The Origins of the Crisis in Spain

By Joaquín Roy Reprint | | Print |

BARCELONA, Jul 25 2012 (IPS) - Not in the last three generations has Spain experienced a crisis as total, devastating, and incomprehensible as the current one. Francisco Silvela, a thinker of the late 19th century and president of the Spanish government, said in August 1898 after the country was stripped of its colonies that Spain “had no pulse”. To a certain degree, the same is true today, especially of those in the government, despite the cuts. Only the protests contradict this feeling. The rest of the country is simply reeling from the financial crisis.

While it shares common features with other countries in Europe, in Spain the origin of the current malaise can be traced back to the evolution of society in the decades after the Civil War (1936-1939).

Until recently the vast majority of the Spanish people were illiterate, lived precariously in miserable crowded housing, ate poorly, dressed in rags, and travelled in carts pulled by mules or later packed into suffocating trains.

All of this started to change at the beginning of the 1960s in response to three factors: the Stabilisation Plan with which the state ended its policy of economic autarchy, the arrival of investment and tourists, and the emigration of the excess labour force and the resulting flood of remittances into the country.

Things changed, albeit slowly. At the beginning of the 1960s there were clear signs of the growth of a middle class and improvements in conditions of the working class, especially in cities. Small cars appeared in the streets; then came the widespread use of refrigerators and home appliances like dishwashers and washing machines.

Later, the new generations of Spaniards worked furiously to be able to afford their own homes rather than live with their parents, which had always been the norm. In fact in a few decades in this regard Spain outstripped Germany and northern Europe, which never gave up the convenience of renting. For many Spaniards, having one’s own place was not enough and they sought the status symbol of a second home.

It is understandable how this spectacular rise in the standard of living was considered to be a just reward for the efforts of both those who entered the workforce as well as their parents. The change was largely the product of people working multiple jobs and longer hours and by the entry of women into the workforce in unprecedented numbers.

In short, Spain’s economic leap was not the product of handouts. If people had public sector jobs, they won them through a carefully run system of competitive hiring that at the time, at least, was only slightly tainted by political corruption.

The welfare state reached Spain only in the second half of the 20th century, having evolved much earlier elsewhere in Europe. Inspired not by communist thought but rather by German chancellor Otto Bismarck, it was then strengthened by the Francisco Franco regime (1936-1975) as another way of winning the docility of his subjects. Franco’s previous technique used the people’s fear of war and repression.

Spain thus transformed itself from a society largely based on agriculture and animal husbandry into a modest industrial power and later a predominantly service sector economy.

With the restoration of democracy after Franco’s exit, the country’s advance accelerated. Spain’s entry into the European Union (EU) was successful both politically and economically, as the country surpassed the average Gross Domestic Product for EU members. Spain was not “different”, as the Franco motto had proclaimed. It was the ninth largest economic power on the planet, the number-three tourist destination, and the largest donor of economic assistance to Latin America, where its investments exceeded those of the rest of the EU and even the United States. Meanwhile it was creating artists and sports figures of international standing, while Spanish became the world’s “number one second language”.

In this context, with easy credit provided by the Common Market and with the introduction of the euro, the lure of consumerism grew irresistible. Because of this, the Spanish economy, which was then based largely on construction, simply collapsed when the world financial crisis hit. The repercussions were catastrophic. The rescue plan (a euphemism for intervention) was a bitter pill and hard to swallow. As after the crisis of 1898, the country now has to regain its pulse, even if this can only come through the eruption of protests. (END/COPYRIGHT IPS)

* Joaquin Roy is “Jean Monnet” professor and director of the European Union Centre of the University of Miami (jroy@Miami.edu).