Francoist Spain - Economic Policy

Economic Policy

See also: Economic history of Spain: Economy under Franco

The Civil War had ravaged the Spanish economy. Infrastructure had been damaged, workers killed, and daily business severely hampered. For more than a decade after Franco's victory, the economy improved little. Franco initially pursued a policy of autarky, cutting off almost all international trade. The policy had devastating effects, and the economy stagnated. Only black marketeers could enjoy an evident affluence.

In 1940, the "Vertical Trade Union" was created; it was inspired by the ideas of José Antonio Primo de Rivera, who thought that class struggle would be ended by grouping together workers and owners according to corporative principles. It was the only legal trade union, and was under government control. Other trade unions were forbidden and strongly repressed along with political parties outside the FET-JONS.

On one occasion, a Czech engineer and con-man managed to convince the general that with the waters of the River Jarama and certain herbs and secret powders, Spain could get all the petroleum it needed. On another, he was convinced of a plan to solve the country’s terrible hunger of the 1940s by feeding the population of 30 million with dolphin sandwiches. (La Memoria Insumisa, Nicolás Sartorius y Javier Alfaya, 1999). Indeed in the background of these economic policies some 200,000 people died of hunger in the early years of Francoism, a period known as Los Años de Hambre (the Years of Hunger).

On the brink of bankruptcy, a combination of pressure from the USA, the IMF and technocrats from Opus Dei managed to “convince” the regime to adopt a free market economy in 1959 in what amounted to a mini coup d’etat which removed the old guard in charge of the economy, despite the opposition of Franco. This economic liberalisation was not, however, accompanied by political reforms and repression continued unabated, though these very reforms would lead to socio-economic changes in Spanish society which would make the regime’s continuation 16 years later untenable.

Economic growth picked up after 1959 after Franco took authority away from these ideologues and gave more power to the liberal technocrats. The country implemented several development policies and growth took off creating the "Spanish Miracle". Concurrent with the absence of social reforms, and the economic power shift, a tide of mass emigration commenced: to European countries, and to lesser extent, to South America. Emigration helped the Régime in two ways: the country got rid of surplus population, and the emigrants supplied the country with much needed monetary remittances.

During the 1960s, the population, mainly the wealthier segments, experienced further increases in wealth, particularly those who remained politically faithful. International firms established their factories in Spain: salaries were low, taxes nearly non existent, strikes were forbidden, labour health or real state regulations were unheard of, and Spain was virtually a virgin market. Spain became the second-fastest growing economy in the world, just behind Japan. The rapid development of this period became known as the Spanish Miracle. At the time of Franco's death, Spain still lagged behind most of Western Europe, but the gap between its GDP per capita and that of the major Western European economies had greatly narrowed; in world terms, Spain was already enjoying a fairly high material standard of living with basic but comprehensive services. However, the period between the mid 1970s and mid 1980s was to prove difficult as, in addition to the oil shocks to which Spain was highly exposed, the settling of the new political order took priority over the modernising of the economy.