JULY 29, Benito Mussolini's birthday, was a day for much soul-searching here about Il Duce's dubious legacy. Indeed, 40 years after the hapless dictator's tragicomic exit from the world stage, Mussolini continues to be a subject of considerable controversy. Unlike Adolf Hitler, who is the object of almost universal disgust, Mussolini is not without his admirers. They are particularly numerous in the long-neglected south, where Il Duce is credited with draining the swamps, building schools and highways, and jailing Mafia kingpins. In fact, it is still common to see slogans such as ``Mussolini lives!'' on whitewashed walls of impoverished southern villages.
But if Mussolini built the autostrada and made the trains run on time, he left his present-day countrymen with a deep skepticism about central governments.
Ironically, it is only now, 40 years after the death of this ``Caesar of the carnival,'' that Italians have created a truly coherent government and finally exorcised Mussolini's ghost.
One example of the new political coherence here is the longevity of Prime Minister Bettino Craxi's five-party coalition government, now two years old and almost certain to become Italy's longest-surviving democratic government in October. Another factor in Italy's renewed political respectability has been the warmth and goodwill that former President Sandro Pertini infused into his largely ceremonial office. Mr. Pertini was succeeded early this month by Francesco Cossiga, also notewothy for his ethical rectitude.
The political stability brought by Messrs. Craxi, Pertini, and now Cossiga has been accompanied by an unexpectedly strong economic upturn, with real growth at 3 percent last year, helped by a remarkable improvement in labor productivity. Similarly, large Italian corporations, such as Fiat, Olivetti, and Pirelli, have risen sphinxlike from the economic disarray of the last decade to look remarkably healthy.
Such export-led growth would have come to naught, however, if Italy's raging inflation -- long the highest among major industrial nations -- had not been brought under control.
The main achievement of the Craxi government has been to revise downward the infamous scala mobile, in which wages were linked to inflation, thus building high inflation structurally into the economy. The one dark cloud hovering over the Italian economy -- and it is also familiar to Americans -- is that government spending has been rather more profligate than the country can afford. Indeed, Italy's public-sector borrowing requirement was $48 billion last year, and if present trends continue,
debt interest payments will take up about 10 percent of the country's gross domestic product this year.
At the same time Italy has enjoyed political stability and general economic improvements, the nation has acquired greater international visibility. For example, Italian soldiers were the most widely admired of any of the military contingents in Beirut last year.
The Craxi government has also acquired additional weight within the European Community, and it was Italy as chairman of the EC that paved the way for Common Market enlargement from 10 to 12. At last month's ill-fated Milan summit of EC heads, Craxi stood out as the force of compromesso between Britain on one side and France and Germany on the other.
Relations between Rome and Washington are also good, with Italy's relatively quick decision to accept 48 Pershing and cruise missiles, contrasting sharply with prolonged soul-searching in the Netherlands and Belgium. Italy's strong NATO connection enjoys a broad national consensus -- including even many Communists -- that is increasingly lacking in Britain and West Germany.
None of this is to say that Italy's age-old problems -- a bloated and inefficient bureaucracy, the Mafia, the gap between the affluent north and the impoverished southwest -- have suddenly disappeared. Moreover, recent activity by left-wing terrorists indicates that the Red Brigades phenomenon may yet reappear.
Still, when one compares today's generally upbeat mood with the pervasive pessimism here -- and in the international media -- only seven years ago, the change is indeed striking. One is happy to report that this image is now outmoded and that Italy is once again a wellspring of Western vitality.
Kevin Michel Cap'e, a French-American living in Europe, writes on international affairs for newspapers in France, Britain, Italy, and Spain.