Tarantelli’s Political Exchange versus the Stick of Deflation: A Long-Term Perspective on the Industrial Relations Model in Italy

This paper revisits Ezio Tarantelli’s proposal of political exchange, reassessing the historical meaning and long-run implications of the reorganization of Italian industrial relations culminating in the July 1993 agreement. While the literature has mainly emphasized Tarantelli’s contribution to wage moderation and coordinated bargaining, this article argues that his critique of monetarism and deflationary stabilization policies is equally central to understanding his thought. The paper reconstructs Tarantelli’s view of inflation as the expression of distributive conflict associated with the “generational leap” and his proposal of political exchange, coordinated wage moderation, and macroeconomic governance aimed at reconciling price stability with an active role for labour in economic policy. Drawing on historical reconstruction and macroeconomic evidence for Italy from the “Hot Autumn” to the early 1990s, the article shows that disinflation and trade union weakeness was inseparable from a broader reconfiguration of economic power associated with financial liberalization, central bank independence, and European monetary integration. In this context, the 1993 became part of a broader institutional regime based on wage restraint and the weakening of labour’s bargaining power.