Understanding the Spanish crisis

Isidro López and Emmanuel Rodríguez have published  a thorough account of Spain’s recent economic history in the New Left Review. This is a must-read for anyone who is interested in the Spanish economic crisis and the ongoing protests. The article summarizes the main findings of the research and activist group, Madrid Metropolitan Observatory, published as Fin de ciclo. Financiarización, territorio y sociedad de propietarios en la onda larga del capitalismo hispano (1959–2010), Traficantes de sueños, 2010.

Interestingly, the authors traces the roots of the current Spanish crisis in the development model set up by Francisco Franco’s dictatorship from 1957 onwards.

The genealogy of the Spanish macro-economic model has been complex; one might even say, ironic. Its origins lie in the modernization programme of the Franco dictatorship from the late 1950s, premised on the development of mass-market tourism from northern Europe and the radical expansion of private home-ownership. This ‘solution’ to Spanish industry’s eternal competitive weakness was a notable anomaly in the context of the manufacturing growth that marked the post-war boom elsewhere in Europe. But as Franco’s Minister for Housing, the Phalangist José Luis Arrese, put it in 1957: Queremos un país de propietarios, no de proletarios—‘we want a country of proprietors, not proletarians’. This Thatcherism avant la lettre transformed the Spanish housing market: during the 1950s, rented accommodation was still the norm; by 1970, private ownership accounted for over 60 per cent of housing, 10 points above the uk level.

Following Naomi Klein’s description of capitalist violence in The Shock Doctrine, one can argue that long before the terror developed by Latin American dictatorships in the seventies, Spain had witnessed itself a shock of an unprecedented scale: the war of 1936-39. Franco’s mass killings and repression paved the way for the implemention, years later and with US support, of the 1959 Liberalisation and Stabilisation Plan, which opened the autarkic Spanish economy to the world. Since then, the Spanish economic model specialized in tourism, property development and construction. There is a strong line of continuity between the economic policy of the 1960s and today. There is also a line of continuity between the constitutional structure of Franco’s regime and the current democratic monarchy.

The entry into the European Communities, today the European Union, served to give a boost to that economic model, this time following neoliberal recipes:

Four factors proved decisive here. First, low interest rates, as Maastricht and the control of public deficits—as well as the demands of the big financial companies, more interested in touting their new products (such as pension and investment funds) than in strengthening the positions of the typical creditors of the 1980s—led to a continual fall in the price of credit. Spain thus began a long journey that would take it from a position of boasting the highest interest rates in Europe to becoming the country with the highest levels of internal indebtedness on the Continent. Second, monetary union and definitive incorporation into the Eurozone in 1999–2002 guaranteed the Spanish economy an international umbrella, endowing it with strong purchasing capacity abroad and marginalizing the importance of its external deficit in the context of the European Union’s relative surplus. Third, the EU liberalization policy set the seal on the privatization of publicly owned companies in strategic sectors such as electricity and telecommunications. Lastly, the privatization of the equivalent public-sector companies in Latin America, often imposed on those countries by the imf’s adjustment plans, opened up significant opportunities for the internationalization of leading Spanish firms. With the aid of the Euro’s purchasing power, Spain’s grande bourgeoisie went global, recolonizing the Latin American markets stricken by the 1998–2001 crisis and snapping up local companies at bargain prices. The two major Spanish banks, BBVA and Banco Santander, became the biggest in Ibero-America, just as Telefónica and the Madrid-based electricity companies became the biggest in their sectors in that region. In other words, the framework established by Maastricht and the Euro opened the door to the financial repositioning of the Spanish economy within the international division of labour and also to what was to become its central element: the property-development cycle.

That cycle is over, as the article explains so well. With a collateral damage: a constitutional crisis, with thousands of Spaniards demonstrating for a real democracy and a new political transition.

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