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"When Monti Spoke, Everyone Listened"


In Italy in the 1970s, private capital was under attack by left-wing radicals, profit was widely considered illegitimate, and state ownership was so prevalent that no antitrust law or authority existed. But in Milan, one maverick, a serious young economics professor at Bocconi University, spoke out frequently in favor of deregulation, liberalization, and competition. His name was Mario Monti. Over the next two decades, Monti helped lead the national debate about modernizing Italy's economic policy and became a sought-after adviser to top policymakers and chief executives, sitting on the boards of Fiat (FIA), Generali, IBM (IBM), and Mediobanca. "When Monti spoke, everyone listened," says one top Milanese banker who sought Monti's counsel.

European Union Competition Commissioner Monti, 59, has been championing free markets longer than almost anyone in Europe, starting at his academic pulpit. At Bocconi, where he rose to the president's post in 1994, Monti built a school of monetary economics from scratch and spawned a new generation of internationally savvy economists. At the same time, he sped the internationalization of Bocconi and dramatically expanded the management school's links to industry. "There is a lot of coherence between what he has done in Italy and his work in Brussels. He has always addressed the problem of how to build markets that really work," says Franco Bruni, a former student of Monti's and today a professor of economics at Bocconi.

Monti's independent views were often unpopular outside the freethinking halls of Bocconi, a 100-year-old university of economics and management. In the 1980s, he enraged corporate chiefs who were demanding that the government lower interest rates to avoid damaging Italy Inc.'s competitiveness. When Monti pointed out that Italy's high inflation rate meant real interest rates were actually rather low, he caused howls of outrage. He became the first economist to calculate Italy's money supply, publishing his homemade M1 and M2 figures in a newsletter, upstaging the Bank of Italy in the process and creating a forum for economic debate. Monti's analysis eventually led to a shakeup in the management of Italy's central bank. "He tremendously raised the level of economic policy debate in Italy," says Alberto Alesina, a professor of economics at Harvard University who studied under Monti.

Yet each time he was offered the chance to exercise political power in Italy, Monti refused. He turned down offers of government posts, including one in the cabinet of Carlo Azeglio Ciampi, a former Prime Minister who today is President of Italy. To spread his open-market gospel, Monti relied on his intellect instead of politics. He wrote columns for influential newspapers, such as Corriere della Sera, and hosted public debates on such topics as the role of the state in a modern economy. "He was like the Alan Greenspan of Italy," says Michele Fratianni, professor of business economics and public policy at the Kelley School of Business at Indiana University. "Monti was able to coordinate people and get results."

Indeed, Bocconi itself was Monti's stealth weapon for policy change in Italy. He urged his students to study abroad at leading universities, knowing the country needed a pool of world-class economists to press the case for modernization. Today some 50% of Bocconi's 2,000 graduates have spent time in other countries, up from 5% a decade ago. To combat Italy's brain drain, Monti set up an economic research institute in 1990 to lure top economists to Bocconi.

Using the safe haven of academia to coax change from the system, Monti for decades deftly sidestepped any bruising political conflicts. Wrangling now in the international arena with a Jack Welch or Bill Gates, ex-professor Monti is finding it much harder to duck the punches. By Gail Edmondson in Milan


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