Commenti disabilitati su THE DISMANTLING OF THE SOCIAL STATE – or of the Anglo-Saxon Welfare State – AND MONETARIST NEOLIBERAL POLICIES, SEEN FROM THE ANGLE OF THE LABOR CONTRACT, October 4, 2016 – April 9, 2020.

This contribution was presented during the Conference promoted by the Secretary of the FIOM Calabria, Massimo Covello. It was held on October 8, 2016 in the ex Franciscan convent of Pedace, in the Cosenza area, For the original text in Italian see:

Premise: The Battle of Ideas is just as important as labor union or political struggle. It is part of the class struggle. It makes a big difference whether the information is collected and articulated in the form of programs by storytellers, with or without a “Nobel Prize” in economics, or whether it is collected and articulated in a scientific way. Marxism is scientific or else it does not exist and vice versa. It allows the proletariat to think for itself in the common interest. Science, unlike narratives, is founded on the equality of all interlocutors. Starting from the concrete, that is the labor contract, we propose here a definitive critique of the dominant bourgeois paradigm in the matter of modern industrial and social relations and trade union democracy.
The economic basis of this essay is found in the
Synopsis of Marxist Political Economy in the Livres-Books section of the website )

To understand the evolution of capitalist society and its epochs of historical redistribution, it is important to understand the evolution of the labor contract and that of productivity, that is, the ability to produce more goods and services during the same labor time but with fewer employees.

The fundamental question then becomes: how to absorb the labor force “freed” by increasing productivity?

With the Welfare State, this was done by sharing the benefits of productivity between capital and labor, and thanks to the introduction of new sectors as well as new labor-intensive intermediary sectors such as automobile and transport, household appliances, aeronautics, etc. They were driving sectors in the sense that they were dependent on other sectors for their supplies, and because they needed large supply chains.

Today the benefits of productivity gains are no longer shared. According to the data from the OECD 2012, the part of the total added value going to labor decreased by 9% between 1990 and 2005. In Italy, it now stops around 55% of the total. (In the USA productivity are no longer shared since the neoliberal monetarist counter-revolution unleashed in 1979-1982, see « The socio-economic consequences of MM. Volcker-Ragan and Co » March 1985, in )

The new sectors are increasingly capital intensive so that labor absorption is no longer as efficient as before. In the second quarter of 2016, according to ISTAT, the labor rate in Italy was 57.3% – it still remains close to 80% in Northern European countries. In Calabria, the labor rate is 39.8% – that is, 50.6% for men and 29.3% for women. Except that ISTAT gives the statistics in an unclear fashion; apart from the methodological question of the interviews done to gather the data, it routinely uses the 15-64 age group and at other times the 15 and over, while today the retirement age is already set at 66 years and 7 months.

According to a recent Davos World Forum study entitled “The Future of Jobs” between 2015 and 2020, the 15 most important OECD countries will suffer a net loss of 5 million jobs, that is minus 7.1 million and plus 2.1 million. All prospective studies confirm the trend albeit with different estimates. For example in 2013, Carl Frey and Michael Osborne for the Oxford University estimated the potential job loss due to robotization and algorithms at 47% of the total labor force in the United States. In a 2016 study, MIT’s Andrew McAfee and Erik Brynjolfesson estimate the loss to 9% for the 21 OECD countries, which still means over 2 million jobs lost for France and almost the same number for Italy. (I)

Soon the key question will become: if basically 20% or 30% of the active population will be enough to produce everything there is to produce, what to do with the remaining 80% or 70%? This is not a matter of science fiction: In Calabria the issue is already of immediate relevance.

There are only two solutions:

A) To return to active economic and labor policies and to divide the socially available labor among all the citizens apt to work as the “gauche plurielle” did with great success in France when it introduced the 35-hour working week. In this context, it is also necessary to return to the secular trend of lowering the retirement age, especially for the more strenuous jobs, and to increase holidays, inaugurating a republic of dignified work and free time. This would allow the return to the system in which social insurance was experienced as a fundamental social right enshrined in the very first articles of the Constitution. (Added: It is also upheld by the Universal Declaration of Social and Individual Fundamental Rights of 1948. )

B) Or share the growing poverty among the popular masses, once again conceived as dangerous classes, in a planned “return” to the obscurantism of a society of the new domesticity and of the new wage slavery – for instance with the regressive and privatizing reform of public education euphemistically known as Buona scuola, with translation into Italian of the US crusaders’ Patriot Act, with the Jobs Act, the unworthy ISE which set the threshold to obtain constitutionally enshrined social assistance but which is unbelievably set at 3000 euros a year for a family,  etc. In this context, charity and stigmatizing and often confessional social assistance dominate. Unfortunately Italy – “once again” as in the 20s and 30s – manages to rank itself at the forefront of this regressive process. (Added: With an ISE so low the State in effect becomes the major supplier of the lavoro nero or illegal work market, but no one cares … this means an 10 to 12 hour day of work without any rights and any security for an average of 20 to 30 euros … )

It is a process of neoliberal monetarist dismantling of the Welfare State and of the Constitution, born of the Resistance, which entails the dismantling of all the democratic popular conquests won since the post-WW II period.

After describing the emergence and consolidation of the Welfare State, I will describe those unfolding under the current neoliberal monetarist Minimum State, focusing on the evolution of the labor contract.

In conclusion, we will see how this neoliberal monetarist era desperately tries to save its skin from the inevitable decline by sanctuarizing its narratives and its anti-economic rules in a proposed constitutional counter-reform. It does so according to the wishes of the strong domestic and international powers-that-be. These are emblematically represented by Yoram Gutgeld, an Israeli-Italian, the current Scissors Doctor of the Spending review and author of the PD program of the unelected Renzi, and by Filippo Taddei, borrowed from the American John Hopkins of Bologna. During the Cold War, this institution located in the heart of Red Italy also had other duties. If Gutgeld must forever remain famous for asking: what is the difference between an open-ended or part-time contract and a fixed-term or full-labor contract with unfettered dismissal, Taddei participated in the translation into Italian of Jean Tirole’s single contract – contrat unique – in the already failed Jobs Act.

Let’s start with the emergence and consolidation of the Welfare State seen from the angle of the labor contract and the development of modern industrial relations.

The labor contract is the fundamental basis of the whole socio-economic micro and macroeconomic structure of any Social Formation, and it reflects its coherence as well as its form of insertion within the Capitalist World Economy.

The scientific function of production, i.e. the immediate production process, written c + v + pv = p, comprises 4 terms:

1) « c », constant capital – machines, organization of production.
2) « v » means variable capital – that is, the labor force.
3) « pv », the profit or surplus value.
4) « p » means the product – goods or services.

With Adam Smith, the father of Classical Political Economy, the production function, rightly based on the crucial attribute of human labor as the sole creator of exchange value, was limited to three terms, namely: capital + labor = product, so that the genesis of profit could not be explained. Smith recognized it himself with great honesty in his major work by writing that «  the capitalist loves to reap where he never sowed. » (Wealth of nations, Sutherland ed. 1993, p 47)

Profit cannot come from the abstinence of the owner of the Means of production or MP – e.g. Max Weber’s Protestant Ethics etc. Nor can it come from the capitalist’s risk taking, an inorganic process, naturally evanescent given the competition, and in any case one that would be eliminated by the resulting price inflation.

The profit comes from the exploitation of the labor force: in fact, with the labor contract, the owner of capital legally acquires the right to make the worker work for a given time in given conditions, say 8 hours a day. If during this time 4 hours are enough to buy all the goods and services necessary for the reconstitution of the mental and physical forces of the worker, the product of the additional 4 hours, or overwork, will be pocketed by the owner of the Means of production as a profit.

Therefore, the labor contract contains all the organic logic of the system and its class struggles for the division of the product of overwork between capital and labor.

But the story does not end here:

The fact is that the worker belongs to a sexually reproduced species. It is not enough for him to reproduce her/himself as a work force available to the owner of MP to be able to start another day of work. S/het must also reproduce as a working class, that is, as a member of the proletariat, in the heart of an household of different sizes, and therefore with different needs. (On the civil liberty aspect of this species character see my essay « Mariage, unions civiles et institutionnalisation des moeurs. » in the Pink Section of my old Jurassic site )

All the class struggles, all the political battles for the sharing of the socially available surplus between capitalist profit and labor income find their origin here.

We can summarize the situation with the concept of « global net revenue » of the household – not to be confused with the inadequate and restrictive Marginalist « disposable income ». It includes:

a ) the individual capitalist wage
b ) the deferred wage – that is, mainly the public social safety nets and the pensions financed by contributions levied on the gross paycheck. This vital part is mostly absent from the Marginalist disposable income. Yet your net paycheck goes much further if you do not need to worry about medical visits or getting an appendicitis. Check the 1972 hilarious movie with Peter Sellers « Where does it hurt? ».
c ) the transfers of resources to households in the form of universal access to social programs and public infrastructures. Which sends one back to the fiscal policy of the State.

Contrary to what bourgeois economic theory claims in all its nuances since JB Say and Léon Walras, the worker is not a production factor like any other and cannot be liquefied in monetary form and exchanged with a simple click on a global scale. In addition, precariousness does not favor the attractiveness of Social Formation as the current Ministry of Economy and Finance seems to believe when he boasts the advantages of low Italian labor costs to foreign investors. From Alfred Marshall to modern theories of technopoles everyone knows that the location factors of companies are quite different, being linked to micro-economic productivity and macro-economic competitiveness, as well as to the cultural and landscape environment of the regions and countries considered. The efficient connection of the unrivalled Big Containers Maritime Hub of Gioia Tauro located close to the magnificent and antic Reggio Calabria Metropolis to the new Saint Gotthard Tunnel would be much more useful.

In addition to having to reproduce within a household, the worker does not work just to please the Owner of MP, he works to live. In his major work The Great Transformation, Karl Polanyi spoke of « livelihood » a concept he used to criticize the cold tendency of capital to reify and de-socialize – indeed to dehumanize – the worker. For this reason, he forged the concept of « disembedding ».

As a human being, with his right to work, the worker must be able to raise and educate his children and to protect himself and his family against disabilities caused by periods of inactivity due to reasons beyond his control – accidents at work (a real massacres in Italy with on average 4 daily deaths), illness, old age, economic crises etc. (American citizens might be acquainted with the CIO unions’ rallying cry in the 1930s and 1940-50s demanding social safety nets for unemployment periods due to « no fault of our own » ) 

His personal interest lies in the increase, in addition to the purchasing power of his individual salary, of the two other components of the « global net revenue ».

On the contrary, the capitalist, as an individual and as a social class, would always like to reduce the worker ‘s income to the individual wage only; this is because he considers the worker as any other commodity, hence as a cost to minimize. At best, he does so by increasing the real productivity of his business. But often this demanding process – investment and R&D – is accomplished by substituting the simple cost of labor for the cost of production, although only the latter is crucial to ensure survival against competition in the medium and long term.

The capitalist believes that capitalist supply creates the necessary demand, in other words he believes that when there is a need to be satisfied, the market can satisfy it. In reality, the capitalist system satisfies only solvent needs; this explains why, when they are not taken over by the State, essential social needs are ignored despite the huge capitalist waste, one which does not concern only the hyper-development of the luxury sector. When social services are privatized, the user becomes a mere customer worthy of attention only if s/he is able to pay. On the contrary, already in his Parisian Manuscript of 1844 and then in the Equations of Simple and Enlarged Reproduction in Book II of Capital, Marx analyzed the “social demand” necessary for the harmonious reproduction of the system. H Ford understood that, in order to mass-produce his cars, his workers had to be able to buy them. But then, he was an exception. Too often when one speaks lightly of the « end of Fordism » – that sends one back to the reproduction aspect – this is confused with Taylorism, which refers to the technical search for the greatest productivity in the immediate production process.

On the labor side, this evolution of the labor contract did correspond to the development of modern industrial relations and trade union democracy, in accordance with the cardinal principles of the 1948 Italian Constitution – right to work, national solidarity, trade union rights, etc. -, with its mixed economy character – Art. 41 – and with Article 99 which established the CNEL, i.e. the institutionalization of social negotiation and collective bargaining with the aim of supporting strategic planning, or the intervention of the State in the economic sphere in view of favoring a more or less harmonious dynamic equilibrium.

If, already in the 1920s – and even before with Bismarck grappling with the powerful German Marxist social democracy – Lord Beveridge had conceived the rights of labor as fundamental human social rights and, at the same time, as useful socio-economic shock absorbers in time of crisis, in the 1930s the bourgeoisie began to understand the consequences of the concentration and centralization of capital.

For example, already in 1920s Gardiner Means, a theorist destined to influence the American New Deal, described what he called the Big Corporations. (Years earlier, Hobson, Hilferding and Lenin had already analyzed the emergence of financial capital …) Thus, the realization of the overwhelming power of financial capital, so different in its behavior from the corner grocers and butchers, the proverbial players of perfect classical competition and its political liberalism, forced the bourgeoisie to theorize the need for counterweights to save the system from its own “animal spirits” – according to Keynes’s clever phrase.

For example, John Galbraith conceived two institutions capable of playing this role: on the one hand, the technostructure necessary to allow the reasoned intervention of the capitalist State in the economy and, on the other hand, the emergence of strong but disciplined unions. With their sectoral, industrial and corporate negotiations, they could usefully balance the constellation of forces in large enterprises without harming their micro-economic productivity and the macro-economic competitiveness of the Nation. (For an analysis see Note 15 on J. Galbraith in my Keynesianism, Marxism, Economic Stability and Growth, 2005 in the Livres-Books section of my old Jurassic site )

On the capital side, the evolution of the labor contract progressed in contradictory fashion in parallel with that of the dominant economic “science”.

The post WW II increase in the purchasing power of individual wages supported domestic demand in the United States to the tune of 70 % and over 60% in Europe – in the latter case without taking into account the more socialized but more efficient European social programs, in other words institutionalized savings.

The development of deferred salary was intimately linked to a better understanding of the virtuous circuits of capital linked to the emergence of social programs, such as contributory or breakdown pension funds. In addition, it operated as an important anti-cyclic stabilizing factor. (For an recent update on the vital circuits of capital theories see: )

Through his acquaintance with Piero Sraffa, inspired by Gramsci who in turn was inspired by Karl Marx, Keynes understood the primordial importance of the circuits of capital linked to the three components of the « global net revenue » of the households, i.e., immediate consumption, social contributions and direct and indirect taxes. Not for nothing, his major work published during the Great Depression in 1936, was entitled General Theory of Employment, Interest and Money. Full-time full-employment – albeit with seasonal frictions – and the « euthanasia of the rentier » – that is to say, in practical terms, the functional segregation of the 4 pillars of the world of finance, deposit banks, commercial banks, insurance and mutual funds or credit unions – had to regulate capitalism and ensure effective aggregate demand, at least sufficient to guarantee the stationary reproduction of the system. Harrod, his biographer from Oxford University, took his inspiration from the Soviet experience in order to dynamize the system conceived by Keynes.

These circuits of capital linked to the structure of the « global net revenue » of the households are very important. They led to fierce battles waged to determine by who and how the accumulated funds available, for example in pension and UI funds, would be used. In fact, in one way or another – contributory funds or the European repartition funds – they always were  controlled by the capitalist State erected as a partial umpire between capital and labor.

We note that before the institutionalization of this wage saving, the ad hoc social assistance measures of the liberal pre-Welfare State did cost much more than the public expenditure related to the Welfare State. (e.g. Hoover’s inoperative initiatives vs. FDR’s New Deal). (Added : Institutional saving acts as a powerful lever for the domestic economic Multiplier.) Today we are witnessing the return to that anti-economic waste that take the form of social assistance, sometime private and confessional, and more often disastrously means tested. (Added: everyone understands that means tested social programs create and maintain increasing poverty pockets, which destroy the basis of republican and democratic social mobility for generations. In this sense, despite their moralistic Prohibition character, they are the epitome of un-American thinking.)

On the contrary, we must underline the hysteria of the Swedish bourgeoisie, despite its social-democratic pretensions, when it was confronted with the publication of Rudolf Meidner’s Plan in 1976 in favor of Workers’ Funds. If they had been adopted, the rapid accumulation of contributions would have allowed the working class to control over 52% of the means of production in less than 20 years.

The third component of the « global net revenue » of the households refers to the evolution of taxation towards a more republican and progressive form. This took the form of the generalization of income taxes on income from labor, capital and inheritances. This sends us back to the planned intervention of the State through the development of a modern fiscal policy and public credit. This tax system managed to hold up until the Volcker-Reagan and Thatcherian counter-reform launched between 1979 and 1982.

As we said, in the post-war period, the tax revolution saw the generalization of direct taxes on labor and capital incomes, together with a higher taxation of successions in the framework of a formally progressive system. The gap between high and low wages was 14 to 1, while at the beginning of the Millennium Maurice Allais had denounced an inequality of 1 to over 400-500 times. Today we are walking in giants’ steps towards an entirely regressive taxation favoring indirect taxes which exacerbates the inequalities between income and wealth.

The intervening power of the Social State was equally derived from the public nature or at least the public control of the Central Bank and therefore of the greater part of the available credit. It was thus possible to quickly finance the post-war reconstruction, together with all public enterprises deemed strategically necessary.

(Added: The financing of public and para-public debts directly on the primary market insures the lowest levels of indebtedness. This is because public credit, being by definition non-speculative, it amounts to the anticipation of growth through investments in the real economy. In so doing, it transforms for some 60 % on average into a new salary mass, the rest transforming into accumulated fixed capital. This is easily checked. For instance, during what Jean Fourastié called the Glorious Thirty Years, the French debt was around 25 % of GDP and remained at that level up until the Pompidou-Giscard-Rothschild 1973 Law that privatised the Banque de France. The public debt started to grow without control after that date. Italy displayed comparable virtuous percentages until the privatization of Bankitalia in the early 1980s. With today catastrophic and unsustainable logic of speculative finance, mostly controlled by a half-dozen so-called primary banks, which exercises its hegemony on the public debt of the States and on the whole real economy, the return to public credit is the only way out.)  

The natural search for greater systemic coherence was shattered against the class interests of the bourgeoisie due to the worsening of the growing contradictions in the dominant economic theory. This led to the substitution of Keynesianism and the European theories of economic regulation with the neoliberal monetarist theory.

In fact, if Keynes was celebrated as a genius by the World bourgeoisie, at least until the Soviet Union was resented as a dangerous example for the Western working classes, he was never really put into practice. What prevailed was the so-called « bastard Keynesianism » theory, to borrow the Cambridge UK phrase, that is to say, a regressive neoliberal synthesis essentially due to Irving Fisher, Hicks, Paul Samuelson and Robert Solow.

This neoliberal synthesis put aside the lessons of the Great Depression and returned regressively to the failed axiom of full-employment created automatically by the market and by the « invisible hand ». The fact is that the capitalist market cannot automatically reach its equilibrium by automatically ensuring full-employment even if, as R. Solow (1956) claims, this “razor-hedge equilibrium” was based on the physiological threshold for workers. Not only does this neo-Malthusian threshold not exist, but this logic – J. B. Say, Walras, Solow etc. – is founded on a huge mistake which consists in believing that for every need there will be an offer. The offer assumes solvent demand. In fact, many essential human needs are ignored by capitalism, an evidence that occurs every day as huge capitalist waste occur in a context of exacerbated inequalities – including for the environmental footprint. Meanwhile essential social services are increasingly being sacrificed. For example, a few years ago, the United States refused to recognize that protection against hunger was a fundamental social right.

With its savings = investments equation, this synthesis showed that it understood nothing about the importance of workers’ savings institutionalized with deferred salaries and operating as virtuous circuits of capital. In addition, it had not even understood the difference between credit, corporate self-financing and household savings.

This turned out to be very serious. For starters, no version of Marginalism was ever able to distinguish between profit and interest. Banking-financial interest is always deducted from the profit created in the real economy. Marginalism cannot even distinguish between classical interest and speculative interest. Yet, the discrepancy explains the periodicity of the economic cycles caused by the erratic sectoral expansions and contractions (the so-called “speculative bubbles”), but never explained by the Marginalist paradigm, precisely because it takes the axiom of the « invisible hand » seriously, regardless of the fact that the companies’ differential access to credit generally depends on their respective importance.

Up until the Volcker-Reagan counter-reform pushing through its financial deregulation, the connection between the real economy and credit was maintained essentially thanks to the functional segregation of the 4 pillars of the banking-financial world, and with the periodic purges carried out by the economic cycles. These 4 pillars were deposit banks, commercial banks, insurance companies and mutual funds, all kept under control by the prudential ratio and by the central bank.

These rules were gradually dismantled in the 1980s, a process that culminated in the repeal of the Glass Steagall Act in 1999, the main cause of the emergence of hegemonic speculation and of the subprime crisis in 2007-2008.

With the birth of the so-called universal bank – the one-stop shop – the banking-financial sector was established as a legally autonomous sector. Therefore with a much higher « productivity » than the other sectors of the real economy, characterised by a more unfavorable fixed capital/salary mass ratio.

In this way, speculative interest played the role of profit. Through capital mobility, the sector with the highest « productivity » determines the relative strength of the competing fractions of capital along with the relative prices structure of goods and services. The unsustainable levels for the real economy of ROE – return over equity – symbolizes this destructive asymmetric relationship. To barely survive a large part of the industry had to outsource and expatriate itself. In the EU alone, the gap between low and high wages varies between 4 euros and 41 euros !!! (Italy with 20 euros is in the eleventh (11th) place in the EU) (2)

Similarly, the Welfare State had been weakened since the beginning with the creation of the new post-WW II and commercial order, firmly placed under American hegemony. In the late 1940s, the IMF, the World Bank and GATT were operational.

GATT, in particular, with its systematic dismantling of tariff barriers led to the extroversion of the Economic Multiplier, making the classic pump-priming and growth policies, generically called Keynesian, more and more inoperative, thus helping to legitimize the neoliberal monetarist mantra of the Chicago Boys and their Public Policy – deregulation, privatization, flat tax philosophy, minimum State, workfare instead of Welfare etc. This Public Policy assumes a dichotomy between capitalist economy and capitalist State while the latter is only the most effective expression of the social division of labor, an evidence verified by the greater impact of the Multiplier induced by the public sectors. Public sectors such as Healthcare have a sector Multiplier of 3,% on average, and not 0.5% or 1%. This factual evidence is something that Blanchard and Rogoff and many others are ideologically unable to understand. They therefore continue to speak of a simple « calculation error » in the national income equation, while it is a fundamental error. It translates in dramatic results for the qualitative and quantitative growth of our economies. By cutting these public sectors, growth dynamics are immediately affected, and a negative socio-economic spiral is triggered which is then difficult to counter. (On my book review of the beautiful book « The body economic : Why austerity kills » see )

The transition from GATT to the WTO in January 1, 1995 represented the last nail in the Social State coffin. This is because the WTO institutionalized two hyper-destructive rules undermining labor and the Nation-State in favor of « global private governance », that is to say, of stateless transnational companies.

A )  First, a definition of anti-dumping that abstracts from workers’ rights, including the minimum rights enshrined in the ILO. Global competition therefore takes place on the basis of the labor cost only but one reduced to the individual capitalist wages without any reference to deferred salary and the other component of the « net global revenue » of the households. Some, like Solow, had invented a physiological threshold that does not even exist for the ½ billion fellow Dalits comrades plagued with an average life expectancy of 40 years … On this basis, the national contract – at the sector, industry, enterprise levels – is substituted with a focus on the contract at the enterprise level and, worse still with a wide use of vouchers, the direct contract between the enterprise and the isolated worker usually entered into without legal framework and recourse. (Added : This is what the English World quickly and aptly called «  gig » or « shitty jobs » to mark the degradation since the pioneering impact of part-time McDo jobs. Labor rights had increased significantly in the US thanks to the efforts of progressive forces such as the One Big Union, the CIO and New Dealers in the entourage of FDR such as Frances and Wagner. The reversal came with McCarthyism and then with the Dunlop and Kerr restrictive version of industrial democracy à la Ralf Dahrendorf under the Nixon’s presidency. The right to strike was limited and negotiations in good faith were slowly replaced by mediation followed by mandatory arbitration and increased back-to-work court orders. In the end the Welfare inspiration was totally reversed with the Reaganian-Thatcherian’s workfare and means tested policies, then embodied in the current anti-dumping definition enshrined at the WTO.) That’s why the regressive forces now include the abolition of the CNEL in their constitutional counter-reform.

B ) Second, any reference to environmental criteria, including the mere precautionary principle, was ruled out.

All this took place in the general context which saw the emergence of new capital intensive sectors, together with the emergence of commercial rivals such as China. As expected, contrary to the prediction of the Western theoreticians of « asymmetric interdependence » in favor of the West, the reason why they pushed for a global free-trade, China does graduate more engineers and deposits more patents than the United States! In addition, as the neoliberal monetarist model produces the same effects on a European and global scale, Italy can no longer unload its labor problems on the massive emigration of Italians citizens. Not even from the South to the North since the precarious wages of new migrant workers are no longer enough to pay the rents.

All these elements led inexorably to the destruction of the positive structure of the « global net revenue » of the households, which in turn structured the micro-economic relations as well as the distribution system – general under-lying equilibrium – and the re-distribution system, that is to say, the dynamic equilibrium organized by the State to correct the contradictions and disparities induced by the blind « invisible hand » of the market, with the help of social negotiation and bargaining, in order to implement the strategic priorities and in particular the priorities relating to constitutionally enshrined « social utility »  (Art. 41) determined by the democratic and parliamentary interactions.

It is then sufficient to list the current social institutions, all based on individual capitalist wages only, and the growing privatization of the social contributions that made up the deferred salaries to immediately understand their inconsistency, especially in the context of the hegemony of speculative finance.

It is easy to understand: If the individual wages come from increasingly precarious jobs, with little or no social contributions and with net wages so low that they do not pay a lot of personal income tax, then the most virtuous circuits of capital – those related precisely to institutionalized wage savings – are perverted in speculative ways, while current general tax revenues, further deteriorated by a increasingly regressive fiscal policy, will be unable to compensate. In fact, today many announced social programs are conditional on the resources owned not by the individual citizen but by the households (means tested) and on the limited funds made available. This fatally creates a new category of rights holders who, in practice, do not receive a single euro. It also feeds a logic of growing pauperization of the masses carefully studied by the neoliberal monetarist elite. This unfolds without even speaking of the crassly incompetent exclusion of thousands of pensioners by the minister E. Fornero’s reform (the « esodati » ). One case among others, the difficulty of renewing so-called « mobility in derogation » a mission partially transferred to ASDI but without the necessary funds. Normally the « derogations » were used to accompanying unemployed long-term seniors towards retirement age … given that the market is unable to create enough work for workers under 35 and for those over 50 years old !!!

Given the fundamental inconsistency of the neoliberal monetarist system, the main road for the bourgeoisie seems to be the « return » to a soft fascist corporatism. At least if the population doesn’t defeat them before reaching this conclusion.

Here are the main lineaments of the current system:

The system is no longer based on work but on social assistance, the means-tested assistance of the households, and on workfare, the unrealistic obligation to enter the labor market. The basis of this regressive social construct, calculated to exclude, is the family unit and its respective ISE set at € 3000.00 in annual income with € 5,000.00 in Real Estates including automobile – for the whole family unit. (Added: this is not a peculiarly Italian perversion; people of my generation are flabbergasted when they read of young American adults forced to live under their family roof.) The Jobs Act, NASPI and ASDI, or UI allowance, are tools designed to mask precariousness and the working poor. As a proof, the vouchers – few hours contracts on demand – are cynically provided by NASPI itself: it is enough to still be unemployed 4 months after running out of NASPI. The ANPAL – purported to be a manpower office – centralizes the inefficient manpower centers only to have a centralized workfare control over the clients. The SIA, or « active inclusion support », is unworthy of the name because it does not even concern all the poor population, being founded on the ISE savage thresholds and furthermore it functions with limited funds allocated to cover only a small part of families fallen in absolute poverty. The European Youth guarantee does not cover more than 30% of the potential beneficiary in Italy. Worse still, from these, only a small portion is paid on time but no one cares to question who and how the available funds are managed.

a ) The evolution of the labor contract towards a growing precariousness since the notorious Social Pact of 1992, and the end of the inflation indexation policy and the Biagi law. The process culminated in the Jobs Act, that is, in the transformation of all jobs into potentially precarious jobs through the easy dismissal and dismantling of union democracy. Now, despite the huge fiscal exemptions, the Jobs Act has proved a resounding failure (4) as demonstrated by the drastic drop in job creation as soon as the fiscal exemption was reduced thus leading to the explosion of vouchers. Government’s shibboleths no longer deceive anyone since, at best, the descent into hell will have turned into a painful transition through the purgatory of vouchers and illegal work. Above all, it should be remembered that it is enough to work just one hour during the last weeks to disappear from the official unemployment data according to the ILO. In 2005, I had exposed the true numbers of unemployment – see the Note ** of my Book III in Livres-Books section of I had asked for the publication of all the categories of unemployed and under-employed workers together with the numbers relating to absolute and relative poverty. France does it; Italian Istat prefers to play on monthly and quarterly analyzes based on interviews in the framework of the restrictive definition of the ILO. By doing so, it does not seem to respect its democratic public service mandate.

It is said that the PA is not included in the logic of the Jobs Act. The issue is still under investigation. It remains however that the Madia Law anticipating the institutional and other transformations contained in the constitutional counter-reform. For example, as it pertains to the effective abolition of the provinces, thus making it possible to privatize common goods and subsidiaries at the regional as well as national level. As a matter of fact, this is the  real reason for the reopening of Chapter V of the Constitution. (For detail see the Categoria « Contituzione » in this same site. ) These privatizations will fatally lead to mergers and painful restructuring, especially for the workforce.

b ) NASPI with its DID – declaration of immediate availability – and with its decreasing coverage despite an almost impossible re-insertion in the work force. The retraining courses, a real business, have become mere tools designed to mask the true numbers of unemployment, without producing in the least a real professional training capable of leading to real jobs. The vouchers are cynically provided by NASPI itself: it is enough to still be unemployed 4 months after running out of NASPI.

c ) ANPAL, or the centralization of manpower centers which today, unfortunately, are no longer able to carry out their mission of helping unemployed to re-enter the labor market. In fact, in our province many workers in these centers are themselves precarious and have been waiting for their regularization for many years. It is not conceivable that the mere centralization of the service will produce better effects. Therefore, the true function of this centralization remains the erection of a centralized control function characteristic of neo-conservative workfare systems.

d ) The SIA or the active inclusion support, is unworthy of its name because it does not even concern all the poor population. In fact, it functions on the basis of a miserable ISE at 3000.00 euros – with 5 000.00 real estate, including the car – for a family with minor children and/or disabled. This leads to a possible maximum allowance of around 80 up to 400.00 euros per month for a family of 5 members. The most successful experiment conducted in Turin shows average checks of around 350 per month but with minimal coverage compared to needs. If this was not enough, the funds made available through this program only covers a minimum fraction of the most needy population, especially in the South!!!

e ) ISE, the resource level which serves in particular to determine the eligibility and the size of the social allowance, that is to say the last « social safety net » – euphemism – before falling into the most abject misery. Except that, as already mentioned, it is defined at 3000 euros per year with 5000 euros of real estate !!! Speak of so-called « citizen income » now considered too expensive. You will remember that Grillo spoke of a citizen’s income set at the poverty line, a proposal that Boeri rejected immediately saying that the funds were not available and that the maximum limit could at most be set at 350 euros per month, thus reflecting the low estimate of the European creator of this grotesque farce, Yoland Bresson. Minister Poletti wasted no time in correcting Boeri and setting the possible ceiling at € 320 per month. Probably after having experienced the system for less than a week himself …

f ) Youth Guarantee and SELFemployment. Many called, few elected among the millions of NEETs already betrayed by the system. We note that in Italy Youth is defined as people aged between 16 to 29 and not to 25 years old as elsewhere in the EU. In short, out of 600,000 young participants  – March 2016 – 42% are included in an active policy path but only 30% conclude that path. And from these these only a small portion is paid on time.

g ) The pension system is subjected to a triple mechanism. First, a postponed retirement age, against the best interest of both young people and seniors. Second, the transition of the solidarity system by repartition to the individually based contribution, which will only favor higher wages and the privatization of wage savings, further increasing the gap between rich and poor, a gap that is already exaggerated in our country – where 10 people are richer than the 3 million less wealthy; and 20% of the population controls 67.7% of national wealth according to Oxfam 2016. Third, with increasing precariousness, the evolution in favor of the contribution system inexorably leads to an automatic reduction of the final pensions pay-out for the average and lower wages. Apart from that, already today, according to « INPS 2015: over 64% of pensions are under € 750 per month ».

In this context, APE and RITA are ingeniously added today, but it is a simple defensive maneuver aimed for one half of the mere 6 billion euros available for 3 years (!) to free up some jobs on the shoulders of pensioners enticed to retire but who would have to indebt themselves with the banks to get out at 63 instead of 66 years and 7 months.

The systemic coherence of this system is nonexistent. Therefore, this systemic coherence will be fatally sought in a populist and soft totalitarian drifting course, though the elite will attempt to push it slowly but unflinchingly.

a ) For example, the EU is accused in the media just to obtain more budgetary margins under the fiscal stability law, in order to be able to continue the squandering of public resources, the dismantling of the Welfare State and the wall-to-wall privatization without changing the prevailing regressive economic rationality except to transfer public wealth directly to private individuals, often foreigners. Goldman Sachs, for instance, bought a majority of the branches and shares of IRI, what remains of the powerful industrial conglomerate that had rebuild the country after the WW II. And this just an example. In his book Gutgled  (Rizzoli 2013; for a criticism see ) he already began to look at our museum and archaeological treasures, and not only in view of entrusting the management to private individuals, according to the notorious preferences of the  Renzi-Gutgeldian Minister Franceschini.

It should be noted that the so-called path of European fiscal consolidation path has now failed for the last 3 years both for the so-called PIIGS as for France.  (Added : see ) Growth rate at comma something is pure lie because recent changes – October 2014 – in national accounts in the European countries automatically add around 3.5% to GDP; it accomplishes this feat through the inclusion of a minute share of the gigantic tax evasion and undeclared labor, as well as an evaluation of drugs, prostitution, a part of armaments and some evaluation of new property rights linked to the so-called « immaterial economy » … The current GDP is only a smoke and mirror ploy, especially for candid and complicit media crews and … academic ones. (Added: The USA GDP was likewise modified in 2013. With an average growth of say 2 % this actually means a « negative growth » of minus 1.5 % and above all these new evaluation do not add a single job, nor any additional social contribution of tax basis. But if the governing elite can show some kind of GDP growth in time of iron austerity policies, this entitles them, against all evidence, but with the help of many servi in camera in media and academia that their recipes actually do work!  )

b ) The reactionary Reaganian « internal fiscal compact », i.e. Article 81 of the Constitution, is not canceled by the Renzi-Gutgeldian counter-reform. On the contrary. This is because it serves top pre-emptively chain progressive governments in case they would be subject to democratic political alternance. Indeed, and unsurprisingly, in the face of the mixed economy and national solidarity, the constitutional counter-reform sanctions the « promotion of competition » and private « insurance funds ».

c ) If current Article 116 of the constitutional counter-reform was not enough, the constitutional counter-reform allows the richer Regions to take advantage of the re-centralization with the aim of facilitating the wall-to-wall privatization at the local level. Once this would be achieved, the richer regions would be entitled to request the devolution of all the central powers, now exceptionally conferred on the provinces of Trento and Bolzano. This would irreversibly destroy the « one and indivisible Republic » founded on decent work and national solidarity.


1. Pressures should be exercised to return to active labor policies within the framework of an authentic economic-industrial strategy. Within the current parameters, the market no longer creates jobs, not even by dividing a full-time job into two or three precarious ones. If a manager does not have enough flexibility with full-time work plus overtime, plus chosen part-time, while also taking into account seasonal or other frictions, then s/he does not deserve his-her pay. The French RTT, or the general reduction of the legal working week, did cost only 23 billion euros annually. (5) In its first year, the disastrous Italian Jobs Act alone wasted 18 billion euros, while generalized insecurity and precariousness as the only counterparts for labor.

2. Italy should urgently request the adoption of a new definition of anti-dumping capable of protecting the three components of « global net revenue » of the households, an option that would allow the interpretation of the current free-trade treaties, one that could be reached without having to renegotiate them (i.e., without having to confront the arduous rule of unanimity of the WTO. For further details see here : ).

3. We must bury once and for all in the ballot box this bad constitutional counter-reform together with this PD government that dared to design it. Our Constitution obliges all citizens to defend it. (Added: I am glad to report that this victory was brilliantly won during the December 4, 2016 referendum. Despite the result our a- constitutional and transversally  philo-Smite Nietzschean and Spinellian leading classes are now devising to proceed to the devolution of central powers to rich regions with an ordinary law. Remember what classical authors cognizant of Sparta’s ruin, say about Republics that violate their own laws?)   

Paolo De Marco
Copyright © La Commune, 4 October 2016


1 ) I robot rimpiazzeranno 5 milioni di posti di lavoro entro 4 anni: il rapporto a Davos,à_posti_lavoro-1493607.html . See Carl Frey and M. Osborne in , Andrew McAfee e Erik Brynjolfesson, Pour l’OCDE, la robotisation ne menace « que » 9 % des emplois, Benoît Georges BENOIT GEORGES–la-robotisation-ne-menace—que—9—des-emplois.htm

2 ) Le coût de la main-d’œuvre varie de 4 à… 41 euros de l’heure au sein de l’UE. Par  |  01/04/2016, 12:18  |  461  mots

See also: « L’euro est trop fort pour l’économie française, pas pour l’allemande » , Par la rédaction pour La Voix du Nord,La Voix du Nord, Publié le 07/02/2013 – Mis à jour le 07/02/2013 à 17:35

(current exchange rate 4 Oct 2016: 1 euro = 1.11 USD

(My translation) « Thus, Germany can support a euro worth 1.53 dollars according to Morgan Stanley’s calculations, or even up to 1.94 dollars according to Deutsche Bank, while French competitiveness begins to suffer when its currency exceeds 1.23 dollar. Italy is in an even more delicate position, and Greece suffers as soon as the euro is exchanged for 1.07 dollar or more. Paris also estimates that if the European currency remains at its current level over time, it risks costing its already sluggish growth 0.3 percentage points. Hence the difficulty of establishing an exchange policy that is suitable for all 17 EMU States. Worse, according to ex-industrialist Louis Gallois, author of a report on competitiveness for the French government, the strong euro is “an element of divergence and dissolution of European industrial solidarity”.»

3) Radiografia Inps 2015: oltre il 64% delle pensioni sotto i 750 euro

4 ) For an analysis of the Jobs Act, see the articles on this same site.

5 ) Here is the summary of the RTT. It did cost only € 23 billion to establish the 35-hour legal week with a national framework agreement. Over 350,000 direct jobs were created. (Other prefer to point out at the around 1.2 million jobs created by the « gauche plurielle » overall. ) The unemployment rate at around 11% dropped to just under 8%. With the income from social contributions – deferred wages – the deficit of the Social Scurity system accounts had almost disappeared – only 4 billion euros remained which would have been canceled in a few months. The growth in full-time employment restored public taxation, causing the French public debt to drop to 59% of GDP, that is to say, one point less than the Maastricht Criterion. Overtime was 4 hours on average – at the time with a 60-day week, the actual work day in the United States was around 33.5 hours per week. The success of the RTT resulted in the spontaneous birth of one new sociology of leisure and free time. All this in just two years of governing by the «gauche plurielle». In Italy, if you add all the more regressive and conspicuous budgetary wasteful handouts – Jobs Act, abolition of the IMU on the first house of the richest 2/3 who was still paid for it, reduction of the tax exoneration for businesses – IRES, IRAP etc. – you would have enough funds to finance two RTT at a minimum !!!
According to the Court of Auditors, the « tax expenditures », or tax breaks and exonerations of various kind amount to , number 800 different ones. They went from € 254 billion in 2014 to € 331 billion in 2015. (see: .)

(Added: in later Reports the Court is following the calculated lead of the reactionary Senate estimating the tax expenditures at around 70 to 80 billion including some that nobody would dare question like assistance to invalids etc). The number mystery was already explained in the following and concluding line of the original essay: When granted, these « tax expenses” kindly disappears from the State budget so that the budget always appears on the brink of the abyss, thus legitimizing other painful cuts in public spending and other privatizations in the eyes of the masses of citizens of goodwill but unfathomably too credulous.

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