Labour market deregulation, taxation and labour productivity in a Marxian–Kaldorian perspective: the case of Italy

Abstract

This paper deals with the Italian recession in a theoretical framework which combines Marxian and Kaldorian elements. The interpretation proposed of the slow rate of growth of the Italian economy in the last decades is based on the view that the implementation of a liberal agenda (mainly in the form of increasing labour market deregulation and increasing taxation on labour) has generated increasing income inequality and the reduction of the growth rate. The basic idea, derived from Kaldor, is that the decline of labour share, the increasing precariousness and measures of fiscal consolidation have reduced domestic demand with negative effects on the level of employment and the growth of labour productivity. Moreover, the increase in public debt involves increasing taxation (mainly on labour), which, in turn, contributes to the reduction of the rate of growth of labour productivity via the deterioration of the quality of the workforce.

The theoretical basis of the CGIL’s analysis of the Italian economic decline

“…The combination of these dynamics generates two outcomes: the decline of private investment as a result of the increasing financial accumulation and the decline of private consumption due to the reduction of the wage share, with the consequent reduction of internal demand 1 . In a long-run dynamic, Italy followed a recessive path which is particularly evident in the current crisis (Forges Davanzati and Giangrande, 2019).…”