Two of the hallmarks of fascist propaganda was that Mussolini's regime had delivered massive economic growth and fostered a wholesale modernization of industry under the aegis of the corportatist state. An important ancillary to this propaganda was that the Italian worker was the prime beneficiary of this developmental strategy. Naturally, the reality of the Italian economy under Mussolini was more complicated and much less positive than the image the state propagated. In the case of Italian industry, fascist policies were often contradictory and simultaneously benefited and hindered Italian firms.
Prior to the 1925, Mussolini's economic policy mirrored much of its liberal predecessor despite the former's claim that he had made a decisive break with the old regime. The new regime focused upon eliminating budget deficits and relatively free trade. The liberal Italian state had fostered an incestuous relationship with large industrial firms like Ansaldo and Mussolini saw no reason to fundamentally alter this relationship. Nor did industry seek to radically alter this relationship. Government contracts and state encouragement of strategic industries like steel and shipbuilding were already major sources of revenue for Italian industrial firms prior to the ascendancy of Mussolini and this state of affairs would continue throughout the entirety of the peacetime fascist regime. The fascist state altered this relationship slightly by favoring firms related to the military-industrial sector. For example, government bailouts during the interwar period favored military firms over non-military sectors like textiles. But again, this state developmentalism had a clear precedent prior to 1921.
1925 marked the start of a turn in fascist economic policy away from liberal measures towards an economy predicated upon autarky and creating an industrial base for expanding military power. This led to much greater state intervention in the economy and a much trumpeted coordination of both industry and labor to work in unison for the state's goals. Industrial firms were to undergo a compulsory cartelization and workers to join fascist unions. Italy began to erect trade barriers to discourage foreign consumption and this trade protectionism dovetailed with a global move to protectionist strategies with the advent of the Depression. The state also poured vast resources into state developmental projects, such as the reconstruction of Rome which included the opening of new rail-stations and expansions of track that eliminated the bottlenecks that had caused Italian trains to have a reputation of being chronically late. The state also lavished funds on scientific research into developments like television or record-setting aircraft that would showcase fascism's inherent modernity both to Italians and the rest of the world.
The effect this fascist turn had upon the overall performance of the Italian economy was pretty negative. Adapting a protectionist stance played to the many inherent weaknesses of the Italian economy. Italy lacked both the mineral wealth and fossil fuels to create the type of economy Mussolini expected from autarky. Italian GDP in the 1920s had a respectable annual growth rate of around 4% and exports were also growing, but the push for autarky led to stagnation in both these fields that was below-average compared to the rest of Western Europe. Only the Italian chemical industry achieved some degree of above average growth, partly as a result of Mussolini's "Battle for Grain," which encouraged the development of a chemical fertilizer industry. The onset of the Depression exacerbated economic sluggishness prompting the state to create the Istituto per la Ricostruzione Industriale (IRI) which took over Italian banks' shares in failing industries and injected much needed capital. Nor did the tendency to produce showcase items lead to a broader modernization of the fascist economy. Often the propaganda value of achieving these triumphs quickly trumped developing the infrastructure to deliver them on a mass scale. Although Italy pioneered television production, the Italian electronics industry was woefully behind its contemporaries as seen in during the Second World War when Regina Marina ships would not be equipped with radar on a large scale until 1942. Perhaps one of the most salient examples of the discrepancies between fascist modernist rhetoric and reality was the disastrous Breda Ba.88 Lince aircraft. Although its streamlined shape, powerful engines and the world-speed records the prototype achieved in 1937 looked formidable in fascist print and newsreels, the aircraft was a complete failure once fitted with operational equipment. Unlike its feline namesake, the operational Lince could barely climb in a straight line and could not safely perform maneuvers unless flown by a pilot of exceptional skill. By late 1940, the remaining aircraft were relegated to airfield decoys after being stripped of their equipment. The failures of these developmental programs was partly a function of the fascist form of government which saw a bewildering duplication of effort and chronic inefficiency coupled with the state's push to achieve results quickly with a minimum of cost.
Yet for all of the state's rhetoric about the new course of the late 1920s and 30s, industry still enjoyed a highly privileged position within the fascist regime. State regulation of industry and labor seldom came at the expense of industry but was clearly biased against the interests of labor. Mussolini did encourage state-subsidized leisure for the working classes, but also made strikes illegal and the fascist union that replaced trade unions was stuffed with various Blackshirt cronies who were not interested in the rights of labor. Although macroeconomic growth slowed in the 1930s, the state's continued guarantee of contracts and investments from the IRI as well as the clampdown on organized labor was an acceptable tradeoff for some of Italy's industrialists. The Italian elite may have resented the intrusion of fascist interlopers into their affairs, but this largely conservative coalition did not desert Mussolini until after the major reverses in the Second World War.
So while development and growth did take place in Italian industry under Mussolini, it seldom matched the lofty rhetoric of the state's claims that it had achieved a magical third way between capitalism and communism. Much of the Fascist improvements in the economy were more cosmetic than substantive. The IRI was much a more effective tool for state intervention postwar than it ever was under Mussolini, in no small measure because the Italian government did not force industry down an autarkic cul-de-sac. The much bally-hewed fascist rail network collapsed under the pressure of the Second World War. Thus the regime became a prisoner of its own propaganda, the phrase "make the trains run on time" originated out of the bombastic rhetoric about the transformation of Italy into a modern state under Mussolini's auspices. When these discrepancies with reality did not match the rhetoric, then the bombast of Fascism became more apparent.
Sources
Cohen, Jon S. "Was Italian fascism a developmental dictatorship? Some evidence to the contrary." The Economic History Review 41, no. 1 (1988): 95-113.
Cohen, Jon S., and Giovanni Federico. The Growth of the Italian Economy, 1820-1960. Cambridge: Cambridge University Press, 2001.
Painter, Borden W. Mussolini's Rome: Rebuilding the Eternal City. New York: Palgrave Macmillan, 2005.
Toniolo, Gianni. The Oxford Handbook of the Italian Economy Since Unification. New York, NY: Oxford University Press, 2013.