What is Smart Power?

The concept of smart power was first elaborated by Joseph Nye[1] in his book “Soft power. A Future for America” (Einaudi, 2004) in which he defines smart power as the ability to combine hard power and soft power resources into effective strategies depending on the context. Nye explains how the use of force, reward and the setting of action programmes based on them constitute what he calls hard power; while, soft power in its full definition is the ability to influence others by co-opting them through programme setting, persuasion and positive attraction, in order to achieve the desired results. Hard power exerts pressure, soft power appeals.

Soft and hard power are closely related since both are approaches to achieving one’s goals by influencing the behaviour of others:[2]

According to Wilson, the smart power approach stems from the realisation that soft and hard power are not simply neutral instruments to be exercised independently. They constitute separate and distinct institutions and institutional cultures that exert their own normative influences on their members, each with their own attitudes, incentives and expected career paths. Smart power means knowing the strengths and limitations of these instruments[3]. The large amount of investment made by China to promote its own culture around the globe is a clear example of soft power. Nye sees the establishment of hundreds of Confucius Institutes around the world and the rapid growth of Chinese international radio and televisions broadcasting as a powerful means of attracting foreign students to China. Combining the growth of its hard power with a compelling discourse on soft power, China has sought to use smart power to convey the idea of the peaceful rise of knowledge and culture[4].

Nye Joseph, Smart power, Laterza, p. 26.
Nye Joseph, Smart power, Laterza, p. 26.

In general, resources associated with hard power include tangible factors such as strength and money, while those associated with soft power often include intangible factors such as institutions, ideas, values, culture and perceived legitimacy of policies. The effectiveness of soft power in achieving certain results depends much more on the recipient than is normally the case with hard power.  But the relationship is not perfect because intangible resources such as patriotism and legitimacy have a significant impact on the military’s ability to fight and win; the threat of using force is also an intangible factor, although it is an aspect of hard power[5].

In international politics, the resources that produce soft power arise largely from the values that an organisation or country has expressed in its culture, in the examples it sets through its domestic practices and policies, and in the way it manages its relations with others; but if the contents of a country’s culture, values and policies are not attractive, the public diplomacy that conveys them cannot produce soft power, indeed it may produce the opposite. For example, as Nye mentions, if one were to export Hollywood movies full of nudity and violence to conservative Muslim countries, this would produce repulsion rather than soft power[6].

It should be specified that smart power is not just “soft power 2.0”, but is an evaluative as well as a descriptive concept. Furthermore, it overcomes the limitation to apply the concept to the United States of America, because as Nye states, smart power is available to all states and non-state actors[7]. The Centre for Strategic Studies and the Commission for International Studies have idealised the concept by stating that smart power means developing an integrated strategy, resource base and toolkit to achieve objectives, drawing on both hard power and soft power[8].

Since the term has been used by the Obama administration, some analysts think it refers only to the United States, while other scholars see it as a slogan to boost propaganda discourse, the concept can be used for analytical purposes and is in no way limited to the United States[9]. Today, the quest for smart power is not only driven by the right or wrong choices of the individual leader. Sophisticated nations have it all: smart bombs, smart phones, smart blogs, to name but a few. Any actor with an ambition to improve its position in the world seeks to build strategies around these new foundations of smartness[10].

Culture is the set of social behaviours by which groups transmit knowledge and values and exists at multiple levels, it is never static and different cultures interact in different ways and over time they influence each other[11]. This is an important resource of soft power. Culture and leadership are two sides of the same coin, because in creating groups and organisations, leaders first create culture. Once culture exists, it determines the criteria for leadership and therefore who can and cannot be a leader. For example, in different areas in the Middle East there are national, regional, local, religious, organisational, and other subcultures. Therefore, leaders face daunting challenges in understanding the cultural contexts of different countries and must also realise that their communication style has different effects on different public opinions[12].

According to Brannen, resorting to smart power is not very complicated, one has to become more aware of the available tools, and above all, re-evaluate alliances and defensive posture, in a way that has changed rapidly in recent years. Resorting to hard power is not always indispensable, as one has to think “beyond the barrel of a gun”[13].

Smart power in the 21st century is not about maximising power or preserving hegemony, but about finding ways to combine resources into successful strategies in a new context characterised by the spread of power and the rise of other actors[14]. This would consist of a strategy that relates means and ends and this requires clarity about the objectives (desired outcomes), resources and tactics for their use. A smart strategy must also answer a second question: what the available power resources are and in what contexts can they be used. In addition, it is essential to have an accurate view of the capabilities and inclinations of potential opponents. In most cases, a good understanding of the target audience is essential for calibrating the tactics used to combine power resources[15].

Antonella Valenti


[1] Nye J., Smart power, Laterza, p.17.

[2] Kennedy R., The nature and demands of Smart Power, Strategic Studies Institute, US Army War College (2013), p. 67.

[3] Wilson E. J., Hard Power, Soft Power, Smart Power, The Annals of the American Academy of Political and Social Science, Vol. 616, 2008, pp.110-116.

[4] Nye J., op. cit., pp. 24-26.

[5] Nye J., Diplomacy and Soft Power, The Annals of the American Academy of Political and Social Science, Vol. 616, 2008, p. 95.

[6] Nye J., op. cit., p. 248.

[7] Wilson E. J, op. cit., pp. 112-113.

[8] Geertz C., Interpretazioni di culture, il Mulino, 1998, p. 73.

[9] Nye J., Leadership e potere: hard, soft e smart power, Laterza, 2009, pp.108-113.

[10] Brannen S., How to make a Great Power a Smart Power, Georgetown Journal of International Affairs, Vol.10, 2009, pp. 169-174.

[11] Nye J., op. cit., pp.246-247.

[12] Craig G. e Gilbert F., Reflections on Strategy in the Present and Future, in Makers of Modern Strategy: From Machiavelli to the Nuclear Age, Princeton University Press, 1986, pp. 871-872.

The pitfalls back of market growth

Financial markets continue their unstoppable growth. After the impressive recovery of April, also May disappointed the expectations of many short sellers[1] who were betting on a downward correction in the market. After a prolonged period of lockdown, the opening in all countries have generated a great euphoria on the financial markets, making the run-up to pre-coronavirus levels continue.

For a long time, we have relied on earnings as the main value driver in the stock market. Wasn’t the price / earnings (P/E)[2] ratio one of the main multiples for valuing stocks? So far, although most companies have reported earnings well below the levels provided by both guidance and analyst forecasts (except those in the technology sector, communications and stay-at home stocks[3]), the market is slowly returning to its pre-crisis level. The Nasdaq composite has returned to very few percentage points from the historical highs.

The numerous negative macroeconomic data amplify the paradox of this overview, almost one-way upwards. The International Monetary Fund estimates[4] predict negative GDP projections in almost all countries of the world, with rare exceptions such as China and India (respectively + 1.2% and + 1.9% in 2020) which in turn are far from the standard growth rate. In 2020, a 7.5% drop is expected in the Euro area with a 4.7% rebound in 2021. We wonder  how long it will take to return to the levels of GDP before the coronavirus.

United States-5.94.7
United Kingdom-6.54.0
United States-5.94.7
United Kingdom-6.54.0
Source: IMF. Pil outlook in percent change.

Additionally, the estimates on unemployment  in the United States reached 14.7% in April, more than triple from 4.4% in March[5]. We must keep in mind that about 70% of the consumption in the United States is due to the US families themselves. Who will consume in the USA considering that unemployment increases?

Together with the macroeconomic assessments there is  the total uncertainty concerning the vaccine too. Although some (few) trials have been successful, an effective vaccine seems to be far from being achieved. Nowadays, the most promising vaccines are being tested. However, it seems that investors have recently forgotten the main uncertainties that this health and economic crisis has caused: there are no effective treatments, we do not know if, and possibly when, profits will return to pre-covid 19 levels, we do not know the consequences of the reopening or if the autumn period could lead to a new wave. And I could continue with many other uncertainties.

So, where does all this optimism come from? The real question is to wonder if perhaps ‘there is no alternative’ market. In fact, alongside all these uncertainties, we have unquestionable certainties: the central banks continue and will continue to print money unceasingly, guaranteeing unlimited stimuli (two examples are the Federal Reserve and the Bank of Japan). The decisions of the main central banks to provide disproportionate liquidity on the market have probably favored a recovery in the short term, but its sustainability will have to be assessed. Inevitably, all these interventions have brought the returns on cash and bonds to such low levels as to generate an implicit investors’ willingness to expose themselves more on the stock market, in order to obtain a more satisfactory risk-return. Added to this is the so-called ‘fear of missing out’ (FOMO) by investors, or the fear of missing the opportunity at the time of the bullish trend to take advantage of the rally[6], which in turn feeds further rises. The problem remains, however, the macroeconomic context, which could lead to an upward trend only in the short term.

Another factor of extreme importance is the possible cold war between the United States and China which could further fuel uncertainty on the markets. The immediate reaction was naturally negative. Such contexts increase the risk-premium and endanger global development. Obviously, an increase in the risk-premium[7] leads, in most cases, to a decrease in the share price. Bear in mind that we are talking about the two major powers in terms of global GDP, and serious repercussions could, with a chain effect, involve all markets.

As for the European market and in particular the Eurozone, the main news concerns the Recovery Fund proposed by the European Commission which should guarantee 750 billion with an issue of thirty-year securities guaranteed by all countries, with a mix of loans and grants. Very complicated negotiations will open in the following months. We are finally approaching a debt mutualization at the European level (eurobond). The problem is that the funds will be accessible no earlier than 2021. Consequently, the instruments available in European countries will be, at least until the end of 2020, the Sure, the Esm and the purchases of government securities by the European Central Bank. These initiatives were taken with great euphoria on the markets, above all that of government bonds which saw a narrowing of spreads[8].

We cannot predict whether the stock rally will last much longer since we are in a truly anomalous market. In this context, investor sentiment seems to count far more than macroeconomic and microeconomic fundamentals. However, there is a crucial principle of the economy: in order to be sustainable in the long term, growth must be based on solid structures  and these, nowadays, seem to be very fragile. In the extreme case, there is the risk of creating a bubble which, if it explodes, would cause further negative consequences on the market.

Gianlorenzo Zeccolella

[1] https://en.wikipedia.org/wiki/Short_(finance)

[2] Price over earnings is one of the most important multiples, used to assess the equity value of a company. When P/E = 15x, the stock price is 15 times its earnings per share.

[3]  Typical examples for stay-at-home stocks are Netflix or Zoom.

[4] https://www.imf.org/external/index.htm

[5] https://www.bbc.com/news/business-52591262

[6] In finance, a rally is a period of sustained increase in the price of an asset. https://en.wikipedia.org/wiki/Rally_(stock_market)

[7] https://www.investopedia.com/terms/r/riskpremium.asp

[8] The spread is the differential between the returns of two securities with the same maturity (typically 10 years). One of the securities compared is considered as a benchmark.

Nuggets of Public Finance

The Government Budget is a complex document that represents in a detailed way the financial and economic condition of a country. In addition, through an accurate analysis of the public expenses, it is possible to find out important information about the culture and the social structure of the State.

Depending on the information searched and the goals pursued, we can distinguish several types of budget statements.

In this article, I will briefly refer to the final budget and the provisional budget to give an idea about the essential content of a public budget statement and about the role of Gross Domestic Production (GDP) in the evaluation of the total wealth produced, of the national income and of the welfare level inside a society.


Cosa é lo Smart Power?

Il concetto di smart power venne elaborato per la prima volta da Joseph Nye[1] nel libro “Soft power. Un futuro per l’America (Einaudi, 2004) in cui ha affermato che lo smart power è la capacità di combinare le risorse di hard power e del soft power in strategie efficaci a seconda dei contesti. Per chiarire in modo esaustivo i concetti portanti della teoria dello smart power: l’uso della forza, la ricompensa e l’impostazione dei programmi d’azione basata su questi ultimi costituiscono ciò che Nye definisce hard power; nella sua definizione completa, invece, il soft power è la capacità di influenzare gli altri cooptandoli mediante l’impostazione del programma, la persuasione e l’attrazione positiva, allo scopo di ottenere i risultati desiderati. Come afferma lo studioso, l’hard power fa pressione, il soft power esercita un richiamo. Il soft e l’hard power sono correlati poiché entrambi sono approcci per conseguire i propri obiettivi influenzando il comportamento degli altri[2].

smart power

Secondo lo studioso Wilson, l’approccio allo smart power nasce dalla consapevolezza che il soft e l’hard power non costituiscono semplici strumenti neutrali da esercitare in modo indipendente. Essi costituiscono istituzioni e culture istituzionali separate e distinte che esercitano le proprie influenze normative sui singoli, ciascuno con i propri atteggiamenti, incentivi e percorsi di carriera attesi. Lo smart power vuol dire conoscere i punti di forza e le limitazioni di questi strumenti[3]. Un esempio sul soft power potrebbe essere quello dei grandi investimenti fatti dalla Cina per promuovere la cultura cinese in tutto il mondo: secondo Nye la creazione di diverse centinaia di Istituti Confucio in tutto il mondo e l’incremento del numero di trasmissioni radiotelevisive internazionali, hanno lo scopo di attirare gli studenti stranieri nelle università cinesi. Affiancando alla crescita del suo hard power un’avvincente discorso sul soft power, la Cina ha cercato di usare lo smart power per trasmettere l’idea dell’ascesa pacifica volta alla conoscenza e alla cultura[4].

In generale, le risorse associate all’hard power includono fattori tangibili come la forza ed il denaro, mentre tra quelle associate al soft power si annoverano sovente fattori intangibili come le istituzioni, le idee, i valori, la cultura e la legittimità percepita dalle politiche. L’efficacia del soft power nel conseguire determinati risultati dipende molto più dal soggetto destinatario di quanto normalmente non accada con l’hard power.  Ma la relazione non è perfetta in quanto risorse intangibili come il patriottismo e la legittimità incidono notevolmente sulla capacità militare di combattere e vincere; anche la minaccia di usare la forza è un fattore intangibile, benché sia un aspetto dell’hard power[5].

Nella politica internazionale, le risorse che producono soft power si basano in gran parte dai valori che un’organizzazione o un paese ha espresso nella propria cultura, negli esempi che dà con le sue pratiche e politiche interne e nel modo in cui gestisce i suoi rapporti con gli altri; ma se i contenuti della cultura, dei valori e delle politiche di un paese non sono attraenti, la diplomazia pubblica che li trasmette non può produrre soft power, anzi, potrebbe produrre l’opposto. Ad esempio, come cita Nye, se si dovessero esportare i film di Hollywood pieni di nudità e violenze nei paesi musulmani conservatori, ciò produrrebbe repulsione piuttosto che soft power[6].

Bisognerebbe specificare che lo smart power non è soltanto un “soft power 2.0”, ma si tratta di un concetto valutativo oltre che descrittivo. Inoltre, si supera la limitazione ad applicare il concetto agli Stati Uniti d’America, infatti come afferma Nye, lo smart power è alla portata di tutti gli Stati e degli attori non statali. Il Centro per gli Studi Strategici e la Commissione di Studi Internazionali hanno teorizzato il concetto affermando che per smart power si intende sviluppare una strategia integrata, una base di risorse e un kit di strumenti per raggiungere gli obiettivi, attingendo sia all’hard power sia al soft power.

Poiché il termine è stato utilizzato dall’amministrazione Obama, alcuni analisti pensano che si riferisca unicamente agli Stati Uniti, mentre altri studiosi lo considerano come uno slogan per poter incrementare un discorso propagandistico, il concetto può essere utilizzato a scopo di analisi e non è in alcun modo limitato agli Stati Uniti[7]. Attualmente la ricerca di smart power non è guidata soltanto dalle scelte giuste o sbagliate del singolo leader. Le nazioni sofisticate hanno tutto: smart bombs, smart phones, smart blogs, solo per citarne alcuni. Qualsiasi attore che ha l’ambizione di migliorare la sua posizione nel mondo cerca di costruire strategie attorno questi nuovi fondamenti di smartness[8].

Una risorsa importante di soft power è la cultura, essa è l’insieme dei comportamenti sociali mediante i quali i gruppi trasmettono conoscenze e valori ed esiste a molteplici livelli. La cultura non è mai statica e culture differenti interagiscono in modi diversi e con il passare del tempo si influenzano a vicenda[9]. La cultura e la leadership sono due facce della stessa medaglia, poiché nel creare gruppi e organizzazioni i leader creano innanzitutto cultura. Una volta che la cultura esiste, questa determina i criteri della leadership e quindi chi può o non può essere un leader. Ad esempio, in diverse aree in Medio Oriente esistono subculture nazionali, regionali, locali, religiose, organizzative e di altra natura. Dunque, i leader devono affrontare difficoltà impietose per comprendere i contesti culturali dei diversi paesi e devono anche rendersi conto che il loro stile di comunicazione ha effetti diversi su opinioni pubbliche differenti[10].

Secondo Brannen, ricorrere allo smart power non è molto complicato, bisogna prendere maggior coscienza degli strumenti in possesso, e soprattutto, rivalutare le alleanze e la postura difensiva, in un modo che è cambiato velocemente negli ultimi anni. Il ricorso all’hard power non è sempre indispensabile, in quanto bisogna pensare “oltre alla canna di fucile”[11].

Lo smart power nel XXI secolo non consiste nel massimizzare il potere o nel preservare l’egemonia, bensì nel trovare i modi di combinare le risorse in strategie di successo in un nuovo contesto caratterizzato dalla diffusione del potere e dall’ascesa di altri attori[12]. Ciò consisterebbe in una strategia che mette in relazione mezzi e fini e ciò richiede chiarezza sugli obiettivi (risultati desiderati), le risorse e le tattiche per il loro utilizzo. Una strategia smart deve rispondere anche a una seconda domanda: quali sono le risorse di potere disponibili e in quali contesti possono essere utilizzate. Inoltre, è essenziale avere una visione precisa delle capacità e delle inclinazioni dei potenziali avversari. Nella maggior parte dei casi una buona comprensione del soggetto destinatario è essenziale per calibrare le tattiche usate per combinare tra loro le risorse di potere[13].

Antonella Valenti


[1] Joseph Samuel Nye Jr. (nato il 19 gennaio 1937) è uno scienziato politico americano. È il cofondatore, insieme a Robert Keohane, della teoria delle relazioni internazionali del neoliberalismo, sviluppata nel loro libro del 1977 Power and Interdependence. Insieme a Keohane, ha sviluppato i concetti di interdipendenza asimmetrica e complessa. Più recentemente, ha spiegato la distinzione tra hard power e soft power, e ha aperto la strada alla teoria del soft power. La sua nozione di smart power è diventata popolare con l’uso di questa frase da parte dei membri dell’amministrazione Clinton, e più recentemente l’amministrazione Obama; è stato capo del National Intelligence Council, vicepresidente del Sottosegretariato di Stato e sottosegretario alla Difesa durante l’amministrazione Clinton. (Laterza, 2012

[2] Nye J., Smart Power, Laterza, 2012, p. 26.

[3] Wilson E. J., Hard Power, Soft Power, Smart Power, The Annals of the American Academy of Political and Social Science, Vol. 616, 2008, pp.110-116.

[4] Nye J., op. cit., pp. 13-14.

[5] Nye J., op. cit., pp. 24-26.

[6] Nye J., Diplomacy and Soft Power, The Annals of the American Academy of Political and Social Science, Vol. 616, 2008, p. 95.

[7] Nye J., op. cit., p. 248.

[8] Wilson E. J, op. cit., pp. 112-113.

[9] Geertz C., Interpretazioni di culture, il Mulino, 1998, p. 73.

[10] Nye J., Leadership e potere: hard, soft e smart power, Laterza, 2009, pp.108-113.

[11] Brannen S., How to make a Great Power a Smart Power, Georgetown Journal of International Affairs, Vol.10, 2009, pp. 169-174.

[12] Nye J., op. cit., pp.246-247.

[13] Craig G. e Gilbert F., Reflections on Strategy in the Present and Future, in Makers of Modern Strategy: From Machiavelli to the Nuclear Age, Princeton University Press, 1986, pp. 871-872.

Pillole di Finanza Pubblica

Il bilancio dello Stato è un documento complesso, in grado di rappresentare in maniera molto dettagliata la situazione economico-finanziaria di un Paese.
Inoltre, attraverso un’accurata analisi delle varie poste di spesa pubblica, è possibile ricavare anche informazioni culturali e sociali su di esso.
In base alle informazioni ricercate e agli obiettivi che si perseguono si possono distinguere diverse tipologie di bilancio.

In questo articolo farò riferimento, in breve, al bilancio consuntivo e al bilancio previsionale per dare, senza eccessivi tecnicismi, l’idea del contenuto essenziale di un bilancio pubblico e del ruolo del Prodotto Interno Lordo nella valutazione della ricchezza prodotta complessivamente, del reddito e del benessere di una società.



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