Italy's publishing industry, like its political life, has recently pulled out of a dangerous tailspin. During the years that Italy was battling terrorism, double-digit inflation and revolving-door governments, many of its most venerable publishing houses were fighting for financial survival. The crisis has left Italians weary of political ideology and more concerned with economic well-being; it has left the book business more stable and prosperous but also more dull and homogenous.

Up until two or three years ago, most of Italy's great presses were dominated by the individuals or families who founded them: Einaudi, Mondadori, Rizzoli and Feltrinelli. A decade of overreaching ambition and financial recklessness has nearly put an end to this era of personal publishing, destroying or weakening several of Italy's great publishing dynasties.

The most extreme case is the empire building of Angelo Rizzoli, who expanded his grandfather's successful book publishing business into a media conglomerate, combining newspapers, magazines, television and movie companies. Gambling on high inflation, he borrowed and borrowed in order to continue buying new ventures, until he found himself in jail and the company in bankruptcy.

"We went through years of megalomania," says Ulrico Hoepli, who observed the crisis both as head of his family publishing house and owner of Milan's largest bookstore. Many publishers, he says, offered absurd discounts in order to crowd the stores with their books and printed far more copies than they had a realistic chance of selling.

"There is now much more of a managerial and entrepreneurial attitude," says Marco Polillo, head of the reconstituted Rizzoli book division. "In the era of personal publishing the editor would say, 'I'm going to publish this book because I like it, whatever the cost.' Now publishers realize the books have to balance."

The era of personal publishing brought results that ranged from brilliant to disastrous. Both extremes were present in the history of the Einaudi publishing house of Turin, until recently Italy's most prestigious. After two years in bankruptcy court, the house of Einaudi is now being auctioned off.

Since its start in the 1930s, Einaudi was both the publisher and intellectual center for many of the country's best writers and thinkers. At one time, not only did it publish virtually every major Italian writer, it employed novelists Cesare Pavese, Italo Calvino and Natalia Ginzburg as editors.

While the personality of its founder, Giulio Einaudi, helped create the prestige and success of the press, it also contributed to its downfall. Many blame Giulio Einaudi for publishing too many lavish encylopedias and reams of political nonfiction that appealed more to the Italian left than to the general reading public. "Einaudi with his obsession with being the conscience of the nation published hundreds of books in the 1970s that today are worth nothing," Roberto Calasso, the editor in chief of Milan's Adelphi press, commented in a recent interview.

Many other Italian presses ran aground because they continued publishing "committed" nonfiction after the mood of the country had turned more conservative, and the public looked for entertainment rather than political enlightenment. Italian publishers clung to the role of guiding rather than following public taste.

This split between the cultural establishment and the general public may account in part for the fact that Italy has proportionately fewer readers than any country in Europe. Only 34 percent of all Italians read three books or more a year as opposed to 69 percent in Switzerland. Even Spain, despite a lower standard of living, has a higher percentage of readers, 40 percent, than Italy.

In order to enlarge the book market, many publishers have become more commerical and more Americanized. Mondadori, publishing everything from classics to Mickey Mouse, sells nearly a quarter of the books sold in Italian stores. Operating like an Italian Random House or Simon and Schuster, it has used its financial muscle to acquire the lion's share of international bestsellers such as John le Carre', Ken Follett, Judith Krantz and Gabriel Garci'a Ma'rquez. Many authors, including Saul Bellow, switched to Mondadori because of the uncertainty of Rizzoli's finances.

Mondadori, to the horror of many, introduced the Harlequin romances into Italy five years ago. Critics said that Mondadori was making the mistake of thinking that what works in America will work in Italy. But the romances now sell 25 million copies a year.

Italian tastes in popular fiction seem to be nearly identical to those in America and the rest of Europe, but nonfiction best sellers do not generally travel well. For example, while 70 percent of Rizzoli's fiction list is in translation, in nonfiction the situation is exactly reversed: 70 percent of the authors are Italian.

But even in nonfiction, the large commercial houses have picked up American publishing formulae and adapted them to the Italian market: instant books on current events, diet and pop-psychology. Publishers have taken advantage of a recent boom in the Italian stock market quickly issuing a series of investment manuals.

Another recent trend has been a series of books on etiquette. They reflect a new Yuppie conformism in which the worst sins are having socks that are too short or using a knife to cut fish. These books are directed at a large new middle class, eager for social respectability as well as economic well-being. Just as in upscale America, any embarassment over conspicuous consumption has been shed, as shown by the success of the new Italian magazines, Pleasure, Class, and Capital.

The publishers' search for a best seller has not always involved a cheapening of quality: The biggest best sellers of 1986 have been the latest novels of Milan Kundera and Gabriel Garci'a Ma'rquez, which both sold over 100,000 copies. "The success of authors such as Kundera, whose early books sold only about 2,000 copies, indicates a return to quality fiction." says Polillo of Rizzoli. "The mass best sellers of the past, Harold Robbins and Judith Krantz, are not doing as well as in the past."

The biggest surprise of the last year is the sudden popularity of young American writers. Family Dancing, a collection of short stories by 25-year-old David Leavitt, has been on the best-seller list for months, selling over 50,000 copies. Up until now America was seen as the source of pulp novels, while serious fiction either went unpublished or sold poorly. "Now these young American writers are as courted as Judith Krantz," says Giancarlo Bonacina, the editor of foreign fiction at Mondadori, who published Family Dancing. Since then, several other young American literary authors have been snapped up by Italian publishers, including Jay McInerney, Susan Minot, Amy Hempel. The sudden boom has driven up the price for foreign rights. Mondadori purchased Family Dancing for only $ 1,500, while McInerney's Bright Lights, Big City recently sold for $ 50,000.

SIMILARLY, there are encouraging signs of life from a new generation of Italian writers. In the 1970s Italian literature was in crisis. There appeared to be no one coming along to replace the great writers of the postwar period, Eugenio Montale, Alberto Moravia, Primo Levi, Italo Calvino and Elsa Morante; the new novels were full of political jargon. In contrast, the young writers of the 1980s -- Antonio Tabucchi, Andrea De Carlo, Daniele Del Giudice, Vittorio Tondelli -- are refreshingly free of ideology.

The great postwar writers were formed by World War II; their values were shaped by the moral struggle against fascism. The new Italian writers have much more in common with their American contemporaries such as Raymond Carver, Jayne Ann Phillips and Ann Beattie. They are part of a generation that has seen social revolution rise and fall and has given up on ultimate meanings and larger messages. They tend to be miniaturists, cool and ironic rather than impassioned. Their characters are struggling with their own private Purgatories rather than engaging in the battle between Heaven and Hell. Perhaps because of this affinity, a number of current Italian writers will soon be published in the United States. After importation of so much American culture into Italy, the exchange may become more of a two-way street.

Alexander Stille is a New York editor and writer.