Shock Treatment

Nowhere in the Western world, save Cuba, does a government own and run so many businesses as in Italy. The practice took hold during the Fascist corporate state days of Benito Mussolini, and has been kept alive by a strange coalition of left-leaning politicians and swashbuckling economic bureaucrats anxious to expand their empires. Almost every time an Italian rides a train, plane or ship, lights up a cigarette, salts his food or gasses up his car, he is patronizing a government monopoly. And pretty soon he will be doing so whenever he switches on the lights.

Late one night last week, after five hours of debate, the Cabinet of Christian Democratic Premier Amintore Fanfani announced plans to nationalize Italy's electric power industry. This was part of the price that Fanfani had agreed to pay for the parliamentary support of powerful fellow-traveling Socialist Pietro Nenni. Nenni, who frankly regards this as a step toward the end of free enterprise in Italy, has scored a real coup: Italy's power industry has more than doubled its output in the last decade (to 60 billion kilowatt-hours last year) and has prospered despite the fact that its rates are the Common Market's cheapest. Even its critics could find only one thing to fault: the industry, going where the business is, has built much more power capacity in booming north Italy than in the poorer south.

If, as seems certain, Parliament approves the nationalization, the government will buy the shares of publicly listed power companies for the average of their 1959-61 prices--a generous 23% above currently depressed levels. Prices for non-listed shares will be based on the valuations that the companies carried on their 1960 books. All told, the government will pay out a total of $2.4 billion.

The power companies, which will be pressured by the government to spend the cash in southern Italy, plan to continue the diversification that they have foresightedly been undertaking for the past decade. The Edison Group, which is Italy's biggest utility and one of Nenni's favorite punching bags, has already spread into dozens of industries from steel to synthetic fibers. But even the fat compensation promised the companies is scant solace to many Italian businessmen, who fear that this is only the beginning of further government assaults on private enterprise. Cried Alberto Ferioli, deputy secretary of the business-minded Liberal Party: "This policy threatens Italy's economic miracle." And even Ernesto Manuelli, president of the state-owned Finsider steel combine, was moved to concede: "For the consumer, this is likely to make things worse rather than better."

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