Because tractors and Stellantis asphalt the singers of the free market
Stellantis asking the Italian government for subsidies to avoid closing the former Fiat factories is the manifestation of a system that is no longer capitalist but neo-feudal, in which the economy is subordinated to political power relations. Giorgio Meletti's analysis for the Appunti di Stefano Feltri newsletter
But in short, what do these people ask about tractors ?
Let's get the facts straight.
We are not talking about exploited plebs but about entrepreneurs who protest sitting on a tractor worth at least 50 thousand euros and own a company worth at least one million euros.
This does not imply the classic "they are rich, screw them" which is also very popular. On the contrary, it means that when companies take to the streets with proletarian styles or, like Stellantis, blackmail the State by demanding inventiveness in order not to close down, we see the world in reverse, that is, a capitalism that no longer works as before.
There is a further specification to make. Cultivating the land and breeding (pigs or cattle or poultry) are two different professions for an obvious structural reason: you can stop breeding and importing meat, ham and eggs, but you cannot stop cultivating the land. And here we come to the point.
Off market
Farmers are in difficulty, but not because of European obligations, taxes or the cost of agricultural diesel, which are the details we love to argue about not to mention the reality. Simply the Italian farmers first, the European ones immediately behind, are going out of the market.
The market theory (which increasingly reveals itself as valid in a concrete historical phase in the past while today tends to remain as a mere superstition without confirmation in reality) makes it simple: if you are out of the market you have to die, that is, close down. This once made sense "almost" always. Today a little less.
Nowadays industrial companies do not go bankrupt, but it is the multinational that closes the Italian factory to transfer the same production to a more competitive place.
However, we hold as valid the idea that if Italy is not competitive in the car industry it is right that it imports cars, and that if it is not competitive in steel it is right that it imports rolls of sheet metal.
But when the Italian market is invaded by Chilean oranges at unbeatable prices, something occurs that market theology had not foreseen: the bankruptcy and closure of agriculture.
According to the diehard market worshipers, the future scenario should foresee that, together with abandoned factories and warehouses in the urban outskirts, swamps will return to spread in a rural landscape of abandoned fields, dry orchards, olive groves transformed into jungle. But this won't happen: behind the tractor protest there is simply uncertainty about how not to make it happen, but it certainly won't happen.
In fact, history teaches us that, when the reasons of the market clash with the reasons of society, the latter prevail, perhaps with a serious delay, but they prevail.
There is therefore a reality that superstitious marketists reject: not everything can be subject to the rules of the market and from day one the capitalist system has made compromises with reality.
The first social protection systems for the poor date back over two centuries, and the freedom of enterprise, always proclaimed by its priests to be absolute and without constraints, has always been limited, for example by laws on working hours or pensions paid by the employer. And in any case we know that European agriculture has been heavily subsidized for 60 years.
Power relations
This balance – free competition within a framework of limits and rules – has broken down for two reasons.
First reason: it is not true that the free market (in its infinite wisdom, better known as Adam Smith's "invisible hand" which, however, according to Joseph Stiglitz is invisible because it does not exist…) solves all the world's problems.
For example, it does not know how to address the issue of climate change and this is why European politics orders the car industry to stop using internal combustion engines by 2035. Ask yourself if the political authority that decides the type of engine to be fitted on cars you are more like the free market or the Soviet Union.
Then ask yourself why the auto industry suffers in silence. And now give yourself the right answer: the car industry knows that its future does not depend on its competitiveness in a free market but on the balance of power in a wine-driven economy that has very little to do with the free market.
The CEO of Stellantis Tavares asking the Italian government for subsidies to avoid closing the former Fiat factories is the manifestation of a system that is no longer capitalist but neo-feudal, in which the economy is subordinated to political power relations.
When capitalism developed, the economic theory that accompanied it (which was considered definitive) did not contemplate the hypothesis that entire economic sectors could fail.
The liberal battles against agricultural rent aimed at reducing it, in order to lower the cost of food and therefore the cost of reproducing the workforce for industry. But they never aimed to make the British landlords go bankrupt by importing all the necessary grain.
Just as it was never conceived that railways or highways or telephones could fail. Simply, where there was a problem, "market failure" was sanctioned and so on with the subsidies.
And here we come to the second reason for the total imbalance: globalization. What in Adam Smith's classical theory was the "perfect market", i.e. an abstraction, a polar star towards which to aim, seems to have come true.
Competition is free without geographical limits (the cost of transport has become irrelevant), without disparities in knowledge (all information is online in real time) and without legal or customs barriers.
At this point, however, we realize that the perfect market was fine as an abstract ideal reference, because now the champions of the competition no longer know what to compete on.
Sergio Marchionne himself admitted it, shortly before his death, that it is madness to have six or seven large automotive groups in the world spending six or seven times the large capital needed to design six or seven identical car models.
Car factories now compete on their respective ability to attract state incentives around the world: Stellantis extracts more subsidies from the Polish government than from the Italian one and is now asking Giorgia Meloni for a raise.
However, where competition works the effect is socially very costly: whoever wins eats, whoever loses dies. What happens in agriculture.
Managing the emergency
Let's go back to the previous discussion. The free market is not capable of managing the environmental emergency and is not far-sighted enough to keep land fallow. The European government imposes obligations but only on European farmers who see their market invaded by foreign products at rock-bottom prices.
Foreign competition does not have to be subject to environmental obligations, but it would still be a winner. And if someone produces oranges at 40 cents a kilo, the one who produces them at 60 is a dead man, and he died instantly thanks to the mechanisms of the perfect market lubricated by globalization. All it takes is a well-organized large-scale retail purchasing system.
The buyer from Coop, or Esselunga or Carrefour will go to the pear producer in Romagna and tell him that this year he needs pears at 35 cents because otherwise he won't get the bonus at the end of the year, and that if our manufacturer doesn't give them to him at that price, he already has an offer ready from Argentina.
There are numerous ways out, and this is precisely the problem. European governments, in the name of the market, could send farmers to hell with their tractors, but for consistency they should also allow farmers to pollute at will and the car industry to insist on the internal combustion engine.
Or they can manage the emergency, hardly by backing down on fallow land and pesticides, more realistically by reshaping the subsidies.
Ultimately Europe will have to decide how much and how to subsidize agriculture more than it currently does.
Whatever happens, the tractors show us that the entire Western economic system has gone haywire: to the point that in global competition it is cornered by Chinese capitalism, a very competitive economy, governed by the Chinese Communist Party and its dictator elected for life . As you can see, the change is such that we no longer have the words to call things.
(Excerpt from the Notes newsletter by Stefano Feltri)
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/agricoltori-stellantis-sussidi/ on Sun, 11 Feb 2024 07:01:19 +0000.