This article introduces the collection of the translated versions of a number of essays published in Rivista Internazionale di Scienze Sociali (RISS) during the 1940s and 1950s, under the directorship of Francesco Vito. More generally, this essay deals with the diverse topics discussed in RISS which concerned both economic theory and policy. With respect to the former field, RISS played an important role in presenting and critically examining the ‘‘new economics’’: Keynesian macroeconomics, business cycle theory, econometrics, imperfect competition and their advancements. As to economic policy, most of the articles in the volume were ‘fathered’ by Vito and a small group of scholars who had embraced his ‘Personalistic’ view of economics. In the articles, particular attention was devoted to the challenges posed by the reconstruction of the Italian economy, by European integration and by the pursuance of a set of social reforms which could promote the dignity and empowerment of human beings.
A leap forward over the wall: Italian economy and economic thought in the Fifties
May the history of economic thought be a useful device for addressing a sustainable path towards economic and financial recovery from the Great Financial Depression and the nowadays Sovereign Debt Crises? According to Cicero the answer should be predictable: ‘‘Historia, magistra vitae’’, but things are likely to be more difficult. Many economists believe that past financial performances may be misleading in predicting and forecasting the future, being the proof of a weak efficient market. This paper finds its roots in the cultural challenge promoted by the Editorial Board of the Rivista Internazionale di Scienze Sociali to select a sample of its articles published during the Fifties, proposing the analysis of the whole sample and of each single article that may add some interesting evidences about both economic methodologies arising from a comparative study, both specific ideas and reflections which may reveal something valuable for the current economic turmoil.
Structural reforms in enterprises and the tasks of the works councils
The article focuses on the debate concerning the participation of laborers in the management of the enterprise. Duchini makes clear that this perspective calls for the replacement of the theory of enterprise in its abstract forms with the objective investigation of the modern corporate structure, defined as the set of relations and ratios between the various constitutive elements of an enterprise located in space and time. The enterprise is depicted as a human collectivity which organizes itself and ties particular relations for the achievement of a common purpose. The main groups involved in an enterprise are capital holders, labor, and governing body or entrepreneur (collegial governing body). In Duchini’s view the enterprise has a goal to reach – making least-cost utilities – and it is structured to reach this goal by heeding technical needs in the most proper way, that is to say respecting human needs.
Purposes and limitations of econometric analysis according to recent approaches
Econometrics demands that economists be familiar both with mathematical statistics and with different branches of higher mathematics. Economists – Lombardini argues in his essay – believe this scientific discipline has some utility, insofar as it paves the way to new perspectives and new paths in economic research. The A. offers a systematic description of the origins and the most recent developments of econometrics and introduce the reader to the most debated methodological issues arising in the building up of econometric models, such as the identification problem, the aggregation of individual demand or supply functions and the stochastic character of economic relations, citing what he deem essential for the critical evaluation of the new econometric methods. The A. highlights the potential as well as the limitations of econometric research, focusing especially on the need to develop a truly dynamic analysis and to bring the influence of institutions at the centre of economic inquiry.
This article discusses full employment policies in their general and theoretical terms and assesses their possibility of application in Italy. Firstly Vito examines the arguments provided by neoclassical theory against full employment policies. Secondly Vito examines the causes of unemployment in Italy: Vito declares his agreement with the view that unemployment in Italy, like in many backward countries, does not derive from a lack of aggregate demand, rather from a structural disequilibrium between a huge workforce population and the capital equipment needed to fruitfully employ it. Vito makes clear that a wide-ranging plan of public intervention is needed in order to cope with structural unemployment: the government should undertake a bold action to foster a better allocation of the available capital, to promote a steadier formation of new capital equipment, to address the strong territorial and social unbalances which prevent the achievement of full employment.
The article offers a review of modern business cycle theory as developed in the first half of XX century. Marrama analyses the extent of economic literature on these topics, pinpointing the main strands of thought and tools used by business cycle economists. The categorization is set forth according to the different methods adopted. Three of these categories are considered as the most important for understanding the current state of business cycle theory: cyclical aggregative models (using a deductive method only); econometrical aggregative models (deductive and inductive method); empirical researches (inductive method only). The A. shows how the increasing dissatisfaction both with the theoretical models formulated by post-keynesian economists and with empirical research on innumerable particular cycles as provided by the NBER group, was leading to a new synthesis centering on the building up of econometric models.
Sylos Labini’s essay is devoted to the analysis of price determination under condition of monopoly and monopsony. The problem of price indeterminacy in case of bilateral monopoly (associated with monopsony) is thoroughly discussed in relation to the market for goods and factors of production. The various cases are examined by assuming the hypothesis of ‘contracting parties’ ignorance of each other’s price elasticities. In the last two sections of the paper, the A. make use of his analysis of monopoly and monopsony to dismiss the ‘Classical’ argument that a perfect wage flexibility can bring about a full employment equilibrium and offers his own interpretation of Keynes’s underemployment equilibrium grounded not on monetary factors but upon market structures. Sylos Labini offers a fresh perspective on the issues he was about to present in his major work Oligopolio e Progresso Tecnico (1956).
The matrix of the Italian economy and developmens in structural interdependence analysis
The article focuses on Leontief’s structural interdependence theory and its recent developments and applications. Fabbrini traces out the origin of this new field of research and provides a rich review of the literature available at that time. In particular the Author discusses the relative merits and limitations of the models based on open and closed matrixes respectively and thoroughly discusses the assumption and the methodological issue involved in the two. The second part of the article is entirely devoted to a detailed comment on the first application of input-output analysis to the Italian post-1951 economic system offered by Chenery, Clark and Cao-Pinna. The author assesses the importance of the methodology undertaken by the abovementioned authors and highlights how their main findings support the possibility of a steady growth rate in the Italian economy driven by a bold program of public investments without imperiling balance of payments equilibrium and monetary stability.
Corporate self-financing and the theory of the business cycle
Continuing the analysis of his own article published in RISS, 1954, 3, Giancarlo Mazzocchi focuses this contribution on Corporate Income Retention: 1915-1943 written by S.P. Dobrovolsky. He focuses on the relation between the wide fluctuations in net income and retained income, which generally conform with changes in overall economic conditions. The author discusses whether propensity to save – in large, medium-size, and small corporations – is more or less stable, and such as to justify its utilization in macroeconomic modelling; in this context he analyses the effect of dividend requirements on profit retention policy and highlight the importance of reliably processed data on corporate dividend policies.
The economic integration of Europe and the problem of international specialized communities
This article focuses on the features and the working of the European Coal and Steel Community, seen as a first step in the ongoing process of European Integration. In Vito’s view the integration process would bear many economic advantages not only for the high concentrated sectors of Steel and Coal, but also in agriculture and transportation. While not ignoring the complex adjustment problem arising from the closure of less efficient firms and the unemployment costs arising from it, Vito underlines economic and social advantages of the 1952 Paris Agreement for the economy as a whole: cost reduction; better terms of trade; technical improvements; development of capital equipment; new outlays for export production and international migration. Moreover the establishment of a common market in Europe would strengthen the sense of solidarity and trust in a common heritage of culture and values, laying down the foundations of a durable peace in Europe.
Corporate saving in the United States: about a recent publication
The life of enterprises and the functioning of the entire economic system are strongly influenced by a typical phenomenon of the modern capitalistic system, namely the practice of corporate selffinancing, i.e. the presence of – voluntary or forced – undistributed profits. This topic, which is related to corporate income retention, is focused upon in the article by Giancarlo Mazzocchi. The Author analyzes the burden of corporate self-financing, which has deep effects on both stockholders and wage earners. Moreover, Mazzocchi investigates the relation between self-financing and the business cycle arguing that there is some sort of interdependence between decisions to save and to invest. Referring to his own work in progress, Mazzocchi asks himself whether in modern analysis, self-financing can be considered one of the likely causes of business cycles, and whether self-financing exerts any influence on the various cyclical phases, either stabilizing or intensifying them.