Professor Jeremy Jennings, Director of the Centre for the Study of Political Thought at QMUL, on the Italian politician Luigi Einaudi.
Over recent years we have become so used to reading about the comic behaviour of Silvio Berlusconi that it is tempting to imagine that the entire Italian political class is and always has been a bunch of clowns. Imagine therefore my surprise when I set about reading some of the writings of Luigi Einaudi.
Einaudi was born in 1874 and spent much of his career as a professor at the universities of Turin and Milan. After a youthful enthusiasm for socialism, he moved progressively to the right and came to be a fervent advocate of the benefits of economic liberalism and free trade. Quite remarkably, following the Second World War, not only was he to serve as the Governor of the Bank of Italy from 1945-48 but also as the second President of the Italian Republic from 1948-55. He also served as correspondent of The Economist. He died in 1961.
Einaudi’s intellectual interests ranged far and wide, from the technical issues of taxation and public finance to the problems of post-war European reconstruction, and much else. Ever the realist, Einaudi did not set himself against all state intervention in the economy but he saw that there existed a fundamental disagreement between liberals and socialists about the justification and scope of that intervention. As he wrote in one of his essays: “the liberal man wants to establish norms which, if they are observed, allow savers, proprietors, businessmen and workers to operate freely; whereas the socialist man wants above all to give direction, an order to the work of the aforesaid savers, proprietors, businessmen and workers”. The lessons of experience showed that the dirigiste approach to the economy did not respond to the demands of consumers, favoured the over production of unwanted goods, and stifled entrepreneurial initiative. He was similarly sceptical about the benefits of price controls and denied that public ownership benefited either consumers or workers. If he opposed private monopolies he also opposed the practices of monopolistic trade unions, recognizing that they artificially increased costs and reduced production. Einaudi was against inheritances taxes. The experiences of inter-war Europe told him that printing banknotes in enormous quantities was no way for governments to solve their problems.
More than this, Einaudi saw that there was a critical point beyond which the pursuit of equality became a threat to individual liberty. He saw also that men were all too ready to be persuaded that if there was a problem that needed solving the government should take care of it. No one, Einaudi admitted, could be precisely sure where that critical point was but the liberal at least knew that “once the collective ownership of all the means of production had been decreed, every possibility of escaping its tyranny, notwithstanding bloody riots, will be prohibited to the people”. It was for this reason, Einaudi argued, that the liberal did not “propose to do what is good; but only to put men in a condition from which they are able to procure it for themselves, when they desire to, or when they know how to use the proper tools for what is needed”. What mattered most was the preservation of human freedom and of what he called “concrete liberties”.
Einaudi never set out his ideas as a logical system and he never secured the recognition accorded to either Keynes or Friedrich von Hayek but as the Italian economy seemingly reaches the point of no return one cannot help thinking that it would be no bad thing if Einaudi was back in charge of the Bank of Italy.
Professor Jeremy Jennings is Director of the Centre for the Study of Political Thought at Queen Mary, University of London. His latest work, Revolution and the Republic: A History of Political Thought in France, was recently published by Oxford University Press.