1 Introduction

In recent decades, the historiography of political economy has moved decisively beyond binary narratives of capitalism versus socialism, replacing them with a more nuanced understanding of how ideas circulate, hybridize, and acquire political relevance across borders. Capitalism has emerged not as a fixed model but as a historically contingent constellation of institutions, norms, and narratives shaped by crises and cross-pollination.¹ This perspective, central to the “new history of capitalism,” has emphasized the plurality of capitalist formations and the heterogeneity of neoliberal trajectories, challenging linear accounts of market liberalism as a unified ideological project.²

At the same time, scholarship on planning and socialism has underscored the multiplicity of “socialisms” in the twentieth century, ranging from democratic planning and Christian-Marxist experiments to social democratic reforms and technocratic models of governance.³ Planning itself did not represent a monolithic socialist paradigm but rather an evolving repertoire of techniques, institutional logics, and normative aspirations circulating across the East-West divide and appropriated in divergent national contexts.⁴

This insight is particularly relevant for Western Europe, where traditions such as social democracy, liberal socialism, ordoliberal social thought, and reformist socialism interacted unevenly and often marginally within national political economies. Italy—characterized by a distinctive tradition on fiscal studies (Scienza delle finanze), a strong Communist Party (PCI), and a fragmented reformist left—provides a revealing vantage point for observing these hybridizations. In what follows, the terms “reformist socialism” or “liberal socialism” are used to describe those currents within the Italian socialist and social-democratic milieu—from sectors of the Socialist Party (PSI) and the Social Democratic party (PSDI) to intellectuals close to the Italian Republican Party (PRI)—that combined an acceptance of the market economy with a strong commitment to redistribution, civil liberties, and European integration. Politically, these groups remained minority actors in a landscape dominated by the PCI and by Christian Democracy (DC). Intellectually, however, they cultivated a distinct language of “programmed capitalism,” fiscal responsibility, and institutional reform that would later provide fertile ground for encounters with ordoliberal and Public Choice ideas. In any case, during the “Long 1980s” the Italian transition from Fordism to neoliberalization unfolded through a sequence of institutional reconfigurations, policy experimentation, and competing models of state-market relations.⁵

This article examines the intellectual exchange between James M. Buchanan, the U.S. architect of “Public Choice theory,”⁶ and Francesco Forte, a prominent economist in Italy’s reformist socialist tradition.⁷ Drawing on largely unpublished archival sources, it reconstructs how their transatlantic dialogue illuminates and intersects with the academic contours and the political trajectories of Reaganism and Craxism during the 1980s.⁸

The Buchanan-Forte connection exemplifies a form of ideological hybridization, i.e., a process through which concepts and normative languages rooted in distinct traditions converged in response to shared crises of legitimacy and governance.⁹ Rather than treating liberalism and socialism as mutually exclusive or doctrinally coherent categories, this analysis adopts a relational perspective attentive to their internal contradictions and their capacity for selective borrowing. This article argues that the Buchanan-Forte exchange contributed to reshaping the vocabulary of capitalism during the long 1980s in both Italian reformist socialism and the United States’ conservative realignment. The assertive leadership styles of Reagan and Craxi similarly sought to broaden their movements’ appeal among middle-class constituencies, linking the call for stronger executive authority to a language of modernization deemed necessary to overcome the political and economic crisis of the 1970s.¹⁰

The article unfolds in four sections. The first revisits the debates on capitalism, socialism and liberalism, underscoring the distinction between market liberalism and capitalist order, as well as the plurality of socialist traditions. The second reconstructs the biographies and early encounters of Buchanan and Forte. The third examines their intellectual dialogue, focusing on shared concerns and convergences. The final section considers their political impact within the Reagan and Craxi administrations, revealing how their dialogue helped recast capitalism as a terrain of ideological negotiation.

By analyzing materials from the George Mason University, Fondazione Craxi ETS, and the Hoover Institution archives, this study contributes to a transatlantic intellectual history of capitalism.

2 Reframing Capitalism: Liberalism and Socialism in Dialogue

The post-1989 euphoria that inspired teleological narratives—most notably Francis Fukuyama’s “End of history”—projected liberal democracy and market economies as the endpoint of ideological development.¹¹ Yet precisely as capitalism gained global primacy, its meaning became more contested.¹² What do we really mean by capitalism? Is it a synonym for free markets? A set of economic institutions? A normative project?¹³

The “New History of Capitalism” deconstructed the notion of capitalism as a singular, self-evident system, instead presenting it as a historically contingent assemblage of institutions, practices, and norms. The term itself has undergone semantic shifts, evolving from a nineteenth-century polemical label to a Cold War marker for the Western identity.¹⁴

A key insight lies in distinguishing “markets” from “capitalism”: while markets can exist under very different regimes, modern capitalism is typically associated with private property, consumer choice, entrepreneurial capital, decentralized decisions and wage labor.¹⁵ Scholars have emphasized its political dimension, including the separation of ownership and control, and the role of institutions in norming accumulation.¹⁶ Others have challenged the presumed affinity between free markets and democracy, questioning whether trade liberalization or deregulation inherently promote freedom in contexts marked by structural inequality.¹⁷ Capitalism thus appears as historically contingent and politically constructed.

These institutional insights underpin the “Varieties of Capitalism” (VoC) literature, which argues that divergences in labor relations, financial systems, education, and welfare provision generate distinct developmental paths—none of them more or less “capitalist.”¹⁸ In this perspective, the United States and Germany stand as opposite archetypes;¹⁹ while later work has highlighted Nordic, Mediterranean, post-socialist, and East Asian configurations—each grounded in different institutional complementarities.²⁰

If capitalism has come to be understood as a sum of institutional configurations rather than a singular model, a similar reframing is needed for socialism. Twentieth-century socialism did not unfold as a unified doctrine but as a spectrum of experiments stretching far beyond the Marxist-Leninist paradigm that dominated Cold War imagination. In North-Western Europe, social democracy reinterpreted planning as a democratic tool for stabilizing markets and expanding welfare rights; in Southern Europe, strands of reformist socialism combined modernization, institutional engineering, and new approaches to taxation that cast the state less as an agent of redistribution and more as a guarantor of collective responsibility.²¹ Elsewhere, Christian-inspired socialisms grounded their critique of capitalism in moral and communitarian arguments, producing forms of planning and corporatism that neither abandoned market mechanisms nor embraced state centralization.²² These currents shared neither a common epistemology nor a uniform institutional design. They diverged on the nature of planning, the legitimacy of markets, the role of religion, and the appropriate scope of state intervention. Acknowledging this internal diversity is essential for understanding how socialist ideas interacted—sometimes productively, sometimes conflictually—with liberal economic doctrines in postwar Europe. Within this broader constellation, the Italian reformist strand remained electorally marginal yet intellectually distinctive. Its emphasis on a civic conception of taxation and its sustained dialogue with ordoliberal and liberal democratic traditions made it a crucial site of ideological encounter, helping to illuminate the reconfigurations that would shape the 1980s.²³

Liberal traditions also followed divergent paths. In the United States, theorists such as Ludwig von Mises and Friedrich Hayek portrayed capitalism as the foundation of Western civilization and denounced hybrid models.²⁴ Although this purist vision was questioned at the 1938 Colloque Walter Lippmann, it regained prominence after 1945 through the activities of institutions like the Foundation for Economic Education and the Volker Fund, and eventually coalesced around the Mont Pelerin Society.²⁵ Milton Friedman’s influential public profile gave this current a powerful voice.²⁶ Revisionist historians of the American state have nonetheless shown that laissez-faire was not a simple legacy of the founding era, but a historically constructed narrative shaped by twentieth-century political conflicts.²⁷ Neoliberalism, in fact, was never a monolith but a constellation of schools—Chicago, Austrian, Freiburg, and Virginia—often in tension with one another. Public Choice should not be conflated with other libertarian minimal-state approaches, given that Buchanan’s constitutional political economy articulated a vision of rule-bound governance aimed at constraining majoritarian opportunism to prevent fiscal and regulatory overreach, not at dismantling welfare institutions per se.

Italian liberalism followed a different line because Luigi Einaudi, Guido Calogero, and Norberto Bobbio advanced a “civil” liberalism grounded in relational freedom, civic duties, distributive justice, and the ethical foundations of public institutions.²⁸ Even proponents of state intervention—such as Pasquale Saraceno—did not repudiate the legitimacy of the market economy. This tradition proved relatively open to reformist socialism and to normative visions of the state, and later resonated with Buchanan’s insistence on constitutional constraints and fiscal responsibility.

In practice, liberal and socialist currents often overlapped. European liberalism absorbed solidaristic elements, while democratic socialisms progressively embraced markets as instruments of emancipation. Reformist currents drew on ordoliberal notions of rules-based governance. Neoliberalism, in this sense, cannot be reduced to a purely right-wing project: key categories such as efficiency, responsibility, flexibility also emerged in European reformist and social democratic milieus.²⁹

These fragmented and evolving configurations created the conditions for unexpected forms of cross-fertilization. It was against this backdrop that the intellectual dialogue between Buchanan and Forte took shape. Their exchange, grounded in shared concerns yet shaped by distinct national trajectories, offers a privileged vantage point from which to observe how ideas traveled, were reframed, and ultimately hybridized across the Atlantic.

3 James Buchanan and Francesco Forte: Intellectual Circulations Across the Atlantic

The intellectual affinity between James M. Buchanan and Francesco Forte did not emerge suddenly during the conjuncture of the 1980s. Rather, it rested on a set of shared formative experiences, overlapping scholarly milieus, and parallel concerns that predated their political prominence by decades. Their exchange reflected a joint attempt to rethink capitalist institutions and reshape the transatlantic political-economic lexicon.

The earliest documented contact between the two took place in 1955, when Buchanan received a Fulbright scholarship to conduct research in Italy.³⁰ In a 1989 retrospective for Paolo Martelli, Buchanan recalled that period as a turning point, noting that there he had “crossed the threshold into what would much later come to be called the research program in ‘public choice’.”³¹

During his stay, Buchanan engaged with the Italian Scienza delle finanze, focusing on institutional design and the normative foundations of fiscal policy.³² Thanks to interactions with figures such as Sergio Steve, Benvenuto Griziotti, Federico Caffè, and Paolo Sylos Labini, Buchanan developed a critical stance toward the idea of the state as a neutral actor.³³ With the support of the U.S. cultural attaché, Buchanan also met former President of the Republic of Italy Luigi Einaudi and lectured at the Civiltà Americana seminar on “The American Competitive System,” co-organized by the United States Information Service (USIS).³⁴ There, competition was presented as a historically constructed order, grounded in legal norms and cultural values.³⁵ From the outset, Buchanan showed concern for the vulnerability of majoritarian politics to fiscal exploitation. He developed a sustained interest in the institutional foundations of capitalism, anticipating the normative core of Public Choice theory and distancing himself from Galbraith’s model of power equilibrium.³⁶

I absorbed what was, for me, an attitude toward “the state” that I could never have quite attained in America (or in Britain) […] after Italy, I was prepared, intellectually, psychologically, and emotionally, to join in an entrepreneurial venture with my Virginia colleague, Warren Nutter, a venture aimed at bringing renewed emphasis to “politic economy” in its classical sense. And from these beginnings, the more directed research spin-off into the “economics of politics,” initiated jointly with my colleague, Gordon Tullock, now seems as but a natural progression.³⁷

Buchanan had originally intended to translate Wicksell into English and study the Italian fiscal tradition during his year in Italy, but his engagement with local economists broadened his project into a deeper reflection on governance, legitimacy, and institutional rules.³⁸ These encounters also laid the groundwork for his later dialogues with Norberto Bobbio and Bruno Leoni, both concerned with constitutional constraints on democratic authority.³⁹

In Pavia that same year, Buchanan met Francesco Forte, a student of Benvenuto Griziotti and already active in reformist socialist circles.⁴⁰ Impressed by Forte’s early writings, Buchanan invited him to the newly established Thomas Jefferson Center for Studies in Political Economy⁴¹ at the University of Virginia.⁴² This collaboration marked a crucial moment of intellectual cross-pollination between the Italian Scienza delle finanze and Public Choice.

In Virginia, Forte worked alongside Buchanan, Warren Nutter, William Craig Stubblebine, and Ronald Coase,⁴³ developing the ideas presented in his Introduction to Welfare Economics, which was challenging the dominance of allocative efficiency as the measure of social welfare.⁴⁴ He argued that “new welfare economics” should integrate the Pareto criteria, the compensation principle, collective choice approach, and the social welfare functions.⁴⁵ From this perspective, democracy itself was problematized and analyzed for its susceptibility to majority exploitation. Policies should be judged acceptable if winners could hypothetically compensate losers—even if no transfer occurred.⁴⁶

Upon returning to Italy in 1961 to succeed Einaudi at the University of Turin, Forte became a leading advocate of market-oriented reform inspired by German ordoliberalism.⁴⁷ Drawing on the Italian tradition and shaped by Einaudi and Ezio Vanoni, he sought to merge the ethical concerns of Italian fiscal thought with the intuition of U.S. economics.⁴⁸

Forte’s critique of bureaucratic opacity and unchecked spending stemmed not from austerity dogma, but from a broader vision of the state as an enabler of individual responsibility and institutional accountability. His work foreshadowed what Michel Foucault would later describe as the extension of market rationality into governance.⁴⁹ Through this hybrid lens, Forte advanced a distinctive model of economic governance, critical of state paternalism yet cautious of market absolutism.

4 Intellectual Resonance and Normative Hybridization: Public Choice and Liberal Socialism

The intellectual exchange between Buchanan and Forte went beyond collaboration, revealing a shared dissatisfaction with the Keynesian consensus and a joint pursuit of normative foundations capable of reconciling liberty, efficiency, and democratic legitimacy.

Public Choice theory, as developed by Buchanan and Gordon Tullock, posits that the same rational self-interest that governs markets also drives political actors. Rejecting the neoclassical ideal of the benevolent planner, the theory maintains that voters, politicians, bureaucrats pursue their own preferences within institutional constraints.⁵⁰ This framework challenged the idealized image of a neutral state and called for constitutional limits to rent-seeking and opportunism.⁵¹ For Buchanan, this approach was not cynical, but moral: institutions should discipline political behavior precisely because individuals are fallible. At the same time, it echoed social democratic concerns about protecting collective goods from both market and state failure.

Forte regarded this framework as a powerful tool to reinterpret the Italian state. In his essay The Law of Selection in the Public Economy as Compared to the Market Economy, he revisited Paretian criteria to address negative externalities stemming from distributive inequities.⁵² A draft version preserved in Buchanan’s archives reveals a notable lexical revision: the phrase “economizing rational man” is said not to “prevail” but merely to “survive” within the market economy.⁵³ This formulation suggests that markets do not embody optimality, but rather minimal conditions for liberty. For Forte, democratic capitalism required a “moral grammar” for institutions, an idea influenced by ordoliberalism.⁵⁴

Forte’s distinctive reception of Buchanan lay in his effort to connect the logic of exchange not merely to efficiency, but to the civic foundations of taxation. In contrast to Tullock’s emphasis on political pathology, Forte advanced a normative and participatory model of fiscal legitimacy, grounded in Italy’s civic humanist and ordoliberal traditions.⁵⁵ Drawing inspiration from Buchanan’s theory of constitutional contract, he reimagined the fiscal state not as a Leviathan extracting resources, but as a voluntary association of taxpayers—a “club” whose obligations stemmed from reciprocity, subsidiarity, and a sense of belonging.⁵⁶ Citizens were not passive contributors but co-authors of tax rules, and public spending was legitimate only when aligned with transparent, accountable preferences.⁵⁷ Redistribution became not a technocratic act but a contractual duty among equals.

Forte’s contributions went beyond the application of Public Choice: he actively shaped its development. In particular, Forte’s work on taxation and economic citizenship contributed to the evolution of the Virginia School. His contractualist approach—especially evident in the co-authored article The Evaluation of Public Services—argued that public goods should be assessed not only according to technical criteria, but also through citizen preferences expressed via exchange.⁵⁸ Refusing Tullock’s hostility toward public intervention, Forte employed what would later be identified as “rent-seeking theory” to critique inefficiencies within Italy’s tax system and to advance incentive-compatible reforms, including fiscal federalism and subnational tax autonomy.⁵⁹ These ideas coalesced around a major concern of constitutional political economy: the democratic legitimacy of taxation.

Whereas Buchanan and Stubblebine distinguished relevant from irrelevant externalities based on the potential for Pareto improvements, Forte underscored their redistributive dimension.⁶⁰ While teaching at the University of California in Buchanan’s stead (1969-1970), Forte remarked in a note to him: “obviously the best scheme is that which subsidizes B [underdeveloped sector in the example, author’s note] and taxes those who enjoy benefits from it.”⁶¹ Fiscal policy, in his view, had to embed ex ante distributive justice grounded in collective responsibility. Moreover, through quantitative studies, he concluded that indirect taxation offered no anti-inflationary advantage over direct taxation, as it fueled cost inflation without ensuring a comparable level of employment.⁶²

Though skeptical of redistributive majoritarianism, Buchanan recognized the normative depth of Forte’s position.⁶³ At a 1993 conference in Milan, Buchanan conceded that he had underestimated the asymmetry in exit options between markets and political institutions.⁶⁴ Exiting a market transaction may be costless; exiting a political community is not. Forte’s view of taxation as civic bond thus resonated with Buchanan’s evolving reflections on legitimacy and obligation.⁶⁵

Forte’s transatlantic role also had a practical dimension. Beyond translating and disseminating Public Choice in Italy through journals, conferences, and publishing initiatives, he promoted in Italy the work of U.S. scholars on welfare, public goods, and fiscal federalism.⁶⁶ At the same time, Buchanan served as a key intermediary in fostering the exchange of ideas and academic networks.⁶⁷

Forte appropriated the Public Choice legacy and combined it with Italian civic traditions, producing a hybrid and complex theoretical framework. As Cubeddu observed, Forte—alongside Domenico da Empoli—was among the few liberals who could be labeled libertarian;⁶⁸ yet his liberalism always remained relational. Drawing on the ordoliberal emphasis on the person in society, he rejected both the atomized subject of neoclassical economics and the idea of liberty as mere consumption. Instead, he advanced a vision of democratic capitalism in which reciprocity, institutional fairness, and civic responsibility were the foundation for legitimate public action.⁶⁹ In Buchanan’s constitutional political economy, Forte found a language and a logic to articulate his project of a reformed state that was neither Leviathan nor redistributor, but a polity of rules, bound by the consent and participation of its citizens.

For Craxi, Forte’s rule-based approach offered a language through which modernization could be framed as both democratic and disciplinarian, allowing the PSI to distance itself from Communist voluntarism while avoiding full alignment with neoliberal minimalism.

5 Political Translations: The Impact on Reagan and Craxi

The political impact of the Buchanan-Forte dialogue unfolded within two institutional settings undergoing profound but distinct transformations during the long 1980s: Reagan’s United States and Craxi’s Italy. In both countries, fiscal governance, party structures, and the legitimacy of democratic institutions were under strain; yet the channels through which economic ideas entered politics differed markedly. Their intellectual exchange did not produce linear policy transfers. Instead, it offered a shared analytic vocabulary—rules, credibility, responsibility—that political actors could mobilize while navigating domestic constraints. This occurred in an era when the figure of the technocrat was both valorized and criticized: popular culture (for example, Hal Ashby’s film Being There, 1979) depicted managerial elites and “depoliticized” expertise as symptoms of a broader neoliberal transition.⁷⁰

In the United States, Ronald Reagan’s embrace of fiscal reform reflected a broader shift within the Republican Party, in which Public Choice theory coexisted with more radical libertarian and neoconservative currents.⁷¹ While the Virginia School held advisory roles during Reagan’s early years, their influence was filtered through the strategic calculations of party operatives and campaign priorities. Buchanan’s proposals for constitutional fiscal rules, notably a balanced-budget amendment, were ultimately sidelined in favor of immediate tax cuts and deregulation.

Previously, during Reagan’s tenure as Governor of California (1967-1975), he had already engaged with Buchanan and like-minded thinkers on fiscal constraints.⁷² The latter endorsed plans to control revenue collection, asserting that such measures protected individual liberty from the fiscal exploitation of political majorities.⁷³ In a 1973 memo to California Assembly Speaker Bob Moretti, he defended Reagan’s tax plan as benefiting “all taxpayers” and especially “those who value freedom of individual action in opposition to an all-embracing bureaucracy-judiciary that threatens us.”⁷⁴ This vocabulary reveals that Buchanan’s concern extended beyond economic efficiency: it was a moral plea to restrain democratic excess in order to safeguard personal freedom. Reagan found this line of reasoning appealing. By the late 1970s, as he prepared for a presidential run, Reagan’s circle (including figures like Milton Friedman, William Niskanen, and advisor Martin Anderson) discussed ideas such as constitutional spending limits and taxpayer “bill of rights” that echoed Public Choice themes of fiscal discipline and skepticism toward interest-group politics.

Reagan’s election in 1980 raised expectations for a full implementation of the Public Choice agenda. Indeed, early in his presidency Reagan prioritized a massive tax cut (the Economic Recovery Tax Act of 1981) and promised to “curb government spending” and balance the budget.⁷⁵ Crucially, while Reagan adopted the rhetoric of Public Choice—railing against “big government” and warning of special interests—he did not fully implement their constitutional reform agenda. Buchanan later called the presidency a missed opportunity for structural reform, as short-term aims and traditional measures prevailed.⁷⁶ This mismatch between tax cuts and spending widened the federal deficit.⁷⁷

Public Choice ideas in the U.S. translated into bold promises to “get government off our backs,” but political realities led to compromise. No constitutional amendment ever materialized; instead, the main lasting legacy was a reframed tax code and a higher tolerance for deficits.

In Italy, the reception of these debates took a different turn. The neo-reactionary Movimento Sociale Italiano praised Goldwater’s campaign, while moderate liberals and reformist socialists selectively engaged with his emphasis on individualism and anti-communism.⁷⁸ Within the PSDI, already in the 1960s Forte argued that a market economy could accommodate certain planning mechanisms as long as they reinforced competition and social cohesion.⁷⁹ During the turbulent 1970s, marked by double-digit inflation, currency instability, and rising public debt, these ideas were recast within a parliamentary, consensus-oriented system. The growing sense that Italy needed stricter rules to govern fiscal policy and monetary stability—reinforced by the external constraint of the European Monetary System—created a receptive environment for Public Choice-inspired proposals.⁸⁰

When Forte entered the Italian governments under Fanfani (1982-1983) and Craxi (from 1983), Italy faced severe pressures. Yet Forte was not the sole architect of Italian fiscal reforms. Franco Reviglio and the “Reviglio boys” from the PSI brought a technocratic, budget-consolidation approach rooted in applied public finance; the Christian Democrat Beniamino Andreatta orchestrated of the separation of Italy’s Treasury from the Bank of Italy to curb the monetization of debt; Giuliano Amato, another PSI intellectual, was formulating constitutional tweaks to bolster executive authority and streamline decision-making. Together, these actors formed an ecosystem of reforms. Forte’s Public Choice-influenced ideas found concrete expression in several mid-1980s initiatives. One notable reform was a revision of the income tax (IRPEF) in 1983-1984, which reduced the number of tax brackets from 32 to 9 and lowered the top marginal rate, amounting to a significant tax cut for high earners.⁸¹ The rationale was to incentivize investment, aligning with international trends. At the same time, the government cracked down on tax evasion through new reporting requirements and enforcement campaigns, which particularly affected self-employed professionals and small entrepreneurs who had traditionally under-reported income.

Beyond technical proposals, Forte articulated a vision of constitutionalized fiscal governance. His reflections intersected—without coinciding—with Amato and Craxi’s Grande Riforma (Great Reform), aimed at strengthening executive authority and stabilizing parliamentary dynamics.⁸² Forte’s focus remained narrower: the “fiscal constitution” required transparent rules, credible constraints, and the active participation of taxpayers as responsible citizens. In other words, PSI was advocating a socialism attuned to market principles and grounded in constitutional reform.⁸³ Drawing from both German ordoliberalism and Public Choice, Forte considered such a path an essential component of a liberal socialist tradition.⁸⁴ Once a proponent of the “New Frontier” and “Great Society,” Forte became progressively the link between Public Choice and the reformist left in Italy.⁸⁵ For Forte, revitalizing Italian capitalism meant breaking free from the twin shackles of bureaucratic clientelism and welfare dependence.⁸⁶ “If we mistreat entrepreneurs and stifle business autonomy,” he warned, “we cannot expect economic development—you can’t make a horse run by beating it.”⁸⁷

PSI’s main figures also applied Gordon Tullock’s rent-seeking theory to identify where public resources were being sapped by special interests: for example, Italy’s heavily regulated energy and fuel sectors, where state subsidies and concessions had created protected niches for certain firms at the expense of consumers. Denouncing these arrangements, Forte argued, was essential to free up Italy’s economic dynamism. In this he found common cause with economists like Antonio Pedone, who sought to expose the hidden costs of clientelism in Italian policy.⁸⁸

Forte’s thinking also intersected with the moral discourse emerging among U.S. neoconservatives. Irving Kristol and Michael Novak presented capitalism as a value-based order grounded in responsibility, authority, and the family. Novak acknowledged Luigi Einaudi’s influence, while Buchanan, through his exchanges with Italian scholars, recognized Italy’s civic economy as a valuable normative foundation for market societies.⁸⁹ As Angelo Maria Petroni noted—recalling Cardinal Ratzinger’s critique of the Church—there was a deep resonance between Public Choice and the Christian-personalist view of society, the latter being the strand of Catholic social thought—associated with thinkers such as Jacques Maritain and Luigi Sturzo—that emphasized the moral agency of the individual within a framework of social responsibility.⁹⁰

The encounter between liberal socialist tradition and some currents of the Reagan administration did not produce a linear chain of influence but a moment of transatlantic hybridization in which ideas and institutional concerns converged to recast the vocabulary of Western capitalism. The social effects of these reforms, however, were uneven. In the U.S., Reagan’s tax cuts favored upper-income groups and corporations while shifting the burden toward payroll taxes, widening inequality despite the administration’s claims of neutrality. In Italy, Forte’s emphasis on generality of taxation reduced sectoral privileges but increased the fiscal exposure of small professionals and protected categories. In both contexts, market insiders and high-compliance taxpayers tended to benefit, while those reliant on exemptions or discretionary transfers faced new constraints.

6 Conclusion

This article has examined a pivotal yet underexamined dimension of late twentieth-century capitalism, namely the transatlantic exchange between liberalism and socialism embodied in the dialogue between Buchanan and Forte. Their interaction exemplifies ideological hybridization rather than doctrinal fusion—a process in which concepts and normative languages rooted in different traditions are recombined under the pressure of fiscal crisis and democratic fatigue.⁹¹ The encounter between liberal constitutionalism and reformist socialism emerges here as an attempt to rethink capitalism beyond oppositions between market and state.

As the previous sections showed, the analogies between Reagan and Craxi did not stem from imitation. They reflected an adaptive uptake of global discourses centered on economic efficiency, fiscal responsibility, and the promotion of entrepreneurship in the wake of the crises of the 1970s.⁹² Both leaders sought to recalibrate the post-war social compromise through tax reform and institutional modernization. Ordoliberal legacies and the analytical frameworks developed by Buchanan and Forte offered languages of responsibility, transparency, and constraint that helped legitimate these agendas.⁹³

Despite their different ideological origins, Reagan and Craxi converged on several key fronts: the defense of core capitalist institutions, anti-communist foreign policy, and an emphasis on individual responsibility over bureaucratic paternalism. Under Craxi’s leadership, Italy remained a loyal NATO partner and echoed aspects of Reagan’s Atlanticist posture, even as it asserted national sovereignty, notably in the 1985 Sigonella incident.⁹⁴ Public Choice critiques provided rhetorical support for tax cuts and deregulation, while entitlement programs remained largely intact and no constitutional amendment materialized.⁹⁵ In Italy, by contrast, Forte and allied technocrats introduced new governance norms like multi-year budget planning, inflation targets, and greater transparency in public finance that anticipated subsequent convergence toward European monetary standards. Notably, neither Buchanan’s nor Forte’s proposals fully determined policy outcomes. Their influence lay in narrowing the range of acceptable options and in framing executive-led reforms as matters of constitutional responsibility rather than partisan preference.⁹⁶

Understanding late twentieth-century capitalism requires engaging with its margins, those zones of ambiguity, hybridity, and adaptation that gave rise to “third way” alternatives long before the term entered mainstream discourse.⁹⁷ Approaching neoliberalism as an institutionally embedded and normatively contested process makes it possible to see how economic orders are shaped not only by material outcomes but also by the justificatory languages and rule systems that sustain them. The Buchanan-Forte dialogue offers a telling example of how such languages travelled and were reworked across borders.

Neither Buchanan nor Forte fits neatly into standard “Varieties of Capitalism” typologies. Both operated as mediators at the intersection of theory and practice, Europe and the United States. Their trajectories show how national political economies appropriate and transform external ideas, and how apparently antagonistic traditions can be reconciled within technocratic, rule-bound frameworks. In this sense, the convergences between Reagan’s United States and Craxi’s Italy reveal capitalism’s dialogical character and the possibility of strategic alignments between distant actors struggling to navigate a shared era of transition.