PUBLIC FINANCE. – The etymology of *finanza* is usually traced to the medieval term *a fini di finanza* (a corruption of *finire*), understood as the “actors by whom accounts were managed and settled (*in finanza*) for the performance of a service, a composition, or a levy.” There is a private finance and a public finance; the former consists broadly of private wealth, the latter of public wealth. Naturally, with the passage of time, the meaning of *finanza* was partly broadened and partly refined according to the various social circumstances and needs.
OUTLINE:
I. Public finance and financial activity
II. Constitutive elements of public finance: minor elements and presuppositions
III. Public expenditure
IV. Public revenue, chiefly: taxes and tax systems
V. The state budget
VI. Extraordinary revenue: public debt
VII. Public finance and monetary circulation; recurring infractions: their causes and effects in the finance of states
VIII. The scientific study of public finance.I. PUBLIC FINANCE AND FINANCIAL ACTIVITY
Public finance has as its object the facts relating to the wealth that the state and smaller public bodies procure and employ in order to achieve the public ends that are specified in public needs.If regard is had to the subject (the state and, within its sphere and according to the forms and within the limits established by it, the smaller bodies: regions, provinces, communes, etc.) that performs these acts, one speaks of financial activity; and this expression always implies the qualification “public.” Moreover, the importance of such activity in the history of peoples—as advanced political communities—has always been so strong and has acquired such clear meaning in comparison with other wealth-related activities (those of private individuals, and of the state itself insofar as it engages in commerce, industry, etc.), that the word *finanza* in ordinary usage has always been shown to mean public finance in its proper sense. In 16th-century France the term *finances* entered into use with reference to public bodies, to signify the wealth, and more especially the revenue, of the state for the attainment of its ends. This completed sense is clearly conveyed in the following phrase of Chancellor De l’Hospital (1568): *“Non adversaries ont peu de finance, unis ita mehanacini boni.”*
II. CONSTITUTIVE ELEMENTS OF PUBLIC FINANCE: MINOR ELEMENTS AND PRESUPPOSITIONS
There are, then, three constitutive elements of financial activity:a) the state, which forms the subjective element; this is so even when dealing with public bodies subordinate to it, since the public needs satisfied by such bodies still fall within the ends of the state, and their finance is regulated by the state, even to the point of organizing it in relation to the state’s own finance;
b) the ends of the state (objective element), which are generically defined as ends of conservation and development of the political organism;
c) wealth, which consists of economic goods (income and property) mostly already existing in private economies and of which the state makes use to a certain extent (normally, in the modern state, by means of levies: taxes, dues, etc.), forming public revenue and employing it in public expenditure.
The minor elements or presuppositions of financial activity relate to the historical and local environment. They concern the various aspects of the life of the state, in which is also the life of society, in its material and spiritual elements, such as: the productive and distributive regime of wealth; the territorial distribution of the population and its division into income and occupational classes, and also, to some extent, the physical conformation of the territory itself; the respect that the state accords to private property and to the freedom within which private income, consumption, and savings are formed and exchanged with foreign countries; the culture and education of the people, and also their domestic and social customs; the fiscal education of taxpayers; the political forms and the established relations that characterize what are called civil and liberty rights of the citizen, including the publicity given to financial budgets and the respect accorded to public opinion regarding the financial action of the state and other public bodies; and so forth.
III. PUBLIC EXPENDITURE
Since the beginning of the 19th century, public expenditure has shown a notable and continuous progressive increase, in relation to the growing expansion of the ends of the state.At present, the end of what is called social security or prosperity in most European and American countries exerts a very strong impetus toward the increase of public expenditure by states and smaller territorial bodies (regions, provinces, communes) and non-territorial bodies (institutional administrative entities created or recognized by the state with their own legal personality to achieve certain social and economic purposes).
Conditions are indeed increasingly arising for a *finanza parafiscale*, which serves as a limit to classical finance relating to the fundamental and traditional ends of political organisms, making room for a finance conducted by non-territorial public bodies with special purposes and tasks of sociality and stimulation of economic life; and this finance is appropriately called *parafiscale*, even though it still lacks well-defined theoretical and practical limits, especially with regard to the nature and tasks of a large number of institutions and associations of a voluntary nature or even of a compulsory mutualistic character, among which social insurance occupies a principal place.
Moreover, a policy of public investment in the period since the Second World War serves as an instrument for implementing changed forms of state intervention in economic life (dirigisme, planning) and also acts as a force for achieving new ends of sociality and civil and economic progress. Public investments thus constitute a surpassing of the classical policy of public works (limited to objects such as roads, ports, fortifications, etc.) and give new directions to public credit for new objectives to be achieved throughout the national economy, also by means of the general management of credit and private investments.
IV. PUBLIC REVENUE, CHIEFLY: TAXES AND TAX SYSTEMS
Only in the modern state and in the most recent times have public revenues consisted almost entirely of levies (unrequited revenue), whereas in the past, and especially in the Middle Ages and early modern period, there were sources of revenue largely consisting of patrimonies that were considered to belong personally to sovereigns and princes, or of commerce and production that they themselves conducted or promoted (fiscal demesnes yielding original revenue); as well as rights in the form of regalia belonging to them, from which certain forms of tax in the more advanced modern state have originated.Taxes fall upon the incomes and properties of individuals (taxpayers) both directly (direct taxes) and indirectly (indirect taxes, which fall upon consumption, transfers of wealth, and acts of exchange in general).
With taxes, the more advanced contemporary states succeed in collecting on average one-third of the total respective national incomes. Hence one understands the utmost importance that, in the public finance of each country, the formation of the tax system has, regulated by criteria of organic unity and rationality.
Taxes, in addition to their primary purpose of providing revenue for the public treasury to cover public expenditures, are today increasingly developing secondary revenues that serve purposes not strictly fiscal in nature. They can, in other words, be used as a direct instrument to modify or correct the natural course of economic life (such as protective tariffs, which serve to limit competition from foreign products) or to achieve social objectives (as occurs with highly progressive tax rates on taxes that target the taxable capacity manifested by the sum of a natural person’s income or property values, or by assets transferred through inheritance, legacies, or donations; thus tending to mitigate the inequality of individual wealth), and so forth.
From this arises the distinction between fiscal finance and extra-fiscal finance, though this distinction tends to obscure the true nature of the financial phenomenon.
V. THE STATE BUDGET
A tool of immense importance in the modern State, both as an accounting and legal instrument, the budget reflects every political, constitutional, administrative, and procedural aspect of public money management. It serves both for the periodic forecast (budget forecast) of financial transactions represented by numerical entries for both revenues and expenditures (which is annual but is tending today toward longer periods) and for their execution, followed by the final accounting (final budget).VI. EXTRAORDINARY REVENUES: PUBLIC DEBT
Extraordinary revenues, intended to cover extraordinary expenditures, can, up to a relatively limited extent, be provided by extraordinary taxes, that is, by temporarily increasing the rates of some or all existing taxes or by introducing new taxes on a temporary basis.Hence arises a highly significant aspect of modern financial activity: public borrowing, which takes the following forms: a) floating debt (to cover temporary cash shortfalls, i.e., payments that are expected to be sufficiently covered by total revenues but whose collection is delayed relative to such payments), primarily in the form of ordinary treasury bills (with short-term maturities in Italy ranging from one to twelve months); b) consolidated debt, which may be either irredeemable (with no maturity date) or redeemable (with a fixed maturity date), the latter being mostly redeemable through annual drawings (amortizable). There is an intermediate form between floating and consolidated debt, represented by extraordinary treasury bills with multi-year maturities (in Italy, primarily November maturities), which serve as a temporary measure until, when credit market and political conditions are favorable, they can be converted into consolidated debt. If such conversion is delayed, these bills are renewed upon maturity.
Naturally, public debt gives rise to regular public expenditure items for the service of interest payments on the loans that constitute it, as well as any premiums associated with them.
Within the framework of repayments and other forms of public debt redemption, which increasingly tend to be limited to the strictly floating debt (though this is renewed annually), the State has only one apparent means of reducing the burden of public expenditure on interest payments for debt contracted under unfavorable credit market conditions: the conversion of irredeemable consolidated debt. When this conversion is voluntary or optional (ordinary conversion), it involves replacing old loan securities with new ones bearing a lower interest rate.
VII. PUBLIC FINANCE AND MONETARY CIRCULATION: RECURRENT COUNTERFEITING, ITS CAUSES AND EFFECTS IN STATE FINANCE
A matter of grave concern for public finance is monetary circulation, which today consists almost everywhere exclusively of banknotes as the principal form of money.In difficult times for public finance—such as those marked by exceptional expenditures, sometimes disproportionately large to be covered by ordinary credit means—such as wars, the issuance of paper money to meet the State’s needs arising from such causes serves as an extraordinary source of revenue and a covert form of public debt (albeit interest-free).
The inflation of monetary circulation, which is the inevitable and dire consequence—at least as long as those causes persist—produces the effect of currency devaluation, damaging the entire economy of the country. However, it has the effect of reducing the burden of previously issued public loans (and the same applies to loans between private entities) by lowering the value of the monetary unit relative to the time of issuance of such loans.
In conclusion, despite the ever-growing nominal volume of public debt since the early 19th century, and today in almost all States, the recurrent devaluations resulting from repeated monetary inflations—certainly not intended or sought by the respective governments—periodically ease the burden of public debt service relative to other budget items.
VIII. THE SCIENTIFIC STUDY OF PUBLIC FINANCE
As an object of scientific study, public finance gives rise to one of the most important social disciplines, taught as a core subject in all faculties of law, economics, and political science: the science of finance, alongside financial law.In this field, Italy has earned a high reputation worldwide, both for its long-standing tradition and for the large number of scholars dedicated to it, whose research and publications form an ever-growing scientific literature that covers every type of contribution, aspect, and genre in the field of finance—one of the most complex within the intricate domain of social sciences.
The foundation of the science of finance is essentially political, with an ethical-legal character, specifically within the framework of State doctrine.
Nevertheless, the prevailing approach in modern financial science since its inception has been economic in nature, so that its study is conducted within the framework of economic theory, treating the science of finance as a special branch of economics. However, the shortcomings of this approach are becoming increasingly evident, and the task of economic theory with respect to financial phenomena is now recognized as developing a category—albeit an important one—of studies on the economic aspects of such phenomena, particularly concerning taxation. Indeed, it is essential to understand the effects of taxes on economic life (financial economics) in order to design tax systems that are as efficient as possible while also promoting sound economic activity, in accordance with the fundamental political objectives of the State. These objectives, in matters of finance, are governed by moral factors and historically operative legal consciousness.
The economic approach to the science of finance has often been corrected by the introduction of political elements (not always understood in conformity with the true nature of the State, which pursues its own ends not compatible with those of individuals or groups of individuals) or sociological characteristics, in which the economic principle and the political element should remain absorbed—according to some writers—while, however, one must return to the pure sense of the political nature of the financial act, as it was in our writers, from St. Thomas Aquinas to the first half of the 19th century, characterized by the moral factor and the juridical order of the State.
FINAL END
Deliberately ordered: “Sola creatura rationabilis est capax Dei, quia ipsa sola potest ipsum cognoscere et amare explicite” (St. Thomas Aquinas, *De verit.*, q. 22, a. 2 ad §). While irrational natures move by an innate inclination toward the functions of their species (e.g., in living beings, nourishment, reproduction, etc.), the spiritual creature can know the supreme Good that transcends the species and possesses the freedom to decide the final end of its actions, thereby “choosing” its destiny. Man, therefore, insofar as he is endowed with an intelligent and free soul and attains the dignity of a “person,” receives as an individual a transcendent value, namely, the immediate ordering to God, which each person can (and must) actualize through the exercise of his freedom. Thus, in the sphere of spiritual beings, the attainment of the final end is not determined by the species in an innocent and predetermined manner, but remains suspended upon the ambiguity of each individual’s free decision. The outcome will correspond to the nature of the choice: happiness for those who have chosen the unchangeable Good, unhappiness for those who have chosen an apparent and transitory good.
The final end can then be considered from an objective point of view, in which all creatures participate insofar as it is the glory of God, which each manifests and actualizes in its own way through the exercise of its activity. Alternatively, the final end can be considered from a subjective point of view, namely, according to that operation which enables the agent to possess or unite with the supreme Good. This subjective final end evidently belongs properly to spiritual natures and entails the supreme repose of perfect and absolute happiness. In the field of Catholic theology, there is debate over whether the essential motive of subjective beatitude consists in an act of the will, as the Scotists maintain, or in the propensive function of the intellect, as the Thomists argue. An explicit declaration by St. Thomas Aquinas clarifies the primacy he attributes to the apprehensive moment, not excluding the affective moment but rather recognizing it as its necessary constitutive completion of beatitude. Faithful to the Aristotelian principle: δεῖξις χεῖρον περὶ τὸ νοεῖν (De An., III, 10, 433 a 25), the Angelic Doctor states: “Quia felicitas est principalissimum bonum hominis, consequens est ut magis consistat in eo quod est rationale per essentiam quam in eo quod est rationale per participationem. Ex quo potest accipi quod felicitas principalis consistat in vita contemplativa quam activa, et in actu rationis vel intellectus quam in actu appetitus ratione regulati” (In X Eth., I, I, lect. 10, ed. Pitrat, Turin 1934, n. 125).
Yet it is in the Commentary on the Gospel of St. Matthew that St. Thomas Aquinas provides the complete formula, precisely with the explicit reference to Aristotle: “Notandum quod secundum Philosophum, ad hoc quod actus contemplativi faciant beatum, duo requiruntur: unum substantialiter, scilicet quod sit actus altissimi intelligibilis, quod est Deus; aliud formaliter scilicet amor et delectatio” (Expositio super Ev. Matheae, cap. 5, lect. 1, ed. Parm., X, p. 49 b). This unusual formula corresponds to that of St. Augustine: “Beatitudo est gaudium de veritate” which is God Himself (Confess., X, 22; cited in 1a-2ae, q. 4, a. 1, sed contra).
II. Historical Note
It is clear that this determination of the subjective final end or happiness presupposes the conception of God, man, and the world that is proper to Christian philosophy, resting upon the truths (1) of the creation *ex nihilo* of the entire world and of spiritual beings themselves, and (2) of the survival or personal immortality of individual souls. These two truths, in their exact metaphysical concept, were absent from all Greek philosophy and faded into obscurity in modern philosophy. The great Socratic systems (Plato and Aristotle) fundamentally criticized hedonism, which placed happiness in bodily goods, as did, for example, the Cyrenaics: pleasure belongs to happiness, but as its completion, just as beauty belongs to youth, and in a certain way pleasure is the highest good.
*Fingetia* — F. del Casino Medicea, work by B. Buontalenti (ca. 1480) — Florence.
One must recognize a profound mystery in the “natural condition” of man, who is drawn to the infinite Good but, with the sole natural powers of his spirit, cannot truly know, love, or possess it in an authentic and proper sense. This is due both to the metaphysical proportion between a nature that remains always finite and to an inexplicable yet real weakness that prevents the intellect from clearly discovering the truth and the will from sincerely aspiring to the good. Thus, humanity, even among its greatest thinkers, has never definitively resolved the problem of man’s ultimate destiny and personal immortality, but has had to settle for precarious and discordant solutions. Hence the unrest and dissatisfaction that have characterized pure philosophical inquiry at all times, as well as the multiplicity and instability of its attempts. St. Thomas Aquinas explicitly acknowledges this in regard to Aristotle and all classical thought: “Quia vero Aristoteles vidit (Eth. Nic., X, 10, 1179 a 33 sgg.) quod non est alia cognitio hominis in hac vita quam per scientias speculativas, posuit hominem non consequi felicitatem perfectam sed suo modo. In quo satis apparet quantum angustiam patiebantur hinc inde eorum praeclara ingenia, a quibus angustius liberabimur si ponamus [according to Faith] hominem ad veram felicitatem post hanc vitam pervenire posse, anima hominis immortali exsistente” (C. Gent., III, 38). Therefore, modern philosophy, which abandons the destiny of the individual by limiting itself to universal Reason, not only distorts the divine promise of Christianity but also betrays the deepest aspiration of classical thought for perfect justice and happiness. Thus, the “anxiety” of the ancient philosophers, who lacked Faith, becomes the “despair” of modern philosophers who reject Faith.
Cornelio Fabro
FINI, TOMASO: V. MASOLINO DA PANCALE.
FINIGUERRA, MASO. — Goldsmith, niellist and draughtsman, b. Florence in March 1426, d. there in August 1464. Pupil of his father Antonio, he first assisted Ghiberti on the second door of the Baptistery. From 1449 he devoted himself to the art of niello (v. 
Finiguerra, Maso – The Annunciation. Architectural interior in the New Sacristy of S. Maria del Fiore – Florence.
), and in 1452 carved a panel on commission from the Calimala Guild. He worked for a long time in the workshop of the goldsmith Pietro di Bartolomeo Sali, frequented by Antonio Pollaiuolo; Baldovinetti (v.) notes in his Ricordi (1463–64) that he painted the heads of five figures in two tarsiae by Giuliano da Maiano, designed by M. F., for the cupboards of S. Maria del Fiore. Of these tarsiae, the Annunciation in S. Maria del Fiore (New Sacristy) is the one most likely to derive from a design by F., although others (Berenon, Arcangeli) consider all the tarsiae executed from cartoons by A. Baldovinetti (Nativity, St. James, Circumcision, Prophets Amos and Isaiah). In any case, the Annunciation is not solely Baldovinettian: clear references to Pollaiuolo, to the Pollaiuolo brothers, and affinities with Giovanni di Francesco are evident. Such might be F.’s manner: not a strong, rather an elusive personality. To him cannot even be attributed, at least at the present state of research, the two nielli, the Paci, in the National Museum of Florence. The Crucifixion is perhaps by Matteo Dei and does not match the description given by Cellini (Trattato della oreficeria); the Coronation displays typical features that do not belong to the cycle of the Passion of Christ, according to Vasari’s account.
On the other hand, the attribution to F. of numerous drawings, including a Florentine Chronicle drawn in pen preserved in the British Museum, is highly uncertain; this work often shows characteristics more akin to Pesellino than to Pollaiuolo.