ABSTRACT: Underlines that the real engine of a market economy is the "principle of profit and losses, which are as important and perhaps more important that profit". Analyses the characteristics of a "responsible company" for the functioning of which "private interest and general interest coincide". Public interventions in the field of economy generate the worst catastrophes. What applies to public economy applies also to "those private enterprises that are glad to be protected by the principle of irresponsibility". Recalls the warnings of Salvemini (1) on the fascist economy.

(1994 - IL QUOTIDIANO RADICALE, 22 November 1993)

There is a relentless talk of the fact that the essence of the market economy is the deplorable drive of profit. This half truth seems immortal, but certainly it does not help understand the nature of a free economy. This is in fact based on the personal responsibility of the authors of the economic choices, i.e. on the principle of profit and losses, which are as important, and perhaps even more important, than profit itself. The absence of a direct assumption of responsibility, in other words, the absence of a proper mechanism of profit and losses, results in an irrational use of the resources and in stagnation. To realize this is not necessary to refer to the experience of the communist countries, where the loss of the drive of profit caused the most enormous economic, social and environmental catastrophe of the modern age; we need only look at what occurred with our state participations, whose shameful state of ruin while conferring strength to the position of those who do not believe in the public prese

nce (rectiu, politics) in the economy, confirms an ancient and half-forgotten truth.

With no public interest, a responsible company can pursue its interest only at the condition of serving the general interest of its clients: to make profits it must offer goods or services that deserve to be bought at competitive prices. The more it serves the interests of the buyers the greater the profits and revenues. When, on the other hand, politics intervenes, the situation changes completely: public subsidies cover the losses, the passive company becomes possible. In this case, the general interest is subordinated to the interest of the productive factors used in the company. These receive an income that does not produce, which means that someone else produces an income he does not receive. The passive company, in other words, represents a means for the redistribution of income (and power) from the productive and efficient sector to the subsidized political one.

It may be noticed that I talked generally about "passive" company, without specifying whether "public" or "private". The explanation is simple: the same considerations that apply to semi-national companies, for instance, apply also to those private companies that are glad to be protected by the principle of irresponsibility and obtain public subsidies, thus confirming what Gaetano Salvemini said about the fascist Italy: "In the fascist Italy, the profit is private and individual, the losses are public and social". The praxis of subsidizing inefficient private companies or supporting ruined semi-national companies with the noble excuse of safeguarding employment levels, cannot be supported from the point of view of efficiency and equity, contrary to the European agreements and, above all, the primary cause of that disastrous combination between politics and economics which plagued Italy with the most widespread and extensive system of corruption of the Western countries. These subsidies subtract resources fro

m those who could use them usefully to attribute them to inefficient companies; they take money out of everyone's pockets, including the poor, to put them in those of all but poor entrepreneurs; they violate the European rules on competition and offer major opportunities of corruption for politicians, party officials and businessmen. To make operative the system of rules without which the market cannot exist the recipe is not original but irreplaceable: throw the politicians out of the economy, restore the ethics of responsibility. This applies both to the state-controlled enterprises, which must be disbanded and given back to the market economy, and for private entrepreneurs, who must lose the bad habit of requesting subsidies and aid. The market discipline, in the absence of interference from the politicians, is the only effective way of keeping at bay what Adam Smith called "the low rapacity and the spirit of monopoly of merchants and manufacturers".

Translator's notes

(1) SALVEMINI GAETANO. (Molfetta 1873 - Sorrento 1957). Italian historian and politician. Socialist since 1893, he founded the weekly "L'Unità", which soon became an important seat of debates. In 1925 in Florence, together with the Rosselli brothers, he founded the clandestine antifascist publication "Non mollare". Subsequently he fled abroad (to the U.S.), where he promoted antifascist information campaigns.