The Banking System as an Instrument for the Progress of Social Economy According to Giuseppe Toniolo

Giuseppe Toniolo must be recognised as one of the leading Italian economists animatingthe debate on the role of credit at the turn of the XIX and XX centuries. While his contribution was limitedon theoretical grounds, it must be acknowledged that his strong reference to ethics conferred a noveland heterodox colour on his work.Toniolo accepted the view of money as goods and the bank as intermediary but, in his criticism ofcapitalism coloured by Catholic ideals, he did not fail to underline the risks involved in permitting capitalto gain dominion over labour and therefore over man.The central role of ethics in Toniolo’s work emerges clearly from his analysis of income distributionand the definition of interest rates. He criticised Böhm-Bawerk’s theory of capital and interest, suggestingthat the latter attributed an intrinsically productive value to capital.Some of Toniolo’s reflections regarding speculation are of undoubted interest today for their modernity.If Catholic morality had placed man and labour at the centre, the new social and economic order, heobserved, had made capital the protagonist. Such a change had paved the way for usury, speculation andmonopoly.Toniolo underlined the fact that the economic system no longer favoured the expansion of productivityand social wealth, preferring rather to encourage financial speculation. It was therefore essential inhis opinion for capital to re-assume its original role, so as to be no longer a cause of crisis and change inincome distribution.Toniolo called on the banking system to fulfil an important task for the progress of social economy,not however without a drastic renewal of both its operators and its instruments. Emblematic of Toniolo’sapproach is the central role attributed to the banks, especially the people’s cooperative banks, in order toremedy a number of financial crises threatening the Italian economy of his time.