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Franco Modigliani and the Italian Left-Wing: the Debate over Labor Cost (1975-1978)

Author

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  • Francesco Cattabrini

Abstract

In 1975 in Italy, as a result of an agreement between the Trade Unions and the Italian Manufacturers? Association, the escalator clause mechanism was changed, establishing a 100% indexation of wages to the rate of inflation. This crucial event led to the so-called ?Modigliani controversy?. This paper aims to examine the debate that arose in Italy following Franco Modigliani?s proposals over labor cost. Our main focus will be on the public debate that raised among economists, the majority of whom were part of the wide intellectual area gravitating around the left wing. Modigliani?s contributions sharpened the conflicts within the left and this resulted in a debate that ended with the acceptance of ?Modigliani?s recipe?: a reduction in real wages was deemed necessary to bring Italy out of the economic crisis.

Suggested Citation

  • Francesco Cattabrini, 2012. "Franco Modigliani and the Italian Left-Wing: the Debate over Labor Cost (1975-1978)," HISTORY OF ECONOMIC THOUGHT AND POLICY, FrancoAngeli Editore, vol. 0(1), pages 75-95.
    • Handle: RePEc:fan:spespe:v:html10.3280/spe2012-001006
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    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Il salario nelle crisi: Modigliani e l’inizio della fine del Pci
      by Lorenzo Battisti in Pensieri Economici on 2012-07-20 00:57:00

    Citations

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    Cited by:

    1. Giovanni Michelagnoli, 2015. "The Shaping of Incomes Policy in the Eighties. The Contribution of Ezio Tarantelli," HISTORY OF ECONOMIC THOUGHT AND POLICY, FrancoAngeli Editore, vol. 2015(2), pages 37-56.
    2. Francesco Cattabrini & Fabio Masini, 2017. "Balance of Payment, Wage Indexation and Growth: the Role of CESPE in Italian Policy-Making in the 1970s," HISTORY OF ECONOMIC THOUGHT AND POLICY, FrancoAngeli Editore, vol. 2017(2), pages 25-48.
    3. Giovanni Michelagnoli, 2019. "Federico Caff? on the economic science in Italy," HISTORY OF ECONOMIC THOUGHT AND POLICY, FrancoAngeli Editore, vol. 8(2), pages 63-83.
    4. Piero Bini, 2013. "The Italian Economists and the Crisis of the Nineteenseventies. The Rise and Fall of the "Conflict Paradigm"," HISTORY OF ECONOMIC THOUGHT AND POLICY, FrancoAngeli Editore, vol. 2013(1), pages 73-101.

    More about this item

    JEL classification:

    • B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies

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