one-party state was created. Financer and Industrialist Count Volpi replaced de Stefani and Mussolini stated the new economic structures were accomplished within Italy. However, Confindustria: the Italian Employer’s Federation made sure the industry’s interests were protected. Early economics were very successful for industrialists, but not for the workers. However, these were the early economics of Fascist Italy. Mussolini’s real economic intellect was to be shown in his economic battles.

As Mussolini was a totalitarian dictator he believed in will power and battled to meet his economic objectives. Throughout the 1920s and 30s the citizens of Italy were involved in a series of battles to benefit the economy and therefore, their living standards. The Battle of the Lira aimed to restore the power and strength of the Lira by fixing it at 90 to £ which it was in October 1922. The battle also aimed to confirm a vivid image of Fascism bringing stability to Italy. Mussolini believed that a weak currency represented a weak nation when he was trying to create an image of a European super-power. By making exports more expensive in foreign countries, Mussolini managed to inflate the value of the lira. This generated mass unemployment in Italy because many industries could not sell their goods. Furthermore, banks instituted tight controls on money supplies so that people could not withdraw and therefore, inflate the value of the Lira. The government imposed a 20% cut in wages and in 1936 they were forced to devalue the Lira.This main reason this individual battle was a failure, is because Italy’s economic base was too small. Italy, at that time, wasn’t a nation of industry but was an agricultural and basing the strength of the economy on agriculture did not work. However, this was only one battle and did not destroy the entire Fascist economy. The Battle for Grain was another economic battle.

Mussolini’s main aim throughout the Battle for Grain was to make Italy economically stronger and self-sufficient by boosting cereal production. Furthermore, Mussolini wanted Italy to be less dependent upon other nations for imports when war came. The Battle of Grain was also aimed to reduce trade deficit and free Italy from foreign bread imports. Fundamentally the plan for this battle was to grow grain. However, this was at the expense of Vegetables and fruits which were a lot cheaper and easier to produce. The government agreed to buy machinery and fertilizers for the farmers. The price of bread in Italy rose rapidly and Italian grain became extremely expensive. This had a very negative impact on the poor as bread was a major part of their diet but they couldn’t afford to buy it. Rich farmers were very happy with the change in prices as they were practically guaranteed a good, high price for what they produced. By 1940 Italy was almost self-sufficient in cereals but not in fertilizers. There were also imports of meat and eggs as these forms of agriculture were suffering as a result of increased cereal production which doubled from 1922 – 1939. The Battle of Grain was a great success for Mussolini’s economics. However, it was only a success in cereal production. Many areas of the economy suffered because of this battle.

The final battle that Mussolini and the citizens of Italy were mobilized in was the Battle of the Marshes. The primary aim for the Battle of the Marshes was to make more land available for cereal production by clearing marshland. As well as this, other aims were to reduce unemployment and improve health which shows the government in action to impress foreigners. Laws on reclamation were passed in 1923, 1928 and 1933 and private landowners were encouraged to collaborate with drainage schemes. One key area that was recovered was the Pontine Marshes near Rome - an area of mosquito-plagued bog land. New towns such as Sabaudia were created to show the beauty and power of Italy. The land that was cleared also had roads built on them to improve the infrastructure of Italy. As these schemes were labour powered they employed a lot of people and so the unemployment rate went down. But, 75% of land cleaned was in the north; therefore, many ambitious plans were blocked by southern landowners. Apart from this the Battle of the Marshes was seen by many as a success. All three of these battles showed Mussolini’s character and his belief that will power should be the driving force of society. The government and Mussolini, like all governments, had to work on certain divided key areas of the economy.

One of the key areas of the Fascist economy was agriculture. Whilst wheat production improved greatly, the rest of Mussolini’s policies were a failure and couldn’t resolve problems such as improve health by reducing malaria. Mussolini wanted the countryside to be a clean place as oppose to the unhealthy life of the cities; he introduced a ruralisation campaign designed to stop everyone migrating to the industrial cities in the north. However, life in southern Italy remained the same with an extreme amount of poverty particularly. The Depression led to 20% - 40% cut in farmer’s wages. Government was very much involved in agriculture and helped by: introducing tariffs on imports, buying machinery/fertilizer and also by spreading scientific knowledge. Another key area of the economy was industry. In addition, like agriculture, industry benefited from government intervention.

Policies which were introduced by the government favoured industry. Cartels, which were associations of manufactures who maintained prices at a high level and controlled production, continued to grow. New industries such as chemicals also grew well. The major firms of the Italian industry were: FIAT, Montecatini, Pirelli and ILVA. These large firms took over smaller ones and all got Government protection. However, Government was more concerned about retaining the existing structure rather than encourage an efficient reorganization. Industry was quite a successful area in the economy. However, smaller firms did get taken over.

Furthermore, transport made vivid progress and many motorways were built and railways were increasingly electrified. On the other hand, prestige projects were troubled and many local roads were left untouched. The poorer built roads of Italy were all located in the backward agricultural areas. The south, once again, was neglected. This key area of the Fascist economy was partially a success; this is because of the development of transport. However, few Italians owned cars to use the roads and all the railway tracks were electrified in the north. Taxation was another key area of the economy.

Before the state got involved in taxation the rich and upper class benefited from the tax policies of Mussolini. However, when the government finally did get involved to build up it’s strength and power, taxation became a lot heaver and spread to everyone. In the 1920s taxes were reduced to fuel investment, but in the 1930s this changed and taxes were raised to 60% indirect and 40% direct in 1934. The Government spent the tax money on state bureaucracy, prestige projects, industry, public works, welfare measures and military weapons. Taxation was a slight success because the government spent the money on projects to strengthen Italy. On the other hand, it was a failure to the people of Italy as there money was being taken which could cause a number of problems.

Italy was a country of few resources and really needed to trade with other nations. But, as Mussolini desired a nation which was not dependent upon others, he dismissed a lot of trade opportunities. As a Nationalistic country, the direction of Italy’s trade was heavily affected by foreign policies. There were two government agencies to control trade: Institute of Foreign Exchange in 1934 and Ministry of Currency Exchange in 1937. Trade wasn’t a failure but it was very restricted in order to establish Autarky; this had an effect on many factors including the diet of Italian’s which declined in quality.

Autarky means economic self-sufficiency and requires a country to produce all of it’s resources and materials itself. Fundamentally, a nationalistic nation, like Italy, needed to make all it’s resources itself and never depend on imports from other countries. The Battle for grain was a major step toward Autarky. Although the price of bread rose and imports of meat, eggs and wine rose, it was a major step because cereal production doubled and grain imports fell by 75%. Moreover, a huge propaganda campaign was released to try and help them to achieve Autarky. The League of Nation’s imposition of economic sanctions in 1935-36 was also an advantage of having a huge, self-sufficient economy. When Italy joined the war with Germany in 1940 it performed very badly as it couldn’t import the materials the military required. The number of Italian exports and imports in 1922 were both 100. But, in 1936, exports reached 115 and imports had fallen to 52. Autarky was always going to be impossible because there was virtually no land resources, land marks for grain failed, they still needed to import food and Abyssinia had no resources. However, Italy had slowly started to move towards self-sufficiency and Mussolini showed great determination. Because Italy was an agricultural nation and Mussolini’s autarky policy, it got through the Depression in the 1930'a better than Europe's industrial power houses. The Depression hit the industrial nations of Europe very hard.

In Italy, like many European countries, the years instantly after 1929 were defined as a major economic slowdown. There was a heavy collapse in grain prices and farmers, due the Battle for Grain suffered as they were unable to diversify. There was also mass unemployment and wages fell considerably. As things gradually worsened, the government got involved introducing the IMI (organization to support banks) and the IRI (1933, to support industry). The IRI took control over companies that were owned by the bank. By 1939, the IRI controlled 20% of all industry in Italy. The IRI did extremely well when dealing with it’s responsibilities. However the Italian economy didn’t fully recover until 1955. Furthermore, the government helped industry by encouraging cartels and by once again imposing wage-cuts. Italy managed to make it through the Great Depression without being hit as badly as other nations. Government policies did prevent social and civil unrest which was seen elsewhere. The developing structure of the Corporative State also helped to protect Italians from the Depression.

The Corporative State was Mussolini’s ‘third way’. Whilst many countries in the world were battling between Socialism and Capitalism, Italy was represented as a unified nation where everyone’s interests and beliefs were protected. Mussolini wanted a society where workers and employers could work happily together in the national interest. Existing Socialist and Catholic unions faded out of existence and Fascist syndicates were unable to protect workers from the state and powerful employers. The formation of the Corporative State was the most important economic reform.

In 1927 on the 21st April, the Charter of Labour expressed the ideas of Fascist Corporate State. The ideas stated that the Government would bring employers and workers of the same economic activity into one alliance. Moreover, work was to be seen as a social duty and there was to be general indication of intent, not legally binding.

In 1934 twenty-two corporations were formed. Each one of the corporations consisted of worker's and employer's representatives. Representatives were also sent by the Government to participate in the establishment of the corporations. All the corporations were put under control of a National Council of Corporations meaning decisions had to be approved and issued by it’s chairman: Mussolini. The Corporative State was used more for propaganda purposes than actual performance. Furthermore, it did nothing to nothing to improve economic conditions and looked far better on paper than in practice.

Overall, after the war, Italy had the most unstable economy of all the major powers in Europe. Mussolini had some of the most complicated, ambitious plans of all European dictators. The two did not match. All this was combined by more basic structural problems relating to divisions between north and south and industry and agriculture. Mussolini had some impacts on the divisions but it was minimal. Whilst Mussolini’s Fascist economy was highly partially a failure, it is difficult to avoid a whole negative assessment. Agriculture, in terms of statistics was cited as a success and the IRI helped Italy survive the Great Depression in the post years of the 1929 Wall Street Crash. However, Mussolini did make many inappropriate policies which led to the failure of the economy as a whole.

By Stephen Leatherbarrow