Economy of Italy Under Fascism - The Corporative Phase

The Corporative Phase

These legal and structural changes led into the second phase, the corporative phase, from 1927. The Labour Charter of 1927 confirmed the importance of private initiative in organising the economy, while still reserving the right for state intervention - most notably in the supposedly complete fascist control of worker hiring. In 1930 the National Council of Corporations was established, it was for representatives of all levels of the twenty-two key elements of the economy to meet and resolve problems. In practice it was an enormous bureaucracy of committees, that while consolidating the potential powers of the state resulted in a cumbersome and inefficient system of patronage and obstructionism. One consequence of the Council was that trade unions were removed from influence at all levels while the realities of private capital and ownership were, mostly, unaffected.

Government intervention in industry was very uneven, large programs started but with little overarching direction. Intervention began with the "Battle of the Grain" in 1925 when the government intervened following the poor harvest to subsidise domestic growers and limit foreign imports by increasing taxes. This reduced competition and created, or sustained, widespread inefficiencies. According to historian Denis Mack Smith (1981), "Success in this battle was... another illusory propaganda victory won at the expense of the Italian economy in general and consumers in particular" and "Those who gained were the owners of the Latifondia and the propertied classes in general... his policy conferred a heavy subsidy on the Latifondisti".

Larger programs began in the 1930s with the Bonifica Integrale land reclamation program (or so-called "Battle for Land"), which was employing over 78,000 people by 1933; the Mezzogiorno policies to modernise southern Italy and attack the Mafia - per capita income in the south was still 40% below that of the north; the electrification of the railways and similar transport programs; hydroelectrical projects; the chemical industry; automobiles; steel. There was also limited takeover of strategic areas, notably oil with the creation of AGIP.