Italy’s strength also lies in its incredibly positive social capital, which has kept the country functioning even during the most challenging of crises. A social capital made up of cohesive communities, enterprising and inclusive businesses, voluntary organisations. Today this social capital is showing worrying signs of erosion. One of the sharpest and most authoritative observers of Italian society, Nando Pagnoncelli, chairman of Ipsos Italia, is sounding the alarm. ‘Confidence in non-profit organisations has crumbled,’ he wrote in Corriere della Sera” on 6 July, commenting on the results of an Ipsos survey ‘on Minister Salvini’s decision to prevent ships belonging to humanitarian organisations that have rescued migrants from the sea from docking at Italian ports.’

According to this survey, 59% of Italians agree with Salvini’s decision, as opposed to 29% against, with predictable higher consensus among voters for Lega (99%) and the Five Star Movement (77%). Support is also very strong among over-35s, the self-employed and the working class.

As for non-profit organisations, since 2010, confidence in them has fallen from 80% to 39%. Now only 22% of Italians believe that their actions are driven by humanitarian intentions, 56% that their motives are financial in nature. This is a significant statistic which we must consider carefully.

Pagnoncelli notes how ‘they have lost the aura of goodness they used to enjoy’ since Luigi Di Maio, leader of the Five Star Movement, described them as ‘sea taxis’ in 2017. He also notes how this has recently taken a turn for the worse, with angry clashes over the acceptance of immigrants.

The widespread fall in confidence, driven by the controversy surrounding migrants (the Diciotti and Sea Watch cases and so on), extends in general to the entire non-profit world. And at times of anxiety-driven and angry communications, characterised by an aggressive ‘friend or enemy’ dichotomy, it is above all the vast and extraordinary ‘third sector’ – ‘third’ after the public sector and private profit-making businesses – that pays the price. It the third sector that focusses on social issues, welfare, cooperation and solidarity: the ‘positive social capital’ we are talking about.

Pagnoncelli continues: ‘This drop in confidence has strongly affected an entire sector, one that includes not only NGOs (non-governmental organisations) involved in sea rescues and sheltering migrants, but represents over 340,000 bodies in the most varied sectors, from personal services (infants, the elderly, the disabled and so on) to culture, sport and international cooperation.’ It’s an entire world, a varied, complex and praiseworthy one made up of over a million permanent employees and 5.5 million volunteers in companies, cooperatives, associations, foundations and social organisations of great humanity with a crucial social function. It runs from Milan to hard-working Brianza, from the Veneto and Emilia to Campania and Sicily, with strong roots in Catholicism and a well-established presence also in secular organisations and service clubs. More than one in ten Italians works in the non-profit world or does voluntary work, according to Istat data reprocessed by Fondazione Social Venture Giordano Dell’Amore.

A worried Pagnoncelli goes on: ‘Together with confidence, donations to the non-profit sector are also falling.’ And he concludes: ‘This is just one of the many side effects of the coarse communication style of today’s politicians.’

His worries are well founded. The extreme rhetoric based on fear and anger that is proving increasingly popular among the political classes represents a serious threat to the foundations of civil society.

The anti-business stance taken by the government is amplifying the difficulties of an economic world on which our well-being, work, welfare and solidarity depends. Business is the main means of social mobility in our country, a key tool for rewarding and developing ‘the capable and the deserving,’ as our Constitution says. The attacks on the non-profit world from the authorities, beginning with immigrants and ending with judgements espoused for propaganda purposes, are worsening the situation.

Of course it isn’t a case of creating an ‘NGO party’ (nobody feels the need) or of placing them centre stage in a clash between the majority and the opposition, between Salvini and Di Maio and the Democratic Party, but rather of avoiding the effects of political manipulation and safeguarding, with non-profit organisations, NGOs and the third sector, a great civil legacy of Italian society.

In fact, leaving aside the individual news stories about rescue ships, closed doors, possible violations of law (whose veracity must be verified by the judiciary) and the need to regulate, in Italy and Europe, the huge phenomenon of migration flows, it is worth focusing here on the damage that a certain type of political propaganda can have on the entire country. It is particularly damaging to the weaker sections of society, whose day-to-day problems of support and assistance are answered non-profit organisations and social volunteering, as we have mentioned.

Responsible politics naturally requires rules. But it must also make intelligent distinctions, between those who violate the law and those who dedicate their time to supporting and assisting the elderly, the sick, those that live alone and communities wracked by social disadvantage. The crisis of confidence in voluntary organisations is a serious wound on the fragile social body of Italy. It’s a wound this country does not deserve.

The Bank of Italy’s periodic survey provides a precise snapshot of the country’s business sector

Tough times for businesses. Times in which you need accurate information on the business climate, and an informed production culture which can also take advantage of reliable information. This is what we can learn by reading the ‘Indagine sulle imprese industriali e dei servizi’ (‘Survey on businesses and services’) just published by the Bank of Italy, a unique and reliable document for understanding how the business and services sector performed in 2018 and its prospects for 2019.

According to the Bank of Italy survey, in 2018 there was a significant slowdown in sales among businesses and non-financial private services with at least 20 employees. This was due to the weakening of domestic demand and the unexpected gradual deterioration of the international cycle. In the meantime, the number of businesses that have reduced their prices has fallen and the number that have increased them has risen. Of even greater significance are today’s forecasts for tomorrow. As the Bank of Italy explains, businesses expect sales and price growth to remain weak also in 2019. Nevertheless, the number of people seeking work grew again during the year, and it would appear that spending on investment also grew in 2018. It seems that the construction industry also saw upward growth.

Having said this, despite the undeniably unfavourable climate, the Italian business and services sector is not giving up and is looking for ways to develop. The growth in investments – particularly in mid-size companies – indicates a desire to look ahead and the existence of a business culture that plans for the future in a constructive way. The attention on new technologies does the same, despite all the difficulties involved. It is the farsightedness of virtuous enterprises that stands out in the Bank of Italy’s findings, which, with regard to new technologies, state: ‘The percentage of businesses which declared that they invested in advanced technology in 2018 has grown … however, the amount of spending in this area remained below 5% in half of these companies.’ It goes on: ‘Overall, we can estimate that the adoption of advanced digital technologies represents around 15% of the total spending on investment recorded by the survey.’ There is therefore a long uphill struggle towards a business culture geared towards innovation. But it’s the only way forward.

All in all, despite the detailed figures, the Bank of Italy document is for general consumption.

‘Indagine sulle imprese industriali e dei servizi’ (‘Survey on businesses and services 2018’)

Various authors.

Bank of Italy, 2019

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A book by multiple authors summarises the features of a new approach to production and profit

The social system as a whole, made up of men, women and machines, business and welfare organisations, aspirations for the future and problems to solve today. A system in which businesses and those who live and breathe them have a fundamental but not an absolute role, and in which profit and well-being go hand in hand, with all of the related constraints.

This goal, of a society that is both truly effective and efficient for all, is difficult but not impossible to achieve, as explained in Foundational Economy: The Infrastructure of Everyday Life, written by a group of researchers – economists, sociologists and others – who have set themselves the goal of outlining a possible future, starting with an analysis of the present.

The crux of their argument is the idea of the foundational economy as a basis for well-being and social cohesion. In other words, those things that we should take for granted every day: safe drinking water, unrationed electricity, advanced and accessible health services, free higher education, efficient infrastructure and public transport, care services for children and the elderly, food markets focused on the well-being of consumers and food producers. ‘Normal’ things that are in fact often anything but.

The book therefore begins by analysing the current scenario and stating how for many years European countries have followed a different path. The foundational economy is at the service of business. It intensifies competition and the focus on profit. The price we pay is growing inequality, the dissolution of social bonds and the rise of populist and nationalist sentiment.

As such, we need to turn our attention back to these ‘normal’ things, the components that make up the foundational economy. A tricky task which, as the authors point out, requires ‘a huge effort in terms of institutional imagination.’

The book has a simple and effective structure. First it describes how the foundational economy has evolved and how it should be. This is followed by an account of its ‘destruction’ and the essential features of its reconstruction and renewal process. The book finishes by underling four key premises: increased involvement of citizens, strengthening of the bond between society and business, reinventing the tax system, and creating ‘hybrid alliances’ through the development of intermediate institutions that are better able to interpret the needs of the general public.

Foundational Economy sets out something that is perhaps utopian for the most part, but also touches on things that we need to carefully consider and in which businesses (and those in power) certainly have a role to play. This is a book to be read carefully and, although you may not necessarily agree with the content, one which can also help the development of a positive business culture.

Foundational Economy: The Infrastructure of Everyday Life

The Foundational Economy Collective

Einaudi, 2019

An analysis of the transition to the circular economy reveals different development methods

Growth and development don’t always follow the same path. Granted, some steps on the path might be the same, but the final destination (of which there is often more than one) is reached from different starting points and paths. This is still true today. To understand the situation more clearly, just think of the different forms that Industry 4.0 takes. The same goes for the transition of existing business to the circular economy.

The complexity of the various possible pathways is considered by Sabine Urban in ‘The Transition of Existing Businesses Towards the Circular Economy: Circular Corporate Entrepreneurship’, her research contribution to the recently published book Circular Entrepreneurship.

The basic premise of her research is simple. The transition of businesses towards the circular economy does not take place according to one single type of process. Everything depends on the range of specific conditions in individual businesses. As Sabine Urban writes, to really understand what is going on, you have to ‘discover the real economy,’ seeking out models that underpin efficient and effective development solutions.

The real value of the research therefore lies in the limitation of the theory and the extensiveness of the practice. The first part is dedicated to the large multinationals SUEZ and Saint-Gobain, described as precursors of the circular economy on the basis of their differing development paths. SUEZ has promoted a radical ‘revolution in resources.’ Saint-Gobain, founded in 1665, is choosing process innovation as its path to a circular economy.  The second part of the research focuses on two successful, family-run businesses, the Hager Group and Soprema. They achieve the same goal by setting out from similar conditions and traditions, but with strong, specific characteristics based on the histories of the families and businesses. The third part examines organisational problems for very large companies (like ENGIE) and smaller and more agile companies (like EIM).

Reading the work of Sabine Urban is useful not only for the individual business cases that she examines but also in order to better understand the role that different production cultures play in meeting the new challenges of the economy.

‘The Transition of Existing Businesses Towards the Circular Economy: Circular Corporate Entrepreneurship’

Sabine Urban

in Circular Entrepreneurship, various authors, Springer, 2019

A book looking at man’s ability to make sense of apparently random data

A lack of references, a constantly changing backdrop, and a need to respond quickly to unforeseeable demands. These are just some of the conditions business owners have to contend with nowadays. In such a context, it is important to be able to turn to new business management concepts. One way to do so is by reading Lavorare nell’azienda liquida utilizzando l’apofenia. La capacità di riconoscere le connessioni nelle situazioni complesse (Working in Liquid Companies Using Apophenia: The Ability to Recognise Connections in Complex Situations), edited by Massimo Bornengo, Ezio Civitareale and Gianpiero Tufilli.

The book’s assertions are based on an environment – the business sector – in which there are no longer any certainties. Technology, planning and organisation increasingly blur the boundaries of skills and tasks. The workplace increasingly feels like an evasive, amorphous, constantly changing environment. To summarise this state of affairs, the editors borrow Zygmunt Bauman’s concept of liquid modernity and come up with their own concept of the liquid company.

But how do we deal with this situation? Bornengo, Civitareale and Tufilli suggest a new approach, based on two terms still foreign in every-day modern life: apophenia and pareidolia. They describe a characteristic of the human mind, namely its ability to recognise patterns or connections in random or seemingly nonsensical data. In other words, the editors explore an intellectual activity that has always been practised by human beings but which until now has not been subject to in-depth analysis. It is the process of making the incoherent and diverse simple and legible. Essentially, it is natural and normal for our minds to ‘put together’ things that are separate, and attribute meaning to things that have none. Apophenia, applied to the world of work, helps us to solve problems, find solutions, simplify and facilitate interpersonal relationships, and hold meetings.

The book therefore begins by summarising the nature of liquid modernity and liquid work, before moving on to addressing the possible future of work. Having laid the foundations, Bornengo, Civitareale and Tufilli analyse the concepts of apophenia (i.e. the ability to recognise patterns or connections in random or nonsensical data) and pareidolia (i.e. the ability to interpret random notes, objects or profiles as something else) from a historical and then from a practical point of view. The book is further enriched by a series of contributions from sociologists, lawyers, journalists, university professors and managers who touch on aspects like union relations, the job market, associations, logistics and corporate organisation.

In short, this book by Bornengo, Civitareale and Tufilli is an interesting and useful way of portraying a changing business culture that adapts to the changing circumstances in which all business organisations have to operate. The three editors write: ‘We believe that, as has always been the case throughout history, it will once again be man’s intellectual capacity that helps us to reorganise chaos and give form to liquidity.’

Lavorare nell’azienda liquida utilizzando l’apofenia. La capacità di riconoscere le connessioni nelle situazioni complesse (Working in Liquid Companies Using Apophenia: The Ability to Recognise Connections in Complex Situations)

Massimo Bornengo, Ezio Civitareale, Gianpiero Tufilli (editors)

Franco Angeli, 2019

‘Inequality is shaking up capitalism and politics.’ This ominous statement appeared on the cover of Bloomberg Businessweek, one of the most widely read magazines on Wall Street, which featured an investigative report on wealth gaps in the US and throughout the world. Indeed, the headline foregrounds one of the key issues in the international political and economic debate, a topic that is coming up more and more often in reports by the International Monetary Fund, the OECD and even the famously elitist World Economic Forum. The theme is inequality. Between different areas of the world, between the countries boosted by globalisation (the new key players in the world economy) and those that have seen their incomes and expectations change (with negative repercussions on the stability of the middle classes). Between generations, with young people experiencing increasing angst and uncertainty. Between those riding the wave of the new digital economy, with its innovative productive processes, and those who’ve been pushed aside by these phenomena, to the point of losing their jobs. Between north and south, as is the case in Italy. Four of the five European regions with the highest unemployment are in southern Italy (Sicily, Calabria, Campania and Apulia). Inequalities are wreaking havoc in well-established social and political structures, fuelling resentment and animosity (often exploited by skilled fearmongers in exchange for political approval). They are creating new cultural fractures and thwarting sustainable development strategies. It is therefore crucial for those who still possess a sense of responsibility and a forward-looking vision – be it in politics, business, or in areas where public opinion is shaped – to tackle these matters with great care.

If we are to avoid the dangers of populism and nationalism, we require ‘a more equal capitalism.’ It’s one of the arguments put forth by Raghuram Rajan in The Third Pillar: How Markets and the State Leave the Community Behind, recently published in Italy by Università Bocconi Editore. Rajan is one of the leading economists of our day. He’s been an executive at the International Monetary Fund and has served as governor of the Reserve Bank of India, the country’s central bank. He now teaches at the University of Chicago, and is thought to be in the running for a Nobel Prize. In 2003, with Luigi Zingales, he also wrote Saving Capitalism from the Capitalists (whose title was echoed by Colin Crouch’s 2018 book Can Neoliberalism Be Saved From Itself?). Rajan is currently arguing that the state, with its sovereignist tendencies, and the markets, dominated by large financial groups and digital multinationals, have become excessively powerful, creating severe new social unbalance and inequality.

There is ‘greater polarisation’ between social classes: ‘The communities most vulnerable to price competition from foreign goods have lost middle-income jobs, held by people with medium to low levels of education, and have experienced progressive decline, while individuals from the upper middle class now have the possibility to compete – on the basis of merit and skills – for dream jobs in superstar companies.’ Such a polarisation ends up crushing hopes, unleashing fears and accentuating conflict. It must therefore be avoided if we wish to preserve a market economy, in its most positive sense, and the very institutions of liberal democracy. Rajan believes that ‘true capitalism flourishes in democratic environments’ and that ‘capitalism and democracy are symbiotic and combining them leads to prosperity.’ We must therefore break the hegemony of the state and the market and restore the power of society, the ‘third pillar’ in question. This means nurturing an ‘inclusive localism’ that values open and welcoming communities, and giving these communities the means to address the needs of their citizens and encourage their participation, making good use of the mechanisms of subsidiarity. In other words, a new economic and democratic balance and a more equal economy.

To understand more, it’s worth reading Inequality: A Short History by Michele Alacevich and Anna Soci, two economists from the University of Bologna who previously taught at Columbia University in New York. The authors explain how economic theory has mostly failed to address this topic, allowing so-called ‘spontaneous market dynamics’ to take hold. But in recent years, the effects of globalisation and the emergence of a digital economy have disrupted social and productive balances as well as traditional welfare policies, casting a shadow on the core values of liberal democracy itself. A serious critical analysis is therefore required. The authors cite the relevant existing literature (including works by Joseph Stiglitz, Jean-Paul Fitoussi, Dani Rodrik, Thomas Piketty and others) and insist on the need for social reforms and active policies, for example in the EU. In their conclusions, they write that ‘how we solve the issue of inequality will determine whether we are able to give globalisation a human face, preserving the credibility of democracy as a viable political system.’

One of the main forms of inequality affects younger generations. Niccolò Zancan details the problem in his book Uno su quattro. Storie di ragazzi senza studio né lavoro (One in Four: Young People Not in Education or Work, Laterza). In Italy today, there are 1.2 million NEETs (not in employment, education or training). They’ve tried everything, from temporary positions found through employment agencies to underpaid internships, and from under-the-table odd jobs to useless education courses, before finally waving the white flag. But their surrender reflects a tragic social waste. It is a scathing indictment of a society that is becoming less and less inclusive. What to do? Invest in education, research, innovation (including social innovation) and new welfare models. In Italy and in Europe.  

One thing, however, must always be clear: there’s no such thing as a free lunch, as Lorenzo Forni, an economist at the University of Padua, states in the title of his recent book, Nessun pasto è gratis, published by Il Mulino. The subtitle reads Perché politici ed economisti non vanno d’accordo (Why Politicians and Economists Can’t Agree) The answer? the former are obsessed with short-term approval ratings, the latter are too bound to doctrines. The crux of the matter is the budget. You can circumvent it for a while, but sooner or later you have to pay the bill. And it’s the weak who have to pay. Forni mentions the cases of Argentina, Belarus and Spain. He also highlights the limits of protectionism and fiscal expansion in the US under Trump. And he warns that ‘public deficit spending, which can only be paid back through growth,’ is ‘a modern attempt to reproduce the miracle of the five loaves and two fish.’ He reminds us that growth can only be achieved through changes that make the economy more digital and competitive, not with loose spending hikes, tax cuts and printing money. In summary, yes to investments in research, education and environmental sustainability, but no to welfarism founded on debt.

Once again, this leads us back to the ideas of John Maynard Keynes, which we discussed in a blog post last week. It isn’t a matter of burdening the state with debt or overindulging in welfare policies (as some superficial and politically motivated readings have suggested in recent years), but rather of balancing budgets and stimulating investments that increase demand and employment. A contemporary adaptation of Keynes’ lesson: reducing waste, consumption, transfers and tax evasion, and investing more in innovation, productivity and competitiveness. Reforms, infrastructure, high-quality training, welfare. This is the path to sustainable growth, to fighting gaps and inequalities

The Archdiocese of Turin publishes a booklet on the links between business, work and local areas

A proper, forward-looking notion of business and work should be something everyone can agree on. But that, unfortunately, is not always the case. It’s often a matter of adverse conditions, but there are also aspects of business and work culture that need to be changed and developed. This will start from mutual understanding, perhaps beginning with young people. This was the premise of a recent initiative by the Archdiocese of Turin, to create the conditions for mutual understanding between young people, businesses, educational institutions, employers’ associations and trade unions. The project consisted of a series of round tables on various aspects of business and work. The results yielded ‘Futuro al lavoro. Riflessione sull’esperienza e sui valori del lavoro’ (‘The Future of Work: A Reflection on the Experience and Values of Work’), a collection of articles focussing on the following topics: young people and work, work and training, work and representation, work and businesses, and guidance in the world of work.  Discussions from each round table contributed different chapters to the booklet. Each begins with a description of the issue, followed by a summary of the discussion of it and a list of good practices and working proposals.

The foreword, by the Archbishop of Turin, Cesare Nosiglia, attempts to identify the common threads linking the different parts of the study. ‘The need to create adequate conditions and policies for economic development,’ Nosiglia explains, ‘is part of the idea of promoting human work, a factor that is crucial not only for the economic growth of a territory, but also for the growth of the individual and society as a whole.’ He then points out that ‘Solidarity is often depreciated because it asks people in the world of work to invest in relationships that transcend their own interests and personal benefit. The challenges of history end in defeat when we face them alone. But when we face them together, they become opportunities…’ Commenting on the role of business within today’s society, the archbishop highlights the possibility of viewing it ‘as a new form of solidarity, an opportunity to create wealth that is not strictly monetary, while rediscovering the benefits of a civilised economy.’ He proceeds to discuss the role of entrepreneurs, suggesting that business ‘can be a space capable of generating wealth for others, rather than merely for personal gain, while creating jobs for the community. This is good, quality employment that serves both the individual and society.’ He goes on: ‘Being an entrepreneur means first and foremost investing in people’s abilities, without subjugating them to the inescapable forces of money, power and profit at all costs.’

‘The Future at Work’ presents an idea of entrepreneurship that may seem limiting to some, but which certainly has much in common with the highest expressions of business culture seen in Italy today.

‘Futuro al lavoro. Riflessione sull’esperienza e sui valori del lavoro’ (‘The Future of Work: A Reflection on the Experience and Values of Work’)

Various authors.

Archdiocese of Turin, May 2019

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