The crisis of the Italian banks, like a glaring crime story, occupied the public discourse in Italy for months. A great clamor, as if Italy had never had banking scandals and was only now discovering that banks too fail, just as national states fail.
In 1892 it was a banking scandal that marked a decade of Italian history and started Giolitti's Italietta. The Banca Romana scandal consigned to irrelevance the historic left that had governed united Italy for 20 years, even with excellent results, and almost cost the career of the most talented politician that Italy has expressed in its history. John Giolitti.
The financial system is a bit like the Catholic Church; tends to wash dirty laundry at home and stay out of the limelight. Few know the names of those who pull the strings of the Italian financial system. Therefore, when a bank reaches the limit of insolvency, in reading the news and listening to the misdeeds of the directors on talk shows, one gets the impression that everyone in the banks has gone mad, from simple promoters to top managers. Despite the fact that books on banks sell like Camilleri's mysteries, there are very few who tell the true reason for the failure of a bank which is a subject that is an expression of the economic and social system of a territory and of a ruling class, rather than of the will of a handful of embezzlers.
In this wise, of rapid but intensive reading, Paolo Perulli analyzes the crisis in the relationship between banks and the territory, between capitalism and civil society.
One scholar who has wondered about the structural reasons for the fallibility of banks in Italy is Paolo Perulli, professor of economic sociology at the University of Eastern Piedmont, with important teaching experience abroad. Paolo Perulli has collected his reflections on this theme in an essay, Why banks fail The clash between capitalism and society (published by goWare, 4,99 ebook version, 9,99 book) which in its brevity and incisiveness is illuminating because it takes reflection on the banking crisis onto new and more profitable terrain for understanding the phenomenon. For this reason, we are going to briefly illustrate the content, analysis and thesis of the book below.
FROM SAVINGS TO DEBT
The debt crisis in Italy is big. The public debt grew from 52% of GDP in 1980 to 134% in 2015, with a slight downward trend. Private debt is also growing: today it is equivalent to 90% of household disposable income, while it was only 40% in 2007, that is, before the financial crisis. All of this is new and dangerous: the financial crisis has dramatically reduced families' propensity to save, which had made the Italian economic miracle possible. This raises questions about the nature of debt, its social and psychological roots, and its future sustainability. The interpretative approach proposed in the book is based on historical sociology, to evaluate the moral foundation of the relationship between capitalism and individuals in local economies.
The book collects ideas and research findings on belief systems (credit comes from: to believe) that guide individuals and groups in contemporary debt-based societies. It focuses on the transition from the origins of mutuality and trust (linked to place) of local economies to the debt mechanisms that build the globalized economies of our time. The focus is on two local communities (Siena and Vicenza) whose local economy has been affected by the impact of the financial crisis on individuals, families and small businesses.
THE PURPOSE OF THE BOOK
The purpose of the book is twofold:
– analytical: how to explain the banking crisis of the two cities, the formation of a middle class of patrimonial capitalism, and the current debt economy;
– regulatory: how local economies and societies can recover from the crisis of confidence due to severe bank losses and from the broader crisis of businesses and households.
The book tries to discover the link between micro and macro in the contemporary debt economy: how individuals and social actors inserted in the local economy are induced to change attitudes and values in a context of financial capitalism and recurring crises, and of uncertainty and even irresponsibility of the banks and of the institutions themselves.
The explanatory contribution will deepen the analysis of both exogenous (the circulation of the debt economy through bank management) and endogenous (excess trust in local elites co-responsible for bank failures; lack of modernization of the local economic culture) stress factors ; opportunism and even 'deviance' by local interest groups). The book intends to redefine the role of finance and its boundaries within local economies, bringing the productive value of Italian industrial districts back to the center of local systems.
THE BACKGROUND
Throughout history, the main legal and social institution governing the economy has been the contract stipulated between groups of free men who entered into stable relationships of interest. The contract then extended to relations between cities and nations. Finally, modern capitalism has incorporated freedom of contract among its defining characteristics, transforming its implicit association of money and myth into a new form of 'religion of debt' (a concept elaborated by Walter Benjamin in 1921).
The book will propose a genealogical approach to deconstruct the changed relationships of the contract: from the ancient forms of mutuality to contemporary urban societies. The munus it meant at the same time an office, a duty, a tax, a gift. munera they were the public offerings of events by wealthy citizens to the common people. That social gift has been reversed in contemporary societies in the private appropriation of public goods.
In the Middle Ages and the Renaissance, the places of economic power (market squares and courtyards, and the Stock Exchanges) and cultural and religious instruments were interconnected. In the subsequent social change, globalized spatial worlds dominated by monetary circulation were created. In modern capitalism the liquidity fetish (a term used by John Maynard Keynes in the 1930s) has become the most antisocial maxim of financial orthodoxy. Professional investors favor short-term forecasts that can lead to disasters. Managing risk and uncertainty is the business of gifted professionals whose professional knowledge, accuracy and trust are today in question. The debt economy reproposes the double meaning of fault, which means both guilt and debt.
RESEARCH STRATEGY AND METHODOLOGY
The purpose of the book is to evaluate whether, and how, Italian capitalism has been eroded by the debt crisis, in two urban contexts such as Siena and Vicenza. The power of the spaces of banks and financial institutions, located in the symbolic places of the two cities, is now under attack. Two banks, Monte dei Paschi di Siena founded in 1472 and Banca Popolare di Vicenza born in 1866, were the most relevant cases of the massive financial losses at the expense of thousands of small savers, 'forced' to invest in risky bank bonds for get loans. It is striking that both banks in crisis (and also those of Arezzo, Ferrara, Jesi, Chieti) are located in the "Third Italy" (as the sociologists Arnaldo Bagnasco and Carlo Trigilia defined it in the 1980s): traditional companies of small and medium-sized entrepreneurs with strong social ties and community socio-economic and ethical circuits. St
exogenous financial hocks may have produced the crisis of the social fabric and local trust networks. However, it is more plausible that the community order of local societies has undergone an involution, and that the local society itself was exposed - if not adequately monitored and modernized - to a similar outcome. The moral legitimacy of bankers and credit institutions is today questioned, and the social perception and self-perception of finance capitalists is criticized.
Their speculative expertise has reversed from good to bad reputation. Both the trust state and the credit state are in crisis. The protest of groups of small savers and citizens, and the judicial pressure on bank managers, have changed the centrality of credit institutions. This shift in engagement from the sphere of individual and family savings to the public space of discussion is noteworthy. In the past, the business model of Italian banks, concentrated on traditional intermediation, was a shelter against crises and made Italian banks more protected.
Today that paradise is lost and the failures, and the moral consequences on individuals and communities, are the focus of the book. Both the historical roots of the two banks and the peculiar capitalist ethics of local elites will be taken into consideration, up to the more recent role of local political systems and sub-cultures that made the crisis inevitable.
