The Great Recession and the Contradictions of Contemporary Capitalism

The Great Recession and the Contradictions of Contemporary Capitalism

New Directions in Modern Economics series

Edited by Riccardo Bellofiore and Giovanna Vertova

The current crisis is one of the great crises punctuating the long history of capitalism, and to be properly understood it is vital to take into account its ongoing structural transformation. This book offers plural perspectives on the Great Recession, placing the analysis of finance, class and gender at the center of the debate. It begins with a comprehensive insight into the crisis, before moving on to focus on debt, asset inflation and financial fragility. Following chapters discuss global imbalances, structural monetary reform and the management of public finance, including a investigation of the Italian experience. The book concludes with novel contributions on the gender dimension of the crisis and the analogies between a nuclear and financial chain reaction.

Chapter 10: Growth and crises in the Italian economy

Vittorio Valli

Subjects: economics and finance, money and banking, post-keynesian economics


The Italian economy faces a double crisis: a structural long-standing crisis (a relative economic decline) and the economic depression following the 2007–08 financial turmoil originating from the US sub-prime crisis. The two facts – the structural crisis and the recent severe economic and financial difficulties – are intimately inter-related. Thus, a short-term stabilization policy is not adequate to solve the problems, and may even, if badly conceived, worsen them. A crucial change in basic economic trends, a structural break, took place in Italy in 1973, when there was the first great energy crisis and a deepening of the decline of the ‘Fordist model of growth’ (on this concept, see Valli 2010a). As Table 10.1 shows, in the 1973–2012 period the rates of growth of population, real GDP, per capita GDP and real investment sharply decreased. Population growth strongly decelerated and the low annual rate of growth of population (1 0.3) was almost completely due to net immigration. While in the first period (1951–73) Italy had been a net emigration country, in the years 1973–2012 it has become a net-immigration country. Moreover, while in the 1951–73 period in Italy real GDP, real per capita GDP and real investment grew faster than in most other industrialized countries, from 1973 onwards they grew much less, and their decline was intensified in the 1990s and the 2000s (Table 10.2). As Table 10.2 and Table 10A.1 of the appendix show, in Italy the recent crisis has been particularly severe.

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