Political Order and Political Decay (20 page)

There were, however, countervailing forces. The independence of the Italian judiciary had been reinforced by the recruitment of a generation of idealistic lawyers in the wake of the global uprisings of 1968. These left-leaning jurists rose steadily in the ranks and by the 1980s were in positions to take on the country's entrenched political elite. The targets of judicial investigations, from Andreotti to Craxi to Berlusconi, have charged the judiciary with political motives, and to some extent that is true. These judges tended to go after politicians on the right more often than those on the left. But many individual judges were willing to take highly courageous stands against corrupt politicians and Mafia bosses. In addition, there were a number of crusading judges such as Giovanni Falcone and Paolo Borsellino whose strong family traditions of civic responsibility ran against the general Sicilian tide. The investigations of the 1980s and '90s led to a virtual war between the Mafia and the uncorrupt parts of the Italian state, with a number of high-profile assassinations of judges and prosecutors by the Mafia. This culminated in the assassination in 1992 of Falcone, his wife, and his bodyguards, and of Borsellino shortly thereafter.
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With the killing of police chief Alberto dalla Chiesa, prosecutor Gaetano Costa, and magistrate Rocco Chinnici, public opinion was gradually mobilized in support of anticorruption efforts. With the cold war no longer serving as a backstop to corrupt but conservative politicians, the revelations that came out of Tangentopoli and other investigations finally brought down Prime Minister Andreotti and the Christian Democratic Party as a whole. The DC did very poorly in the 1992 elections and ceased being a factor in Italian politics after 1994.
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THE FAILURE OF MODERNIZATION

Italy would have done well if the events that brought about the collapse of the post–World War II political system had paved the way for a strong reform coalition like the one that appeared in the United States at the turn of the twentieth century. Unfortunately, events did not play out in this manner. The right was reorganized under the leadership of media magnate Silvio Berlusconi, who used his corporate empire to build a new base of support. He came to power at the head of a coalition that included the Northern League of Umberto Bossi and the neo-Fascist Alleanza Nazionale of Gianfranco Fini. These parties, plus Berlusconi's Forza Italia, picked up the pieces of the old Christian Democratic Party; versions of this coalition ruled Italy in 1994, from 2001 to 2006, and again from 2008 to 2012.

Berlusconi's public face was one of a modern, free-market politician in the Reagan-Thatcher mold who wanted to reduce taxes, reform and reduce the size of the Italian state, and make it run more effectively, like one of his businesses. Unfortunately, Berlusconi was himself the product of the old system, a politician with a clientelistic mind-set who simply brought new media techniques to bear. If the essence of a modern state is the strict separation of public and private interest, Berlusconi moved in exactly the opposite direction, using his own business holdings in newspapers, television, and sports teams to build a mass political base. Not only did he fail to initiate, in any of his three terms, any serious reforms of the Italian public sector, he launched a broad attack on the independent judiciary and its corruption investigations against him. Operation Clean Hands, which had helped destroy the old party system, was itself undermined by his ministerial choices and decrees shielding various defendants.
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Berlusconi used his parliamentary majority to vote himself immunity and failed egregiously to rein in either the appearance or substance of conflict of interest. And he did nothing to reform the clientelistic politics of the South, which has continued unabated: in the crisis over the euro in 2011–2012, the inability of Sicily to control its public finances led to people labeling it the “Greece of Italy,” a crisis that has contributed overall to the country's weak fiscal condition.
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A reform coalition failed to materialize in Italy in part because of the Northern League and its leader, Umberto Bossi. The social base of the party was in the modern, northern parts of Italy and consisted heavily of small-business owners and middle-class professionals fed up with the corruption and inefficiency of the Italian state. Bossi, unfortunately, built his party not around state reform but around populist issues like opposition to immigration. He and his party were themselves not above using clientelistic methods to win voters, and they were willing to acquiesce in many of Berlusconi's antics in order to stay in power. A social group that should have been at the center of a reform coalition was thus neutralized.
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The left-wing governments that ruled between the Berlusconi prime ministerships did little better. Some modest reforms were launched in the 1990s focusing on universities, local governments, and bureaucratic red tape, with some effect. But there was never strong leadership or consensus about the need to change the nature of the Italian state itself, to free it completely of political patronage, to move more of the economy into the formal sector, and to control the state's overall size.

Outside forces could have supplied some of the missing political will to reform the system. Entry into the eurozone in 1999 put strong external pressure on Rome to meet budget targets. But once Italy was in, fiscal discipline relaxed as it did in Greece. A second opportunity came with the euro crisis in 2009–2011, which finally forced the replacement of Silvio Berlusconi with Mario Monti, an unelected technocrat. But Monti was forced to step down at the end of 2012, and new elections created, if anything, a consensus against more serious structural reforms. Whether Matteo Renzi, the new leader of the center-left, can change the system remains to be seen.

Both Greece and southern Italy have been home to clientelistic politics; both are notable because they are modern, industrialized societies that nonetheless have not succeeded in reforming their public sectors and eliminating political patronage as Germany, Britain, and the United States did. The similarities between Greece and southern Italy are striking. Both were impoverished and backward compared to other parts of Europe and saw late development of a capitalist economy. Both came to be heavily reliant on the state for employment and economic advancement; both experienced “modernization without development.” And in both, governments were weak, in terms of legitimacy and capacity.

Greece and Italy differ importantly from one another insofar as Italy has had the makings of a reform coalition, while Greece has not. Although I have stressed regional differences between Italy's North and South, the conflict has not been strictly territorial. As many observers have pointed out, the South has produced civic-minded individuals like Giovanni Falcone, just as the North has experienced corruption and patronage. Judith Chubb has explained how Naples saw something of a civic renewal during the 1970s while Palermo did not, and Simona Piattoni has noted that there are varieties of clientelism practiced across the Mezzogiorno that are much less hostile to development than others.
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In Greece, by contrast, it has been hard to locate an important constituency interested in reform of the public sector.

THE IMPORTANCE OF TRUST

I began the previous chapter by noting the degree to which Greek and southern Italian society were characterized by generalized social distrust, directed at both the government and fellow citizens. Is there a relationship between trust and good government, and if so, what is it?
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As a personal attribute, trust is not inherently good or bad. If I am living in a neighborhood full of thieves and swindlers, being a trusting person will get me into trouble. Trust becomes a valuable commodity only when it exists as the by-product of a society whose members practice social virtues like honesty, reliability, and openness. Trust makes no sense unless it reflects a general condition of trustworthy behavior; under these conditions, it becomes the marker and facilitator of cooperation. Of course, an opportunist could try to take advantage of other people's trust and try to cheat them. But if one wants to live in the community, this will quickly lead to ostracism and shunning.

Living in a high-trust society has many advantages. Cooperation is possible in low-trust societies, but only through formal mechanisms. Business transactions require thick contracts, litigation, police, and legal enforcement because not all people can be relied upon to meet their commitments. If I live in a neighborhood with high rates of crime, I may have to walk around armed, or not go out at night, or put expensive locks and alarms on my door to supplement the private security guards I have to hire. In many poor countries, as we will see in Part II, families have to leave a member at home all day to prevent their neighbors from stealing from their garden or dispossessing them of their house altogether. All of these constitute what economists call transaction costs, which can be saved if one lives in a high-trust society. Moreover, many low-trust societies never realize the benefits of cooperation at all: businesses don't form, neighbors don't help one another, and the like.

The same thing applies in citizens' relationship to their government. People are much more likely to comply with a law if they see that other people around them are doing so as well. In the previous volume of this book, I presented evidence that faculties for norm following are genetically embedded as part of human nature. In most societies, law-abidingness is only in part the product of the degree to which governments can monitor compliance and enforce penalties for lawbreaking. The vast majority of law-abiding behavior is based rather on the fact that people see other people around them obeying the law and act in conformity to the perceived norm. Conversely, if a bureaucrat sees a fellow worker taking a bribe for allowing someone to jump the queue, or if a politician perceives that the rival party is benefiting from rake-offs from public contracts to his detriment, then he will be much more likely to behave in a similar fashion. If many citizens cheat on their taxes (as happens routinely in both Greece and Italy), then any given person is going to look stupid paying up in full.

The quality of government thus depends critically on trust or social capital. If the government fails to perform certain critical functions—if it cannot, for example, be trusted to protect my property rights, or if it fails to defend my person against criminals or public hazards like toxic wastes—then I will take it into my own hands to secure my own interests. As we saw in the case of Sicily, the Mafia had its origins in the failure of the Bourbon and later the Italian state to do precisely this, which is why individuals began hiring “men of honor” to provide them with private protection. But since the mafiosi were not themselves trustworthy individuals, distrust of government metastasized into distrust of everyone.

A low-trust society constitutes what economists call a collective action problem. Distrust is socially counterproductive, and everyone would be better off if they behaved in a trustworthy manner. But any given individual has no incentive to be the first person not to take a bribe or to pay her taxes. Since distrust feeds on itself, everyone is trapped in what is known as a low-level equilibrium, where everyone is worse off but no one can break out. By contrast, if the government were clean, honest, and competent, then people would be willing to trust it and follow its lead.

Both Greece and southern Italy had governments in the nineteenth and twentieth centuries that were, using the terminology developed in chapter 3, large in scope but weak in strength or capacity. Neither country on entering the modern democratic era inherited an autonomous, Prussian-style bureaucracy. The legitimacy of governments in both countries was tainted by connections to foreigners: both were ruled by external powers prior to the nineteenth century, and even after nominal independence Greece's institutions and political parties were strongly shaped by outside powers. In southern Italy it was a matter of internal colonization, with a northern-dominated central government shaping policy in the South. In both Greece and Italy, the government became an early source of patronage, and then overt clientelism as the systems democratized and shifted to mass political participation.

What was the relationship between these extensive but weak states, on the one hand, and low levels of generalized social trust on the other? The causality would seem to go in both directions. As we have seen, lack of trust in government leads individuals to seek private solutions to the provision of public goods like property rights. This can take a highly pathological form like the Mafia, or it can result simply in families leaning on their own resources as the only source of reliable behavior. The familism that is so pronounced in both societies is to some extent a defensive measure in societies with weak institutional support for extrafamilial trust.

On the other hand, once social distrust becomes culturally embedded, it takes on a life of its own. Cynicism about the government, or expectations that other people are out to take advantage of you, leads to behavior that reinforces these outcomes: you try to avoid paying taxes to a government that you think is corrupt and illegitimate; even if you are not inclined to actively take advantage of strangers, you have little expectation that working with them will lead to any good.

Of course, not all countries are trapped in this fashion. I have spanned the gamut of government quality in Europe, from a Weberian Germany to clientelistic Greece and Italy. I now turn to two intermediate cases, Britain and the United States, where government quality improved. Britain began the nineteenth century with a patronage-based civil service, and succeeded in reforming it by the 1870s. The United States had a patronage system in the early decades after ratification of the Constitution, but transformed it into a full-blown clientelistic system by the 1830s. Like Britain, the United States also reformed its system and laid the foundations for a modern Weberian state. But the peculiarities of the American form of government—its system of checks and balances—meant that this happened later than in Britain and took many more years to accomplish.