Italian Fascism: The Economy

Italian fascism battle of grain
Figure 1.--Mussolini's Wheat Battle started in 1925. There were several aspects to it. The Government launched a major effort to drain the marshes near Rome (Agro Pontino) between 1926 and 1937. The use of chemical fertilizers. Grain production was given priority over fruits and vegtables. The Fascists succeeded in increasing the wheat crop about 30 percent, but at considerable cost. The Fascist-controlled media heavily publicized the effort. Here we have a typical propaganda photo.

Italy was one of the important countries of Europe, but like Germany was a relatively new unified nation. Unlike the major western powers (Britain, France, and Germany), it did not have a large industrial base. The Italy Mussolini seized control of was still a largely agricultural country with percapita income levels subtantially below that of the major powers. Unlike its Allies in World War I (America, Britain, and France). Italy did not experience an ecomomic boom after the War, in large measure because of the weakness of the industrial sector. Mussolini launched a series of campaigns he called "Battles" to invigorate the Italian economy and to transform Italy into one of the Great Powers. Of course all the great western world powers share one common factor--an industrial sector created by free market capitalism. Mussolini while best known as the creator of Fascism came out of the world socialist movement. He thus had no appreciation of the importance of capitalism in creating a modern economy. Mussolini did not attack capitalism like Lennin and Stalin, but he did not base Fascist economic development on capitalism. He launched his great Fasict economic battles on his personal feelings rather than any sophisticated understanding of economics. Italy's Fascist contrilled media trumpeted glorious achievements. In fact, Fascist Italy made little significant progress in creating a modern economy. Mussolini would cap his economic falures by taking Italy to war against the great industrial western powers. Mussolini's three great economic battles were: 1) the Battle for Land, 2) the Battle of the Lira, and the 3) Battle for Grain.

Italy and Europe

Italy was one of the important countries of Europe, but like Germany was a relatively new unified nation. Unlike the major western powers (Britain, France, and Germany), it did not have a large industrial base. The Italy Mussolini seized control of was still a largely agricultural country with percapita income levels subtantially below that of the major powers. Living stanfards in the north were close to France and Germany, but the lasrgely agricultural south wsas still almost feudal. Unlike its Allies in World War I (America, Britain, and France). Italy did not experience an ecomomic boom after the War, in large measure because of the weakness of the industrial sector. Mussolini launched a series of campaigns he called "Battles" to invigorate the Italian economy and to transform Italy into one of the Great Powers.

Capitalism

Of course all the great western world powers share one common factor--an industrial sector created by free market capitalism. Mussolini while best known as the creator of Fascism came out of the world socialist movement. He thus had no appreciation of the importance of capitalism in creating a modern economy. Mussolini did not attack capitalism like Lennin and Stalin, but he did not base Fascist economic development on capitalism. Of course capitalist ecomomic development took time. But for Mussolini this was probably not the key factor. His Socialist background led him to believe that the Goverment could jump start ecomomic sevelopment and that his personal genius could modernize Italy more effectively than a free market.

The Corprate State

Italian dictator Benito Mussolini developed the idea as the corporate state as the core idea of Italian Fascism. The idea of the Corporative New State was that a state (meaning government) does not 'give'. A state 'demands' meamning requires. Firstly, it demands (meaning requires) men and arms for defense of the nation. Secondly, it demands obedience to its laws and authority. The whole purpose of a state is to ensure national survival in competition with other countries. Mussolini explains that "Fascism rejects all ... the conceptions that there can be any doctrine of unquestioned efficiency for all times and all peoples." The Fascist state does not rest on the assent of individuals. Mussolini insisted this was a delusion. Rather the state rests on the the assent of the Corporations. Here he is not talking about corporations in the modern sence (private brinesses), but associations or institutions to which the individual belongs such as labor unions. In sharp contrast to liberalism democracy, Fascism insists on obedience to constituted authority and declares that only in adopting the hierarchal principle can any political competence in the individual exist or be represented. Mussolini declares this to be the natural order and the only direction in which real human accomplishments can be achieved. Fascism unlike the other form of totalitarian socialism did not abolish private property. Instead in turned private owners into mere managers. The state controlled ecomnomic decisions such as wages, hiring, production, access to raw materials, prices, and other other aspects of running a business.

NAZI Economics

Mussolini's economic policies were in sharp contrast to those of his future Axis partner--Hitler and the NAZIs. Hitler had his left-wing supporters. The SA was filled with working-class adherents that wanted to pursue socialist policies. Hitler soon after seizing power, essentially destroyed the SA as a mjor component of the NAZI power structure. Instead he harnessed German capitalism to building up the German military. he Germany people widely believed that Hitler had brought about an economic miracle in ending the Depression. Less well understood was the impact on real wages under the NAZIs who significantly reduced the availability of consumer goods and by reducing quality prevented price increases. The German Labor Front (DAF) restricted wages, but sought to develop alternatives to rewaediung workers rather than higher wages. Even less well understood was the level of defecit spending and the the economic crisis approaching at the time Hitler launched the War. The level of devbt became moot once the War began because with the early economic the NAZIs could finance the war by looting the economies of the captive nations. Contrary to expectations, this policy proved effective in the West rather than the East. It was very common before World War II to read about an a Gernman economic miracle. Many in the 1930s lauded the NAZI achievement in ending the Deopression. Other of course envied the Soviet Union. This is perhaps understandable in the 1930s when it was not entirely clear what was going on in those countries. Wha is surprising is that we still see some authors blinkered by ideology and often adding outriht falsehoods still talking about the NAZI achievement. Here is a typical example, "The Nazis came to power in Germany in 1933, at a time when its economy was in total collapse, with ruinous war-reparation obligations and zero prospects for foreign investment or credit. Yet through an independent monetary policy of sovereign credit and a full-employment public-works program, the Third Reich was able to turn a bankrupt Germany, stripped of overseas colonies it could exploit, into the strongest economy in Europe within four years, even before armament spending began. In fact, German economic recovery preceded and later enabled German rearmament, in contrast to the US economy, where constitutional roadblocks placed by the US Supreme Court on the New Deal delayed economic recovery until US entry to World War

Fascist Ecomomic Battles

Mussolini launched his great Fasict economic battles on his personal feelings rather than any sophisticated understanding of economics. Italy's Fascist contrilled media trumpeted glorious achievements. In fact, Fascist Italy made little significant progress in creating a modern economy. Mussolini would cap his economic falures by taking Italy to war against the great industrial western powers. Mussolini's three great economic battles were: 1) the Battle for Land, 2) the Battle of the Lira, and the 3) Battle for Grain.

The Battle for Land

The Battle for Land was an effort to create more arable land to increase agricultural production and was thus related to Battle for Grain. The principal effort was to drain marshland so that it could be used for farming and a variety of other purposes One of the principal areas draimned and prepared for farming was the Pontine Marshes south of Rome. This was a large mosquito-infested area of marsh which had defied development for two milenia. Work began in 1926 and cointinued for more than 10 years. The marches were drained for farm land as well as olther purposes. Public housing weas built in some areas as well as modern roads. This effort was labor intensive because a lot of the work was done by hand rather thasn heavy equipment. Large numbers of people were employed in the various projects involved with draining the marshes and building infrastructure in the area. It took more than 10 years (1926-37). This was an important schievement. There were some negative consequences, especially deforistation.

Battle of the Lira

The Battle of the Lira was launched because Mussolini thought a major power should have a strong currency. He did not like other countries have a currency that bought large numbers of lira. He thought this ,made Italy look bad. He also wanted to restore the the purchasing power that the lira had lost. Thus Mussolini adopted fiscal policies that increased the value of the lira beyond its actual value. The result was to make Italian manufactured products expensive and as a result difficult to export. (This was exactly the opposite policy of the Chinese Governent in the 2000s.) The impact not only created industrial unemployment, but impeded the growth of the industrial sector. In effect, Mussolini actively impeded the development of a modern economy.

Battle for Grain

Rising population and a moribund agriculture sector affected Italy's ability to supply the domestic market. One of the best known Fascist campaihns was thus the "Battle for Grain". Mussolini focused state resources on the agricultural sector. He saw an element of national strength as being self suffient. And here he saw the production of grain (principally wheat) as particularly important. He saw becoming self sufficent as making economically stronger. Thus he wanted to increase domestic grain production. Mussolini launched the Battle for Grain or the Wheat Campaign -- Battaglia del Grano (1925). There were three principal actions. First, the drainage of the marshes near Rome (Agro Pontino) was a major public works project (1926). The effort took more than 10 years to complete, but did suceed. Second, the use of chemical fertilizers was increased. The spreading of fertilizers increased wheat yields. The Montecatini Spa, at the time the major Italian chemical factory, played an important role. Third, grain was given priority at the expense of fruit and vegetables production. This involved changing fields over from vegetabkes and other crops to wheat. Vegetable were, however, cheaper to produce. Italy as a result of the campaign did increase grain production. Harvests increased about 30 percent. The economic impact of the Battle for Grain was not as impressive as the harvest amount as the Fascist-controlled media cl;aimed. The Grain effort diverted substantial resources for grain production, away from other crops. Thus fruit and vegetable productin declined. And while grain production increased, the cost of profuction also increased. Domestically produced gain was more expensive than imported grain. This made grain expensive and increased the price of bread and pasta. This adversely affected low-income Italians because grain-based bread and pasta was such an impotant part of their diet. Wealthy landowners on the other hand dis well because the Government guaranteed them good prices for the grain they produced. There were also unanticipated consequences of the Government's involvment. The massive state expeditures spending and subsidies not only create economuc inefficiencies, but substantially increased governmnt debt.

The Great Depression

The economic doctrine of the Corporate State (Stato Corporativo) was formulated in the Labor Charter (Carta del Lavoro) was approved by the Fascist Great Council on April 21, 1927. The most important economist that collaborated with the Fascist regime was Alberto Beneduce (1877-1944). He was born in Caserta, near Naples, As a young man he joined the Socialist Party and became a deputy in Parliament. After 1922 he strictly collaborate with the Regime, but never joined the Fascist Party. He guided the Italian economy from 1926 and in the time of the Great Depression. Beneduce's concept of the Corporate State was influential among American New Dealers. That influence can best be seen in the National Recovery Act (NRA). The NRA blue eagle was seen in stores and businesses throughout the United States in the early years of the New Deal. The NRA was, however, struck down by the Supreme Court. Historians and ecomists differ about the Fascism corporate experience. Most contend that the experience miscarried because of the authoritarian nature of the Fascist regime. Here it is often difficult to separate antipathy to Fascism from purely economic assessments. We are unsure about unemolyment and industrial production trends in the 1930s. One reader suggests that the state bureaucracy was a problem. Mussolini invasion of Ethiopia (1935) brought about an international embargo, but not all countries complied. Mussolini's subsequent decession to join Germany in World War II (June 1940) oroved and unmitigated disaster. The Italian people who had not fulkly recovered from the Depression were plunged into poverty by the cost of the War and the military reverses which followed.

Other Totalitarian Economic Economic Campaigns

Several other totalitarian states launched ecomomic campaigns. All the totalitarian were convinced that they could better manage the economy than the free market. All failed, although the economic zand social cost vsried from country to country. The Stalinist era Five Year Plans substantially increased industrial production. The industrial complex helped defeat the NAZIs in World war II. After the War, however, Soviet planners gradually realized that the country's industrial sector was inefficent and uncompetive. Most factories prouced products that were worth less than the raw materials used to produce them. As a result, Russia today has an economy based on exporting raw materials like a Third World Country. Mao introduced the Great Leap Forward, the nost disaterous ecomomic campaign in history. Fidel Castro as a revolutionary criticized Cuban leaders for the country's sugar monoculture. After seizing power, he launched a campaign to harbests 10 million metric tons (t) of sugar (1969-70). The Cubans greatly expanded the sugar harvest, but in doing so caused tremendous dislocations in the Cubazn ecomomy. An horrendous economic and social campaign was the Kymer Rouge Autarky campaign (1965-69).






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Created: 7:07 PM 4/22/2010
Last updated: 3:56 AM 10/4/2019