Visiting Economist Sees Crisis In Collapse of Italian Regime

Political troubles in Britain, Germany, and Israel may have diverted public attention from Italian attempts to forge a new government.

But from his office at Harvard's Center for West European Studies, Romano Prodi, the visiting lecturer on Italian Civilization who is delivering this spring's Lawro de Bosis Lectures on "Post-War Italian Economy," watched the developments in his native country.

After a dispute over anti-inflation policies, Italy's ruling four-party coalition collapsed Saturday and Italian party leaders are now negotiating the formation of what will be Italy's 37th government in 27 years.

Prodi, who is professor of economics at the University of Bologna, insists that this time, the fall of his country's regime represents a formidable crisis with possible revolutionary implications.

"The world is so used to weakness in Italian politics that when a government falls it is not news. But we are faced now with a real crisis and the press should know this," Prodi said Tuesday.

For the first time, the Italian Communist Party will figure in government policy and inflation threatens to create a "crisis of democracy," Prodi said.

"I don't give much weight to the problems of the collapse of the government, but the crisis facing the new government is different from any crisis of the past," he said.

To curb inflation, Prodi said, the government requires support of the labor unions which have strong Communist ties. This link has given the Communist Party a strong bargaining position.

Despite their control of 30 per cent of the popular vote, the Communists have been kept out of government coalitions in post-war Italy, Prodi said. "Over the years, the Communist Party has been too strong to be out of the government and too weak to be in it. It's a sort of paradox."

"Future policy will have to be such that Communists won't oppose it heavily," he said. "There will probably be no Communists in the new coalition, but it will have more influence than ever before."

Prodi says he is convinced that with a "clear economic policy," thus far prevented by tenuous coalitions, the government can solve mounting problems of capital outflow and 15 per cent annual inflation.

Should economic problems continue to grip the nation, the current crisis could result in revolution and this is a primary concern for Prodi. However, after economic stresses subside, Italy faces "a challenge no other countries have" in controlling the social unrest which accompanies inflation, he said.

"Italy is the only West European nation where factory owners and workers are of the same nationality. In other countries the humblest workers are foreigners; in Italy they are Italians," Prodi said.

"In other countries, worker dissatisfaction is handled by revoking visas of foreign laborers, but in Italy this is not possible and we face an internal solution," he says.

"Italy has a homogeneous labor market. There is no dual market of the kind found in Germany or France--there is no division of foreign workers and native workers."