Economists and commentators around the world analyzed Mr. Alessandro Profumo's "resignation in the dark" as Unicredit Bank CEO. Everyone knows the casus belli-the explicit one at least: the shareholders' disagreement on the presence of the Libyans in the equities of the Italian bank. At this point, those who have attempted to reconstruct the story in detail, advance suspects, identify political and wheeler-dealer connections, draw fictional political stories and fanciful financial scenarios; nevertheless, they weave in the ancient backstage art, topped with the best sauce flavoured of conspiracy.

The reconstructions could also affect us and they could show strong elements of plausibility, but we believe that we can take this opportunity to try to think over market limitations and conditions. After all, those who defend Profumo's strategy argue their reasons supporting the superiority of the market over the interests of politics and, more importantly, the interests of some local party strongholds (see Prof. Francesco Giavazzi in "Il Corriere della Sera", Sept. 22, 2010). On the other hand, those who denounced the dangers of centralizing strategy pursued by Mr. Profumo and the growing presence of Libyan funds, also cannot be settled sic et simpliciter as short-sighted profiteers of local customers; the market is a network of institutions that arise from the lowest level, it doesn't tolerate very well the centralized solutions and the integration of elements that, for reasons of political and cultural nature, show themselves relentlessly hostile to freedom and not conforming to the same market structure. Ultimately, we believe that the market, in order to fulfill its function as a system of resources, must recognize some limitations and assumptions. In this case, from the theoretical perspective of " Liberalism of Rules " and the Social Market Economy tradition, the question we ask is not whether the market or the policy must guide choices in the financial field, indeed that is not a task to one or to the other, because that is a question of ethics. The question we ask is: what are necessary institutions to ensure that the market can continue to play its role?

Ultimately, does the presence of a Libyan (outside the liberal-democratic logic) sovereign fund (out of the logic of the market) conform to the principles that underlie the free market or undermine its foundations? And moreover, is the apparent irritation of some political circles of the North Italy truly justified on basis that the principle that locals have a natural share (as stakeholders) among the matters of a banking group like Unicredit? Or is it an undue interference of politics? In short, these questions point to two problems. First, can the market survive in any ethical, cultural and political context? Is it a function of certain institutions that presuppose and put it in place? And secondly, is it correct to identify the party system with civil society or is it a process by which the centralism of the former would engulf the plurality of the second? It is our hushed opinion that the market needs of economic, political and cultural institutions which presuppose it and that the presence of a sovereign fund that doesn't match with the logic of the market, furthermore related to a political authority as despotic as Libya, represents a serious threat to the proper functioning of the market. Claiming to represent local interests cannot be contracted exclusively to any one political party.

Mr. Profumo's resignation is an indication of how in our country (Italy) the operators of the financial system and political system are preys of a dangerous schizophrenia under which freedom, democracy and participation have been claimed in the name of sectarian and nepotistic particularism, while, on the other hand, the reasons for the market are defended by others as metaphysical elements created by themselves and not as the product of a complex institutional network whose conditions are of ethical and cultic order.

Flavio Felice is an adjunct fellow at AEI.

Photo Credit:iStockphoto/S. Greg Panosian