Italy Economic History

Italy Economic History

Economic Thought in Italy From 1870 To World War II

No better illustration of the relationship between industrial evolution and the progress of economic thought could be given than that afforded by developments in Italy. During the greater part of the seventeenth and eighteenth centuries Italy, decadent, had lost her commercial leadership and was the object of diplomatic and martial struggles among foreign powers.
The forces leading to the French Revolution were not without effect, however, and accordingly we find such relatively important names as Genovesi (1765), Galiani (1770), Beccaria (1769), Verri (1771), and Ortes (1774) coming to the front. Although all were limited by the undeveloped character of Italy's economic background, they advocated some measure of industrial freedom.

Developments to 1875, Economic History Of Italy

During the greater part of the nineteenth century, however, Italy fell behind the countries leading in economic thought; for she was torn and divided, politically and industrially, while her industrial backwardness withheld both the problems and the phenomena of economic life that were apparent in more advanced states. A rather shallow optimism furnished the prevailing economic philosophy. Accordingly from 1800 down to 1870, the chief contributions consisted in some scattering studies in currency and taxation.

During this early nineteenth-century period, the names of Gioja (1767-1829) and Ferrara (1810-1900) may be noted, the latter being transitional to the development which came after 1870. Indeed, from Ferrara may be dated the beginning of the modern development of economics in Italy. He wrote no comprehensive work, but was a teacher and editor, whose views — chiefly on value, money and banking, and history of economic doctrines — are largely found in introductions contributed by him to the Biblioteca dell' economista. He was a free trader. In general, his views on method, government intervention, and the nature of economic laws, were like those of Bastiat and the French optimistic school. Ferrara is notable as being (along with the German, Duhring) a follower of Henry Carey; for he accepted Carey's peculiar rent ideas, and made the American's cost-of-reproduction idea of value the center of his own scheme of distribution. Like Bastiat and Carey, Ferrara's thought is full of paradoxes.

But in 1870, Italy became united. Soon thereafter the phenomena of transport, tariffs, currency, and the like began to develop, while a single government and a united people could confront the problems which attended an evil social and financial condition. Forthwith, a more scientific study of such subjects as population and public finance made its appearance. The leaders of the new movement were Messedaglia and Luigi Cossa.

Messedaglia (1820-1901), though not a polemist, may be regarded as the central figure in the reaction against the ideas of Ferrara and the then dominant "liberal school." He had little constructive power, but was a keen analyst and a careful, accurate worker, with considerable powers as a logician and statistician. A trained physicist and mathematician, he reflected developments in the natural sciences, and stood for the introduction of more scientific methods into economics. Messedaglia's best work is found in the field of statistics, monetary problems, and public loans. He will be remembered for his modification of Mai thus' statement of the law of population; for he reasoned that even as a tendency, the increase of population could not be in a geometric ratio — 2, 4, 8, 16. When the food supply falls short, the power of population to increase will be diminished and the rate of growth decreased. Thus 4 persons will tend to produce, not 8, but 6, the result being an arithmetic progression, though still a more rapid one than governs food.

Meanwhile, the influence of German economics, which, as will be remembered, was undergoing important developments at this same time, must be observed. Both Cossa and Nazzani studied in Germany, and the Italian reaction of 1870 was much affected by German thought.

Luigi Cossa (1831-1896) was the first modern Italian economist to win wide international recognition, and to him is due in large measure the establishment of Italian economics on a scientific basis. At the close of the nineteenth century, the greater number of the younger Italian economists had felt Cossa's influence as a teacher or writer. He is best known by his investigations in the history of economic thought (Guida alio studio dell' economia politico, 1876) although, like so many of his countrymen, he has done good work in the science of finance (Primi elementi di scienza dellefinanze, 1876). His Guida, translated into English as an Introduction to the Study of Political Economy, besides showing an extensive knowledge of the economic literature of all countries, together with much critical ability, has a "theoretical part" which contains valuable suggestions concerning the scope and method of economics, and proves the writer's claim to rank as a systematizer. Cossa studied in Germany under Roscher, and in Austria under Stein, being particularly influenced by the former, whom he calls his "revered master." Yet, on the whole, he is a follower of the doctrines of the Classical School, and, while very sympathetic with historical studies, he severely criticizes the methods of the younger Historical School.

Others who helped the new movement were Nazzani, Lampertico, and Cusumano. Nazzani (1832-1904), who showed considerable critical ability, combined the doctrines of Roscher, Schaffle, and Wagner with the Classical economics, although in the main he held to the Ricardian economics as developed by Senior. Cusumano had studied in Berlin. Lampertico, like Nazzani, was a pupil of Messedaglia's.

Naturally the influx of ideas from the German Historical School and Socialism of the Chair meant war from Ferrara and his followers, among whom were Magliani, Martello, Pareto, and Peruzzi. Ferrara opened hostilities in 1874, and here another of Messedaglia's pupils, L. Luzzatti, gained some local fame by a temperate but weighty rejoinder. This writer's statement of the being typical of the new Italian movement, is worth quoting from:

"Between the Classical economists at one extreme and the socialistic iconoclasts at the other, there is to-day a mediation in the historical or inductive school. ... Its adherents do not admit a priori either harmony or contradiction of interests. They investigate the world as it is, and not as it ought to be. . . . They admit liberty as a principle. . . . They respect and uphold progress equally with liberty; and where compulsory social action, i.e., the action of the state, serves to prevent conflicts which liberty promotes and to procure benefits which liberty obstructs, they accept in their economic proceedings a directive action."

The new school founded the Giornale degli economisti in 1875 as its organ, and the editors — notable among whom was Forti — spread German economic ideas. It stood for the historical approach and accepted much state intervention. Besides those already mentioned, the names of De Martiis Cognetti (1844-1891), C. Ferraris, R. Schiattarella, and Ricca-Salerno are to be noted.