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FASCIST ERA

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Italy emerged from World War I in a poor and weakened condition. The National Fascist Party of Benito Mussolini came to power in 1922, at the end of a period of social unrest. During the first years of the new regime, the Fascist pursued a laissez-faire economic policy: they initially reduced taxes, regulations and trade restrictions on the whole. However, once Mussolini acquired a firmer hold of power, laissez-faire and free trade were progressively abandoned in favour of government intervention and protectionism. In 1929, Italy was hit hard by the Great Depression. Trying to handle the crisis, the Fascist government nationalized the holdings of large banks which had accrued significant industrial securities. A number of mixed entities were formed, whose purpose it was to bring together representatives of the government and of the major businesses. These representatives discussed economic policy and manipulated prices and wages so as to satisfy both the wishes of the government and the wishes of business. This economic model based on a partnership between government and business was soon extended to the political sphere, in what came to be known as corporatism. At the same time, the aggressive foreign policy of Mussolini led to an increasing military expenditure. After the invasion of Ethiopia, Italy intervened to support Francisco Franco's nationalists in the Spanish Civil War. By 1939, Italy had the highest percentage of state-owned enterprises after the Soviet Union. Finally, Italy's involvement in World War II as a member of the Axis powers required the establishment of a war economy. The Allied invasion of Italy in 1943 eventually caused the Italian political structure - and the economy - to rapidly collapse. The Allies, on the one hand, and the Germans on the other, took over the administration of the areas of Italy under their control. By the end of the war, Italian per capita income was at its lowest point since the beginning of the 20th century.

 
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Join Date: October, 20th 2011
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