10

Serra and Underdevelopment

Cosimo Perrotta

1 Underdevelopment in Serra and as a general concept

This paper is in some respects a continuation of a previous article,1 in

which we set out to demonstrate that Antonio Serra took a fully mercan-
tilist approach; that – on examining the Kingdom of Naples – he was
the first to investigate economic backwardness; and, finally, that he was
also the first to analyse economic dependence (together with Luis Ortiz,2
but more in depth). Here we mean to show that Serra’s analysis is also
useful to understand both the origin of Southern Italy’s backwardness
and some basic processes of underdevelopment in general.
Backwardness in Southern Italy (Serra’s country) began four centuries
before his publication. It is remarkable that the economic phenomena
he analyses and those described by historians of the Middle Ages for this
region are much the same. Even more striking is the fact that the same pre-
modern situation – in its structural elements – lasted for another three and
a half centuries after Serra’s book, until the middle of the 20th century.3
On the other hand, the basic processes that Serra describes are very similar
to those which development economists addressed in the second half of
the 20th century and which they labelled as underdevelopment.
To begin with, we should stress that underdevelopment is not a
synonym for backwardness. While the development economists of the
1940s and 1950s used the two terms interchangeably, later on a concep-
tual distinction emerged. In general, an economy is considered back-
ward when it is poor and has not yet been touched by industrialization,
and this distinction is based mainly on traditional agriculture. In the
1960s and 1970s, economists began to use underdevelopment in the
sense of an economy which – although still poor and little industrial-
ized – is transformed by a relationship with a stronger, more developed

214
 Serra and Underdevelopment 215

economy. The two economies develop a dependence on each other, in

which the stronger one reshapes the other to its own advantage. It is a
spontaneous, although not necessary, process.4
Both concepts – backwardness and underdevelopment – are relative.
The situations that they describe are definable only in comparison with
developed economies, where steady growth is a normal trend and a
shared value. The idea of backwardness first arose, although not as a
theoretical category, among the mercantilists, notably including Starkey,5
Ortiz,6 and Serra,7 as well as, later on, P.M. Doria,8 Uztáriz,9 and Ulloa.10
In the period of the Enlightenment, Genovesi11 and his pupils, above all
Galanti,12 proposed a more articulated version of the concept, taking an
essentially historical perspective. List adopted a similar line, in contrast
to the classical approach. This concept gradually took shape through the
combined efforts of all these authors. They lamented the relative back-
wardness of their own country, taking other countries as positive exam-
ples and calling for a policy of modernization and industrialization.13
The idea of underdevelopment – although already adumbrated in
some contexts – emerged as a category in the 1960s, but underdevelop-
ment itself had come about very early. It began not long after economic
development – that is, that process of steady growth in the production
of wealth which started in Western Europe around the year 1000. When
two economies of very different strength and advancement come into
contact, the tendency towards diffusion of development is stymied by
the opposite tendency towards polarization. The former tendency was
best explained by Smith, who wrote that capital in mature economies
yields ever less as it increases, with progressive saturation of the market.
A part of capital then migrates towards new countries, which have yet
to develop.14 A similar view is implicit in many versions of the classical
(Ricardian) law of comparative advantages and in general in the neo-
classical approach, which tends to see underdevelopment as a conse-
quence of the lack of free trade.
The tendency towards polarization has been illustrated by some of
the most important development economists, such as Singer, Prebisch,
Hirschman, Perroux, Furtado, and Balogh,15 and it was best expressed
in Myrdal’s application of the cumulative process model to poor econo-
mies.16 However, the idea was already present in Marx’s concept of capi-
talist accumulation, which implies the centralization of capital and of
wealth in general. Marx’s followers maintained this approach.17
The cause of polarization is that factors of production (especially
capital) tend to go where their remuneration is higher – that is, towards
the more developed countries. In backward areas, there is often such
216 Cosimo Perrotta

poverty among economic factors that the cost of production is higher

than in rich areas. The early development economists described this
situation as the vicious circle of poverty, in which factors hinder one
another, producing a general immobility. The vicious circle refers to
skilled labour, technologies, efficiency in administration, effective
demand for products, and so on.18 In general the lack of supply also
produces a lack of demand and vice versa.
Serra does not employ a concept like polarization, but his way of
connecting the different factors of development or lack thereof recalls
the idea. In his analysis, as in those of many development economists, it
clearly appears that polarization is not only a spontaneous tendency but
is often implemented or reinforced by human will. More often than not,
it is difficult to separate the objective aspect from the efforts made by
the agents of the stronger economy to turn economic processes to their
advantage. On this aspect, it is important to read the pioneering article
of Erik and Sophus Reinert, which uses Serra’s categories to analyse
today’s literature about underdevelopment and dependence.19
However, polarization is not the only feature of underdevelopment.
Equally important are the internal factors which block potential growth,
converging in conservative defence of the existing social structure.
Privileges, rents, and corporate interests are in general very strong in the
weaker economies. People who have vested interests oppose the trans-
formations produced by development because the latter would harm
them.
Thus, we can say that underdevelopment derives from the combina-
tion of external and internal factors. Quite often, such a connection
produces an alliance, covert or manifest, between outer and inner social
groups, who aim to impede changes or manage them to their own
advantage. This kind of process came under way as early as the 12th
century in Southern Italy; in the 16th-17th century in Spain; in Ireland
from the 17th century to 19th century; in post-colonial countries; in
Eastern Europe, intermittently; and so on. And Southern Italy was most
probably the first underdeveloped economy in history.
Serra does not, of course, distinguish between backwardness and
underdevelopment. He starts by describing four factors (“accidents”)
that he holds necessary for the enrichment of a country – that is, for
development (he expresses development in the mercantilist way, as an
inflow of gold and silver – of monetary capital). The four factors are
these: manufacturing activities, extensive trade, an enterprising attitude
(“people’s quality”, as the original text says), and good government. The
Kingdom of Naples, he repeats time and again, is poor because it lacks all
 Serra and Underdevelopment 217

of these factors. In the second half of the book, Serra associates this lack
with the hold that foreign merchants had on the Kingdom’s economy.
Thus, he goes on from description of a backward situation to analysis of
dependence.
In Section 2 we will examine the natural causes of Southern Italy’s
backwardness both in Serra’s reflection and in reality. We will then show
the convergence between Serra, later historians, and development econ-
omists on the internal causes of this standstill. First, we will examine the
economic causes (Section 3), and then go on to the political and social
ones (Section 4). The same convergence will clearly appear in Serra’s
treatment of the basic role that foreign merchants played in the origins
of underdevelopment (Section 5) and in his projects for remedies to the
standstill (Section 6).

2 Natural poverty of Southern Italy

The first “accident” (i.e. factor) that Serra mentions as an obstacle to

the Kingdom of Naples’ development is a natural one: the geograph-
ical position, which, he states, is worse than that of any other region.
Unlike Venice, for instance, the Kingdom is far away from both central-
northern Europe and Asia (p. 119),20 and it is not a place of transit to go
to other countries (p. 127).
Although Serra overrates this shortcoming, there can be no denying
it. In the medieval period, given its peripheral position, Southern Italy
not only found it difficult to trade with Europe but was also occupied
time and again by new invaders. This created a situation of perma-
nent disorder and instability, which stood in the way of a flourishing
economy.21
In the Dark Ages, this region had maintained a strong connection
with Byzantium and Byzantium’s maritime trade, which, unlike western
trade, never ceased.22 This is why the first maritime republics in Italy
were from the south (together with Venice). In the 9th century, Amalfi’s
trade was more important and extensive than that of Venice.23 However,
such trade was always confined to exchange between luxuries from the
eastern Mediterranean countries and agricultural goods from Southern
Italy. In contrast with the consequences it led to in the northern cities,
this trade never gave rise to an increase in craft activities and growth in
production.24
Another natural factor mentioned by Serra, “agricultural surplus”,
seems to contrast with the first. Following his adversary, Marc’Antonio
de Santis, on this point,25 Serra states that the Kingdom’s agricultural
218 Cosimo Perrotta

products “exceed the amount required for the needs or comforts of the
inhabitants” (pp. 119, 135) and that the accident of agricultural surplus
in Naples “occurs to perfection” (p. 133). The paradox expressed by de
Santis is that, despite the export of this huge surplus, the Kingdom lacks
money.
Here Serra confuses the surplus relative to the population’s needs with
the surplus that goes to the great landowners. The latter did exist in
Naples, while the former did not. In fact, Southern Italy has always been
somewhat thinly populated, and up to the mid 20th century the peas-
ants and labourers there had always gone hungry.
Serra is to some extent conditioned by the time-honoured myth of the
prosperous and generous nature of Southern Italy. This myth, which de
Santis clung to, was created by the first southern dynasties and demol-
ished as late as 1904 by Giustino Fortunato.26 In any case, Serra takes for
granted de Santis’s paradox: why is there such scarcity of money in the
Kingdom despite such a large volume of exports?
De Santis – as is well known – saw the cause of this situation in the
excessively low exchange value of the Kingdom’s currency, thanks to
which foreigners importing goods from the Kingdom could speculate
on the difference in value between currencies. Serra, however, came up
with a challenging answer. He shifted the question from the familiar
monetary level to a new level: the economy as a whole.
All the historians whose judgement has not been marred by the anti-
mercantilist bias have greatly appreciated Serra’s view of the problem,27
which had a wider scope and went deeper than de Santis’s. However,
Zagari and Rosselli rightly note that, as far as the short run is concerned,
de Santis’s empirical analysis is not totally unfounded.28
Before examining Serra’s answer, we have to stress that de Santis’s
supposed paradox did not exist. The land of Southern Italy was in
general far from fertile, consisting mainly of mountains, with extensive
Karst or clayey soil, poor in water, with torrent-like rivers.29 Since the
Dark Ages, the nature of the territory had favoured the persistence of
the long-established latifundia (large estates), concentrating the surplus
in the hands of the big landowners,30 hindering the formation of cities
in the internal areas and rendering transport and communications
extremely difficult.
With political and military unrest coming on top of all this, artisanal
activities and the consequent export of manufactured commodities
hardly stood much chance of growing. Thus, the export of agricultural
goods alone could hardly match the import of manufactured goods that
the Kingdom needed.
 Serra and Underdevelopment 219

Note that the situation was just the opposite in Northern Italy. There,
exceptionally fertile land rich in rivers favoured the breakup of ancient
latifundia, to the advantage of communities in the internal areas. This
breakup allowed cities to control – and increase – their agricultural
surplus, which in turn extended artisanal activities and developed trade,
thanks also to easy river transport.31 Serra overlooks the scant fertility
of the Kingdom’s soil, and yet he hints at the main issue – that is, the
lack of manufactured production. His book is dedicated to accounting
for de Santis’s supposed paradox. His explanation is divided into three
parts. In part 1 of the book, Serra shows that the Kingdom lacks money
because it lacks the above-mentioned four factors of development, while
in part 2 he confutes de Santis’s monetary arguments. Part 3, devoted to
the “remedies”, is in fact dominated by Serra’s thesis that the inflow of
money from exports is overwhelmed by an enormous outflow of money
as a result of three types of payment: interest on the public and private
debt, plus other rents (financial or from estates) paid to foreigners; profits
produced by foreigners’ businesses in trade or production; and imports.

3 The lack of economic factors for development

Serra, with a typical mercantilist approach, maintains that agricultural

surplus is in any case far less important for development than manu-
factured products. The latter are more important because they do not
depend on the variable weather and other natural conditions; can
be multiplied indefinitely and at decreasing costs; do not deteriorate
and so will sooner or later be sold; and generally yield higher earnings
(p. 121).
Manufacturing activities, Serra stresses, are the first cause of wealth
in a state. Venice and Genoa have no agricultural production at all, but
they enjoy great riches because they abound in manufactures of several
types, while Naples, practically devoid of manufactures, remains poor
(pp. 123, 133–135).
Serra’s thesis is fully confirmed by historians and development econo-
mists. Manufactured production has always been the driving force for
transition from a static backward economy to a developed one. In medi-
eval times, this came about through the extension of artisanal production
(for example, in Northern Italy, Flanders, Barcelona, etc.); in the modern
era, through manufactures (for example, in 16th-century Holland and
England, and then in France). Later, this transition was accomplished
thanks to industrialization (in 19th-century Germany, in 20th-century
Asian “tigers”, and finally in today’s emerging economies).
220 Cosimo Perrotta

Development economists have shown that, when a backward country –

for lack of manufactured production – exchanges its raw materials and
agricultural products for manufactured (industrial) products, it does
not achieve development. This is the ultimate meaning of Singer’s and
Prebisch’s explanation of the deterioration of poor countries’ terms of
trade.32 This kind of exchange generates a negative cumulative process
in the backward country which, needing manufactured goods, is forced
to concentrate entirely on agricultural production to buy manufactured
goods from the developed countries.
All the development economics authors have stated from the very outset
that development can only be based on industrialization.33 Mercantilists
had expressed the same thesis for more than two centuries.34 Serra is one
of the most brilliant representatives of their approach.
On Southern Italy, Serra’s description perfectly reflects the state of
affairs in the Kingdom in the previous centuries. Most historians agree
that it was condemned to backwardness because its artisanal produc-
tion did not grow and the exportation of manufactured goods was
never implemented. These, they say, were the necessary conditions for
development.35
The Kingdom’s main income remained agricultural rent from the
large estates, obtained with primitive methods of cultivation. The lack
of other activities was the result of the mistaken policy of the state. As
soon as Southern Italy was unified (by the Normans in the 11th and
12th centuries), the sovereigns squeezed the cities by imposing very
heavy taxes and by severely restricting their autonomy.36 The maritime
cities struggled hard to preserve their autonomy, but in the end they
were defeated.37
This policy was implemented not only for fiscal reasons. The sover-
eigns were afraid of losing control over the cities with weakening of the
central power. In the end, they destroyed the cities’ foreign commerce.
If there had been any chance for artisanal activities to develop, it was
definitely precluded by the state.
After Serra, the preference for manufactures vanished. The 18th
century authors thought that both agriculture and manufactures needed
a great deal of attention to develop the economy.38 In the second half
of the 19th century, the authors on the “Southern question”, as it is
called, believed that Southern Italy’s development depended solely on
the modernization of agriculture.39 However, this project failed. Then, at
the beginning of the 20th century, Francesco Saverio Nitti finally called
for the industrialization of the region.40 Much later, after World War II,
 Serra and Underdevelopment 221

the Italian governments sought to bring industrialization to the south,

with ambiguous results.

* * *
The other economic factor which is necessary for development, according
to Serra, is extensive trade. Here, too, the model is Venice, whose exten-
sive trade is largely due to manufacturing activities. Thus, Serra depicts,
in elementary terms, a cumulative process, in which an increase in trade
and increase in production reinforce each other. Later, he repeats this
concept and adds effective government to the factors which reinforce
one another (pp. 139–141).
On the contrary, in Naples, besides the unfavourable geographical
position, there is an indolent population and a lack of industries. All
this necessarily leads to the lack of extensive trade. The only possible
trade is internal, but this – Serra maintains – cannot produce wealth
(pp. 125–127). The sterility of domestic trade was a conviction shared
by all 17th century authors. This is the main shortcoming of early
mercantilism. At that time, foreign trade was the driving force of devel-
opment, and the authors consequently rejected internal demand as
an outlet for domestic production. Only at the end of the century did
the idea slowly gain ground that the domestic market also could foster
development.

4 Internal causes of the standstill

The other two factors which are necessary for development (although
not strictly economic), according to Serra, are an enterprising popula-
tion and effective government, again lacking in the Kingdom; and their
absence, we may say, leads in turn to the lack of the factors already
examined (manufacturing activities and extensive trade).
Let us begin with effective government. Serra does not say explicitly
that Naples lacks it, but the comparison with Venice means precisely
that Naples does. This element – the author states – is the most powerful
factor of development; it is the efficient cause which contains the other
causes (pp. 129–131).
An effective government singles out what every economic activity
needs, sees the obstacles that must be removed, and finds the ways to
reach the respective goals. It must be aware of the consequences of its
decisions. First of all, it must prevent any disorder (pp. 127–133). In
Venice, Serra writes, there is a collective government, made of several
222 Cosimo Perrotta

bodies, the election and functions of which are strictly regulated in

detail. The republican organization of the government endows norms
and policies with stability and offers economic agents certainty. It also
takes advantage of the experience of the body members and allows
the continuity of governance (pp. 139–145). This is not the case for
Naples, whose policies last only for the term of office of the viceroy
(p. 141).
In sum, Serra suggests that Venetian government is stable and effi-
cient because it is performed by the local population and represents the
interests of the people (or at least of most of them). This is why the insti-
tutions act so carefully and appropriately and why they are concerned
about the wealth of the community. Thus, in Venice – Serra implies in
his analysis – the interests of the common people and those of the elite
converge, so that the public interest is shared as the basic value of the
commonwealth. Enriching society is the common aim.
The inadequacy of the Kingdom’s government suggested by Serra is
fully confirmed by most historians, who date it back to the period of the
formation of the southern state. The general opinion is that the unified
state, far from favouring development, became an insuperable obstacle
in the way of it.41
It would not be appropriate to interpret Serra’s reflection on effective
government as commitment to democracy or political independence (as
in fact some have).42 Such aspirations were completely extraneous to his
times. However, our author seems to grasp one of the most basic causes
of Southern Italy’s underdevelopment: the hiatus between the people
and the state. From the outset, the sovereigns of the southern kingdom
perceived themselves, and were perceived, as invaders and dominators
rather than as representatives of the local population. This was also due
to the lack of cultural homogeneity in Southern Italy’s regions, which
varied greatly in religion, customs, and even language.43
The sovereigns were not accountable to the people for their deci-
sions, nor did they care about their approval. Rather, they relied on
feudal landlords, many of whom were changed when the dynasty
changed. They also relied on the Church (whose institutions were, in
great number, among the big landowners) and on foreign merchants
(see below). This explains why the sovereigns were so callous towards
the cities and so indifferent to the wretched conditions of the
common people.
This attitude gave rise to deep reciprocal distrust and bitter hostility
between the institutions and the people. The institutions were rightly
seen as instruments in the hands of the rich and the privileged. Rules
 Serra and Underdevelopment 223

and public decisions were interpreted as hypocritical ways of asserting

the interests of the powerful. Distrust of the institutions has proved the
most lasting factor of southern underdevelopment, even nowadays, and
it also characterizes underdeveloped societies in general.

* * *
The last factor of development mentioned by Serra is an enterprising
population – that is, people who are industrious, diligent, inventive,
who look out for opportunities for their investments and often travel
abroad for their business. This, says the author, is the main factor for
private enrichment. He mentions, as positive examples, the people of
Genoa, Venice, Florence, and Bergamo, as well as Spain, France, and
Germany. On the other hand, the Kingdom of Naples’ population is indo-
lent and lazy. Even the local industries in Naples are run by foreigners
from Northern Italy. This is why Genoa, a barren state, is so rich, while
Naples, with its fertile land, is poor (pp. 123–125, 155).
Serra appears obsessed by this attitude of the local population (pp. 153,
163, 193, 207). He never tries to develop the concept or look into the
causes, but he is certain that this feature is decisive for all the other
aspects of the Kingdom’s backwardness. Bearing in mind the origins
of Southern Italy’s underdevelopment, we may say that the indolence
that Serra witnesses is the result of centuries-long processes. We know
that the original attitude of the southern cities was very different. Their
populations were enterprising, keen to struggle for their autonomy, and
ready to travel abroad and risk their business.44 What made the people
indolent was the tendency of the state to impede any economic activity
by the locals and tax it heavily, and to be suspicious of any initiative
from the bottom.
On top of these problems, the landlords were greedy. They reduced
the peasants to bare survival; privatized the common land; dominated
the cities;45 and made alliances with foreign monopolies for the export
of their agricultural products. The prevalence of landlords and agricul-
tural rents was the millstone of Southern Italy’s backwardness.46
While in the rest of Western Europe the sovereigns, in alliance with
artisans and merchants, struggled against feudal landlords, marginal-
ized them, and so started economic development, in Southern Italy an
unnatural alliance was built up between sovereigns and feudal landlords
against the new productive classes, namely merchants and artisans. In
fact, it was an alliance against development.
Under the sway of rents, indolence also became an attitude of the
rich, driven to protect their own parasitic revenues while abandoning
224 Cosimo Perrotta

all entrepreneurial initiative. Finally, distrust of the institutions even

extended to the elite. The historians tell us that this was a state of affairs
that led Southern Italy’s society, taken as a whole, to despise the modern
world, its rules and its values. Economic backwardness in the end also
became civic and cultural backwardness.47
Serra concludes that the above-mentioned four factors are the only
causes of the wealth of a country. There are no other causes, implying
that the monetary processes are irrelevant (p. 133). Thus, in the
rationale of Serra’s book, the prime causes of the Kingdom’s malaise
appear to be internal. Although he never refers to social structure, he
ultimately ascribes the economic standstill to a political and cultural
element: the lack of effective government and the indolence of the
local population.
The last part of the book is devoted, by contrast, to the external
factors which contribute to creating an underdeveloped economy.
The external processes appear to be a consequence of the internal
flaws, although their negative influence makes it very difficult to
escape standstill.

5 Foreign merchants, the external cause of backwardness

Chapter XI of part 1 marks the crucial passage from the internal causes
of the Kingdom’s malaise to the external ones. As usual, Serra puts
the question in de Santis’s terms of inflow and outflow of money. De
Santis maintains that the Kingdom annually exports commodities for
six million ducats, while it pays six hundred thousand ducats to the
foreigners for their revenues in the Kingdom, and another six hundred
thousand for imports (pp. 135, passim). In the final balance, an inflow of
4.8 million ducats should arrive into the Kingdom; but, on the contrary,
there is great scarcity of money.
Serra’s answer, let us recall, is that the cause of such a situation is not
the exchange rate but rather the outflow of money, which exceeds the
inflow. As we have seen, this outflow is due to three causes: the reve-
nues that foreigners obtain from the country, the profits they earn from
their enterprises in the country, and imports. Serra repeats these three
causes tirelessly: “The total value of these causes,” he explains, “is far
higher than that of the exported goods, even if the level of exportation
were increased, and this is why money does not enter the Kingdom in
exchange for exports” (p. 237).
Let us start from imports. This is the only cause that Serra describes with
a certain detail. The number of imports, he says, is seriously underrated
 Serra and Underdevelopment 225

by de Santis. Because of the lack of manufactures and the people’s indo-

lence, the Kingdom is forced to import all manufactured goods. He then
gives a remarkable list of examples. What strikes in the author’s list is
that the Kingdom imports even the most insignificant manufactured
goods and the easiest to produce internally, such as clothes, sugar, dyes,
and wax. On the other hand, it imports books; glasses of every type;
manufactured items made of iron, copper, or brass; spices; medicines;
chemicals; weapons; and so on (pp. 147–151).
The author also remarks on a process – typical of underdevelopment in
any historical period – which had led Starkey to call for an import substi-
tution policy in England, namely the export of raw materials which are
then re-imported as manufactured goods.48 Many products, Serra says,
“which occur naturally in the Kingdom have to be imported from else-
where at a price equivalent to double the value of the raw materials
themselves” (p. 151). On the “rare occasions” when foreigners encour-
aged some internal production, the initiative failed because of the idle-
ness of the locals (ibid.).
As for the other two factors in the outflow of money, they too were
greatly undervalued by de Santis: “If the foreigners exported as much as
was possible by the sole use of the money they earn from their invest-
ments and businesses in the Kingdom, the total value of those exports
would equal or exceed” the inflow due to agricultural export (p. 153;
see also p. 163). In fact, a small part of these incomes is invested by the
foreigners inside the Kingdom. Otherwise, the country would lack even
the little money it has (p. 153).
Thus, besides the export of raw materials, Serra insightfully describes
the other most important factor to be seen in underdeveloped econo-
mies throughout the ages: what we today call the export (or repatriation)
of profits by foreign enterprises. He states, “the true cause of money not
coming into the Kingdom in exchange for exports is precisely this – the
foreigners’ income from investments and earnings from business and
imports” (p. 197). He repeats this thesis time and again (see pp. 205,
207, 219, and 237). And he adds: if foreigners could, “they would neces-
sarily export their money by any means possible” (p. 215).
Now the question is, were these two processes – export of agricul-
tural products (especially raw materials), and export of profits – new in
Serra’s time? Actually, they were not. Once again, their roots go back to
the very beginning of Southern Italy’s Kingdom. If we put together the
many pieces of the jigsaw puzzle that the historians leave us with, we
can understand the whole process that generated underdevelopment in
this region.
226 Cosimo Perrotta

The sovereigns, by repressing economic life in the cities and leaving

production to the feudal landlords, condemned the economy to
poverty.49 Then, in order to fuel their disproportioned ambitions of
conquest – in addition to the normal expenses of administration – they
had to turn to foreign merchants from Northern Italy and later also
from other countries.50 These merchants were able to lend the sover-
eigns enormous sums of money at high interest rates. In order to pay
these interest rates or in exchange for the loans, the sovereigns gradu-
ally handed over to the foreign merchants all the Kingdom’s revenues:
export and import duties; taxes on transports, on state monopolies as
well as on trade-licences for any activities; taxes on banks, enterprises,
and manufactures; tax collection monopolies; and in the end, even total
control over public finance.51
All this generated what Serra generically calls revenues (entrate, trans-
lated in the English version as “investments”) of foreign merchants.
They include the interests rates paid by the state on the loans, which
had formed an immense public debt over the centuries; the interest on
loans paid to merchants by private citizens – for example, by landlords
or professionals; all the financial rents which derived from the monopo-
lies on public duties; and, finally, the commission on tax collection.
Beside these revenues, there were the profits that foreign merchants
received from their activities, ranging from collection and export of agri-
cultural products, which they bought from the landlords and import;
distribution and sale of manufactured goods to all the businesses
involved in internal trade; exchange; and some little manufacturing
activities (p. 151). The people, says Serra, referring to the locals, “are so
indolent, that far from exporting those commodities, they do not even
sell them within the Kingdom itself” (p. 193). Serra calls earnings of
this type gains from industrie (trades), usually translated in the English
version as “businesses”.
This overall picture frequently leads Serra to explain that this is why
the foreigners do not convert their final bills of exchange into capital.
In the Kingdom, there is nothing left to be sold (pp. 153, 195, 215, 237):
no agricultural products, no duties, no monopolies. The foreigners have
“sucked the very lifeblood from the citizens of the kingdom” (p. 153; for
repetitions, see pp. 195, 207, 237. The latter is an expression used by de
Santis that Serra agrees with).
Note also that the foreign merchants who lived in the southern cities
never mixed with the locals,52 which explains why they exported nearly
all their profits and earnings. Significantly, even in the 17th century,
Serra still saw them as a body alien to local society. And the northern
 Serra and Underdevelopment 227

merchants maintained their economic domination throughout the

Modern Age.53
There is yet another aspect of dependence that Serra singles out with
great insight. He contests de Santis’s observation that the foreign states
need the Kingdom’s exports because they consist of necessaries and that
their price can therefore be raised without negative consequences. It is
quite the opposite, Serra says. Since these states export manufactured
products, which are not subject to deterioration, they can exchange
them even at great distances, while the Kingdom depends on their
buying its agriculture goods (p. 193).

6 The remedies

In part 3, Serra shows some perplexity over the hard task of finding a
remedy to that situation. The causes of the malaise are very powerful, he
says, and even if we know them, there can be no certainty of finding a
remedy (pp. 207, 235–237).
First of all, the author suggests a ban on the exportation of money. If
we took this proposal superficially, we should suspect Serra of being a
chrysohedonist (the old accusation against mercantilists),54 even more
than de Santis. In fact, here Serra expresses another idea typical of devel-
opment economists, to the effect that, as Myrdal puts it, a temporary
protectionist policy is necessary for the weak economy in its trade with
a stronger economy.55
Serra’s argument is cogent. In normal circumstances, a ban on the
export of money would harm the Kingdom, but since foreigners find
nothing more to buy internally, they export all their earnings, and,
because of its backwardness, “there is no need for the money that leaves
the Kingdom ever to return” (p. 215). In our case, says Serra, money is
not exported in order to make a profit – that is, for investment or for
trade (which would enrich the state) – but, on the contrary, consists of
profits made internally that are taken out. This represents a total loss for
the state (p. 231).
He then stresses that different situations call for different policies:
“certain medicines are beneficial to some people but harmful to others”.
The lack of extensive trade means that the Kingdom’s needs differ from
those of a normal situation. This difference turns the exportation of
money from beneficial to damaging (p. 229).
His observation reveals another basic principle, later to be adopted
by development economists. While classical and neo-classical theo-
ries suggest that “economic laws” hold in any context, development
228 Cosimo Perrotta

economics states that the same policies can have different effects in
different conditions. What is good in a normal situation – for example,
free trade – can be harmful in underdeveloped economies (Myrdal and
Balogh elaborate brilliantly on this point).
In sum, the export of capital must be obstructed, as many poor coun-
tries tried to do in the 20th century. Serra recalls once again that the
malaise of the Kingdom’s economy is due first of all to the export of
capital by the foreigners: “These are the very causes that have impov-
erished the Kingdom”. Therefore, “the more opportunities one gives
[the foreigners] to trade with advantage and profit and to buy shares
and assets, the less money will enter the country in exchange for the
exported goods” (p. 219).
In this case, the author notes, limiting export does not contradict the
idea that extensive trade is necessary for the country’s wealth. Foreign
trade, he maintains, favours development only if the imported goods are
again sold abroad. If it is confined to imports, it even “causes poverty
rather than wealth” (p. 219). The comparison with Venice returns.
Venice exports the fruits of its enterprising attitude; it does not trade out
of necessity, like Naples. This is why Naples remains poor, while Venice
enjoys wealth (pp. 219–221).
However, Serra perceives that it is “extremely difficult”, “if not
impossible”, to remove the whole economic network implemented by
foreigners. This “remedy might have a disastrous effect on the Kingdom
as a whole and on countless private citizens” (pp. 237–239). Moreover, it
would be illegal to take away the foreigners’ rents and profits (ibid.), and
failing to pay the interest rates would be harmful (p. 241). Here Serra
appears to be acutely aware of a difficulty that affects all the underdevel-
oped economies, which have been organized according to external inter-
ests. All former colonies, for instance, have found it very difficult, “if not
impossible”, to eliminate monoculture, to stop state borrowing despite
the increasing public debt, to substitute manufactured imports, or to
limit the exploitation of their own resources by foreigners. Short-run
necessity usually forces these economies to retain the very causes of
their poverty.
The only radical remedy, Serra concludes, would be to introduce the
factors of development that are now lacking. But even this, although it
is “not strictly impossible”, is “extremely difficult in practice” – the main
obstacle being the indolence of people. All this depends on the possi-
bility to have an effective government (p. 239). This pessimistic analysis
is powerful and rigorous. It stresses that the true long-lasting obstacles
 Serra and Underdevelopment 229

to development in Southern Italy are cultural and institutional, impedi-

ments in the Middle Ages and in Serra’s times, and even more so today.
In the very last page of his book (p. 249), Serra repeats once again that
“all it would need is ... effective government”, which is “the controlling
superior cause of all other accidents” (development factors). This is still
the core problem of Southern Italy’s underdevelopment.
However, the author continues his quest for possible remedies. A
part of the foreigners’ businesses and the importation of manufactured
goods can be removed and then substituted by introducing manufac-
turing activities in the state (p. 241). The essential goods that we cannot
help importing, instead of being paid for in cash, “could be paid for with
commodities of equivalent value” – that is, with goods produced inside
(p. 247). In sum, these policies call for the introduction of the develop-
ment factors now lacking. By doing so, we can enrich the state “even
without the help of ... a domestic agricultural surplus”, Serra says, “as the
experience of many Italian cities has shown” (pp. 247–249).
Thus, although the foreigners’ rents and profits cannot be removed,
their harmful effects can be reduced (pp. 243–245). On this latter point,
Serra was very cryptic because he hoped to use the promise of his sugges-
tions to be freed from prison.

7 Conclusions

We leave the conclusions to Serra’s own words, which eloquently express

a call to struggle for development in Southern Italy (a call which still
holds). On the introduction of manufactures in the country, he writes:
“These aims are not merely possible but ... vital. They must therefore
be pursued as energetically as possible”. “Difficulties”, he adds, “may
daunt the weak and faint-hearted, but not a strong, courageous prince”
(p. 241).
The courage he is talking about is above all an intellectual attitude: “It
is the intellect’s function to make difficult things easy, and it can often
achieve things that most people think impossible” (ibid.). He criticizes
that kind of mind “which holds that anything it does not already know
is impossible, not considering that all the inventions of ancient and
modern times would no doubt have seemed impossible until they were
invented” (p. 249).
Serra’s call for cultural change – as a pre-requisite for development –
was to be revived during the Enlightenment by Genovesi,56 who passed
it on to his followers.
230 Cosimo Perrotta

Notes
1. Perrotta, C., “Antonio Serra’s development economics: mercantilism, back-
wardness, dependence”, History of Economic Thought and Policy, 2, 2013,
pp. 5–19.
2. See Ortiz, L. (1558), “Memorial a Felipe II”, Anales de Economia, XVII, 63,
January 1957, pp. 117–200.
3. See Perrotta, C. and C. Sunna (eds), L’arretratezza del Mezzogiorno. Le idee,
l’economia, la storia, Milan: Mondadori, 2012.
4. See e.g. Furtado, C. (1961), “Desenvolvimiento e subdesenvolvimiento”,
partly included in his Théorie du développement économique, Italian trans. Bari:
Laterza,1972, especially ch. IV.
5. Starkey, T. (1529–1532), A Dialogue between Pole and Lupset, London: Royal
Historical Society & University College, 1989.
6. Ortiz, L., Memorial del contador Luis Ortiz a Felipe II [1558], Madrid: Instituto
de España, 1970.
7. Serra, A. (1613), A Short Treatise on the Causes that Can Make Kingdoms Abound
in Gold and Silver Even in the Absence of Mines (in the cover: A Short Treatise on
the Wealth and Poverty of Nations), trans. from Italian by J. Hunt, ed. by S.A.
Reinert, London-New York, NY-Delhi: Anthem Press, 2011.
8. Doria, P.M., “Relazione dello stato politico, economico, e civile del Regno
di Napoli”, in his Manoscritti napoletani, vol. I, Galatina: Congedo, 1709,
pp. 49–139.
9. Uztáriz, G. (1724), Theórica y práctica de Comercio y de Marina, Madrid: Sanz,
1742.
10. Ulloa, B., Restablecimiento de las fábricas y comercio español, 2 vols, Madrid:
Marin, 1740.
11. Genovesi, A. (1765–1767), Delle lezioni di commercio o sia di economia civile,
Milan: Vita e Pensiero, 2013.
12. Galanti, G. (1781–1794), Della descrizione geografica e politica delle Sicilie, 2
vols, Naples: ESI, 1969.
13. Besides Ortiz and Serra, cited, see Starkey (1529–1532), Doria (1709), Uztáriz
(1724), Ulloa (1740), Genovesi (1765–1767), Galanti (1781–1794), List, F.,
System der politischen Ökonomie, Italian trans. Milan: ISEDI, 1972. (1841).
14. Smith, A., The Wealth of Nations, E. Cannan (ed.), London: Methuen, 1904,
online ed. Library of Economics and Liberty (1776), I, pp. 9, 10–15.
15. Prebisch, R. (1949), ‘El desarrollo económico de la América Latina ... ’, now
in Desarrollo económico, 1986, No. 103, pp. 479–502; Singer, H.W., “The
distribution of gains between investing and borrowing countries”, American
Economic Review, vol. 40, no. 2, 1950, pp. 473–485; Hirschman, A., The
Strategy of Economic Development, New York, NY-London: Norton, 1958, ch.
7; Furtado 1961; Balogh, T. (1963), Unequal Partners, Italian trans. Turin:
Einaudi, 1967; Perroux, F. (1964), L’économie du 20.me siècle, Italian trans.
Milan: Comunità, I, chs 1–3, pp. 33–100, II, chs 2–6, pp. 145–272, VI, chs
6–7, pp. 584–590.
16. Myrdal, G. (1957), Economic theory and under-developed regions, Italian trans.
Milan: Feltrinelli, 1966, esp. chs 2–3.
17. See e.g., Marx, K. (1867), Das Kapital, Buch I, Italian trans. Rome: Editori
Riuniti, 1964, ch. 23, secs 1–4, pp. 671–709; Luxemburg, R. (1912) Die
 Serra and Underdevelopment 231

Akkumulation des Kapitals, Italian trans. Turin: Einaudi, 1960, 3rd part;
Sweezy, P. (1942), The Theory of Capitalist Development, Italian trans. Turin:
Boringhieri, 1970, ch. 12, pp. 253–280.
18. Cfr. Nurkse, R. (1951), Problems of Capital Formation in Underdeveloped
Countries, Italian trans. Turin: Einaudi, 1965. ch. 1.
19. Reinert, E.S. and S.A. Reinert, “An Early National Innovation System: the Case
of Antonio Serra’s 1613 Breve Trattato”, Institutions and Economic Development,
Milan: Franco Angeli, 2003, I/3, pp. 87–119.
20. The pages cited (numbers in parentheses in our text) are from the only
complete English translation of Serra’s book, edited by Sophus A. Reinert
in 2011: Serra [1613]. This edition has parallel texts; the English text (from
which we cite) is on the odd pages.
21. Cfr. Lopez, R., “Commerce in medieval Europe: The South”, ch. 5 of M.M.
Postan and P. Mathias (eds), Cambridge Economic History, vol. II, 1952, Italian
trans. Turin: Einaudi, 1982, pp. 291–396, p. 307; Tabacco, G. and G.G. Merlo,
Medioevo, V–XV sec., Bologna: Il Mulino, 1981, pp. 306–307; Falkenhausen,
V., ”I ceti dirigenti prenormanni ... ”, in G. Rossetti (ed.), Forme di potere e
struttura sociale in Italia nel Medioevo, Bologna: Il Mulino, 1977, pp. 321–377,
321–324.
22. Pirenne, H. (1917), Histoire de l’Europe des invasions au XVIe siècle, Italian
trans. Rome: Newton Compton, 1991, pp. 157–158.
23. See Lopez (1952), pp. 309–310; Abulafia, D., “Gli italiani fuori d’Italia”, in
R. Romano (ed.), Storia dell’economia italiana, Turin: Einaudi, 1990, vol. I,
pp. 261–286; Tabacco, G., Egemonie sociali e strutture del potere nel medioevo
italiano, Turin: Einaudi, 1979, pp. 183–188.
24. Cfr. Galasso, G., Mezzogiorno medievale e moderno, Turin: Einaudi, 1975,
pp. 106–118. On Northern Italy, see Tabacco and Merlo, 1981, pp. 411–423,
435–446.
25. See de Santis, M.A. (1605), “Discorso intorno agli effetti che fa il cambio in
Regno; and Secondo discorso Intorno ... ”, in Colapietra, R. (ed.), Problemi
monetari negli scrittori napoletani del Seicento, Rome: Accademia Nazionale dei
Lincei, 1973, pp. 110–141.
26. Fortunato, G. (1904), “La questione meridionale e la riforma tributaria”, in
his Il Mezzogiorno e lo stato italiano. Discorsi politici, Florence: Vallecchi, 1926,
vol. 2, pp. 305–375, pp. 309–318, 325–326, 335, passim.
27. Cfr. De Rosa, L., “Antonio Serra e i suoi critici”, Clio, I, 1, 1965, pp. 115–136.
For a detailed and updated history of Serra’s fortune, see S.A. Reinert,
“Introduction” in A. Serra (1613): A Short Treatise on the Causes that can make
Kingdoms abound in Gold and Silver even in the Absence of Mines, trans. from
Italian by J. Hunt, ed. by S.A. Reinert, London-New York, NY-Delhi: Anthem
Press, 2011, pp. 1–85, pp. 71–85.
28. Zagari, E., “Moneta e sviluppo nel ‘Breve trattato’ di Antonio Serra”, in
Roncaglia, A. (ed.), Alle origini del pensiero economico in Italia, Bologna: Il
Mulino, 1995, pp. 15–36, p. 26; Rosselli, A., “Antonio Serra e la teoria dei
cambi”, in A. Roncaglia (ed.), Bologna: Il Mulino, 1995, pp. 37–58, p. 55.
29. Cfr. Galasso, G., Storia del regno di Napoli, Vol. I., Turin: De Agostini, 2008,
pp. 779–789.
30. Jones, P. (1980), Economia e società nell’Italia medievale, trans. from English,
Turin: Einaudi, 1981, ch. 2; Martin, J.-M., “Città e campagna: economia
232 Cosimo Perrotta

e società (sec. VII–XIII)”, in Galasso, G. and R. Romeo (eds), Storia del

Mezzogiorno, Naples: Banco di Napoli – Ed. del Sole, 1989, vol. II.2,
pp. 257–382, pp. 274–276. See also Galanti (1781–1794), I, p. 59.
31. See Jones, P., “L’Italia”, ch. 7.II of Postan, M.M. (ed.), Cambridge Economic
History, vol. 1, 1966, Italian trans. Turin: Einaudi, 1976, pp. 412–526,
pp. 497–498; Luzzati, M., “La dinamica secolare di un ‘modello italiano’”,
in Romano, R. (ed.), Storia dell’economia italiana, Turin: Einaudi, 1990, vol. I,
pp. 5–114, pp. 35–63.
32. Singer, 1950, Prebisch, 1949.
33. See e.g. Rosenstein-Rodan, P. N. (1943), “Problems of Industrialization of
Eastern and South-Eastern Europe”, Economic Journal, now in Agarwala, A.N.
and S.P. Singh (eds), The Economics of Underdevelopment, Oxford: Oxford
University Press, 1958, pp. 245–255; Kuznets, S. (1965), Sviluppo economico
e struttura, trans. from English, Milan: Il Saggiatore, 1969, pp. 242–263;
Lewis, A.W. (1954), Economic Development with Unlimited Supply of Labour,
The Manchester School, now in Agarwala and Singh (eds) (1958), 1963,
pp. 400–449, and L. (1966), Development Planning, Italian trans. Milan:
Feltrinelli, 1968; Robinson, J., Aspects of Development and Underdevelopment,
Cambridge: Cambridge University Press, 1979, chs 4 and 6.
34. Cfr. Perrotta, C., Consumption as an Investment, London-New York, NY:
Routledge, 2004, ch. 10.
35. Pirenne, H. (1933), Storia economica e sociale del medioevo, transl. from
French, Milan: Garzanti, 1967, ch. 2.1, pp. 53–58; Jones, 1966, pp. 422–428;
Gerschenkron, A. (1968), La continuità storica, trans. from English, Turin:
Einaudi, 1976, ch. 8, pp. 274–277; Cipolla, C., Storia economica dell’Europa
pre-industriale, Bologna: Il Mulino, 1974, part 1.
36. Cfr. Tabacco and Merlo, 1981, pp. 532–533; Galasso, G. (1969), Dal comune
medievale all’unità. Linee di storia meridionale, Bari: Laterza, 1971, pp. 64–71.
37. Cfr. Azzara, C., Le civiltà del medioevo, Bologna: Il Mulino, 2004, p. 202; Vitolo,
G., Città e coscienza cittadina nel Mezzogiorno medievale (secc. IX–XIII), Salerno:
Laveglia, 1990, pp. 24–26.
38. See e.g. Genovesi (1765–1767), I, chs 8–9 and 22.
39. See Sunna, C. (a) “La nascita della Questione meridionale”, ch. 7 of C. Perrotta
and C. Sunna (eds), 2012, pp. 118–137, section 3.
40. Sunna, C. (b) “Il meridionalismo dal primo Novecento al fascismo”, ch. 8 of
Perrotta and Sunna, (eds), 2012, pp. 138–159, section 3.
41. See e.g. Abulafia, D. (1977), Le due Italie, trans. from English, Naples: Guida,
1991; Jones, 1980, Introduction; Martin, 1989; Azzara, 2004, pp. 223–224.
42. See Perrotta, C., “Antonio Serra’s development economics: mercantilism,
backwardness, dependence”, History of Economic Thought and Policy, 2, 2013,
pp. 5–19, fn. 29.
43. Cfr. Galasso, 1969, pp. 30–32, 64–65; Galasso, 1975, pp. 29, 39–40.
44. Cfr. Perrotta, C., “Medioevo. Lo sviluppo soffocato sul nascere”, ch. 2 of
Perrotta and Sunna (eds), 2012, pp. 25–51, sections 2 and 3.
45. Vitolo, 1990, pp. 21–29; Vitolo, “In palatio Communis”, in Chittolini, G.,
Petti Balbi, G. Vitolo,(eds), Città e territorio nell’Italia del medioevo, Naples:
GISEM-Liguori, 2007, pp. 243–294, pp. 250–252.
46. Cfr. Balestracci, D., Medioevo italiano e medievistica, Rome: Il Calamo, 1996,
pp. 136–137.
 Serra and Underdevelopment 233

47. Cfr. Jones (1980), p. 21; Sylos Labini, Paolo (1994), “Sul libro di R. D. Putnam,
La tradizione civica ... ”, in his Scritti sul Mezzogiorno (1954–2001), Manduria-
Bari-Rome: Lacaita, 2003, pp. 369–377.
48. Starkey, 1529–1532.
49. See Vitolo, G., Città e contado nel Mezzogiorno tra medioevo ed età moderna,
Introduzione, Salerno: Laveglia, 2005, pp. 8–26, pp. 11–13.
50. Corrao, P., “Mercanti stranieri e regno di Sicilia”, in Del Treppo, M., Sistema di
rapporti ed élites economiche in Europa (sec. XII–XVII), Naples: GISEM-Liguori,
1994, pp. 87–112, p. 90.
51. See e.g. Romano, A., “ ... stranieri e mercanti in Sicilia nei sec. XIV–XV”, in
Del Treppo (ed.), 1994, pp. 113–132, p. 116.
52. Cfr. Corrao, 1994, pp. 88–102; Musi, A., “Le élites internazionali a Napoli
dal primo Cinquecento alla guerra dei trent’anni”, in Del Treppo (ed.), 1994,
pp. 133–161, p. 136; Del Treppo, M., “Stranieri nel regno di Napoli”, in
Rossetti, G. (ed.), Dentro la città: stranieri e realtà urbane nell’Europa dei sec.
XII–XVI, (1st ed. 1989), Naples: GISEM-Liguori, 2004, pp. 179–233, p. 211;
Del Treppo, M. and A. Leone, Amalfi medievale, Naples: Giannini, 1977,
pp. 207–218. Yver, G., Le commerce et les marchands dans l’Italie méridionale
au XIIIe et au XIVe siècle, Paris: Fontemoing, 1903, in the second part, gives a
detailed map of the presence of foreign merchants in Southern Italian cities.
53. Galasso, G., Storia del regno di Napoli, Vol. VI, Turin: De Agostini, 2011,
pp. 374–377.
54. See Perrotta, 2013, pp. 2–3, 9–10.
55. Myrdal, 1957, ch. 7, pp. 89, 96–99.
56. Genovesi, 1765–1767, see e.g. I.22, sections 8–24, pp. 247–256.