All stories start in a specific time and place; that’s how literature explains the complexity of the world. The crisis affects me directly; many of my Spanish friends are currently experiencing its full devastating force. They feel that the future is full of uncertainty and watch in astonishment as life in a normal European country becomes more out of joint by the day, swept along in the mad two-horse race between the centre-right People’s Party (PP) and centre-left Spanish Socialist Workers’ Party (PSOE), neither of which is capable of giving the slightest account of what went wrong in the past, what is going wrong today and — worst of all — what could go even more wrong in the future.
The role of a government is to create a narrative for a society, with all its contradictions and problems, but Spain does not have — and never has had — such a story. This is because, since the death of Franco and the start of the transition to democracy (1), Spain’s political class has established intellectual laziness as a defining feature. A viable model for running the country has never been devised. When you reread parliamentary statements or electoral campaign speeches, you look in vain for the slightest vision for Spanish society.
The only statesman who ever attempted such a narrative was Manuel Azaña, the last president of the republic before Franco’s coup d’état. There has never been another, because Spain’s great shortcoming stems from the absence of an enlightened middle class, which in turn is the result of a lack of statesmen.
The most telling statement was Felipe González’s (2) quotation of the motto of the Chinese leader Deng Xiaoping: “It doesn’t matter if a cat is black or white, as long as it catches mice.” Taking this metaphor, which has come to be applied to all social, economic, cultural and political situations in the country, as a starting point, I shall try to construct a narrative which makes it possible to understand what has happened in the past, what is happening now and why.
On a chilly February day in 1988, Carlos Solchaga, finance minister in Felipe González’s Socialist government, gave a speech in Madrid’s Palacio de Congresos to at least a thousand business leaders: “In no other country in Europe, and perhaps in the world,” he told them, “can you make so much money in so short a time as in Spain. I’m not the only one saying this: it’s what consultants and market analysts are saying too.”
The PSOE couldn’t have been clearer: Spain was a country where only idiots didn’t get rich, or failed to believe that they were. The functioning of the economy, the principle of solidarity, the social-democratic conception of well-being, a left-wing analysis of the origins of wealth: all of these things had been swept aside on the glorious road that would lead society to recognise itself only in wealth — especially short-term wealth.
How does a country succumb to the siren’s song of easy money? The arguments put forward by economists to explain the global crisis omit an essential fact: not only has the capitalist system failed as a whole, but in Spain’s case, this failure has been amplified by the failed transition from Catholic-nationalist dictatorship to democratic state whose sole obsession is with forgetting the past.
Joining the community of European nations made any discussion of the nature of the democratic project impossible or drowned it out. The republican experience was ignored, without worrying about the price to be paid for the absence of historical reference points, for the desire to be part of the West which flung us into the arms of Nato at the end of the cold war, and — especially — for the cultural curse known as the picaresque (3). The cat, whatever its colour, had to catch mice.
Failures of the past
When this picaresque vein becomes a principle to live by — or worse, to govern by — the consequences are lasting. Our problems today are a reminder of the failures of the past.
Among those failures is the distorted vocabulary we use to keep reality at arm’s length. It’s no accident that the state terrorism practised against ETA (4) in the 1980s was called “anti-terrorist policy”, or that “crisis” was replaced by “reduced growth”, or that the bailout of a private bank with public funds was presented as “a loan on the most favourable terms”. From the very first day of the transition to democracy, euphemism has been part of the very fabric of political discourse.
Three years before the fall of the Berlin Wall, Spain joined the European Union, and the term “globalisation” silenced all reflection on the true nature of the opportunity or the best way of integrating Spain into the new globalised economy. The overwhelming majority of economists and the political class in general, complacently believing they belonged by osmosis to the wealthy minority, never reflected on the consequences of a decision that is, nonetheless, at the root of the present crisis.
‘Spain’s doing well’
When the world’s most powerful economies decided that the least developed nations ought to be turned into a giant market, on condition that they competed with products from the “first world”, Solchaga-style prophets continued to believe, and ceaselessly predicted, that the conditions imposed on third-world countries, however unfair and unattractive, would drive an unstoppable dynamic: the poor would sell more goods to the rich and become more competitive.
These countries experienced spectacular growth and were dubbed “emerging” economies. But their new wealth, which could have been hailed as just recompense for centuries of pillage, was concentrated mostly in the hands of elites, encouraging states to prioritise economic “necessities” over political considerations. Western countries, preoccupied with their quest for profit, were happy to sacrifice their own industries. The relocation of factories abroad, and blackmail of the “No taxes or I’m leaving” type, encouraged them to tighten their belts and make the first cuts to the welfare state — a step towards its complete dismantlement.
There was nothing truly novel about the face that capitalism displayed in the new Spain. Long before the word “globalisation” entered the political and economic vocabulary, its meaning had been perfectly summed up by Salvador Allende (5) in a speech to the UN General Assembly on 4 December 1972: “We are faced by a direct confrontation between the large transnational corporations and the states. The corporations are interfering in the fundamental political, economic and military decisions of states. The corporations are global organisations that do not depend on any state and whose activities are not controlled by, nor are they accountable to any parliament or any other institution representative of the collective interest. In short, the whole world’s political structure is being undermined.”
In those days the market already behaved like a dictatorship, and politics — the old art of the possible — was taking on the appearance of a test of who was best equipped to run the market. All this was deliberately ignored by Spanish politicians. The old adage “I scorn that which I do not know” (so characteristic of the pícaro) caused them to freeze rigid at the first signs of the crisis.
People in Spain are fond of telling you that tourism is the country’s biggest (or possibly second biggest) industry. But nobody adds that tourism is subject to forces beyond the control of those who desire it, and generates not just fortunes for hotel owners but an inferiority complex that damages the whole of society. There is a difference between living in a country at the cutting edge of technological innovation and living in a land of hotel receptionists, cooks and waiters.
Spain’s accession to the EU (along with Greece and Portugal) marked not only the end of Iberian self-sufficiency, but the start of an influx of money from the Cohesion and Development Funds, more money than the Marshall Plan provided for the whole of Europe after the second world war. In the period 2007-2013 alone, Spain will have received €3.25bn. Despite the “Spain’s doing well” mantra preached during José María Aznar’s eight-year term, and despite the announcement by his successor, José Luis Rodríguez Zapatero (6), that the country had a more prosperous economy than Italy, and a more successful finance sector than the rest of the world, Spain didn’t contribute a cent for the ten states from eastern Europe which joined the EU in 2004. This parsimony should have set Spain’s European neighbours thinking. If it didn’t, it was because the markets saw in Spain — as they had done previously in the US — a goose that laid golden eggs far more enticing than the uncertain plans to modernise the country’s manufacturing base. These were property speculation and the limitless availability of mortgages.
Few Spanish politicians or economists had taken stock of the fact that, during the five years that preceded the collapse of Lehman Brothers, emerging economies such as China, Brazil and India had recorded phenomenal rates of growth. That was because the race to improve the competitiveness of the few Spanish businesses still able to take on the global market mattered little next to the short-term gains to be made from the property bubble.
Corruption, the very essence of the picaresque, appeared in Spanish political life: “I’ll fund your electoral campaign if you grant me construction permits on your commune’s land.” Urban nightmares began to spring up everywhere, such as Seseña, the ghost town in the desert of Toledo: 13,500 apartments without water, gas or other infrastructure — and almost without residents too. The banks artificially increased the price of this real-estate carbuncle before ceding it to one of Spain’s richest entrepreneurs, the semi-illiterate billionaire Francisco Hernando Contreras, who started his career as a sewage worker.
Ghost towns and empty airports
Ghost towns like Seseña were built all over the country. True, their construction created jobs. In one of his typically extravagant statements, Zapatero insisted that between 2006 and 2008 Spain had created more jobs than France, Italy and Germany combined — omitting to mention that these new Spanish employees earned two-thirds less than their French, Italian and German counterparts. The country was, after all, doing splendidly. “Brand Spain” was making its owners proud.
The productivist model applied to the property sector corrupted not just political life but social and cultural life too. Hundreds of thousands of young people willingly renounced their right to an education as the building sites beckoned. Why study for six or eight years to become an engineer or doctor, when three months’ salary was all it took to get a 30- or 40-year loan that would buy you an apartment, a car, an HD TV set and the latest mobile phone? No other country had seen its universities abandoned so fast and completely. Or sacrificed its future so joyfully for the promise of short-term gain.
Property fever, and accompanying corruption, produced grandiose airports where no plane ever landed, high-speed train lines no one ever used, motor-racing circuits where rabbits could peacefully propagate, cultural institutes that became pigeon lofts. And all along, the banks posted their most triumphant results ever. The cat was catching the mice.
Solchaga’s prophesy had come true: Spain was the best place to make millions overnight, with an endless supply of a natural resource whose value just kept increasing — land. The property boom gave the lie to the maxim that the entrepreneurial strength of a country can be gauged by the diversity of what it produces. In Spain, small and medium enterprises devoted themselves almost entirely to keeping the cement mixers churning.
Too good to last
Perhaps the best proof of the intellectual weakness of Spanish leaders is their apparent inability to grasp the fact that a society’s narrative must follow an Aristotelian arc — exposition, climax, dénouement. In other words, the future is not a repeat of the present. Or, in economic terms, cycles inevitably come to an end. From the start of the property boom, those in charge of the economy and the unions knew they were sitting on a powder keg. But in spite of timid warnings from the United Left (7), no one wanted to make the first move. The cat had to go on catching mice, even if they were only a mirage.
Bertold Brecht said that people should dissolve a useless government and elect another, but that a government might sometimes wish it could dissolve the people if they were found wanting. This expresses the state of mind of the PSOE after its punishing electoral defeat last year. During their final months in power, the Socialists had faced up to the crisis — whose existence they had initially denied, since the ideology of the market guaranteed that the Spanish economy was invulnerable — by burying for good any desire to be a government of the left. They felt there was no need to explain to the people why the banks were no longer lending, why small and medium enterprises were going under one after the other or why unemployment was rising by the day. The rare efforts by the Zapatero government to save what could be saved came under fire from the right, obstinately opposing every move in the most irresponsible manner ever seen in a democratic country). But on both sides, there was agreement that the anxiety overwhelming the people was of no account compared with the need to “reassure the markets”, in other words, to favour the banks with a surfeit of public funds.
The last few months of the Socialists’ term were a tragi-comedy. As the government cut salaries and poured money into the banks, opposition politicians such as Cristóbal Montoro, the current finance and public administration minister, would swagger in public: let the country go under, we’ll get it back on its feet. Among its would-be saviours was Luis de Guindos, executive president of Lehman Brothers in Spain and Portugal from 2006 to 2008; he concealed from the Iberian authorities first-hand information in his possession about fake bank accounts and warning signs of the bank’s collapse. He was rewarded three years later with the post of minister for economy and competition in Rajoy’s government.
And so, as the Socialist government cut spending on social programmes in the name of “necessary adjustments” and “obligations imposed by Brussels”, the number of unemployed rose from two million to three, then four, and now five. The constitution was quietly changed to impose a budgetary golden rule, which would complete the transformation of the economic crisis into a social one: the accelerated spread of poverty throughout a land that no longer appealed to property developers.
The elections produced no compelling narrative of how things had come to this pass. Voters simply faced the question: “Do we want to be citizens or consumers?” A substantial majority of Spaniards opted for the latter, giving the right an overwhelming majority.
The cat could keep catching mice. Not least because a new feast was on offer: a sale of public debt. The funds that poured into the banks were not being fed through to businesses to save them from going under, nor to mitigate mortgage payments and prevent the eviction of ordinary home-owners who couldn’t keep up their payments, but to buy up public debt at interest rates of 3-5%. It was state-subsidised speculation. Ultimately, the financial crisis left the finance sector untouched. Perhaps it was less bloated than before, but it was far from dying of hunger.
Under EU rules, states have a duty to guarantee the integrity, robustness and durability of their financial systems. This enables speculators to win either way: if things go well, they monopolise the profits; and if they don’t, it’s the taxpayer who picks up the bill.
Tax revenues ran out a few months before Zapatero’s government left office. The European Central Bank (ECB) issued loans at a rate of just 1%, without worrying about the health of the banks the funds were destined for. With cheap money from the ECB, the banks scooped up public debt at the magnificent interest rate of 5%, then 6%, then 7%. Solchaga was right: Spain was still the best place in the world to earn the maximum amount of money in the minimum amount of time.
In euphemistic Spain, disgust at corruption is known as “disaffection with politics”. As the country sank into a morass of unemployment, the directors of banks and savings banks were preparing for their retirement by awarding themselves fabulous bonuses under the placid gaze of the ill-named “political class”. Spain’s political class serves the interests of the market above all else. It is true that the borders between the two worlds are sometimes porous. Former prime minister, José María Aznar, now a high-end consultant, splits his time between the mighty News Corporation and Endesa, the Spanish electricity multinational. His predecessor, Felipe González, has become an adviser to the Gas Natural Fenosa group. A special mention should be made of former Socialist minister Elena Salgado, promoted to adviser to Chilectra, Endesa’s Chilean operation, which is devastating the environment in Patagonia.
In Spain, each new day brings more bad news. The government runs the country like the representative of the tenants’ association of a block of flats. Mariano Rajoy may look as though he belongs in a 19th-century notary’s office, but he is a man of his time in the way he goes about increasing the insecurity of the people, who are treated as disgraced consumers. Each morning we wake up to a new blow: education cuts, reductions in health spending, redundancies (called “adjustments”), deafening silence in the face of corruption scandals, a stream of thefts and swindles.
Now we have the Bankia affair — a symptom of the wave of kleptomania. The bank reputed to be the most secure in the country now threatens to bring the whole system down. Created in 2010 by the amalgamation of seven regional savings banks, Bankia put out a clear message: the overriding obligation to be competitive required the elimination of the last vestiges of the social function that savings banks once served. The early results seemed promising, particularly for shareholders. But suddenly the air went out of the balloon. Although a deep mystery still surrounds the causes of the puncture, the state rushed to inject €23.5bn into Bankia’s leaky coffers. That’s more than Spain’s entire infrastructure budget.
Everyone can bring to mind the image of a ruined banker jumping to his death during the crash of 1929. In today’s Spain, the fate of those responsible for the financial crisis has been less severe. Rodrigo de Rato, former economics minister in the Aznar government and former managing director of the IMF, didn’t jump from his window. Perish the thought. He earns over €2m a year.
And so the tale of the Spanish crisis begins and ends with an apology for corruption, a Socialist defence of Profit — and a cat of uncertain colour that consumes a lot of mice.
Karl Marx said capitalism contained the seeds of its own destruction. He was thinking of England, but if he had sunned himself on a Marbella beach with Felipe González’s cat nibbling at his toes, he might have pondered the fact that capitalism, as a system of exploitation that creates surplus value, far from self-destructing, has in fact regenerated itself by borrowing from the market its invisible face, its incorporeal body and its prodigious voracity.