International Integration and the Balance of Payments Constraint: The Case of Italy
A major feature of economic development since the second world war has been a significant increase in the integration of industrial economies. Exports as a proportion of GDP of industrialised capitalist economies more than doubled from the beginning of the 1950s to the end of the 1960s with the consequent diminution of the scope for independent national economic policies advocated by Keynes in 1933. A particular striking example of this loss of independence may be seen in the current position of the Italian economy. Government policy since the war has led to a rapid integration of Italy into the world economy. The resulting specialisation has been such that the production process, and hence the level of domestic activity, is markedly dependent on imports. The implications of this dependence have been obscured by an economic policy which has not been oriented towards the achievement of high levels of employment. Despite significant net labour emigration (about 100 thousand per year in the period 1960-1969 (1STAT, 1970), the average rate of unemployment in Italy throughout the 1960s was greater than in the other Western European countries (Sorrentino, 1970; Moy and Sorrentino, 1975). More significantly, this high rate of unemployment has continued even though there were very large surpluses on the current account of the balance of payments throughout the 1960s (except 1963) which persisted up to 1972. Further, whenever the overall balance of payments was in deficit the road of deflation was chosen, irrespective of the circumstances underlying the deficit. These policies have resulted in a structure of industry such that a government determined to deal with unemployment would today find itself severely constrained by balance of payments difficulties.
The Influence of Unemployment, Productivity and Institutions on Real Wage Trends: The Case of Italy 1970–2000
The aim of this chapter is to describe and attempt to interpret the trends of wages in Italy in the period 1970–2000. While it is an applied work, it may be useful to provide at the beginning a brief clarification of the broader framework implicit in the analysis. On consideration of the analytical faults found in neoclassical substitution mechanisms as a foundation for decreasing factor demand schedules, we do not approach the explanation of wages by assuming that the economic forces underlying their determination can be described by the interaction between labour demand and supply functions. More generally, we envisage no tendency of the economy towards full employment or NAIRU (non-accelerating inflation rate of unemployment) equilibria, such as is still assumed in the models that replace the traditional labour demand and supply curves with ‘pseudo-curves’ based respectively on firm pricing rules and models of wage determination.1 In line with the classical approach and its modern revival, we instead expect wage trends to be affected by a set of historical and current circumstances that can be broadly classified as labour-market conditions, the degree of organization of the parties involved, and broader economic and political/institutional factors. All these circumstances affect wage determination through the same channel, that is their influence on the ability of the parties involved to establish favourable conditions for themselves in the distribution of income (Stirati 1992; Levrero 2006).
Strategy and Manipulation in Medieval Elections
There are many goals in developing electoral protocols, including a desire for a system which is transparent, in that it is clear what the rule or procedure to follow is; nonmanipulable, in that it is not in a person’s best interest to misrepresent their preferences; honest, in the sense that it elects the ‘right’ candidate; and not open to strategizing, i.e., bribery or collusion. However, these desiderata are in tension with each other: Often, transparent electoral procedures are the least strategy resistant, and many honest procedures encourage manipulation. Thus a balance between these different goals must be sought. In modern times, since the seminal result on vote manipulation, the Gibbard-Satterthwaite Theorem [5, 6], much attention has been devoted to developing voting rules where manipulation is never in the best interest of the voters [4] or which are computationally too complex for the average bounded agent to be able to manipulate [1]. This focus on computational aspects of electoral methods is one of the hallmarks of modern studies on voting. But pursuit of these goals is not restricted to modern times: Those participating in elections in the Middle Ages also sought transparency, non-manipulability, honesty, and strategyproofness in so far as these properties can be consistently expressed in a single procedure. However, given the lack of computational sophistication in the Middle Ages, alternate approaches were needed in order to promote honesty, discourage strategizing, etc. These approaches can be classified as either external (constraints introduced outside of the electoral procedure, such as incentives for coming to consensus quickly) or internal (constraints introduced within the electoral procedure, such as voting rules which cannot be manipulated without adverse effects, or which are too difficult for the average bounded agent to manipulate). Surveying examples of both approaches in the context of medieval ecclesiastical and secular elections provides an interesting comparison to modern electoral procedures. Elections in the Middle Ages were used for the same reasons that they are today: To select suitable candidate(s) for a particular office, duty, or obligation. However, it is important to note that the term electio was used in the Middle Ages in a broader sense than our modern ‘election’. Its primary sense was ‘selection’ or ‘choice’, and only secondarily ‘election’ in the modern sense. Thus, many records which purportedly discuss elections are not discussing elections of the type which interests us. We can identify four categories of medieval electoral processes: (1) Election by an external authority having no direct interest in the election; (2) Indirect election, where electors name other electors who then select or elect the officials; (3) Election by lot; and (4) Election by ballot. Elections of the first and third types are generally computationally uninteresting; the first type corresponds to dictatorial voting rules, and the third type collapses to probability theory. In general, interesting voting methods are found only in the fourth type, election by ballot, though they can also occur in indirect election.