A fairer future is possible, in Italy

11 June 2020

A fairer future is possible, in Italy

A FAIRER FUTURE IS POSSIBLE

Memorandum for post Covid-19 in Italy

Historically, pandemics have forced humans to break with the past and imagine their world anew. This one is no different. It is a portal, a gateway between one world and the next. We can choose to walk through it, dragging the carcasses of our prejudice and hatred, our avarice, our data banks and dead ideas, our dead rivers and smoky skies behind us.

Or we can walk through lightly, with little luggage, ready to imagine another world.

And ready to fight for it.

Arundhati Roy, April 2020

Open Questions

How should we contain the drop in productive capacity and increase in inequalities created by the Covid 19 Crisis? How can we guarantee the necessary physical distance without creating social distance and preventing a democratic expression of dissent? How should we build a fairer post Covid-19 world starting with social protection, the re-distribution of losses and a just use of the massive public funds set up to tackle the crisis? How can we avoid new recognition and legitimacy for public action precipitating into authoritarian state control? How can we avoid further concentration of private knowledge, or a mortification of democracy, civil society, and entrepreneurship, being smuggled in under the double-edged swords of “digital progress” and “major investment plans”? How can we turn the new social imbalances, changes in preferences and the acceleration of technological transformation into a change of tack towards social and environmental justice? Who are the enemies of this change of tack and which forces and alliances might be able to fight them? Which strategic objectives and interventions should take priority in the short and medium-long term?

These are the main questions that drive the current commitment of the Italian Forum on Inequality and Diversity (ForumDD), an alliance of eight active citizens’ organizations and academic and institutional research, comprising over 80 members * and project partners. We have just presented our analytical framework and proposals in a new book “Un futuro più giusto” (Il Mulino) and in a Document on the effects of the crisis (both in Italian). This essay summarizes their main points and attempts to offer our work to a wider, international audience. While some cases are specific to Italy, the commonality of the problems have led us to believe our blueprint to be useful for a wider audience. In what follows, we identify the main inequalities and structural weaknesses brought to the fore by the crisis. Despite the systemic uncertainty still with us, we also attempt to pin down the social, economic, and institutional trends triggered by the crisis. This allows us to identify the many bifurcations ahead of us and to sum them up in three possible scenarios: Normality and Progress, The Authoritarian Dynamic, and A Fairer Future for All. In order to achieve this third scenario, we propose seven short-term actions and five strategic objectives supported by concrete proposals. The goal is achievable but only if the vision and the proposals are backed up by robust alliances across society and by organized social mobilization.

Inequalities and Trends

The extent to which the pandemic was triggered by existing imbalances still needs to be fully ascertained. The imbalances and inequalities that have amplified the spread of Covid-19 and its economic, social, and health effects, however, are well known and have been previously investigated by the ForumDD. They are both global and specific to Italy.

The following elements apply the world over: unpreparedness for the pandemic linked to an exacerbated privatization of knowledge; failure of international political cooperation; a prolonged stalemate of the EU (with the exception of its sole federal institution, the ECB) before significant measures were put forward by the European Commission, assuming a shared responsibility for financing the recovery; an unprecedented share of precarious and irregular workers who are directly hit by the crisis, a feature which has been actively promoted by policy choices; very high territorial inequalities in broadband access, education, health service, and mobility; a high share of population with insufficient savings to survive even a few weeks.

There are some features that are specific to Italy: a polarization of small and medium-sized enterprises (SMEs), many of which compensate low productivity with low wages or irregular labor and have little or no liquidity set aside to survive a shock; pronounced disinvestment in the public health system, especially in local integrated health and welfare delivery; archaic and ineffective public administrations, with unsystematic exceptions; poorly implemented (although needed) decentralization.

Faced with this list of failings, it would be unreasonable not to react to the shock by changing tack. And yet, there is a real risk of no change. In order to foresee the alternative scenarios ahead of us we need first to pinpoint, however uncertain they are, the main trends triggered by the crisis. Of course, the crisis is destroying productive capacity and loading public finances with exorbitant expenses requiring a policy that redistributes the costs fairly. At the same time, however, the crisis is destabilizing old balances and opening up several bifurcations:

The breech of international value chains could penalize exports but, at the same time, offer opportunities for domestic production;
The sudden recognition of the vast number of previously invisible workers – young precarious labor, unskilled and manual labor, immigrant and migrant labor – required to produce essential goods and services could increase workers’ negotiating power;
The change in preferences towards essential services and local products (agro-food, tourism, energy) opens up opportunities for new firms and good jobs including in areas that have been marginalized over the previous 40 years, and increase the awareness of the linkages between social and environmental justice.
The acceleration in digital transformation could have very different outcomes. It could further increase – it is already increasing – the concentration in knowledge, power, and wealth in the hands of digital mega-corps or it could be employed to improve access to, and dissemination of, knowledge; it could lead to greater labor fragmentation, or be used to enhance the autonomy and responsibility of workers; it could condition our preferences, increase surveillance and thus limit our freedom, or be implemented to promote creativity and mutualism and thus increase our freedom; it could improve everybody’s health care and prevention, or be used to de-humanize health care and welfare interventions.
The new recognition and legitimacy for public action could evolve in three different directions. First, a state that is supine to pseudo-technical decisions taken by the few, veiled by the mantra of the market. Second, an authoritarian, punitive, and dirigiste state. Third, a democratic platform where the sentiments, interests, and experience of labor and citizenship are given voice and find compromise solutions through heated, open, informed, and reasonable public debate: what is sometimes called democratic experimentalism.

Three Scenarios

These multiple bifurcations, alongside the destabilization of the old order, change the parameters of what is possible and could therefore create many different scenarios. They can be summarized as follows.

The instinctive and reasonable urge to return to “before” will be used —is already being used — by all those who believe and never tire of repeating that “there is no alternative” in order to convince us that the reality we have left behind us is the best we can hope for. Of course, it is being presented as a modernized and digitalized reality – a Digital New Deal – and the flag of inequality reduction is also hoisted. The selling point is something like Normality and Progress. Yet, the whole system is supposed to be governed by the same principles and leverages as in the past forty years. This is to say: pseudo simplifications made up of uniform standards and rules that are blind to places; further sidelining both the discretional power of public administration in adapting general guidelines and labor and civic participation in public decision making; unloading on the family (and therefore mostly on women), and on civic society, the role of “social insurance of last resort”; pushing labor market flexibility; reducing the purpose of firms to mere shareholder value, thereby de facto ignoring other stakeholders (namely workers and environmental interests) and encouraging opportunistic behavior; public action, however grand, supine to the few.

In Italy, as elsewhere, there are many warning signals that this scenario is gaining ground:

Political resistance to providing emergency income for people with no guarantees or alternative income, which are disproportionately migrant/minorities;
The rhetoric of “smart-working”, “working from home” and “distance learning” that is blind to the requirements for digitalization to improve the quality of life, work, and learning and reducing inequalities;
Resistance to the idea that governing the reopening of firms and production should involve a collaborative process of firms, unions, workers, and local government in order to guarantee safety;
Provision of much-needed measures to ensure liquidity to firms that disregards the firms’ real needs and misses the chance to build a pact with society at large in order to promote environmental and social goals;
The rhetoric of inequalities supplemented by the old-fashioned logic of compensation through subsidies, while not touching wealth formation and the balance of powers;
Seeing civic activism, social enterprises and mutualism in an ancillary role, substituting public welfare with underpaid jobs, rather than as co-actors of change towards a fairer society;
Taking for granted the fact that most social needs induced by the crisis are disproportionally borne by women, with a negative impact on gender relations and exasperating imbalances in the distribution of caring roles.

The Normality and Progress option is not only unjust, sounding to many more like a threat than a reason for hope, but it is also completely inadequate to these times. To whatever extent public resources are invested, they are destined to eventually rekindle or trigger anger and resentment. These sentiments were already present before the Civid-19 crisis and are now fueled by uncertainty, anxiety, and poverty. It is easy to imagine that this scenario could boost another one: a return of the authoritarian dynamic (Karen Sennert). In this second scenario, whose selling point is something along the lines of Security and Identity, the renewed role of public action is identified with a centralized state: that is, a state enacting the decisions of the few with no pretense of public debate, conducts surveillance, sanctions outlying behavior, guarantees people against diversity and contamination, and raises walls defending closed communities, ignoring both procedural and substantial freedom. These two options could well blend together, into a situation where the state is supine with deep pockets on the economic front, and pro-active and punitive when it comes to freedom and rights.

This brings us to the scenario we propose as a positive vision for a possible future which we call A Fairer Future for All: steering towards social and environmental justice the change brought about by the shock. This is an option that can find nourishment in some positive signs that have emerged in these difficult months. These include solidarity within territorial communities, the reaction of forms of self-organization and mutualism, the new recognition of previously invisible labor, the creative reaction of entrepreneurs, the engagement of active citizens’ organizations in supporting the most vulnerable people and in advancing new ideas. From this starting point, an exit strategy can be built where the State operates through democratic experimentalism, aiming at enhancing everybody’s “capability to do things he or she has reason to value … without compromising the capability of future generations’ to have similar – or more – freedom” (as in Amartya Sen sustainable substantive freedom). Which can lead to good and stable jobs, free circulation of knowledge, dignified and safe housing, basic services appropriate to places, a rebalancing of gender relations, a voice and recognized role for immigrants and migrants, a daily life in harmony with the eco-system, new industrial filières in energy, agro-food, and local tourism, a new season for small- and medium-size enterprises (SME’s) based on innovation, etc.

These objectives are within reach. It will not be easy, however. In order to move in this direction, we need a vision accompanied by concrete proposals, combining and responding to “a multiplicity of heterogenous demands” in order to preserve an internal differentiation within a unified whole (Chantal Mouffe). The proposals should address wealth and income formation (pre-distribution) not just intervene ex post on its distribution. Moreover, they should be supported by organized social mobilization, given that the change of tack has many enemies.

“Normality” when the pandemic crisis exploded was certainly unjust for many people but it suited many others. These others will resist any change: those who have accumulated extraordinary wealth; those who have acquired strong and unprecedented control over knowledge and digital transformation; rentiers who benefit from a plethora of subsidies and tax benefits; whoever, in the public, private, or social sector, acts as an intermediary for the allocation of badly-spent public resources; whoever takes care only of their own workplace guarantees disregarding the working conditions of others; whoever reduces the idea of personal merit to a question of their capacity to accumulate wealth.

These forces will have to be counterbalanced by an alliance of people, either in the private, public, or social sector, who are committed to the general interest, considering social and environmental justice as a requisite for development and as a badge of personal merit. This alliance could include, among others, workers who are ready to safeguard all workers’ dignity and to participate in strategic decisions; young people who demand more power and a real environmental turning point; women who are able to combine gender parity with social objectives; minorities and migrants aware of their culturally regenerating role; private entrepreneurs ready to play the innovation card, in particular in green production where Italy is a potential forerunner (together with Germany, US and China); micro and small, private and social firms with strong animal spirits and creativity; managers of state-owned enterprises motivated by a “mission publique”; those civil servants who, despite a perverse system of incentives, bravely exert their discretional power in order to improve service quality.

Whether and how such an alliance can come about is an open question, which is central for the current travails of democracy. Reinvigorating public debate and conflict is the only way through which “social people”, who are otherwise “amorphous, elusive and improbable”, can manifest themselves, alongside “electoral people” and “principle people” as expressed by the Constitution (Pierre Rosanvallon). However, holding a vision and advancing radical and operational proposals aimed at rebalancing powers are necessary steps in this direction. These are the steps undertaken by the ForumDD.

Short-term interventions

The long term is nothing but a sequence of short terms. Thus, our future is already being shaped by the actions and inactions of the first weeks: the warning signals, as we said before, are loud and clear. An adjustment is necessary right away. We indicate seven steps in the right direction, relevant both for Italy and for other countries:

Social protection for everyone according to their needs. Regarding the measures rolled out by the Italian government, the ForumDD with the Alliance for Sustainable Development (ASviS) proposed linking protection of self-employed workers to their actual losses, and extending protection to the 6-7 million precarious or informal workers with no social protection whatsoever. The latter not only responds to a principle of justice and tackles a serious emergency, but also represents an opportunity to bring the informal sector and many “invisible” immigrants and migrants into contact with the state and with civic society, triggering a virtuous emancipatory process towards good jobs. Our proposal had a partial impact on the Government’s decision.
Adequate information on contagion. From the outset of the Covid-19 crisis we proposed monitoring a significant sample of the population: this will become essential in the coming months. As far as developing tracking systems is concerned, it is vital they comply with the following requisites: a clear-cut and convincing identification of the purpose the data may serve; decentralized data storage; entrusting health workers with the ultimate responsibility for guiding and reassuring people, thus satisfying the “right to obtain human intervention on the part of the controller, to express his or her point of view and to contest the decision” (Art.22, EU General Data Protection Regulation). The issue is still open.
A participatory approach to re-open and adapting businesses place by place. Based on national guidelines, re-opening businesses should be implemented place by place, by means of a governance where firms, labor, and local government interact in order to ensure and to monitor workplace safety and to adapt business to the new circumstances (for example, by allowing restaurants, bar and other shops to take over outside space). Some Regions (such as Emilia-Romagna) and municipalities are following this approach.
A participatory plan to re-open schools according to local contexts. The primary objective should be to make sure existing high inequalities in access to and quality of education do not grow even wider, owing to differences in families’ capacity to support children learning and to gaps in the quality and effectiveness of distance learning delivery (assuming there is adequate digital connection and that adequate devices are available), or the temptation to drop out of school after a long period outside the system. Considering the enormous territorial differences in contagion levels and in the availability of alternative venues for classroom teaching (at city and even district level and between urban and rural areas), general national guidelines should be implemented place by place on the basis of a public debate involving teachers, families, and local government. The issue is still open.
Liquidity support for firms conditional on just requisites. Loans guaranteed by the state, or other public interventions to support firms, should satisfy the following conditions: they should not substitute existing bank loans but rather be in addition to them; they should not be used for shares buy-back or dividend payments; and they should come together with a social pact whereby firms open up and democratize their governance, allowing other stakeholders, namely workers and citizens, to have a voice in strategic decisions, so that the re-opening and re-launching of economic activity can promote social and environmental objectives. None of these conditions are currently satisfied.
Financial support to active citizens’ organizations. Many of these organizations operate at the forefront of social emergencies, providing a social protection for the most vulnerable members of our society and combating impoverishment. The aim is to help these organizations adapt their operations to the new conditions. The support should be allocated according to their past record: a method contemplated by EU structural fund allocation. This objective has been achieved though legislative action, although the financial resources are not adequate.
Redistribution and alleviating the effects of the crisis on SMEs. The crisis has highly asymmetric effects on SMEs. These effects should be redistributed. The loss in fixed and human capital should also be avoided whenever possible by renewing management and managers. Three interventions could help (no results yet):

Reducing per capita weekly working hours: this solution is particularly well suited to the many industrial districts of Italy, where there is high homogeneity in business activity and required skills.
Workers’ buy-out: much greater use should be made of an existing mechanism by which workers in a failing firm are given the option to become owners, by means of a co-operative structure that makes use of the public subsidies they would have received if the firm had closed down.
Partnership by Cassa Depositi e Prestiti (CDP): this institution, the most important Italian investment bank, has been endowed with major resources to take stakes in private firms or to lend. It should be used to promote a renewal of management and managers, and to promote energy transition and green products.

Five Strategic Objectives and Proposal to Achieve Them

Implementing the short-term interventions listed above would be a significant step in the right direction but it would be just the beginning. A new development path driven by social and environmental justice would require pursuing five strategic objectives with unfailing determination and constancy. We present them here together with the operational means to achieve them, many of which were designed by the ForumDD before the Covid-19 crisis as part of a strategy to combat inequalities. A detailed description of each proposal can be found in the book “Un futuro più giusto”.

Our proposals do not correspond to the nth grand expenditure plan drawn up in an office to be dropped into a place regardless of the context and without the benefit of local knowledge. Rather, they aim at rebalancing powers, changing organizations, modifying how things are done, and how these powers and public money are used. Once again, the proposals are shaped to the Italian context, but some of them have a European dimension, and all of them are relevant for most countries.

Increase access to knowledge and steer digital transformation towards social and environmental justice. The first pillar to counteract the destruction of people’s opportunities and of productive capacity and to steer development in a just direction is a breakthrough in people’s access to knowledge. A jump in the number of people who, independently of their current economic and social conditions, are given the chance to make the most of their instinctive skills, of their capacity to learn and discover, and to access all available knowledge, in order to rebuild their life program. This is true both for individuals and for private firms and social enterprises. Thus, the following steps are necessary:

At EU Level:

Strategic missions aimed at social and environmental justice to be used as guidance for EU expenditure and for coordinating national policies by means of the European semester.
Establishing three European state-owned enterprises with the purpose of using open science produced by the approximately 1,000 public research infrastructures in order to sustain a leap forward in innovation in the fields of health and aging, energy transitions, and digital transformation. Thus, consumers will not be forced to pay for the innovation two or three times: through taxes, monopolistic pricing, and providing their data for free.
Committing to a change in the TRIPs treaty (a few words are enough) rebalancing the principle of guaranteeing intellectual private property against free access to knowledge.

At national Level investing in four important state-owned knowledge hubs:

National state-owned enterprises. Their investments represent 17% of total Italian private fixed investments and R&D expenditure and about one third of the share value traded at the Milan Stock Exchange. They hold a highly under-used potential, especially in energy, digital transformation, transport logistics, and engineering. For this potential to be unleashed, they must be assigned long-term strategic missions, promoting systemic actions, aligning both their strategy choices and those of national and regional administrations.
Universities. The social justice impact of these institutions can be recognized, boosted, and valorized with particular regard to increasing today’s very low enrollment and completion rates, transferring knowledge to SMEs, improving the general population’s culture and scientific literacy, and civil servant training.
Schools. The crisis has brought to the fore the importance of pedagogy, the role of schools in protecting children’s mental health, and in organizing family and economic life. This is an opportunity to recognize and overhaul these functions and to launch a national plan to fight a very high educational poverty and to redeem the social recognition of schools and teachers in our society.
Public management of digital resources. Developing and using national and local digital platforms in order to steer the acceleration of digital transformation towards social justice, to take the just road at each bifurcation ahead of us and to ensure a democratic and accountable governance of data and machine-learning algorithms, so that basic services can be designed according to people’s needs.

Promote basic services, new businesses, and good jobs, starting in marginalized areas.

Caring services, education/training, culture, entertainment, 0-km food products, low-density local tourism, self-produced energy, quality housing, flexible transport systems. These and other basic goods and services, which could benefit from a likely change in preferences and activate private, social, and public entrepreneurship, would stimulate a just development. In marginalized areas (urban peripheries, inner areas, and de-industrialized countryside), where a virtuous supply-demand cycle will not be triggered automatically, a place-based and people-empowering, participatory policy is needed. This policy should ensure that new needs brought about by the crisis will be satisfied on the market or through quality public services and that the obstacles to private and social enterprises working to satisfy these needs will be removed. Italy has already implemented in some contexts a policy of this kind, which breaks from the logic of compensating subsidies. Now is the moment to roll it out systematically.

Dignity, social protection, and strategic participation of workers through a new pact with entrepreneurs.

Relaunching development on a different basis requires the recognition of the central role played by previously invisible workers during the crisis to be transformed into investment in their dignity, social protection, and participation in firms’ strategic choices. The need for this transformation, for that matter, was glaringly evident before Covid-19.

At EU Level:

Implementing the European Pillar of Social Rights. These principles have until now been empty declarations. Prioritizing and applying these rights is a matter of urgency. For example, guaranteeing that in every EU member state all workers — without exception — are covered by social protection and insurance. Revising labor market guidelines is equally urgent, with the declared aim of reducing the precariat.

At national Level:

Implementing the current government’s pledge to introduce a minimum wage, extend to all workers the contracts agreed between the most representative employer and employee organizations, and reinforce inspections.
Increasing recourse to workers buy-out as a way for SMEs to survive and regenerate.
Introducing in medium and large firms and in industrial districts innovative governance structures such as the Labor and Citizenship Council proposed by the ForumDD. The council includes representatives of workers (from the whole filières, including those with short-term contracts) and citizens (holders of environmental and consumption interests) and evaluates firms’ strategic choices with different degrees of power according to the types of choices.
Reforming the current welfare system so that workers are protected both in ordinary circumstances and in unpredictable shocks, and re-opening a sincere, well-informed and reasonable debate at national and EU level on universal basic income.

Increase young people’s freedom to carve a life path for themselves and to contribute to their country’s future.

Well before the crisis, Italy was in the midst of a profound generational crisis with disgracefully high statistics. Covid-19 emergency has been worsening the generational crisis owing to increased uncertainty about the future and to losses of opportunities which impinge on their life perspective. At the same time, however, young people are potentially the best candidates for changing the course of Italy’s (as any other country’s) post-Covid. To play this role, they would require skills, financial independence, voice and power. Three necessary and urgent actions are needed:

An increased role of schools and universities, as in strategic objective 1.
A universal inheritance for 18-year-olds, which should be unconditional and accompanied by strategic capacity-building starting at 14, as proposed by the Forum DD (15,000 Euros from 2024, on the basis of Anthony Atkinson’s proposal). This would be largely financed by a reform of inheritance tax, which reduces the number of tax payers and increases progressivity, therefore concentrating the tax burden on the wealthy.
A deliberate and decisive generational renewal of the political and administrative class. Strategic objective 5 will contribute to the renewal of administrations, while renewing the political class will be the task of organized social mobilization.

Improve the quality and practice of public administration: change by doing

Improving the quality and practice of public administration is a sine qua non for achieving strategic objectives 1 – 4. At the same time, only by pursuing objectives 1- 4 can the quality and practice of public administration be improved. Entrusting all civil servants with a mission publique will enable them to shed their distrust and cynicism and contribute to the country’s leap forward. Yet another unnecessary grand reform should be avoided. What is needed is radical change in practice: change by doing.

In particular:

Recruiting 500,000 or more young civil servants — anyway planned because a whole generation of employees is quickly retiring — to be selected according to the skill-set and organizational capacity required by the motivating strategic objectives themselves.
Planning their career entry through mentoring and shadowing performed by the most engaged older colleagues.
Freezing and then revising the rules that create a disincentive for civil servants to exert discretional power, while at the same time introducing rigorous evaluation of organizational capacity as a way to promote individual and team work.
Strengthening the evaluation of results as a monitoring tool for active citizens’ organizations.
Adopting administrative practices that encourage systematic citizen participation (according to Article 118 of the Italian Constitution).
Implementing digital transformation as a way to improve labor organization, and to make civil servants more autonomous and responsible (as in existing pilot experiments)

This essay outlines the framework for a possible strategy: to avoid being trapped inside a single system by changing everything “in order to stay the same” (Tomasi di Lampedusa); to avoid plummeting into a desperately grim authoritarian dynamic; and not to succumb to the dangerous compromise between the two.

In a crisis of this order, the parameters of what is possible are changing. It is up to all of us to mobilize the human resources, skills, practices, and social and civic passion to build a fairer future.

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