New Left Review - Isidro López et al: The Spanis... http://www.newleftreview.org/?view=2895 New Left Review 69, May-June 2011 ISIDRO LÓPEZ & EMMANUEL RODRÍGUEZ THE SPANISH MODEL Prior to the debacle of 200 , !"ain#$ econo%y had been an ob&ect of "articular ad%iration for We$tern co%%entator$( )1* +o re"roduce the colourful %eta"hor$ of the financial "re$$, in the 1990$ and early 2000$ the !"ani$h bull "erfor%ed %uch better than the %o"in, lion$ of -.ld /uro"e#( 0n the decade followin, 1991, 2 %illion &ob$ were created and the econo%y grew at a rate of nearly 3 "er cent4 between 1991 and 2002, the no%inal wealth of hou$ehold$ increa$ed threefold( !"ain#$ hi$toric $"eciali5ation in $ector$ $uch a$ touri$% and "ro"erty develo"%ent $ee%ed "erfectly $uited to the age of ,lobali5ation, which in turn $ee%ed to $%ile on the country. 6on$truction boo%ed a$ hou$e "rice$ $oared, ri$in, by 220 "er cent between 1992 and 2002, while the hou$in, $toc7 e8"anded by 90 "er cent, or 2 %illion unit$( All feelin, of bein, %erely the bi,ge$t country of the continent#$ "eri"hery wa$ di$"elled by a new i%a,e of %odernity, which did not &u$t catch u" with but in $o%e ways $ur"a$$ed $tandard /uro"ean e8"ectation$;at lea$t when !"ain#$ dyna%i$% wa$ co%"ared to the -ri,iditie$# of the /uro5one#$ core( Add to thi$ the 2003 return to "ower of the !ociali$t Party, under a youthful Jo$< Lui$ Rodr=gue5 Za"atero, and the effect of $uch ?uinte$$entially -%oderni5in,# law$ a$ tho$e on $a%e-se8 %arriage, and the %i8ture acquired the bou?uet of a young red wine@ e8tre%ely robu$t on the "alate( 0n $tar7 contra$t, the financial cri$i$ ha$ given the country a co%"letely different i%a,e of it$elf, with effect$ on /uro"e that re%ain to be calculated( .ver the "a$t year, !"ain ha$ on $everal occa$ion$ hovered on the brin7 of cla$$ification a$ a ca$e for /uro5one bail-out, followin, Areece, 0reland and Portugal( 0t$ con$truction indu$try, which in 2002 contributed nearly a tenth of the country#$ ,d", ha$ $uffered a %a$$ive blow-out, leavin, an over-build of un$old hou$in, wor$e than 0reland#$, and the $e%i-public $avin,$-and-loan$ $ector waterlo,ged with debt( +he effect$ of the hou$ing-market colla"$e have reverberated throughout the econo%y@ une%"loyment i$ runnin, at over 20 "er cent, and %ore than double that rate a%on, the under-21$( : dee" rece$$ion ha$ been co%"ounded by draconian au$terity %ea$ure$, $u""o$edly ai%ed at reducin, a deficit currently $tandin, at over 10 "er cent of gd" to 9 "er cent by 2019( +he "olitical fall-out of the cri$i$ i$ "uttin, additional $train on !"ain#$ decentrali5ed govern%ental $tructure$, in which the $eventeen Autono%ou$ 6o%%unitie$ ad%ini$ter a large "ro"ortion of "ublic $"endin,4 in 6atalonia and el$ewhere, the ac budget$ are al$o runnin, deficit$( +he !"ani$h bull#$ "ro$tration al$o carrie$ i%"lication$ for the /uro5one a$ a whole( At over 31 %illion, the "o"ulation of !"ain i$ al%o$t twice a$ large a$ tho$e of Areece, 0reland and Portugal "ut together4 it$ econo%y i$ the fourth lar,e$t in the /uro5one, with a gd" of B1,309bn, co%"ared to B901bn for Areece, B203bn for 0reland and B229bn for Portu,al( +he $cale of a !"ani$h bail-out, were Madrid to run into difficulty in financing it$ debt$, would be li7ely to ca"$i5e the /uro5one#$ current tactic$ for dealin, with it$ indebted peri"hery—heavily conditional i%fCecb loan$, so far made available to Greece, Ireland and Portugal with the ai% of -tidin, the% over#, while $afe,uardin, the e8"o$ed "o$ition$ of bi, Aer%an, French and Eriti$h ban7$( !o far, the wager ha$ been that, after a do$e of au$terity and labour-market refor%, !"ain#$ "re-cri$i$ econo%ic %odel can be re$u$citated in leaner, fitter for%( 0$ thi$ a viable "ro"o$itionF Phalangist architects +he genealogy of the !"ani$h %acro-econo%ic %odel ha$ been co%"le84 one %i,ht even $ay, ironic( 0t$ origin$ lie in the %oderni5ation "ro,ra%%e of the Franco dictator$hi" fro% the late 1910$, "re%i$ed on the develo"%ent of %a$$-market touri$% fro% northern /uro"e and the radical e8"an$ion of "rivate ho%e-owner$hi"( +hi$ -$olution# to !"ani$h indu$try’$ eternal co%"etitive wea7ne$$ wa$ a notable ano%aly in the conte8t of the %anufacturin, ,rowth that %arked the "o$t-war boo% el$ewhere in /uro"e( Eut a$ Dranco#$ Mini$ter for Gou$ing, the Phalangi$t Jo$< Lui$ :rre$e, "ut it in 1912@ Queremos un país de propietarios, no de proletarios;-we want a country of "ro"rietor$, not "roletarian$#( +hi$ +hatcheri$% avant la lettre 1 de 15 11/11/11 09:01 New Left Review - Isidro López et al: The Spanis... http://www.newleftreview.org/?view=2895 tran$for%ed the !"ani$h hou$in, %ar7et@ durin, the 1910$, rented acco%%odation wa$ $till the nor%4 by 1920, "rivate owner$hi" accounted for over 60 "er cent of hou$in,, 10 "oint$ above the u7 level H$ee Fi,ure 1I( +he le,acy of the Dranco dictator$hi" and the enor%ou$ $hortco%in, of the country’$ indu$trial $tructure did not au,ur well in a $cenario characteri5ed by increa$ing co%"etition in international %ar7et$( +he rece$$ionary cri$i$ beginnin, in 1929 wa$ %ore $evere in !"ain than in %o$t /uro"ean countrie$, overla""in, with the "olitical tran$ition that followed Franco#$ death in 1921( Eut the advent of "arlia%entary de%ocracy brou,ht no chan,e in %acro-econo%ic "olicy. +he Partido !ociali$ta .brero /$"aJol H"$oeI, in "ower continuou$ly under Feli"e Aon5Kle5 fro% 19 2C96, had no alternative %odel to "ro"o$e( 0ndeed, the $trategy for relaunchin, the econo%y in the 19 0$ wa$ ba$ed on dee"enin, !"ain#$ e8i$tin, -$"eciali5ation$# in touri$%, "ro"erty develo"%ent and con$truction, a$ -co%"etitive advanta,e$# neatly ada"ted to the new a""roache$ of the e%erging ,lobal econo%y, i(e( hi,h ca"ital %obility and growin, co%"etition to ca"ture financial inco%e$( +hi$ a""roach wa$ effectively $anctioned by the other /uro"ean "ower$ in the negotiation$ that "receded !"ain#$ acce$$ion to the eec. In the$e pact$, which effectively con$tituted a strategic agenda for the country, the Gon5Kle5 govern%ent acce"ted it$ "artial de-indu$triali5ation in e8change for e8tre%ely generou$ $ub$idie$, which would account for an annual average of 1 "er cent of !"ain#$ gd" between 19 6 and 2003( :$ we $hall $ee, the$e fund$ would "lay a 7ey role in buildin, the infra$tructure—tran$"ort, energy, etc(—underlyin, the later con$truction boo%, which con$u%ed %ore than half the total $ub$idie$( +he run-u" to inte,ration into the /uro"ean 6o%%unity on 1 January 19 6 $aw a fren5y of inve$t%ent, a$ /uro"ean ca"ital reco,ni5ed the %ar7et o""ortunity o"ened up by the 0berian countrie$# entry into the eec. Aer%an, French and 0talian %ultinational$ took u" key "o$ition$ within !"ain#$ "roduction $tructure, buying u" %o$t of the bi, food-indu$try co%"anie$ and the "ublic-$ector fir%$ that were bein, "rivati5ed, takin, over %uch of the $u"er%arket $ector and ac?uirin, what re%ained of the %a&or indu$trial co%"anie$( .nly the ban7$, con$truction fir%$ and the $tate-owned electricity and teleco%%unication$ %ono"olie$ re%ained i%%une to the buyin, fren5y for !"ani$h a$$et$( +he u"$hot of thi$ wave of inve$t%ent—which brought the fir$t "eriod of $u$tained growth $ince 1929;wa$ a ra"id 2 de 15 11/11/11 09:01 New Left Review - Isidro López et al: The Spanis... http://www.newleftreview.org/?view=2895 overheatin, of the %arket$( +he Madrid !tock /8chan,e $aw increa$e$ of 200 "er cent between 19 6 and 19 9, while the ca"ital#$ "ro"erty %arket beca%e one of the %o$t "rofitable on the "lanet( 0n "arallel with Reagani$% in the u$ and +hatcheri$% in Eritain, the econo%ic cycle in !"ain under Aon5Kle5 fro% 19 1 to 1991 wa$ the fir$t atte%"t in continental /uro"e at growth by %ean$ of a financial and "ro"erty a$$et-"rice bubble that would have a "o$itive knock-on effect on do%e$tic con$u%"tion and de%and without any $i,nificant $u""ort fro% indu$trial e8"an$ion( )2* +he eu"horia did not la$t lon,, however4 the ,rowin, e8ternal deficit and the lac7 of a $olid foundation for growth ended u" unlea$hin, $"eculative attacks again$t the !"ani$h "e$eta, who$e value the govern%ent wa$ "ledged to %aintain at any co$t( : %a$$ive "ublicity ca%"ai,n around the "o%" and cere%ony of the Earcelona .ly%"ic Aa%e$ and the !eville Univer$al /8hibition in 1992 "roved unable to "revent the cra$h of the %arket$—followed, eventually, by a $erie$ of a,,re$$ive currency devaluation$( Ey the early 1990$, the !"ani$h econo%y wa$ once a,ain faced with the "roble% of findin, a "ath to growth( Euro-boost Genceforward, however, !"ani$h %acro-econo%ic "olicy would be increa$ingly deter%ined at /uro"ean level, $tructured within the fra%ewor7 of the convergence criteria $et for %onetary union and the neoliberal do8a con$olidated in the Maa$tricht +reaty and it$ $ucce$$or$, to which both "$oe and "" govern%ent$ gave their full $u""ort( +he reduction of "ublic $"endin,, inflation-targetin, and the deregulation of labour %ar7et$ laid down by Maa$tricht enabled a recovery of financial "rofit$, but ,enerated new "roble%$ of $ti%ulatin, de%and in /uro"e#$ rather $lac7 econo%ie$( +he "ace of the !"ani$h econo%y#$ "o$t-91 recovery—acceleratin, fro% 1992 onward$ to ,row by an avera,e 1 "er cent "er year between 199 and 2000—cannot be e8"lained, therefore, by the local i%"le%entation of neoliberal "re$cri"tion$( 0t lay rather in the ca"acity of the new round$ of "ro"erty develo"%ent and financial en,ineerin, to re$olve, if only te%"orarily, a nu%ber of contradiction$ inherent in the chaotic articulation of the neoliberal reci"e$ the%$elve$( Four factor$ "roved deci$ive here( Dir$t, low intere$t rate$,