(FORTUNE Magazine) – Italy is saying arrivederci to its old ingrown way of doing business. For decades, a few powerful Northern families have dominated many huge corporations, as the Agnellis do Fiat, while a giant state sector has owned and run most of the major banks and other industries. But now the government is preparing to privatize its holdings. Among the companies already on the block: Credito Italiano, a leading bank. Down the road, Alitalia, the flagship airline, will also be sold. A huge ideological debate has erupted over whether the ownership of such state-controlled firms should be spread widely among individual investors or transferred to a couple of big ones, including, perhaps, the Agnellis. But don't look to the corporate dynasties to come up with the money. Fiat's First Family is trying to raise cash, and has already diluted its ownership of the automaker from 40% to 30%. The Ferruzzis? The holding company through which that family controls chemical giant Montedison is about $18 billion in debt and the subject of a bank bailout. Scion Arturo Ferruzzi is out as chairman. Says William Cowan, analyst at James Capel: ''We're seeing the end of family capitalism in Italy.'' The long-ruling Christian Democrats might once have tried to offer such dynasties special prices to buy control of privatized companies, but an ever- spreading corruption scandal has crippled the party. In November's municipal elections, voters turned to the neo-fascists and former Communists. General elections scheduled for this spring could confirm Italy's new economic order.