Interview. We spoke with economist Emiliano Brancaccio about the arrival and reception of Mario Draghi to power. 'I have many doubts that Draghi embodies a Keynesian viewpoint.'

Brancaccio: With Draghi in power, ‘relaunch the social struggle’

Professor Emiliano Brancaccio, you have always been very critical of Mario Draghi. Aren’t you surprised by such a wide support for his government, even on the left? 

This new adventure with Draghi as Prime Minister is presented on the basis of a “techno-Keynesian” narrative: that is, the idea that this time it is different, that the technocrat is not called in to cut spending—as has historically happened—but to distribute enormous resources. And this explains the widespread support. But I have many doubts that Draghi embodies a Keynesian viewpoint.

Do you dispute that the resources are there, or that Draghi will distribute them in the best way? 

I’ll say that the Recovery Plan has modest resources for a crisis twice as serious as in 2011. In fact, if we take the 209 billion that should reach Italy, we have 127 billion in loans which—according to a reasonable forecast of the spread—do not bring more than a saving of 4 billion a year. As for the 82 billion in non-repayable funds, the problem is the coverage from the common European budget, which at the moment is far from being a reality—there is only the idea of a tax on plastic—and therefore it will be up to the member states themselves to cover the funds as usual on the basis of their GDP: this means that Italy will not pay less than 40 billion. Finally, it should be considered that in the coming years, Italy will be a “net contributor” to the EU in the amount of 20 billion. Therefore, a net 22 billion remain, that is, less than 4 billion net per year. In short, between savings on interest and non-repayable resources, there will be less than 10 billion net per year. If we consider that Italy has seen 160 billion of its GDP slashed in 2020, it is clear that these are very modest resources. This is why I’m saying that the Draghi government risks turning out to be not too different from the old “technocrat” austerity governments.

The support, also from the unions, is based on the commitment to social dialogue. But it is true that no one knows what Mario Draghi thinks, for example, about the freeze on layoffs which expires at the end of March.

But perhaps we do know something. These days, there are many references to Draghi as a student of Federico Caffe. Of course, he has been Keynesian at the ECB—although I do not know if Alexis Tsipras would agree—but he has always been an advocate of the selective virtues of the market. And this is confirmed by the last official document he drafted in mid-December as head of the executive committee of the “Group of 30.” In that document, he does not praise the magnificent destiny of Keynesian policy. Far from it: he explicitly says that “zombie enterprises” must be liquidated and we must encourage the transition of workers to virtuous enterprises—hence, labor flexibility. I call this a “creative destroyer” view, because the transition of workers in a time of crisis cannot be painless. In short, Draghi sounds like a follower of Schumpeter—the one who coined the term “creative destruction”—with a neoliberal bent.

This would go hand in hand with the idea of maintaining the citizenship income, perhaps aiming at the yet-to-be-seen active policies to relocate workers. 

In this logic of relying on the selective mechanisms of the market, the citizenship income, in the specific form of a subsidy, fits well because it creates a temporary buffer. The big dangers lie elsewhere: I fear that he will be hostile to the freeze on layoffs, just as I fear he could promote a reduction in the redundancy fund, downsized towards an unemployment benefit consistent with a tempered version of neoliberalism.

Is it the same thing for pensions? The Quota 100 system did not work, but at the end of 2021—thanks to Salvini—we will return to the Fornero system. 

On pensions, the prevailing interests are still pushing towards restoring complementary pensions and bringing workers to the financial market. As well as towards an increase in the retirement age, while the only truth is that it would be necessary to restore a form of taxation for social dues: future pensions will be so modest that a fiscal intervention that goes beyond the pension contributions will be needed.

Maria Cecilia Guerra, writing in il manifesto, has argued that there is a logic to being inside the government to influence the policies that Draghi will implement. 

I believe that this kind of “opposition from within” is wrongheaded. I think that the “technocrats” do nothing but accelerate the historical trend towards the weakening of parliamentary institutions and the executivization of the political process, concentrating decision-making power in the hands of the government. I very much doubt that a critical form of support can influence their line.

But technocratic governments have never lasted long: Ciampi’s for 8 months, Monti’s for a year and one month. One could “pull the plug” on Draghi as soon as one sees that he’s doing the wrong things. 

All the more reason to stay out. Also because those governments have lasted little but have involved colossal changes in economic policy, which we’re still paying for.

If this is the case, what perspective can the left have? Pursue conflict? A general strike? 

As hard as this historical period is, we need to relaunch the social struggle. It is not possible that the only ones able to mobilize should be the representatives of reactionary and petit-bourgeois interests. We need the subordinate class to practice struggle once again for social and civil progress.

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