by Julio Martínez Cava-Aguilar and Mario Espinoza Pino
A research paper developed in the Summer School “Teaching the crisis – Geographies, Methodologies, Perspectives”
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1. Crisis and social break up: the emergence of the 15M
If we want to understand the 15M movement, we have to contextualize the social and political conditions of its emergence, that is to say, the roots of Spain’s economic and democratic crisis. The crisis is intimately related with the effects of the Spanish real state bubble (1997/2007), whose catalyst was the subprime mortgage panic of 2007 in the USA. But to deal with this critical moment adequately, we have to make a brief scheme of some political and economic features of Spain’s productive structure:
1. Since the fifties, under Franco’s dictatorship rule, the country’s main productive activities were focused into two areas: real estate and tourism. The industrial modernization made between the decades of the military dictatorship and the first years of democracy was partial and irregular, with the concentration of factories and industries in specific regions (Vasque country, Catalonia, Cantabria, Madrid) and a strong productive and social polarization[1].
2. The cost of Spain’s entry in EU in 1986 was the destruction of part of its weak industrial structure. The PSOE –the party in the government– had not an alternative model of production to implement, so they accepted the partial dismantlement of Spain’s industry in exchange of large economic subsidies by the EU (1 per 100 of the Spanish PIB between 1986 and 2004). The money acquired was re-invested in the same old economic sectors: real state and tourism.
3. With the Maastricht Treaty in 1992 Spain started its way into the neo liberal economic dogma. After a first Spanish cycle of growth, exhausted by the 92 real state bubble, the country reentered a new economic cycle of expansion in 1997 due to the influence of the EU: 1) The EU politics of deficit control (containment of public expenditure[2]) and the interest of the major European financial companies in the Spanish real estate investment (and other assets), the credit flowed with easiness. 2) The EURO: the European Union strengthened Spain’s economy with the guarantee of their common currency, that is to say, it enhanced the power of Spain to buy and invest with more security[3].
4. After a new wave of market liberalizations in Spain, implemented by the EU and IMF, the country –ruled by the PP– re-activated the real estate investment market between the years 1997-2007.During these years the housing prices increased its value in 220% and seven million houses were built[4]. The easiness of credit flow, the expansion of Spain’s economy and the abnormal elevation of real estate prices, created a sort of “wealth effect” in the middle of these “golden years”. But in 2007, due to the subprime crisis, the bubble burst.
