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What does “dittatura legalizzata” mean in this context?

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It means "legalized dictatorship".
Fascism could be considered a "legalized dictatorship" because it basically acted like a dictatorship without formally breaking the laws of the time.
For instance, as described in this article, they used "decreto legge" - which was meant as an "exceptional" tool to pass urgent laws quickly and with less opposition - as their standard way to pass laws.

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