The political sources of Italy’s economic problems: Between opportunistic political leadership and pragmatic, technocratic leadership

The economic crisis beginning in 2008 brought into high relief problems in the Italian political economy that had been smoldering for a while. But these were exacerbated by a center-right government under the political leadership of Berlusconi that did little to stem the decline in economic competitiveness, the shrinking of domestic wealth, and the explosion of youth and female unemployment, let alone to confront the crisis head on through effective reform initiatives. When that government collapsed, a new government under the technocratic leadership of Professor Mario Monti came to the rescue. This replicates a pattern seen before, in which long stretches of opportunistic, ideologically divided and ineffective political economic leadership for time are followed by pragmatic technocratic leadership at critical junctures, which manages to overcome political institutional constraints to liberalize and modernize. In order to explain this back and forth pattern, the article combines a discursive institutionalist analysis of Italian political leaders’ ideas and discursive interactions with a historical institutionalist analysis of Italy’s formal political institutional arrangements. It also sets Italy’s political economy in comparative perspective, as a ‘state-influenced’ market economy in which the state hinders more than it enhances political economic activity by contrast with France and even Spain.