owned large holdings in engineering, steel, ship-
yards and armaments. After 1945, it also inaugu-
rated public works programmes in the south, but
its most important contribution between 1945
and 1955 was the modernisation of the steel
industry, basic to the success of private industry,
which was complemented and supported by the
public sector. After a period of great inflation up
to 1947, the Italian governments’ fiscal policies
produced price stability until the 1960s, which
helped to create the right conditions for indus-
trial growth. State investment in housebuilding,
transport, railways and motorways, television and
telephones and agriculture fuelled that growth in
the 1950s. Through another holding company
the state also developed the huge gasfield in the
Po valley, and a petrochemical industry grew up.
Entry into the Common Market in 1957 as a
founding member was good for exports, Italy’s
most efficient industrial sectors in private hands
having been poised to take full advantage of the
removal of tariffs. The most successful of Italy’s
industrial giants was Fiat. Other Italian manufac-
turers became household names throughout
Western Europe: Olivetti, Pirelli, Snia Viscosa
and, in chemicals, Montecatini; their dynamic
managers made Italian cars, office machines,
domestic appliances, rubber products, textiles and
chemicals fully competitive with those of the rest
of the world. The increase in Italian production
from 1958 to 1963 reached a peak that came to
be called the ‘economic miracle’. But the growing
prosperity of the north contrasted with continued
stagnation in the south. The gulf of wealth and
poverty between Italy’s regions widened.
Industry’s easy years of expansion, profits and
high investments based on low wages came to an
end in 1963. For the ordinary people, however,
living standards continued rising in the 1960s;
with low unemployment rates the unions recov-
ered in strength. Wage rises now regularly out-
stripped productivity and the country began
to suffer again from a high rate of inflation.
Economic growth became erratic, the kind of
stop–go policies familiar in Britain as balance-of-
payment difficulties forced successive govern-
ments to tighten the economic reins in the
mid-1960s. Nevertheless, the 1960s, when judged
as a whole, still showed outstanding economic
growth when compared with the rest of Western
Europe. Italy held its own in the Common Market
and in world competition, with substantial exports
of cars, washing machines, refrigerators, typewrit-
ers, textiles, chemicals and consumer goods. A
flair for design, good marketing and managerial
skills kept the best of Italian industries abreast
with the best in Europe. Where Italy began to lose
out was in the new, less labour-intensive techno-
logical industries of the third industrial revolution.
Italians were in danger of being overtaken unless a
programme of modernisation was instituted. Like
Britain, Italy fell behind the world competition in
the 1970s. The south remained backward, with
employment and wages much worse than the
north, although successive governments made
large-scale investments. Public development funds
and regional reforms consistently failed to pro-
duce the hoped-for results.
The years 1968 and 1969 mark a watershed
between two decades of stability and steady
growth and a period of social, economic and
political impasse, conflicts and crises. In 1968, the
year of student revolt, youth challenged attitudes
and authority all over Western Europe. The new
generation in their twenties and thirties were no
longer content with what had been achieved since
the end of the war: their standard of comparison
was not with the depression of the 1930s or the
miseries of war and defeat. They had grown up
1
THE TRIBULATIONS AND SUCCESSES OF ITALIAN DEMOCRACY 553
Italy’s GNP growth and unemployment, 1951–74 (percentages)
1951–8 1959–63 1964–5 1966–70 1972–5
Growth of GNP 5.0 6.3 3.2 6.0 1.6
Unemployment 7.0 5.0 3.0 5.6 Northern Italy 2.5 (1972–6)
Southern Italy 5.0 (1972–6)
