Exploring Italy’s material constitution.
Last week I did a new piece on the current political situation in Italy for Foreign Policy. Will Mario Draghi make a bid to take the office of Italian President? If so what would be the implications for Italy and for Europe?
It is an update to the piece I did for FP a year ago, comparing Yellen and Draghi’s roles as managers of the modern economy.
There is always a good reason to come back to Italy. The most important one, that should never go unmentioned, is that Italy is lovely. Plus, thanks to Dana I get to spend time there. The more academic and political reason is that Italy is pivotal to the future of the Eurozone.
Italy’s $2.9 trillion in debts are the critical issue. How Italy and Europe manage that pile of obligations, raises important questions in the relationship between politics and economics in Europe and in capitalist democracies in general.
Since the late 19th century Italy has been one of the laboratories for working out the tense relationship between capitalism and democracy. Not for nothing it has generated a fascinating tradition of thinking about political theory, jurisprudence and political economy. Italy was an important part of the narrative of the crisis of liberalism in the early 20th century that I developed in my book Deluge. The collapse of liberal crisis-management into fascism in 1922 should haunt us all. This year, as my colleague Angelo Caglioti recently reminded me, is the centenary of Mussolini’s March on Rome.
In the wake of the disastrous world war, after two decades of rapid postwar growth, from the late 1960s to 1992 Italy underwent a convulsive upheaval in its political economy, the echoes of which are still with us today. The senior figures on the current Italian political scene – most notably Mario Draghi, President Sergio Mattarella and Silvio Berlusconi – are veterans of that era. If in the US, economic policy discourse still could be said to revolve around the consequences of the Volcker shock of 1979, in Italy politics still refers to the crisis of 1992. In that extraordinary year a corruption crisis swept away much of the old political class, a financial crisis rocked the Italian state, and the centrist elite (including Draghi and Mattarella) committed itself to tying Italy to the Franco-German vision of the EU organized around a common currency.
I don’t, in this issue of the newsletter, want to put economic analysis at the center. But we would not be having this conversation if Italy’s growth had met the expectations of the centrists who made their wager on the euro from the 1990s onwards. Instead, and it cannot be repeated too often, Italy’s GDP per capita has stagnated in a dramatic fashion.
Unsurprisingly perhaps, governing a society experiencing this kind of stagnation under democratic conditions is not easy. It leaves Italians, in public and private, looking for answers and ways out of the impasse.
How much growth does Italy really need? I don’t want to engage in the degrowth debate here. But Italy is also interesting from that aspect. By most reasonable criteria, despite this stagnation in gdp per capita, the standard of living in Italy for a large majority of the population is very attractive, enviable indeed. Behind a rawlsian veil of ignorance, would you pick a “success story” like the United States over Italy? But Italians compare themselves not with the US but with Germany and France. They combine the benefits of a welfare state and functioning community life with much higher growth. The sense of being left behind by others is painful. Italy’s corporations have lost ground in the global competitive race. And comparison with others aside, it is obvious that Italy could do so much better. There are very real deficits of an institutional kind, in technical modernization, not to mention the future problems of the climate, energy transition etc. What Italy needs is not brute-force growth at any price, but faster, “smart” growth, reform of institutions to improve everyday life, above all in the legal system and state administration, and a major investment in its education system, which currently fails far too many young Italians.
If Italy cannot achieve an acceleration in growth, what it faces is relative decline, bitter zero-sum domestic struggles over a fixed cake, the stunting of the life chances of entire cohorts of young people and, in the event that financial markets start to sell off Italy’s government deb, the very real possibility of an acute financial crisis. The question of Italian spreads relative to Bunds is already back on the European agenda.
This isn’t a matter of “economic laws” or “financial gravity”. If Italy had a sovereign national central bank, or if the ECB had a different mandate there would be little immediate reason for panic. Even with the current monetary constitution, the arrangement can be managed, if Rome acts and talks in a cooperative fashion, if there is a bit of creativity in the legal department of the ECB, if the other national governments play along and if Germany’s Constitutional Court bites its tongue. But that is a lot of “ifs” and $2.9 trillion is a lot of debt.
All this means that Italian politics demands our attention and it rewards that attention with a rich and fascinating debate (as thanks to google translate one can glimpse even without Italian).
How can Italy be steered through the rapids and set on a more positive course of development? Since this is a hard task for elected politicians, five times in recent decades the job of Prime Minister has been handed to a non-parliamentary figure.
The most recent parachutist is Mario Draghi, recently retired from the ECB. He took office in January 2021 to oversee the spending of the NextGen EU package. This allocates over 200 billion Euro to Italy in grants and credits. This, if you like, is Europe’s gamble on using investment to accelerate Italian growth.
After one year, the question has arisen of whether Mario Draghi should remain as Prime Minister for a limited term that expires in 2023 at the latest, or gamble on his elevation to the Presidency, which would keep him in power for seven more years. The selection process begins on January 24. I go into the political calculations in the Foreign Policy piece. For a timely review of the constitutional issues, see Carlo Fusaro’s piece here.
Those who favor a move by Draghi to the Presidency do so either on optimistic grounds (missions accomplished as PM) or, more commonly, on the pessimistic grounds that Italy needs a powerful, authoritative check on its disorderly and populist parliament. That is the scenario that I want to explore further here.
The idea is that if Draghi were made President, in the event of a right-wing populist electoral breakthrough, he would have the authority to resist a government that embarked on an aggressive nationalist course that put Italy’s euro membership in doubt, thus risking a devastating sovereign debt crisis that through its entanglement with the Italian banking system would spill over into a banking crisis. For Europe this doom-loop is ominous. An Italian crisis was the nightmare that hung over Europe during the eurozone crisis of 2010-2012. Unlike Greece, Italy is both too big to fail and too big to bail. “Whatever it takes”, it must not be allowed to enter crisis.
Given the powers provided to the Italian President by the postwar constitution, Draghi could curb a dangerous government in various ways. He could veto legislation or particularly dangerous ministerial appointments. He can maneuver with the government’s enemies in parliament and, in the last instance, dismiss the Prime Minister and call new elections. None of this is science-fiction. These are the kind of tools that were deployed against Berlusconi in 2011 by then President Napolitano and more recently and relevantly by Mattarella against 5Star and the Northern League after their election victory in 2018. In particular, Mattarella intervened to veto the nomination of the euroskeptic economist Paolo Savona as Minister for the Economy by the League. When that stalled negotiations, Mattarella proposed the economist Carlo Cottarelli, ex of the IMF, as a safe pair of hands. Instead, the 5star came up with Conte, their own safe pair of hands. In 2019 Conte would form the pivot around which the government was reshuffled, the Lega bounced itself out and the “center left” DP was brought back into power. The DP and 5Star provide the mainstay of Draghi’s support today.
In 2018 Dana and I were in Italy and I did a blogpost on the events in real time. Blast from the past!
How should one interpret this Presidential intervention in 2018 and what implications might it have for a future Draghi Presidency?
In researching the latest article for FP I was excited to (re)discover the very interesting constitutional theory debates that unfolded in 2018 on the pages of the indispensable Verfassungsblog – some in German but much in English and it is really great – around the Presidential intervention and what it meant. It is worth emphasizing that the 2018 situation was dramatic. Bond markets were seriously worried. We are very far from that situation today. But 2018 is the closest thing we have to an experiment of the Draghi scenario envisioned for the future.
Was President Mattarella’s intervention legal and legitimate? What does it mean for European constitutionalism? How might one imagine this spinning forward in 2022 and beyond with Draghi as president?
The debate in 2018 was fierce. The leader of the Five Star Movement, called for President Mattarella to be impeached under Article 90 of the Italian Constitution, for «high treason or violation of the Constitution. Clearly, if you engage in this kind of heavy-duty intervention you have to have a politician’s thick skin. There isn’t much in Draghi’s track record to tell us, one way or the other, whether that is part of his character. So far, the applause has been so universal that he has hardly been tested.
More substantively the critics alleged that Mattarella’s veto on Savona was a classic case of European financial imperatives curbing national democratic politics. In a phrase coined by the German constitutional judge and theorist Dieter Grimm, it was a case of over-constitutionalization. Marco Dani and Agustin José Menendez argued that
“this episode is revealing of the democratic limits of the European constitutional architecture and institutional culture. Following Dieter Grimm, we claim that the events here analysed reveal the extent to which the EU legal framework is overconstitutionalised and the democratic costs and risks inherent in this legal and political order.”
In effect Mattarella was repressing debate in the name of unspoken constitutional principles that Italians could have any government they wanted except one that challenged the imperatives of eurozone membership.
As Dieter Grimm had observed about European law,
as interpreted by the European Court of Justice and, we would add, as practiced in the context of the European economic government, ties with the golden fetters of the euro the hands of national governments, rendering hopeless the task of removing the obstacles to the realization of substantive equality, as required by the Italian (and other) constitutions. It seems to us that Mattarella’s decision only starts to make sense if one adds a fundamental piece to the constitutional equation, namely a form of “convention” (functionally equivalent to a constitutional convention) according to which political parties or coalitions that are critical of the existing economic and monetary arrangements within the Eurozone cannot get into government. Or, more accurately, they are entitled to govern in a tamed form … Such a convention could be said to be a renovated form of “pactum ad excludendum”, only this time it would not be the communists, but those daring to be critical of European economic govermment arrangements that would have to be prevented from holding power.
This is a powerful critique, but it did not go unanswered. The defenders of the President argued that he was fully within his rights. The Italian constitution provides for the President to be an active force, not merely a tool of the Prime Ministers will. The constitution always foresaw precisely such action. Furthermore, one should not fall too easily for the rhetoric of popular or national sovereignty as opposed to elite-European rule. As Massimo Fichera commented Italy was playing out a (fictional dialectics):
“The people” suggest a simple, quick way out of complexity. “The elite”, instead, appear aloof and untrustworthy. Democracy, according to this dialectics, can only be protected by pleasing the former – never mind that “the people” is often a smokescreen, hiding concrete plans and targets identified by concrete individuals.
In 2018 the concrete individuals enacting the drama were all too evident, with Matteo Salvini of the League being seen as the main actor in the drama. And this was the nub of Mattarella’s action. As Diletta Tega and Michele Massa argued in their defense of Mattarella, a key defense of the President’s position was that the appointment of an openly euroskeptic government would precipitate a crisis that would forestall a serious debate about Italy’s European options.
participation in the Euro and the EU are fundamental choices and they must be given open and serious consideration, whereas they have not been at the forefront of the Italian political elections of March 2018.
As President Mattarella stated in justifying his decision to block Savona,
“The decision of joining the Euro is of key importance for the prospects of our Country and of our youth: if we want to discuss it, we have to do so openly and after a serious in-depth analysis. Also because it is an issue that was not brought up during our recent election campaign”.
According to his defenders, Mattarella did not deny the possibility of exiting the eurozone or flaunting its formal rules and the cooperative tissue that holds it together. But it was important to be clear about the gravity of the choice. The pressures generated by eurozone membership are due to deep and real entanglements. Nor is Italy’s entanglement a matter of fate. It cannot be blamed on anonymous forces like globalization. It was chosen. Now the logic of European integration is working itself out. As Fichera argued in a second blog post this has always had a compulsive logic based around the threat of crisis and the promise of security.
the reasons behind Mattarella’s decision are deeply linked with the “security of the European project”, a rationale which has been a constant feature of European integration. …. the President’s intervention is in line with the constant trend of the material constitution towards an ever-stronger role of the Head of State. ….
Casting off, or promising to cast off from this deeply entrenched security project is conceivable, but it will come at a huge costs and reverse a long-standing development of the practices of government. There is no denying, Fichera insists, the process that is underway. The critics of Mattarella’s choice
… correctly emphasise(s) the worrying tension between freedom and coercion, which can be detected in EU constitutional law. Although the Italian crisis was a matter of domestic constitutional law, it inevitably affects the EU legal and political framework, because of the commitment towards the European project, which is enshrined in the Italian Constitution (Articles 11 and 117). As recently argued by some Italian scholars when commenting on the appointment of the Monti government (above all Antonio Ruggeri), the persistent state of crisis might have modified some of the traditional theoretical categories employed to describe the “constitutional State”, to the extent that governments would now have to seek not only a formal vote of confidence from Parliament, but also an informal vote from the EU and the financial markets.
The tension between freedom and coercion is here particularly visible and is expressed by what I (Fichera) call the “security of the European project”, a meta-constitutional rationale which has been historically developing through discursive practices detectable both at the national and the EU level. As EU integration reaches a more advanced stage, its conflictual elements, which have been previously concealed, come to the surface- and, together with them, all the contradictions that affect the EU liberal model. Security is thus both the presupposition of, and a threat to, the project of European integration and such feature can be observed not only as regards the financial and economic crisis, but also in relation to the refugee crisis, the constitutional identity crisis, the rule of law crisis and Brexit.
Fichera concluded by demanding more debate.
Crisis and security are intertwined and mutually reinforced concepts. However, when crisis turns into a permanent condition and security becomes self-referential, the premises and foundations of a polity are themselves questioned. To be sure, precisely the contradictions and conflicts are an inherent feature of constitutionalism. They have been ignored for too long. It is now time to address them through an open and public debate, keeping in mind the risk of “over-constitutionalisation” both at the EU and at the domestic level.
But, where would that debate go. What follows if we “address” the tensions and contradictions and what implications might this have for a new era under a Draghi Presidency?
I take the drift of the apologists for Mattarella’s intervention to be one of realism. Let us recognize the scale and implication of our entanglement, including its compelling aspects. Let us not indulge in sovereigntist illusions. If you want to have a debate about leaving the euro, do so openly and face the full consequences. You will almost certainly conclude, as Syriza did that the risks are too high. Indeed, you may find that open debate itself is expensive. The markets don’t appreciate it. But that does not imply passive acceptance of the status quo. Certainly not after the shock of 2020.
On Draghi’s watch a raft of new proposals are already emerging as to modifications of the Stability and Growth Pact. Draghi has struck up a relationship with Macron to push for a fiscal settlement that enables investment to go ahead. It remains to be seen whether the Germans will bite. Rather than digging into technical details I want to continue to follow the path of legal theory that was opened up in 2018.
Aside from the indignation aroused by Mattarella’s intervention in 2018, what is the level at which we should appropriately analyse the process of political construction that is going on in Europe and playing out at the national level? In the LRB recently Perry Anderson made Luuk van Middelaar’s work into the anchor for a gigantic review of the European scene. For Middelaar finding a realistic language and conceptual basis for analysing Europe is the central challenge and this is presumably also his appeal to Anderson. There is nothing Anderson appreciates more than a bracing whiff of realism.
In the debate about the Italian crisis in 2018 one of the key moves made by Fichera is to argue that we should not get bogged down – for or against – in matters of textual interpretation of the Italian constitution. What needs to be recognized is the de facto development of what he calls the “material constitution”. He doesnt elaborate on his meaning, focusing instead on the rather ethereal meta-discursive frame of security. For a somewhat more substantial discussion of the material constitution, one can turn to Michael A. Wilkinson and Macro Goldoni. See also their Modern Law Review paper.
These are very rich interventions with a fascinating discussion of two interwar theorists of the law and the state who should be much better known. Hermann Heller and Constantino Mortati. But it is their analytical framework I want to focus on here.
What is the material context of constitutional order? The purpose of this paper is to offer an answer to that question by sketching a theory of the material constitution. Distinguishing it from related approaches, in particular sociological constitutionalism, Marxist constitutionalism, and political jurisprudence, the paper outlines the basic elements of the material constitution, specifying its four ordering factors. These are political unity, the dominant form of which remains the modern nation-state; a set of institutions, including but not limited to formal governmental branches such as courts, parliaments, executives, administrations; a network of social relations, including class interests and social movements, and a set of fundamental political objectives (or teloi). These factors provide the material substance and internal dynamic of the process of constitutional ordering. They are not external to the constitution but are a feature of juristic knowledge, standing in internal relation and tension with the formal constitution. Because these ordering factors are multiple, and in conflict with one another, there is no single determining factor of constitutional development. Neither is order as such guaranteed. The conflict that characterizes the modern human condition might but need not be internalised by the process of constitutional ordering. The theory of the material constitution offers an account of the basic elements of this process as well as its internal dynamic.
Abstract at this sounds – and this is the abstract of the paper – the idea of defining the “material constitution” of Italy and its relationship with Europe in terms of these four distinct dimensions – the grounds of political unity, institutions, social relations and the common purpose – is, in fact, extremely useful.
As for the grounds of political unity, you could say that Europe-Italy is in something of a counterflow. On the one hand in the wake of COVID, the notion of a community of fate at the European level is stronger than ever before. This is a phrase that Middelaar has picked up from the German usage. On the other hand in Italy it is also worth stressing that the particular parties that monopolize the integralist language of unity, are the far right. In particular Meloni’s post-fascist Fratelli d’Italia are now a real threat. Unity is a poisoned chalice.
Crisis management in 2020-2021 involved clear institutional development and it is for that reason that Draghi matters. Next Gen EU is a huge institutional step forward. In a classic institutionalist mode, Italy and France have announced their intention to insist on it as a precedent for further action. No less significant is the institutional autonomy again displayed by the ECB in responding to the COVID crisis and the ongoing recovery process. This is where Draghi is pivotal, as a representative of Italy and key institutional player. The independent reality of these institutional structures is not reducible to the sheer quantity of resources they can mobilize. In the worst case scenario of an escalating debt crisis, institutional and legal issues will come back to the fore with a vengeance.
A key element of any constitution, as Wilkinson and Goldoni insist, is its purpose. Polities are wedded to purposes and thus, in the modern conception, to history. This is particularly true for the EU. As Middelaar has also noted, the EU is compulsively attached to a telos, a future goal, “ever closer union” is an end in itself. This cannot be dismissed as mere self-serving ideology. It is crucial to motivating action. Again, since 2018 Europe has lurched towards a redefinition of its purpose and in this respect too, NextGen EU matters, beyond the numbers and the institutional structures. It defines a purpose of collective green modernization. The significance of that project can now be judged against the Biden Presidency’s stranded project of Build Back Better and the huge hole that has torn in the Democrats’ agenda.
But this leaves the fourth facet, social relations. The basic question remains, is there any prospect of the socio-economic structure of Italy shifting, so as to enable an escape from the fiscal impasse? And with this, we are back to “economics”, which we will think of here not as a naive expression of “underlying” social relations but, in complex ways as their correlate.
The pessimists will say that the structures are entrenched and heavy and hard to move. You can’t accelerate Italy’s growth with a sprinkle of Draghi’s fairy dust and a bit of administrative reform. See this critical write-up of the Draghi project by Thomas Fazi and Paolo Cornetti. On Italy’s organic crisis, see also this piece by Fazi. And this remarkable write-up, also by Fazi, on the eternal return of technocratic government in Italy. In a short piece on the 2018 crisis, Wilkinson takes up Fazi’s concept of an organic crisis.
The substance is, in fact, not in dispute. In communication with the IMF the Italian government has put the maximum growth effect of Next Gen EU, at less than 1 percent. That is a step in the right direction, but hardly a national take off. But growth rates are not the only crucial issue. Precisely in light of the four-dimensional definition of Italy’s situation inspired by Wilkinson and Goldoni’s definition of the “material constitution”, a surge in actual growth is only one facet of a stabilization of Italy’s situation. Indeed, even in the realm of the economic, growth aside, the mesh of social relations that hold Italy in Europe, is thick and complex and resistant to radical crisis.
If crisis management is the key, then it may not be Draghi’s person, but in the end social relations that provide the critical check. The key figure here may be Draghi’s development minister Giancarlo Giorgetti, who represents business interests within the nationalist Lega. He may provide an internal check on the radicalization of any future right-wing government. There is simply too much at stake to allow a full blown crisis scenario to unfold. And this logic applies not just to Italy nationally. When it comes to Italian debt, in the end things move, solutions are found, because the threat of a crisis is simply too extreme.
Going back to 2018 evokes dark nightmares. We are far from any such situation in 2022. Though Italian yields have nudged up, they are far below critical levels. The mood between Rome, Berlin and Paris is good. There is no prospect of an imminent escalation. But there is a reason that the question of Draghi’s Presidency matters. The fact of Italy’s debt to GDP level of 155 percent remains, as does the fact of Italy’s economic stagnation. At the very least, one can agree with Fazi et al, that the question has not been conjured off the table.
In the mean time, I’m frankly delighted to have stumbled into the legal theory literature. There is a huge amount to dig into here. By way of theorists like Heller and Mortati it forms an organic link between the crises of the interwar period and the present. Both Fichera and Wilkinson have recent books out that merit more attention. In The Foundations of the EU as a Polity Massimo Fichera elaborates on his idea that “European constitutionalism has been informed from its earliest stages by a meta-rationale, which is expressed by security and fundamental rights as discourses of power.” Wilkinson’s book on Europe and authoritarian liberalism appeared last August with OUP. I’m really looking forward to getting into it.
In the mean time, I’ve done a review of van Middelaar’s Pandemonium which should be appearing in New Statesman at the end of the month. It is a much shorter piece than Anderson’s but, I think, addresses a huge blindspot in both Middelaar and Anderson’s reading of the contemporary European scene – a blindspot the size of the climate. Watch this space.
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What does the formation of this new cabinet mean within the frame of the Italian form of government as dictated by the 1948 Constitution?
In fact the birth of the Draghi’s government has aroused some debate among constitutionalists, in particular between those who wanted to see in it a sort of healthy ‚return to the Constitution‘ (as if it were possible and appropriate to downsize if not exclude political parties from the function of government) and those who saw in it the umpteenth sign of the system’s difficulties. According to the former, not only has the new government been created in full compliance with constitutional rules, which is absolutely true, but it is also a clear application of what the Constitution provides for. According to the others, however, the sixth government led by a non-parliamentarian, the fourth one actually suggested if not imposed by the head of state (after Ciampi, Dini and Monti), is a clear demonstration of a more and more inadequate regime.